Seychelles
Country Report
Competitiveness Strategies For Small States
Malta, 23-31 May 2011
Jayant Mayadas – Trade Consultant, Ministry of Finance & Trade
Davis Laporte – Economist, Central Bank of Seychelles
Key Facts
Location – (see map) – 115 islands
Time Zone – GMT +4
Population – 89,000
Land Area – 455 sq km
Ocean EEZ area – 1.4 million sq.km
Form of Govt – Sovereign Democratic Republic
Languages – English, French, Creole
Currency – Seychelles Rupee
Other Indicators
Life Expectancy : 73 yrs
Literacy : 96%
UN Human Development Index : last
assessed 51 of 176
WB Ease of Doing Business: 95 of 183
GDP per capita: $ 10,600
Legal Framework for
Trade
• The Constitution
• Laws
– Business Tax Act
– Companies Act
– Trades Tax Act… soon to be replaced by Customs Magmt Act
– Food Act
– Goods and Services Tax Act…. VAT act
– Licenses Act
– Seychelles International Business Authority Act
– International Trade Zone Act
– Companies (Special Licenses) Act
• International Agreements
– Regional agreements
– Bilateral Agreements
Trade Framework
• WTO – in accession process. Observer status.
• IEPA – the Interim Economic Partnership Agreement with the
European Union.
• Free Trade Agreement (FTA) since 2008 with the Common
Market for Eastern and Southern Africa (COMESA).
• Rejoined the Southern Africa Development Community (SADC) in
2008 and pursuing FTA with them.
• Pursuing the Tripartite Initiative – COMESA/SADC/EAC
• Double Taxation Avoidance Agreements (DTAs) and Bilateral
Investment Promotion and Protection Agreement (BIPPAs) with
various countries.
• Other International Agreements
–IOC (Indian Ocean Commission) member since ‘84
–Vienna Convention
– Montreal Protocol on Substances depleting the Ozone
Layer
– CITES (trade in endangered species)
–Convention on Biodiversity
Market Access
Import Tariffs based on HS 2002 classification. In transition to
HS 2007.
94% of the tariff lines are at 0% duty
Duty mostly concentrated on 4 main revenue sensitive items
Fuel
Alcohol
Tobacco
Motor vehicles
Environmental Levy – due to fragile & important resource
Vehicles
Plastic bottles
Plastic bags
Metal cans
Main Industries
Tourism
Fisheries
Financial Services
Lesser industries – construction, domestic manufacture,
livestock farming…
Tourism
Share of GDP : 25%
Share of Workforce: 15%
Profile of Activities within the Sector.. Hotel, restaurant,
car hire, diving & water borne activities, tour operators,
airline agents etc.
Strengths
Image.. Exclusive, privacy
Natural environment protection
Pollution free
Peaceful
Outside cyclone belt
Tourism
Constraints
Remote – distance from market.. Access
Costs of operation & import dependence
Infrastructure – water..
HR & service productivity
ICT
Piracy – cruise ships.. Aldabra.. game fishing ..
Tsunami / drought risk
Sustainable / eco practices
Fisheries
Share of GDP : 10%
Share of Visible Exports : 92%
Strengths
Product Quality
Resource Management
Labour relations / unions
Potential for value chain growth
Govt incentives & support
Fisheries
Constraints
Diversification – markets & products – preference
erosion
Water supply for large processing
HR & productivity issues
Support services – ICT, R&D, Labs, port
infrastructure
Piracy
Sustainable management of resource risks
Financial Services
Structure of Financial System:
Central Bank of Seychelles (CBS)
Domestic commercial banks (6)
Offshore banks (2)
Seychelles Credit Union
Development Bank of Seychelles
Housing Finance Company
Banks:
Governed By Financial Institutions Act 2004
Must be locally incorporated
Prescribed minimum capital – USD 2 million
Financial Services
cont…
Domestic V/S Offshore Banks
Offshore banks
Conduct transactions solely with non-residents and in foreign
currency
Exempted from tax
Domestic banks
Conducts both onshore and offshore banking business (i.e. with
residents and non-residents and in all currencies)
Financial Services
cont…
Objective of the Seychelles Authorities is to encourage entry of
more foreign reputable banks, both domestic and offshore.
New foreign banks would be expected to
Increase competition
Introduce new products and open up new frontiers for domestic
sector
Transfer knowledge and skills
Introduce new technology
Create employment
Financial Services
cont…
From 1994 Seychelles ventured into incorporation of offshore
companies
These companies are regulated through the Seychelles
International business Authority (SIBA)
To date Seychelles has incorporated around 90,000 IBCs, 200
CSLs and 300 Trusts.
SIBA is also an active player behind the setting-up of the
country’s 1st Stock exchange – Expected to be operational by
2012
STRATEGIES
- Aggressive marketing in international forums/internet
- Lower tax rates
- Confidentiality – However, to remain on OECD’s White List a
certain degree of disclosure is required
- Benefit through Double Taxation Avoidance agreements of the
country
Development
Strategies
History – NDPs…
2007 – Strategy 2017 – govt vision for 23 sectors
2008 – world financial crisis & impact
From Nov 2008 – with IMF – macroeconomic and
structural reforms program. MEFP 2009-2012.
Results so far & medium term strategy ahead
Currency float & liberalization of FX regime
Fiscal tightening
State assets sale and decreased public sector
Elements of the ongoing
Macroeconomic Reform
Program
IMF-supported reform programme since November, 2008
Objective: To promote macroeconomic stability and sustainable
growth.
Main components:
Monetary policy framework- market determined interest
rates, reserve money targeting
Foreign exchange policy- free floating exchange rate
regime
Fiscal policy – primary balance surplus
Sustainable public debt
Sustainable balance of payments position
Public sector reforms – downsizing of public sector,
increase efficiency
Structural reforms – privatisation of several public entities
Cross-cutting
Constraints to
Competitiveness
Regulatory & Legal framework
Tax Policy & Admin – ambitious reform ongoing –
revenue neutral, but equity & simplicity target.
HR Skill Building – institutions & access
GOP policies – balance of expatriate skills access
Incentives Regime - distorting
Backward Linkages of Main Industries
Communication – better awareness for buy-in
Development
Strategies..contd
Will remain an open economy, so must compete on that basis
MTNDS – Med Term Nat Dev Strategy
Cycles of growth & decline – due external vulnerability
Dependence on tourism & 90% imported consumpn
Narrow economic base to be strengthened & widened; food
security & basics to be assured; renewable energy, better HR,
ICT and infrastructure to give a sustainable platform to all other
endeavours.
Some Policy
Suggestions for Action
Oil exploration – regulated
Specialized niche tourism
Eco
Medical
Elderly
Accelerated HR development & education
Global supply chain
Host education services
Careful accession strategy to WTO and RTAs
“The winner is the chef who
takes the same ingredients as
everyone else and produces
the best results”
- Edward de Bono
Thank You