Foreign Investors Shy Away From Tunisia

Foreign Investors Shy Away From Tunisia

From The Guardian

Some foreign investors are certainly worried about the political instability and acts of terrorism, though for the time being there have no attacks, nor even threats, against foreign business interests. The mid-August decision by Standard & Poor’s to downgrade Tunisia’s debt rating from B to BB- is a setback too.

“The Tunisian economy is dying,” warned Wided Bouchamaoui, head of the Tunisian Union for Industry, Commerce and Handicrafts (Utica), in an interview with Nessma TV last month. He blamed the government for being too passive. “Since the end of 2012 we have been calling for a state of economic emergency to be declared, in order to reassure national and international investors … There has been no response.”

The wariness is apparent in the trends for foreign investment and job creation. Almost $575m was pumped into the economy during the first half of the year, creating 2,610 jobs, compared with $581m over the same period in 2012, with 6,700 new jobs, according to the Foreign Investment Promotion Agency. Investment is up on 2011, but down by 14% compared with the first half of 2010, before the revolution.

“It’s more difficult to persuade investors to locate to Tunisia, due to the country’s image in the media,” says Mokhtar Chouari, Fipa’s head of international marketing. Yet everything needed for investment is on hand, with infrastructure for business, qualified personnel and financial incentives. “Firms which only work for the export market pay no tax on profits for the first 10 years. The minimum wage is $200 a month,” Chouari adds.

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Some employers are thinking about pulling out; others have already taken the plunge. Fifty wholly or partly owned French companies closed in 2011-12, as against an annual average of 43 over the previous decade. Italian and German firms have followed suit (respectively, 54 and 14 closures in 2011-12).

The Bizerte area, with its huge industrial parks, is a major economic hub. But it has suffered from the downturn. On 10 July the Italian safety shoes specialist Jal Group closed its factories. In July Germany’s Continental Automotive Systems announced it would be leaving in the first quarter of 2014. Production will be transferred to Rambouillet, France, and a site in the Czech Republic. The firm, with a workforce of 400 in Tunisia, did not respond to our questions.

Read more at The Guardian.