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

10. Political and Security Environment

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

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

10. Political and Security Environment

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

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

10. Political and Security Environment

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics