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Foreign Direct Investment Analysis In Tunisia

FDI in Figures

FDI currently represents 10% of productive investments, generates one-third of exports and over 15% of the total number of jobs. After a decline in recent years due to the global recession, the country's socio-political revolution and the crisis in the Eurozone, FDI saw a strong recovery. However, it declined again in 2013 and in 2014, due to the deterioration in the country's security situationand the lack of medium and long term economic visibility. Between 2015 and 2016 Tunisia nevertheless gained one place in the Doing Business report of the World Bank, which rates countries' business climate (ranking 74th out of 189 countries). According to forecasts by the Tunisian Agency for the Promotion of Foreign Investment, FDI flows rose by 20.7% in 2015 compared to 2014. This FDI was mostly concentrated in the industry sector, while it declined in the service sector.

The main investment sectors are textile, computer science, corporate services, energy and tourism. The sectoral distribution today shows a definite orientation towards industrialisation.

Foreign Direct Investment Analysis In Tunisia

Why You Should Choose to Invest in Tunisia

Strong Points:

The country's credit-worthiness guarantees it access to international capital markets. The growing diversification of the economy reinforces its resistance to economic crises. Tunisia enjoys a strategic location on the Mediterranean and its capital city Tunis is, on average, at a two hour flight from the major European capitals. A well-developed social system and an ambitious education policy aims to reduce the social cost of adjustment and reinforce the modernisation of the country. Tunisia has a qualified, productive workforce at competitive salary levels. In 2016, Tunisia adopted a new investment law that simplifies procedures to obtain investment authorisations and eases restrictions on hiring foreign workers.

Weak Points:
Economic reform in Tunisia has not kept pace with political reform since the revolution of 2011. Issues of corruption and nepotism remain while prohibitive customs and tax regimes continue to pose barriers to small and medium-sized enterprises. State-owned enterprises still play a large role in Tunisia’s economy; many sectors remain closed to foreign investment. The informal sector is large (estimated at 40-60% of the economy by the U.S. State Department). According to a report on Tunisia by the IMF (February 2016), the lack of access to finance, the ineffectiveness of public institutions and stringent labour regulations are among the key constraints to higher private investment in the country.

Government Measures to Motivate or Restrict FDI

Over the last few decades, Tunisia has chosen to further liberalise its economy and to integrate it in the world economy. A new competition law, adopted by the Government in 2015, canceled previous provisions that fixed prices, limited the entry of companies into certain sectors and controlled production, distribution, investment, etc. Tunisia has free trade zones (known as Parcs d’Activités Economiques) in Bizerte and in Zarzis, where companies are exempt from taxes and customs duties and benefit from unrestricted foreign exchange transactions. The production in these zones has a limited duty-free entry into Tunisia for the purpose of transformation and re-export. 

In 2016, Tunisia adopted a new investment law that simplifies the procedures to obtain investment licenses, permits and authorisations. The law creates the High Investment Board as a central body to replace the multitude of administrative bodies that previously issued these required documents. The hiring of foreign workers is also made easier by this law, adding an element of flexibility to what are otherwise the most rigid labour market regulations in the MENA region.

The list of measures established by the Government to encourage FDI is available on the Foreign Investment Promotion Agency (FIPA) website.

Foreign Direct Investment Analysis In Tunisia

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