Mauritius, a success story of the 1980s, is looking for investors to participate in the next development phase - includes related article

Often cited as the success story of the 1980s among the developing countries of the world, Mauritius is now launching a major worldwide campaign to attract foreign investors to participate in the island's second phase of economic development.

Mauritius is an island about the size of Rhode Island located 500 miles east of Madagascar. It has an ethnically diversified population of just over one million. The economy, based on sugar, textiles, manufacturing, and an expanding offshore banking center, has grown at an average rate of 8 percent since 1984. Unemployment has fallen fro 20 to 2.7 percent, inflation from 42 to 5 percent, and the budget deficit from 14 to 2.5 percent of gross domestic product. Moreover, the balance of payments is now in surplus.

Mauritius now aims to be the spring-board for those who which to tap into the huge potential in the Indian Ocean, especially Madagascar, and southern and eastern Africa. Mauritius is actively looking for the foreign investment and expertise that will allow it to develop into a sophisticated financial center.

Financial Center--In early 1989, Mauritius invited banks to set up offshore banking units. Major banks such as Barclays, Banque Nationale de Paris Intercontinentale, Hong Kong and Shanghai, Rothschild, and Bank of Baroda have already opened up for business. They benefit from:

* complete freedom of exchange control;

* strategic time-zone location between Far Eastern markets and European financial centers;

* concessionary income tax rate of 5 percent on all offshore profits;

* ability to repatriate profits freely without other tax or levy;

* advanced, efficient telecommunications facilities to all financial markets around the world.

In order to reduce the cost of stationing expatriate staff at offshore banks, expatriate employees are subject to personal income tax at 17.5 percent (half the normal rate of personal tax). In addition, every offshore bank is eligible for exemption from customs duties on office equipment, automobiles, and household equipment for a maximum of two expatriate staff.

Areas of Offshore Investment--The preceding conditions are being extended to 10 other types of offshore businesses, including offshore fund management, royalties companies, operational headquarters, construction, securities, consultancy companies, ship management, trading, and re-invoicing.

Mauritius has licensed some offshore insurance companies. The marine legislation is providing for flags of conventience to be licensed in Mauritius. Mauritius has opened a Free Port for the transshipment of goods across the Indian Ocean from the Indian Subcontinent and the Far East to southern and eastern Africa.

International Seminar--To better inform the international business community of the possibilities in the offshore sector in Mauritius, the government of Mauritius is cosponsoring with EuroMoney, the European financial magazine, an international seminar in Mauritius, april 13-14, on the subject of "Mauritius: The Offshore Center." Participants will be addressed by a panel of internationally recognized experts led by Sir John Quinton, Chairman, Barclays Bank PLC.

Export Processing Zone--From 1971 to 1990, the number of enterprises in the Export Processing Zone jumped from 10 to 574; employment from 644 to 88,258; exports (Rs M) from 4 to 11,000; and exports from the Zone as a percentage of total Mauritian exports from 11 to 63.

Although textiles make up approximately 80 percent of all exports of manufactured goods, exports from the Export Processing Zone are well diversified. Other Zone items include watches and components, leather items, toys, optical goods, printed circuit boards, television sets, VCRs, etc.

Investors have been pleasantly surprised at the conditions prevailing in the country. Some of the key elements which have contributed to the Mauritian success are: political stability, an educated and bilingual labor force, good communications, excellent infrastructure, and a well-balanced package of fiscal incentives. Mauritius is an active member of the PReferential Tariff Area and benefts from the U.S. Generalized System of Preferences.

The Second Phase--Mauritius is taking the necessary steps to ensure the success of the second phase of development. Heavy emphasis is being placed on training through the Industrial and Vocational Training Board in certain fields such as electronics, informatics, jewelry, leather, production of optical goods (sunglasses, spectacle frames, and lenses), manufacture of toys, assembly of watches, and printing and publishing operations.

Labor Conditions--Mauritius has a young population, and some 14,000 jobs must be created each year fr new entrants into the labor market. Industrialists have noted that the Mauritian labor force is highly motivated. Wages are competitive--approximately US$100 per month for shop floor wrokers. Trade unions are free to operate, which they do within the tripartite framework (employers, government, and unions), providing the basis of a peaceful and smooth industrial climate which prevails in the country.

U.S.-Mauritian Relations--Since the days in the late 18th century, there have been constant and friendly relations between the two countries. This friendship was further consolidated in June 1991 when the Prime Minister of Mauritius made an official visit to the White House. The fundamental beliefs in freedom, democracy, the market economy, and free trade have cemented the relations between the two countries.

The government of Mauritius wants to develop in partnership with the foreign investor who sees the great potential waiting to be tapped in this part of the world.

COPYRIGHT 1992 U.S. Government Printing Office
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