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Mauritius

Executive Summary

Mauritius is an island nation with a population of 1.3 million people.  The Government of Mauritius (GoM) claims an Exclusive Economic Zone (EEZ) of approximately 2.3 million square kilometers. Mauritius has a stable and competitive economy, with a gross domestic product (GDP) of USD 14.22 billion (2018) and per capita gross national income (GNI) of USD 12,050 in 2018.  According to the International Monetary Fund, real GDP growth for 2019 is estimated at 4 percent and projected to fall to negative 6.8 percent in 2020 due to the Covid-19 effect on the global economy.  The inflation rate decreased from 3.2 percent in 2018 to 0.5 per cent in 2019.  The unemployment rate decreased from 6.9 percent in 2018 to 6.7 percent at the end of 2019.  According to the World Bank’s 2020 Ease of Doing Business Index, Mauritius ranks first in Africa and 13th worldwide, out of 190 countries.

Since achieving independence in 1968, Mauritius has made a remarkable economic transformation from a mono-crop economy (sugarcane) to a diversified economy driven by export-oriented manufacturing (mainly textiles), tourism, financial and business services, information and communication technology, seafood processing, real estate, and education/training.  Before Covid-19, authorities planned to stimulate economic growth in five areas:  Serving as a gateway for investment into Africa, increasing the use of renewable energy, developing smart cities, growing the blue economy, and modernizing infrastructure, especially public transportation, the port, and the airport.  But 2020 will, like most countries, focus on rebuilding existing sectors whose customers disappeared due to the pandemic.  Economists predicted that tourism and manufactured exports would be the hardest hit sectors.

Government policy in Mauritius seeks to promote trade and investment.  The GoM has signed Double Taxation Avoidance Agreements with 46 countries and jurisdictions and maintains a legal and regulatory framework that keeps Mauritius highly ranked on “Ease of Doing Business” and good governance indices.  In recent years, Mauritius has been especially intent on attracting foreign direct investment from emerging economies like China and India, as well as courting more traditional markets like the United Kingdom, France and the United States. The GoM, which is currently finalizing bilateral trade agreements with both India and China, promotes Mauritius as a safe, secure place to do business due to its favorable investment climate and tradition as a stable democracy. Corruption in Mauritius is low by regional standards but there remains room for improvement improve in terms of transparency and accountability.  A recent commercial dispute between a U.S. investor and a parastatal partner that has turned into a criminal investigation, for instance, has raised questions of governmental impartiality.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2019 52 of 180 http://www.transparency.org/
research/cpi/overview
World Bank’s Doing Business Report 2020 13 of 190 http://www.doingbusiness.org/
en/rankings
Global Innovation Index 2019 82 of 126 https://www.globalinnovationindex.org/
analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2018 9,544 https://apps.bea.gov/international/
factsheet/factsheet.cfm
World Bank GNI per capita 2018 12,050 http://data.worldbank.org/indicator/
NY.GNP.PCAP.CD

3. Legal Regime

Transparency of the Regulatory System

Since 2006, the GoM has reformed trade, investment, tariffs, and income tax regulations to simplify the framework for doing business.  Trade licenses and many other bureaucratic hurdles have been reduced or abolished.  With a well-developed legal and commercial infrastructure and a tradition that combines entrepreneurship and representative democracy, Mauritius is one of Africa’s most successful economies.  Business Mauritius, the coordinating body of the Mauritian private sector, participates in discussions with and presents papers to government authorities on laws and regulations affecting the private sector.

Regulatory agencies do not request comments on proposed bills from the general public.  Both the notice of the introduction of a government bill and a copy of the bill are distributed to every member of the Legislative Assembly and published in the Government Gazette before enactment.  Bills with a “certificate of urgency” can be enacted with summary process.  All proposed regulations are published on the Legislative Assembly’s website, which is publicly accessible via http://mauritiusassembly.govmu.org/English/bills/Pages/default.aspx.  

Companies in Mauritius are regulated by the Companies Act of 2001, which incorporates international best practices and promotes accountability, openness, and fairness.  To combat corruption, money laundering and terrorist financing, the government also enacted the Prevention of Corruption Act, the Prevention of Terrorism Act, and the Financial Intelligence and Anti-Money Laundering Act.  While Mauritius does not have a freedom of information act, members of the public may request information by contacting the permanent secretary of the relevant ministry.

Budget documents, including the executive budget proposal, enacted budget, and end-of-year report, are publicly available and provide a substantially full picture of Mauritius’ planned expenditures and revenue streams.  Information on debt obligations is also at http://mof.govmu.org/English/Public%20Debt/Pages/Debt-Data.aspx .

International Regulatory Considerations

Mauritius is a member of the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA).  It is a signatory to the African Continental Free Trade Area (AfCFTA), which entered into force in May 2019, and the COMESA-EAC-SADC Tripartite Free Trade Area.  As at April 2020, the Tripartite FTA has yet to enter into force.  The GoM implements its commitments to these regional economic institutions with domestic legal and regulatory adjustments, as appropriate.

Mauritius has been a member of the World Trade Organization (WTO) since 1995.  The GoM reports that they notify all draft technical regulations to the WTO Committee on Technical Barriers to Trade to the extent possible.  In July 2014, Mauritius notified its category A commitments to the WTO, among the first African countries to do so.  Mauritius was the fourth country to submit its instrument of acceptance for the Trade Facilitation Agreement (TFA).  In 2019, Mauritius notified its category B and C commitments and their corresponding dates of implementation.

Of TFA’s 36 measures, Mauritius has classified 27 as category A, five as B, and four as C.  Discussions with donors to obtain technical assistance to finance trade facilitation projects listed under category C are ongoing and Mauritius secured assistance from the World Bank and the World Customs Organization.

To coordinate efforts to implement the TFA, in 2015 Mauritius set up a National Committee on Trade Facilitation, co-chaired by representatives from government and the private sector.  Members include Customs, the Ministry of Agro-Industry and Food Security, the Ministry of Finance and Economic Development, and the Mauritius Chamber of Commerce and Industry.  The committee has met 10 times since.  Discussion topics include identification of sources of financing for category C commitments and resolution of non-tariff barriers in Mauritius.

Legal System and Judicial Independence

Mauritius draws legal principles from both French civil law and British common law traditions.  Its procedures are largely derived from the English system, while its substance is based on the Napoleonic Code of 1804.  Commercial and contractual law is also based on the civil code.  However, some specialized areas of law are comparable to other jurisdictions.  For example, its company law is practically identical to that of New Zealand.  Mauritian courts often resolve legal disputes by drawing on current legislation, the local legal tradition, and by means of a comparative approach utilizing various legal systems.  The highest court of appeal is the judicial committee of the Privy Council of England.  Mauritius is a member of the International Court of Justice.  Mauritius established a Commercial Court in 2009 to expedite the settlement of commercial disputes.

Contracts are legally enforceable and binding.  Ownership of property is enforced with the registration of the title deed with the Registrar-General and payment of the registration duty.  Mauritian courts have jurisdiction to hear intellectual property claims, both civil and criminal.  The judiciary is independent and the domestic legal system is generally non-discriminatory and transparent.  The Embassy is not aware of any recent cases of government or other interference in the court system affecting foreign investors.

Laws and Regulations on Foreign Direct Investment

The 2017 Economic Development Board Act governs investment in Mauritius, while the 2001 Companies Act contains the regulations governing incorporation of businesses.  The Corporate and Business Registration Department (CBRD) of the Ministry of Finance and Economic Development administers the 2001 Companies Act, the 2002 Business Registration Act, the 2009 Insolvency Act, the 2011 Limited Partnerships Act, and the 2012 Foundations Act.  Information regarding the various acts can be accessed via the CBRD’s website: http://companies.govmu.org/English/Legislation/Pages/default.aspx  

All laws and regulations related to foreign investment can be found on the EDB’s website: http://www.edbmauritius.org/resources/legislations/ .

Competition and Anti-Trust Laws

The Competition Commission of Mauritius (CCM) is an independent statutory body established in 2009 to enforce the Competition Act of 2007.  It is mandated to safeguard competition by preventing and remedying anti-competitive business practices in Mauritius.  Anti-competitive business practices, also called restrictive business practices, may be in the form of cartels, abuse of monopoly situations, and mergers that reduce competition.

The institutional design of the CCM houses both an adjudicative and an investigative organ under one body.  While the Executive Director has power to investigate restrictive business practices (the Investigative Arm), the Commissioners determine the cases (the Adjudicative Arm) on the basis of reports from the Executive Director.

Since it began operations, the CCM has undertaken 54 investigations, of which 44 have been completed and 10 are ongoing as of May 2020.  To date, the CCM has conducted 266 enquiries, which are preliminary research exercises prior to proceeding to investigations.  The results of completed investigations are available on the CCM’s website:  http://www.ccm.mu.  

Since 2018, the CCM has initiated a process to review and amend the Competition Act of 2007 to enable more effective enforcement.  The process was expected to be completed in 2020.

Expropriation and Compensation

The Constitution includes a guarantee against nationalization. However, in 2015, the government passed the Insurance (Amendment) Act to enable the Financial Services Commission (FSC) to appoint special administrators in cases where there is evidence that the liabilities of an insurer and its related companies exceed assets by 1 billion rupees (approximately USD 26 million) and that such a situation “is likely to jeopardize the stability and soundness of the financial system of Mauritius.”  The special administrators are empowered to seize and sell assets.  The government enacted this law in the immediate aftermath of the financial scandal explained below.

In April 2015, the Bank of Mauritius, the central bank, revoked the banking license of Bramer Bank, the banking arm of Mauritian conglomerate British American Investment (BAI) Group, citing an inadequate capital reserve ratio.  As a result, Bramer Bank entered receivership and by May 2015 the receiver had transferred the assets and liabilities of Bramer Bank to a newly created state-owned bank, the National Commercial Bank Ltd., thus effectively nationalizing Bramer Bank.  In January 2016, the Mauritian government merged the National Commercial Bank Ltd. with another government-owned bank resulting in Maubank, a new bank dedicated mainly to servicing small- and medium-sized enterprises.  The GoM owns over 99 percent of Maubank shares.  Efforts to privatize the bank in 2018 did not produce any results.

The government likewise took over much of Bramer’s parent, the BAI Group.  The FSC placed the BAI Group in conservatorship, alleging fraud and corporate mismanagement in BAI’s insurance business.  Following passage of the Insurance (Amendment) Act in 2015, the FSC created the National Insurance Company, which took over the BAI Group’s core insurance business, and the National Property Fund, which took over other BAI Group assets, including a hospital and several retail outlets.  CIEL Healthcare, a local private company, bought the hospital in 2017.

In 2015, BAI’s former chairman filed a dispute against the GoM with the United Nations Commission on International Trade Law (UNCITRAL), alleging that the government illegally appropriated BAI’s assets.  The former chairman, who is a Mauritian-French dual national, claimed that Mauritius had breached the Mauritius-France bilateral investment treaty and requested the restitution of his assets and payment of compensation.  The tribunal concluded that it lacked jurisdiction over the dispute and ruled in favor of the GoM.  The former chairman has appealed this decision.  In May 2019, the former chairman filed a case in the Supreme Court to challenge the appointment of the liquidator for the Bramer Banking Group.

Dispute Settlement

Mauritius is a member of the International Center for the Settlement of Investment Disputes and a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards Act.  Mauritius is also a member of the Multilateral Investment Guarantee Agency of the World Bank.

Investor-State Dispute Settlement

Mauritius does not have a bilateral investment treaty or free trade agreement with the United States.

The embassy is aware of a dispute between a U.S. company that operates in Mauritius and a parastatal partner.  After an apparent commercial impasse, in early 2020 the parastatal filed a criminal complaint against the CEO of the U.S. company, who is a U.S. citizen.  The accused, whom police did not take into custody but forbade to leave the country pending investigation, alleged that the parastatal filed the complaint to gain leverage in the commercial dispute.

As explained above, the former chairman of BAI, a dual French-Mauritian national, filed a dispute against the government of Mauritius with UNCITRAL alleging that the government illegally appropriated BAI’s assets.  The tribunal ruled in favor of the government and the former chairman has appealed.

In 2017, the Supreme Court rendered a judgment in a major unfair competition case lodged in 2005 by Emtel Ltd., a local telecommunications firm, against Mauritius Telecom, a parastatal entity, and the former regulator Telecommunications Authority.  Emtel was engaged in a joint venture with U.S. majority-owned Millicom Enterprises, but Emtel bought all the shares of Millicom in 2014.  The court awarded over USD 16 million in damages to Emtel.

A Malaysian power company, CT Power, is challenging the government’s decision to cancel a proposed energy project, which they had been negotiating with the previous government. The Supreme Court ruled in favor of CT Power in July 2016.  The Ministry of Energy and Public Utilities, supported by the Central Electricity Board, appealed to the Privy Council, which overturned the ruling in June 2019.

Another dispute involves local company Betamax against the State Trading Corporation (STC) for breach of contract.  In 2009, Betamax received a long-term contract with a previous government for the transportation of petroleum products from an oil refinery in India to Mauritius.  A different government elected in 2014 tried at first to negotiate Betamax out of the transportation contract on the grounds that the contract had been awarded unlawfully.  After negotiations failed, the government decided to rescind the contract.  Betamax took the case to the Singapore International Arbitration Center (SIAC).  In 2017, SIAC decided in favor of Betamax and ordered the STC to pay approximately USD 133 million in damages to Betamax for breach of contract.  STC petitioned the Supreme Court of Mauritius to set aside the verdict, which it did in May 2019, concluding that the contract violated local procurement regulations and public policy.  In June 2019, Betamax appealed to the Privy Council, which has not yet heard the appeal.

The Association des Hoteliers et Restaurateurs of Mauritius (AHRIM), which promotes the interests of hotels and restaurants in Mauritius, has challenged the GoM’s issuance of an environmental impact assessment license to Growfish International Ltd., a company involved in aquaculture.  AHRIM is concerned about the impact the fish farm can have on tourism and the marine environment.  Growfish is a company incorporated in Mauritius and financed by investors from South Africa and Norway.  In April 2019, the tribunal ruled in favor of AHRIM.

International Commercial Arbitration and Foreign Courts

In 2011, the GoM, the London Court of International Arbitration (LCIA), and the Mauritius International Arbitration Center (MIAC) established a new arbitration center in Mauritius called the LCIA-MIAC Arbitration Center.  LCIA-MIAC offered all services offered by the LCIA in the United Kingdom.  In July 2018, the LCIA and GoM terminated the partnership, after which the MIAC began operating as an independent organization.  The organization’s website is http://miac.mu.  

Additionally, the Mauritius Chamber of Commerce and Industry’s (MCCI) Arbitration and Mediation Center (MARC) was established in 1996 as an initiative of the MCCI to provide the business community with alternative forms of dispute resolution using internationally accepted arbitration and mediation standards.  More information is available at https://www.marc.mu/en.  

As mentioned above, state-owned STC asked a Mauritian court to set aside a decision by the Singapore International Arbitration Center.  The court ruled in favor of the STC.  The plaintiff has appealed to the Privy Council.

Bankruptcy Regulations

Bankruptcy is not criminalized in Mauritius.  The 2009 Insolvency Act amended and consolidated the law relating to insolvency of individuals and companies and the distribution of assets in the case of insolvency and related matters.  Most notably, the act introduced administration procedures, providing creditors the option of a more orderly reorganization or restructuring of a business than in liquidation.  A bankrupt individual is automatically discharged from bankruptcy three years after adjudication, but may apply to be discharged earlier.  The act draws on the Model Law on Cross-Border Insolvency adopted by the United Nations Commission on International Trade Law in 1997.  The act can be found  at https://www.fscmauritius.org/media/1155/insolvency-act-2009-130114.pdf.   

In April 2020, the Insolvency (Administration) (Equal Treatment to Classes of Creditors) Regulations were issued to ensure equal treatment to creditors classified in the same category.  The regulations can be accessed at https://bit.ly/2WwTIev .  According to the World Bank’s 2020 Doing Business report, Mauritius ranked 28th out of 190 countries in terms of resolving insolvency.

4. Industrial Policies

Investment Incentives

Mauritius applies investment incentives uniformly to both domestic and foreign investors.  The incentives are outlined in the Income Tax Act, the Customs Act, and the Value Added Tax Act.  In the 2018-2019 national budget, a number of incentives were implemented to attract investors to Mauritius.  These include: (i) reduced corporate tax rate of three percent for companies engaged in global trading activities; (ii) investment tax credit of five percent over three years on the cost of new plant and machinery excluding motor vehicles; (iii) five year tax holiday for Mauritian companies collaborating with the Mauritius Africa Fund with respect to investment in the development of infrastructure in Special Economic Zones, and; (iv) five year tax holiday on income derived from smart parking solutions or other green initiatives.

Mauritius offers prospective investors a low-tax jurisdiction and a number of other fiscal incentives, including the following: (i) flat corporate and income tax rate of 15 percent; (ii) 100 percent foreign ownership permitted; (iii) no minimum foreign capital required; (iv) no tax on dividends or capital gains; (v) free repatriation of profits, dividends, and capital; (vi) accelerated depreciation on acquisition of plant, machinery, and equipment; (vii) exemption from customs duty on imported equipment; and (viii) access to an extensive network of double taxation avoidance treaties.

Additionally, the government has established a Property Development Scheme (PDS) to attract high net worth non-citizens who want to acquire residences in Mauritius.  Buyers of a residential unit valued over USD 500,000 in certain projects are eligible to apply for a residence permit in Mauritius.  The residential unit can be leased or rented out by the owner.  More details on the PDS and other investment schemes are available via http://www.edbmauritius.org/schemes.  

The Regulatory Sandbox License (RSL), announced in the 2016-2017 national budget, is intended to promote innovation by eliminating barriers to investment in cutting-edge technology.  An RSL gives an investor fast-track authorization to conduct business activity in a sector even if there is not yet a legal or regulatory framework in place for the sector.  Further details on the RSL can be accessed via http://www.edbmauritius.org/schemes/regulatory-sandbox-license/ .

Foreign Trade Zones/Free Ports/Trade Facilitation

The Mauritius Freeport, a free trade zone, was established in 1992 and is a customs-free zone for goods destined for re-export.  The Freeport has grown dramatically in its 26-year history:  Developed space has increased from 5,000 square meters in 1993 to over 300,000 square meters in 2018.  The government’s objective is to promote the country as a regional warehousing, distribution, marketing, and logistics center for eastern and southern Africa and the Indian Ocean rim.  Through its membership in COMESA, SADC, and the IOC, Mauritius offers preferential access to a market of over 600 million consumers, representing an import potential of USD 100 billion.  Companies operating in the Freeport are exempt from corporate tax.  Foreign-owned firms operating in the Freeport have the same investment incentives and opportunities as local entities.

Activities carried out in the Freeport include warehousing and storage, breaking bulk, sorting, grading, cleaning and mixing, labeling, packing, repacking and repackaging, minor processing and light assembly, manufacturing activity, ship building, repairs and maintenance of ships, aircrafts, and heavy-duty equipment, storage, maintenance and repairs of empty containers, export-oriented seaport and airport based activities, freight forwarding services, quality control and inspection services, and vault activity for storing precious stones and metals, works of art, and the like.  Approximately 3,800 people are employed at the Freeport.

In 2019, trade value at the Freeport was 29.7 billion rupees (approximately USD 825 million) and volume was 517,000 metric tons.  This is a decrease from 2018, when trade value was 44 billion rupees and volume was 542,000 metric tons.  Top trading partners for import in 2019 were the United Kingdom, India, Taiwan, Malaysia, and China.  Top trading partners for export in 2019 were Reunion (France), South Africa, Kenya, Seychelles, and United Arab Emirates.  Top goods traded through the Freeport included mineral products, live animals, foodstuffs and beverages, and plastic and metal products.

Per the 2019 Finance Act, a Freeport operator engaged in manufacturing inside the Freeport is allowed to apply as a private Freeport developer to build, develop, and manage its own infrastructural activities, provided that it carries out the same manufacturing activity.  A Freeport operator or private Freeport developer engaged in the manufacture of goods pays a 3 percent tax rate on profits derived from the sale of goods on the local market.

Existing manufacturing companies with a Freeport certificate must employ a minimum of five employees and incur an annual expenditure exceeding 3.5 million rupees (USD 880,000).  Freeport operators must pay Corporate Social Responsibility tax on the sale of goods on the local market.

Performance and Data Localization Requirements

The GoM does not impose local employment requirements on foreign investors.  A foreign national can apply for an Occupation Permit (OP), which is a combined work and residence permit, subject to certain conditions such as minimum investment, salary, and/or business turnover.  The OP allows foreign nationals to work and reside in Mauritius under three specific categories, namely: (i) investor, (ii) professional, or (iii) self-employed.  Also, foreign nationals above the age of 50 years may choose to retire in Mauritius under a Residence Permit (RP).  An OP or an RP is issued for a maximum period of three years and the permit holder may submit a new application upon expiry of the permit.  Dependents of an OP or RP holder may also apply for residence permits for a duration not exceeding that of the OP or RP holder.  Details on the minimum investment, salary, and turnover amounts required to qualify for an OP or RP are available via http://www.edbmauritius.org/work-and-live-in-mauritius/occupation-permitresidence-permit.  

The 2017 Data Protection Act (DPA) is the law that governs the protection of personal data in Mauritius.  Effective January 15, 2018, the DPA aimed to align with the European Union’s General Data Protection Regulation (GDPR).  The GoM established the Data Protection Office (http://dataprotection.govmu.org/English/Pages/default.aspx ) in 2009.  The Data Protection Commissioner is responsible for upholding the rights of individuals set forth in the DPA and for enforcing the obligations imposed on data controllers and processors.

In 2016, Mauritius ratified the Council of Europe’s Convention for Protection of Individuals with regard to Automatic Processing of Personal Data (Convention 108).  Mauritius is the second non-European country and the first African country to sign the convention.  The agreement gives individuals the right to protection of their personal data.  The Ministry of Information Technology, Communication and Innovation has started the ratification process of Convention 108 with the Council of Europe.

Mauritius’ DPA applies only when processing of personal data is concerned.  Failure to comply with Section 28 of the DPA, which establishes the lawful purposes for which personal data may be processed, can result in a fine and up to five years imprisonment.  Section 29 sets requirements for processing special categories of data, such as ethnic origin, political adherence, and mental health condition.

There are no enforcement procedures for investment performance requirements.

5. Protection of Property Rights

Real Property

Real property rights are respected in Mauritius.  A non-citizen can hold, purchase, or acquire immovable property under the Non-Citizens (Property Restriction) Act, subject to the government’s approval.  Ownership of property is memorialized with the registration of the title deed with the Registrar-General and payment of the registration duty.  The recording system of mortgages and liens is reliable.  Traditional use rights are not an issue in Mauritius as there were no indigenous peoples present at the time of European colonization.  According to the World Bank’s 2020 Doing Business Report, Mauritius ranks 23rd out of 190 countries for the ease of registering property.

Intellectual Property Rights

Intellectual property rights (IPR) in Mauritius are protected by two pieces of legislation, namely     the 2014 Copyrights Act and the 2019 Industrial Property Act of 2019.  In August 2019, the new Industrial Property bill was enacted. (http://www.mauritiustrade.mu/ressources/pdf/industrial-property-act-2019.pdf)  It consolidates different elements of industrial property (patents, utility models, layout-designs of integrated circuits, breeder’s rights, industrial designs, marks, trade names, and geographical indications).  The 2019 act also makes provisions for Mauritius to adhere to treaties that the World Intellectual Property Organization (WIPO) administers,, such as the Patent Cooperation Treaty (PCT) for the international registration of patents, the Hague Agreement Concerning the International Registration of Industrial Designs, and the Madrid Protocol to facilitate the registration of trademarks.

In 2017, the Copyright Act was amended to redefine and better safeguard the interests of copyright owners and to put in place a new regulatory framework for the Mauritius Society of Authors (MASA).  MASA is responsible for collection of copyright fees and for administering the economic rights of copyright owners.  Amendments to the Copyright Act can be accessed on the Supreme Court website: https://supremecourt.govmu.org/_layouts/CLIS.DMS/Legislations/SearchLegislations.aspx.  

Mauritius is a member of WIPO and party to the Paris Convention for the Protection of Industrial Property the Berne Convention for the Protection of Literary and Artistic Works, and the Universal Copyright Convention.  The Industrial Property Act complies with the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).  A trademark is initially registered for 10 years and may be renewed for another 10 years.  A patent expires 20 years after the application filing date.

While IPR legislation in Mauritius is consistent with international norms, enforcement is relatively weak. According to a leading IPR law firm, police will normally only take action against IPR infringement in cases where the rights-holder has an official representative in Mauritius because the courts require a representative to testify that the products seized are counterfeit.

The Customs Department of the Mauritius Revenue Authority is the primary agency responsible for safeguarding Mauritian borders against counterfeit goods and piracy.  The Customs Department requires owners or authorized users of patents, industrial designs, collective marks, marks, or copyrights to apply in writing to the Director General to suspend clearance of goods suspected of infringing intellectual property rights.  Once an application is approved, it remains valid for two years.  There are no administrative costs to pay for an application.  An application can also be filed as a preventive measure.  Further details on the documents required to apply can be found at  https://www.mra.mu/download/BrochureIPR.pdf.  

Customs may act upon its own initiative to suspend clearance if there is evidence of IPR infringement..  Customs will then contact the owner or authorized user for follow-up actions.  IPR owners  are recommended to join the World Customs Organization’s Interface Public-Members tool, which allows Customs officers to access operational data input by rights holders concerning their products, thus facilitating the identification of counterfeit goods.

The Customs Department keeps a record of counterfeit goods seized.  Customs has authority to seize and destroy counterfeit goods.  In 2019, the Customs Department carried out seizures of a total of 261,267 goods valued at USD 2.3 million. The infringing party is responsible for paying for the storage and/or destruction of the counterfeit goods.

Mauritius is not listed in the U.S. Trade Representative (USTR) Special 301 Report or the Notorious Market List.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at https://www.wipo.int/directory/en/details.jsp?country_code=MU 

Embassy Contact for IPR:

Smita Bheenick
Economic/Commercial Section
U.S. Embassy Port Louis, Mauritius
Tel: +230 202 4430; Fax: +230 208 9534
Email:bheenicks@state.gov

Some IPR Law Firms in Mauritius:

Law firms are listed for convenience and should not be taken to imply U.S. government endorsement.

Sanjeev Ghurburrun
Director, Geroudis
27-29, Dr. Lesur Street
Beau Bassin, Mauritius
Tel: +230 210 3838; Fax: + 230 210 3912
sanjeev@geroudis.com 
www.geroudis.com 

Marc Hein
Chairman, Juristconsult Chambers (DLA Piper Africa)
Level 12 Nexteracom Tower II, Ebene Cyber City
Ebene, Mauritius
Tel: +230 465 0020; Fax: +230 465 0021
mhein@juristconsult.com
www.juristconsult.com

Michael Hough
CEO, Eversheds Sutherland
Suite 310, 3rd Floor Barkly Wharf, Le Caudan Waterfront
Port Louis, Mauritius
Tel: +230 211 0550; fax: +230 211 0780
Email: michaelhough@eversheds-sutherland.mu
https://www.eversheds-sutherland.com/global/en/where/africa/mauritius/offices/index.page 

6. Financial Sector

Capital Markets and Portfolio Investment

The GoM welcomes foreign portfolio investment.  The Stock Exchange of Mauritius (SEM) was opened to foreign investors following the lifting of foreign exchange controls in 1994.  Foreign investors do not need approval to trade shares, except for when doing so would result in their holding more than 15 percent in a sugar company, a rule detailed in the Securities (Investment by Foreign Investors) Rules of 2013.  Incentives to foreign investors include no restrictions on the repatriation of revenue from the sale of shares and exemption from tax on dividends for all resident companies and for capital gains of shares held for more than six months.

The SEM currently operates two markets:  the Official Market and the Development and Enterprise Market (DEM).  As of December 2019, the shares of 62 companies (local, global business, and foreign companies) were listed on the Official Market, representing a market capitalization of USD 9.8 billion.  Unique in Africa, the SEM can list, trade, and settle equity and debt products in U.S. dollars, euros, pounds sterling, South African rand, as well as Mauritian rupees.  A variety of new asset classes of securities such as global funds, depositary receipts, mineral companies, and specialist securities including exchange-traded funds and structured products have also been introduced on the SEM.  The DEM was launched in 2006 and the shares of 37 companies are currently listed on this market with a market capitalization of USD 1.4 billion.  Foreign investors accounted for 39.5 percent of trading volume on the exchange for the financial year 2018-2019.  Standard & Poor’s, Morgan Stanley, Dow Jones, and FTSE have included the Mauritius stock market in a number of their stock indices.  Since 2005, the SEM has been a member of the World Federation of Exchanges.  The SEM is also a partner exchange of the Sustainable Stock Exchanges Initiative.  In 2018, in line with its strategy to digitalize its investor services, SEM launched the mySEM mobile application.

The government respects IMF Article VIII by refraining from restrictions on payments and transfers for current international transactions.  A variety of credit instruments is available to local and foreign investors through the banking system.

Money and Banking System

Mauritius has a sophisticated banking sector.  As of April 2020, 20 banks are licensed to undertake banking business, of which five are local banks, nine are foreign-owned subsidiaries, one is a joint venture, four are branches of foreign banks, and one is licensed as a private bank.  One bank conducts solely Islamic banking.  Further details can be obtained at https://www.bom.mu/financial-stability/supervision/licensees/list-of-licensees .  On April 1, 2020, the Bank of Mauritius appointed a conservator for BanyanTree Bank.  Details were scarce, but the law allows the central bank to appoint a conservator to protect the bank’s assets.

According to the Banking Act of 2004, all banks are free to conduct business in all currencies.  There are also six non-bank deposit-taking institutions, as well as 12 money changers and foreign exchange dealers.  There are no official government restrictions on foreigners opening bank accounts in Mauritius, but banks may require letters of reference or proof of residence for their due diligence.  The Bank of Mauritius, the country’s central bank, carries out the supervision and regulation of banks as well as non-bank financial institutions authorized to accept deposits.  The Bank of Mauritius has endorsed the Core Principles for Effective Banking Supervision as set out by the Basel Committee on Banking Supervision.

The banking system is dominated by two long-established domestic entities:  the Mauritius Commercial Bank (MCB) and the State Bank of Mauritius (SBM), which together constitute about 60 percent of the total domestic market.  Maubank, the third-largest bank in the country, became operational in 2016 following a merger between the Mauritius Post & Cooperative Bank and the National Commercial Bank.  The Bank of China started operations in Mauritius in 2016.  Other foreign banks present in Mauritius include HSBC, Barclays Bank, Bank of Baroda, Habib Bank, BCP Bank (Mauritius), Standard Bank, Standard Chartered Bank, State Bank of India, and Investec Bank.  As of February 2020, commercial banks’ total assets amounted to USD 41.7 billion.

According to the Bank of Mauritius 2019 Annual Report, the banking sector remained healthy with an average capital adequacy ratio of 19 percent as of June 2019.  Banks’ asset quality was unchanged from end-June 2018 to end-June 2019 and is generally considered to be sound.  Non-performing loans as a ratio to total outstanding loans stood at 5.5 per cent in June 2019.

In July 2017, the Banking Act was amended to double the minimum capital requirement to USD 11.2 million from USD 5.8 million.  The Central Bank began reporting the liquidity coverage ratio in 2017 to improve the liquidity profile of banks and their ability to withstand potential liquidity disruptions.  The latest International Monetary Fund Article IV report highlights that banks have increased exposure to the region and that the Bank of Mauritius has strengthened cross-border supervision and cooperation with foreign regulators.  The IMF report also recommends that additional steps be taken to strengthen financial stability, including lowering the high non-performing loans stock through a more stringent approach to writing-off legacy exposures, and by safeguarding the longer-term forex funding needs stemming from banks’ swift expansion abroad.

The Covid-19 crisis is expected to heavily impact banks’ profitability due to increased defaults and delayed loan repayments.  As part of its Covid-19 response, the Bank of Mauritius has made USD 132 million available through commercial banks as special relief funds to help meet cash flow and working capital requirements.  The cash reserve ratio applicable to commercial banks was reduced from 9 percent to 8 percent.  The Bank of Mauritius also put on hold the Guideline on Credit Impairment Measurement and Income Recognition, which was effective since January 2020.

In July 2019, the Bank of Mauritius Act was amended to allow the Bank of Mauritius to use special reserve funds in exceptional circumstances and with approval of the central bank’s board for the repayment of central government external debt obligations, provided that repayments would not adversely affect the bank’s operations.  This provision was used in January 2020 to repay government debt worth USD 450 million, raising concerns about the central bank’s independence.

Most major banks in Mauritius have correspondent banking relationships with large banks overseas.  In recent years, according to industry experts, no banks have lost correspondent banking relationships and none report being in jeopardy of doing so as of April 2020.

In January 2019, the Central Bank signed a memorandum of cooperation with the Mauritius Police Force on financial crimes and illicit activities relating to the financial services sector.  In February 2020, the Financial Action Task Force (FATF) named Mauritius as a jurisdiction under increased monitoring, commonly known as the Grey List.  At that time, Mauritius made a high-level political commitment to work with the FATF and the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) to strengthen the effectiveness of its AML/CFT regime.  Since the completion of its Mutual Evaluation Report in 2018, Mauritius has made progress on a number of its recommended actions to improve technical compliance and effectiveness, including amending the legal framework to require legal persons and legal arrangements to disclose of beneficial ownership information and improving the processes of identifying and confiscating proceeds of crimes.  Mauritius is working to implement its action plan, including (i) demonstrating that the supervisors of its global business sector and Designated Non-Financial Businesses and Professions implement risk-based supervision; (ii) ensuring the access to accurate basic and beneficial ownership information by competent authorities in a timely manner; (iii) demonstrating that law enforcement agencies have capacity to conduct money laundering investigations, including parallel financial investigations and complex cases; (iv) implementing a risk based approach for supervision of its non-profit sector to prevent abuse for terrorism financing purposes, and (v) demonstrating the adequate implementation of targeted financial sanctions through outreach and supervision.

In May 2020, the European Commission added Mauritius to its list of AML-CTF high-risk jurisdictions, pending approval from the European Council and European Parliament, and not to take effect until October 2020.

In February 2018, the Fintech and Innovation-driven Financial Services (FIFS) Regulatory Committee held its first meeting at the Financial Services Commission, the regulator for the non-banking financial services, to assess the regulatory framework concerning FIFS regulations in Mauritius and to identify priority areas within the regulatory space of fintech activities.  In May 2018, the Committee submitted recommendations for regulating the fintech sector to authorities.  A National Regulatory Sandbox License (RSL) Committee was set up to assess all fintech applications requiring a sandbox license for business activities without an existing legal framework.  Guidelines to apply to the RSL for fintech projects can be found at https://www.edbmauritius.org/opportunities/financial-services/fs-fintech-and-innovation.    

Effective March 2019, the Financial Services Commission allows businesses that provide custodial services for digital assets.  According the Bank of Mauritius 2019 Annual Report, the FIFS committee has initiated work on approaches to regulate Fintech tools such as artificial intelligence, big data, distributed ledger technologies, and biometrics.

Foreign Exchange and Remittances

Foreign Exchange 

The government of Mauritius abolished foreign exchange controls in 1994.  Consequently, no approval is required for converting, transferring, or repatriating profits, dividends, or capital gains earned by a foreign investor in Mauritius.  Funds associated with any form of investment can be freely converted into any world currency.

The exchange rate is generally market-determined, though the Bank of Mauritius, the central bank, occasionally intervenes.  Between January 2019 and December 2019, the Mauritian rupee depreciated against the U.S. dollar by 6.4 percent, the pound by 8.3 percent, and the euro by 3.6 percent.  Due to the Covid-19 crisis, the Bank of Mauritius intervened regularly on the domestic foreign exchange market in early 2020.

Remittance Policies

There are no time or quantity limits on remittance of capital, profits, dividends, and capital gains earned by a foreign investor in Mauritius.  Mauritius has a well-developed and modern banking system.  There is no legal parallel market in Mauritius for investment remittances.  The Embassy is unaware of any proposed changes by the government to its investment remittance policies.

Sovereign Wealth Funds

The government of Mauritius does not have a Sovereign Wealth Fund.

7. State-Owned Enterprises

The government’s stated policy is to act as a facilitator to business, leaving production to the private sector.  The government, however, still controls key services directly or through parastatal companies in the power and water, television broadcasting, and postal service sectors.  The complete list of SOEs can be found at https://www.icac.mu/wp-content/uploads/2019/08/The-Declaration-of-Assets-Stated-owned-Enterprises.pdf.   

The government also holds controlling shares in the State Bank of Mauritius, Air Mauritius (the national airline), and Mauritius Telecom.  These state-controlled companies have Boards of Directors on which seats are allocated to senior government officials.  The government nominates the chairperson and CEO of each of these companies.  In April 2020, Air Mauritius requested voluntary administration, similar to Chapter 11 bankruptcy in the United States, because it could not comply with financial obligations.

The government also invests in a wide variety of Mauritian businesses through its investment arm, the State Investment Corporation.  The government is also the owner of Maubank and the National Insurance Company.

Two parastatal entities are involved in the importation of agricultural products:  the Agricultural Marketing Board (AMB) and the State Trading Corporation (STC).  The AMB’s role is to ensure that the supply of certain basic food products is constant and their prices remain affordable.  The STC is the only authorized importer of petroleum products, liquefied petroleum gas, and flour.  SOEs purchase from or supply goods and services to private sector and foreign firms through tenders.

Audited accounts of SOEs are published in their annual reports.  Mauritius is part of the OECD network on corporate governance of state-owned enterprises in southern Africa.

Privatization Program

The government has no specific privatization program.  In 2017, however, as part of its broader water reform efforts, the government agreed to a World Bank recommendation to appoint a private operator to maintain and operate the country’s potable water distribution system.  Under the World Bank’s proposed public-private partnership, the Central Water Authority (CWA) would continue to own distribution and supply assets, and will be responsible for business planning, setting tariffs, capital expenditure, and monitoring and enforcing the private operator’s performance.

In March 2018, despite protest by trade unions and consumer associations, the Minister of Energy and Public Utilities reiterated his intention to engage by the end of the year a private operator as a strategic partner to take over the water distribution services of the CWA.  To date, this has not materialized.  The government has said for years it planned to sell control of Maubank, into which it has injected about USD 173 million since it nationalized the bank in 2015.  In the 2019-2020 budget speech, the prime minister said the government would sell non-strategic assets to reduce government debt.  His office never identified a list of assets, but in parliament the prime minister has mentioned Maubank, the National Insurance Company, and Casinos of Mauritius as possible divestments.

8. Responsible Business Conduct

The National Committee for Corporate Governance (NCCG) was established under Section 63 of the Financial Reporting Act (2004) and is the coordinating body responsible for all matters pertaining to corporate governance in Mauritius. The purpose of the Committee is to: (i) establish principles and practices of corporate governance; (ii) promote the highest standards of corporate governance; (iii) promote public awareness about corporate governance principles and practices; and (iv) act as the national coordinating body responsible for all matters pertaining to corporate governance.  The latest Code of Corporate Governance for Mauritius (2016) was launched on February 13, 2017, and can be accessed at http://www.miod.mu/info-centre/new-code-of-corporate-governance-for-mauritius-2016 . The Financial Reporting Council (FRC), also set up under the Financial Reporting Act (2004), aims to advocate for the provision of high-quality reporting of financial and non-financial information by public interest entities and to improve the quality of accountancy and audit service.

The Ministry of Financial Services and Good Governance was established following the December 2014 elections.  Its mandate is to provide guidance and support for enforcement of good governance and the eradication of corruption.  The Mauritius Institute of Directors (MIoD) is an independent, private sector-led organization that also promotes high standards and best practices of corporate governance, with additional information available at http://www.miod.mu.  

In 2017, the government set up a National Corporate Social Responsibility (CSR) Foundation, which operated under the Ministry of Social Integration and Economic Empowerment.  In 2019, this foundation became the National Social Inclusion Foundation (NSIF).  The NSIF is managed by a council consisting of members from the private and public sectors, civil society, and academia.  Under the 2016 Finance Act, every company registered in Mauritius must set up a CSR fund and contribute each year the equivalent of 2 percent of its taxable income from of the previous year.  In 2017 and 2018, companies were required to remit at least 50 percent of their CSR funds to tax authorities for the National CSR Foundation.  The required contribution increased in 2019 to 75 percent.  The NSIF is supposed to channel the money to NGO projects in priority areas identified by the government.  These priority areas are poverty alleviation, educational support, social housing, family protection, people with severe disabilities, and victims of substance abuse.  Further details can be found on the NSIF website: https://www.nsif.mu.

9. Corruption

The prevalence of corruption in Mauritius is low by regional standards, but graft and nepotism nevertheless remain concerns and are increasingly a source of public frustration. Several high-profile cases involving corruption have reinforced the perception that corruption exists at the highest political levels, despite the fact that Mauritian law provides for criminal penalties for corruption by officials.  A former prime minister was arrested in 2015 on allegations of money laundering although courts have since dismissed all charges.  The state prosecutors appealed the last dismissal in late 2019 and the appeal is pending.  A minister in the previous government had to step down in 2016 on allegations of bribery.  In March 2017, allegations surfaced concerning possible political interference in the Financial Services Commission’s issuance of an investment banking license to an Angolann billionaire, who is being investigated for alleged corruption in Portugal.  In March 2018, the president of Mauritius resigned after press reported that she bought apparel, jewelry, and a laptop computer with a credit card provided by an NGO financed by the same Angolan businessman.

Investors should know that while the constitution and law require arrest warrants to be based on sufficient evidence and issued by a magistrate, police may detain an individual for up to 21 days under a “provisional charge” based on a reasonable suspicion, with the concurrence of a magistrate.  Two French businessmen claimed that in February 2015 authorities held them against their will.  A U.S. investor has been unable to leave Mauritius since February 1, 2020, without charges filed against him.

In 2002, the government adopted the Prevention of Corruption Act, which led to the establishment of an Independent Commission Against Corruption (ICAC).  ICAC has the power to investigate corruption and money laundering offenses and can also seize the proceeds of corruption and money laundering.  The Director of ICAC is nominated by the prime minister.  The Good Governance and Integrity Reporting Act of 2015 was announced as a measure to recover “unexplained wealth” and came into force in early 2016.  Critics of the act dislike its presumption of guilt, requiring the accused to demonstrate a lawful source of questionable assets, as well as the application of the law retroactively for seven years. The 2018 Declaration of Assets Act (DoA) entered into force in June 2019 and defines which public officials are required to declare assets and liabilities to the ICAC.  These public officials include members of the National Assembly, mayors, chairpersons and chief executive officers of state-owned enterprises and statutory bodies, among others.

Mauritius is the 52nd least-corrupt nation out of 175 countries, according to the 2019 Corruption Perceptions Index reported by Transparency International, up from 51st in 2018 and down from 54th in 2017.  However, Mauritius retained its first rank in overall governance in Africa for the 12th consecutive year, according to the 2018 Ibrahim Index of African Governance.

Although Mauritius’ generally positive reputation for transparency and accountability has been hurt by some high-profile scandals.  U.S. investors, in conversations with embassy personnel, have not identified corruption as an obstacle to investment in the country.  They have, however, encountered attempts for bribery.

Resources to Report Corruption:

Navin Beekharry
Director-General
Independent Commission Against Corruption
Reduit Triangle, Moka, Mauritius
+230 402 6600
icacoffice@intnet.mu

Contact at watchdog organization:

Rajen Bablee
Director
Transparency Mauritius
4th Floor, Fon Sing Building, 12 Edith Cavell Street, Port Louis, Mauritius
+ 230 213 0796
transparency.mauritius@gmail.com

10. Political and Security Environment

Mauritius has a long tradition of political and social stability.  Civil unrest and political violence are uncommon.  Free and fair national elections are held every five years with the last general elections held in November 2019.  Those most recent elections took place without incident.  The incumbent prime minister, who as finance minister in January 2017 was appointed prime minister when his father resigned (in accordance with the constitution), won the elections.

Crime rates are low but petty and violent crime can occur.  Visitors should keep track of their belongings at all times due to the potential for pick-pocketing and purse-snatching, especially in crowded and tourist areas.  Visitors should also avoid walking alone, particularly on isolated beaches and at night, and should avoid demonstrations.

11. Labor Policies and Practices

According to the Mauritian government, total employment stood at 551,300 in 2019, an increase from 543,700 in 2018.  The unemployment rate decreased to 6.7 percent in 2019 from 6.9 percent in 2018, with a high jobless rate among youth and women.  In the fourth quarter of 2019, the youth unemployment rate was 23 percent, and 62 percent of the total 37,900 unemployed people were women.

The labor market remains restricted by rising unemployment among graduates and low-skilled workers, and a high number of unemployed women.  It is further characterized by a persistent mismatch between qualifications of the unemployed and the skills required in an increasingly services-oriented economy.  Government labor market programs aimed at building human capital have been extended, with policies to develop skills of the unemployed focusing on apprenticeships and placements.  In November 2016, the government introduced the National Skills Development Program (NSDP), a fully-funded  technical training program for youth, which was still running as of April 2020.  The NSDP is managed by the Human Resource Development Council (HRDC), which operates under the Ministry of Education and is responsible for promoting the development of the labor force in Mauritius.  The HRDC, with technical and financial support from the French development agency, is also devising a National Skills Development Strategy (NSDS) for 2020-2024.  The aim of the NSDS is to improve the effectiveness and efficiency of skills development programs.  In 2018, the government introduced the SME Employment Scheme, which allows SMEs to employ recent graduates and the government pays the graduates a monthly stipend for one year.  In 2019, the government opened the scheme to diploma holders as well.

In 2017, the National Assembly passed the National Employment Act.  The object of the act was to repeal the Employment and Training Act and introduce a modern legislative framework.  The act provides the labor market with information on supply and demand of skills, job seekers, and training institutions; promotes placement and training of job seekers, including young persons and persons with disabilities; and promotes labor migration and home-based work.  In November 2017, the Equal Opportunities Act was amended to protect prospective employees with criminal records from discrimination when being considered for recruitment or promotion.

In 2018, the government introduced a minimum monthly wage of 9,000 Mauritian rupees (approximately USD 255) for all workers, affecting over 100,000 low-paid workers.  In November 2019, the cabinet, following a recommendation from the National Wage Consultative Council, increased the  minimum wage again to 10,200 rupees (USD 284), effective January 2020.  Workers’ rights are protected under the 2019 Workers’ Rights Act, taking effect in January 2020.  The legislation provides for a portable retirement gratuity fund, fair compensation in case of termination, harmonization of working conditions in different sectors, the flexibility to request the right to work from home either on a full- or part-time basis, and equal remuneration for equal work, among others.  The act also adds to the Equal Opportunities Act through several measures against discrimination in employment and occupation.

Trade unions are independent of government and employers.  Mauritius has an active trade union movement, representing about 25 percent of the workforce, and labor-management relations are generally positive.  A list of trade unions is available at http://labour.govmu.org/English/Publications/Pages/Reports-and-publications.aspx .  The last major strike affecting the economy took place in 1979.  The government generally seeks to avoid strikes through a system that promotes settlement through negotiation or arbitration by the Employment Relations Tribunal and the National Remuneration Board.  Mauritius participates actively in the annual International Labor Organization (ILO) conference in Geneva, Switzerland, and adheres to ILO core conventions protecting workers’ rights.

12. U.S. International Development Finance Corporation (DFC) and Other Investment Insurance Programs

In December 1997, Mauritius signed an investment incentive agreement with OPIC: https://www.state.gov/wp-content/uploads/2019/02/12912-Mauritius-Finance-Guarantees-12.15.1997.pdf.  Mauritius, being classified as an upper-middle income country, is not a priority for DFC programs, but may be considered for programs that address key agency priorities.   Mauritius is also a member of the World Bank’s Multilateral Investment Guarantee Agency.  Countries with significant government-financed investment in Mauritius include India, France, and China.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2018 13,930 2018  14, 220 www.worldbank.org/en/country 
Foreign Direct Investment Host Country Statistical source USG or international statistical source USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) N/A 2018 9,544 https://apps.bea.gov/international/
factsheet/factsheet.cfm
Host country’s FDI in the United States ($M USD, stock positions) N/A 2018  552  https://apps.bea.gov/international/
factsheet/factsheet.cfm
Total inbound stock of FDI as % host GDP N/A 2018 37.2% https://unctad.org/en/Pages/DIAE/
World%20Investment%20Report/
Country-Fact-Sheets.aspx
 

*Source: National Accounts 2018, Statistics Mauritius, http://statsmauritius.govmu.org/English/StatsbySubj/Documents/Digest/National%20Accounts/Digest_NA_Yr18.pdf 

Table 3: Sources and Destination of FDI
Direct Investment from/in Counterpart Economy Data (2018)
From Top Five Sources/To Top Five Destinations (US dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward 333,504 100% Total Outward 283,106 100%
United States 65,988 20% India 125,951 44%
Cayman Islands 44,868 13% Singapore 22,294 8%
Singapore 26,454 8% United Kingdom 21,197 7%
India 25,598 8% South Africa 8,216 3%
South Africa 16,774 5% Netherlands 7,917 3%
“0” reflects amounts rounded to +/- USD 500,000.
Table 4: Sources of Portfolio Investment
Portfolio Investment Assets (June 2019)
Top Five Partners (Millions, US dollars)
Total Equity Securities Total Debt Securities
All Countries 139,124 100% All Countries 116,533 100% All Countries 22,591 100%
India 93,602 67% India 89,000 76% United Kingdom 10,593 47%
United Kingdom 11,899 9% Hong Kong 5,937 5% India 4,602 20%
United States 7,387 5% United States 3,928 3% United States 3,460 15%
Hong Kong 5,977 4% Singapore 3,176 3% Not specified (confidential) 617 3%
Singapore 3,364 2% Cayman Islands 2,958 3% Switzerland 471 2%

14. Contact for More Information

Smita Bheenick
Economic/Commercial Section
U.S. Embassy Port Louis, Mauritius
Tel: +230 202 4430; Fax: +230 208 9534
Email: bheenicks@state.gov

Seychelles

Executive Summary

Seychelles is an island nation located off the eastern coast of Africa in the Indian Ocean with a population of 97,265. Seychelles gained its independence from the United Kingdom in 1976, at which time the population lived at near subsistence level. Today, Seychelles’ main economic activities are tourism and fishing, and the country aspires to be a financial hub. Although the World Bank designated Seychelles as a “high income” country in 2015, its wealth is not evenly distributed. According to the United Nations Development Program’s Human Development Report for 2019, the share of income held by the richest 10 percent in Seychelles amounts to 40 percent.

Seychelles experienced a socialist coup in 1977, which resulted in a centrally planned economy and, in the short term, rapid economic development. However, serious imbalances such as large deficits and mounting debt contributed to persistent foreign exchange shortages and slow growth that plagued Seychelles through the first decade of the 21st century. After defaulting on interest payments due on a $230 million bond in 2008, the Government of Seychelles (GOS) turned to the International Monetary Fund (IMF) for support. To meet the IMF’s conditions for a stand-by loan, the GOS implemented a program of reforms, including a liberalization of the exchange rate regime, devaluing and floating the Seychellois Rupee (SCR), and eliminating all foreign exchange controls. As a result, the country has experienced economic growth, lower inflation, a stabilized exchange rate, declining public debt, and increased international reserves.

Drivers of economic growth include fisheries, tourism, and construction. However, heavy reliance on the tourism industry, which contributes to 60 percent of GDP, makes the overall economy vulnerable to external shocks, such as a slowdown in the economies of European, Middle Eastern, and Asian countries from which most tourists travel. According to the Central Bank of Seychelles, real GDP grew by 3.9 percent in 2019, down from 3.8 percent in 2018. The IMF forecasts that the GDP will contract by 10.8 percent in 2020 due the Covid-19 crisis. Despite GOS attempts to diversify the economy, it remains focused on fishing and tourism. Seychelles’ vast Exclusive Economic Zone (EEZ), which spans 1.3 million square kilometers of the western Indian Ocean, is a potential source of untapped oil reserves and represents potential business opportunities for U.S. companies. Seychelles also has a small but growing offshore financial sector. There is also potential for U.S. investment in renewable energy as Seychelles seeks to reduce its heavy dependence on imported fossil fuels while preserving its naturally beautiful environment.

Seychelles welcomes foreign investment, though the Seychelles Investment Act and related regulations restrict foreign investment in a number of sectors where local businesses are active, including artisanal fishing, small boat charters, taxi driving, and scuba diving instruction. The country’s investment policies encourage the development of Seychelles’ natural resources, improvements in infrastructure, and an increase in productivity levels, but stress that this must be done in an environmentally sound and sustainable manner. Indeed, Seychelles puts a premium on maintaining its unique ecosystems and screens all potential investment projects to ensure that any economic, social or industrial benefits will not compromise the country’s international reputation for environmental stewardship.

Politically, Seychelles’ first multiparty presidential election was held in 1993, after the adoption of a new constitution. In September 2016, the opposition coalition Linyon Demokratik Seselwa (made up of the four opposition parties: the Seychelles National Party, the Seychelles Party for Social Justice and Democracy, the Lalyans Seselwa, and the Seychelles United Party) won the legislative elections for the first time. Before the elections, the ruling Parti Lepep (now also called United Seychelles) held all 25 directly elected seats in the National Assembly and an additional seven proportionate seats, leaving just one seat for the opposition. Currently, and for the first time since the return of multi-party democracy in 1993, Parti Lepep (United Seychelles) does not have a parliamentary majority, holding only 14 of 33 seats. The next presidential election is scheduled to be held between September and November 2020.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2019 66 of 175 http://www.transparency.org/
research/cpi/overview
World Bank’s Doing Business Report 2020 100 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2019 N/A https://www.globalinnovationindex.org/
analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2019 N/A https://apps.bea.gov/international/factsheet/
World Bank GNI per capita (USD) 2018 15,600 http://data.worldbank.org/indicator/
NY.GNP.PCAP.CD

3. Legal Regime

Transparency of the Regulatory System

Although the government has made considerable efforts to liberalize the economy, Seychelles continues to suffer from overregulation. Concerns over government corruption have focused on the lack of transparency in the privatization and allocation of government-owned land and businesses. However, following the last election in 2016, the new government, pressed by the opposition majority in parliament, has taken a number of measures to combat corruption and nepotism. For example, an Anti-Corruption Commission has been set up, the Auditor General’s Office has begun more frequently publishing special audits of questionable government transactions, and the President appointed opposition supporters to many boards of national organizations and important positions.

In an attempt to promote transparency in the public procurement system, Seychelles’ National Tender Board publishes all tenders both on its website (http://www.ntb.sc ) and in local newspapers. It publicizes contracts that have been awarded and includes the name of successful bidders and bid amounts. The government has also set up a Procurement Oversight Unit, which serves as a public procurement policy and monitoring body (http://www.pou.gov.sc/ ).

During the September 2016 parliamentary elections, the opposition alliance won a majority in the National Assembly for the first time in 40 years, resulting in significant procedural changes. In 2017, there was considerably more legislative debate about the 2017 budget than in prior years. Similarly, in preparation for budgets since 2017, a series of focus group discussions were held with stakeholders such as the business community and NGOs.

Proposed laws and regulations, as well as final laws, are published in the Official Gazette on a monthly basis. Regulatory transparency has improved with the new administration which has proposed several new laws, including a Freedom of Information Act. Additionally, ministries are now required to submit white papers and consult with stakeholders before legislation is adopted.

Seychelles’ budget is easily accessible to the general public: http://www.finance.gov.sc/national-budget/35 . Budget documents, including the executive budget proposal and the enacted budget, provide a substantially full picture of Seychelles’ planned expenditures and revenue streams. Publicly available budgets included expenditures broken down by ministry and revenues broken down by source and type. Information on debt obligations is also readily available. In 2019, for the first time, the government included a fiscal risk statement, which identified substantial fiscal risks emanating from public enterprises in Seychelles. Details on explicit and contingent liabilities are available in the fiscal risk statement, which is available on the following link: http://www.finance.gov.sc/uploads/national_budget/Fiscal%20Risk%20Statement%202019.pdf .

International Regulatory Considerations

Seychelles has signed trade agreements with regional blocs such as COMESA, SADC, and the iEPA. Seychelles has also signed the Tripartite Free Trade Agreement (TFTA) and the African Continental Free Trade Agreement (AfCFTA) but has not yet ratified these agreements. In January 2019, four Eastern and Southern African (ESA) countries including Seychelles signed the UK-ESA Economic Partnership Agreement, which would safeguard trade preferences currently enjoyed under iEPA after Brexit.

Seychelles joined the WTO in 2015, becoming the 161st member. Seychelles does notify draft technical regulations to the WTO Committee on Technical Barriers to Trade. In 2016, Seychelles ratified the Trade Facilitation Agreement (TFA). Further details on Seychelles’ TFA notifications to the WTO can be found here: https://tfadatabase.org/members/seychelles/measure-breakdown 

Legal System and Judicial Independence

Seychelles’ legal system is a blend of English common law, the Napoleonic Code, and customary law. Civil matters, such as contracts and torts, are governed by the Civil Code of Seychelles, which is derived from the French Napoleonic Code. However, the company law and criminal laws are based on British law. In both civil and criminal matters, the procedural rules derive from British law. Seychelles does not maintain a specialized commercial court. Judgments of foreign courts are governed by Section 3 of the Foreign Judgments (Reciprocal Enforcement) Act of 1961. The World Bank ranked Seychelles 128th out of 190 countries in enforcing contracts in its 2020 Ease of Doing Business Report. Under the current government, the perception among Seychellois is that the judiciary is no longer influenced by the executive.

Laws and Regulations on Foreign Direct Investment

The GOS established the SIB (https://www.investinseychelles.com/ ) as a one-stop shop for all matters relating to business and investment in Seychelles. The SIB’s main functions are to promote investment and facilitate the investment process within the country’s administrative and legal framework. The SIB also assists in screening potential investment projects in cooperation with other government agencies. The GOS is keen to ensure that business activities are not conducted at the expense of Seychelles’ natural environment. For a business to operate, investors need to apply for a license from the Seychelles Licensing Authority (http://www.sla.gov.sc/ ). The GOS established an Investment Appeal Panel in 2012 to provide an appeal mechanism for investors to challenge GOS decisions regarding investments or proposed investments in Seychelles.

Competition and Anti-Trust Laws

The SIB only reviews competition cases initiated by other government authorities, private sector entities, or investors. Current legislation does not empower SIB to sua sponte review all transactions for competition related concerns. The Fair Trading Commission (http://ftc.sc/ ) is responsible for investigating competition-related concerns. Such investigations may be initiated by the Commission or may be carried out following a complaint.

Expropriation and Compensation

The Lands Acquisition Act 1978, last amended in 1990, states that when the government takes possession of property, it must pay prompt and full compensation for the property. The GOS may expropriate property in cases of public interest or for public safety. Following the 1977 coup, the GOS engaged in expropriation of land for redistribution or for use by the state. With the return of a multi-party political system in 1993, the GOS compensated some of those who had lost land to expropriation/redistribution in the late 1970s. In 2017, Seychelles set up a Land Compensation Tribunal to look into cases where compulsory land acquisition was made by Government without adequate compensation. Seychellois whose land was taken by the government from 1977 to 1993 have until June 2020 to make their claims. The Land Compensation Tribunal also works in close collaboration with the Truth Reconciliation and National Unity Commission (TRNUC) which is investigating cases of human rights abuses prior and after the 1977 coup. Illegal land acquisition by the government also forms part of the TRNUC’s mandate. The Embassy does not anticipate major expropriations in the near future, nor is it aware of any pattern of discrimination against U.S. persons.

Dispute Settlement

ICSID Convention and New York Convention

In 1978, Seychelles joined the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention). In February 2020, Seychelles deposited its instrument of accession to the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention), which will enter into force in May 2020.

Investor-State Dispute Settlement

The Embassy is aware of at least one investor-government dispute in the reporting period. The dispute involves the operation of a large hotel resort by a company with U.S. shareholders that the GOS also had a small stake in. In 2008, the GOS sought to wind up the company on the grounds that it “had disappeared in its ability to operate as a hotel resort” arguing that the hotel resort had been allowed to fall into disrepair, and resulted in the cancellation of its operating license. The liquidation and subsequent sell-off of the hotel, formerly the country’s second largest hotel, raised suspicions of government corruption among many local press outlets and business institutions, including the chamber of commerce. The former owner of the hotel claimed that he was threatened into selling the hotel by a businessman with ties to the government. The purchasers of the hotel were the lowest bidder, a newly formed group allegedly led by the same businessman with close government ties who threatened the previous owner. In October 2019, the Supreme Court recommended that a Commission of Inquiry be set up to inquire into the matters pertaining to the sale of the hotel. As of June 2020, President Faure appointed a Commission of Inquiry to look into the dispute and a report is expected in six months.

Parties involved in investment disputes are encouraged to resolve their disputes through arbitration and negotiation. The Seychelles Investment Act created an Investment Appeal Panel to which aggrieved investors may appeal for a review of a decision made by a public sector agency with regard to their investments or proposed investments in Seychelles. In addition, investors may appeal to the Court of Appeal in the event they are not satisfied with the decision of the Investment Appeal Panel. Seychelles has effected the accession to the New York Convention on the recognition and enforcement of foreign arbitral awards. The convention entered into force on May, 3 2020. In the World Bank’s 2020 Ease of Doing Business Report, Seychelles ranked 143rd out of 190 countries for protecting minority investors.

International Commercial Arbitration and Foreign Courts

Due to Seychelles’ small size and relatively short recent history with foreign direct investment, there is no precedent for international arbitration in Seychelles, although the legal framework exists through the Seychelles Investment Act.

Bankruptcy Regulations

Bankruptcy in Seychelles is governed under the Insolvency Act of 2013 (https://www.seylii.org/sc/legislation/act/2013/4 ). According to the Act, an individual may be discharged from bankruptcy three years from the date of its declaration. Bankruptcy is not criminalized in Seychelles. According to the 2020 World Bank Doing Business Report, Seychelles ranks 75th out of 190 countries on the resolving insolvency index. It takes on average two years to complete a bankruptcy.

4. Industrial Policies

Investment Incentives

The GOS enacted legislation providing incentives for investment in several sectors. Examples include the Agriculture and Fisheries (Incentives) Act 2005, the Tourism Incentives Act, the Seychelles International Trade Zone Act, and fiscal incentives under the Investment Code. Incentives under these laws most often take the form of tax credits, tax holidays, duty-free access for the import of materials required for initial investment, and expedited work permits for foreign employees who move to Seychelles.

The SIB has the mandate to promote investment in Seychelles and assists in screening potential investments. In 2018, the GOS announced an investment policy guided by the following principles: (i) creation of a conducive and transparent environment to attract investment and operate business; (ii) modernization of the legal framework for investment; (iii) application of international best practices and standards for investment; and (iv) respect for the environment and sociocultural fabric of the country. The investment policy statement is available on the following link: https://www.investinseychelles.com/downloads/investment-policy/seychelles-investment-policy/download .

According to the SIB, the GOS does not issue investment guarantees, but Seychelles’ Public Private Partnership framework allows public and private sector entities to jointly finance foreign direct investment projects.

Foreign Trade Zones/Free Ports/Trade Facilitation

The Seychelles International Trade Zone (SITZ) Act of 1995  provides for the establishment of free trade zones, which aim to combine the benefits of a freeport and an export processing zone. A number of locations have been declared International Trade Zones under this regime. Updated in 2018, the list of concessions available to SITZ license holders includes the following:

  • Exemption from customs duties on certain capital equipment to be used in the SITZ;
  • Exemption from certain taxes;
  • Exemption from fees with respect to work permits;
  • Entitlement to full foreign ownership;
  • Entitlement to employ 100 percent foreign labor; and
  • Exemption from national labor laws.

Activities of the SITZ are regulated by the Seychelles Financial Services Authority, formerly known as the Seychelles International Business Authority. Foreign-owned firms benefit from the same incentives as local firms operating in the SITZ. In order to meet the requirements of the Base Erosion and Profit Shifting (BEPS) standard of the Organization for Economic Cooperation and Development (OECD), licensable export services activities under the International Trade Zone Act have been amended. Under the revised regime, the holder of an export services license will not be allowed to provide services other than repair and reconditioning of goods, warehousing and rental of storage space, or logistical services, provided that these activities relate to goods physically handled in the zone in Seychelles.

Export services operators licensed on or before October 16, 2017 will still enjoy all concessions and exemptions accorded under the International Trade Zone Act until June 30, 2021, provided that the benefits do not extend to assets or activities introduced on or after October 17, 2017. In his 2020 budget speech, the President announced that further amendments will be made to the tax regime governing manufacturing activities under the International Trade Zone and a grandfathering period, which will not extend beyond December 31, 2022, will be applied for the new regime. In his 2020 State-of-the-Nation Address, President Faure announced that foreign workers will pay into the Seychelles Pension Fund and recover only 25 percent of their pension payment when they leave the country.

Performance and Data Localization Requirements

The government of Seychelles does not mandate local employment, nor are there local employment mandates for senior management or directors. Visa, residence, and work permit requirements are not excessively onerous. The GOS has announced that the Gainful Occupation Permit (GOP) fees for foreign workers working in Seychelles for more than 12 years as well as for top management level jobs in big companies will increase this year.

Investors operating in Seychelles are expected to abide by the following obligations:

  • Comply with the provisions of the governing laws on investment procedures and carry out investment activities correctly in accordance with the approvals granted. This includes the responsibility of the investor for accuracy and truthfulness in materials submitted in investment proposals and registration;
  • Fully discharge their financial obligations, including taxation, in accordance with the law;
  • Carry out the provisions of the laws on accounting and auditing;
  • Carry out the provisions of the laws on registration of companies and other legal entity; and
  • Carry out the provisions of the employment laws and regulations.

Seychelles does not have a single comprehensive law that addresses the collection and use of personal data. The Data Protection Act (DPA) was enacted in 2003 to provide individuals with privacy rights regarding processing of their personal data, but as of February 2020 it has not entered into force. Other sectoral laws that include data protection provisions are: Civil Code of Seychelles (1976), Computer Misuse Act (1998), Electronic Transactions Act (2001), Financial Institutions Act (2004), Central Bank of Seychelles Act (2004), Anti-Money Laundering and Combating the Financing of Terrorism Act (2020), Financial Services Authority Act (2013), Anti-Corruption Act (2016), and International Business Companies Act (2016).

Currently there is no legal requirement obliging foreign IT providers to hand over their source code or provide access to the encryption utilized. Seychelles does not have any legal instrument that prevents or restricts companies from transmitting customer or business-related data outside the country. Consequently, at the moment there are no Government agencies involved in enforcing any rules or regulations with regards to local data storage in Seychelles.

The Embassy is not aware of any investment performance requirements.

5. Protection of Property Rights

Real Property

The courts enforce interests in real property. Mortgages and liens are enforced, and the land registrar resolves land disputes. All lands in Seychelles are either publicly or privately held. According to the World Bank’s 2020 Doing Business Report, Seychelles ranked 65th out of 190 countries in the Registering Property index. In 2014, the GOS discontinued selling state land to non-Seychellois.

The Immovable Property Tax Act, which was enacted in December 2019, introduced an annual tax of 0.25 percent on the assessed market value of residential property owned by all foreigners.

Intellectual Property Rights

The GOS has measures in place to enforce intellectual property rights (IPR) but awareness of IPR is limited and enforcement is weak. Seychelles joined the World Intellectual Property Organization (WIPO) in March 2000. The country became a contracting party to the Paris Convention for the Protection of Industrial Property and the Patent Cooperation Treaty (PCT) in November 2002. The Cabinet of Ministers has approved plans for Seychelles to accede to the Madrid Protocol .  Seychelles also signed the Beijing Treaty on Audiovisual Performances in June 2012. and ratified the Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization (ABS) to the Convention on Biological Diversity (CBD) in October 2014.  Additionally, the Cabinet of Ministers approved Seychelles’ membership in the African Regional Intellectual Property Organization (ARIPO) by way of acceding to the Harare Protocol on Patents and Industrial Designs.

The Copyright Act 2014 and the Industrial Property Act 2014 contain provisions that set forth the laws relating to infringement of intellectual property rights. The Customs Management (Border Measures) Regulations 2014 provides enforcement measures at the border with respect to counterfeit goods.  There is currently no legislation for plant variety protection. As required by WTO principles, Seychelles IP law treats foreign nationals and Seychellois citizens equally. Enforcement of IPR protection laws is limited since very few international brands and trademarks have local or even regional representatives.

In 2017, the Cabinet of Ministers established a National Intellectual Property Committee to serve as a coordinating body for consultations with stakeholders on IP matters. The Committee, which falls under the purview of the Trade Division of the Ministry of Finance, Trade, and Economic Planning, comprises representatives from government, non-governmental organizations, and the private sector and meets on a monthly basis. In the 2018 budget speech, the Minister of Finance announced that that Government would develop a modernized Intellectual Property Office that would serve as a “one stop shop” for IP issues. While the Registrar General’s Office services as the one-stop-shop for both copyright and intellectual property, a new facility is expected to be built in the future.

Chapter 13 of the Customs Management (Border Measures) Regulations 2014 provides for enforcement measures at the border with respect to counterfeit and/or pirated goods. Furthermore, the Trade Division has, in consultation with the Customs Division, developed Procedural Guidelines on Border Measures for the Protection of Intellectual Property Rights (https://www.src.gov.sc/resources/Guides/2018/IPRs.pdf ) to counter the import and export of counterfeit and pirated goods. While no statistics are available, the Seychelles Revenue Commission’s customs officials monitor incoming shipments for counterfeit goods. However, their focus is on counterfeit products that pose a public health risk, such as medications and electrical appliances. Counterfeit apparel, CDs, and DVDs are widely available in Seychelles markets.

Seychelles is neither listed on the United States Trade Representative (USTR) Special 301 Report nor the s Notorious Markets List..

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

Embassy Contact for IPR:

Smita Bheenick
Economic/Commercial Specialist
U.S. Embassy
Port Louis, Mauritius
+230 202 4430
bheenicks@state.gov

Some Law Firms in Seychelles also handling IPR:*

KAREN DOMINGUE
Room 8, Trinity House
Huteau Lane 41
Victoria, Mahe
Seychelles
+248 422 6243
icsey@sechelles.net

A.G. AMESBURY
Room 104, Premier Building
Victoria, Mahe
Seychelles
+248 423 28 41
a.g.amesburyattorney@gmail.com

ANTONY G. DERJACQUES
Suite 5 & 6, Trinity House
Huteau Lane
Victoria, Mahe
Seychelles
+248 432 19 00
dec@seychelles.net

FRANK ALLY LAW CHAMBERS
Suite 213, Premier Bldg.,
Albert Street
Victoria, Mahe
Seychelles
+248 432 30 80
frankally@seychelles.net

*List for convenience only, not intended to imply endorsement by the U.S. Government.

6. Financial Sector

Capital Markets and Portfolio Investment

Seychelles welcomes foreign portfolio investment. The Seychelles Securities Act (https://www.fsaseychelles.sc/wp-content/uploads/2019/08/Consolidated-Securities-Act-2007-to-20th-December-2018.pdf ) provides the legal framework for the Seychelles stock market. The Seychelles Securities Exchange, owned by South Africa’s Quote Africa Group, has operated since 2012. The exchange, which was previously known as Trop-X, was rebranded MERJ in 2019. Listing and trading are available in U.S. Dollars, Euros, Pounds Sterling, Seychelles Rupees, and South African Rand. In August 2019, the exchange listed its own security tokens on its main board. This was followed by an initial public offering (IPO) in September, where 16 percent of the company’s tokenized shares were offered to the general public. Portfolio investment in Seychelles is limited by the small size of the economy and banking sector. The buying and selling of sizeable positions may have an outsized impact on the Seychelles Rupee and the economy in general. There are no restrictions on trading by foreigners. By the end of February 2020, there were 38 equity listings with a total market capitalization of $1.244 billion and two debt listings with a market capitalization of EUR 205 million. MERJ is also a partner exchange of the Sustainable Stock Exchanges Initiative.

Existing policies facilitate the free flow of financial resources in and out of the economy. The GOS respects IMF Article VIII by refraining from restrictions on payments and transfers for current international transactions. Foreign investors are able to obtain credit on the local market and through the Seychelles banking system, and a variety of credit instruments are available to both local and foreign investors.

Money and Banking System

Seychelles has a two-tier banking system that separates the central and commercial bank functions and roles. Commercial banks, both domestic and foreign, are regulated and supervised by the Central Bank of Seychelles (CBS). According to the Central Bank of Seychelles Act 2004, the CBS is responsible for the formulation and implementation of Seychelles’ Monetary and Exchange Rate policies. The CBS is the only administrative body responsible for receiving applications for banking licenses, whether domestic or offshore, and issuing the corresponding licenses.

As of February 2020, there were eight commercial banks in operation: Absa Bank, Bank of Baroda, Mauritius Commercial Bank (Seychelles), Nouvobanq, Seychelles Commercial Bank, Al Salam Bank Seychelles Ltd, Bank of Ceylon, and the State Bank of Mauritius (SBM) (Seychelles). According to a 2016 report by the CBS, 94 percent of Seychellois use banks. Seychelles also has three non-banking financial institutions: the Seychelles Credit Union, a savings and credit cooperative society; the Development Bank of Seychelles, which provides flexible financing for businesses and projects to promote economic growth and employment; and the Housing Finance Corporation, a government-owned company that provides financing to Seychellois for the purchase of land, the construction of homes, and financing home improvements.

Seychelles has a number of laws that govern the financial services sector: Financial Institutions Act 2004, Anti-Money Laundering and Combating the Financing of Terrorism Act 2020, Data Protection Act, Mutual and Hedge Fund Act 2007, and Central Bank Act 2004. The Seychelles banking sector is generally healthy, though it is limited by small size and reliance on correspondent bank relationships. Due to concerns about money-laundering and illicit finance in the Seychellois financial sector, some local banks have lost their correspondent banking relationship with foreign banks, a phenomenon known as de-risking, making it difficult for local banks to perform international transactions. In 2017, the CBS and the Financial Services Authority visited foreign financial centers to address de-risking. The government is actively working with international experts, including the World Bank and International Monetary Fund, to ensure Seychelles is not perceived as high-risk jurisdiction. In February 2020, the European Union added Seychelles to the list of non-cooperative jurisdictions for tax purposes as Seychelles had not implemented the tax reforms by the agreed deadline of December 2019 to which it had committed. Two months earlier, France added Seychelles to its blacklist of tax havens for not providing adequate information on French offshore entities operating in the island nation’s jurisdiction. On March 5, 2020, the President signed the National Assembly passed the Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) Act 2020 and the Beneficial Ownership (BO) Act 2020. These two pieces of legislation address the deficiencies identified in the 2018 Mutual Evaluation Report of the Eastern and Southern Africa Anti Money Laundering Group (ESAAMLG).

According to the CBS, in February 2020 non-performing loans to total gross loans in the Seychelles banking sector stood at 2.99 percent, and foreign currency deposits totaled 8,059 million Seychelles Rupees ($573 million).

A wide range of financial services such as checking accounts, savings accounts, loans, transactions in foreign currencies, and foreign currency accounts are available in the banking system. Foreigners and foreign/offshore firms must establish residency or proof of business registration to obtain a bank account.

Foreign Exchange and Remittances

Foreign Exchange

Since the IMF reform package of 2008-2013, the GOS places no restrictions or limitations on foreign investors converting, transferring, or repatriating funds associated with investment. Funds are freely converted. Seychelles maintains a floating exchange rate for the Seychelles Rupee (SCR), which has mostly fluctuated between SCR 12 and SCR 14.5 to $1 over the past five years. In 2019, the SCR remained fairly stable against the USD with an average exchange rate of SCR 14.1 to $1. Between March and April 2020, the SCR depreciated by 27 percent with the rate at the end of April being SCR 17.9 to $1. Due to the Covid-19 crisis, there has been a notable decrease in foreign exchange inflows and the CBS has intervened by disbursing $10 million in the domestic market.

Remittance Policies

Foreign exchange controls were removed in 2008 and foreign investors are free to repatriate their profits and other incomes. The Embassy is unaware of any planned changes to remittance policies, time limits on remittances, or use of any legal parallel market.

Sovereign Wealth Funds

Seychelles does not maintain any sovereign wealth funds. However, in his State of the Nation address in March 2018, the President said that a law would be presented to the National Assembly later during the year to establish a sovereign wealth fund. As of April 2020, this had not materialized.

7. State-Owned Enterprises

Seychelles is one of 14 countries participating in the State-Owned Enterprises (SOE) Network for Southern Africa, which was launched in 2007 to support, in collaboration with the OECD, southern African countries in their efforts to improve the performance of SOEs.

According to the Public Enterprise Monitoring Commission Regulations 2019 there are currently 34 state-owned commercial public enterprises,  which have either been established using public financial resources or in which the government has a significant shareholding. These government-owned organizations are responsible for the delivery of both commercial and social objectives. They offer a range of essential services, including electricity, water, roads, seaports, fuel supply, import/export, retail, transport, civil aviation, housing, and tourism. In his 2019 State of the Nation Address, President Faure announced that the government would inject $6 million into Air Seychelles each year for the next five years. At the end of 2018, total assets of SOEs amounted to $2 billion, representing 189 percent of total GDP while the total net income was $89 million.

SOEs are generally free to purchase and/or supply goods and services from private sector and foreign firms. However, there is a growing concern in the business community that SOEs such as the Seychelles Trading Company (STC) have been allowed to exceed their explicit mandate and compete unfairly. For example, STC has expanded its operations in the retail business with the opening of a hypermarket, a hardware store, and a luxury goods department selling perfumes and designer bags. Most SOEs and parastatal bodies maintain a board of directors and make regular reports to the corresponding ministry. The President and the responsible Minister have authority over the size and composition of the boards of SOEs. The Public Enterprise Monitoring Commission (PEMC), set up in 2013 through the PEMC Act, is an independent institution responsible for monitoring financial, governance, and transparency issues related to public enterprises. Governance and operational assessments of six major SOEs were conducted in 2016 with World Bank assistance. On this basis, an implementation plan for governance and operational review of public enterprises for the period 2017-2019 was prepared and approved by the Cabinet of Ministers.

Audited financial statements of SOEs are published annually on the PEMC website (https://www.pemc.sc/reports ). The GOS has published a Code of Governance for Public Entities to provide guidelines to improve the governance, monitoring and control of public entities in Seychelles. The Code, which was developed by the PEMC along with other stakeholders, can be accessed on its website: https://www.pemc.sc/resource-centre.

Privatization Program

In his 2018 budget speech, the Minister of Finance announced that his Ministry will call on private sector investors to enter into public-private partnership initiatives or partial privatization of the following SOEs: (i) L’Union Estate Company, (ii) Indian Ocean Tuna, (iii) Land Marine Ltd., (iv) European Investment Bank’s shares in Development Bank of Seychelles, and (v) Agence Francaise de Developpement’s shares in Development Bank of Seychelles. In his March 2018 State of the Nation address, the President announced that 20 percent of the Seychelles Petroleum Corporation would be privatized beginning November 2018, but this decision was later withdrawn. Similar privatization plans were announced in previous years, but progress has been slow. The Embassy is not aware of any other formal legal barriers to foreign investors participating in privatization.

8. Responsible Business Conduct

Seychellois society has a high level of awareness of Corporate Social Responsibility (CSR), especially in environmental protection and social programs, but CSR is generally regarded as a function of government. Since 2013, the Seychelles Revenue Commission has been collecting a CSR tax of 0.5 percent on monthly turnover for businesses with an annual turnover of SCR 1 million or more. More information on the CSR tax is available via the following link: https://www.src.gov.sc/pages/csr/csr.aspx . Officially, there are no waivers available for foreign investors with regard to labor law, employment rights, consumer protection, or environmental standards.

The Citizens Engagement Platform Seychelles (CEPS), an umbrella organization for Seychelles’ NGOs, provides a list of NGOs active in the country to the Ministry of Finance, which then decides which organizations would benefit most from the CSR tax revenues. The GOS revised the CSR guidelines in January 2017, with focus on programs linked to social needs. In particular, the following sectors benefit from the CSR fund: environment; health and society; community, youth, sports and arts; and drug rehabilitation and substance abuse. It was announced again in the 2020 budget that all CSR contributions from public enterprises will be used to build an elder care facility.

Seychelles currently has no production in the extractive sector, but international companies have undertaken petroleum exploration activities offshore. The Extractive Industries Transparency Initiative (EITI) accepted Seychelles as a candidate country in August 2014 and Seychelles’ validation against the standard began in January 2018. The 2017 EITI annual progress report published in July 2018 can be accessed at: https://eiti.org/document/seychelles-eiti-annual-progress-report-2016 . In October 2018, the EITI Board assessed Seychelles as having achieved “meaningful progress” against the EITI standard.

9. Corruption

Ruling with transparency and accountability are stated priorities of the current government. In 2016, the government established the Anti-Corruption Commission of Seychelles (ACCS) under the Anti-Corruption Act, which gives it authority to investigate, detect, and prevent corrupt practices. The ACCS is now functional and, though small, has carried out a number of investigations. A local chapter of Transparency International, Seychelles Transparency Initiative (TI), was set up in 2017. TI’s focus is currently on increasing transparency in tourism, fisheries, finance and construction.

In his March 2018 State of the Nation address, the President stated that the government will review anti-corruption laws and provide more resources to the ACCS so it can fulfill its mandate. The Anti-Corruption (Amendment) Bill  (https://seylii.org/sc/legislation/bill/2020/4 ) was voted in by the National Assembly in 2019 giving the ACCS investigative and arresting powers similar to that of the police.

Seychelles signed the UN Convention against Corruption in February 2004 and ratified it in March 2006. Seychelles is not party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

In 2003, the GOS published the Public Service Code of Ethics and Conduct, the stated purpose of which is to provide guidance to public sector employees on the standards of behavior required of them. The Public Officer’s Ethics Act of 2008 prohibits personal enrichment through public office, defines and outlaws bribery, provides guidelines for avoiding conflict of interest, and mandates declaration of financial assets for public officials including members of the National Assembly. The government does not require private companies to establish internal codes of conduct.

Resources to Report Corruption

Anti-Corruption Commission
May De Silva
Chief Executive Officer
Victoria House,
State House Avenue
Victoria, Mahe

Nicole Tirant-Gherardi
Ombudsperson
Office of the Ombudsperson
Room 306, Aarti Chambers, Mont Fleuri, Mahe
+248 225147
ombuds@seychelles.net

10. Political and Security Environment

The constitution provides citizens the right to change their government peacefully, and citizens exercise this right in practice through periodic elections based on universal suffrage. Seychelles has not experienced large-scale political violence since the late 1970s. The United Seychelles party, formerly known as Parti Lepep, governed Seychelles following the 1977 coup and won every election from the introduction of multi-party democracy in 1993 until 2016, when a coalition of opposition parties won the majority of the National Assembly seats. Shortly afterward, President James Michel resigned in favor of his Vice President, Danny Faure. The current era of divided government, with one party in the Presidency and another in control of the legislature, has so far resulted in political stability.

11. Labor Policies and Practices

The national unemployment rate for the year 2019 was 2.7 percent, 2.9 percentage points lower than in 2018. In the fourth quarter of 2019, 61.9 percent of the unemployed population were male. The annual youth unemployment rate fell from 10.5 percent in 2018 to 9.4 percent in 2019.

The private sector accounted for 67 percent of formal employment in the fourth quarter of 2019. Within the private sector, the largest categories of employment were accommodation and food services activities (27 percent) and construction (19 percent). Major challenges that persist in the labor market include difficultly recruiting locals for certain jobs and low productivity level.

Seychelles has long been an importer of foreign labor due to its small population and low human resource base. The share of foreign labor to total employment in the private sector is approximately 40 percent, with the majority working in the fishing and construction sectors. Since 2014, a quota system has applied to industries for which demand for foreign labor is high.

Seychelles has been a member of the International Labor Organization (ILO) since 1977 and has ratified all fundamental International Labor Organization (ILO) conventions. Under Seychellois law, all workers, with the exception of police, military, prison, and firefighting personnel, have the right to form and organize unions of their own choosing, to participate in collective bargaining, and to conduct legal strikes. However, these rights are limited or restricted by other provisions of law. Although collective bargaining is legal, it rarely happens because the law gives the right to the government to review and approve all collective bargaining agreements in both the private and public sector. Strikes are illegal in Seychelles unless all other arbitration procedures have been exhausted. About 15 percent of the workforce is unionized.

In January 2020, the President raised the minimum wage to SCR 5,804 ($426) per month. In 2017, the government re-introduced the Unemployment Relief Scheme (URS) for Seychellois aged above 18 and who are dependent on welfare. In the event of layoffs where there is no employee misconduct, the employer must provide the worker with one month’s notice or the equivalent of one month’s salary. Additionally, for workers that have been employed for five years or more, the employer must pay one day’s pay for each month that the employee has worked for the employer. For severance calculation, there is no distinction between layoffs and firing with severance.

The Employment Tribunal handles employment disputes for private-sector employees. The Public Service Appeals Board handles employment disputes for public-sector employees, and the Financial Services Authority deals with employment disputes of workers in the Seychelles International Trade Zone. The law authorizes the Ministry of Employment, Immigration and Civil Status to establish and enforce employment terms, conditions, and benefits, and workers frequently obtain recourse against their employers through the Employment Tribunal.

The GOS introduced the Occupational Safety and Health Decree in 2012 and the Prohibition of Trafficking in Persons Act in 2014. Seychelles Police and Customs personnel have traveled to U.S. Government-led training at the International Law Enforcement Academy in Gaborone, Botswana. However, there are very few health or labor inspectors in Seychelles and they are limited by meager public resources and the vast ocean distances they are expected to cover.

In November 2011, Seychelles and the ILO signed the 2011-2015 Decent Work Country Program, which seeks to address such issues as employment creation, consolidation and protection of workers’ rights, enhancing social protection, and strengthening social dialogue. Compliance with international labor standards has in recent years been sufficient such that business in the country should not pose a reputational risk to investors.  Concerns about trafficking in persons, however, do exist.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2018 $1,576 2018 $1,590 www.worldbank.org/en/country 
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) N/A N/A 2018 $35 IMF CDIS Data available at
https://data.imf.org/
?sk=40313609-F037-48C1-
84B1-E1F1CE54D6D5
 
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A N/A N/A N/A
Total inbound stock of FDI as % host GDP N/A N/A 2018 192.2% UNCTAD data available at
https://unctad.org/en/Pages/DIAE/
World%20Investment%20Report/
Country-Fact-Sheets.aspx
 

* Source for Host Country Data: Annual National Accounts 2018, National Bureau of Statistics: https://www.nbs.gov.sc/downloads/economic-statistics/annual-national-accounts 

https://www.nbs.gov.sc/downloads/economic-statistics/annual-national-accounts 

Table 3: Sources and Destination of FDI
Direct Investment from/in Counterpart Economy Data (2018)
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward 945 100% Data Not Available
Mauritius 418 44%
Cyprus 161 17%
Russian Federation 107 11%
United Kingdom 44 5%
United States 35 4%
“0” reflects amounts rounded to +/- USD 500,000.
Table 4: Sources of Portfolio Investment
No detailed information is available on the IMF’s Coordinated Portfolio Investment Survey (CPIS) website and no information is available on outward direct investment from Seychelles.

14. Contact for More Information

Chelsea Bergesen
Political and Economic Officer
Mauritius
+230 202 4465
BergesenCR@state.gov

Smita Bheenick
Economic and Commercial Specialist
Mauritius
+230 202 4430
BheenickS@state.gov

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