Madagascar

Madagascar: Investment and Business Opportunities

Madagascar's numerous natural riches, the currently very competitive labor costs, and the ready availability of trainees and entry- to mid-level workers should prove very attractive to investors. Now may well be the best time to invest in the country.

The main opportunities are in the mining, infrastructure, agriculture, light manufacturing, tourism, and information/communication technology sectors. The Malagasy government has streamlined the procedures to establish and conduct business in the country, specifically in order to encourage foreign investors. The recently-created Economic Development Board of Madagascar (also known as the "EDBM") is the official one-stop-shop for all legal documents required for business transactions, where a prospective foreign investor can.

create a corporation in less than 3 days, including registration, filing of the statutes, obtaining a taxation identification number, and making sure the corporate officers are aware of the applicable fiscal laws;
obtain the necessary visas for all foreign personnel, in less than 5 days;
register leased or purchased real estate in 60 days or less from the date of application;
obtain information about the streamlined reporting requirements for the movement of capital into and out of the country.

The EDBM office is located in the center of Antananarivo in Ampefiloha, near the Carlton (ex-Hilton) hotel.

Foreign Investment Considerations

A peaceful country:

The Global Peace Index, a collaboration between the Economist Intelligence Unit and the Institute for Economics and Peace that seeks to quantify the level of social, economic and political peace in the world's different countries, ranked Madagascar 41^st in the world in 2007 (ahead of Botswana, Brazil, China, the UK and the USA), and 72^nd in the crisis year of 2009 (still ahead of Brazil, China and the USA).

Language:

Madagascar is one of the few countries in the world where everybody essentially speaks the same language. Though there are various ethnic groups and dialects spoken, communication is still possible across groups because of the commonality of the basic Malagasy language. French is the first foreign language but the use of English is becoming more widespread than in the past.

Infrastructure:

The road network has seen remarkable and sustained improvement (in the size of the network and in the level of maintenance) due to the official recognition of its importance to the economy.

Flights to and out of Madagascar currently encompass six weekly long-haul Air Madagascar flights (to Paris, Marseille, Bangkok and Guangzhou/Canton), three weekly Air France flights to Paris, a daily South African Airways flight to Johannesburg, and several weekly regional options.

Current government efforts are focusing on improving oversight of the public utility company in charge of water and power, and also encouraging more private participants within the sector.

Communication within the country has increased through readily available internet access with multiple providers as well as several cellular phone networks.

Foreign Investment Incentives

In addition to the explicit language in the Constitution favoring free enterprise and the free circulation of goods, persons and capital, several measures were recently passed by the government to encourage private investment, including:

the creation of the EDBM one-stop-shop to assist foreign investors with all legal transactions and requirements.
the creation of the Malagasy Arbitration and Mediation Center (known by its French acronym CAMM), a private organization to promote and facilitate the use of arbitration to resolve commercial disputes.
a privatization law with a specific clause declaring that the Government of Madagascar accepts binding international arbitration of investment disputes between foreign investors and the State. The courts recognize and uphold foreign arbitral awards, and international arbitration is accepted as a means of settling investment disputes between private parties.
parliament adopted a new law in December 2008 granting exporters specific benefits including a reduction of the customs tax rate on imported raw materials and capital goods to 5% (from the previous 10% to 20% range). Additional benefits include export tax exemptions, the freedom for Malagasy companies to open bank accounts abroad, and the creation of an export agency under the Ministry of the Economy to facilitate and promote exports.
a new investment law authorizing foreign investors to gain access to land through long-term leases (see the EDBM description above).
a new law creating special Export Processing Zones and granting EPZ companies the following advantages and tax incentives: 15-year tax exemption, exemption from any Value-Added-Tax or customs duties on imports of raw materials, exemption from registration taxes, exemption from customs tax on exported goods, and free access to foreign currency deposits.
the creation of the Malagasy Industrial Protection Office (OMAPI) and the Malagasy Copyright Office (OMDA), in charge of protecting intellectual property rights.
the creation of the American Chamber of Commerce in Madagascar in December, 2008, in the hope of further developing trade and investment between the USA and Madagascar.

The Malagasy government has a solid track record of commitments relating to trade and foreign investment. Some of these commitments are focused on being transparent within the international regulation environment, such as joining the World Bank's Multilateral Investment Guarantee Agency. Madagascar has also subscribed to the provisions of Article 8 of the IMF statutes guaranteeing the free circulation of transfers, and is a signatory to the International Center for the Settlement of Investment Disputes (ICSID) Convection. In 2008, Madagascar joined the Extractive Industries Transparence Initiative, having joined the World Trade Organization and being bound by the WTO Trade Related Investment Measures.

For more information

download our Madagascar Investment booklet
click here to go to the IPPSA investment project in Madagascar
have a look at the links on our links page