Executive Summary

Tunisia has maintained the forward momentum of its democratic transition since the parliamentary and presidential elections of late 2014. This will be further strengthened with the holding of the municipal elections, scheduled to take place in December, 2017. Economically, Tunisia is still going through hardship due to a sluggish recovery after the two terrorist attacks that targeted its important tourism sector in 2015 and the uneasy task of mobilizing funding for the budget.

Both the former and current governments made substantial progress on much-needed structural reform, including passing new public-private partnership, competition, bankruptcy, and renewable energy laws; safeguarding the independence of the Central Bank through a new central bank law; and improving the investment climate through a new investment law. The United States and other donors are partnering with the government to achieve remaining reforms, including those on taxes and customs. Enacting these reforms will help Tunisia attract higher foreign and domestic investment.

Tunisia’s strengths are its proximity to Europe, its relatively educated workforce, and its positive attitude toward foreign direct investment (FDI). In the past, most investments were in electronics manufacturing and textiles; today, the economy is more dynamic. Sectors such as agribusiness, aerospace, telecommunication technologies, and services are increasingly promising.

There is potential for significant improvement to the business climate once the Investment Law of April 1, 2017 enters into force. As economic reforms are adopted by the Parliament and implemented by the government, the business climate is expected to improve through development of more simple, clear, and transparent regulations.

Substantial barriers to investment remain. State-owned enterprises play a large role in Tunisia’s economy, and some sectors are not open to foreign investment. The informal sector, estimated to be between 40-60 percent of the overall economy, continues to pose difficulties to companies forced to compete with smuggled goods.

The United States has provided more than $400 million in economic growth-related assistance since 2011, including loan guarantees in 2012, 2014, and 2016 enabling the Government of Tunisia to borrow nearly $1.5 billion to help stabilize government finances, ongoing support for small and medium enterprises, and technical assistance to implement economic reform.

Table 1

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2016 75 of 175 http://www.transparency.org/
World Bank’s Doing Business Report “Ease of Doing Business” 2016 77 of 190 doingbusiness.org/rankings
Global Innovation Index 2016 77 of 128 https://www.globalinnovationindex.org/
U.S. FDI in partner country ($M USD, stock positions) 2015 US$ 311 million http://www.bea.gov/
World Bank GNI per capita 2015 US$ 3,980 http://data.worldbank.org/

Policies Towards Foreign Direct Investment

The Government of Tunisia (GOT) has a favorable attitude toward FDI and is working to ensure a good investment climate in the country. The GOT prioritizes attracting and retaining FDIs, reducing unemployment, and encouraging investment in the interior regions. 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. In 2016, the sectors that attracted the most FDIs were energy (47 percent), electrical and electronic industries (17 percent), pharmaceuticals (6 percent), agro-food (6 percent), and ICT (5 percent). Inadequate infrastructure in the interior regions results in the concentration of most foreign investments in the capital city of Tunis and its suburbs (67 percent) and the eastern coastal regions (27 percent). Internal western and southern regions attracted 6 percent only of foreign investments despite special tax incentives for those regions.

The Tunisian Parliament passed a new Investment Law (#2016-71) in September 2016 that went into effect April 1, 2017. To encourage good governance of investments, the law provides for the creation of three major institutions: the High Investment Council, the Tunisian Investment Authority, and the Tunisian Investment Fund. These institutions are scheduled to be launched in 2017. Meanwhile, the Foreign Investment Promotion Agency (FIPA) continues to be Tunisia’s principal agency to promote foreign investments. 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 all other government authorities.

Under the 2016 Investment Law (article 7), foreign investors enjoy national treatment not less favorable than Tunisian investors for their rights and obligations.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign investment is divided into two categories:

  1. “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. Some exceptions to these percentages exist; for example, foreign equity in the agricultural sector cannot exceed 66 percent of the capital, and foreign investors cannot directly own agricultural land.
  2. “Onshore” investment caps foreign equity participation at a maximum of 49 percent in most non-industrial projects. “Onshore” industrial investment may attain 100 percent foreign equity, subject to government approval.

The 2016 Investment Law (article 4) stipulates that a list of sectors in which investment will be subject to government authorization will be set by decree. These sectors touch on defense and national security, subsidy rationalization, preservation of natural resources, cultural heritage, environment protection, and public health.

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 .

In November 2012, the GOT conducted an investment policy review (IPR) through the Organization for Economic Cooperation and Development (OECD) (http://www.oecd.org/daf/inv/investment-policy/tunisia-investmentpolicyreview-oecd.htm )

Business Facilitation

The World Bank report Investing Across Sectors affirms that Tunisia has the fewest limits on foreign equity ownership in the Middle East and 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 ).

For most businesses, the Agency for Promotion of Industry and Innovation (APII) is the focal point for business registration. 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 

While the online declaration process is clear and APII aims to respond within 24 hours, there are many additional steps that involve other government agencies in order to complete the business registration. APII has set up a one-stop shop which offers registration of legal papers with the tax office, tax inspection office, court clerk, official Tunisian gazette, and customs. This one-stop shop also houses representatives providing consultations from the Investment Promotion Agency (API), Ministry of Employment, National Social Security Authority (CNSS), Ministry of Interior, and the Ministry of Industry and Trade. The World Bank’s Doing Business 2017 study reports that business registration takes an average of 11 days and costs about $150 (325 Tunisian dinars) http://www.doingbusiness.org/data/exploreeconomies/tunisia#starting-a-business .

A local business consulting firm estimates that this process can take up to 40 days and costs $500 on average.

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 Foreign Investment Promotion Agency (FIPA) is the central point of contact for foreign investors. Its website is: www.investintunisia.com.tn .

Outward Investment

The GOT does not incentivize outward investment, and capital transfer abroad is tightly controlled by the Central Bank.

The 2002 Trade and Investment Framework Agreement (TIFA) between Tunisia and the United States remains active. A meeting of the bilateral Trade and Investment Council in April 2017 helped promote engagement and cooperative reform efforts. A Bilateral Investment Treaty (BIT) between Tunisia and the United States entered into force in 1993. The BIT with Tunisia differs in certain key aspects from more recent investment agreements signed by the U.S.

Tunisia has bilateral trade agreements with approximately 81 countries, including its neighbors Libya and Algeria. In January 2008, Tunisia’s Association Agreement with the EU went into effect. This agreement eliminated tariffs on industrial goods with the eventual goal of creating a free trade zone between Tunisia and the EU member states. In addition, Tunisia is signatory to the Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group which offers private sector political risk insurance guarantees. Tunisia has signed the WTO Agreement, bilateral agreements with the Member States of the European Free Trade Association (EFTA), and bilateral and multilateral agreements with Arab League members and Turkey.

A 1985 bilateral treaty (and 1989 protocol) guarantees U.S. firms freedom from double taxation. In 2013, the Parliament adopted the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters.

Transparency of the Regulatory System

As stipulated in the 2014 new constitution, Tunisia has adopted a semi-parliamentary political system where power is shared between the Parliament, which fulfils the legislative role, and the Presidency of the Republic and the Government, composed of the ministerial cabinet led by a Prime Minister. The Presidency and the Government fulfill the executive role.

Most laws and regulations are developed by the Government; however, the Presidency of the Republic as well as the Parliament can also develop and propose laws.

The Parliament debates and votes on the adoption of the laws. Draft laws are accessible to the public via the Parliament’s website.

Ministerial decrees, decisions, and other related regulations are debated at the level of the government and adopted by a Ministerial Council headed by the Head of Government.

After adoption, all laws, decrees, and regulations are published on the website of the Official Gazette and enforced by the Government at the national level.

The Government takes few proactive steps to raise public awareness of the public consultation period for new draft laws and decrees. Civil society, NGOs, and political parties are all pushing for increased transparency and inclusiveness in rule-making. Many draft bills, such as the budget laws, were reviewed many times before submission for the final vote under the pressure of civil society. Business associations, chambers of commerce, unions, and political parties reviewed the 2016 Investment Law prior to final adoption.

Not all accounting, legal, and regulatory procedures are in line with international standards.

Publicly listed companies adhere to national accounting norms.

The Parliament has oversight authority on the Government but cannot ensure that all administrative processes are followed.

The World Bank Global Indicators of Regulatory Governance  for Tunisia are available here: http://rulemaking.worldbank.org/data/explorecountries/tunisia .

Tunisia is a member of the Open Government Partnership, a multilateral initiative that aims to secure concrete commitments from governments to promote transparency, empower citizens, fight corruption, and harness new technologies to strengthen governance. http://www.opengovpartnership.org/country/tunisia 

International Regulatory Considerations

Tunisia has a free trade agreement in goods with the EU. In its effort to achieve a Deep and Comprehensive Free Trade Agreement (DCFTA), the GOT is working on incorporating as many EU standards as possible in its own regulation.

Tunisia has been a member of the WTO since 1995 and notifies it about draft technical regulations on Technical Barriers to Trade (TBT).

Legal System and Judicial Independence

The Tunisian legal system is secular. It is based upon the French Napoleonic code and meets EU standards. While the 2014 Tunisian constitution guarantees the independence of the judiciary, constitutionally mandated reforms of courts and broader judiciary reforms are still Ongoing.

Regulations or enforcement actions are appealable at the Court of Appeal.

Laws and Regulations on Foreign Direct Investment

The 2016 investment law went into effect April 1, 2017. With a total number of 36 articles, the new law is much shorter and clearer than the previous lengthy and complex Investment Code of 1993. It directs tax incentives towards regional development promotion, technology and high added value, research and development (R&D), innovation, small and medium enterprises (SMEs), and toward encouraging investments in certain sectors (such as education, transport, health, and culture) and environmental protection.

The primary one-stop-shop webpage for investors looking for relevant laws and regulations is hosted at the Investment and Innovation Promotion Agency (APII) website http://www.tunisieindustrie.nat.tn/en/home.asp . The 2016 Investment Law (article 15) calls for the creation of the Investor’s Unique Point of Contact within the Ministry of Development, Investment, and International Cooperation to assist new and existing investors to launch and expand their projects.

In addition, the Parliament has adopted a suite of economic reform laws since 2015, including a new renewable energy law, competition law, public-private partnership law, bankruptcy law, and central bank statute to enshrine the independence of the Central Bank of Tunisia

Competition and Anti-Trust Laws

The 2015 Competition Law established a government appointed Competition Council to reduce government intervention in the economy and promote competition based on supply and demand.

The law ensures free pricing of most products and services, with the exception of a list (determined by decree) of protected products and services such as bread or electricity. In exceptional cases of large increases or collapse in prices, the Ministry of Industry and Trade reserves the right to regulate prices for a period of up to six months. The law also voided previous agreements that fixed prices, limited free competition or the entry of other companies, and limited or controlled production, distribution, investment, technical progress, or supply centers. The Ministry of Industry and Trade reserves the right to uphold these competition-inhibiting agreements, however, if parties can convince the Competition Council that these practices are necessary for overall technical or economic progress, and that benefits are fairly distributed.

The Competition Council has the power to investigate cases and make recommendations to the Ministry of Industry and Trade upon the Ministry’s request.

Expropriation and Compensation

The 2016 Investment Law (article 8) stipulates that investors’ property may not be expropriated except for public interest. Expropriation, if and when carried out, must comply with legal procedures, be executed without discrimination on the basis of nationality, and provide fair and equitable compensation.

U.S. investments in Tunisia are protected by international law as stipulated in the U.S.-Tunisia Bilateral Investment Treaty (BIT). According to Article III of the BIT, the GOT reserves the right for direct and indirect expropriation or nationalization of investments for a public purpose only, in a non-discriminatory manner, and upon advance compensation of the full value of the expropriated investment. The treaty grants the right to prompt review by the relevant Tunisian authorities of the expropriation and compensation’s conformity to the principles of international law. When compensations are granted to national or third country companies whose investments suffer losses owing to events such as war, armed conflict, revolution, state of national emergency, civil disturbance, etc., U.S. companies are accorded “the most favorable treatment in regards to any measures adopted in relation to such losses.” There are no outstanding expropriation cases involving U.S. interests.

Dispute Settlement

ICSID Convention and New York Convention

Tunisia is a member of the International Center for the Settlement of Investment Disputes and is signatory to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

Investor-State Dispute Settlement

U.S. investments in Tunisia are protected by international law as stipulated in the U.S.-Tunisia Bilateral Investment Treaty (BIT). The U.S.-Tunisia Bilateral Investment Treaty stipulates that procedures shall allow an investor to take a dispute with a Party directly to binding third-party arbitration.

Disputes involving U.S. persons are relatively rare. Over the past 10 years there were four dispute cases involving U.S. investors; three were settled and one is still ongoing. U.S. firms have generally been successful in seeking redress through the Tunisian judicial system.

The Tunisian Code of Civil and Commercial Procedures allows for the enforcement of foreign court decisions under certain circumstances; i.e., arbitration.

There is no pattern of significant investment disputes or discrimination involving U.S. or other foreign investors.

International Commercial Arbitration and Foreign Courts

The Tunisian Arbitration Code brought into effect by Law 93-42 of 26 April 1993 governs arbitration in Tunisia. Certain provisions within the code are based on the UNCITRAL model law. Tunisia has several domestic dispute resolution venues. The best known is the Tunis Center for Conciliation and Arbitration. When an arbitral tribunal does not adhere to the rules governing the process, either party can apply to the national court for relief. Unless the parties have agreed otherwise, an arbitral tribunal may, on the request of one of the parties, order any interim measure that it deems appropriate.

Bankruptcy Regulations

Parliament adopted in April 2016 a new bankruptcy law which merged and replaced Chapter IV of the Commerce Law and the Law N° 95-34 (Recovery of Companies in Economic Difficulties law). These two previous laws had duplicative and cumbersome processes for business rescue and exit and gave creditors a marginal role. The new law increases incentives for failed companies to undergo liquidation by limiting state collection privileges. The improved bankruptcy procedures are intended to decrease the number of non-performing loans and facilitate access of new firms to bank lending.

According to the Word Bank 2017 Doing Business report, Tunisia’s recovery rate (which calculates how many cents on the dollar secured creditors recover from an insolvent firm at the end of insolvency proceedings) is about 52 cents on the dollar (compared to 26 cents on the dollar for MENA as a whole and 73 cents on the dollar for OECD high income countries).

Investment Incentives

Preferential status (offshore, free trade zone) is usually linked to percentage of foreign corporate ownership, percentage of production for the export market, and investment location. The 2016 Investment Law provides investors with a broad range of incentives linked to increased added value, performance and competitiveness, use of new technologies, regional development, environmental protection, and high employability.

To incentivize the employment of new university graduates, the GOT assumes the employer’s portion of social security costs (16 percent of salary) for the first seven years of the investment, with an extension of up to 10 years for investments in the interior regions. Investments with high job-creation potential may benefit from the purchase of state-owned land for a very small payment (one Tunisian dinar [less than $1] per square meter). Investors who purchase companies in financial distress may also benefit from tax breaks and social security assistance. These advantages are determined on a case-by-case basis.

Further benefits are available for offshore investments, such as tax exemptions on profits and reinvested revenues, duty-free import of capital goods with no local equivalents, and full tax and duty exemption on raw materials, semi-finished goods, and services necessary for operation.

According to the World Bank’s 2017 Ease of Doing Business report, Tunisia’s overall ranking dropped to 77 out of 190, down from 75 a year ago.

Foreign Trade Zones/Free Ports/Trade Facilitation

Tunisia has free trade zones, officially known as “Parcs d’Activités Economiques,” in Bizerte and in Zarzis. While the land is state-owned, a private company manages the free trade zones. They enjoy adequate public utilities and fiber optic connectivity. Companies established in the free trade zones are exempt from taxes and customs duties and benefit from unrestricted foreign exchange transactions. Inputs enjoy limited duty-free entry into Tunisia for transformation and re-export. Factories are considered bonded warehouses and have their own assigned customs personnel.

For example, companies in Bizerte’s free trade zone may rent space for three Euros per square meter annually – a level unchanged since 1996 — plus a low service fee. Long-term renewable leases, up to 25 years, are subject to a negotiable 3 percent escalation clause. Expatriate personnel are allowed duty free entry of personal vehicles. During the first year of operations, companies within the zone must export 100 percent of their production. Each following year, the company may sell domestically up to 30 percent of the previous year’s total volume of production, subject to local customs duties and taxes. Lease termination has not been a problem, and all companies that desired to depart the zone reportedly did so successfully.

Performance and Data Localization Requirements

Foreign resident companies face restrictions related to the employment and compensation of expatriate employees. The 2016 Investment Law limits the percentage of expatriate employees per company to 30 percent of the total work force (excluding oil and gas companies) for the first three years and to 10 percent starting in the fourth year. There are somewhat lengthy renewal procedures for annual work and residence permits, and the GOT has announced its intention to ease them in the future. Although rarely enforced, legislation limits the validity of expatriate work permits to two years.

Central Bank regulations impose administrative burdens on companies seeking to pay for temporary expatriate technical assistance from local revenue. For example, before it receives authorization to transfer payment from its operations in Tunisia, a foreign resident company that utilizes a foreign accountant must document that the service is necessary, fairly valued, and unavailable in Tunisia. This regulation hinders a foreign resident company’s ability to pay for services performed abroad.

The host government does not follow “forced localization,” the policy in which foreign investors must use domestic content in goods or technology.

There are no requirements for foreign Information Technologies (IT) providers to turn over source code, but they need to inform the Ministry of Communication Technologies and Digital Economy about encrypted equipment.

Public companies and institutions are prohibited by the Ministry of Communication Technologies and Digital Economy from freely transmitting and storing personal data outside of the country.

Private and public institutions have to comply with the recommendations of the National Authority for Personal Data Protection (INPDP) when dealing with personal data even if it is business related.

Performance Requirements

Until recently, performance requirements were generally limited to investment in the petroleum sector. Now, such requirements are in force in sectors such as telecommunications and for private sector infrastructure projects on a case by case basis. These requirements tend to be specific to the concession or operating agreement (e.g., drilling a certain number of wells, or producing a certain amount of electricity).

Real Property

Secured interests in property are enforced in Tunisia. Mortgages and liens are in common use, and their recording system is reliable.

Foreign and/or non-resident investors are allowed to lease any type of land, but can only acquire non-agricultural land.

A large portion of privately held lands, especially agriculture lands have no clear titles, and the government is investing a great deal of effort to encourage people to clear and register their properties.

Properties legally purchased have to be duly registered to ensure they remain the property of their actual owners even if they are unoccupied for a long time.

Intellectual Property

Tunisia is a member of the World Intellectual Property Organization (WIPO) and signatory to the United Nations (UNCTAD) Agreement on the Protection of Patents and Trademarks. The agency responsible for patents and trademarks is the National Institute for Standardization and Industrial Property (INNORPI – Institut National de la Normalisation et de la Propriété Industrielle). Tunisia is party to the Madrid Protocol for the International Registration of Marks. Foreign patents and trademarks should be registered with INNORPI.

Tunisia’s patent and trademark laws are designed to protect owners duly registered in Tunisia. In the area of patents, foreign businesses are guaranteed treatment equal to that afforded to Tunisian nationals. Tunisia updated its legislation to meet the requirements of the WTO agreement on Trade-Related Aspects of Intellectual Property (TRIPS).

Copyright protection is the responsibility of the Tunisian Copyright Protection Organization (OTPDA – Organisme Tunisien de Protection des Droits d’Auteur), which also represents foreign copyright organizations.

If a copyright violation is suspected, customs officials are permitted to inspect and seize suspect goods. For products utilizing foreign trademarks registered at INNORPI, the Customs Code allows customs agents to operate throughout the entire country. Tunisian copyright law applies to literary works, art, scientific works, new technologies, and digital works. Its application and enforcement, however, have not always been consistent with foreign commercial expectations. Print, audio, and video media are considered particularly susceptible to copyright infringement. Much smuggling of illegal items takes place through Tunisia’s porous borders.

Resources for Rights Holders

Aisha Y. Salem
Intellectual Property Attaché for the Middle East and North Africa
U.S. Embassy Kuwait City, Kuwait
U.S. Department of Commerce Global Markets
U.S. Patent and Trademark Office
Tel: +965 2259 1455
AmCham Tunisia http://www.amchamtunisia.org.tn/ 
Attorneys list https://tn.usembassy.gov/u-s-citizen-services/local-resources-of-u-s-citizens/attorneys/

Capital Markets and Portfolio Investment

Tunisia’s financial system is dominated by its banking sector, with banks accounting for roughly 90 percent of financing in Tunisia. Overreliance on bank financing impedes faster economic growth and stronger job creation. Equity capitalization is relatively small; Tunisia’s stock market provides 6-7 percent of corporate financing. Other mechanisms such as bonds and microfinance contribute marginally to the overall economy.

Created in 1969, the Bourse de Tunis (Tunis stock exchange) listed 79 companies (66 in the main market, 12 in the alternative market, and one in a special group) as of December 2016. Capitalization of these companies was valued at $10.6 billion. During the last five years, the exchange’s regulatory and accounting systems have been brought more in line with international standards, including compliance and investor protections. The exchange is supervised and regulated by the state-run Capital Market Board. Most major global accounting firms are represented in Tunisia. Firms listed on the stock exchange must publish semiannual corporate reports audited by a certified public accountant. Accompanying accounting requirements exceed what many Tunisian firms can, or are willing to, undertake. GOT tax incentives attempt to encourage companies to list on the stock exchange. Newly listed companies that offer 30 percent percent capital share to the public receive a five-year tax reduction on profits. In addition, individual investors receive tax deductions for equity investment in the market. Capital gains are tax free when held by the investor for two years.

Foreign investors are permitted to purchase shares in resident (onshore) firms only through authorized Tunisian brokers or through established mutual funds. To trade, non-resident (offshore) brokers require a Tunisian intermediary and may only service non-Tunisian customers. Tunisian brokerage firms may have foreign participation, as long as that participation is less than 50 percent. Foreign investment of up to 50 percent of a listed firm’s capital does not require authorization.

Money and Banking System

Tunisia hosts 32 banks, of which 21 conduct both commercial and investment services. Two are Islamic universal banks, seven are offshore, and two are business banks. After the fall of the former regime, companies, banks, and real estate that belonged to ousted President Ben Ali’s family were brought under GOT receivership.

Private credit stands at 65 percent of GDP in Tunisia. According to the World Bank, this level lags behind economic peers such as Morocco and Jordan, whose rate is 80 percent. In the World Bank’s 2017 Ease of Doing Business survey, Tunisia’s raking improved in terms of ease of access to credit from 126 in 2016 to 101 in 2017. According to the IMF Financial System Stability Assessment, the banking sector faces significant challenges such as a weak domestic economy and the legacy of the previous regime. In particular, loan quality, solvency, and profitability have deteriorated. Weak underwriting practices contributed to inappropriate lending to well-connected borrowers. Tunisia’s 25 onshore banks offer essentially identical services targeting the same segment of Tunisia’s larger corporations. Meanwhile, SMEs and individuals often have difficulty accessing bank capital due to high collateralization requirements.

Government regulations hold down lending rates. This prevents banks from pricing their loan portfolios appropriately and incentivizes bankers to restrict the provision of credit. Competition among Tunisia’s many banks has the effect of lowering observed interest rates; however, banks often place conditions on loans that impose far higher costs on borrowers than interest rates alone. These non-interest costs may include collateral requirements that come in the form of liens on real estate. Often, the collateral must equal or exceed the value of the loan principal. Collateral requirements are high as banks face regulatory difficulties in collecting collateral, thereby adding to costs. Nonperforming loans (NPLs) increased to 17 percent in 2016.

Beyond the banks and stock exchange, few effective financing mechanisms are available in the Tunisian economy. A true bond market does not exist, and government debt sold to financial institutions is not re-traded on a formal, transparent secondary market. Private equity remains a niche element in the Tunisian financial system. Firms experience difficulty raising sufficient capital, sourcing their transactions, and selling their stakes in successful investments once they mature. The microfinance market remains underexploited, with non-governmental organization Enda Inter-Arabe the dominant lender in the field.

The GOT established two categories of financial service providers: banking (e.g., deposits, loans, payments and exchange operations, and acquisition of operating capital) and investment services (reception, transmission, order execution, and portfolio management). Non-resident financial service providers must present initial minimum capital (fully paid up at subscription) of 25 million Tunisian dinars ($11.7 million) for a bank, 10 million dinars ($4.7 million) for a non-bank financial institution, 7.5 million dinars ($3.5 million) for an investment company, and 250,000 dinars ($112,000) for a portfolio management company.

Foreign Exchange and Remittances

Foreign Exchange

The Tunisian Dinar can be traded only within Tunisia and it is illegal to move dinars out of the country. The dinar is convertible for current account transactions (remittances of investment capital, earnings, loan or lease payments, royalties, etc.). Central Bank authorization is needed for some foreign exchange operations, however. For imports, Tunisian law prohibits the release of hard currency from Tunisia as payment prior to the presentation of certain documents establishing that the merchandise has physically been shipped to Tunisia.

The Tunisian Central Bank pegs the dinar daily to a basket of currencies (including the Euro, the U.S. dollar, and the Japanese yen) weighted to reflect the relative importance of these currencies in Tunisia’s external trade. The dinar is adjusted in real terms to the fluctuations of these currencies, taking into consideration inflation differentials. The exchange rate is freely quoted by Tunisian banks, which command a slight transaction premium. The Central Bank can intervene in the market to stabilize the currency or relieve pressure on the market. In 2016, the dinar depreciated 12.7 percent against the dollar and 3.2 percent against the Euro.

Non-residents are exempt from most exchange regulations. Under foreign currency regulations, non-resident companies are defined as having:

Non-resident individuals who own at least 66 percent of the company’s capital, and

Capital financed by imported foreign currency.

Foreign investors may transfer funds at any time and without prior authorization. This applies to principal as well as dividends or interest capital. The Procedures for repatriation are complex, however, and within the discretion of the Central Bank. The difficulty in the repatriation of capital and dividends is one of the most recurrent complaints made by foreign investors in Tunisia.

There is no limit to the amount of foreign currency that visitors can bring into Tunisia to exchange for dinar. However, amounts exceeding the equivalent of 25,000 dinars ($10,900) must be declared to customs at the port of entry. Non-residents must also report foreign currency imports if they wish to re-export or deposit more than 5,000 dinars ($2,200). Tunisian customs authorities may require currency exchange receipts on exit from the country.

Remittance Policies

Tunisia’s 2016 Investment Law enshrines the right of foreign investors to freely transfer abroad funds in foreign currency with minimal interference from the Central Bank. The new law instructs the relevant authorities to publish, before October 7, 2017, a list of “administrative authorizations;” i.e., investment transactions requiring Central Bank approval, together with the time periods, procedures, and conditions under which approval shall be granted. Only investment transactions cited on this list will require pre-authorization.

Additionally, the list will include specific deadlines to which regulators must adhere in responding to investors’ requests for remittances. If regulators fail to provide a specific response to an investor within these deadlines, the remittance shall be deemed approved. The list, and its associated implementing decrees and procedures, had not yet been published at the time of this report.

Sovereign Wealth Funds

By decree 85-2011, the GOT established a sovereign wealth fund “Caisse des Depots et des Consignations” (CDC) to boost private sector investment and promote Small and Medium Enterprise (SME) development. It is a state-owned investment entity charged with independently managing a portion of the state’s financial assets. The CDC was set up with support from the French CDC and the Moroccan CDG (Caisse de Depots et de Gestion) and became operational in early 2012. The original impetus for the creation of the CDC was to manage assets confiscated from the former ruling family as independently as possible in order to serve the public interest. More information is available about the CDC at www.cdc.tn .

At the end of 2015, CDC had 5 billion dinars ($2.3 billion) worth of assets and a 200 million dinars ($ 90 million) capital.

All CDC investments are made locally with the objective of boosting investments in the interior regions as well as promoting SME development.

The CDC is governed by a surveillance committee formed by representatives from different ministries and chaired by the Minister of Finance.

State-owned enterprises (SOEs) are still prominent throughout the economy. Many compete with the private sector in industries such as telecom, banking, and insurance. There remain monopolies in other sectors considered sensitive by the government, such as railroad transportation, water and electricity distribution, postal services, and port logistics. Importation of basic staples and strategic items such as cereals, sugar, edible oil, and steel also remain under SOE control.

Senior management officials of SOEs are appointed by the GOT and report to their respective ministries. The board of directors for each SOE comprises representatives from various ministries and public shareholders depending on the relevant sector. Like private companies, SOEs are required by law to publish independently audited annual reports, whether or not corporate capital is publicly traded on the stock market.

The GOT encourages SOEs to adhere to OECD Guidelines on Corporate Governance, but adherence is not enforced. Investment banks and credit agencies tend to associate SOEs with the government and consider them having the same risk profile for lending purposes.

Privatization Program

The GOT allows foreign participation in its privatization program. A significant share of Tunisia’s FDI in recent years has come from the privatization of state-owned or state-controlled enterprises. Privatization has occurred in many sectors, such as telecommunications, banking, insurance, manufacturing, and fuel distribution, among others.

In 2011, the GOT confiscated the assets of the former regime. The asset list touched upon every major economic sector. According to the GOT Commission to Investigate Corruption and Malfeasance, a court order is required to determine the ultimate handling of frozen assets. Since court actions frequently take years – and with the government facing immediate budgetary needs – the GOT allowed privatization bids for shares in Ooredoo (telecom), Ennakl (car distribution), Carthage Cement (cement), City Cars (car distribution), and Banque de Tunisie (banking). The GOT does not exclude the possibility of selling shares in these companies on the “Bourse de Tunis,” Tunisia’s stock exchange, in its efforts to cope with budget constraints, upgrade the banking sector, and increase foreign reserves. The government is expected to sell some of its stakes in state-owned banks; however, no clear plan has been officially adopted or communicated so far.

There is no comprehensive national policy on responsible business conduct, although there is increasing awareness among the government, NGOs, and private companies. Tunisia is an adherent to the OECD Guidelines for Multinational Enterprises.

Since 1989, the public sector has been subject to a government procurement law that requires labor, environmental, and other impact studies for large procurement projects. All public institutions are also subject to audits by the Court of Auditors (Cour des Comptes).

The Tunisian Central Bank adopted a circular in 2011 setting guidelines for sound and prudent management, guaranteeing and safeguarding the interests of shareholders, creditors, depositors and staff. The circular also established policies on recruitment, appointment and remuneration, as well as dissemination of information to shareholders, depositors, market counterparts, regulators, and the general public.

The emerging role of non-government organizations in Tunisia, notably in human rights, environmental protection, consumer rights, labor unions, and employer unions has redefined the role of Tunisian businesses to include social responsibility.

The national point of contact for OECD for Multinational Enterprises guidelines is:

Mr. Abdelmajid Mbarek, Director
Ministry of Development, Investment, and International Cooperation
Avenue Mohamed V
1002 Tunis
Tel: +216 7184 9596
Fax: +216 7179 9069
Email: a.mbarek@mdci.gov.tn

Tunisia has not yet joined the Extractive Industries Transparency Initiative (EITI). Tunisia did participate in the 7th world conference of the EITI in Lima, Peru. Projects related to commercial development of oil, natural gas, or minerals are subject to Parliamentary approval.

Tunisian and U.S. businesses with regional experience indicate that corruption exists, but may not be as pervasive as that found in neighboring countries. U.S. investors report that corrupt practices involve routine procedures for doing business (customs, transportation, and some bureaucratic paperwork). These behaviors, however, do not appear to pose a significant barrier to doing business in Tunisia. Transparency International’s Corruption Perceptions Index 2016 gave Tunisia a score of 41 out of 100 and a rank of 75 among 175 countries. Regionally, Tunisia is ranked 9th among MENA countries and first in North Africa, ahead of Morocco, Algeria, Egypt, and Libya. Most U.S. firms involved in the Tunisian market do not identify corruption as a primary obstacle to foreign direct investment.

Tunisia’s penal code devotes 11 articles to defining and classifying corruption and assigns corresponding penalties (including fines and imprisonment). Several other regulations also address broader concepts of corruption. Detailed information on the application of these laws and their effectiveness in combating corruption is not publicly available, and there are no GOT statistics specific to corruption. The Independent Commission to Investigate Corruption, created in 2011, handled corruption complaints from 1987-2011. The commission referred 5 percent of cases to the Ministry of Justice. In 2012, the commission was replaced by the National Authority to Combat Corruption, which has the authority to forward corruption cases to the Ministry of Justice, give opinions on legislative and regulatory anti-corruption efforts, propose policies and collect data on corruption, and facilitate contact between anti-corruption efforts in the government and civil society.

In February 2017 the Parliament passed a new law (#2017-10) on corruption reporting and whistleblower protection. The law is considered a significant step in the fight against corruption, as it establishes the mechanisms, conditions, and procedures for denouncing corruption. Article 17 of the law provides protection for whistleblowers, and any act of reprisal against them is regarded as a punishable crime.

For public servants, the new law also guarantees that whistleblowers are protected against possible retaliation by their superiors.

Recent government efforts to combat corruption include: the seizure and privatization of assets belonging to Ben Ali’s family members; assurances that price controls on food products, gasoline, etc., are respected; enhancement of commercial competition in the domestic market; establishment of a division within the Prime Minister Office dedicated to the fight against corruption; and harmonization of Tunisian laws with those of the European Union.

Since 1989, a comprehensive law designed to regulate each phase of public procurement has governed the public sector. The GOT also established the Higher Commission on Public Procurement (CSM – Commission Supérieure des Marchés publics) to supervise the tender and award process for major government contracts. The government publicly supports a policy of transparency. Public tenders require bidders to provide a sworn statement that they have not and will not, either themselves or through a third party, make any promises or give gifts with a view to influencing the outcome of the tender and realization of the project. Despite the law, competition on government tenders appears susceptible to corruptive behavior. Pursuant to the Foreign Corrupt Practice Act (FCPA), the U.S. Government requires that American companies requesting U.S. Government advocacy certify that they do not participate in corrupt practices.

Resources to Report Corruption

Contact at GOT agency responsible for combating corruption:

Mr. Chawki Tabib
The National Anti-Corruption Authority (Instance Nationale de Lutte Contre la Corruption – INLUCC) http://www.inlucc.tn 
71 Avenue Taieb Mhiri, 1002 Tunis Belvédère – Tunisia
+216 71 840 401 / Toll Free: 80 10 22 22

Contact at “watchdog” organization:

Mr. Achraf Aouadi
I WATCH Tunisia
14 Rue d’Irak 1002 Lafayette, Tunisia
+ 216 71 844 226

Tunisia has a history of political stability. Incidents involving politically-motivated damage to economic projects or infrastructure are extremely rare. In December 2010 and January 2011, however, civil unrest in the underserved interior regions eventually forced former President Ben Ali to flee Tunisia on January 14, 2011.

Post-revolution instability in 2013, including two high profile political assassinations, resulted in widespread public protests. Political calm was restored in early 2014 with the successful conclusion of Tunisia’s National Dialogue; a new constitution; and the installation of an interim, technocratic government that paved the way for free and fair parliamentary and presidential elections at the end of that year. The next national-level elections are scheduled to take place in 2019; local elections will take place before that; they are scheduled for December 2017.

Two major terrorist attacks targeting the tourism sector occurred in 2015, killing dozens of foreign tourists at the Bardo National Museum in Tunis and a beach hotel in Sousse. Travelers are urged to visit www.travel.state.gov for the latest travel alerts and warnings regarding Tunisia. In addition, a presidential guard bus was bombed by terrorists in Tunis in November 2015, and the border town of Ben Guerdan in south Tunisia was attacked by armed militants in March 2016.

Tunisia has a highly literate labor force of approximately 3.9 million. The official 2016 unemployment rate was 15.5 percent; however, unemployment is estimated at over 30 percent among university graduates. Official statistics do not count underemployment or provide disaggregated data by geography.

In order to keep the unemployment rate at current levels, 60,000 new private sector jobs must be created each year. Over the past two decades, the structure of the workforce remained relatively stable, and as of the last quarter of 2016 stood at 15 percent agriculture and fishing, 33 percent industrial, and 52 percent commerce and services. Tunisia has successfully developed its industrial sector and created low-skilled employment, but has been unable to absorb educated entrants into the job market.

The right of labor to organize is protected by law. Currently, four national labor confederations operate in Tunisia. The oldest and largest is the General Union of Tunisian Workers (UGTT – Union Générale des Travailleurs Tunisiens). Three newer ones are the General Confederation of Tunisian Workers (CGTT – Confederation Générale des Travailleurs Tunisiens), the Tunisian Labor Union (UTT – Union Tunisienne du Travail), created in May 2011, and the Tunisian Labor Organization (OTT – Organisation Tunisienne du Travail), created in August 2013. UGTT claims about one third of the salaried labor force as members, although more are covered by UGTT-negotiated contracts. Wages and working conditions are established through triennial collective bargaining agreements between the UGTT, the national employers’ association (UTICA – Union Tunisienne de l’Industrie, du Commerce et de l’Artisanat), and the GOT. These tripartite agreements set industry standards and generally apply to about 80 percent of the private sector labor force, regardless of whether individual companies are unionized.

The most recent private sector wage increase agreement was signed in March 2017 and stipulates an increase of 6 percent. An emboldened labor movement has also increased its demands for private sector reforms. Labor unrest is still an issue although at a smaller scale than in 2011 and 2012. The official national minimum monthly wage (based on 40 hour/week) in the industrial sector is 302.75 dinars (~$150), and 348 dinars (~$175) for a 48 hour week.

In December 2016, the GOT and UGTT reached a wage increase agreement in the public sector that enters into force starting January 2017.

The Overseas Private Investment Corporation (OPIC) has been active in the Tunisian market since 1963. OPIC provides political risk insurance and financing to U.S. companies. OPIC has designed a number of investment funds that include Tunisia. These funds cover, among other sectors, franchising and small and medium enterprise development. OPIC supports private U.S. investment in Tunisia and has sponsored several reciprocal investment missions. In 2015, OPIC signed a credit guarantee facility agreements totaling $50 million with three Tunisian banks to increase access to capital for SMEs.

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) ($M USD) 2015 43,141 2015 43,020 www.worldbank.org/en/country 
Foreign Direct Investment Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2016 4.04 2015 311 BEA data available at http://bea.gov/international/direct_investment_
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2015 17 BEA data available at http://bea.gov/international/direct_investment_
Total inbound stock of FDI as % host GDP 2015 2.32% N/A N/A N/A

* Source: Tunisia’s Foreign Investment Promotion Agency (FIPA) End 2015 and End 2016.

Table 3: Sources and Destination of FDI

Direct Investment from/in Tunisia in 2016 (excluding energy)
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward 510.85 100% Total Outward Amount 100%
France 169.75 33.2% N/A
Germany 72.43 14.2% N/A
UK 42.85 8.4% N/A
Libya 37.86 7.4% N/A
Qatar 27.73 5.4% N/A
“0” reflects amounts rounded to +/- USD 500,000.

* Source: Tunisia’s Foreign Investment Promotion Agency (FIPA), yearend 2015 and yearend 2016.

Table 4: Sources of Portfolio Investment

Tunisia was not covered by the IMF’s Coordinated Portfolio Investment Survey (CPIS).

Portfolio Investment Assets in Tunisia in 2016
Top Five Partners (Millions, US Dollars)
Total Equity Securities Total Debt Securities
All Countries 40.89 100% All Countries Amount 100% All Countries Amount 100%

* Source: Tunisia’s Foreign Investment Promotion Agency (FIPA), yearend 2015 and yearend 2016.

Embassy Tunis Commercial Section
Commercial Officer
U.S. Embassy Tunis, Les Berges du Lac, 1053, Tunisia
+216 71 107 000

2017 Investment Climate Statements: Tunisia
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The Lessons of 1989: Freedom and Our Future