News Highlight
Major reforms to gear the economy towards global
competitiveness
Business facilitation and
opening of the economy are key to securing the transition from trade
preferences to global competition, as set in the budget proposals.
In his inaugural budget speech delivered on 9 June
2006, the Deputy Prime Minister and Minister of Finance and Economic
Development, Mr. Rama Krishna Sithanen, announced a series of measures to
build “a new, open and competitive service platform that is fully
integrated into the global economy.”
The
Mauritius 2006-2007 budget will in essence aim at creating jobs, promoting employment
and returning to growth whilst “securing the transition from a preference
dependent to a globally competitive economy.” In addition, Mr. Sithanen outlined several measures to revitalise
existing economic sectors, facilitate investment and open up the economy.
Ease of Doing Business and Opening
Up of the Economy
One of
the prime objectives of the proposed reforms is the encouragement of private
investment in new pillars of the economy, such as the seafood and aquaculture
hub, property development (Integrated Resort Scheme), the land based ocean
industry, the knowledge hub, the medical hub and the pharmaceutical cluster.
Mr. Sithanen highlighted that the achievement of the above
objective rests on the “ease of doing business and opening the
economy”.
A new approach to doing business has
been proposed to allow businesses to start operations on the basis of self
adherence to comprehensive and clear guidelines, while doing away with the
present framework and incentive system. The new system introduces 12 measures
intended to streamline the application process down to 3 working days.
“These reforms will improve the investment climate to world
standards,” Mr. Sithanen said.
The object is to enhance the
country’s attractiveness as an investment destination.
Complementary to this ambition is
the opening of the economy. Mr. Sithanen referred to
foreign investors and the Mauritian diaspora that
could come in “without hindrance”: “(…) money is not
enough. We also need to attract the people who can contribute to our
development by bringing ideas that germinate and flourish elsewhere.” To
this end, he proposed 14 new measures that would give the government’s
“outward looking strategy” a global perspective, by opening the
country not only to investment but also to foreign talents, know how, ideas,
and technology.
“The Financial Services sector must grow, modernize and
diversify”
Mr. Sithanen
further enumerated forthcoming developments that would promote the
diversification and growth of the financial services sector:
§
The
Securities Act, which now provides for the setting up of Securities Exchanges
only, will be reviewed to empower the Financial Services Commission to approve
the setting up of other types of Exchanges.
§
The
Over the Counter Market will be phased out and a Development and Enterprise
Market with less stringent criteria than those applicable to official listings
on the Stock Exchange of Mauritius will be set up to allow smaller companies to
be listed as well.
§
A
renewed fillip for progress will be given to the Global Business sector through
the following reforms, being activated on five fronts:
î
the
range of banking activities conducted from
î
present
commercial law will be reviewed to provide for a mode for notification in the
case of assignment of debts and on the pledging of shares that will encourage
the use of
î
the
extension, with slight modifications, of the regime of the ‘Gage
Special’ presently existing in favour of banks
to transactions involving global business companies;
î
the
Financial Services Commission will encourage the exchanges to create special
boards for the listing of global business companies;
î
the
regulatory framework will be amended to enable Management Companies in the
global business sector to provide fund administration services to funds
established in other recognised financial centres.
Moreover,
labour market reform, controlling wastage and
securing efficiency gains in the public sector, fiscal consolidation and
discipline, tax reforms as well as broadening the circle of opportunities are
expected to be instrumental in achieving sustainable growth in the years ahead.
Other important components of the budget include a
major restructuring of Income Tax, the introduction of a National Residential
Property Tax, the gradual raising of retirement age from 60 at present to 65 in
2018, and the creation of an Empowerment Programme with a project value of Rs 5 billion.
15 June 2006
Download full budget speech at www.gov.mu