1998 SOUTHERN AFRICA ECONOMIC ... - National Treasury
1998 SOUTHERN AFRICA ECONOMIC ... - National Treasury
1998 SOUTHERN AFRICA ECONOMIC ... - National Treasury
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M O Z A M B IQ U E<br />
business application pro c e d u res simpler and more consistent.<br />
The CPI is also taking a pro a c t i ve role in obtaining permits and<br />
ap p rovals from diffe rent government ministries and national<br />
d i rectorates on behalf of fo reign inve s t o r s . CPI provides a<br />
“matchmaking” service for fo reign investors seeking to identify<br />
local Mozambican part n e r s ,and has attempted to simplify and<br />
speed up the process for gaining project ap p roval with the help<br />
of the private sector and the World Bank. B u re a u c r a c y<br />
s u rrounding investment is unfo rt u n a t e ly still high.<br />
A step tow a rds the reduction of investment related bure a u c r a c y<br />
was the execution of a compre h e n s i ve study on administrative<br />
b a rriers to investment at the end of 1996. The study was<br />
c a rried out under the auspices of the International Finance<br />
C o r p o r a t i o n .A commission examining outdated laws pert a i n i n g<br />
to the business sector was due to present its proposals to<br />
government by December 1997.<br />
I n c e n t i ves Offe red To Investors includes:<br />
- Full exemption from customs duties and consumption and<br />
c i rculation tax on some equipment for green field<br />
i nve s t m e n t s ,i e a new enterprise constitution with new<br />
b u i l d i n g s .<br />
– Reduction by 80 percent of the Industrial Contribution Tax<br />
(corporate tax) and supplementary taxes during the period of<br />
re c ove ry of investment expenditures in Niassa,Tete and Cabo<br />
Delgado prov i n c e s .Reduction by 65 percent of the same<br />
t a xes for investments located outside other provincial<br />
c ap i t a l s ,and 50 percent reduction of taxes for investments in<br />
the capitals of other prov i n c e s .<br />
– Deduction from the taxable income of operating ve n t u res of<br />
100 percent of investments in new equipment, plant and<br />
i n f r a s t r u c t u re and construction for up to five ye a r s .<br />
– Deduction of losses for tax purposes of expenditures on<br />
c o n s t r u c t i o n ,rehabilitation of public ro a d s ,s c h o o l s ,s ewe r a g e<br />
and training of Mozambican wo r ke r s .<br />
E x p o rt Incentive s<br />
M o z a m b i q u e ’s main effo rt to expand its export markets are the<br />
Industrial Free Zones (IFZ). I nvestors are invited to deve l o p<br />
and/or administer an IFZ, p rovided they make a minimu m<br />
i nvestment of USD5m. Companies operating in an IFZ are<br />
e xempt from all taxes and customs duties. To qualify for IFZ<br />
status a company must export at least 85 percent of its<br />
p ro d u c t i o n , and a minimum investment of USD50,000 is<br />
re q u i re d . Both developers of and operators in an IFZ are<br />
re q u i red to pay a royalty of 1 percent of their gross turnove r,<br />
the former from their 6th year of operation and the latter fro m<br />
their 2nd year of operation. Although the regulations gove r n i n g<br />
IFS came into effect in Janu a ry the concept has not yet taken off.<br />
The first IFZ to be developed will be located in Map u t o.<br />
Mozambique is eligible for duty-free exports quotas to EU<br />
m a r kets and also to the USA and other developed economies<br />
under the GSP. Mozambique also enjoys pre fe rential low - d u t y<br />
e x p o rt quotas to the Eastern and Southern African marke t<br />
under COMESA, and has a special trade agreement with South<br />
A f r i c a .<br />
Ta x a t i o n<br />
Companies are taxed at various rates according to their type of<br />
b u s i n e s s ;the rate for industrial companies is 40 perc e n t , fo r<br />
a g r i c u l t u re 35 percent and for commerce and services 45<br />
p e rc e n t .In add i t i o n ,t h e re is a circulation tax on invoices of 10<br />
p e rc e n t .Personal income tax is pro g re s s i ve with a maximu m<br />
rate of 30 perc e n t .<br />
I nvestment Code and Protection of Inve s t m e n t<br />
The 1993 Investment Law lays down the framework for fo re i g n<br />
and domestic inve s t m e n t s ,including guarantees and incentive s ,<br />
as outlined above. The law stipulates modalities for re m i t t a n c e<br />
of funds abro a d .<br />
F u rt h e r m o re the law offers the fo l l owing guarantees to<br />
i nve s t o r s :<br />
– Security and legal protection of pro p e rty over goods and<br />
rights in connection with investments made.<br />
– F reedom to import equity capital or take up loans to carry<br />
out inve s t m e n t s . .<br />
– Repatriation of capital invested upon liquidation or sale, t o t a l<br />
or part i a l ,of goods or rights of an investment undert a k i n g .<br />
– Just and equitable compensation in event of expropriation<br />
based on absolutely necessary and weighty reasons of public<br />
and national intere s t ,health and public ord e r.<br />
Mozambique is a member of MIGA, OPIC and offers re c o u r s e<br />
to arbitration through ICSID and the Paris based International<br />
Chamber of Commerc e.<br />
I N V E S TM E N T<br />
O P P O R T U N I T I E S A N D<br />
P R O J E C T S<br />
O p p o rt u n i t i e s<br />
Mozambique has a vast potential for deve l o p m e n t ,c o m m e n c i n g<br />
with the development of and/or rehabilitation of infrastructure<br />
p rojects in all sectors of the economy. Other areas of intere s t<br />
to investors include: a g r i c u l t u re, a g ro - p ro c e s s i n g , m i n i n g ,<br />
m a nu f a c t u r i n g , f i s h i n g , a q u a c u l t u re (the culture of oy s t e r s ,<br />
mu s s e l s ,algae and pearls) and tourism.<br />
A g r i c u l t u re / Fo re s t y rSector<br />
In part i c u l a r, o p p o rtunities exist in the production of crops such<br />
as cashew nuts in the Nampula and Gaza Provinces and<br />
c o c o nuts in the Zambezia Prov i n c e. The government is<br />
rehabilitating its sugar industry, and partners are also being<br />
sought for the production of cotton and sisal around Mocuba in<br />
Zambezia prov i n c e s . Plenty of opportunities exist for inve s t o r s<br />
to process agricultural pro d u c t s .<br />
O p p o rtunities for investment exist in fo rest plantations and the<br />
industrial processing of wood pro d u c t s . P rovincial fo re s t ry<br />
p rojects are being established and re fo restation pro g r a m m e s<br />
a re planned.<br />
Mining Sector<br />
Fo reign partners are being sought by a number of<br />
e n t re p reneurs for the development of tantalite and pegmatite<br />
mining in Zambezia,bauxite in Manica prov i n c e,gold pro d u c t i o n ,<br />
also mainly in Manica, and the mining of a number of other<br />
minerals and precious and semi-precious stones<br />
M a nufacturing Sector<br />
The re i n t roduction of sugar production for the local and export<br />
m a r kets is already underway and government is seeking<br />
a dditional investment in this industry. Factories in Mafambisse,<br />
X i n av a n e,Maragra and Sena sugar estate have been identified fo r<br />
fo reign inve s t m e n t . N e gotiations with fo reign investors are<br />
u n d e r w ay for some of these factories.<br />
Industries in both the centre and the north of the country offe r<br />
o p p o rtunities for expansion resulting dire c t ly from easy access<br />
to raw materials, c h e ap power sources and quick ro a d / r a i l<br />
access to the sea. Industries such as cement manu f a c t u re enjoy<br />
a high demand as a result of the re c ove ry in the construction<br />
i n d u s t ry.<br />
Fishing<br />
T h e re are openings in praw n , l o b s t e r, c r ayfish and quality<br />
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