Tunisia - leader in North Africa
Economic outlook of Tunisia today and what are the prospects for the country?
Tunisia underwent a crucial phase in its history, launching a revolution that dazzled the world with its peacefulness and quietness; a stage full of challenges where everyone is looking forward to meet the aspirations of Tunisian people to achieve a political, economic and social transformation based on democracy, freedom, justice and dignity.
2014 marked a new stage in the democratic transition: a Tunisia's new constitution has come into force and a free and fair elections were voted. This political progress has been rapid and remarkable, inspiring and necessary.
Like the political process, the road to the next step – economic reform – is challenging. The substantial challenges to overcome are related to the high rates of youth unemployment, a large number of marginal jobs and substantial regional disparities. A profound structural reform process has been undertaken by Tunisian Government during 2016 and 2017 aiming to speed up growth, generate new jobs, implement effective social policy and promote regional development in the long run.
* To overcome the first challenge, Tunisia is developing a sustainable process of job creation that relies on a competitive private sector.
* To overcome the second challenge, several incentives are designed to channel resources toward selected high-value-added and knowledge intensive sectors, and likewise stimulate product innovation and market diversification. Tunisia is also pursuing its real opportunities in agriculture, industry, and services to promote an intensive use of human capital and to diversify its markets within and beyond Europe.
In this matter, the country has achieved relatively high economic growth during the past decade driven by agriculture and tourism, real GDP growth is on track to reach 2.6 percent in 2018. In fact, growth has been improving over the last three quarters, signalling a certain robustness of the economic recovery. This pickup in growth is due to the agricultural and service sector and is driven by an encouraging performance in the tourism, transport and financial services.
* To overcome the third challenge that pertains to realising the "ambitions of regions", a comprehensive development strategy has been designed to promote parity in access to basic services such as health across the country’s regions. Thus, the government can promote labour mobility between regions by investing in transportation infrastructure, easing access to affordable housing, and developing regional complementarities. Such measures will expand opportunities for the people who live in the interior of the country without depriving those on the coast and eventually lead to a more balanced standard of living across regions.
Today, Tunisia makes significant progress on the economic front. According to the World Bank , Tunisian economic growth will improve in 2019, as the business climate improves, structural reforms are implemented and security and social stability increase.
Prospects for the country
Tunisia think innovatively to attract international investment within the global context, it is of interests to investors from new countries such as the USA and countries in Scandinavia, northern Europe and the Gulf, knowing that France is by far the largest investor in the country, followed by Qatar, Italy and Germany.
Which kinds of business and investment opportunities there are for Finnish companies in Tunisia?
Tunisia is a destination of choice in the Mediterranean basin in attracting investment; Tunisia today that many experts do not hesitate to call as the “smart site” of the Mediterranean is relying on its historical advantages to host investors and all international corporations. Thanks to its preferential and structural assets, Tunisia followed in real time the advances recorded by the world industry. Today, the industries of textile, mechanics, electricity and aircraft components have enabled the country to occupy the position of first industrial exporter on the southern shore of the Mediterranean towards the European Union. And whether high style garment or extremely sophisticated highly technological mechanical or technical parts, Tunisian institutions respond in a timely manner and with accuracy to the orders coming from Europe, America and other Arab and Asian markets.
In this case, it should be mentioned that different Benchmarking Studies have been conducted for several years now and several investment niches, in which Tunisia enjoys comparative advantages mainly in Aerospace industries, Electronics, Automotive components, Food processing industries, Renewable Energies, IT and Outsourcing activities.
Today, over than 80 aerospace companies are operating in the aeronautical industry employing over 17 000 people. Other factors that blessed this sector which is an opportunity to be seized by companies seeking better performance and productivity is the hosting of Airbus’s subsidiary Stelia of an aeronautic park specialized in aircraft subassemblies which reflects the advancement in the industrial sector and the potential of aerospace industry of Tunisia and the presence of internationally renowned players such as LATECOERE group, SABENA TECHNICS, ZODIAC AEROSPACE..
The automotive components sector is quite developed. Tunisia is indeed the 2nd car components manufacturer in Africa. A number of foreign companies such as Lear Corporation, Delphi, Dräexlmaier, Leonische and valéo have chosen Tunisia to supply car manufacturers like Audi, VW, Renault, Volvo, Ford mainly with wire harnesses, electronic and electrical components and plastic parts... In this sector, there are numerous investment opportunities in subcontracting, spare parts manufacture and specialized services
As far as the Electronics and electrical manufacturing industries constitute the branch receiving the most FDI and the leading export sector. They have managed in a short time to put themselves in the forefront of Tunisian industry. The EEI sector relies on over 1,000 companies including 435 totally exporting units and employing more than 130,000 people.
As far as the agro-food industry is concerned, the food industry has witnessed an important development aiming at creating a diversified and competitive industry. It is run by 1064 companies representing 18.5% of the industrial fabric (199 totally exporting companies and 166 companies with foreign participation). In this sector, Tunisia is the 1st worldwide exporter of olive oil, the 1st worldwide exporter of dates, the 2nd exporter of organic products in Africa and the 10th worldwide tomato producer. There are more than 100 export destinations. The main markets remain those of the European Union (Italy, France, and Spain) and Libya. New destinations arise such as: the USA, Canada, Russia, Japan, the Middle East and Sub-Saharan countries (Niger, Senegal and Côte d´Ivoire)).
One of the chief challenges of Tunisia is to enhance the IT & Outsourcing sector which is one of the most dynamic sectors (About 1 800 ICT companies and 300 foreign offshoring companies such as HR Access, Transcom Worldwide, Teleperformance, STREAM (the US outsourcer) employing more than 34 000 jobs). In terms of jobs created, the sector posts one of the highest rates of recruitment of highly qualified human resources (between 3000 and 4000 a year). In the area of investment, the sector enjoys the support of Tunisian authorities and there has been growing volume in expenditure for infrastructure (200 University degrees in ICT-related fields) and human resources, with almost 7000 young people graduating in information and communication sciences every year and becoming available on the job market. At an equivalent level of skills for a European counterpart, a Tunisian computer engineer costs four times less.
The sector of textile and apparel in Tunisia is experiencing a true dynamic: 1,695 companies employing more than 160,000 people, of which 1,410 exclusively producing for export. At the end of 2015, the number of foreign companies reached 1,142 employing more than 125,274 people. Despite the strong competition from Asia, the sector has bounced to preserve its market share. The textile sector has maintained its growing place in terms of exports allowing Tunisia to keep its position as the 9th largest supplier of Europe and 2nd supplier of France.
lf a Finnish company decides to invest in Tunisia, what are the most important issues this enterprise must take into consideration to succeed in the market?
What to consider if a Finnish company decides to invest in Tunisia
The solvency of the country gives it access to international capital markets and allows it to find its place in the world economy;
The growing diversification of the economy (tourism, mining production developed in phosphates and oil sectors, etc.) strengthens its resistance to economic crises;
The economy can rely on a young, fairly skilled and productive workforce at competitive pay levels;
The country's proximity to the European market and its association agreement with the EU: the capital city Tunis is, on average, two hours flight from the main European capitals;
The social system is well developed and an ambitious education policy has been launched; it aims to reduce the social cost of adjustment and strengthen the modernisation of the country;
The political transition has been gradual and relatively peacefulcreating a generally positive business environment.
While FIPA Tunisia is firmly committed to providing all the conditions for success to foreign companies that are currently in Tunisia, which exceed 3450 institutions, it believes that foreign investors interested in Tunisia will find promising prospects they still ignore and several real opportunities waiting to be seized, which is why FIPA Tunisia encourages Finnish companies today to discover closely these opportunities and fields and to study them thoroughly, and it is confident that those who are willing to invest in Tunisia will find the best sites for producing, exporting and realizing profits in the best conditions.
Which kind of assistance and which kinds of benefits there are in Tunisia for Finnish companies which would Iike to invest in Tunisia?
Investment Assistance for Finnish companies
The Foreign Investment Promotion Agency (FIPA-Tunisia) is determined to provide the necessary support and guidance to foreign investors in terms of :
Information on investment opportunities in Tunisia and the main reasons why Tunisia is such an attractive site for FDIs. All useful information about Tunisian economy, human resources, infrastructure, investment incentives are presented in wide range of documents available in different language.
Contact from Tunis or abroad thanks to a preliminary survey work and specific contact missions to meet the needs of investors. FIPA’s approach is to present the most satisfactory Tunisian offer for companies seeking internationalization;
Advice on the appropriate conditions for the success of projects, regions of operation, investment plans, financing methods…
Assistance to investors on exploratory visits to Tunisia and in the various phases of project implementation. The contact programs with Tunisian institutions and companies in the areas of desired activities and interests of investors are prepared by FIPA staff;
Support to improve the sustainability of the company through personalized monitoring and ongoing assistance with the various Tunisian ministerial departments and organizations as well as with regional authorities.
Other support organizations are in charge of providing all the support and care, so foreign investors can achieve their plans and projects in the best conditions and deadlines.
· Tunisia Investment Authority (TIA): www.tia.gov.tn
· Industry and Innovation Promotion Agency (APII): www.tunisieindustrie.nat.tn
· Agricultural Investments Promotion Agency (APIA): www.apia.com.tn
· Tunisian National Tourist Office (ONTT): www.tunisietourisme.com.tn
Benefits for Finnish companies
Tunisian Government actively encourages and places a priority on attracting foreign direct investment (FDI) in key industry sectors such as electronics manufacturing, aerospace and aeronautics, automotive parts, call centers, and textile.
Foreign investment in Tunisia is regulated by the Investment Code (Law n° 1993-120) which was last amended on January 26, 2009 then repealed after the entry of the investment Law into force since January 1st of 2017. It covers investments in all major sectors of economic activity except mining, energy, the financial sector and domestic trade. The Investment law divides potential investments into two categories:
Offshore, in which foreign capital accounts for at least 66% of the equity ;
Onshore, in which foreign shareholding is limited to 49% in most non-industrial projects. Onshore industrial investments can have up to a 100% foreign shareholding.
The legislation contains two major hurdles for potential FDI as foreign investors are denied the same treatment as nationals in the agriculture sector and foreign ownership of agricultural land is prohibited (although land can be secured through long-term (up to 40 years) leases. However, the Government actively promotes foreign investment in agricultural export projects.
While investments in manufacturing industries, agriculture, agribusiness and certain services only require a simple declaration of intent, other sectors are covered by further Government authorisations.
One of the most notorious changes introduced by the new investment law of 2017 resides in the fact that any company is allowed to recruit foreign employees up to 30% of the total number of the management staff till the end of the third year following the legal constitution of the company, or starting from the date of its entry into effective production according the enterprise’s choice. This limit is reduced to 10 % starting from the fourth year from that date. In all cases, the enterprise is allowed to recruit up to four foreign management staff. Beyond this percentage, the recruitment of foreign management staff is subject to employment Ministry approval in accordance with the labour Code.
The investment law grants foreign investors a certain number of benefits:
- The investor is free to own, rent and exploit non agriculture properties for the purpose of achieving direct investment operations or their extension.
- Foreign investor must not be treated less favorably than Tunisian investor in like circumstances with regard to his rights and obligations.
- Investor’s funds, possessions and intellectual rights are guaranteed in conformity with the legislation in force.
- Investors’ properties shall not be expropriated, except for public interest without any discrimination regarding nationality and upon fair and equitable compensation in accordance with due process of Law.
- Foreign investors can freely transfer abroad funds in foreign currency in accordance with applicable change legislation.
- Dispute Settlement: Where a dispute arises between the Tunisian State and the investor, parties are freely allowed to agree on the mediation’s procedures and rules, Otherwise, Conciliation Rules of the United Nations Commission on International Trade Law shall apply. If a dispute between the Tunisian State and a foreign investor is not settled through conciliation, it may be submitted to arbitration under an agreement between the parties. In such case, the arbitration procedures are subject to the arbitration Code provisions. Otherwise, the Tunisian courts are exclusively entitled to examine the dispute.
Government decree 417-2018
The Government decree 417-2018 has been published on May 11, 2018 to fix:
The exclusive list of economic activities subject to authorization ;
The list of authorizations required for the realization of the projects ;
The list of activities for which the authorizations to exercise activities have been canceled ;
Simplifications and clarifications in Entrepreneur-Administration relations.
This decree will facilitate the task of professionals, entrepreneurs and administration through a compilation in one and unique support, conditions, documents, procedures, deadlines and legal references of activities subject to authorization.
This government decree must evolve in the direction of a gradual removal of other activity authorizations but also shortened response times of the administration that will oscillate between 60 and 180 days.
Tranversal Law 2019
The'transversal' law for the improvement of the business climate was adopted in April 2019. It
aims to eliminate all legal obstacles in order to mobilize investment and facilitate administrative procedures.
Please explain us how Tunisia has benefited from the Free Trade Agreements?
Tunisia attaches a great importance to strengthen the economic and trade cooperation relations in the field of investment with countries, which would contribute to the further integration into the global economy.
The European Union (EU) is by far the most important trading partner and accounted for almost 70 percent of Tunisian imports and about 74 percent of its exports. Tunisia entered into an association agreement with the EU in 1995, having seen its barriers to trade gradually reduced for more than a decade. In 2008, this resulted in Tunisia establishing a free-trade area with the EU, the first country in the Mediterranean to do so.
Following the Association and free trade agreement with the European Union, Tunisia became an Advanced EU Partner in November 2012. This status grants Tunisia commercial benefits, strengthening its economic agreements with the EU and thus giving priority to its exports to European markets.
As part of its policy to promote and diversify its trade, Tunisia has signed a number of preferential bilateral and multilateral agreements:
* A bilateral agreement establishing a free trade area with Turkey,
* A Free Trade Area Agreement with EFTA countries,
* The Agadir Free Trade Agreement between Jordan, Egypt, Morocco and Tunisia,
* Bilateral agreements establishing a free trade area with Libya, Egypt, Morocco, Jordan and Iraq,
* An agreement establishing the Pan-Arab Free Trade Zone with 18 countries of the League of Arab States.
* Tunisia joined the OECD (Organization for Economic Co-operation and Development) Declaration on International Investment and Multinational Enterprises in 2012.
Tunisia became member of the Common Market of Eastern and Southern Africa (COMESA) in 2018. Tunisia will systematically have access to the triangular free trade area which includes, in addition to COMESA, the East African Community (EAC) and the African Development Community (SADC) which represents a market of 500 million people with trade valued at more than 110 billion dollars annually.
Furthermore, Tunisia benefits from reduced tariffs granted under the Generalized System of Preferences (GSP), which promotes the integration of countries into the multilateral trading system and contributes to promoting development through trade.
The GSP covers a wide range of exported products mainly manufactured, agricultural and craft goods with the United States, Canada, Japan, Switzerland and Australia.
We know Tunisia as a great holiday destination for Finns. Please, tell us more about the tourist attractions and holiday resorts in your country
Tourism in Tunisia is an industry that generates around 8 million arrivals per year, which makes the country one of the best-known destinations in the Mediterranean.
Often seen as simply a beach destination, Tunisia has a surprising tourist attractions. This is North Africa with vast Sahara dunes, mammoth ancient ruins, and exotic cities that are home to a sprawling tangle of souks. Tunisia was Rome's breadbasket, and the cultural riches the Romans left behind are more than enough reason to visit. But the history of Arab Empires has also bestowed the country with some of the region's most beautiful examples of Islamic architecture.
Aside its rich culture, Tunisia boasts lovely beaches, pleasant landscapes, several golf courses and the opportunity to enjoy premium spa care. Indeed, water sports, spa, quad trips, sea excursions and golf tournaments are only a few examples of the leisure activities offered by Tunisia.
This sector is popular mainly on the east coast. The following is a list of the largest resorts:
Questions: Ms Anne Hatanpää, Liaison Manager, Finland Chamber of Commerce
Answers: Embassy of Tunisia in Helsinki