DARE - Because Entrepreneurs Do

Rajiv Servansingh Regional Director, Mauritius Board of Investments in India

What steps has Mauritius taken to reassure investors in these times of economic slowdown?
Over the past two or three years there has been a new government. It has taken a number of steps to consolidate the fiscal situation in Mauritius, reducing debt to GDP ratio, reducing fiscal deficit and disciplining government expenditure. On the other hand, a number of measures have been taken to improve the business environment in Mauritius. Taxes have been capped at 15% for corporate as well as individuals. We have liberalized access to Mauritius for professionals. Today they can easily go and live in Mauritius if they work in the country, as well as for investors who can settle down in Mauritius rather easily now. All these measures have helped us in containing the effects of the crisis.
It is also true, however, that we are suffering. Our GDP growth has come down from 6.5%. We expect it to be 3.2% this year. We have suffered mostly in our export sector, particularly garments. There has also been a slowdown in export of services. This is regarding our tourism industry, where we were having a growth of 10 to 12% yearly, but that growth has slowed down last year to around 2 to 2.5%.

What are the new opportunity areas for investors in Mauritius?
If you have to make a distinction between emerging and traditional sectors in Mauritius, basically the traditional sector would be agriculture (mainly sugar), tourism and government manufacturing; and in terms of emerging sectors we are looking at BPO, ICT, ITeS, medical tourism, which is leveraging our position in tourism. The fact that we are well positioned in the European market, for example, and what we think would be ideal is to marry this reputation that we have as a tourism destination with expertise from India in the medical field. We think that if you can marry these two, we can have a good medical tourism industry in Mauritius. We are also looking at the knowledge industry.

The African market is still very much untapped. Do you think it is one area where Indian entrepreneurs can benefit?
What we are selling to Indian companies is Mauritius as a platform between India and Africa. Basically, Mauritius is an African country. Although we are not part of the African continent, we are politically an African country. We are part of the African Union etc. This provides a number of benefits for companies that are manufacturing in Mauritius for exports to Africa.
We believe (also my personal belief) that Africa is probably going to be the next big destination. It is one of the untapped areas of the world.

How is the tax regime favorable for investors?
We have capped taxes at 15%, both corporate and individual. Dividends are not taxable. There is no restriction on foreign exchange movement. These are some of the benefits of doing business in Mauritius.

How much does it cost to start a business in Mauritius?
In terms of renting an office or renting industrial space, if you compare it to Mumbai, we are certainly cheaper. In terms of industrial space, we are still a bit cheaper than India. Labor costs are a little bit more expensive than India. Although I find that in the past three years that I have been in India, even labor costs there have been going up sharply. Electricity costs are exactly the same in both countries.
We have also made things very easy. You can set up a company in Mauritius, wholly owned by Indians, within three days. You don’t have an obligation to have a Mauritian partner, as you have, for example, in Dubai. In Mauritius you can set up a 100% Indian-owned company within three days. This will cost you maybe Rs 4,000 to 5,000.

How easy is it to close your business?
Nothing in the law prevents you from closing your company. But there is a process that one has to follow. It is similar to firing an employee. Nothing in law says that you cannot fire an employee. The thing is, the law says how you do it and that is all.

Is it easy to hire people and lay them off?
We have modernized our labor laws. We haven’t had a strike in Mauritius in the last 10 years. The labor market is regulated, but it is not over-regulated. You can keep temporary labor. You can also import labor. You can bring in professionals to work in Mauritius. This is something we have made easy.

In which sectors do you see more interest from Indian entrepreneurs?
I must tell you honestly. In Mauritius in the tourism industry it is our policy to go for the high end of the market. So when we are looking at foreign investors, and given that it is a small island, we want to maximize the use of land on the coast, so we go for big companies. But over the past two or three years, ITC Welcom has set up a company in Mauritius. We have had interest from Grand Hyatt. Big Indian companies like Taj and Oberoi are already present in Mauritius.

What are the sectors where you would like to see more action from Indian entrepreneurs?
I am looking at ICT, BPO, medical tourism and financial services (we already have Bank of Baroda and SBI; we would like to see some private players too). In the medical space we have done quite well. We have got a number of speciality hospitals that have come up. Fortis has recently purchased a clinic. Education is one of the major areas. Using Mauritius as a platform to have African students to come and have Indian education in Mauritius. The faculty will be Indian, the course content Indian.

Are there any sector-specific incentives
there too?
We have done away with these. We used to have them, but then we decided about three years ago to remove those. We had a situation where corporate tax was 35%, while in some sectors there was no tax, in yet others it was 15%. So we decided it was far simpler to create a level playing field. We have now reduced it to 15% for everybody.