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 http://www.gov.mu/