Investment in seychelles

SEYCHELLES

A Look into the Bright Side for Foreign Direct Investment

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TABLE OF CONTENTS INTRODUCTION CHAPTER 1: Introduction to Seychelles CHAPTER 2: Living in Seychelles CHAPTER 3: The Status of Foreign Direct Investment in Seychelles CHAPTER 4: The Business Climate in Seychelles CHAPTER 5: The Investment Policy in Seychelles CHAPTER 6: Investment Opportunities in Seychelles CONCLUSION

Introduction One of the crucial contributors to a country’s development and economic growth is foreign direct investment (“FDI”). FDI has the potential of bringing capital, access to new markets, technology, employment, and management know-how. Many developing countries including the African countries have realized this potential and have come to embrace it. Each and every government in every African country is doing all that it can to woo international investors to come and invest in their countries. In so doing, they promote the utilization of the business opportunities in their home countries that have not been fully utilized by domestic investors.

In the recent past, FDI inflows into the African continent have been increasing. However, they remain far below the other continents. The reason behind this trend is that African countries face many challenges that discourage many foreign investors from investing in those countries. Seychelles is a Small Island Developing States (SIDS), and they are not far off from the above common misconception. Many people perceive them to have very limited natural resources, markets, and areas prone to natural disasters like tsunami and cyclones just because water surrounds them.

Most people never think about the business opportunities available in these countries but rather the challenges. As an international investor, it is not until you get comprehensive information about these countries that you can get the business opportunities available despite the widely cited challenges.

Robert Arnott once said that “In investing, what is comfortable is rarely profitable.”

Sometimes, it is necessary to get out of your comfort zone and to step out to unearth investment opportunities some of which have not been utilized by other investors. It is however very important to know the boundary of your comfort zone and know all the necessary information tere is to know before investing in a project or a foreign country.

Many developing economies in the world provide many investment opportunities to international investors. It is only those who are aggressive enough who can turn them into lucrative ventures.

Seychelles: A Look into the Bright Side for Investment is a book that has been written with the international investor in mind. Little is known about some developing countries and what is known sometimes tends to be half-truths. This book has been written specifically to enlighten potential foreign investors about all the important information concerning foreign investment in the Republic of Seychelles. Although many SIDS are prone to natural disasters, all of them cannot be categorized on the same level. This book seeks to leave the reader informed about how Seychelles is different from some other SIDS. The book is written to specifically bridge the information gap between international investors, who are seeking investment opportunities and the Republic of Seychelles as the host country encouraging international investors to invest in the country. There are several publications mostly from the agencies of the Government of Seychelles that seek to inform international investors more about investing in the country. These agencies

are tasked with the responsibility of increasing the FDI inflows into the country. The information provided may only contain what may be good-sounding to the international investors. This book has been written from a neutral point of view with the aim of informing potential investors of what to expect if they choose to invest in the country.

Having been compiled after days of comprehensive research, this book provides valuable information about FDI in Seychelles. Chapter 1 introduces you to the Republic of Seychelles by presenting the general information and facts about the country. The second chapter is generally about how life is like in the country including the cost and quality of living. Chapter 3 explains the status of FDI in the country, common trends and what the government of Seychelles is doing to promote the country as the ultimate destination for FDI. The fourth chapter is about the investment climate in the country.

It enlightens potential foreign investors about the conditions that investors in the country must operate in. The fifth chapter presents the investment policy in the country, and this informs international investors about the legal and policy regulations that govern FDI in the country. The final chapter gives foreign investors clues about the profitable business opportunities that they can choose to invest in.

It is my intent to give you a comprehensive compilation of the information concerning FDI in Seychelles. I have written this book in the shoes of an international investor who is looking for information about FDIs in the country. The purpose of the book is to help international investors to make informed decisions before choosing to invest in the country.

Chapter 1: Introduction to Seychelles 1.1 Seychelles At a Glance The Republic of Seychelles is an upper-middle income country comprised of a group of 120 islands scattered in the Indian Ocean and about 1,500km to the east of the Kenyan coast. The country is located outside the cyclone belt thus having a relatively stable weather condition with rare natural disasters. The outbreak of tropical diseases such as malaria that is known to be a concern to many SIDS does not occur in the country.

The archipelago is grouped into two: the Mahé group and the Coralline group. The Mahé group consists of 45 islands while the Coralline group is comprised of 75 islands. Mahé is the most important island which is 27km long and 11km wide. Other important islands are Praslin and La Digue.

All the islands combined, make a total land area of 455 km2. The small size of the country coupled with a developing economy makes it one of the SIDS. French, English, and Seychellois Creole are the official languages in the country, while the latter is a spinoff of the French language. English is also the language of the government. The capital city is Victoria, which is on Mahé Island. The total population of Seychelles is approxiamately 92,000, and 75% of who live in Mahé. The archipelago occupies an Exclusive Economic Zone (EEZ) of 1.4 km2.

The archipelago lies within the time zone of GMT +4. During summer, it is usually three hours ahead of Britain and two hours ahead of Europe. The currency used in the Seychelles is Seychellois Rupee (SR). US$ 1 is equivalent to SR 13.49 as at March 2016.

1.2 Brief History The islands were not inhabited before the Portuguese discovered them in early years of 16th Century, although there is some evidence that the islands had some contact with the outside world way before the Portuguese came. The current population in the country immigrated into the islands in the 1700s. This late settlement is the reason as to why there is no indigenous population in Seychelles. The country is multi-racial with African, French, Indian and Chinese population. The advantage of the diverse population is that the diversity enables the harmonious work and relationships of people from different cultures and backgrounds. As a result, investors from around the globe usually find it easy to live in Seychelles.

Seychelles was a French colony from 1756 up to 1811 when it was made a British dependency of Mauritius after the French ceded it to the British. In 1903, it became a British colony before attaining independence in 1976. Seychelles later on became a republic before becoming a member of the Commonwealth.

In 1977, just a year after independence, James Mancham, the first president, was ousted

by France Albert René after a bloodless coup d’état. René led the coup because he did not like the idea of over-depending on tourism. He wanted the republic to be only for

the Seychellois and to have the economy diversified. Through the 1979 Constitution, his regime introduced a socialist one-party state that was to last until 1991. The Constitution was amended in 1993 where the multi-party state was re-introduced.

Prior to the 1993 amendment of the Constitution, the country experienced several attempted coup d’états all attempting to remove René from power. During this period, the investment environment was not conducive enough for international investors. This explains why FDI inflows into the country despite the fact that they had picked up so well especially after the opening of the international airport in Mahé in 1971. The socialist rule hampered FDI inflows into the country as the country was then generally politically unstable.

1.3 Geography and Climate The islands forming the country lie between 4o and 10o to the south of Equator. Despite being close to the Equator, the climate is very stable. The temperature of the country moves from between 25oC and 31oC throughout the year. July and August are the collest months while March and April are the hottest. There are times when the country experiences very long hours of sunshine from 5.30 am to 8.00 pm. It receives an annual rainfall of above 2000mm though some Coralline islands attract annual rainfall far below this. The archipelago lies outside the hurricane zone. Thunderstorms rarely occur and are not extreme.

1.4 Visa Requirements There are no visa requirements for foreigners entering Seychelles despite their countries of origin. However, several traveling documents must be produced for foreigners to get immigration clearance while entering the country either by sea or air. These documents include a valid passport, return ticket and proof of accommodation which also includes contact details.

Upon the presentation of these documents, visitors are issued with Visitor’s Permit once they arrive in the country. These visitors permits re valid for oe month only and can be extended for other three months. This can further be extended for successive periods of up to 12 months.

1.5 Permanent Residence It is possible for foreigners to be granted permanent residence in Seychelles after making an application and if they meet the general set conditions. Foreigners can be considered for permanent residence in the country if they are not prohibited immigrants, they are not absent in the country for more than one year without the express permission from the relevant Minister, and if they have not been sentenced for more than one year in prison.

For foreign investors applying for permanent residence in the country, priority is given to those who have invested more than US$ 1 million in the country and have stayed in the country for over one year. Another priority is given to those who have invested more

than US$ 1 million in the country and have business association resulting from FDI for at least five years.

The Residency Permit is usually valid for five years after which it can be renewed by following the application procedure. Citizenship is given to investors who have invested more than US$1 million in the country and have lived in Seychelles for over 11 years.

1.6 Natural Resources The ideal location of Seychelles offers an exquisite natural environment making it one of the finest holiday destinations for tourists. In 2011, Seychelles was the honeymoon destination for Prince William and Kate Middleton.

Some of the natural resources in the country include sculpted granite boulders, untouched natural forests, coral reefs and amazing bird sanctuaries. The private resorts and exotic hideaways add to the magnificence of the archipelago.

Seychelles has very beautiful flora and fauna of which almost 50% of the land area in the country has been set aside for preservation. The beaches in Seychelles are just breathtaking. The archipelago offers the best opportunities for sailing, diving, fishing, islandhopping and trekking.

1.7 Legal Structure and Government The Seychelles legal system borrows heavily from the English Common Law and the French Napoleonic Code. The country’s Civil Code is adapted from the French Napoleonic Code while the company law and other aspects of the modern commercial laws are based on the English Common Law. The public law is derived from the English Common Law. The Court of Appeal is the hghest court in Seychelles and English is the official language for its legislation and the courts.

There are several law firms in Seychelles but the majority of the lawyers, who are known as attorneys-at-law, are sole practitioners. Most of them are trained in England but have to go through pupillage in Seychelles for a period of two years before they are licensed to practice in the country. The pupillage is important for them to be conversant with the specifics of the law in the country.

The legislative authority lies in the National Assembly, which is comprised of 34 members. Of the 34 members, 25 are representatives of constituencies directly elected into office while nine are for proportional balance depending on the outcome of the elections. The current Constitution was last amended in 1993, introducing a multi-party system of governance.

Today, Seychelles is a democratic multiparty republic that is under the leadership of Parti Lelep, formerly the Seychelles People’s Progressive Front. The country is a member of the United Nations, the African Union, La Francophonie and the Commonwealth.

Chapter 2: Living In Seychelles Before moving into a country, foreign investors usually consider what business opportunities are available. They, therefore, need to have the necessary knowledge of what to expect once they move into that country. I have compiled the relevant information of what to expect when you move to Seychelles.

Despite the fact that Seychelles is comprised of several races, there is no apparent discrimination based on skin colour or any other basis such as creed, gender, religion or even disability. Seychellois interact well with everyone although they sometimes group themselves into some social circles that someone who does not belong to the group may find it hard to break into.

The Republic of Seychelles provides for various housing options which include private luxurious apartments and private residential. Housing in Seychelles depends on what type of house you want to live in. Houses can be rented from private individuals either for short or long term lease. In this case, the monthly rent of a bedsitter ranges from US$ 340 to US$ 700, depending on the location and how it is furnished.

In Seychelles, fish is cheaper than meat. It is good to buy the ones that are gutted when they are fresh from the sea to keep them fresh for a longer period. The other alternative is salted fish which lasts forever.

The people in Seychelles have a fantastic way of reducing costs. For instance, most of them grow some basic vegetables for their own consumption at their homes. The vegetables that can be grown include tomatoes, sweet potatoes, pumpkins, maniocs among others. If you are planning to stay in the country for a long time while monitoring your investment, it will be a great idea to grow your own vegetables. It is also a great move because the grocery stores and fresh markets are few in the country.

There are several supermarkets in the cities and towns where you can do your household shopping. It is wise to shop once a month and at the beginning of the month so as to avoid running to the supermarket every other time.

Utility bills such as electricity, water, and telephone are paid for at the end of each month. Charges increase if you happen to over use these basic utilities. It is important that you consider using energy saver bulbs and to use water wisely while avoiding unnecessary leakages.

Public transportation is readily available with bus fare for one trip costing around US$ 0.40, cabs charging around US$ 45 and car hires starting from US$ 60 per day. It is, therefore, easy and cheaper to get around Victoria and MahĂŠ at large by use of public transportation. Walking and cycling may not be a good idea because the roads are windy, narrow, have dangerous turns and most do not have sidewalks. Hiring a car could also be a good thing because it is also affordable when you compare the costs with cab fares.

The traffic rules require people to drive on the left. However, this appears to be more of

a suggestion more than a rule. Petroleum is sold at US$1.24 in Victoria. The transport system is very efficient. The islands are also well connected with ferries.

Victoria is the capital and is home to aboutc75% of the population. The comparison of cost of living in Victoria and elsewhere is as follows: (a) Clothing cost is low; (b) alcohol and tobacco costs are average; (c) education is low; (d) communication is average; (e) groceries is high; (f) health care is high; (g) furniture and appliances costs are average; (h) household accommodation is average; (i) personal care is very high; (j) transport is high; (k) restaurant meals and hotels costs are average; and (l) recreation and culture costs are very low.

The cost of living in Victoria is cheaper than in Stockholm, Atlanta, Dubai, and Havana.

It is almost the same as in Brussels, Madrid and Bologna. It is, however, more expensive than in Durban, Johannesburg, Maputo and Pretoria.

While living in Seychelles, there are no risks of contracting tropical diseases such as malaria, cholera, and yellow fever. Besides that, the healthcare sector is efficient with decentralized public health system offering different healthcare services. There are also many private clinics and dental care centres which supplement the public health sector.

Chapter 3: The Status of Foreign Direct Investment (FDI) in Seychelles 3.1 The Trend of FDI Inflows The FDI options in Small Islands Developing States (SIDS) are limited. However, despite all the factors limiting FDI into these countries, the overall FDI inflows into SIDS is reported to be very high considering the size of their economies.

The ratio of FDI inflows to the size of the economies of SIDS happens to be very high because there is low competitive pressure in these countries. Foreign investors are willing to invest in these countries because despite the fact the market is small, there are few players, and therefore, the market share is much higher. Some SIDS including Seychelles have relatively very high purchasing power further mitigating the problem of small market size.

Seychelles just like other SIDS has a small market size, narrow resource base and remotely located. These factors usually limit the scope of the economic activities that can be carried out in the country. Air and sea are the only two options to access the country. This is also another factor that can push investors away especially if the investments they want to make rely heavily on imported goods. The transport costs through sea and air tend to be very high as compared to road and railway.

Just like other SIDS, the economy of Seychelles is physically isolated from the continental Africa, and it is economically vulnerable. There is very high specialization in the economy and the fluctuations in the world economy highly affect the country’s economy. An example is an overreliance on tourism sector; whereby the decrease in the numbers of tourists visiting the country, the major will be the blow that the economy will face.

However, despite these challenges, the ratio of FDI inflows to the GDP remains very high compared to the world’s average. Seychelles is ranked the same as Mauritius among all other SIDS according to how attractive their FDI is. The reason behind this is the fiscal advantages in the country that encourage foreign investors to invest in the country. There are incentives such as effective business registration, favourable tax regimes, secrecy rules and lax regulatory framework. All these factors have made Seychelles become a hub for offshore financial centres (OFCs).

Although Seychelles is part of the African continent, it is not a continental country. The ideal geopolitical location of the country means that there are no dangers of conflicts from other countries spilling over into Seychelles. Other problems such as terrorism and disease outbreaks are also eliminated.

Most of the FDI inflows to Seychelles come from the United States. FDI inflows from China are increasing at a very high rate almost overtaking those from the United States and Australia. Most FDIs are in the country’s tourism sector, but the other sectors also

have promising business opportunities and some foreign investors are already taking advantage of them.

3.2 Bilateral Investment Treaties (BITs) All investors, whether local or foreign, always choose to invest in areas where the law protects their investments very well. Seychelles has investment laws that protect the interests of all investors in the country. Sometimes, however, the investment laws may have some gaps while protecting investors. That is why the country has entered into BITs with other countries to further protect foreign investments. BITs refer to agreements entered into by two countries to protect foreign investments in one country from the other. BITs are intended to increase FDI inflows between the contracting states by reducing the political risks which usually hampers FDIs. In the BITs, the two contracting States agree that they will protect the foreign investors in the host country and treat them as their own. Many countries are known to shield their own investors from the competition from foreign investors by introducing protectionist measures such as investment requirements that are unfavourable to foreign investors and licensing requirements of which the domestic investors are exempted from.

Some countries tend to favour investors from certain countries because of reasons such as historical ties. BITs, therefore, ensure that foreign investors from either contracting parties are treated the same way as the investors from the most favoured countries.

Another advantage of BITs is that they provide for the dispute resolution mechanisms because, in some cases, the host country may not have a strong framework to resolve disputes, especially high-profile investment disputes. BITs, therefore, spell out what should be done should any investment dispute between the investors from the two countries arise.

The Government of Seychelles has executed several BITs with Cyprus, Egypt, China, France, and India with the aim of attracting more FDIs into the country. It has also entered into other investment agreements such as ESA-EU EPA, EU-SADC Interim Agreement, COMESA Investment Agreement, SADC Investment Protocol, Cotonou Agreement, COMESA-US TIFA, COMESA Treaty, AU Treaty and SADC Treaty.

3.3 Double Taxation Avoidance Agreements (DTAs) Most African countries impose capital gains tax at rates between 30% and 35%.

However, Seychelles has entered into DTAs which have the effect of restricting the imposition of capital gains taxes. This is another factor encouraging foreign investors to invest in the country as they can make significant tax savings. The Government of Seychelles has signed DTAs with South Africa, China, Botswana, Oman, Malaysia, Thailand, Kenya, Sri Lanka, United Arab Emirates, Cyprus, Vietnam, Indonesia, Bahrain, Barbados, Qatar, Kuwait, Belgium, Guernsey, Mauritius, and Zimbabwe. These DTAs are also part of BITs.

These DTAs together with the other BITs that Seychelles has entered into are regularly reviewed to make sure that their provisions are favorable to foreign investors and that they make foreign investors more certain of how their taxes will be treated. They ultimately reduce the instances of double taxation while increasing profits.

3.4 Regional and International Cooperation Seychelles is very focused on both regional and international cooperation. It is a member of the African Union, the Indian Ocean Commission (IOC), Common Market for Eastern and Southern Africa, and South African Development Community (SADC).

The membership of these regional organizations has opened up the east and southern Africa as well as the western Indian Ocean region to businesses that are based in the archipelago. The small market provided by the small population in the country is expanded by the country’s membership in these organizations. These organizations have free trade principles, and therefore, the combined population of their member states can also be the target market for the products from the businesses in the country.

Seychelles is a member of the African Union, UN, Commonwealth, and Francophonie.

The country also has many overseas embassies and diplomatic posts. This is one of the ways the Government of Seychelles has been wooing international investors to come to invest in the country.

3.5 Anti-Money Laundering Seychelles has had a reputation for being a haven for international anti-corruption and anti-money laundering thanks to its booming offshore industry. However, there have been reports of foreigners channelling money earned through suspicious ways to companies in Seychelles in an attempt to make them “clean”. It has been estimated that nearly $32 trillion has been channeled into the country’s offshore industry. This is not a small sum of money because it equals the combined annual output of the United States, Japan, and China!

To restore the international reputation of a place safe for business, the government passed the Anti-Money Laundering Act (“the Act”) in 2006. The aim of the Act was to help fight this vice and to promote legitimate international investment in the country.

The Act guarantees that the investors in the country carry out their operations in a transparent manner. The country also cooperates with the international community in the efforts to eliminate this vice that hampers economic growth of countries in the world.

Earlier in 2004, the Prevention of Terrorism Act was enacted with the aim of guaranteeing foreign investors their safety. The implementation of the two Acts has been very successful, and they have significantly promoted FDI inflows into Seychelles.

Chapter 4: The Business Climate in Seychelles 4.1 The General Investment Climate The investment climate in Seychelles has significantly improved in the past decade. It has also proved to be very stable over the years with the high potential for growth. This is the reason behind the increase in FDI inflows. The country’s tourism industry, together with the other emerging sectors, has experienced tremendous growth.

The Government of Seychelles has made great efforts to encourage foreign investment in a bid to promote economic growth in the country. For a long time, the economy of the country has been dependent on tourism and fishing. For the past decade, the government has done a remarkable job to diversify the economy by attracting foreign investments in other sectors as well.

The country has come up with many reforms in the legislative framework to remove all the barriers to FDI. The government offers foreign investors generous incentives to encourage them to invest in the country. The BITs signed with other countries together with DTAs further facilitate foreign investment in the country. Today, Seychelles is one of the perfect destinations for foreign investments as the environment attracts them.

4.2 Labour Environment The labour force in Seychelles is estimated to be about 50,000. The literacy level stands at 96% and it among the highest in Africa. The country’s training needs are met by the technical colleges in the country. There is a large pool of professionals in the country in fields such as law, medicine, economics, and accounting among others when compared to the total population.

The labour regulations are fair to the employers, and it is not expensive for them to employ workers. The maximum working hours per week is 60 hours. The minimum employment age is 15 years though there are restrictions as to the tasks the employees under the age of 18 can perform. The minimum wage for government workers is US$ 320 per month. The private sector is free to come up with its salary scale that depends on qualifications and experience.

4.3 Government’s Support for FDI The Government of Seychelles has come up with measures to make it easy for foreign investors to choose to invest in Seychelles. The measures are also intended to guarantee foreign investors high returns on investment once they choose to invest in the country.

The fiscal laws are very fair as compared to other developing countries. The government has introduced many incentives to be enjoyed by foreign investors. It offers tax incentives to the investors who invest in the tourism, agriculture, and fisheries sector.

4.4 Infrastructure

Seychelles has excellent direct links with the United States, Europe, Asia and Africa through sea and air. The Seychelles International Airport is a world-class airport that has direct flights to various destinations across the world. The airport is located near the capital Victoria and the main airlines flying to and from it including Air Seychelles, Emirates, Kenya Airways, Etihad Airways, Qatar Airways, Ethiopian Airways, and Air Austral among others.

Port Victoria is strategically located in the Indian Ocean providing the best international route which makes it a crucial transportation hub. The harbour has two deep-water berths, is spacious for the handling of containers, and is equipped with the modern equipment to handle cargo. It is the deepest port in the entire Indian Ocean.

Apart from the perfect international links, the inland transportation is also superb with a good road network. The telecommunications system in the country is perfect, and it only compares to some developed countries. Water and electricity supplies in the country are good enough. The country is very peaceful, and this tranquil environment is ideal for businesses to thrive in.

4.5 Starting and Doing Business Ranking Seychelles is ranked at 95 out of 189 by the World Bank in terms of countries “ease of doing business”. This is an improvement from position 104 in the previous year. It is ranked number 123 on dealing with construction permits, 139 on getting electricity, 67 on registering property, 109 on getting credit, 105 on protecting minority investors, 43 on paying taxes, 86 on trading across the borders, 138 on enforcing contracts and 63 on resolving insolvency.

4.6 How Secure is Your Business?

Seychelles enjoys political stability compared to some other African countries. Largescale political violence is a common feature among many African countries. Seychelles has however not suffered any since in 1977 after the coup that brought the ruling party, the People’s Party best known as “Lepep,” to power. The 1993 Constitution advocates for peaceful means of changing the government through, free, fair, regular and transparent elections.

In Victoria and other towns, just like in many other towns and cities in the world, petty crime such as pickpocketing is prevalent. The high-seas surrounding the archipelago are insecure because of the Somali pirates in the Gulf of Aden, Arabian Sea and the Indian Ocean. This is where serious crime targeting tankers and dry bulkers takes place. As a result, many pirated goods are secretly sold in the markets in the country. It is a criminal offence to handle pirated goods in the country and so you should avoid buying these goods at all costs.

4.7 Corruption The Republic of Seychelles is ranked number 47 out of 177 countries in the Transparency International Corruption Perceptions Index. With this ranking, it is

among the least corrupt countries in the African continent. However, there are claims that those who are close allies of the government are usually treated preferentially.

Seychelles has been a signatory to the UN Convection against Corruption since February 2004.

4.8 Vulnerability To Natural Disasters Seychelles is not located within the cyclone belt, and this gives it an upper hand over other countries prone to natural disasters such as Mauritius, and all the Caribbean countries. Natural disasters are not common occurrences like some other countries surrounded by water. However, it is still vulnerable to natural disasters such as tropical cyclones, storm surges, floods, tsunamis, landslides, climate change and sea level rising.

The last cyclone that hit the country was in 2013 leading to damage and loss estimated to be about $8.4 million. The cyclone led to the government declaring a state of emergency. The 2004 tsunami did not bring so much damage to Seychelles compared with other countries hit by the same.

Seychelles is the only African country to qualify for the World Bank Group contingency financing aimed at helping countries to build resilience to natural disasters impacting the economy and the individuals in the country.

4.9 Banking and Financial Services The Republic of Seychelles has a good, financially sound and stable banking system. The banking industry provides for a wide range of services. The Central Bank of Seychelles regulates and supervises the industry. The commercial banks available in the country include Barclays Bank, Seychelles International Mercantile Banking Corporation, Bank of Baroda, Mauritius Commercial Bank, Habib Bank and Seychelles Savings Bank. The commercial banks have 24-hour ATMs and all major international credit cards such as Visa, Master Card, American Express and others are widely accepted in the country.

There are other microfinance financial institutions such as the Development Bank of Seychelles and the Seychelles Credit Union which offer credit facilities to businesses and projects to promote economic growth.

The insurance industry in Seychelles is also well-established, and there are several insurance companies and also insurance agents and brokers. The insurance providers in the country have varying charges depending on the type of business that is being insured.

Chapter 5: The Investment Policy in Seychelles 5.1 The Investment Laws In Seychelles Over the past decade, the Government of Seychelles has enacted laws that are favourable for foreign investors by ensuring that they are treated fairly and equally. The investment laws play a very critical role in ensuring the increase of the FDI inflows into the country. The laws have further served to open up the market for any investor whether local or foreign.

One very important piece of legislation is the Investment Act (the “Act�) of 2010. The Act has many provisions that ensure that foreign investors, together with their interests, are protected adequately well. For instance, the Act guarantees the protection of the property rights of the investors against any expropriation by the Government or any individual. The Act also allows foreign investors to freely transfer their profits out of the country.

The Act gives a wide definition to an investment and investors to include even those who do not initiate an investment, but they help in investing in the country in one way or the other. A perfect example is the acquisition of a stake of 40% in Air Seychelles. Etihad Airways is therefore accorded protection under the Act as an investor.

5.2 The Investment Institutional Framework The Government has established several institutions to facilitate the growth of FDI inflows into Seychelles. One of such institutions is the Seychelles Investment Board (SIB). The Bureau advises potential investors on the profitability of the business ventures they intend to invest in. It also guides them on all the steps they need to take for the business ventures to become successful.

The Bureau aims at reducing bureaucratic procedures while investing in Seychelles. It offers investors a wide range of services all under just one roof. All these services were previously being provided for by different Government Ministries and Agencies. It employs investment experts who have the responsibility of guiding new investors on procedural requirements. These experts assist investors from start until the end. It is a perfect institutional framework that has managed to promote Seychelles as the perfect destination for international investment.

The Seychelles International Business Authority (SIBA) manages the offshore investments. The Authority works to maintain the confidence of international investors to invest in the offshore sector. SIBA is the regulatory body providing investors with numerous investment opportunities in Trusts, International Business Companies, and many others.

5.3 Rights of Foreign Investors Foreign investors in the Republic of Seychelles are guaranteed equal rights just like the domestic investors. For instance, the investment laws in the country protect the right to

autonomy of investment. All the investors in the country whether domestic or foreign, are free to choose the sector to invest in, the type of investment to make, the scale of the investment whether small scale or large scale, the ways of raising capital, and operation period among other considerations.

Registered foreign investors also have the right to equally access and use the investment resources in the country without any discrimination whatsoever. They can access credit, use land and other natural resources as long as it is permitted under the laws of Seychelles.

Foreign Investors also have the right to import raw materials, machinery and equipment and to also export their produce as far as everything is done within with the provisions of the relevant laws. They also have the right to carry out advertisement and marketing of their products. They are also free to enter into contractual obligations with organizations that are authorized to publish advertisements. They also have a right to carry out processing and reprocessing activities of products. Foreign Investors also have the right to access all the policies and legal instruments concerning investment. They can give their opinions on investment laws and policies.

Intellectual property rights are well protected in Seychelles where all foreign investors and nationals are all treated equally. The Seychelles Copyright Act guarantees thiS protection which is manadated by the World Trade Organization.

5.4 Obligations of Foreign Investors Legal entitlements always come with duties and obligations. The Republic of Seychelles has made reforms on its legal framework to meet the international standards. The government is dedicated to ensuring that it creates the best environment for FDI that is both safe and stable. The obligation of each investor in Seychelles is a true reflection of any other modern and dynamic economy. The laws follow international standards which make the country safe and competitive and do not hinder participation in international trade.

Some of the obligations that investors have include the requirement for them to comply with all the legal provisions and procedures and to ensure that all their investment activities are sanctioned by the law. Investors are also expected to comply with all the financial obligations such as taxation as provided for in the law.

Environmental protection in the archipelago is not an optional extra like in some countries but a matter of priority. The location of the country makes it weak and as a result, environmental conservation is taken seriously. The country depends on the tourism and fishing sector. The two sectors have the potential of affecting the environment negatively if the activities are not regulated. This is why the emphasis is put on the conservation of the environment and the utilization of the resources in the country in a sustainable manner. SIB scrutinizes every new investment in the country to assess its impact on the environment before it is approved.

5.5 The Guarantee of Investment and Protection of Assets and Capital The Government guarantees foreign investment into the country by reviewing all the investment legislations on a regular basis to make sure that they still reflect the international standards and that the country remains competitive. This is all aimed at ensuring that the existing and new investments in the country are successful.

The Republic of Seychelles ensures the peace of mind of foreign investors in the country by various ways. The 2010 Seychelles Investment Act (the “Act�) ensures the protection of all investments against expropriation by the government. The Act provides that expropriation of foreign investments can only be done because of public interest such as national defense. This, however, cannot be arbitrary and prompt and fair compensation according to the market value should be given to those who are affected.

5.6 Settlement of Investment Disputes The Investment Code of Seychelles stipulates the ways in which investment disputes are to be resolved. Parties to the investment disputes are encouraged to mediate before the commencing of legal proceedings. For arbitrations, the dispute is heard by a neutral arbitrator depending on the contractual agreements between the parties. However, if they cannot resolve the disputes by themselves, the Code provides for settlement in a court of law.

Seychelles is a signatory to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. The convention establishes the International Centre for Settlement of Investment Disputes (ICSID) as an international arbitration institution dedicated to resolving investment disputes between investors and states.

5.7 Taxation in Seychelles The principles guiding the tax regime in Seychelles include transparency, fairness, responsibility and efficiency. The Seychelles Revenue Commission is the body tasked with the administration and collection of tax in the country. The calendar year, from January to December, also serves as the income year, but taxpayers can request for a different period to apply for their businesses.

Taxes levied in the country include Business Tax, Withholding Tax, Personal Income Tax, Trades Tax Imports, and VAT, which was initially Goods and Services Tax (GST).

The Business Tax rates are competitive. For an entity, trustee or a government agency, the first SCR 1 million is taxed at the rate of 25% while the remiander is taxed at the ate of 33%. For any other person who is not an entity or a government agency, the first SCR 150,000 of the taxable income attracts 0%, SCR 150,000 to SCR 1 million 18.75% while the remainder is taxed at 33%.

The Business Tax can be paid in different ways depending on the circumstances of each business. Most businesses usually file annual returns for an income year; others pay their taxes as they go (PAYG) every month.

The Government has zero-rated VAT for capital equipment in educational institutions, communications, for licensed medical practitioners and cable television services. There are some tax incentives depending on the industry one has invested in such as tourism, agriculture, fisheries, among others. Taxes are only levied on the income that has been accrued in the country.

5.8 Leasing and Purchasing of Land Foreign investors can acquire land in Seychelles either by leasing from the state or by buying it from private owners. For a lease from the government to be approved, investors must submit a project concept to SIB. The lease term ranges from 60 years to a maximum of 99 years, and this depends on the scale of investment.

Chapter 6: Investment Opportunities in Seychelles 6.1 The Reserved and Strategic Business Opportunities Seychelles is a free market economy where foreign investments and business ventures are encouraged. It is also part of the efforts by the government to liberalize the economy to encourage more FDI inflows into the country for the sake of economic growth. There are however some sectors that are termed as “reserved” while others are “strategic”. The first category consists of the sectors that are reserved only for domestic investors while the second category refers to the sectors that are open to all investors whether domestic or foreign which are subject to conditions aimed at protecting the public interest.

The areas reserved only for domestic investors include accommodation of less than ten rooms except luxury villas, overnight scuba services of one or two boats, tourist guide services, travel agent services, car hire business, diving centers except dive operators, taxi business, cottage industry, employment agency, boat operator, tour operator, public exhibition of films, artisanal fishing, building contractor except class one contractor, video shops, water sports, Internet reseller, and small enterprises. Other exceptions include business ventures into sectors that have not been invested in before or new technology introduced in the country for the first time.

The strategic investment areas include storage and distribution of petroleum, production and supply of water and electricity to the whole country, seaport and airport infrastructure, arms and ammunition manufacture and distribution, mining, activities related to the airspace, telecommunications and broadcasting services, genetic centers, production, storage and distribution of hazardous substances and animal feed, parent stock, hatchery and abattoir.

Grab more information here http://www.sib.gov.sc/ 6.2 Investment Opportunities Available For International Investors Seychelles’ strategic location in the West Indian Ocean, progressive legal and administrative framework together with the political stability it enjoys, makes it a relatively good investment destination for foreign investors. As a growing economy, there are many opportunities in various sectors that are available for foreign investment at whichever scale. Before choosing which sector to invest in, foreign investors should ascertain whether the area is preserved for domestic investors only or if it is open for foreign investment.

The country’s environment is among the best conserved in the world, and this makes it home to unique species of birds, flora and fauna, and fish. This widens the scope of the business opportunities that are available in the country.

6.2.1 Tourism The tourism sector is the backbone of Seychelles economy contributing 20% to the country’s GDP. 19% of the working class is employed in this sector. Seychelles is a

popular tourist destination, and recently, Prince William and Kate Middleton went for their honeymoon in the country.

Tourism sector can be said to be the widely exploited sector in Seychelles. However, there are still some business opportunities that the sector offers to the international investors. The rapid growth of the sector generates more business and at the same time creates more demand. The existing and profitable business opportunities include setting luxury resorts; island resorts; marinas and yachting; specialized restaurants such as Japanese, Chinese and French; ecotourism products; and cruise and mini-cruise tourism. These opportunities are profitable because the industry is growing very fast.

Through the government’s efforts, more visitors are visiting the country every year.

Therefore, there is a need for more products and services.

6.2.2 Fishing Fishing is another very important sector in Seychelles economy. The fishing sector in the country offers many investment opportunities that are not found in many countries that practice fishing. They include fish processing and value addition, aquacultures such as prawn farming, fishing fleets, boat repairs, and marine equipment and supplies.

6.2.3 Agriculture The topography of Seychelles limits the number of agricultural activities that are practiced in the country. However, there are other factors that favour agriculture, and they include the long hours of sunshine and plentiful rainfall. People in the country have learned how to take advantage of the two factors to grow fruits and vegetables. There is a high demand for fruits and vegetables and that is why some private island resorts have made heavy investments in agricultural activities on those islands employing hydroponics techniques.

The investment opportunities available in this sector include agro-processing, hydroponics, and crop farming which is friendly to the environment. The produce can be supplied to the domestic market, and the surplus can be exported. The demand for fresh and high-quality fruit and vegetables is always high, and the return on investment is pretty good.

6.2.4 Energy Seychelles experiences long hours of sunshine daily. During the longest days, the sun can shine from 5.30 AM to 8.00 PM. This offers foreign investors a business opportunity of establishing solar energy projects. There are many islands in the country, and many have not been inhabited. These are perfect sites for tidal, wind and other renewable energy source projects. Seychelles also takes environmental conservation very seriously.

Projects producing renewable energy are therefore great ideas sanctioned by the government. The business opportunities provided include photovoltaic system and system maintenance, assembling and distribution of water solar heaters and renewable energy support and technical services.

6.2.5 Manufacturing The manufacturing sector in Seychelles is still growing, but it is hampered by limited natural resources and labour supply which is low because of the small population. There are several opportunities in the sector which can be profitable. These opportunities can be found in solid waste management, design, and packaging that considers environmental conservation, recycling, and warehousing.

6.2.6 General Services The population in Seychelles is highly westernized. Products and services to support this lifestyle are in high demand. The country is strategically located coupled with political stability. The government, therefore, encourages foreign investors to consider setting their head offices in the country. The opportunities with promising returns on investments here include real estate developments; entertainment facilities such as underwater museums, bowling, and theme park; specialized pharmacies and medical centers; and trade in specialized boutiques, fishing gears, vehicle spare parts and agricultural supplies. Foreign investors who buy a real estate property in the country are given an automatic residence permit. The prices of real estate property such as villas and apartments are very high. The prices range between US$ 400,000 to around US$ 1 million, but the return on investment is very promising.

6.2.7 Oil Exploration Seychelles has a vast Exclusive Economic Zone of 1.4 million km2. The area is thought to contain unexploited oil reserves. Exploration in some areas is already on-going but still there are many places which have not been examined. The country potentially contains many other oil reserves that have not been discovered yet. The investments in this sector obviously require huge amounts of capital, but the profits are very high. The opportunities which foreign investors can consider venturing in include oil exploration and oil industry support services.

6.2.8 Offshore Industry The offshore packages offered by Seychelles are one of the best and most attractive in the world. The environment is enabling, and the legal, and regulatory framework encourages both domestic and foreign investors to invest in the offshore industry.

Investments in this sector are further encouraged by the government offering low government fees, an international trade zone, well-defined tax treaties with other countries, and low tax structures for investments. This has made Seychelles one of the world’s best offshore financial centres with numerous offshore products and services. It is the perfect tax haven coupled with a well-established secrecy policy and ideal offshore business laws.

The industry is usually threatened by foreign investors who try to clean their “illegally� obtained money by investing it in the country. The government, in its endeavour to curb

this is incoproarting anti-money laundering measures to ensure that it is only legitimate business that takes place in the country.

6.3

Places to Invest in Seychelles

6.3.1 Mahé This is the largest island in the Republic of Seychelles. It measures 155 km2 and has an estimated population of 80,000 people. This accounts for more than 75% of the total population. Victoria, the capital, is located in this city. Almost all the country’s facilities are located on this island. The island has a direct link to the outside world through the Seychelles International Airport and the Port. The capital and the island have a lot to offer ranging from tourism to real estate.

6.3.2 Praslin This is the second largest inhabited island located some 44 km north of Mahé. It occupies an area of 38.5 km2 and has an estimated population of about 7,500 people.

The island is an only 15-minute flight from Mahé or one-hour boat ride. It hosts two UNESCO World Heritage sites of Aldabra Atoll and Vallée de Mai. This makes it a major tourist destination in the country. Investment in tourism sector can prove to be very profitable.

6.3.3 La Digue It is the third largest inhabited island with a population of about 2,800 people. Its beaches are very popular especially because of its beaches and the wildlife. Tourists visiting the island have increased over time, and this means that more business opportunities are available. It takes 30 minutes on the ferry to get from Mahé to the island.

6.3.4 Silhouette This island is located 20 km northeast of Mahé. Its surface area measures 20.1 km2 and the population is estimated to be 200 mostly the people working on the island. There is only one resort operating in this island despite the fact that more tourists are trooping into the country.

6.3.5 Coetivy Island This is one of the coralline islands and is located 290 km south of the largest island Mahé. Its land area is 9.31 km2 and has a population of 252 who are mostly the people working on the island. The island is accessible by sea and also has an airstrip. The island is known for its attractions for tourists. Apart from that, it has a high potential for aquacultural development in addition to enough land for the same.

6.3.6 Assumption Island This island is located some 1,100 km away from Mahé. It is 11.07 km2 large and has a small settlement with a population of 7. The island has a long, white and sandy beach

that is said to be the best in the world. This attracts many visitors to the island. The island is highly potential for hotel development.

Conclusion Having read this book, you now understand Seychelles and FDI in the country better.

This is very important because as an investor, you need as much information as possible before you invest in the area that you are interested in. Although investments entail taking risks, it is important to have compact information about the area you want to invest in. This increases your certainty and confidence, and the two are ingredients of success in business ventures.

Benjamin Franklin said that “An investment in knowledge pays the best interest.� This means that the investment decisions made using excellent information have a high potential for success. The perfect knowledge is acquired from a comprehensive research, and this has already been done for you in this book.

The information in this book also enables you to be able to predict what you are likely to encounter when you make a decision of investing in Seychelles. It minimizes the risk of making investments that end up being a loss of resources.

Though increasing, FDI inflows into Seychelles are still low, and this is partly due to the challenges faced by SIDS. It is also partly because the facts about the country are not well known by the international community.

I hope that reading this book opens your eyes as a potential investor in Seychelles, though one of the SIDS has lucrative business opportunities in some sectors which have not been fully exploited.

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