Mauritius: France overtakes South Africa as largest FDI source market
A report released by the Central Bank of Mauritius showed that South Africa has had a radical decline in FDI pumped into Mauritius, from Rs 5,344 million in 2012 to Rs 1,498 million in 2013. (Image: Tebogo Mogashoa)
In what may come as a surprise to those industry watchers who expect the share of a struggling EU to come down in the island economy and yield place to emerging economies in Asia and Africa, France has overtaken South Africa as the largest source market for Foreign Direct Investment into Mauritius.
A report released by the Central Bank of Mauritius showed that South Africa has had a radical decline in FDI pumped into Mauritius, from Rs 5,344 million in 2012 to Rs 1,498 million in 2013.
On the other hand, France surpassed South Africa in 2013 with FDI inflows of Rs 2,709 million, even as its own share came down to Rs 4,295 million.
Besides a reshuffle in source markets, the sectoral composition of Foreign Direct Investment in Mauritius has also shown major changes with the share of ‘agriculture, forestry and fishing’ going up from Rs 127 million in 2012 to Rs 678 million in 2013.
However, a drastic decline was noted in the manufacturing sector’s share in FDI, which nosedived from Rs 1,597 million in 2012 to Rs 280 million in 2013.
The construction sector’s share in FDI also saw a steep plunge, decreasing from Rs 2,305 million in 2012 to Rs 762 million in 2013.
Financial and insurance activities also showed a major decline, with FDI flows dipping from Rs 5,512 million in 2012 to Rs 716 million in 2013.
Besides, accommodation and food service activities also attracted lower FDI flows at Rs 314 million in 2013 compared to Rs 1,839 million in 2012.
Meanwhile, real estate activities continued to attract more than half the FDI flows into the island economy, even though their share over the years declined by Rs 1,629 million over 2012 figures to settle at Rs 5,924 million in 2013.
The continued dominant position of the real estate sector in FDI flows can be explained by the real estate scheme (RES), which achieved an almost four-fold jump in investment inflows with as many as 18 Real Estate Scheme (RES) projects representing a total investment value of Rs 5.9 billion being approved by the BOI in 2013, compared to Rs 1.6 billion in 2012
It may be noted that cumulative FDI flows of Rs 9.51 billion were received into the island economy in 2013, compared to Rs 20.37 billion in 2012. However, the BOM report noted that data from 2011 and 2012 is not strictly comparable with 2013 figures, due to revisions brought about in the data pertaining to the two years.
Besides data reshuffle, continued uncertainty over the Double Taxation Avoidance Agreement (DTAA) between Mauritius and India, as well as renegotiation of the DTAA between Mauritius and South Africa in May 2013 may serve to explain the steep drop in FDI flows between 2012 and 2013.
In particular, regarding the DTAA renegotiation with South Africa, some tax experts expressed their concerns that the change to the treaty will cause uncertainty among South African multinationals that have their registered business in Mauritius and make Mauritius a less attractive jurisdiction.