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Seychelles:
Islands of
Unlimited Opportunities
Seychelles High
Commissioner to
India H.E. Dick
Patrick Esparon
believes that
sky is the limit
for investment
opportunities
between India
and his country,
whose population
comprises people
of Indian origin.
In an interview
to Satya Swaroop
& Tripti Chakravorty
the High Commissioner
says that Seychelles
and India are
realizing that
there are unlimited
opportunities
to be tapped in
both countries.
Excerpts.
Please
give us an in-depth
account of Seychelles'
economic development
and what schemes
are being offered
to promote India
Investment there?
Since independence
in 1976, per capita
output in this
Indian Ocean archipelago
has expanded to
roughly seven
times the pre-independence,
near-subsistence
level, moving
the island into
the upper-middle
income group of
countries. Growth
has been led by
the tourist sector,
which employs
about 30 percent
of the labor force
and provides more
than 70 percent
of hard currency
earnings, and
by tuna fishing.
In recent years,
the government
has encouraged
foreign investment
to upgrade hotels
and other services.
At the same time,
the government
has moved to reduce
the dependence
on tourism by
promoting the
development of
farming, fishing,
and small-scale
manufacturing.
Real GDP grew
by 5.8 percent
in 2007, driven
by tourism and
a boom in tourism-related
construction.
The Seychelles
rupee was allowed
to depreciate
in 2006 after
being overvalued
for years and
fell by 10 percent
in the first nine
months of 2007.
Concurrent with
the stabilization
process, the development
of infrastructure,
education and
health was undertaken
to create a solid
base for future
economic growth.
Today the country
is in a transition
from central planning
to a free market
economy with greater
private sector
involvement. The
government is
willing to consider
the privatization
of state-held
assets ranging
from the wholesale
sell-off of parastatals
to private sector
participation
with majority
control. Strategic
social sectors
of the economy,
including the
generation of
electricity, provision
of piped water,
import of essential
and staple commodities
and public bus
transport, will
remain under government
control.
While tourism
remains the backbone
of the economy
and provides the
bulk of Seychelles
foreign exchange
earnings, efforts
at economic diversification
are central to
future plans.
The development
of Seychelles
as an International
Business Centre
(IBC) is being
pursued. The IBC
programme includes
a duty-free trade
zone called the
Seychelles International
Trade Zone (SITZ),
a legal framework
for the establishment
of international
trusts, offshore
company registration,
development of
financial services
to support international
trading and businesses,
and the registration
of certain activities
in Seychelles,
including those
under the Merchant
Shipping Act and
Air Navigation
Act.
Business &
Investment Environment
Since the early
1990s, the formulation
of all economic
policies has been
based on the concept
that investment
by the private
sector in the
economy is the
key to the future
of Seychelles.
Legislation to
create an enabling
environment for
increased private
sector involvement
in the economy
was implemented
in 1995. It included
a general tax
reduction and
the passing of
new legislation
providing guaranteed
incentives. Also
in 1995, government
established the
Investment Development
Advisory Service
(IDEAS), later
renamed the Investment
Desk, a division
within the Ministry
of Finance, which
aims to develop
and promote an
enabling investment
climate.
Investment Promotion
Act (IPA)
The Investment
Promotion Act,
promulgated at
the end of 1994,
took effect on
1 January 1995.
IPA aims to develop
the economy through
promoting new
types of economic
activities, upgrading
the standard of
existing activities
as well as addressing
the fiscal environment
for those marginal
activities whose
circumstances
were a result
of factors other
than undercapitalization
and poor management.
Investments are
classified into
various sectors:
Agriculture and
Marine Resources
Investment; Industrial
and Manufacturing
Investment; Professional
Services Investment;
Small-Scale Industries
Investments; and
Tourism Development
Investment.
Concessions are
prescribed for
the various sectors
under three main
categories: Export-Oriented
Units; Special
Growth Areas (any
activity in the
Outer Islands,
a yacht marina,
five-star hotels,
helicopter services,
a golf resort,
semi-industrial
fishing using
the longline or
dropline method);
and General Category.
Investments that
qualify are issued
with a Certificate
of Approval for
a fixed period.
This document
lists the concessions
and incentives,
which are automatic
and guaranteed
during its validity
and cannot be
changed to the
disadvantage of
the investment.
If subsequent
legislation that
is issued is more
favourable, then
the investment
can benefit from
the change. For
instance, in 1997
several amendments
to the IPA were
introduced to
attract foreign
investment within
the tourism sector.
The new legislation
allows yachts,
liveaboards and
passenger cruise
ships registered
in Seychelles
exemption from
certain provisions
of Social Security,
the Immigration
Decree and Business
Tax Act. In the
past only yachts
and liveaboards
benefited from
complete exemption
from trades tax
on capital equipment,
raw materials
and manufactured
goods and services.
The amendments
now authorize
the same concessions
to cruise ships.
The incentives
address all areas
of taxation and
range from concessionary
rates to complete
exemption of tax.
In certain areas
the importation
of foreign labour
up to a limit
is permitted upon
payment of concessionary
work permit fees.
Another provision
of the Act allows
for accelerated
depreciation of
up to 150 percent
in the first five
years which could
mean a virtual
tax holiday in
an appropriately
structured company.
The Seychelles
International
Trade Zone (SITZ)
Efforts to transform
the archipelago
into an offshore
business base
is seen by the
creation of the
Seychelles International
Trade Zone (SITZ).
SITZ is a business
park for export-oriented
activities. Projects
involving the
redistribution
of goods from
Seychelles, transhipment,
repackaging, warehousing,
light assembly,
manufacturing,
and processing
of goods for export
may qualify for
an SITZ licence.
The SITZ is located
between the airport
and the port,
thus minimizing
transportation
costs. It consists
of three distinct
areas: Zone 1
(16,000 sq. m)
is close to Port
Victoria and has
been designated
specifically for
warehousing and
redistribution;
Zone 2 (96,497
sq. m) is to be
used partly for
warehousing and
partly for light
assembly; and
Zone 3 (140,000
sq. m) is closer
to the airport
and intended for
manufacturing
and processing
activities. All
three zones have
been developed
by the government
with utilities
and infrastructure.
Companies situated
in the zones benefit
from major fiscal
incentives Including
exemption from
all local taxes,
the ability to
import foreign
labour, fast and
efficient customs
clearance, adequate
outbound container
space and attractive
rates for export
cargo.
In return, operators
must ensure that
their output is
geared for an
export market;
that adequate
insurance cover
is provided for
their workers
within the zone;
that all transactions
are carried out
in conformity
with the laws
of Seychelles;
and that their
project or manufacturing
process does not
pose a threat
to the environment.
SITZ is managed
by the Seychelles
International
Business Authority
(SIBA).
Applications for
licences, together
with a project
memorandum, should
be lodged with
SIBA who evaluate
and approve all
proposals.
Conducting Business
in Seychelles
The Companies
Act governs companies
trading in Seychelles.
The incorporation
process is simple
and can take place
within 48 hours.
There are no restrictions
on ownership and
companies may
be 100 percent
foreign-owned.
All businesses
require a license
issued by the
Seychelles Licensing
Authority. All
imports require
an import permit
issued by the
Ministry of Finance
and Communications.
Investment Opportunities
Opportunities
abound in a wide
range of sectors
such as agriculture,
livestock and
animal feed production,
fishing and fish
processing, tourism,
light industry,
and oil exploration.
Credit may be
extended by the
Development Bank
of Seychelles
for sectors in
which there is
scope for foreign
equity and expertise
such as fish smoking,
prawn farming,
and other value-added
fish-related activities.
Small hotels offer
opportunities
(although investment
is restricted
to those with
more than 25 beds),
as well as boat
building for export
to states around
the Indian Ocean.
Taxation
A trade's tax
is applied on
all items imported
into the domestic
economy. The rates
vary from zero
to 200 percent
on luxury items,
but the average
rate is 25 percent.
Goods for transshipment
and re-exportation
are exempt from
tax, as are imports
of capital equipment
by new businesses
(excluding passenger
vehicles), raw
materials and
industrial throughputs,
agricultural inputs
and used personal
effects (excluding
passenger vehicles)
of individuals
taking up residence
in Seychelles.
Professional services
such as accountants,
lawyers, architects
and engineers
are also subject
to a trades tax
on their turnover.
Business tax is
payable on profits.
Dividends and
other personal
income are not
subject to business
tax.
The rates of business
tax are:
First SR 24,000
(0 percent)
Next SR 24.000
(25 percent)
Next SR 48,000
(30 percent)
Above SR 96,000
(40 percent)
Income from rental
of residential
property, ships
registered under
the Merchant Shipping
Act (1992), International
Business Companies
(offshore companies),
International
Trusts (offshore
trusts), and of
operators on the
Seychelles International
Trade Zone (SITZ)
are completely
exempt from business
tax.
Foreign Trade
Seychelles has
always relied
heavily on imports
and is generally
a net importer
of visible goods.
The country imports
a wide range of
consumer goods,
fuel and all capital
equipment. However,
efforts are being
made to substitute
locally produced
goods for imported
commodities.
Seychelles has
great potential
as a centre for
transshipment
and redistribution,
being located
at the centre
of the Indian
Ocean, midway
between the large
trading and manufacturing
blocs of Asia
and Europe and
having direct
access to major
cities in Asia,
Africa, Europe,
the Middle East
and the Far East.
Preferential import
tariffs are applied
to goods originating
from member countries
of the Indian
Ocean Commission
(IOC), namely,
Mauritius, Comoros,
Madagascar and
Reunion. Likewise,
exports originating
from Seychelles
receive preferential
import tariff
treatment in IOC
countries.
Besides being
a member of IOC,
Seychelles is
also a member
of SADC, COMESA,
and a signatory
to the Lome Convention.
The Government
of India launched
the Focus: Africa
programme in 2002,to
cover seven countries
but extended it
to the entire
continent a year
later because
of the immense
bilateral trade
potential it offered.
Since then, four
India-Africa Partnership
Conclaves, followed
by the First Ever
India-Africa Summit
in June this year
have been held.
Please give a
detailed account
of how has Seychelles
benefited from
all this exposure?
Seychelles for
reasons unknown
to us was not
invited to participate
in the four India-Africa
Partnership Conclaves.
As for our participation
in the first ever
India-Africa Summit
in June this current
year, Seychelles
participation
was through SADC
and the African
Union Executive
Committee.
Given the above,
it is tasking
to outline the
benefits derived
by Seychelles
through the above
mentioned incentives/forum.
Can you identify
specific areas
where Indian companies
have transferred
technology and
invested funds
in Seychelles?
Yes definitely,
one of India's
telecommunication
giants "Airtel
of the Bharti
group started
operation in Seychelles
more than 10 years
ago.
India's Bank of
Baroda which started
operations 30
years ago and
continues to be
a major provider
of banking services
in Seychelles.
The majority of
the big construction
companies building
Hotels and other
Tourism infrastructures
are of Indian
origin and their
work force is
almost entirely
made up of Indian
nationals.
Line of Credit
(LOCs) from Export
Import Bank of
India have been
effective instruments
of promoting projects
development besides
bilateral trade
with Africa. What
is the total quantum
of funds that
Seychelles has
received under
various LOCs and
what are the specific
projects funded?
The Line of Credit
that Seychelles
has with the Government
of India and which
is being disbursed
by the Exim Bank
of India amounts
to 8M-USD. The
agreement to that
effect was signed
by the Principal
Secretary for
Finance of Seychelles
and Exim Bank
Officials in Mumbai
in July 2006.
The Line of Credit
is being utilized
to import Tata
Buses and spares(for
the public Transport
System) and basic
commodities and
foodstuffs namely,
onions, Potatoes,
Rice Sugar, Soya
Meal, Yellow Maize
etc.
India
as well as China
accord high priority
to Africa because
of its natural
resources, especially
in the energy
sector. What specific
resources that
Seychelles can
offer India, and
what schemes are
being offered
to promote Indian
investment there?
What are the other
opportunities
for synergy between
India and Seychelles?
Seychelles is
a very small country
when compares
to the other countries
of the Indian
Ocean and Africa.
But, however we
are very strategically
positioned in
the middle of
the Indian Ocean.
Seychelles working
in partnership
with India could
very well be transformed
to become the
trans-shipment
hub of the Indian
Ocean. Seychelles
has a vast maritime
exclusive economic
zone. The potential
for investment
in the following
areas is overwhelming;
fishing; fish
processing ,post
services, and
infrastructure
development industrial
tuna fishing,
mari culture for
high value species
such as pearl,
oysters, aquarium
fish, fish farming
and exploitation
of water species.
Through Seychelles
Indian investors/companies
can access the
other countries
of the Indian
Ocean and the
African continent.
The Hospitality
sector of Seychelles
is offering safe
haven to Indian
investors. Investing
in Hospitality
sector of Seychelles
can result in
high sustainable
growth. Indian
investors can
engage in the
development of
luxury resorts,
residential properties
and high class
leisure and recreational
facilities.
Information Technology
and Communication
Seychelles can
gain from India's
robust service
sector particularly
by the highly
competitive technology
segment. Seychelles
is well versed
in basic computing
and establishing
a center for excellence
would provide
the ground for
specialized computer
training. E-commerce
facilities are
potential areas
presently being
considered by
the Government.
Other areas of
telecommunications
and information
technology including
assembly, retails
and wholesale
of hardware for
domestic and re
export market.
Pan African Network
- Trade and Commerce
Indian Manufacturers
and service provider
can provide Seychelles
with the bulk
of its day to
day requirements.
Trade between
India and Seychelles
more than doubled
from 1999 to 2007.
More specifically
trade grew by
156 percent-The
bulk of the commodities
are food, live
animal products
and manufactured
goods.
India is a potential
market for importing
of rice, potatoes
and similar food
commodities.
Education &
Human Resource
Development
The Strategy 2017
launched by Seychelles
President James
Michael which
outlines the Seychelles
economic framework
for the next ten
years places a
lot of emphasis
on Education and
Training. The
University of
Seychelles was
henceforth launched
as the vehicle
for the creation
of knowledge based
society. In the
post discussions
with the Government
of India, it was
felt that Seychelles
could tap into
India's expertise
when it comes
to the provision
of qualified Lectures
for the University
of Seychelles.
Rightly this is
yet again another
possible area
of cooperation
which we would
promote.
The network is
a satellite based
network provider
Tele-education,
Tele medieval
services and VVIP
connectivity for
53 countries in
Africa. This project
is being implemented.
In fact experts
and technicians
from India are
in Seychelles
right now. It
will be operational
towards the end
of 2008.
Would
you like to highlight
a recent success
story of Indian
Investment in
Seychelles?
Bharti Airtels
Telecommunication
Company started
operation in Seychelles
some 10 years
ago. Prior to
Airtel coming
on the scene the
whole domestic
market was monopolized
by the cable and
wireless of Seychelles.
Airtel today is
a major player
when it comes
to telecommunication
in Seychelles.
Construction Industry
The construction
Industry in Seychelles
is actually today
controlled by
companies of Indian
Origin and the
majority of the
construction workers
are Indian Nationals.
Banking Sector
The Bank of Baroda
-started operation
same 30 years
ago and has today
assumed his rightful
place as amongst
the most respectable
Bank in Seychelles.
Public Transport
The Indian Tata
buses and the
Ashok Leyland
buses are the
daily mode of
transportation
for thousands
of Seychellois.
The Indian buses
have been found
to be idly suited
to travel the
roads of Mahe
(the main island)
and Praslin (the
second largest)
islands of Seychelles
Personally, what
are the initiatives
have you have
taken to promote
bilateral trade?
First and foremost
let me clarify
that the Seychelles
High Commission
in Delhi opens
its doors in May
this year.
Secondly my priority
for this year
is to revisit
and attend to
all the dossiers
of cooperation
between the Government
of India and Government
of Seychelles.
And most importantly
focus on the dossiers
where I feel that
progress has been
slow.
Thirdly, I have
embarked on a
series of meetings
visits and fact
"finding
missions"
with the view
to ascertain that
indeed there are
avenues to promote
bilateral trade
between India
and Seychelles
and to assess
what India has
to offer.
I have met and
continue to meet
with major organizations
like CII, the
PHD Chamber of
Commerce etc and
other individual
and private organizations
and institutions
here in India.
I am in the process
of networking
with those organization
and Institutions
to organize a
visit to India
by a very High
Level Delegation
from Seychelles
which will include
Top Executives
from the Ministry
of Finance, Seychelles
Fishing Authority,
Seychelles Tourism
Board ,Seychelles
Investment Bureau,
Seychelles Chamber
of Commerce to
present to India
what Seychelles
has to offer.
The one thing
that, I am trying
to get materialized
is the signing
of the double
Taxation Avoidance
Agreement between
India and Seychelles.
This is one hurdle
that we have to
overcome if we
are to drastically
improve and promote
bilateral trade
between our two
countries.
To summarize,
the groundwork
and foundations
are being laid
for a sustainable
and genuine partnership
and increase in
the volume and
quality of trade
traffic between
India and Seychelles.
Anything else
you would like
to add?
I am optimistic
and convinced
that Seychelles
and India are
slowly but surely
coming to the
realization that
there are unlimited
opportunities
to be tapped in
both countries
and that if we
collaborate and
cooperated with
each other the
sky is the limit
as to what could
be achieved.
Seychelles and
India shares a
common history-The
Seychelles Population
comprises of people
of Indian Origin.
Our destinies
are to a large
extent intertwined.
History will observe
how two countries;
one with a population
of 1.2 billion
people and the
other of only
85,000 has been
able to partner,
and overcome the
artificial obstacles
that lay in their
path to achieving
peace and prosperity
for their respective
people. |
