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Cablegate: Corrected Mauritius: 2010 Investment Climate Statement

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R 041230Z FEB 10



E.O. 12958: N/A

REF: STATE 124006

1. Per reftel request, Post submits the following 2010 Investment
Climate Statement for Mauritius. Please note that the exchange rate
used throughout the report is (i) 2007: USD 1 = MRs 32, (ii) 2008:
USD 1 = MRs 29, and (iii) 2009: USD 1 = MRs 32.50. (Mauritius
Rupees = MRs).

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2. Mauritius is among the most competitive and successful economies
in Africa and actively seeks foreign investment. The World BankQs
2010 Doing Business report ranks Mauritius 17th among the 183
economies covered by the report and first in Africa for the second
year in a row in terms of overall ease of doing business. In three
years Mauritius has moved from the 49th (2006) to the 17th place
(2009). Mauritius is praised in the report for its continued
efforts in the past year to improve the business climate with the
adoption of a new insolvency law, the establishment of a specialized
commercial division within the courts, the easing of property
transfers, and the expediting of trade processes. The governmentQs
objective is for Mauritius to rank among the top ten most investment
and business friendly locations in the world.

3. The World Economic ForumQs 2009-2010 Global Competitiveness
Report places Mauritius second in Africa (after South Africa) and
57th in the world in terms of competitiveness. The report lauded
Mauritius as Qa country characterized by strong and transparent
public institutions, with clear property rights, strong judicial
independence, and a security that is good by regional standards.

4. ECONOMIC REFORM: MauritiusQ economy suffered at the turn of the
millennium as longstanding trade preferences in textiles and sugar,
which were the foundation of its growth strategy, were phased out.
The government which took office in 2005 embarked on a bold economic
reform program aimed at opening up the economy, facilitating
business, improving the investment climate, and mobilizing foreign
direct investment (FDI) and expertise. The reforms have resulted in
a strong and balanced growth across all sectors of the economy and
have spurred foreign investment to record levels.

5. Mauritius witnessed three years of robust economic growth between
January 2006 and December 2008. In 2008, Gross Domestic Product
(GDP) was close to USD 9 billion, with a GDP growth rate of 5.3% and
a per capita income of USD 7,000, one of the highest in Africa.
However, the Mauritian economy, which demonstrated remarkable
resilience in 2008, started to feel the impact of the global crisis
at the beginning of 2009, resulting in a decelerated growth rate of
2.8 percent for the year. However, following the recent signs of
recovery in the world economy, GDP growth is forecast to recover to
4.3 percent in 2010. By 2011, the economy is expected to return to
its pre-crisis growth of more than five percent.

6. FDI, which averaged USD 33 million annually for the two decades
ending in December 2005, has risen to USD 280 million since 2006.
Following the reforms initiated in 2006, Mauritius has attracted
more than USD 1 billion from foreign investors. In 2009, FDI is
estimated at close to USD 280 million.

7. BUSINESS FACILITATION: The GOMQs policy since 2005 has been to
open the economy and streamline administrative procedures for people
to come, work, and live in Mauritius. The Business Facilitation Act
of 2006 simplified the business licensing process with respect to
starting a business and allowed businesses to start operations
within three days of incorporation. Also, residence permits and
work permits for foreign investors, entrepreneurs, and professionals
have been combined into what is called an occupation permit, which
is now processed within three working days.

8. Investment in Mauritius is governed by the Investment Promotion
Act of 2000. Investment regulations are consistent with the WTO's
Agreement on Trade Related Investment Measures (TRIMS). The GOM
does not discriminate between local and foreign investment.
Businesses can be conducted locally in several forms: under a
self-employed activity, as a partnership with Mauritian nationals,
or a 100 percent foreign-owned company under the Companies Act. For
a limited number of regulated activities in such sectors as tourism,
sugar, and broadcasting, an application for the appropriate permit
or license must be made to the competent authorities prior to start
of operations. For such activities, investors should seek advice
from the Board of Investment (

9. The Board of Investment (BOI) acts as a one-stop focal agency for
business registration. BOI acts as the facilitator for all forms of
investment in Mauritius and guides investors through the necessary
processes for doing business in the country. Before starting
operations, businesses must register with the Registrar of
Companies. Regulations governing incorporation are contained in the
Companies Act of 2001. After receipt of a certificate of
incorporation from the Registrar of Companies, all companies must
register their business activities with the BOI to be able to apply
for occupation permit and other facilities offered to investors.

10. INVESTMENT OPPORTUNITIES: Mauritius has realized a remarkable
economic transformation from a mono-crop economy based on sugar
production to a diversified economy driven by export-oriented
manufacturing, tourism, and financial and business services sectors.
In recent years, Information and Communication Technology (Business
Process Outsourcing, call centers, software development),
Hospitality and Property Development (commercial malls, luxury
villas, and international flagship hotels), the Seafood and Marine
Industry (fish farm, tuna fishing and canning, and seafood
processing) and the Biomedical Industry (medical devices,
pharmaceutical products, multi-specialty hospitals) have emerged,
attracting substantial investment from both local and foreign

11. In addition, Mauritian authorities have identified a number of
projects in the following sectors for implementation in the next few
years: (i) agri-business and biotechnology (refined sugar, ethanol,
food crop production --potato, corn, soya bean--food processing,
dairy products and livestock),(ii) renewable energy and environment
--wind, bagasse (sugar cane fibrous residue),solar, cold sea water
for air conditioning, and waste-to-energy projects (ii) medical
tourism (medical, surgical and diagnostic packages to the one
million English and French speaking tourists currently visiting
Mauritius) (iv) bio-medical research and clinical trials and (v)
knowledge-based industries (foreign universitiesQ campuses in
Mauritius, distance education, e-learning, vocational and technical

12. The location of Mauritius, situated in the Indian Ocean between
Africa, Asia, and Australia, offers a successful business base for
both regional and international trade. U.S. companies can use
Mauritius as a platform to tap regional markets through Mauritius
membership in the Southern African Development Community (SADC) and
the Common Market for Eastern and Southern Africa (COMESA), which
offer preferential access to a market of 380 million consumers.
Mauritius also has a free trade agreement with Pakistan and is
negotiating one with Turkey. It is also in the process of
finalizing a Comprehensive Economic Cooperation and Partnership
Agreement with India.

Year Index Ranking
2010 World Bank Doing Business 17
2009 TI Corruption 42
2009 Heritage Economic Freedom 18

Conversion and Transfer Policies
13. The GOM abolished foreign exchange controls in 1994.
Consequently, no approval is required for the repatriation of
profits, dividends, and capital gains earned by a foreign investor
in Mauritius. In general, businesses have no difficulty obtaining
foreign exchange.

14. The exchange rate is market-determined, but the market is
dominated by a small number of institutions. The Central Bank
occasionally intervenes to stabilize the market. There is
convertibility on both capital and current accounts. Settlement can
be done in foreign currency, and foreign currency accounts can be
opened in Mauritius. There is no legal parallel market in Mauritius
for investment remittances.

15. Mauritius has a well-developed and modern banking system. At
the end of October 2009, net international reserves amounted to
close to USD 3 billion, representing an import cover of close to 41
weeks. Between June and December 2009, reflecting international
trends and reduced domestic imports, the Mauritian rupee appreciated
by 8.5 percent against the U.S. dollar, the pound sterling, and the

Expropriation and Compensation
16. Legislative guarantees against nationalization exist and are
respected. The GOM has never nationalized an industry.

Dispute Settlement
17. An entity formed through a joint venture between a local company
and a U.S. investor, has been engaged in a lengthy dispute (since
2005) with Mauritius Telecom, its cellular subsidiary, Cellplus (now
called Orange), and the former Telecommunications Authority, over
allegations of unfair competitive practices by Mauritius Telecom and
Orange. The case remains in the courts. There has not been any
expropriation of private assets in Mauritius thus far. Mauritius is
a member of the International Center for the Settlement of
Investment Disputes and the Multilateral Investment Guarantee Agency
of the World Bank.

18. The Mauritian legal system is largely based on English common
law and French civil law. A Commercial Court was set up in early
2009 to expedite the settlement of commercial disputes. The
domestic legal system is generally non-discriminatory and
transparent. Members of the judiciary are independent of the
legislature and the government. The highest court of appeal is the
judicial committee of the Privy Council of England. Mauritius is a
member of the International Court of Justice.

Performance Requirements and Incentives
19. The investment code is in line with the WTO's Agreement on Trade
Related Investment Measures. A foreign investor, a professional
under a contract of employment, or a self-employed person may apply
for work and residence permits if the following conditions are met:
(i)Investor: the proposed business activity should generate an
annual turnover exceeding MRs 3 million (approx. USD 93,000) (ii)
Professional: the basic monthly salary should exceed MRs 30,000
(approx. USD 925); and (iii) Self-employed: the annual income from
the proposed business activity should exceed MRs 600,000 (approx.
USD 18,500). An investor may subsequently apply for permanent
residence status if his/her business activity generates an annual
turnover exceeding Rs 15 million (approx. USD 462,000) during the
first three years. In the case of self-employed persons, the
business activity should generate an annual income exceeding Rs 3
million (approx. USD 93,000). Foreign nationals can acquire property
for business purposes.

20. Investment incentives are applied uniformly to both domestic and
foreign investors. Mauritius offers a low tax jurisdiction: (i) a
flat corporate and income tax rate of 15 percent, (ii) tax free
dividends, (iii) no capital gains tax,(iv) up to 100 percent foreign
ownership, (v) exemption from customs duty on equipment, (vi) free
repatriation of profits, dividends, and capital, (vii) no minimum
foreign capital required, (viii) 50 percent annual allowance on
declining balance for the purchase of electronic and computer
equipment; and (ix) an extensive tax treaty network with several

21. Moreover, the government has set up the Integrated Resorts
Scheme (IRS) to attract high net worth non-citizens desiring to
acquire an immoveable property of not less than USD 500,000 in
Mauritius (within a resort approved by the BOI) for personal
residence. The Real Estate Scheme (RES) introduced in 2007 allows
non-citizens to acquire a residence with no minimum price set. The
investor and his/her spouse and dependents are granted resident
permits to live in Mauritius when a residential property is acquired
for a price exceeding USD 500, 000. More detailed information on the
incentives is available on BOIQs website:

Right to Private Ownership and Establishment
22. Under the Non-Citizens (Property Restriction) Act, a non-citizen
investor may acquire property in Mauritius with the prior approval
of the Prime Minister. However, the Prime MinisterQs approval is
not required when the property is acquired (i) under a lease
agreement not exceeding 20 years, (ii) under the Integrated Resort
Scheme or Real Estate Scheme for the purchase of a villa, (iii)
under the Invest-Hotel Scheme for the acquisition of a hotel room,
or (iv) when the investor has obtained approval from the Board of
Investment to acquire property for use in his/her business.

Protection of Property Rights
23. Property rights are respected. Mauritius maintains a
sophisticated and impartial legal system based on both Napoleonic
code and British common law. The system protects all tangible
property. Intellectual property rights are protected by the
Copyrights Act of 1997 and the Patents, Industrial Designs and Trade
Marks Act of 2002, which are in line with international norms.
Mauritius is a member of the World Intellectual Property
Organization (WIPO) and party to the Paris and Bern conventions for
the protection of industrial property and the Universal Copyright

24. The Patents, Industrial Designs and Trade Marks Act of 2002 was
introduced by the government, in part, as a response to the rise in
the production and trade of counterfeit goods, such as Ralph Lauren
shirts. In 2004, Polo Ralph Lauren (PRL) successfully sued local
manufacturers and retailers of PRL counterfeit products in Mauritian
courts, which resulted in the closure of the counterfeit operations.
In December 2008, the Supreme Court ruled in favor of PRL lawyer by
ordering Customs to seize PRL products imported by a local
businessman without PRLQs authorization. In December 2009, Nike and
Adidas lodged a legal action at the Supreme Court against a local
businessman, who imported 2,000 pair of shoes suspected of being
counterfeit goods. Mauritius Customs has seized the goods and the
case will be heard in March 2010.

25. The new trademark and patent laws comply with the WTO's Trade
Related Aspects of Industrial Property Rights (TRIPS) agreement and
protects designs, brands, and technological inventions. Also, the
law dictates that well-known international trademarks are protected,
whether they are registered in Mauritius or not. A trademark is
initially registered for 10 years and may be renewed for successive
periods of 10 years. A patent is granted for 20 years and cannot be

26. The Police, Customs and Judicial authorities have effectively
enforced trademark and copyright protection of firms like Polo Ralph
Lauren and legitimate distributors of Bollywood films that have
established a legal or commercial presence in Mauritius. However,
U.S. and European producers and distributors of cinema and software
have in general not established any representation in Mauritius and
protection of their copyrights and intellectual property is
practically non-existent. According to a leading IPR law firm, the
Police would take action against IPR infringements only in cases
where the IPR owner has an official representative in Mauritius
because the Court would require a representative to testify that the
products seized are counterfeit. According to the PoliceQs Anti
Piracy Unit, IPR infringement could be curtailed substantially if
the law is amended to put the burden of proof on the seller rather
than on prosecution. The Customs Department also requires right
holders or authorized users to register their trademarks and
copyrights with its office in order to take action to protect their
marks/copyrights at the borders of Mauritius. Application forms for
registration can be downloaded from the Mauritius Revenue
Authority/CustomsQ website:

27. WIPO has recently prepared an Intellectual Property Development
Plan for Mauritius, which recommends, inter alia, the revision of
some existing legislation to strengthen IPR laws and enforcement.
The new legislation has not been finalized yet.

Transparency of the Regulatory System
28. Mauritius has built its success on a free market economy.
According to the 2009 Index of Economic Freedom of the U.S. based
Heritage Foundation Wall Street Journal, Mauritius leads Sub-Saharan
Africa in economic freedom and is ranked 18th worldwide. With a
well-developed legal and commercial infrastructure and a long
tradition of entrepreneurship and representative government,
Mauritius is one of the developing world's most successful
democracies. Mauritius also has a long-standing tradition of
government and private sector dialogue which allows the private
sector to effectively voice its views on the development strategy of
the country. The Joint Economic Council, the coordinating body of
the Mauritian private sector, is a key vehicle in this regard.

29. During the last four years, the government brought radical
reforms to trade, investment, tariff, and income tax regulations to
simplify the framework for doing business. Trade licenses and many
other bureaucratic hurdles were abolished.

30. Companies in Mauritius are regulated by the Companies Act of
2001, which incorporates international best practices and promotes
accountability, openness, and fairness. In order to combat money
laundering and terrorist financing, the government also enacted the
Prevention of Corruption Act, the Prevention of Terrorism Act, and
the Financial Intelligence and Anti-Money Laundering Act.

31. PUBLIC PROCUREMENT ACT 2006: A Central Procurement Board,
established under the Public Procurement Act 2006, oversees all
forms of procurement by public bodies. The Procurement Policy Office
is responsible for formulating policies and issuing directives for
the operation of a transparent and efficient public procurement
system. According to the Procurement Act, a bidder or potential
bidder can challenge the procurement proceedings of a public body at
any stage and request the Chief Executive Officer of the public body
to consider his complaint and, where appropriate, take remedial
action. Appeals may be brought against the decisions of a Chief
Executive Officer to an Independent Review Panel. A simplified
two-tier process, therefore, is available to unsatisfied persons to
seek remedy.

32. COMPETITION ACT 2007: In December 2007, the National Assembly
adopted a Competition Bill to promote competition, prevent
monopolistic pricing, and restrict collusion in consumer markets.
The Competition Act 2007 was proclaimed and became effective on
November 25, 2009 and the Competition Commission is now fully
operational. Monopoly, and more generally, collusion between
suppliers are prevalent in the domestic economy. The Competition
Commission started its first enquiries in mid-December 2009.

--------------------------------------------- ----
Efficient Capital Markets and Portfolio Investment
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33. With its well-developed financial services sector, Mauritius
aims to become a regional financial center. The financial system has
not been involved in sub-prime lending or any activity deriving
directly or indirectly from that asset class. As a result, the
government has not had to intervene to bail out any bank. The sector
is well regulated and has proven to be quite solid and highly
profitable. It has ample liquidity to meet the financing needs of
the economy.

34. The Stock Exchange of Mauritius (SEM) has done quite well in
terms of the volume of transactions, the number of listed companies,
market capitalization, and the fairness and efficiency of its
operations since its launch in 1989. In December 2009, the Stock
Exchange of Mauritius had 38 companies listed on the Official Market
and 49 companies on the Development and Enterprise Market which is
designed for small and medium enterprises. Market capitalization
grew from USD 92 million in 1989 to about USD 4.6 billion in
December 2009. The SEM is a member of the World Federation of
Exchanges, which reports that the SEM adheres to industry business

35. In November 2007, the SEM was included in the new Morgan Stanley
Capital International (MSCI) Frontier Markets Indices which are
designed to track the performance of a range of equity markets that
are now more accessible to global investors. Mauritius was among
four countries in Africa to be included in the new indices. The SEM
has also been included in the DOW Jones SAFE 100 Index which was
launched in March 2009 by the South Asian Federation of Exchanges
(SAFE). The DOW Jones SAFE 100 Index measures the performance of
the 50 largest stocks trading in India and the 50 largest stocks
trading in 4 other countries, including Mauritius.

36. The Mauritius stock market was opened to foreign investors
following the lifting of the foreign exchange controls in 1994. No
approval is required for the trading of shares by foreign investors
unless investment is for the purpose of legal and management control
of a Mauritian company or for the holding of more than 15 percent in
a sugar company. Incentives to foreign investors include free
repatriation of revenue from the sale of shares and exemption from
tax on dividends and capital gains.

37. Mauritius has an active offshore financial (now called global
business) sector, which is a major route for foreign investments
into the Asian sub-continent. Mauritius is by far the largest
source of FDI and portfolio investment in India, estimated at close
to USD 43 billion for the period April 2000-September 2009, which
accounts for 44 percent of the total FDI inflows into India. Major
U.S. corporations use the Mauritius offshore sector to channel their
investment to India. These investments are mainly attracted by a
particularly favorable Double Taxation Avoidance Treaty (DTAT) which
exists between Mauritius and India. By January 2010, Mauritius had
DTATQs with a total of 37 countries, including China, Malaysia,
Singapore, South Africa, U.K, France, Germany, Kuwait, and U.A.E.

38. Mauritius has a relatively sophisticated banking sector with 18
banks currently licensed to undertake banking business. The Banking
Act of 2004 provides for banking business to be conducted under a
single banking license regime. Accordingly, all banks are free to
conduct business in all currencies, including the Mauritian rupee.
There are also several non-bank financial institutions which are
authorized to conduct deposit-taking business.

39. The banking system is highly concentrated with two
long-established domestic and two international banking groups
dominating, holding between them 70 percent of all banking assets.
Foreign banks present in Mauritius include the Hong Kong and
Shanghai Banking Corporation (HSBC), Barclays Bank, Bank of Baroda,
Habib Bank, Banque des Mascareignes, PT Bank International
Indonesia, Deutsche Bank, Standard Bank, Standard Chartered Bank,
and Investec Bank.

40. The banks focus mostly on trade financing and on provision of
working capital. Accounts may be opened in all major currencies as
well as the Mauritian rupee. Several commercial banks offer
card-payment services, such as credit and debit cards and direct
debits. Other facilities, including phone banking, home banking,
internet banking, and PC banking, are also provided by some banks.
Commercial banks offer spot and forward transactions in all major

41. Commercial banks have diversified into non-banking business
through subsidiaries and affiliates. Banks are engaged in the
provision of leasing, stock brokering, asset and fund management,
investment and private banking business, insurance agency, and
portfolio and custodial management. As of October 2009, commercial
banks' total assets amounted to approximately USD 23 billion.

42. The Bank of Mauritius, the Central Bank, carries out the
supervision and regulation of banks as well as non-bank financial
institutions authorized to accept deposits. A new Bank of Mauritius
Act, which strengthened the central bankQs institutional framework
as well as its supervisory powers, was enacted in October 2004. It
also has the power to establish prudential safety and soundness
standards and regulations, and does so primarily by issue of
Guidelines/Guidance Notes. The Central Bank has endorsed the Core
Principles for Effective Banking Supervision as set out by the Basel
Committee on Banking Supervision. In July 2009, the Bank of
Mauritius Act was amended to provide for the setting up of a
Financial Stability Committee comprised of the Central Bank, the
Financial Services Commission and the Ministry of Finance to review,
on a regular basis, the soundness of the financial system.

Competition from State-Owned Enterprises
43. The government policy is to act as a facilitator to business,
leaving production to the private sector. The government, however,
still controls key utility services directly or through para-state
companies, including electricity, water, waste water, postal
services, and television broadcasting. The government also controls
the import of what it deems to be strategic products such as rice
(only non-basmati or other non-luxury rice), wheat flour, petroleum
products, and cement through the State Trading Corporation.

44. The government also has controlling shares in the State Bank of
Mauritius, Air Mauritius (the national airline), and the Mauritius
Telecom. These state-controlled companies have a Board of Directors
on which seats are allocated to senior government officials. The
Chairperson is generally nominated by the government. However, they
are required by law to publish an annual report and their books are
submitted to independent audit. They also are subject to the same
corporate social responsibility as private firms.

Corporate Social Responsibility
45. The Government of Mauritius has established a policy whereby all
profitable firms are required to either spend two percent of their
profits on Government-approved activities/programs which contribute
to the social and environmental development of Mauritius or transfer
the funds to the Government to be used for social investment.

46. Approved areas of activities include eradication of poverty,
vocational training for vulnerable groups, promotion of human
rights, support to the disabled and the elderly, women empowerment,
small enterprise development, support to vulnerable children and
youth, rehabilitation of drug addicts, protection and preservation
of the environment, health and nutrition, leisure and sports, and
promotion of arts and crafts. All projects are reviewed by a
National Corporate Social Responsibility Committee.

47. Major corporate groups in Mauritius have begun to implement in
partnership with Non-Governmental Organizations a number of projects
related to social housing, health, education and training, leisure
and sports, environmental protection, and sustainable development.
There is greater awareness on the part of private companies for the
need to be accountable to the community. Firms which undertake
corporate social responsibility projects are viewed favorably.

Political Violence
48. Mauritius has a long tradition of political and social stability
and is internationally recognized for its well-established
democracy. Inter-ethnic tensions, however, led to four days of
rioting in February 1999, following the death in police custody of a
popular minority singer. Governments since then have sought to calm
ethnic tensions and stress national unity.

49. Civil unrest and political violence are uncommon. General
elections in 2000 and 2005 brought a change in government in each
case and passed off without incident. The next general elections are
expected to be held in 2010.

50. In 2009, Mauritius ranked 42nd worldwide and 2nd in Africa
(after Botswana), with a score of 5.4 on Transparency
InternationalQs Corruption Perceptions Index. The index examines
perceptions of public-sector corruption in 180 countries. It scores
countries from zero, which indicates the highest level of perceived
corruption, to ten, the lowest level. Mauritius is one of only three
Sub-Saharan countries to score over 5, indicating that corruption is
not seen as a widespread problem.

51. In 2002, the government adopted the Prevention of Corruption
Act, which led to the setting up of an Independent Commission
Against Corruption (ICAC). ICAC has the power to detect and
investigate corruption and money laundering offenses and can also
seize the proceeds of corruption and money laundering.

Bilateral Investment Agreements
52. In September 2006, Mauritius and the United States signed a
Trade and Investment Framework Agreement (TIFA), aimed at
strengthening and expanding trade and investment ties between the
two countries. The TIFA Council, comprising of representatives from
both governments, held its first meeting in Mauritius in February
2007. The Second Annual Council Meeting took place in April 2008 in
Washington, D.C., while Mauritius hosted the Third Annual Meeting in
April 2009. Mauritius also has an investment incentive agreement
with the Overseas Private Investment Corporation (OPIC), while the
first round of negotiations for a Bilateral Investment Treaty (BIT)
between the United States and Mauritius took place during the first
week of 2010.

53. Mauritius has signed Investment Promotion and Protection
Agreements with the following 35 countries: Barbados, Belgium,
Luxemburg, Benin, Botswana, Burundi, Cameroon, Chad, China, Comoros,
the Czech Republic, Finland, India, Indonesia, France, Germany,
Ghana, Guinea, Madagascar, Mauritania, Mozambique, Nepal, Pakistan,
Portugal, Republic of Korea, Romania, Rwanda, Senegal, Singapore,
South Africa, Swaziland, Sweden, Switzerland, U.K., Zimbabwe, and
Tanzania. Agreements with the following countries are awaiting
signature: Chile, Egypt, Ethiopia, Lesotho, Malawi, Turkey, Uganda,
and Qatar.

OPIC and Other Investment Insurance Programs
54. Mauritius is eligible for the full range of OPIC's investment
insurance programs. It is also a member of the Multilateral
Investment Guarantee Agency.

55. As of September 2009, Mauritius had a total labor force of
569,400, including 357,700 males and 211,700 females. Total
employment stood at 527,300, including 21,000 foreign workers,
mainly from China, India, Madagascar, Sri Lanka, Bangladesh, and
South Africa, and mostly employed in textile factories but also in
construction, tuna canning, and hotel and catering sectors. The
unemployment rate, which reached 8.5 percent in 2007, fell to 7.4
percent in 2009, representing about 42,100 unemployed.

56. The GOM administratively establishes minimum wages, which vary
according to the sector of employment, through the National
Remuneration Board (NRB), and it mandates minimum wage increases
annually based on inflation. However, most trade unions negotiate
wages higher than those set by the NRB. The NRB issues Remuneration
Orders for more than 90 percent of the workforce in the private

57. In February 2009, the Employment Rights Act and the Employment
Relations Act came into force. Their main objectives are to revise
and consolidate the existing labor and industrial relations laws
which date back to over 30 years and to liberalize the labor market
and enhance the effectiveness of collective bargaining. The new
legislation also provides for the introduction of a Workfare Program
under which workers who have been laid off will benefit from
government financial assistance for up to twelve months and
opportunities for training to increase their employability.

58. Wages are low by Western standards but high by most Asian and
African standards. Factory workers in export-oriented enterprises
generally earn between USD 200-USD 250 per month. Middle managers
earn between USD 700 and USD 1,000 per month. Fringe benefits,
including transport and meal allowances, paid leave, and bonuses,
represent about 25 to 30 percent of the basic wages of employees.

59. While Mauritius has an active trade union movement,
labor-management relations are generally good. Unionized workers,
which account for less than 25 percent of the workforce, act
responsibly and rarely disrupt business. There has not been a major
strike since 1979. Under current legislation, unions have the legal
right to strike. However, the government seeks to preempt strikes
through a system which promotes settlement through negotiation or
arbitration by the Employment Relations Tribunal and the National
Remuneration Board.

60. Workers' rights are protected under the Employment Rights Act
2008. Mauritius participates actively in the annual ILO conference
in Geneva and adheres to ILO conventions protecting worker rights.

Foreign Trade Zones/Free Trade Zones
61. The Mauritius Freeport (free-trade zone) was established in 1992
as a customs-free zone for goods destined for re-export. The
government's objective is to promote the country as a regional
warehousing, distribution, marketing, and logistics center for
Eastern and Southern Africa and the Indian Ocean rim. Through its
membership in the Common Market for Eastern and Southern Africa
(COMESA), the Southern African Development Community (SADC), and the
Indian Ocean Commission (IOC), Mauritius offers preferential access
to a market of 380 million consumers, representing an import
potential of USD 90 billion.

62. Situated on 52 hectares of land adjacent to port facilities and
a modern container terminal, the Freeport offers 120,000 square
meters of world-class infrastructure, including cold rooms, dry
storage, an international trade exhibition center, processing units,
and office space for transshipment, consolidation, storage, and
processing activities. Freeport facilities are also available at
the airport. Port Louis is increasingly used by major shipping
lines (i.e. Maersk/Sealand, P&O Nedloyd, and MSC) as a regional
container transshipment hub.

63. Activities that can be carried out in the Freeport include
warehousing and storage, breaking bulk, sorting, grading, cleaning
and mixing, labeling, packing and re-packing, minor processing,
transshipment, cash and carry sales, export-oriented port based
activities, export-oriented airport based activities, freight
forwarding, express courier services, mail order, simple assembly,
reshipment, and quality control and inspection services.

64. By the end of 2009, about 350 Freeport companies were engaged in
activities such as re-export, transshipment, minor processing, and
assembly. In 2008, the Freeport imported USD 178 million and
re-exported USD 302 million worth of goods. Main products
re-exported include: machinery and telecommunication equipment (25
percent); apparel and accessories (21 percent); seafood (21
percent); chemical and pharmaceutical products (11 percent); and
beverages and tobacco (5 percent). In 2008, the principal export
markets for the Freeport were Madagascar, the United Arab Emirates,
France, Reunion Island, Spain, and Italy.

65. The Freeport sources its imports from a wide range of countries,
including Hungary, China, India, Finland, Taiwan, France, Spain and
South Africa. The main products imported include fish, chemicals
and pharmaceuticals, telecommunication equipment, textile fabrics
and accessories, ready-made garments, electrical goods, and general
consumer goods.

66. The Freeport facilities for warehousing, breaking bulk, and
re-export should be of particular interest to American companies.
These services enable businesses to ship containerized goods to
Mauritius, warehouse them in secure, low-cost facilities, then break
bulk and re-export them in an efficient and timely manner to African
and Indian Ocean rim destinations. Modern computerized
warehouse/logistics facilities, including cold rooms and processing
centers, are provided by the private developers. These include
Freeport Operations (Mauritius) Ltd (,
Mauritius Freeport Development Co. Ltd (, and Froid Des
Mascareignes ( Goods can also be assembled in
the Freeport for export to the African and Indian Ocean markets.
Current assembly and processing activities in the Freeport include:
jewelry and precious stones, slabs from semi-precious minerals, PET
plastic bottles, transformation of fish into fillets, aluminum
frames and fittings, re-packaging of pharmaceuticals, and
reconditioning of second-hand vehicles.

67. Three U.S. companies are present in the Mauritius Freeport.
Amazing Stone Ltd., established in 2005 by a U.S. citizen, is
involved in the production of slabs made from semiQprecious minerals
which can be used for kitchens, floors, bathrooms, walls, and
furnishings. The firm, which employs 50 people, imports its raw
materials from the region, mainly Madagascar.

68. Boxmore Plastics (Mauritius) Ltd., which started operations in
Mauritius in 2002, is 100 percent owned by Chesapeake Corporation,
headquartered in Richmond, VA. It manufactures PET (polyethylene
teraphthalate) pre-forms for the soft drink bottling companies in
Mauritius, Reunion, Madagascar, and Seychelles. Casamar (Mauritius)
Ltd., a subsidiary of U.S.-based Casamar Holdings, Inc., which
specializes in the assembly and repair of nylon-braided tuna purse
seine nets, opened an office in Mauritius which provides marketing
support for its fishing net repair and assembly operations in

69. The GOM, in collaboration with the private sector, is actively
promoting the Freeport as a seafood hub, in particular focusing on
the transshipment, processing, storage, distribution, and
re-exportation of high value-added seafood products using the modern
port and Freeport facilities and logistics. A one-stop shop has
been established in the port area to help facilitate administrative
clearances related to the seafood industry. Thon des Mascareignes
Ltd. (TDM), a leading Mauritian company in partnership with Spanish
investors, is operating a tuna loin processing plant with a daily
processing capacity of 300 tons for export to Europe and the U.S.
for final processing and packaging. U.S. firm Bumble Bee Foods has
a tuna supply and processing agreement with TDM.

70. The Board of Investment, in collaboration with Airports of
Mauritius Ltd., plans to develop a dedicated air cargo logistics
center at the airport. The land parcelling for this project is
currently under way. The main activities targeted include re-export
of high value/low volume products, light assembly operations,
warehousing, labeling and repackaging, sea-air/air-sea and
transshipment cargo, express courier, and freight forwarding

Foreign Direct Investment
71. After several years of decline, FDI picked up strongly in 2006,
as a result of radical economic reform measures taken by the
government to open up the economy, facilitate business, and improve
the investment climate. FDI, which averaged USD 33 million annually
for the two decades ending in December 2005, has risen to an
estimated USD 280 million in 2009. Between 2006 and 2009, Mauritius
has attracted more than USD 1 billion from foreign investors.

72. The following statistical tables, supplied by the Bank of
Mauritius (Central Bank), show inflows of FDI in Mauritius by sector
and country of origin (2006-2009).

Foreign Direct Investment by Sector, 2006-2009

- 2006 2007 2008 2009*
- (USD millions)
Manufacturing 5.7 8.5 5 20.5
Tourism 83 187 137 89
Banking 114 127 157 15
Real estate 15 32.2 65 54
Other 11.3 5.3 29 16.5
- ----------------------------
Total 229 360 393 195

Foreign Direct Investment by Country of Origin, 2006-2009
- 2006 2007 2008 2009*
- (USD millions)
China 0.2 - 2.7 5.3
Dubai 3.6 40 29.2 11
France 16.6 36.7 40.2 56.7
Germany 5.6 1.8 5.9 0.4
India 5 19 66.2 9.3
Belgium 2.6 14 9.8 3.1
Luxembourg 1.1 2.1 7.2 2
Reunion Island 4.0 18 1.7 2.4
South Africa 1.2 15.6 49 10.5
Switzerland 18.6 40.2 21 12
U.K. 121 87.6 70 37
U.S. 5.2 74.4 36.6 19
Others 44.3 10.6 54 26.3
- -----------------------------
Total 229 360 393 195
Source: Bank of Mauritius

* Figures for 2009 are for the period January-September only

73. In 2008, the largest inflows of the USD 393 million of FDI into
Mauritius came from U.K., followed by India, South Africa, France
and the United States. Together these five countries represented
close to 70 percent of total investments. The bulk of the FDI was
directed to the tourism and banking sector. From January to
September 2009, FDI stood at USD 195 million, the main sources being
France (USD 57 million), U.K. (USD 37 million), and the United
States (USD 19 million), followed by Switzerland, Dubai, and South
Africa. Hotel and tourism, real estate development under the
Integrated Resort Scheme (luxury villas), and banking are the
sectors that attracted the bulk of the FDI in 2009.

74. There is one U.S. investor in the export-oriented manufacturing
sector. Mauriden Ltd, owned by a U.S. investor, was one of the
first companies to operate in the EPZ more than 30 years ago.
Initially involved in diamond cutting and polishing, Mauriden now
focuses on the production of jewelry for its duty free shops
(Adamas). As indicated in the Freeport section above, three U.S.
companies (Amazing Stones Ltd, Boxmore, and Casamar) are present in
the Freeport zone.

75. Apollo-Blake, a joint venture between American (20 percent) and
South African (80 percent) investors, started operations in 2008 as
a Business Process Outsourcing (BPO) company that focuses on
customer relations services, working primarily with U.S.-based
customers. The company, which provides bilingual services (English
and French) to its clients, had 220 employees at the end of 2009 and
plans to expand to 400 employees by end of 2010.

76. In November 2009, Thompson-Chalon Associates, another U.S. and
South African joint venture, signed a memorandum of understanding
with the Government of Mauritius for the development and financing
of the Mauritius Land-Based Oceanic Park, an eco-park project that
will pump cold sea water 1,000 meters deep for air conditioning of
data centers and other applications. Two U.S. firms are involved in
the implementation of the first phase of the eco-park, valued at USD
150 million. Makai Ocean Engineering of Hawaii will be responsible
for the construction of the pumping station and the laying of pipes
while Fortress International will build 10,000 sq. meters of data
center on part of the 120 hectares of land allocated for the project
on the west coast of the island. Works are scheduled to start in the
first quarter of 2010.

77. MIC-USA Inc., a subsidiary of Millicom International Cellular,
is a joint venture partner (50 percent shareholding) with local
company Emtel Ltd in the provision of cellular phone service in
Mauritius. Ceridian (Mauritius) Ltd., a subsidiary of Ceridian Inc.
specializes in software development and payroll and human resource
solutions for European, U.S., and Canadian markets. Other U.S.
businesses operating in the domestic Mauritian market include
Caltex, a brand owned by Chevron Corporation. Microsoft and IBM
have regional distribution offices in Mauritius, serving the Indian
Ocean region. KFC, Pizza Hut, and McDonald's have been operating in
Mauritius for a number of years, all through local franchisees. UPS
and FedEx also have offices in Mauritius.

78. Other U.S. investments in Mauritius include Covance Laboratories
Ltd, a subsidiary of Covance Inc., which holds 43 percent of the
share capital of Noveprim Ltd., a local company involved in the
breeding of monkeys for export to U.S. and European medical research
laboratories. In 2006, Covanta Energy established a joint venture
with local company Gamma Civic Ltd to build, own, and operate a USD
160 million waste-to-energy project in Mauritius. Plans were to
operate a 20 MW power plant generating electricity from 300,000
metric tons of solid waste annually. However, Embassy believes
Covanta may withdraw its plans because of a Mauritius court ordered
stay to its business license pending government completion of a much
delayed Environmental Impact Assessment.

79. Several French, British and Indian companies in joint ventures
with Mauritian partners have invested in the ICT sector in Mauritius
as a result of the government's determination at the beginning of
this decade to develop Mauritius into a cyber island. Other leading
global players, including Accenture, Orange Business Services
(France), InfoSys (India), Hinduja (India), Huawei (China), TNT
(U.K.) have started Business Process Outsourcing activities, call
centers, disaster recovery and business continuity centers, and
software development.

80. Significant investment has been made by Indian companies in the
past several years. Indian Oil Ltd. has built a 24,000 metric
ton-fuel storage terminal as well as a testing laboratory. It also
operates a number of retail distribution outlets in Mauritius.

81. Another Indian company, Mahanagar Telephone Mauritius Ltd.,
(MTML) started international long distance telephone service as well
as fixed phone services in competition with the local utility
(Mauritius Telecom), in early 2006. It now also provides mobile
phone and wireless internet services. The State Bank of India
acquired 51 percent equity in a local domestic bank for the sum of
USD 8 million. In 2007, Apollo Hospitals Group from India embarked
on the construction of a high-tech 200-bed hospital in Mauritius,
estimated at USD 30 million, in joint venture with a local corporate
group. The hospital is operational since July 2009. In December
2008, another Indian healthcare provider, Fortis Healthcare Ltd.,
invested approximately USD 2 million in the share capital of a
well-known private local health clinic. Fortis has upgraded the
services provided by the clinic and plans to develop the clinic into
a 400-bed health center providing specialized services in the
future. Various Indian hotel groups, including Oberoi, Sagar and
Taj, have also invested in high-end hotels and resorts in

82. A Chinese consortium, including Taiyuan Iron & Steel Group, the
Shanxi Group, and the Tianli Group, is set to invest USD 770 million
in the Jin Fei Economic and Trade Cooperation Zone, the largest and
most important foreign direct investment in the country. This
development project, backed by the Chinese government, is expected
to attract Chinese investors in a wide range of sectors, including
manufacturing, information technology, property development, tourism
and leisure, health, logistics, and services. Works on the project
started at the end of 2009 and it is scheduled to be completed in
2016. It will create more than 34,000 direct jobs as well as a
substantial number of indirect jobs and generate up to USD 215
million in export earnings a year. The Chinese government is
encouraging the Chinese business community to invest in Mauritius in
order to tap the regional markets of COMESA and SADC.

83. Investment opportunities in Mauritius are available in the
following sectors: seafood and aquaculture, information and
communication technology (particularly legal and business process
outsourcing), tourism, land-based oceanic industry (exploiting
deep-sea cold water for air conditioning, water bottling,
aquaculture, and pharmaceuticals), hospitality and real estate
development (including hotels and integrated resort/luxury villas),
ethanol production, spinning, renewable energy, environment,
clinical trials, education and training, healthcare, creative arts,
and global professional services.

84. CAPITAL OUTFLOWS: In Mauritius, there are no restrictions on
capital outflows. The bulk of direct outward investment for the
past three years have been coming from the tourism sector (hotel
construction) in Maldives and Seychelles, the manufacturing sector
(mainly apparel) in Madagascar, and the banking sector in
Seychelles, Maldives and South Africa.

85. The Government of Mauritius supports regional integration. In
line with this objective and in order to promote food security, the
Government of Mauritius has established a Regional Food Company
(RFC). Under this initiative, Mauritius plans to grow a variety of
crops, including rice, potatoes, onions, and corn in Mozambique and
Madagascar. The Government of Mauritius has recently obtained 16,000
hectares of land from the Government of Mozambique for the growth of
agricultural staples. The RFC, in association with private firms,
plan to start the cultivation of rice in part of these lands in

86. The Mauritius Commercial Bank Ltd, the largest banking
corporation in Mauritius, has established a strong presence in the
Indian Ocean region with operations in Reunion, Madagascar,
Seychelles, Mozambique, and more recently in the Maldives. They
also have operations in France. The State Bank of Mauritius,
another important local bank, has established banking operations in
India and Madagascar.86. Outward FDI in the garments industry
emerged in 1990, when the low-end operations were relocated to
lower-wage countries in the region. The African Growth and
Opportunity Act (AGOA) also provided the impetus for several local
textile companies to open factories in the region, mainly Madagascar
and Mozambique.

87. Other Mauritian investments on the African mainland relate to
the use of expertise in the sugar industry to rehabilitate and
manage sugar production in Mozambique, Tanzania, Ivory Coast,
Madagascar, and Uganda. Long-established conglomerates like the
Rogers Group, IBL Group, the Currimjee Group, the Food and Allied
Industries Group, the Altima Group, and the British American
Investment Ltd. have established foreign subsidiaries in commerce,
poultry, and financial non-banking services, principally in
Madagascar. Mauritius Telecom and Emtel, a subsidiary of the
Currimjee group, have also invested in the telecommunications sector
in Madagascar and Seychelles.

88. The following tables provide statistics on FDI outflows by
country and sector of investment during the period 2006-2009.

Mauritius Direct Investment Abroad by Sector, 2006-2009*
- 2006 2007 2008 2009*
- (USD millions)
Tourism 12.4 33.4 31.7 17.4
Manufacturing 10.6 7.3 7 3.2
Real estate 2.9 7.6 7.3 3.7
Banking 0.4 3.5 7.2 6.4
Other 9.7 5.2 2.2 1.5
- -----------------------------
Total 36.0 57 55.4 32.2

Direct Investment Abroad by Mauritius, 2006-2009
- 2006 2007 2008 2009*
- (USD millions)
France - 2 5.2 6
Reunion Island 0.2 4 4.8 1
USA - 2.9 0.4 0.8
Madagascar 9.2 8.3 8 2.7
Maldives 3.4 9.3 21 9.8
South Africa 0.4 1.1 0.7 -
India - 1 0.9 0.4
Seychelles 5.9 5.4 5.7 6.3
Mozambique 8.6 4.5 0.3 0.3
Others 8.1 18.5 8.4 4.9
- -----------------------------
Total 36.0 57 55.4 32.2
Source: Bank of Mauritius

* Figures for 2009 are for the period January-September only


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