Update (17 June, 2011)
I see in today’s papers that Foreign Direct Investment for the first quarter of 2011 is 25% of what it was for the same period last year. One of these reasons is the global erosion of capital. Other reasons are described below. What investors of capital look for is long term security. If a government gets a reputation for changing laws and breaking promises, this does not create a climate of certainty about the future.
Original Post (15 June, 2011):
Following on from an earlier post in ‘The Captain’s Blog’ in May 2010 titled “Throwing the Baby out with the Bath Water’, about how Mauritius seems to be doing its utmost to chase out investors, here is an extract from an analysis of current Mauritian economic policy by the Economic Intelligence Unit, dated 6 June 2011:
The dilemma for Mr Jugnauth (Minister of Finance) is that much of the success of Mauritius’s economy since 2005 has been attributed to the economic reforms introduced by his predecessor, Rama Sithanen. These have resulted in Mauritius being ranked as the top country in Sub-Saharan Africa for economic freedom. However, these reforms were politically unpopular and, to some extent, they have been relaxed by Mr Jugnauth, whose economic strategy is based on expansionary economic policies rather than continuing structural and economic reforms. This has been commented on by the IMF and heavily criticised by the World Bank, and could weaken Mauritius’s attractiveness to overseas investors and undermine Mr Jugnauth’s GDP growth target.
To highlight this point, in 2010 foreign direct investment increased by 67% with the funds flowing into the property and financial sectors and one hospital.
Yet in 2011 we increased reporting and disclosure requirements for Global Business Category 2 companies, taxed dividends received by individuals at 10%, introduced capital gains tax and have failed to renew countless residence permits.
I heard yesterday that there is now a minimum age of 50 on retirement permits. In my humble opinion this is an old fashioned view. Many individuals who retire from the rat race at a fairly young age would love to move to Mauritius with their newly acquired wealth and then manage their portfolios from the comfort of their villas, purchased or rented. They may not be drawing pensions, but they are retired.
It looks to me and many others that certain Mauritians don’t want foreigners here, just their money. This is further evidenced by the failure to deliver on the permanent residence scheme promises after cancelling the other schemes.