Why should you invest in Tunisia?
In an international context which is gradually recovering from the financial and economic crisis, a new, post-revolution Tunisia is seeking to attract foreign investors based on three main assets: geography, human capital and low wages.
Consequences of the Arab Spring: mixed feelings
The multiple Arab revolutions, known as the Arab Spring, began in Tunisia on December 17, 2010 following the self-burning of Mohamed Bouazizi, in Sidi Bouzid. The death of this young street vendor sparked an incredible movement that was quickly spread to five other countries: Libya, Egypt, Iraq, Syria and Yemen. Although, the Tunisian revolution is considered by the authorities has essentially non-violent, it caused the death of 338 people.
If the Arab Spring in Tunisia is considered has a positive happening for the country providing hope for its citizens and a better image to the international community, both terrorists attacks in Bardo and Sousse damaged dramatically what Tunisia conquered.
The famous Bardo National Museum, in Tunis, was attacked by three terrorists on March 18, 2015 causing the death of twenty-two people, including twenty foreigner tourists. Just three months after, on June 26, 2015 a mass shooting happened at the resort Port El Kantaoui, causing the death of thirty-eight people.
These terrorist attacks were both a human and economic catastrophe for the Tunisian authorities. The country couldn’t afford to lose a sector that counts 8% of GDP, provides thousands of jobs and is a key source of foreign currency. According to the United Nations World Tourism Organisation, Tunisia lost 25% of tourists in 2015 compared to 2014.
Six years after the overthrow of the Tunisia’s dictator, Zine al-Abidine Ben Ali, the main challenge is how to maintain the current investment and attract new ones.
How to brand safety?
With an eye to Italy, Tunisia seems to be the natural bridge between Europe and Africa, between the East and the West.
“We are one of the most competitive economies in Africa and the first one in North Africa” stated Khalid Laabidi, General Manager of the Tunisian Foreign Investment Promotion Agency. “We were victims of bad press regarding both terrorists attacks but you should have in mind that we were and are also victims. We were not prepared for what happened. We were under shock for quiet some time but the new government took measures in order to provide, again, a safe environment” he concluded.
“I was already working in Tunisia before both the revolution and the attacks. Personally, my business didn’t suffer any negative impact. I have a few clients back from Europe that are sometimes sceptical about investing in Tunisia or working with me. It is a constant battle to explain that the economic environment is safe.” explained Carlo Battaglia, business partner of Magic Yachts. Carlo is based in Bizerte where he developed his business of creating and restoring boats.
“The process of creating a company in Tunisia is quiet simple and efficient. The authorities established a concrete strategy in order to attract and maintain european foreign investment. In my case I’m working within the headquarters of the Parc d’Activités Économques de Bizerte where I have all the conditions to boost my business” he concluded.
A new Investment Law, which came into force on the April 1, 2017, offers multiple advantages to foreign investments such as:
- total freedom of foreign equity participation for offshore companies.
- reduction in the number of authorisations and review of the relevant specifications.
- freedom of access to land ownership for the realisation of the investment.
- guarantees to the investor in compliance with international standards for fair and equitable treatment and for the protection of industrial and intellectual property.
- freedom to transfer of funds (profits, dividends and assets) abroad.
- possibility to hire 30 % of foreign executives during the first 3 years by simple declaration and 10 % thereafter with 4 executives guaranteed in all cases.
Is Tunisia going towards a low cost brand?
“Income tax rate was reduced in 2017 to 10 % for totally exporting companies. We think this is an important measure in order to attract more investment. Another pillar of our strategy is to explain that we do have an excellent human capital able to work in different fields” stated Mr. Laabidi.
There are around 70 000 graduates in Tunisia per year and 35% of which are engineers. The engineers’ wages are way lower compared to Europe. It ranges between 286 Euros (700 TND) and 448 Euros (1100 TND) whereas in France it would range between 2700 Euros (6620 TND) and 3000 Euros (7356 TND).
Luca Galfetti, another Italian expat and project manager of CPT, a company located in Bizerte, confirmed that lower wages played a very important role on the decision to open a company in Tunisia. “I’m very happy with the quality of my workers even if at the beginning I experienced a cultural shock on how to approach work”.
“We don’t want to brand the country as only a competitive cost location. We acknowledge that lower wages are an added value for our economy however it’s more important that the investor understands that it is easy and quick to open a company in Tunisia; that we have an excellent human capital and that we are located in a perfect geographical position that will allow the investor to have its final product back in Europe in 48 hours. This is our message” summed up Mr. Laabidi
Tunisia hosts 3200 international companies that generate 300,000 jobs. France, Italy, Germany and Belgium are the first industrial investors in Tunisia. 2017 seems to be a turning point for Tunisia’s economy.