B USINESS AND I NVESTMENT O PPORTUNITIES

3.1 Business and Investment Opportunities

The MENA, short for The Middle East and North African region, has always been portrayed by the media and, believed to be unstable and extremely repressive. The media’s inclination to report mainly just disastrous events ensures that these stories become the countries’

most known facts and their presumed reality. Thus making it tough for several investors to look past the 2015 non-state terrorist attack that hit the Tunisian city of Sousse for instance, which has affected the tourism sector the hardest (Vashchilko, Mihalache-O'Keef, Kleffner, Karakoç, &

Halek 2020).

However, since the year 2015, the Republic’s political violence and religious extremism risk have been determined to be of low level, along with having successful counter-terrorism procedures. On a political level, unlike all other Arab countries, the Tunisian uprising has been the only victorious one. As of today Tunisia’s most important features and elements include freedom of speech, valuing human rights, the rule of law and depoliticizing the army

(Vashchilko, Mihalache-O'Keef, Kleffner, Karakoç, & Halek 2020).

The investment incentives code in Tunisia protects all its organizations with the

exception of those related to the energy, trade, mining or finance divisions, as they are ruled by their own separate acts and directives. Businesses are entitled to the code’s benefits once they undergo the procedure of self-declaration or just by attaining preceding authorization (approval).

Some of the code’s tax benefits mainly comprise of advantages for investments in incentive territories for district expansion and development, full tax relief on any reinvested profit or

income, along with unlimited reliefs provided to finance the promotion of housing for employees and the Taxe de formation professionnelle for investments in the divisions of tourism, industry and service activities (UHY CNBA 2019).

The Tunisian code has also offered further benefits for conducting investments in so-called “encouragement zones”. However, these projects would have to in one way or another, encourage agriculture or environment protection, advance and manage technology locally, or promote health, transport, education and culture (UHY CNBA 2019). And finally, new

businesses/companies will be absolved for the period of 10 years from income tax, and some in particular regions will even collect state subsidies for the so-called employer contribution.

Alongside above-mentioned incentives, investors will also have access to a wide range of professional and skilful labour force with about 65,000 graduates looking for jobs yearly (Invest in Tunisia n.d.).

As reported by the UNCTAD in its “World Investment Report 2020”, the foreign direct investment flows in the Republic of Tunisia have fallen to 2,324 million Tunisian Dinars in 2019, which is an 18 percent decrease when in comparison to the year 2018. The country’s largest FDI sectors regularly attracting investors include industry (worth 1,238 million TD), energy (worth 825 million TD), services (worth 261 million TD), tourism, manufacturing and electronics. Moreover, the Republic’s top investors are France accounting for 28 percent of total foreign investment, succeeded by the United Arab Emirates at 14 percent total investment, followed by Qatar at 9 percent, Italy, Germany, Malta and Saudi Arabia. Tunisia has only recently gotten this much attention from gulf countries, in terms of foreign investments, as they have been involved in tourism, banking and the services division. It is also worth noting that 20 percent of all foreign investments are solely dependent on Arab funding (Export Enterprises SA 2020) (UHY CNBA 2019).

Even though several businesses faced many difficulties due to the ever going effects of the Arab Spring, the Tunisian government has been relentless to make the best out of its situation and provide as many opportunities to serve its people. The state wishes to lower its

unemployment problem and raise its overall living standards to OECD, short for Organization of Economic Co-operation and Development, through growing both foreign and local investments,

exports, production, while still managing to keep inflation and current account deficits at bay.

Furthermore, Oil exploration proposals are projected to revive FDI, for instance, the Republics of Tunisia and Malta are in the works of discussing the possibility of commercially utilizing the continental shelf between both regions (UHY CNBA 2019).

Due to the COVID-19 outbreak that has started in the first quarter of the year 2020, the Republic like most countries had its borders shut out of precaution for more than three months.

However, in June 2020, as the situation was more or less under control. The government had air, land and sea borders reopened along with operations at the capital’s Tunis Carthage airport being resumed. Nevertheless, the tourism sector was still affected greatly, a division that makes up almost 10 percent of total gross domestic product. Tourism profits in the first five months of the year 2020 have dropped by half, when in comparison with the previous year, due to hotels and retreat resorts left empty because of lockdown restrictions (Reuters 2020).

In the year 2016, the Tunisian Republic declared the establishment of the “Tunisia Solar Plan 2030” that is focusing on raising the share of renewable energy up to 30 percent by the next decade. The Sidi Mansour wind farm is only going to aid the country in reaching its renewable energy goals, together with lessening the overall dependence on fossil fuels, while also

showcasing that the Republic is an outstanding destination to invest in renewable resources in particular. It is also worth noting that this project will be one of Tunisia’s very first wind independent power manufacturers. The project of Sidi Mansour has also anticipated to bring down 56.6 thousand tons of carbon in the country, revive its economy, along with generating more than a hundred jobs and social plans for the community. The construction of this program has been set out to start by the end of the year 2020 and will be worth around 110 million Tunisian Dinars in total investment (Karume 2020).

Moreover, Tunisia’s former Prime Minister Youssef Chahed had stated that production had commenced in the Nawara natural gas project, in the early months of 2020. Owned by both the Tunisian Company of Petroleum Activities in collaboration with the Austrian OMV group, this will only strengthen the countries’ foreign relations. Manufacturing from this project will bring in about 7000 barrels of oil, 3200 barrels of liquified petroleum gas and 2.7 million cubic meters of gas on a daily basis. Investments made into this sector have been said to have

amounted to 3500 million Tunisian Dinars, and once in action, the Nawara plant is expected to raise the country’s production of gas by 50 percent. The Republic's trade deficit together with its energy deficit will also notice a significant decrease of 7 percent and 20 percent, whilst overall economic growth increases by 1 percent (Qekeleshe 2020) (Reed 2020).

In the last few years, the Republic has taken measures in hopes of strengthening the competitiveness of its globally celebrated olive oil, as it is one of the country’s most important exports and is responsible for employing more than one million Tunisian citizens. In the year 2017, the stakeholders of this industry gathered up to outline a unified vision and scheme, with aid from the EBRD, short for the European Bank for Reconstruction and Development, the European Union, along with the FAO, short for Food and Agriculture Organization of the United Nations. This collaboration played a pivotal role in maintaining public-private sector harmony on all matters, including production, quality control, promotion and added value; all essential when tackling a new market (FAO 2020).

The 2019-2020 season exceeded all expectations manufacturing about 350,000 tonnes of olive oil, a noticeable increase in comparison to its previous season. Nonetheless, on account of the COVID-19 pandemic agrifood supply chains internationally were disturbed, from borders being shut close to a decrease in demand and diminished access to funds. FAO economic expert Lisa Paglietti, has stated that even the small-scaled Tunisian farmers are able to produce olive oil of high standards, thus making it stronger on the market and able to resist major shocks, COVID-19 included (FAO 2020).

The Tunisian Confederation of Industry, in partnership with the Food and Agriculture Organization of the United Nations, and the Union of Industry Trade and Handicrafts are said to hold two conventions once all the movement restrictions are fully eliminated, as seeing the superb potential the olive oil sector holds in Tunisia. The first conference will be covering policies that will assist the progress of this industry, whilst the second will investigate

technology’s part in stimulating competitiveness, recognition and quality. Lastly, FAO declared plans on elaborating a 2020-2025 program to further invest in the Republic’s olive oil industry (FAO 2020).

Furthermore, the aerospace field in Tunisia has been getting added recognition in recent years, just through the years of 2009-2019, the country achieved an average of 30 percent of added value, at the same time exports multiplied 9.5 times over. This industry’s top goods and services consist mainly of aeronautical systems, seat parts of aeroplanes, electrical parts, metal components, maintenance, engineering and overall training. In addition, about 80 percent of all industrial businesses and 20 percent of the service industry are involved in projects related to the aerospace sector, engulfing the whole supply chain. As Thierry Haure-Mirande GITAS

Chairman stated, “Tunisia has one of the most comprehensive aerospace supply chains in the world with the capability to make a product from A to Z” (Invest in Tunisia 2019).

The Republic also offers several technological infrastructures throughout its regions devoted solely for the aerospace division. Its largest being El Mghira Aerospace Cluster in Ben Arous, layered over an area of more than 200 hectares and is responsible for 20 percent of all aeronautical exports, with 15 training centers across the country also available, and over 150 developed industrial areas (Invest in Tunisia 2019). Thus, making the Tunisian Republic a hub for opportunities and investments in this domain and all the aforementioned ones.