4th Tunisia-UK Trade Investment Forum

4th Tunisia-UK Trade &

Investment Forum

Tunisia has many attractions to the prospective investor, including notably its competitive costs, wide pool of talent, world-class infrastructure, choice of transport connections, dedicated industrial sites and free zones and a business friendly environment.

These issues and the latest opportunities in a wide number of sectors were flagged up during the 4th Tunisia-UK Trade & Investment Forum hosted by the Chamber on 9th December 2021.

The ABCC welcomed a trade delegation from Tunisia in London to participate in the forum held at the Chamber premises and organised in collaboration with the Tunisian Embassy. A distinguished speaker panel was headed by His Excellency Mr Nabil Ben Khedher, the Ambassador of the Republic of Tunisia, who was joined by Mr Jed Mrabet, President, Tunisian British Chamber of Commerce, Mr Zied Braham, Director, FIPA UK - Invest in Tunisia, and Mr Gonzalo Butori, Senior Associate, Giambrone & Partners, an ABCC member company.

Mr Bandar Reda, CEO & Secretary General and the Rt Hon Baroness Symons, ABCC Chairman, both delivered opening contributions at the event. Mr Reda remarked that the ABCC was looking at the possibility of leading a UK business delegation to Tunisia during 2022.

In her opening remarked, Baroness Symons described Tunisia as a very welcoming place for visitors and highlighted its many attractive features such as its heritage, natural landscape and accessible location. Tunisia’s population was generally well educated and skilled while women have long played a prominent part in public life, including business.

Mr Abdeslam El-Idrissi, ABCC Deputy CEO & Secretary General, chaired the discussion.

Delegates to the event heard that Tunisia was promoting itself as a gateway to Africa.

In his keynote remarks, H E the Ambassador explained that the purpose of the forum was to highlight prospects for trade and investment, as was the case with the previous three forums that have been held since 2017.

His Excellency Mr Nabil Ben Khedher flagged up one of the recent successes as being a recent change to the rules on olive oil exports to the UK. Thanks to this one of the best olive oils available anywhere was now available in UK stores.

A task of the forum was to make people more aware of what Tunisia had to offer with the ultimate aim of raising the level of trade and investment. The Ambassador explained how Tunisia was seeking to boost exports in agri-food produce and textiles.

He looked forward to Tunisia forming partnerships with UK companies interested in garments production and specialist textiles. The prevalence of talent in the Tunisian IT sector meant that there were notable opportunities for the UK IT sector.

Tunisia also aimed to see a major influx of holidaymakers and tourists from the UK.

The two countries were looking to develop closer links in the field of education and language learning.

New projects were emerging in the clean energy sector following the commitments to reduce carbon emissions. Tunisia’s serious intentions were reflected in the large delegation from the country that attended the COP26 summit in Glasgow. UK and Tunisia were currently exploring new green energy projects.

Jed Mrabet stated that the current transition in Tunisia was opening up new opportunities for investment and doing business with the UK.

He outlined the activities of the Tunisian British Chamber of Commerce, of which he is president. The TBCC was helping to identify areas of opportunity and seeking to match projects with investors.

A business taskforce had been established to suggest the kind of reforms needed to improve the investment climate and attract new investors.

Zied Braham, Director, FIPA UK, explained the country’s FDI landscape and the key sectors with most potential. He said that 3,700 foreign firms from the UK, EU, US, Japan and China were active in the Tunisian economy with the majority producing for export. The UK was Tunisia’s 12th largest investor with over 90 companies active in the market in sectors from textiles to the emerging high tech industries, Mr Braham said. He saw that UK firms were currently expanding their operations in the country.

Pharmaceuticals, electronic components and organic produce were some of the areas that investors should seriously look into for the potential that they offer.

The London office of FIPA was open to provide help and advice to any prospective investors and it would be able to help people make useful connections.

KEY ATTRACTIONS OF TUNISIA

The country’s main industries are petroleum, mining (phosphates, iron ore), tourism, textiles, footwear, agribusiness.

In terms of trade, Tunisia’s main exports are textiles, clothing and semi-finished goods, crude petroleum, agricultural produce, olive oil, phosphates, mechanical goods and electrical equipment.

As a destination for investment, the country’s Foreign Investment Promotion Agency (FIPA-Tunisia) identifies significant potential to be found in aerospace, agribusiness, electronics, mechanical, plastics and textiles as offered most potential for foreign investors.

Tunisia’s major trading partners, on the basis of 2019 data, are France (29.1% of global total), Italy (16.2%), Germany (12.8%), Spain (3.8%), Libya (3.6%), Algeria (2.7%), followed by the United Kingdom (2.2%).

Population

Of the country’s assets and strengths, Tunisia boasts a population of 11.8 million, on World Bank data for 2020. Human capital is a definite asset for the country given the highly educated and skilled population. Women play a prominent role in public life and in business.

Another asset is the country’s location close to the main markets of the European Union and the United Kingdom.

High Literacy Level

Tunisia has a high literacy rate (79%) which has continued to improve year on year. Improving education has remained a policy priority since the country first achieved independence. named Najla Bouden, a senior civil servant in the higher education ministry and lecturer in geological engineering, to the post making her the first female prime minister of any Arab country.

The appointment of Bouden reflects the fact that Tunisia was for long at the forefront among Arab countries in terms of promoting civil rights for women, granting them full legal equality including marriage rights.

Tunisia positions itself as a “Gateway to Africa” with FIPA-Tunisia is promoting the country to investors in a “Your Gateway to Africa” campaign. On 9December, FIPA-Tunisia planned its first post-COVID-19 event under this theme in Milan. The aim was to discuss investment and business opportunities in sectors with high growth potential within the country. FIPA-Tunisia recorded a slight decline in foreign investments into Tunisia of two percent during the first nine months of 2021, estimated at 1.383 billion dinars ($494 million).

Trade Agreement with the UK

The UK signed an association agreement with Tunisia, which is now in effect, to ensure continuity following the UK’s exit from the European Union. This trade agreement opens up new opportunities for doing business.

GDP Growth

Tunisia revised its GDP growth expectations for 2021 to 2.6%, down from a previous forecast of 4%, according to Reuters. The IMF figure for real GDP growth was 3%.

Investment Law

Tunisia’s investment law simplifies the procedures for obtaining licenses, permits and investment authorisations and limits restrictions on the hiring of foreign workers. A High Investment Board acts as a central body and replaces the multitude of administrative bodies that previously issued these required documents. The hiring of foreign workers is also made easier by this law, adding flexibility to labour market regulations. Other initiatives include a new bankruptcy law, an investment code and a law enabling public-private partnerships. The Tunisian Parliament passed law 2019-47, which contains 38 amendments to address shortcomings in existing laws and regulations that impeded investment.

Tunisia has free trade zones (known as Parcs d’Activités Economiques) in Bizerte and in Zarzis, where companies are exempt from taxes and customs

duties and benefit from unrestricted foreign exchange transactions. The production in these zones has limited duty-free entry for the purpose of transformation and re-export.

UK-Tunisia Trade

Bilateral trade is currently small with potential for expansion.

Total trade in goods and services between the UK and Tunisia was £380 million in the four quarters to the end of Q2 2021, a decrease of 31.3% or £173 million from the four quarters to the end of Q2 2020, according to DIT data.

Of this £380 million:

• Total UK exports to Tunisia amounted to £174 million in the four quarters to the end of Q2 2021 (a decrease of 30.4% or £76 million compared to the four quarters to the end of Q2 2020);

• Total UK imports from Tunisia amounted to £206 million in the four quarters to the end of Q2 2021 (a decrease of 32.0% or £97 million compared to the four quarters to the end of Q2 2020).

Data from Trade & Investment Fact Sheet on Tunisia, DIT, December 2021

UK Drops Tariffs on Tunisian Olive Oil

Imports After Signing Trade Deal,

Tunisian exporters can now sell olive oil in the United Kingdom duty-free after an agreement between the two countries came into force earlier this year, reported the Olive Oil Times, 13 July 2021.

The post-Brexit trade agreement between Tunisia and the UK was signed in October 2019. The trade agreement allows for 7,723 tons of Tunisian virgin olive oil to be imported without tariffs each year.

According to the International Trade Centre data, Tunisia exported 6,239 tons of olive oil to the UK in 2019, the last year for which data are available. Overall, the UK is the twelfth largest destination for Tunisian olive oil by value globally and the sixth-largest in Europe.

Agriculture is a key sector in the Tunisian economy, accounting for 10.4% of the GDP and employing 12.7% of the workforce in 2020, according to the World Bank. An improvement in production methods in recent years has allowed the sector to develop and improve the cultivation of olive trees, fruit trees and palm trees, while enabling the country to reach a level of food sufficiency. Organic farming has boomed in recent years, where Tunisia is seen as one of the most productive countries in Africa.

Certified Organic Produce

Tunisia became a certified exporter of organic produce in 2010 which has allowed it to export produce like organic olive oil to the UK market. Olive oil accounts for the largest share in agricultural exports, followed by dates, olives and fresh fruit. Agricultural and agri-food offer attractive investment opportunities.

Industrial Sector

Industry represents 22.7% of the GDP and employs 32.5% of the active population, according to World Bank data. Tunisia’s industrial firms are predominantly export-oriented. Sectors such as leather and shoe industry, paper, cardboard, plastic, wood, food and construction materials have all experienced a decline in activities. Meanwhile, the chemicals, textiles and clothing sectors were growing until 2019 when the Covid-19 pandemic began to exert an impact on the industrial sector, in particular on textiles and clothing and the mechanical and electrical engineering sub-sectors. The fall in foreign demand led to a reduction in exports of mechanical and electrical engineering and textiles by 27% by mid-2020 year-on-year.

Automotive Industry

The automotive industry has shown great flexibility and has developed the capacity to adapt to new trends. The sector has strengths across the value chain in advanced R&D, production planning, concept definition product development manufacturing and assembly, marketing, sales & after-sales, equipment manufacturers and suppliers.

Services

The local economy is largely orientated towards services, which account for 61.7% of GDP, including the booming sectors of ICT and tourism. The service sector employs 54.8% of the country’s workforce. Following a difficult period, tourism recovered considerably in 2019 with international arrivals rising to 9.4 million or a 13.6% increase year-on-year. The growth rate in the services sector was 0.6%. Professional training and research are both rising sectors.

Tourism

The Covid-19 pandemic had a strong impact on tourism revenues which fell by almost 30%, affected by the closure of international borders in March 2020. With the total lockdown in April 2020, foreign tourist bookings were cancelled, with an estimated 80% drop in the tourism sector.

Improvement in Tourism Indicators

Tourism revenues slightly improved and were estimated at around 1.9 billion Tunisian dinars (about $678 million) in the first 10 months of 2021, according to the financial and monetary indicators released by the Central Bank of Tunisia (BCT).

Tunisia received about 1.94 million tourists, an increase of 7.2 percent, with a six percent rise in revenues, which may provide a stock of foreign exchange the economy desperately needs during this period. However, these figures are still far lower than records achieved in 2019, when Tunisia received around 9.5 million tourists, bringing in five billion dinars ($1.8 billion) in revenues.

Renewable Energy

Tunisia is working to increase the share of renewable energy in the electricity mix to 30 per cent by 2030. During 2021 Tunisia launched tenders to develop and build 16 solar power plants with a total capacity of 70 MW. Selected projects will sell national electricity utility company STEG under a long-term power purchase agreement. Tunisia aims to install 3.8 GW of renewables before 2030.

Clothing & Textiles

Both the UK and Tunisia are committed to forging closer partnerships between their respective professional clothing industries. Tunisia boasts natural advantages based on its close proximity to the UK market and the maturity of its diverse textile and manufacturing industry.

The UK government has funded a project to support Tunisian companies in the textiles sector to become trusted supply partners for the fashion and retail industry. Tunisia is already the goto partner for many leading Italian and French brands.

A Buy Tunisia Textiles campaign aims to achieve a sustained increase in trade between Tunisia and the UK. The campaign was implemented by international trade and investment advisory firm OCO Global based in Belfast and overseen by Coffey International Development on behalf of the British Embassy in Tunis. Tunisian counterparts involved are national export promotion agency, CEPEX, the Tunisian-British Chamber of Commerce, and regional Chambers of Commerce.