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Burkina Faso

Executive Summary

Burkina Faso welcomes foreign investment and actively seeks to attract foreign partners to aid in its development.  It has partially put in place the legal and regulatory framework necessary to ensure that foreign investors are treated fairly, including setting up a venue for commercial disputes and streamlining the issuance of permits and company registration requirements.  More progress is needed on diminishing the influence of state-owned firms in certain sectors and enforcing intellectual property protections. Burkina Faso scored 59.4 out of 100 in the 2019 Heritage Foundation Economic Freedom Index and ranked 78 out of 180 countries in Transparency International’s 2018 Corruption Index.

The gold mining industry has boomed in the last seven years, and the bulk of foreign investment is in the mining sector, mostly from Canadian firms.  Moroccan, French and UAE companies control local subsidiaries in the telecommunications industry, while foreign investors are also active in the agriculture and transport sectors.  In June 2015, a new mining code was approved with the intent to standardize contract terms and better regulate the sector, but the new code is not yet fully operational. In 2018, the parliament adopted a new investment code that offers many advantages to foreign investors. This code offers a range of tax breaks and incentives to lure foreign investors, including exemptions from value-added tax on certain equipment.  Effective tax rates as a result are lower than the regional average, though the tax system is complex and compliance can be burdensome. Opportunities for U.S. firms exist in the energy sector, where the government has an ambitious plan for the installation of new power capacity in both traditional and renewable sources.

Despite significant progress in building democratic institutions, the recent political and security environment in Burkina Faso has been marked by a series of terrorist attacks, especially in the northern and eastern regions, and the rise of self-defense groups comparable to militias in rural areas.  Most recently, in March 2018, the Army headquarters and the French Embassy in Ouagadougou were the targets of a terrorist attack. The government is still struggling to balance security concerns with its economic priorities, and will continue to face the twin challenges of too few resources and high public expectations.

Table 1: Key Metrics and Rankings

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2018 78 of 180 http://www.transparency.org/research/cpi/overview 
World Bank’s Doing Business Report 2019 151 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2018 124 of 126 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, stock positions) 2018 N/A http://www.bea.gov/international/factsheet/ 
World Bank GNI per capita 2018 $731 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

10. Political and Security Environment

Violent extremist elements remain active in Burkina Faso and throughout the region. They have specifically targeted Westerners in attacks and kidnappings. Terrorists may conduct attacks anywhere with no warning. Targets may include hotels, restaurants, police stations, customs offices, military posts, and schools. There have been over 300 terrorist incidents in Burkina Faso since 2015, including ambushes of security forces and improvised explosive device (IED) attacks. In addition to attacking police stations, customs offices, military posts, and schools, extremists have attacked Ouagadougou three times since January 2016.

On March 2, 2018, extremists attacked the French Embassy and Burkina Faso’s military headquarters in downtown Ouagadougou. Eight security force personnel, including soldiers and police officers, were killed, and over 80 others were injured. In August 2017, a small group of armed men attacked the Aziz Istanbul Café, a restaurant in downtown Ouagadougou, and killed approximately 19 people. Extremists attacked the Cappuccino café and Splendid Hotel in the heart of Ouagadougou’s downtown on January 15, 2016.

The Government of Burkina Faso has declared a state of emergency due to insecurity in parts of 6 out of 15 administrative regions. In March and April 2019, the Burkinabè military conducted a large-scale military operation to counter extremist activity in eastern Burkina Faso.

Demonstrations may occur throughout Burkina Faso with little or no advance warning.

In the past year, there have been a number of incidents of violent extremists targeting local and foreign companies, including attacks against security forces escorting convoys of mining company employees, as well as hijackings of company vehicles and kidnappings of company personnel.

Violent extremist elements remain active in Burkina Faso and throughout the region. In the past 13 months, Post has upgraded the public travel advisory three times to reflect deteriorating security in various regions of the country. Burkina Faso is rated as “Level 3: Reconsider Travel” with areas of “Level 4: Do Not Travel”. The “Level 4” areas have increased from just a portion of the northern Sahel Region in early 2018, to include the Est Region (except Gnagna Province) in September 2018, and again in January 2019 to include all of the Est Region, Sahel Region, and portions of the Centre-Est Region and regions in western Burkina Faso bordering Mali.

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) 2016 $10,886 2017 $12,323 www.worldbank.org/en/country   
Foreign Direct Investment Host Country Statistical Source USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) N/A N/A N/A N/A BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data  
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A N/A N/A BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data  
Total inbound stock of FDI as % host GDP N/A N/A 2017 21.9% UNCTAD data available at https://unctad.org/en/Pages/DIAE/World%20Investment%20Report/Country-Fact-Sheets.aspx  


Table 3: Sources and Destination of FDI

Direct Investment From/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward $2,869 100% Total Outward $74 100%
Canada $878 30% Cote d’Ivoire $19 26%
Barbados $594 21% Mali $19 26%
United Kingdom $387 13% Togo $15 20%
France $238 8% Benin $7 9%
Bermuda $183 6% Senegal $7 9%
“0” reflects amounts rounded to +/- USD 500,000.


Table 4: Sources of Portfolio Investment

Data not available.

Egypt

Executive Summary

Progress on Egyptian economic reforms over the past two years has been noteworthy.  Though many challenges remain, Egypt’s investment climate is improving. The country has undertaken a number of structural reforms since the flotation of the Egyptian Pound (EGP) in November 2016 and implemtation of a three-year, USD 12 billion International Monetary Fund (IMF)-backed economic reform program.  Increased investor confidence and the reactivation of Egypt’s interbank foreign exchange (FX) market have attracted foreign portfolio investment and grown foreign reserves. As yields on government debt fall, investors may shift towards direct investments, which would be a positive market signal that the Egyptian economy is beginning to trend  towards higher growth. The Government of Egypt (GoE) understands that attracting foreign direct investment (FDI) is key to addressing many of the economic challenges it faces, including low economic growth, high unemployment, current account imbalances, and hard currency shortages. Though FDI inflows grew 13 percent year-on-year in 2017, they declined slightly in 2018 from USD 7.9 to 7.7 billion, according to the Central Bank of Egypt.

Egypt implemented a number of regulatory reforms in 2017 and 2018.  Key among these are the new Investment Law and the Companies Law – which aim to improve Egypt’s ranking in international reports of doing business and to help the economy realize its full potential.  These reforms have increased investor confidence.

The Investment Law (Law 72 of 2017) aims to attract new investment and provides a framework for the government to offer investors more investment-related incentives and guarantees.  Additionally, the law aims to attract new investments, consolidate many investment-related rules, and streamlines procedures.

The government also hopes to attract  international investment in several “mega projects,” including a large-scale industrial and logistics zone around the Suez Canal, the construction of a new national administrative capital, a 1.5 million-hectare agricultural land reclamation and development project, and to promote mineral extraction opportunities in the Golden Trianlge economic zone between the Red Sea and the Nile River.

Egypt is a party to more than 100 bilateral investment treaties, including with the United States.  It is a member of the World Trade Organization (WTO), the Common Market for Eastern and Southern Africa (COMESA), and the Greater Arab Free Trade Area (GAFTA).  In many sectors, there is no legal difference between foreign and domestic investors. Special requirements exist for foreign investment in certain sectors, such as upstream oil and gas as well as real estate, where joint ventures are required.

Several challenges persist for investors.  Dispute resolution is slow, with the time to adjudicate a case to completion averaging three to five years.  Other obstacles to investment include excessive bureaucracy, regulatory complexity, a mismatch between job skills and labor market demand, slow and cumbersome customs procedures, and various non-tariff trade barriers.  Inadequate protection of intellectual property rights (IPR) remains a significant hurdle in certain sectors and Egypt remains on the U.S. Trade Representative’s Special 301 Watch List. Nevertheless, Egypt’s reform story is noteworthy, and if the steady pace of implementation for structural reforms continues, and excessive bureaucracy reduces over time, then the investment climate should continue to look more favorable to U.S. investors.

Table 1: Key Metrics and Rankings

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2018 105 of 175 http://www.transparency.org/research/cpi/overview 
World Bank’s Doing Business Report 2019 120 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2018 95 of 126 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country (M USD, stock positions) 2017 $9,352.0  http://www.bea.gov/international/factsheet/ 
World Bank GNI per capita 2018 $3,010 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

10. Political and Security Environment

Stability and economic development remain Egypt’s priorities. The GoE has taken measures to eliminate politically-motivated violence, while also limiting peaceful protests and political expression.  Egypt’s presidential elections proceeded without incident in March 2018. Late 2018 and early 2019 saw a relatively low number of small-scale terrorist attacks primarily against security targets in Cairo and elsewhere in the Nile Valley, with some against civilians. Militant groups committed several large-scale attacks in the Western Desert and Sinai in late 2017, and a car bombing in Alexandria in early 2018.  In the Sinai Peninsula, militants affiliated with ISIS have conducted terrorist attacks against military installations and personnel, as well as a prominent religious site targeting civilians. In response, the government launched a comprehensive counterterrorism offensive beginning in early 2018, which is still ongoing. The United States designated three groups – Harakat Sawaad Misr (HASM), Liwaa el Thawra, and ISIS Egypt – as Specially Designated Global Terrorists in 2018, and designated ISIS-Sinai Province as an alias of Ansar Bayt al-Maqdis, which had been designated a Foreign Terrorist Organization in September 2015.

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 ) 2017 $235,370    2018 $242,800 www.worldbank.org/en/country  
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) 2018 $2,244.4  2017 $9,352.0  BEA data available at https://tradingeconomics.com/egypt/foreign-direct-investment  
Host country’s FDI in the United States (M USD , stock positions) 2017  $2,960.0  2017  $2,950.5 BEA data available at http://bea.gov/international/direct_investment_multinational_companies_comprehensive_data.htm  
Total inbound stock of FDI as % host GDP N/A N/A 2017 55.63% UNCTAD data available at https://unctad.org/en/Pages/DIAE/World%20Investment%20Report/Country-Fact-Sheets.aspx  

Measurements of FDI in Egypt vary according to the source and the definitions employed to calculate the figure.  The Central Bank of Egypt records figures on quarterly and annual investment flows based on financial records for Egypt’s balance of payments statistics.  They are reported in the table below. The Ministry of Petroleum maintains statistics on investment in the oil and gas sector (which accounts for the bulk of FDI in Egypt), while GAFI has statistics on all other investments – including re-invested earnings and investment-in-kind.  Statistics are not always current. GAFI’s figures are calculated in EGP at the historical value and rate of exchange, with no allowance for depreciation, and are cumulative starting from 1971.

U.S. firms are active in a wide range of manufacturing industries, producing goods for the domestic and export markets.  U.S. investors include American Express, AIG, Ideal Standard, Apache Corporation, Bechtel, Bristol-Myers Squibb, Cargill, Citibank, Coca-Cola, Devon Energy, Dow Chemical, ExxonMobil, Eveready, General Motors, Guardian Industries, H.J.  Heinz, Johnson & Johnson, Kellogg’s, Mars, Mondelez, Microsoft, Proctor and Gamble, Pfizer, PepsiCo, Pioneer, and Xerox. Leading investors from other countries include BG, ENI-AGIP, BP, Vodaphone, and Shell (in the oil/gas sector), Unilever, Al-Futtaim, (UAE), the M.A. Kharafi Group (Kuwait), and the Kingdom Development Company (Saudi Arabia).


Table 3: Sources and Destination of FDI

Data not available.


Table 4: Sources of Portfolio Investment

Portfolio Investment Assets
Top Five Partners (Millions, US Dollars, 2016)
Total Equity Securities Total Debt Securities
All Countries $1,886 100% All Countries $888 100% All Countries $998 100%
Cayman Islands $416 22% Saudi Arabia $347 39% Cayman Islands $406 41%
Saudi Arabia $392 13% International Organizations $250 28% United States $190 19%
International Organizations $250 12% United Kingdom $45 5% Qatar $103 10%
United States $219 5% Italy $36 4% Germany $48 5%
Qatar $103 5% Switzerland $32 4% Saudi Arabia $46 5%

Thailand

Executive Summary

Thailand, the second largest economy in Association of Southeast Asian Nations (ASEAN) after Indonesia, is an upper middle-income country with pro-investment policies and well-developed infrastructure. The interim military coup government held elections on March 24, 2019 and 2014 coup leader General Prayut Chan-o-cha was elected by Parliament as Prime Minister on June 5.   Thailand celebrated the coronation of King Maha Vajiralongkorn May 4-6, 2019, further stabilizing the country. Despite some political uncertainty, Thailand continues to encourage foreign direct investment as a means of promoting economic development, employment, and technology transfer. In recent decades, Thailand has been a major destination for foreign direct investment, and hundreds of U.S. companies have invested in Thailand successfully. Thailand continues to encourage investment from all countries and seeks to avoid dependence on any one country as a source of investment.

The Foreign Business Act (FBA) governs most investment activity by non-Thai nationals. Many U.S. businesses also enjoy investment benefits through the U.S.-Thai Treaty of Amity and Economic Relations, signed in 1833 and updated in 1966. The Treaty allows U.S. citizens and U.S. majority-owned businesses incorporated in the United States or Thailand to engage in business on the same basis as Thai companies (national treatment) and exempts them from most FBA restrictions on foreign investment, although the Treaty excludes some types of business.  Notwithstanding their Treaty rights, many U.S. investors choose to form joint ventures with Thai partners who hold a majority stake in the company, leveraging their partner’s knowledge of the Thai economy and local regulations.

The Thai government maintains a regulatory framework that broadly encourages investment, though the process of rule-making and interpretation is not always transparent or predictable. Government policies generally do not restrict the free flow of financial resources to support product and factor markets, and credit is generally allocated on market terms rather than by directed lending.

The Board of Investment (BOI) is Thailand’s principal investment promotion authority. The BOI offers business support and investment incentives uniformly to qualified domestic and foreign investors through clearly articulated application procedures. Investment incentives include both tax and non-tax privileges.

The government launched the Eastern Economic Corridor (EEC) development plan in 2017. The EEC is a part of the “Thailand 4.0” economic development strategy introduced in 2016. Many planned infrastructural projects, such as high-speed trains, U-Tapao Airport commercialization, and Laem Chabang Port expansion, could provide opportunities for investments, and good and services support. Thailand 4.0 offers to incentives for investments in ten “new” targeted industries, namely advanced robotics, digital technology, integrated aviation, medical, biofuels/biochemical, defense manufacturing, and human resource development.

Table 1: Key Metrics and Rankings

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2018 36/ 99 http://www.transparency.org/research/cpi/overview
World Bank’s Doing Business Report 2018 27 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2018 44 of 126 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, stock positions) 2017 USD 15,006 http://www.bea.gov/international/factsheet/
World Bank GNI per capita 2017 USD 5,950 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

10. Political and Security Environment

On March 24, 2019, Thailand held its first national election since the 2014 military coup that ousted democratically elected Prime Minister Yingluck Shinawatra. On June 5, the newly-seated Parliament elected coup leader General Prayut Chan-o-cha to continue on in his role as Prime Minister. However, stark political divisions remain in the country.

Violence related to an ongoing Malay-Muslim insurgency in Thailand’s southernmost provinces has claimed more than 7,000 lives since 2004. Although the number of deaths and violent incidents has decreased year-over-year, efforts to end the ethno-nationalist insurgency have so far been unsuccessful. The government is currently engaged in peace talks with an insurgent umbrella group, but the principal insurgent faction refuses to participate. Almost all attacks have occurred in the three southernmost provinces of the country.

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 $504,990  2017 $455,303  www.worldbank.org/en/country  
Foreign Direct Investment Host Country Statistical Source USG or International Statistical Source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2018 $16,110 2017 $15,006 BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data  
Host country’s FDI in the United States ($M USD, stock positions) 2018 $7,887 2017 $2,900 BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data  
Total inbound stock of FDI as % host GDP N/A N/A 2017 50.7% N/A

 

Table 3: Sources and Destination of FDI

Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward $235,390 100% Total Outward $134,015 100%
Japan $86,600 37.0% China, P.R.: Hong Kong $22,127 16.5%
Singapore $32,946 14.4% Singapore $15,586 11.6%
China, P.R.: Hong Kong $21,030 8.9% Mauritius $10,480 7.8%
United States $16,110 7.3% Netherlands $9,276 6.9%
Netherlands $15,628 5.6% United States $7,887 5.9%
“0” reflects amounts rounded to +/- USD 500,000.


Table 4: Sources of Portfolio Investment:
https://www.bot.or.th/English/Statistics/EconomicAndFinancial/
Pages/StatInternationalInvestmentPosition.aspx
 

Portfolio Investment Assets
Top Five Partners (Millions, US Dollars)
Total Equity Securities Total Debt Securities
All Countries $52,349 100% All Countries $30,095 100% All Countries $22,299 100%
Luxembourg $8,222 16% Luxembourg $7,888 26% Japan $2,604 12%
United States $7,331 14% United States $5,440 18% China, P.R. Mainland $2,557 12%
Ireland $5,108 10% Ireland $5,014 17% Laos DPR $2,094 9%
China, P.R.: Hong Kong $3,458 7% Singapore $2,512 8% United States $1,892 8%
Singapore $3,101 6% China, P.R.: Hong Kong $1,752 6% China, P.R.: Hong Kong $1,706 8%
Investment Climate Statements
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