INVESTMENT OPPORTUNITIES

IN

MADAGASCAR

September 2004

MALAGASY ECONOMY

Structure of the economy:

GNP: US $ 230 per inhabitant

Population: 17 millions (2004)

GDP structure:

Primary sector: 29.2%

Secondary sector: 15.4%

Tertiary sector: 55.4%

Exportation: 28% GDP (average 2001–2003)

Coffee, clove, vanilla, crustaceans, textile, chromite,

France, USA, Germany, Japan, Great Britain,

Importation: 22% GDP (average 2001–2003)

Equipment, oil products, raw materials (textile, chemical, iron and steel)

  • France, United Arab Emirates, Hong Kong, Mauritius, China, South Africa, Belgium,

ECONOMY:

PERSPECTIVES 2004

Growth rate at least 10%

Inflation restraint at most 5%

Export increase of 16%

Import increase of 7.6%

Tax rate pressure: 11.2%

Increase of the purchasing power

Improvement of health conditions, education, basic infrastructures, security…

GLOBAL OBJECTIVES

Respect of Democracy

Good management of State business

Respect of Human's Rights

Justice and Liberty

INVESTMENT POLICY

Free enterprise–Economy of market

Free movement of goods, people and capitals

Private sector: motor of the growth

Administration: facilitator

INVESTMENT GUARANTEES

Member of the Multilateral Investments Guarantee Agency (AMGI/MIGA): non commercial Risks

African Trade Insurance Agency (A.T.I.A.): political and commercial Risks

ARRANGEMENT REGULATIONS

Liberty of investment

Reassurance of capitals and investments

Liberty of contribution transfer into capitals

Free working order of the business according to statutory rules

Free management of the staff in the respect of the Malagasy labour regulation

Equality of investor treatment

FUNDAMENTAL MEASURES

Foreigners access to the landed-estate: (Law 2003-028 on the 21-08-2003)

Conditions:

Presentation of an investment program

  • Supplying of an attestation of contribution of investment funds (U.S. $ 500.000)

Given surface:

  • Ranging from 5.000 to 25.000 sq. meter with possible derogation according to the investment in foreign currencies

Possibility of emphyteotical lease for the state property lands: from 18 to 99 years

Planning of dedicated industrial zones: pilot free zone in Toamasina

Construction of tourist land reserves

Constructions of special economic planning zones (SEPZ)

TAX REGIME

Two effective regimes types

1)Regime of common law:

Applicable to all activities operating on local market

2)Regime of exception:

  • Preferential Free Zone regime reserved to the activities oriented toward the exportation.
  • Law on the Main Mining Investments (more than U.S.$ 250 Millions)

REDUCTION OF DUTIES ON IMPORTATION

(From September 2003 to September 2005)

  • Goods of industrial, agricultural and public work facilities.
  • Trucks, commercial vehicles,
  • Computer facilities, electrical and audiovisual devices,
  • Inputs and consumable for clothing industry
  • Construction materials (cement, hoses, etc)

BUSINESS ENVIRONMENT IMPROVEMENT

Setting up of the “Guichet Unique des Investissements et du Développement de l’Entreprise” - G.U.I.D.E.-

G.U.I.D.E: “ONE STOP SHOP”

Information – Advice – Orientations

Simplification of Administrative Procedures

Administrative procedures within the GUIDE:

Creation of enterprises: 03 days

  • Visa for foreign investors: 05 days
  • Concession of work permit: 72 hours
  • Application for land acquisition : 60 days
  • Prior authorization on Tourism: 25 days
  • Approval on free enterprises: 20 days
  • Compatibility of Investments with the Environment (MECIE)

Creation of the (Support Committee to the enterprise running follow-up):

  • Consulting organ between Administration and Private Sector
  • Re-enforcement of partnership between Administration and Private Sector

ECONOMIC POTENTIALITIES

a)Human potentiality:

  • Young population
  • Skilled and serious labour force
  • Competitive labour force cost

b)Natural resources:

  • Piscatorial resources
  • Intensive and extensive breeding
  • Unique and varied forest ecosystems
  • Palms – rose wood – ebony
  • Important mining Resources:
  • Semi-precious stones and gold
  • Industrial stones and precious ores

c)Flourishing sectors :

  • Tourism
  • Mines
  • Fishery and aquaculture
  • Manufacturing industries oriented toward exportation
  • Handicraft
  • Agriculture (Biologic, agribusiness)
  • TIC
  • Basic infrastructures : roads, telecommunications, transportation,
PISCATORIAL RESOURCES
  • Seawater – fresh water

-5.000 km of coastline,

-2 navy miles of continental shelf,

-2.000 km2 of lakes, of rivers and aquaculture centers,

  • Potential not yet exploited

-450.000 tons of fish

-Tuna, octopuses, squids cuttlefishes, algaes, “trépang”,…

  • Shrimp

-very profitable,

-possibility of improving the reproduction conditions

  • Dialogue between authorities (Ministry of Agriculture Breeding and Fishery) and the Association of Shrimp boat Owners in Madagascar (GAPCM),
  • Transparency in license concessions
  • Products:

-Varied and of qualities

-“Chevaquines”, “bichiques”, “cigales de mer”, shark fins, eels, frogs’leggs, etc.

  • Aquaculture:

-Available lands at the rear of mangroves and tropical water of quality

-Eligible sector to the free Zone regime

  • Other potentialities:

-Processing Industries after the “boutres”,

MINING RESOURCES

  • Rich subsoil:

-World leader in terms of mica, second in chromite, deposits growth (quartz, marbles, graphite, nickel, cobalt, “ilmenite”, titanium, iron, copper, gold, tin of strong “cassiterite” content,…

-Safe of treasure: fine stones, ruby, sapphire, emerald, beryl,…

-Under - exploited

  • Mining code:

-Guaranteed mining rights

-Equitable management of mining permit

-Investment securities

-Automatic transformation of research permits into exploitation permit

  • Mining titles: transferable, modifiable, susceptible of pledge or mortgage,
  • Privilege of Industries jewelers

AGRICULTURE

Potentiality

-Varied climate

-Varied Pedology

-Fertile and virgin land set for large scale culture

-Young rural and abundant labour force

  • Biological agriculture:

-Spices: pepper, cinnamon, ginger, “curcuma”, pimento… (Total Production: 3.000 t per year

-Essential oils: ylang-ylang, cinnamon, vanilla, clove, mint, “tagète”, geranium,…

-Medicinal plants: Centella asiatica, Raventsara…

-Textile fibers: raffia, “rabane”, raw cotton,

-Others; sugar bio, agricultural rum…

In term of figurers:

-Biological Products: increasing demand on the international market (ex.: USA: a market of more than US $200 Billions)

- “Spices–Essential Oils” sector generates for Madagascar foreign currency of more than US $20 Millions per year

T.I.C

  • Telephonic facilities modernization:

-Numerical stations,

-Land stations linked by satellite

-Operations of network adjusting

  • Opening to the outside world:

-Land lines till the remote regions,

-Concession of licenses to operators of mobile telephony

TOURISM

Madagascar: a privileged site

-Fourth biggest island of the world with its coast full of islets serving shelters to fishers;

-Crossroad between Asia and Africa;

-Diversity of destinations:

  • Seashore sport,
  • Surfing and diving,
  • Discovery of parks, reserves, beaches of white sand or volcanic canyons of Madagascar,

REGIONAL SPECIFICITIES

Haut-plateaux:

Past volcanic

Massif of Andringitra

North-West: virgin island coast

Bay of Antsiranana : one of most beautiful in the world and the first tourist destination, Nosy Be

South-West and:

Tropic of Capricorn

“Exhumation: returning of death” re-wrapped in their new shroud

Depth of sub-marine and immense coral reef of Toliary

South-East:

Coast of contrasts, between tropical forest and “bush” semi-arid

East:

Coast of Rosewood and primary forest

VanillaCreeksGardens of pirates dens

DIVERSIFIED AND ENDEMIC NATURAL RESOURCES

Varied flora:

95% of plantation species specific to the island

Orchids, wild rosebushes, dwarf baobab,

Large virgin spaces

Unique fauna to the world:

32 species of lemurs,

190 types of amphibians,

250 kinds of reptiles

Varied climates

HOST COUNTRY FOR INVESTORS

Constitution of tourist land reserves

Modernization of roads and airports

Tourism: Second source of foreign currencies

MADAGASCAR:

ENORMOUS POTENTIALITY

OPENING TO FOREIGN INVESTORS

Misaotra Tompoko!

Merci beaucoup!

Thank you!

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