1. Openness To, and Restrictions Upon, Foreign Investment
Policies Toward Foreign Direct Investment
The GOT is working to improve the business climate and attract FDI. The GOT prioritizes attracting and retaining investment, particularly in the underdeveloped interior regions, and reducing unemployment. More than 3,350 foreign companies currently operate in Tunisia, and the government has historically encouraged export-oriented FDI in key sectors such as call centers, electronics, aerospace and aeronautics, automotive parts, textile and apparel, leather and shoes, and agro-food and other light manufacturing. In 2018, the sectors that attracted the most FDI were energy (33 percent), services (22.8 percent), the electrical and electronic industry (18 percent), the mechanical industry (6.6 percent), and agro-food products (4.7 percent). Inadequate infrastructure in the interior regions results in the concentration of foreign investment in the capital city of Tunis and its suburbs (58 percent), the northern coastal region (25.7 percent), and the eastern coastal region (9.7 percent). Internal western and southern regions attracted only 6.6 percent of foreign investment despite special tax incentives for those regions.
The Tunisian Parliament passed an Investment Law (#2016-71) in September 2016 that went into effect April 1, 2017 to encourage the responsible regulation of investments. The law provided for the creation of three major institutions:
- The High Investment Council, whose mission is to implement legislative reforms set out in the investment law and decide on incentives for projects of national importance (defined as investment projects of more than 50 million dinars and 500 jobs).
- The Tunisian Investment Authority, whose mission is to manage investment projects of more than 15 million dinars and up to 50 million dinars. Investment projects of less than 15 million dinars are managed by the Foreign Investment Promotion Agency (FIPA).
- The Tunisian Investment Fund, which will fund foreign investment incentive packages.
These institutions were all launched in 2017. However, the Foreign Investment Promotion Agency (FIPA) continues to be Tunisia’s principal agency to promote foreign investment. FIPA is a one-stop shop for foreign investors. It provides information on investment opportunities, advice on the appropriate conditions for success, assistance and support during the creation and implementation of the project, and contact facilitation and advocacy with other government authorities.
Under the 2016 Investment Law (article 7), foreign investors have the same rights and obligations as Tunisian investors. Tunisia encourages dialogue with investors through Foreign Investment Promotion Agency (FIPA) offices throughout the country.
Limits on Foreign Control and Right to Private Ownership and Establishment
Foreign investment is classified into two categories:
- “Offshore” investment is defined as commercial entities in which foreign capital accounts for at least 66 percent of equity, and at least 70 percent of the production is destined for the export market. However, investments in some sectors can be classified as “offshore” with lower foreign equity shares. Foreign equity in the agricultural sector, for example, cannot exceed 66 percent and foreign investors cannot directly own agricultural land, but agricultural investments can still be classified as “offshore” if they meet the export threshold.
- “Onshore” investment caps foreign equity participation at a maximum of 49 percent in most non-industrial projects. “Onshore” industrial investment may have 100 percent foreign equity, subject to government approval.
Pursuant to the 2016 Investment Law (article 4), a list of sectors outlining which investment categories are subject to government authorization (the “negative list”) was set by decree on May 11, 2018. The sectors include natural resources; construction materials; land, sea and air transport; banking, finance, and insurance; hazardous and polluting industries; health; education; and telecommunications. Per the decree, if the relevant government decision-making body does not respond to an investment request within a specified period, typically 60 days, the authorization is automatically granted to the applicant. The decree went into effect on July 1, 2018.
Other Investment Policy Reviews
- The WTO completed a Trade Policy Review for Tunisia in July 2016. The report is available here: https://www.wto.org/english/tratop_e/tpr_e/tp441_e.htm .
- The OECD completed an Investment Policy Review for Tunisia in November 2012. The report is available here: http://www.oecd.org/daf/inv/investment-policy/tunisia-investmentpolicyreview-oecd.htm .
The World Bank Investing Across Borders initiative affirms that Tunisia has the fewest limits on foreign equity ownership in the Middle East and the North Africa (MENA) region. The GOT has opened up the majority of the sectors of the economy to foreign capital participation, with the exception of electricity transmission and distribution (http://iab.worldbank.org/data/exploreeconomies/tunisia ).
The World Bank Doing Business 2019 report ranks Tunisia 63rd in terms of ease of starting a business. In North Africa, Tunisia ranked ahead of Egypt (109), Algeria (157), and Libya (186) and behind Mauritania (46) and Morocco (34): http://www.doingbusiness.org/en/data/exploreeconomies/tunisia#DB_sb .
The Agency for Promotion of Industry and Innovation (APII) is the focal point for business registration generally for new businesses. Online project declaration for industry or service sector projects for both domestic and foreign investment is available at: www.tunisieindustrie.nat.tn/en/doc.asp?mcat=16&mrub=122
APII has attempted to simplify the business registration process by creating a one-stop shop that offers registration of legal papers with the tax office, court clerk, official Tunisian gazette, and customs. This one-stop shop also houses consultants from the Investment Promotion Agency (API), Ministry of Employment, National Social Security Authority (CNSS), post office, Ministry of Interior, and the Ministry of Trade. Registration may face delays as some agencies may have longer internal processes. Prior to registration business must first initiate an online declaration of intent, to which APII provides a notification of receipt within 24 hours.
The World Bank’s Doing Business 2019 report indicates that business registration takes an average of 8 days and costs about USD 115 (350 Tunisian dinars): http://www.doingbusiness.org/en/data/exploreeconomies/tunisia#DB_sb .
For agriculture and fisheries, business registration information can be found at: www.apia.com.tn .
In the tourism industry, companies must register with the National Office for Tourism at: http://www.tourisme.gov.tn/pour-investir/prestations-administratives.html.
The central point of contact for established foreign investors and companies is the Foreign Investment Promotion Agency (FIPA): http://www.investintunisia.tn .
The GOT does not incentivize outward investment, and capital transfer abroad is tightly controlled by the Central Bank.