Transcript Oecd Org Investment Investmentfordevelopment 34974158 Ppt

THE UNITED REPUBLIC OF TANZANIA
TANZANIA INVESTMENT CENTRE
“INVESTMENT FOR AFRICAN
DEVELOPMENT: Making it happen”
NEPAD/OECD INVESTMENT INITIATIVE,
Imperial Resort Beach Hotel
ENTEBBE, UGANDA
25th – 27th May 2005,
Presented by:
Samuel J. Sitta
Executive Director
Tanzania Investment Centre
E-mail: [email protected]
Website: www.tic.co.tz
CONTENTS/OVERVIEW
1.
2.
3.
4.
5.
6.
7.
8.
Introduction
Economic Policy Reform
Investment Policy Framework
Private Sector Development Initiatives
a) National Investment Steering Committee (NISC)
b) Tanzania National Business Council (TNBC)
c) Investment guarantees & settlement of disputes
Remaining regulatory, legislative & administrative
impediments to private investment
Tanzania Investment Regime
Challenges and The way Forward
Conclusion
2
ECONOMIC REFORMS AND THE DEVELOPMENT OF
THE NATIONAL INVESTMENT PROMOTION POLICY
Economic reforms initiated in 1986:

Trade liberalization

First Investment Code June 1990

Private investment allowed in allocated areas
Some of the problems met in implementing the 1990
Investment Policy & the Act as per studies carried out:

Restrictive investment environment

Lack of coordination of sectorial policies and the
investment policy

Existence of several laws and regulations that conflicted
with the investment code

Existence of a non commercialised society

Existence of a non facilitative civil service
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CORRECTIVE MEASURES TAKEN TO FURTHER
IMPROVE THE TANZANIAN INVESTMENT CLIMATE
Major highlights of the Studies carried
(i) Review of the investment Policy and Law, prepared by Dr. H.
Sinare and Dr. F. Ringo under the auspices of Economic and
Social Research Foundation (ESRF) - 1996 and
(ii) Investors Road Map (1996) prepared by The Services Group, a
team from USA.

Both reports addressed policy, legal, procedural
administrative barriers to investment in Tanzania

The reports forced GoT departments to re-examine their
processes and make appropriate changes; main changes where
as follows: 




and
Adoption of the New Investment Policy 1996
Enactment of the new investment code 1997 & establishment
of Tanzania Investment Centre (TIC) One Stop Shop for
investors
Harmonized key legislation
Removed restrictions on investment areas
Enhanced economic and social reforms from 1996 onwards.
4
TANZANIA ECONOMIC REFORMS
The Government has implemented reforms
aimed at transforming its economy from
one based on a large State-owned sector
and central planning to a market-and
private-sector-based economy.
16 major reform legislations were enacted
between 1990 and 2004.
These reforms have helped Tanzania to improve
efficiency and weed out ills that impede
growth.
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TANZANIA ECONOMIC REFORMS
Major reform legislations enacted between 1990 and 2002
are as follows:
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The Income Tax Act 2004
The Companies Act No. 12 of 2002
The Export Processing Zones Act No. 11 of 2002
The Commission for Human Rights & Good Governance Act No. 7 of
2001
The Land Act 1999
The Mining Act 1998
The Privatisation Trust Act No. 7 of 1997
The Financial Laws Miscellaneous Amendments Act 1997
The Tanzania Investment Act No. 26 of 1997
The Tanzania Revenue Authority Act No. 11 of 1995
The Immigration Act No. 7 of 1995
Capital Market and Security Act No. 5 of 1994 and as amended by
Capital Market and Security Act No. 4 of 1997
The Public Corporations Act 1992 and Amendment Act 1993
The Foreign Exchange Act 1992
The Banking and Financial Institutions Act No 12 of 1991
The Loans and Advances Realization Act 1991
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TANZANIA INVESTMENT CENTRE (TIC)
 TIC established in 1997 to be “The Primary Agency
of the Government to coordinate, encourage,
promote and facilitate investment.
 “One-Stop Facilitative Centre” with officers from
Ministry of Trade & Industry, Business Registration &
Licensing Authority (BRELA), Lands, Immigration,
Labour and TRA stationed at the TIC.
 TIC Relationship Managers regularly visit investment
projects to follow up on implementation and obtain
feedback to resolve any business problems.
 Facilitates investors to acquire land by offering them
land derivative titles on behalf of the Govt.
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TIC CLIENTS CHARTER
OUR COMMITMENT TO INVESTORS
TIC is committed to facilitating investors
Application
Days taken
 Company Registration
3
 Business licensing
3
 Certificate of incentives
7
 Resident Permit Class ‘A’
14
 Resident Permit Class ‘B’
14
 Special Pass
1
 TIC voted Africa’s Best IPA of the year 2004
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TANZANIA INVESTMENT CENTRE
Currently TIC
is installing
the computer
workflow
management
system
towards
paperless
office
operation.
Customers
Africa
America
Europe
Tanzania
Asia
Business Development Services
Optical
Scanner
Signed
Documents
Domino.Doc
Document
Management
Internet
PowerShift eCRM
eTrack
Project
Management
(QuickPlace)
Certificate of Incentives processing
Respective Government
Agencies/ Approval / Routing /
Project Tracking & Management
Domino
WorkFlow
Engine
Pre-Investment
Investment
TIC
Systems Architecture
Domino Workflow
January 2005
Operational
In addition it is also re-designing and updating its website so as
to constantly provide current and update investment
information including new legislations/regulations to investors
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NATIONAL INVESTMENT STEERING
COMMITTEE (NISC)
• Spearheading investment policy formulation,
• Fast track solutions to investors problems of
investors,
• Identify and supervise the elimination of legal
impediments to investment
• Chaired by the Hon. Prime Minister,
• Other members of the committee are Ministers
for Finance, Agriculture, Lands, Industry and
Trade, President’s Office Planning &
Privatisation; Governor of BoT; Attorney
General and Executive Director-TIC
(Secretary).
10
NATIONAL BUSINESS COUNCIL (TNBC)
 National Business Council seeks to enhance
Public/Private sector “smart partnership”.
 The Business Council is chaired by the
President and the Chairman of Tanzania
Private Sector Foundation is Vice Chairman.
 TNBC organizes and facilitates Investors
Round Table Meetings (IRT); Local and
International
 The TNBC has resolved a number of business
impediments including enactment of a new
business friendly land law and abolition of
many nuisance taxes.
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INVESTMENT GUARANTEES AND
SETTLEMENTS OF DISPUTES
•Tanzanian law offers guarantees
nationalization and expropriation,
against
•Tanzania is a member of both the International
Centre for Settlement of Investment Dispute
and Multilateral Investment Guarantee
Agency,
•Free/Unconditional Transfer of Capital,
Profits, dividends and other benefits for
investors and employees working in Tanzania
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REGULATORY TREATMEMENT OF FDI IN
TANZANIA (RESTRICTIONS ON INVESTMENT
S/No.
Restriction
1.
General Restrictions on entry
•Entry of FDI
•Foreign purchase of Shares
•IMF Article VIII status
•Liquidation proceeds transfer
Abroad
2.
Sectoral Limitations to FDI
•Financial Services
•Other Services
•Primary Sectors
•Manufacturing
•Acquisition of real estates for
FDI purposes
Current Status
New Developments
Yes (threshold of USD
0.3m and USD 0.1m
for foreign & local
respectively
No restrictions
Signed
However at DSE foreigners
are not required to exceed 65%
share purchase in a Listed
Company
No restrictions
Some restrictions
No restrictions,
however no incentives
offered for some
services
Initiatives are underway to
establish Special
Economic Zones (SEZ)
Minimal restrictions
No restrictions
No restrictions
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REGULATORY TREATMEMENT OF FDI IN
TANZANIA (RESTRICTIONS ON INVESTMENT
S/No. Restriction
3.
Post entry restrictions
•Access to local finance
•Access to privatisation
•Access to public
procurement
•Taxation
•Discriminatory licensing in
public utilities
•Nationality-based
restrictions on boards
•Discriminatory practices
•Entry of key personnel
•Performance requirements
Current Status
No restrictions
No restrictions
New Developments
Land Act 1999 has also been
amended so that land can be
used as collateral by local and
foreign investors to get bank
loans
No restrictions
No restrictions
No restrictions
New income Tax 2004
No restrictions
No
No restrictions
Not required
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REGULATORY PRACTICES OTHER THAN
RESTRICTIONS
S/No.
Regulatory Practices
1.
Practices encouraging FDI
•FDI-targeted tax & and other
incentives
•Number of bilateral investment
treaties (of which with OECD
members)
•Number of bilateral tax treaties
(of which with OECD members)
2.
Enhancing Policy Transparency
•Publications of regulations
•Notification prior to regulatory
changes
•Negative list of restricted sectors
•“silent and consent” authorisation
Current
Status
Yes
New Developments
Initiatives are underway to
harmonise EAC investment
Regimes
20
(12)
Pending negotiations 10
12
(7)
Pending negotiations 8
Yes
Yes
Yes
Yes
Publication through various
media including newly
parliamentary website at:
www.parliament.go.tz
Government website at:
www.tanzania.go.tz and
Treasury at: www.mof.go.tz
A good example is at the
TIC’s One Stop Centre
operation, when seeking
authority from other Govt.
MDAs
MDAs = Ministries, Departments and Agencies
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BILATERAL INVESTMENT TREATIES. LIST
OF BIT SIGNED AS OF JANUARY 2005
S/No
OECD Countries
Year of
Signing
S/No
Non OECD
Countries
Year of
Signing
1
Denmark
1999
1
South Africa
1959
2
Finland
2001
2
Zambia
1968
3
Germany
1965
3
India
1979
4
Italy
2001
4
Egypt
1997
5
Korea
1998
5
Mauritius
2003
6
Netherlands
2001
6
Zimbabwe
2003
7
Sweden
1999
7
Malawi*
2003
8
Switzerland
1965
8
OPEC Fund*
2003
9
United Kingdom
1994
10
Canada
1995
11
Korea
1998
12
Swiss Confederation 2004
Source: Government of Tanzania
* Partial Agreement
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BILATERAL TAX TREATIES. LIST OF DTTs
SIGNED AS OF JANUARY 2005
S/No
OECD Countries
Year of
Signing
S/No
Non OECD
Countries
Year of
Signing
1
Canada
1995
1
Zambia
1968
2
Denmark
1976
2
South Africa
1959
3
Finland
1976
3
India
1979
4
Italy
1973
4
Kenya (EAC)
2004
5
Norway
1976
5
Uganda (EAC)
2004
6
Sweden
1976
6
Zimbabwe
7
Korea
2003
7
UAE
8
Russia
9
Seychelles
10
Mauritius
11
Egypt
12
Yugoslavia
13
Oman
Source: Government of Tanzania
* Under negotiations
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TANZANIA INVESTMENT REGIME
Investment framework in Tanzania is characterised by: • Relative ease of entry and establishment
• No ownership restrictions or performance requirements.
• A fiscal stability clause, Section 19(2) of TI Act 1997 that
guarantees investors that incentives provided will not be
amended or modified to the detriment of the investors
enjoying those benefits.
• No restrictions on the repatriation of profits or
disinvestments in Tanzania
• Investors have the right to make transfer payments in
freely convertible currency
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TANZANIA INVESTMENT REGIME
• Investors are allowed to obtain land for investment purposes
through the TIC that issues derivative rights (under the new Land
(Amendment) Act (2004) ) .
• Under Section 24 of the TI Act 1997, TIC certificate holders have
the right of an initial automatic quota of employing up to five
persons during the start up period.
• Only in a few cases are foreigners required to pay an extra tax
other wise the corporate tax stands at 30 percent, and VAT is 20
percent for all companies except for those that have specific
incentives.
• Govt. has passed the Employment and Labour Relations Act
(2004) with the purpose of having a labour regime whose policies,
laws and regulatory structures promote employment, protect
labour and at the same time allow enterprises to grow and compete
in the modern economy.
• The country also benefits from specific bilateral initiatives
particularly USA, under the familiar AGOA program, and the EU
under EBA.
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RECENT DEVELOPMENTS
• The establishment of the Customs Union Protocol, which was
signed on 2nd March 2004, is one of the greatest
achievements of the new EAC.
• A number of specialized taskforces have been formulated and
revision of regulations through task forces such as the Tax
Reform Taskforce, the Land Reform Taskforce, and the
Labour Reform Taskforce, etc. These task forces include
members from different government departments, civil
society, and the business community.
• Tanzania has also signed a number of international
agreements governing the protection of foreign investment in
Tanzania including bilateral investment treaties (BIT) and
double taxation treaties (DTT). Negotiations are currently in
the process to conclude agreements with Zimbabwe, Malawi,
Mauritius and South Africa.
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ATTRACTIONS
1. Beautiful country with friendly people
2. Favourable Investment Environment
A. Successful Macroeconomic performance
B. Effective “One Stop facilitative Centre” (TIC)
C. National Investment Steering Committee
D. Tanzania National Business Council for“smart
partnership”
3. Abundant Investment Opportunities
4. Talented and skilled labour force.
5. Willingness to listen
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PERCEPTIONS HINDERING FDI
BUREAUCRACY
No. of Days to start a business
250
215
200
153
146
150
122
97
92
85
100
45
50
38
35
40
46
4
US
A
Ch
i na
DR
C
Le
so
tho
Ma
l aw
Mo
i
za
mb
iqu
e
Na
mi
bia
S/A
fric
a
Ta
nz
an
ia
Za
mb
ia
Zim
ba
bw
e
An
go
la
Bo
t sw
an
a
0
Source: Doing business in 2004 (World Bank)
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TANZANIA ECONOMIC STATISTICS
1997
1998
1999
2000
2001
2002
2003
Population (millions)
29.1
30.0
30.9
31.9
32.9
34.5
36.0
GDP (factor cost ) Tshs
bn
4,282
5,125
5,978
6,705
7,635
8,629
9,110
Real GDP Growth, %
change
3.3
4.0
4.7
4.9
5.6
6.2
5.6
GDP per Capita
(at c/prices-Tshs 000’)
147
171
193
210
232
256
300
Exchange rate
(Tshs/US$) ann. Avg.
612
665
745
808
876
967
1039
Inflation
annual average (%)
16.1
12.9
7.8
6.0
5.2
4.5
4.4
Investment/GDP ratio
(%)
14.7
16.0
15.4
17.6
17.0
18.9
18.5
FDI (US$ mn)
158
172
542
282
467
240
248
Source: National Bureau of Statistics 2004 - Tanzania
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GDP GROWTH RATE AND INFLATION IN
TANZANIA (1997 – 2004)
8
18
7
16
GDP Gowrh %
12
5
10
4
8
3
6
2
Inflation rate %
14
6
4
1
2
0
0
1997
1998
1999
2000
2001
2002
2003
2004
Years
GDP Growth
Source: Bank of Tanzania - 2005
Inflation
24
1800
450
1600
400
1400
350
1200
300
1000
250
800
200
600
150
100
400
50
200
2004
2003
2002
2001
2000
1999
1998
1997
0
1996
0
Values of Projects in US $ Million
500
1995
No. of Registered Projects
TIC REGISTERED PROJECTS
FROM 1995 TO 2004
Years
No. of Registered Projects
Values of Projects (US$ Million)
25
FDI INFLOWS TO TANZANIA
FROM 1992-97 TO 2003
US$ Million
542 *
600
467 *
500
400
282
300
200
240
248
2002
2003
172
@
90
100
0
1992-97
1998
1999
2000
2001
@ Annual average from 1992 to 1997
* Sharp increase was due to huge investment in mining projects
Source: World Investment Report - 2004
• Despite declining world FDI inflows, FDI into Tanzania has been
increasing in the past five years, with an average of US$ 356
million annually.
26
THE WAY FORWARD
27
THE BEST PROGRAMME
• The Government and Donors (DFID, SIDA,
DANIDA and the Royal Netherlands Govt. have
set-up a basket fund late 2003 for the Business
Environment Strengthening of Tanzania
(BEST).
• This is a five year programme commenced this
year (2004) to year 2008 at a cost of US$ 18
million.
• The BEST programme piloting continuous
improvement of an enabling environment for
private sector operations.
• Creating a better policy, administrative, legal,
regulatory and judicial framework
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SUMMARY OF THE INTERLINKED COMPONENTS
OF THE BEST PROGRAMME
S/No.
COMPONENTS
MAIN OUTPUTS
Achieving Better
Regulation
Unnecessary regulations removed
Sustainable process established for ensuring business-friendly laws,
regulations and administrative procedures
Improved efficiency and transparency of government institutions
dealing with business
Improving
Commercial Dispute
Resolution
Improved accessibility to the court system for formal and informal
business
Strengthening the
Tanzania Investment
Centre
Increased number and value of local and foreign investment in
Tanzania
Changing the Culture
of
Government
Improved customer service ethos for services provided to the private
sector by the public and judicial service
Empowering Private
Sector
Advocacy
Improved capacity of private sector stakeholders to identify regulatory
problems and solutions and advocate for an improved business
environment
Speed and quality of service provided by court system for business
improvement
Enhanced promotion of Tanzania as investment destination
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THE WAY FORWARD
The establishment/formation of programmes such as
• Business Environment Strengthening for Tanzania
(BEST)
• Export Processing Zone (EPZ)
• Special Economic Zones (SEZ)
• Spatial Development Initiatives (SDIs)
• Tanzania National Business Council (TNBC)
• National Investment Steering Committee (NISC)
Among others, is a manifestation of the Govt’s
commitment towards establishing a private sector
led economic growth.
30
THE WAY FORWARD
• Proactively championing Regional Integration
to create bigger markets and investments with
enhanced benefits and faster growth to all.
• As follow up action to the UNCTAD Investment
Policy Review –2003, TIC has commissioned
two research studies (i.e. Tanzania
comparative/competitive advantages study and a
study to evaluate the growth and impact of
investment) in order to target more precisely
investment promotion & facilitation activities.
• New licensing legislation (under BEST
programme)
• Labour laws being amended
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Visit us on: http://www.tic.co.tz
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