Towards More Sustainable Investment Frameworks

3. The opportunity for SIFA negotiations between the EU and Southern Neighbourhood countries

Abstract

All five Southern Neighbourhood countries have made impressive efforts in recent years to improve the transparency and predictability of their legal frameworks for investment, and for the streamlining of investment applications procedures by their relevant administrative bodies. Despite these important efforts, all countries fare differently in terms of investment facilitation and have, to varying degrees, incorporated key SIFA provisions relating to within their domestic frameworks. Based on the benchmarking assessment carried out in Chapter 1, this Chapter aims at identifying potential room for improvement in the five countries of the Southern Neighbourhood, to guide the EU Commission on potential future SIFA negotiations.

Algeria

The Algerian investment framework: the 2022 Investment Law

Algeria recently modified its institutional framework for investment facilitation with the establishment of the Algerian Investment Promotion Agency (Agence algérienne de promotion de l’investissement, AAPI), which succeeds the National Investment Development Agency. The AAPI’s establishment was part of broader legislative reforms aimed at enhancing the country’s legal framework for investment. The new 2022 Investment Law seeks to promote investment in priority sectors and sectors with high added value to ensure sustainable development and to develop natural resources and local raw materials. It covers acquisition and ownership operations, extensions of capacity, and greenfield investments in the production of goods and services and provides for a general principle of ‘transparent’ and ‘equal’ treatment of foreign investors.

Addressing a number of transparency and predictability priorities

Algeria features several core principles enshrined in the EU-Angola SIFA with regards to the transparency and predictability of its legal framework for investment. Regulatory material is readily available via the Secretariat General’s website, allowing users to consult laws alongside all of their related and implementing instruments. Information relevant to the country’s investment framework is also centralised on the AAPI website, especially relating to business establishment. Dissemination of proposed or expected regulatory changes is a pivotal element of regulatory transparency and predictability, as reflected by the EU-Angola SIFA. Algeria has shown significant strides in recent years to enhance the transparency of its policymaking process. Some drafts of regulatory changes are features on the People’s National Assembly and the Council of the Nation websites.

Further, the newly launched AAPI website features some information on Algeria’s investment framework, especially on steps to invest in the country. It also provides an extensive overview of the country’s incentives framework, which is also available via the country’s nation-wide investor-platform. These sources provide an overview of the country’s investment framework, including information on eligible activities and types of incentives available.

Recent institutional rearrangements aim at further streamlining administrative procedures

Burdensome investment authorisation procedures have in past years often been highlighted by investors as a shortcoming to Algeria’s business and investment framework (World Bank Group, 2020[1]; U.S. Department of State, 2022[2]).1 Such bottlenecks may have stemmed, in part, from the absence of an overarching framework to streamline investment authorisation procedures across different regulatory authorities. Delays for the processing of applications would ultimately depend on sector-specific legislation governing licensing procedures and may vary across competent authorities.

Most of Algeria’s recent regulatory changes have principally focused on measures to streamline investment-related authorisations and processes. Such efforts have led to the creation of two OSS operating within the AAPI mandated with overseeing investment-related procedures specifically: one dedicated to foreign investments and “large projects” (i.e., investments having a capital equal or greater than DZD 2 billion), and the other one caters to domestic investments that do not qualify as “large projects”.

Both OSS share the same structure and perform similar duties under the Law with regards to investments falling within their competence. They serve as a single interlocutor for investors, offer an information desk, and facilitate licencing and authorisations procedures via competent and sectoral authorities’ representatives. These are either mandated with directly issuing authorisations, decisions and documents on behalf of their respective authorities, while others serve as points of contact to ensure smooth communication lines between investors and their respective authorities. The implementation of these institutional arrangements should, in time, ensure streamlined business establishment and operation procedures.

Looking forward: continued implementation of the Law and enhanced transparency and streamlining efforts

The publication of translations of legal instruments as well as of further aspects of the investment framework (e.g., relating to FDI restrictions, and separately, the administration of investment incentives) could increase the accessibility of legal information by investors and thereby enhance the predictability of the Algerian investment framework. Published material could also include information on application procedures, documents, and institutional settings for incentives. Information on activities subject to licensing or admission-related authorisations could also be centralised with a view to ensure ease-of-access to investors. In that regard, several sector-specific executive decrees adopted over the years have nevertheless defined the regime for controlled activities in oil and gas distribution, wholesale and retail trade, manufacturing activities, scientific activities (testing laboratories), or even public utilities.

The Law has sought to address regulatory predictability concerns by incorporating a “stabilisation clause” within its provisions. While this mechanism – adopted in other Southern Neighbourhood countries as well – seeks to address predictability objectives, it also carries the potential of creating a fragmented legal landscape and could also hamper the effective implementation of reforms on labour or environmental standards and responsible business conduct principles. Formalising requirements relating to the provision of an opportunity to comment on proposed measures (and considering such comments in the proposed measures’ elaboration process), providing explanations as to the objective of a measure once published, and finally, allowing a reasonable time between a measure’s publication and its application to investors, could be more effective in tackling regulatory predictability concerns. For instance, it appears that limited stakeholder involvement was considered in the adoption of the Law (Algérie Eco, 2022[3]). Fostering inclusive and participative policymaking further enhances the legitimacy of regulatory activity among stakeholders and ensures that the changes yield their intended results.

While the establishment of two OSS with clearly delineated mandates highlights Algeria’s strong intent to further facilitate authorisation procedures, it is unclear at the time of writing in September 2023 whether these institutional reforms have effectively been implemented, or whether the single OSS under the previous IPA’s mandate – the ANDI – continues to operate during a transitional period. Algerian officials have recently restated their intent to introduce reforms aimed at tackling bureaucracy and corruption in administrative agencies, and to establish a legal framework to simplify administrative procedures, guarantee their transparency and improve the overall quality of public services (Algérie Presse Service, 2022[4]). Overall, a strong procedural framework to streamline administrative procedures and to address information gaps would bolster the country’s recent efforts that aim at enhancing the transparency and predictability of its investment framework.

Egypt

The Egyptian investment framework: the 2017 Investment Law

Egypt has in recent years reformed its investment promotion and facilitation architecture. In 2017, Egypt introduced a new Investment Law – complemented by a series of Executive Regulations and implementing Decrees – thereby repealing its previous 1997 Investment Guarantees and Incentives Law. The new investment framework has sought to enhance the clarity of the investment regime via the consolidation of investment rules which had until 2017 been fragmented under various laws and regulations, and by streamlining procedures through the strengthening of GAFI’s mandate (OECD, 2020[5]). The Law applies to greenfield investment and acquisition and ownership operations and defines the legal regime for domestic and foreign “investment projects” in a wide range of sectors, identified therein. It sets out the principles and guarantees offered to investors, including fair and just treatment, national treatment to foreign investors, non-discrimination, protection against unlawful expropriation, and free transfer of capital in foreign currency. The Law also establishes Egypt’s new approach to investment promotion, via the establishment of several investment regimes, governed by different authorities, incentives regimes and at times, operation procedures and requirements.

Important advances in enhancing regulatory transparency and predictability

Egypt has made important advances in infusing its legislative and regulatory framework for investment with transparency principles. The Egyptian Official gazette is restricted by a paywall, but several governmental platforms provide access to the Law and its accompanying Executive Regulations, including a dedicated GAFI portal, although access to investment instruments is at times fragmented and/or not consolidated. The GAFI portal also features additional laws and regulations relevant to investment and investors, including company, environmental, fiscal, labour, finance, and protection of intellectual property rights legislation.

Egypt has also introduced a number of measures and taken steps that seek to enhance the overall transparency of its investment framework, including with respect to establishment formalities, operation authorisations, and incentives. The website of the Egyptian OSS, the ISC, and the ISC Investor Guide provide information and assistance to investors with respect to company incorporation formalities. Incorporation formalities may also be carried out online, with GAFI’s e-incorporation portal (these e-services were as at September 2023 not fully operational and/or digitalised). GAFI and the ISC must complete company legal incorporation within one business day of receipt of an application file. Separately, GAFI’s website features several sectoral licensing guides (available for the most part only in Arabic), elaborated by ministries. Most guides broadly outline the relevant procedures for obtaining permits, approvals and licenses, eligibility conditions and requirements, the competent authorities to which applications must be submitted, and estimate timeframes of these procedures. These guides are reviewed and if and when necessary, updated, periodically every six months, and are legally binding. The ISC Investor Guide also outlines some of the formalities, documents required, applicable pre-conditions, and applicable fees for some of these procedures.

Further, the Law partly outlines some of the investment incentives schemes’ eligibility conditions; the conditions and benefits granted under some specific schemes – namely, Special and Additional Incentives Schemes – are fragmented in separate instruments. GAFI’s website also features some information about the incentives schemes available under the main “Inland” investment regime. A GAFI-developed “Golden Licence Guidebook” provide investors information on eligibility conditions and application procedures under this separate scheme. The Law does not explicitly and comprehensively outline in a readily accessible way the formalities which investors must comply to benefit from Special and Additional Incentives. In contrast, Golden Licence incentives applications may be submitted online via the Egyptian Cabinet’s official website.

New streamlining mechanisms introduced, and additional forthcoming measures

Only a small share of foreign-invested enterprises identified business licensing and permits as a “major constraint hampering their operations”, although some business surveys have pointed to bureaucratic red tape as impacting Egypt’s investment climate. In that regard, the Egyptian ISC – headquartered in Cairo, with regional branches across governorates – is mandated under the Law to receive investor applications for approvals, permits and allocation of real estate and licences required for the realisation of investment projects, with a view to centralise the processing of investment-related authorisations. ISC membership consists of representatives ranging a large number of competent authorities that are either vested with the authority to directly issue authorisations, or alternatively, that act as liaison officers between the competent authorities they represent and investors. Investors were at the time of writing in September 2023 expected to carry out authorisation applications and formalities at the relevant physical ISC offices and/or directly with the competent authorities.

The Law has also introduced structural investment framework-specific streamlining measures which bind GAFI, the ISC and the competent authorities represented therein to streamline authorisation procedures and enhance investors’ confidence in the Egyptian investment framework. These establish clear timeframes within which the ISC and competent authorities must decide upon investor authorisation applications. They also require that competent authorities notify investors of the outcome of their applications in writing and within clear timeframes. GAFI is entrusted with the power to expedite pending authorisation applications if these are not granted within the established timeframes. Further, a ‘tacit approval’ mechanism is available if competent authorities do not issue a decision within a defined timeframe. In the event of incomplete applications, competent authorities and their ISC representatives must request missing documents from investors within a prescribed timeframe, beyond which application files must be considered complete. ISC and competent authorities’ decisions on investor application for operation authorisations and licences must be reasoned, justified and transparent, and investors may appeal negative decisions before GAFI’s Grievance Committee, the procedures for which are set out in the Law. The Law also prevents competent authorities from revoking or suspending authorisations without first providing the user with prior notice and a prescribed “grace period” to rectify any notified breaches. In this scenario, it is GAFI that is entrusted with the authority to authorise revocations, where appropriate.

Looking forward: expected streamlining reforms for investment authorisation procedures and enhanced transparency

Egypt remains engaged in continued reforms to further improve its investment facilitation framework, specifically with regards to enhanced streamlining of authorisation procedures. Consultations with GAFI have indicated that a system for license automation and was currently under development, which would allow investors to electronically submit and follow up on their applications for approvals, permits and licenses, as well as submit inquiries and complaints online. The Egyptian Supreme Council for Investment has also recently approved a number of decisions and proposed amendments to the current investment framework with a view to reduce the costs and timeframes for company incorporation and lift restrictions linked to foreign ownership of land (Ahram Online, 2023[6]).

The Law has sought to alleviate regulatory predictability concerns via a “stabilisation clause”. While this mechanism – adopted in other Southern Neighbourhood countries as well – seeks to address predictability objectives, such clauses also carry the potential of creating a fragmented legal landscape and could also hamper the effective implementation of reforms on labour and environmental standards, and responsible business conduct principles. Other measures could be considered to further enhance the transparency and predictability of the Egyptian framework. This could include the introduction of participative policymaking measures, either via a whole-of-government approach or investment framework-specific (e.g., relating the publication of drafts of proposed measures in advance of their adoption, arrangements that afford the public with a reasonable opportunity to comment during the elaboration of proposed measures). Ensuring easy and free access to relevant and applicable consolidated and up-to-date legislation (e.g., via a centralised searchable and regularly updated multilingual database)2 could also further enhance the transparency, and in turn, predictability, of the Egyptian investment and overall regulatory framework. Further, measures to enhance the ease of access to comprehensive and consolidated information, e.g. via an online single portal, on: investment incentives schemes (specifically with respect to Special and Additional Incentives Schemes, currently fragmented across several instruments, in line with Single-Approval Scheme procedures, which have been centralised via a recently launched online platform), on FDI restrictions, and on practical steps relevant to investors (connection to essential infrastructure, acquisition and registration of property) as well as domestic suppliers with a view to strengthen local economy linkages, could similarly improve the Egyptian investment framework’s overall predictability.

Jordan

The Jordanian investment framework: the 2022 Investment Environment Law

Jordan recently overhauled its legal framework for investment with the adoption of the Investment Environment Law in October 2022, which entered into force on 14 January 2023. The Law reflects Jordan’s investment policy strategy aimed at enhancing its investment environment and encouraging sustainable investments. It applies to greenfield investments as well as acquisitions and ownership operations by Jordanian or non-Jordanian natural or legal persons in a defined number of sectors, including industrial, commercial, agricultural activities, services, tourism, information technology or creative industries. The Law sets out a principle of national treatment of foreign investors, and enshrines the principle of fair, equitable and transparent treatment within Jordan’s regulatory framework. It also limits the possibility of partial or total expropriation of an investment to circumstances where a “public, specific and legitimate purpose” may warrant it and if carried out in a non-discriminatory manner and subject to fair compensation. Against common institutional arrangements observed in the Southern Neighbourhood countries and beyond, investment facilitation is not entrusted to a separate IPA in Jordan; rather, investment facilitation is overseen by the MoI, which was established in October 2021 to address the shortcomings of the previous IPA in operation since 2014.

Significant strides towards a transparent and predictable legislative framework

Jordan has in recent years made significant strides to enhance the transparency and predictability of its legal framework for investment. New measures pertaining to participative policymaking processes have been introduced, whereby ministries and regulatory authorities are strongly encouraged to publish texts of proposed regulations before their adoption. Draft legislation is available for consultation on relevant ministry websites, often accompanied by explanatory notes on proposed changes, and stakeholders are often provided with an opportunity to comment on draft bills. The Law’s development itself closely involved stakeholders: a draft of the law was made public several months prior to its adoption, along with an explanatory note underlining the rationale of the proposed changes and what these might entail in practice for potential and established investors, and the draft also appears to have been subject to extensive consultations with public and private sector representatives prior to its adoption in October 2022. The Law entered into force nearly three months further to its publication in the Official Gazette, which also provided investors with sufficient time to familiarise themselves with the new instrument.

Legislation is available in Jordan in Arabic via the country’s Official Journal website. Translations are in some instances featured for business-related legislation via the MoI website, which was still under construction at the time of writing in September 2023. The website provides English translations of the Law and the 2020 Public-Private Partnership Projects Law, along with their implementing regulations. Other pieces of legislation can be found in English on the Companies Control Department’s (CDD) website. Further, and in accordance with the Law, a licensing guide was made available in September 2023 in Arabic only; it provides detailed information as to the conditions, procedures, documents, requirements, and timeframes relevant to obtaining permits and licences.

Important streamlining measures introduced to simplify authorisation procedures

Investors’ perceptions of the Jordanian investment climate have improved significantly in recent years (World Bank Group, 2019[7]). The MoI’s OSS – the Comprehensive Investment Services Unit (CIS) – has been mandated under the Law with providing guidance to foreign investors on licensing conditions applicable to their intended projects, and in some cases, even facilitate the obtention oof these licences in the 12 economic sectors falling within its competence as defined by the Decree 7 of 2023. These include permits in the health sector, agricultural permits, tourism, environmental permits etc. The CIS thus comprises fully authorised competent authority representatives entrusted with the authority to directly issue approvals and licences for investment projects on behalf of their respective authorities, including tax authorities and several relevant ministries, including the Ministry of Tourism or the Ministry of Agriculture (for sectoral licences), the Ministry of Environment (for environmental approvals), and the Ministry of Labour (for work permits).

Outside of CIS services for licensing, investors need to address relevant authorities to obtain licences that do not fall within the competence of the CIS. The Law provides for an overarching framework for the processing of applications by authorities in the country. It enshrines procedural principles to significantly reduce authorities’ discretion in appreciating authorisation applications: authorities are required to publish the conditions relevant to obtaining licences, negative decisions must be reasoned and motivated, and the Law explicitly prohibits a number of grounds for refusals of licences. Decisions to withdraw licences ex post must follow a specific procedural framework under the Law, as authorities are required to notify the licence holder of the alleged violation of the licence terms and provide them with a timeframe for responding with evidence that no violation has occurred or for rectification of the violation.

The Law foresees the creation of a joint electronic platform operated by the MoI to ease communications between different licensing authorities assessing applications. It also introduces several guiding principles for the streamlining of administrative processes, similar to those introduced by other selected Southern Neighbourhood countries. These pertain to the types of documents authorities may request from users and applicants, and on what basis; the timeframes for the processing of applications are also within the general framework; as well as a ‘tacit approval’ mechanism.

Finally, certain controlled activities – about 360 in total – also require prior authorisation for company incorporation, based on sector-specific legislations. These authorisations fall within the competence of 35 distinct public authorities, including the Energy and Minerals Regulatory Commission, the Ministry of Interior, the Ministry of Public Works and Housing, the Telecommunications Regulatory Commission, and the Jordan Central Bank. The CDD’s website publishes a list of pre-registration approval requirements, creating transparency as to the regimes applicable to these authorisations. Jordan has also recently simplified the application procedures for some of these pre-registration approvals with the launch of a single CIS portal for pre-registration approvals. These relate to approvals granted by authorities that have partnered with the CCD for the provision of these pre-registration approvals. At the time of writing in September 2023, only 6 out of the 35 competent public authorities have partnered with the CCD to facilitate the obtention of these approvals and authorisations. Aside of the authorisations granted by these agencies, investors must apply for pre-registration approvals directly with the competent authorities prior to registering an enterprise with the CCD.

Looking forward: progressive implementation of the Law to enhance transparency and further efforts to streamline authorisation procedures

Although the Law has sought to alleviate regulatory predictability concerns via a “stabilisation clause” – adopted in other Southern Neighbourhood countries as well – such mechanisms carry the potential of creating a fragmented legal landscape, and could also hamper the effective implementation of reforms on labour and environmental standards and responsible business conduct principles. Additional reforms to further enhance the transparency of the investment framework could rather focus on enhancing information on the country’s legal framework for investment and facilitating access to it. The MoI’s website for instance provides little information on FDI restrictions, which are nevertheless consolidated in negative lists within the implementing decree of the Law. Similarly, information on practical steps and their procedures relevant to investors, such as connection to essential infrastructure, acquisition and registration of property, among others, do not appear to be available on the MoI’s website. Jordan is the only country in the Southern Neighbourhood that does not currently provide a comprehensive information portal on the country’s incentives offer despite its previous IPA having developed and launched an ‘incentives inventory’ under the previous regime. This gap is expected to be palliated in the near future, as underlined by the country’s priorities enshrined in the Investment Promotion Strategy (2023-2026).3

While the Law contains important provisions to rationalise administrative procedures in the country, streamlining efforts appear to be uneven across administration. The MoI’s CIS has a limited mandate, and the latter could be expanded to cover investment projects falling outside of the Law’s scope. Similarly, pre-incorporation approvals required in certain sectors could be further streamlined by expanding the CCD’s partnerships beyond the 6 authorities it currently cooperates with.

Morocco

The Moroccan investment framework: ongoing institutional and regulatory reforms since 2019 and the 2022 Investment Charter

Morocco’s institutional approach to investment promotion and facilitation is unique among the selected Southern Neighbourhood, as it is primarily undertaken at regional level by regional CRIs and CRUIs, rather than entrusted to the country’s nation-wide IPA, the AMDIE. The governance structure of CRIs was reformed in 2019, and their mandates harmonised across the country’s regions, which significantly enhanced the efficiency of the country’s institutional framework for investment. CRIs, together with CRUIs – a complementary investment facilitation entity operating at regional entity – among others centralise investment-related applications, procedures and decision-making. Following these institutional reforms, Morocco overhauled its legal framework for investment with its new Investment Charter in 2022, adopted against the backdrop of broader structural reforms which the country has set in motion since 2019 to improve administrative efficiency, specifically decentralisation. The Charter and its implementing decrees together define the legal regime for domestic and foreign investors across economic sectors, except for agricultural activities which are subject to sector-specific policies. It sets out general principles and rights enjoyed by investors, including freedom of enterprise, free competition, equal treatment irrespective of the nationality of the investor, the right to transfer funds related to investment projects, and legal predictability and good governance.

Significant strides in enhancing regulatory transparency and predictability

Investors’ assessments of the Moroccan investment climate have been fairly positive, partly owing to the country’s recent efforts to enhance the transparency of its investment framework (World Bank Group, 2022[8]; U.S. Department of Commerce, 2023[9]). Investment legislation is publicly accessible and free of charge in both Arabic and French through the website of Morocco’s Official Journal, and the principal investment instruments are also accessible through most regional CRIs’ online portals. Some CRIs have also yielded efforts to provide information via their online portals on domestic suppliers and investment opportunities relevant to foreign investors. The development of a freely accessible centralised searchable and regularly updated multilingual database would significantly enhance the transparency and accessibility of the investment – and overall regulatory – framework, and Morocco is currently working towards developing and launching an online comprehensive platform to that effect. From the perspective of participative policymaking, the Moroccan legislative framework requires that public authorities undertake public consultations in their decision- and policy-making processes, and the Moroccan House of Representatives and House of Councillors are both expected to publish drafts of laws and regulations.

The country’s regional CRIs feature considerable information and assistance on company incorporation and establishment formalities and information on Morocco’s newly enacted investment incentives regime (e.g., eligibility criteria, legal basis of available incentives, forms of incentives, documents required for applications and an outline of the application process). Separately, the country’s unified CRI-Invest Platform outlines relevant investment-related authorisations, as well as the formalities and documents required to successfully complete them, the regulatory frameworks relevant to them, and an estimate timeframe for their successful completion. A manual outlining these procedures is also expected to be prepared by the relevant authorities as per legislation in force.

Important whole-of-government and investment-specific streamlining reforms

While investors perceptions of the Moroccan investment climate are fairly positive, some have occasionally reported facing bottlenecks in terms of administrative processes, including with respect to business licensing and permits (World Bank Group, 2023[10]). In the light of these constraints, Morocco has made strides towards to simplify administrative processes and improve the efficiency of the country’s two sets of investment authorisation procedures specifically. Further to institutional reforms introduced throughout the years, CRUIs have been mandated with considering applications for and issuing a defined list of investment authorisations (“administrative acts”), which include land authorisation, planning permissions and other permits. CRIs facilitate these procedures by liaising between investors and CRUIs. Investors may submit their applications electronically via the centralised CRI-Invest Platform, and are kept informed in real time of the status of their applications. The platform also provides comprehensive information on application requirements and procedures, competent authorities, and estimate timeframes (which are prescribed clearly by way of decree and may be extended only in certain defined circumstances). Investors are also afforded the opportunity to provide additional information required to complete their applications. Denied applications must be reasoned and communicated to investors, and investors may appeal CRUIs’ negative decisions; appeal procedures are in that regard prescribed by defined timeframes and may be submitted and managed via the same Platform.

Other permits, licenses and authorisations which may be required by investors for the realisation of their investment projects are issued by the relevant competent authorities. A considerable number of these authorisations have been identified by way of decree, and the processes by which these applications are streamlined have in large part been laid out by way of legislation enacted in 2020, which among others prescribes information requirements with a view to simplify application-related documentary procedures. Several online governmental platforms have been launched to provide information on application procedures and formalities, competent authorities, estimate timeframe and fees relevant to these authorisations, but only one of these operated as an application portal at the time of writing in September 2023. Investors are currently required to submit their applications directly to the relevant authorities, which may require the submission of several applications to more than one authority for a single authorisation, and thus generally impact the overall ease by which investors obtain authorisations required for the realisation of their investment projects. unified and national digital platform for authorisation procedures and formalities, which is expected to be launched by 2025, is likely to further ensure that application procedures are efficient, streamlined and predictable for investors. A tacit approval mechanism may operate when prescribed timeframes have elapsed, and public administrations are also bound by the same facilitation arrangements that seek to ensure streamlined procedures as those applicable to CRUI-processed applications outlined above.

Looking forward: forthcoming measures to further enhance streamlining investment authorisations

Reforms introduced by Morocco in recent years – the overhaul of the institutional architecture for investment facilitation, “whole-of-government” measures to simplify administrative procedures, the enactment of the new 2022 Charter – have enhanced the overall predictability of the country’s investment framework and also significantly streamlined all investment-related authorisations and procedures. Additional reforms are also currently being considered to continue improving the country’s investment climate, including facilitating access to property for investment projects and the development of special economic zones; facilitating access to finance; and advancing ongoing reforms for the streamlining of investment-related administrative procedures and formalities at the regional level.

From a policymaking perspective, ensuring that existing formal requirements (e.g., publication of drafts of proposed measures in advance of their adoption, arrangements that afford the public with a reasonable opportunity to comment during the elaboration of proposed measures) are effectively implemented could further enhance the transparency and predictability of the Moroccan investment framework and create a more investment-friendly business climate. The overall transparency of the framework could also be enhanced by facilitating access to comprehensive and consolidated information on FDI restrictions across sectors, and similarly, to information on practical steps and their procedures relevant to investors, such as connection to essential infrastructure, acquisition and registration of property, among others, e.g., via an online single portal.

Tunisia

The Tunisian investment framework: the 2016 Investment Law and more recent whole-of-government reforms

Tunisia overhauled its investment framework in 2016 with the adoption of a new Investment Law, repealing and replacing the Investment Incentives Code of 1993. The Law and its implementing decrees rest on three main pillars: the reform of the country’s investment governance architecture, with the establishment among others of a new IPA that carries a core facilitation role; the adoption of a new, reformed investment incentives regime; and the introduction of core standards intended to significantly streamline authorisation procedures. It defines the legal regime for domestic and foreign investors across economic sectors and applies to greenfield investments as well as acquisition and ownership operations in Tunisia. It also establishes a general principle of freedom of investment and guarantees treatment of foreign investors no less favourable than that enjoyed by domestic investors and protection of investor assets against unlawful expropriation, among others.

More recently, Tunisia also adopted whole-of-government legislation with a view to enhance the transparency and predictability of its investment framework and further streamline investment-specific and other authorisation procedures. The country operates more than one IPA, as two principal agencies feature complementary investment facilitation mandates: the Tunisian Investment Authority (TIA), established further to the 2016 Investment Law coexists together with a network of smaller agencies, including the Agency for the Promotion of Industry and Innovation (APII). The TIA was originally established with the objective of integrating and replacing investment facilitation functions carried out by APII among others, but the latter still operates to date. This architecture directly impacts how investment facilitation is conceived and implemented in the country.

Substantial transparency-enhancing measures to enhance the predictability of the investment framework

The Tunisian investment frameworks features important pillars of transparency. Regulatory material, including investment-related measures, are published in Tunisia’s Official Journal and are freely accessible online, in Arabic and French. The websites of the TIA and the APII feature the principal legal and regulatory instruments of Tunisia’s investment framework, as well as a number of ‘Fact Sheets’ – available in Arabic, French and English – which shed light on specific features of the investment framework. Both IPA portals also make available information destined to foreign investors on domestic suppliers and the local economy with a view to encourage linkages. Establishment and legal incorporation formalities are outlined via both the TIA’s and the APII’s portals, in accordance with their respective mandates, and investors can in great part carry out these procedures online.

In relation to investment authorisations, Tunisia adopted some regulations that set out comprehensive lists of all economic activities subject to authorisations. This regulation also identifies the pre-conditions, formalities and requirements, competent authorities, indicative timeframes and legal frameworks relevant these authorisations. The TIA Investor Guide also provides a general overview of the licensing requirements, the relevant procedures to obtain them and the contact details of dedicated TIA staff and liaison officers. Finally, implementing decrees and orders adopted further to the Law have clarified the eligibility conditions, procedural requirements, estimate timeframes and institutional arrangements relevant to the new Tunisian investment incentives schemes; these also establish that incentives-related decisions be motivated, and provides investors with a right of appeal for negative decision. To complement this, the TIA Investor Guide features an interactive portal which provides an overview of the different types of available incentives, as well as information pertaining to the value of incentives, relevant procedures, and contact details of dedicated TIA liaison officers. It does not however specify the conditions for obtaining incentives or provide practical information on any post-approval processes, which may negatively impact the transparency of the investment framework insofar as investment incentives are concerned.

Significant measures introduced to streamline the investment framework against the backdrop of whole-of-government reforms

Foreign investors have at times pointed out to processes and procedures relating to business licensing and permits as representing an obstacle in the Tunisian investment climate (World Bank Group, 2020[11]). To tackle such concerns, Tunisia has, between 2019 and 2020, introduced a series of facilitation measures and standards which seek to create streamline authorisation procedures throughout the country’s administrative authorities. These include specific rules which prescribe the types of documents competent authorities may request from users and applicants, and on what basis, what information competent authorities should make publicly available, and a requirement to develop a general framework for the digitalisation of application procedures. To complement these overarching streamlining measures, investment-specific streamlining standards have been introduced by way of regulation with a view to simplify the processing of operation authorisations. These among others define binding and capped timeframes for the issuance of authorisations when these are not clearly set out by competent authorities, and requires that negative decisions be motivated and grounds for refusal notified in writing (recourse or appeal mechanisms are however not available to applicants). The framework also features a ‘tacit approval’ mechanism, whereby complete authorisation applications which competent authorities have not expressly denied within the defined timeframe are deemed approved.

Further streamlining services are available in respect of authorisations required for the realisation of investment projects whose capital value exceeds TND 15 million, which are processed through the TIA’s Commission for licences and approvals. The Commission, whose membership includes relevant ministries and public bodies, is directly responsible for reviewing, deciding upon and ultimately issuing applications for these authorisations, in coordination with the relevant competent authorities, with whom it is required to liaise according to defined procedures and within specified timeframes. The TIA also provides general assistance to qualifying investors; in that regard, the TIA Investor Guide provides a general overview of licensing requirements, relevant procedures and contact details of dedicated TIA staff and liaison officers. The TIA’s dedicated investor portal is also expected to offer online services for investment incentive and authorisation applications. It is not clear whether this feature was operational at the time of writing in September 2023. In contrast, procedural and institutional arrangements for authorisations for projects whose capital value falls under the TND 15 million threshold and outside of the TIA’s mandate is limited, and investors are expected to submit their authorisation applications directly to the relevant competent authorities, which may prove administratively burdensome and time inefficient.

Looking forward: reform projects underway to further improve the Tunisian business climate

Tunisia’s recent “whole-of-government” reforms have significantly enhanced the overall predictability of the country’s investment framework and contributed to the streamlining of investment-related authorisations and procedures. Tunisia is currently considering further reform to enhance its investment facilitation framework: it has launched, in the context of its 2023-2025 National Reform Programme, a “National Strategy for the Improvement of the Business Climate”, accompanied by a nation-wide public e-consultation process and a wider public-private dialogue with the aim of addressing perceived obstacles to an improved business climate and to identify relevant structural reforms, ultimately with a view to stimulate foreign investment. This process may bring about additional reforms to address constraints and difficulties flagged by investors. Reforms envisaged in the context of this National Strategy currently include establishing a database providing easy access to applicable legislation relevant to sectoral conditions applying to FDI, further cuts in the number of required authorisations to carry out economic activities and implement investment projects, and enhanced simplification of authorisation processes (Government of Tunisia, 2023[12]). The introduction of measures seeing to achieve these objectives would significantly enhance the Tunisian investment facilitation framework.

Additional transparency and accessibility measures could also be considered to further strengthen the predictability of the Tunisian investment framework, including with respect to policymaking: ensuring that existing formal requirements (e.g., publication of drafts of proposed measures in advance of their adoption, arrangements that afford the public with a reasonable opportunity to comment during the elaboration of proposed measures) are effectively implemented could contribute to creating a more investment-friendly business climate. Further, boosting facilitation services, especially as regards to operation authorisations, destined to smaller-scale projects, and in that context clarifying the role of the TIA vis-à-vis other entities that carry a facilitation mandate, such as the APII, would also contribute to strengthening Tunisia’s investment framework (Government of Tunisia, 2023[12]). The overall transparency of the framework could also be enhanced by facilitating access to comprehensive and consolidated information on practical steps and their procedures relevant to investors, such as connection to essential infrastructure, acquisition and registration of property, among others, e.g., via an online single portal. In that regard, Tunisia is currently working towards developing a range of online administrative services at sectoral level, including services specifically intended for investors; these would include among others the filing and processing of administrative permits, social security affiliation, customs, and tax formalities.4

The Tunisian local press reported in May 2023 that a new investment law was currently under elaboration; this development had not at the time of writing in September 2023 been reported via official government channels, nor had any drafts of measures have been shared with the public (African Manager, 2023[13]).

References

[13] African Manager (2023), En attendant le nouveau Code des investissements promis pour bientôt, https://africanmanager.com/en-attendant-le-nouveau-code-des-investissements-promis-pour-bientot/ (accessed on 28 July 2023).

[6] Ahram Online (2023), Egypt announces new single-approval system to facilitate investment, https://english.ahram.org.eg/NewsContent/3/12/506166/Business/Economy/Egypt-announces-new-singleapproval-system-to-facil.aspx (accessed on 15 September 2023).

[3] Algérie Eco (2022), Le nouveau code de l’investissement va libérer et booster les investisseurs.

[4] Algérie Presse Service (2022), Le Gouvernement déterminé à lutter contre la bureaucratie et la corruption, https://www.aps.dz/algerie/146136-benabderrahmane-reaffirme-la-determination-du-gouvernement-a-lutter-contre-la-bureaucratie-et-la-corruption (accessed on 16 September 2023).

[12] Government of Tunisia (2023), Programme National des Reformes – Stratégie Nationale pour l’amélioration du climat des affaires – Feuille de route (2023-2025), http://www.mdici.gov.tn/wp-content/uploads/2023/01/Strategie_nationale_pour_l_amelioration_du_climat_des_affaires-1.pdf.

[5] OECD (2020), OECD Investment Policy Reviews: Egypt 2020, OECD Investment Policy Reviews, OECD Publishing, Paris, https://doi.org/10.1787/9f9c589a-en.

[9] U.S. Department of Commerce (2023), “Morocco (2023)”, Investment Climate Statements, https://www.state.gov/reports/2023-investment-climate-statements/morocco/.

[2] U.S. Department of State (2022), “Algeria (2022)”, Investment Climate Statement, https://www.state.gov/reports/2022-investment-climate-statements/algeria/.

[10] World Bank Group (2023), Enterprise Surveys: Morocco (2023), https://www.enterprisesurveys.org/en/data/exploreeconomies/2023/morocco.

[8] World Bank Group (2022), “Economy Profile: Morocco”, Doing Business, https://archive.doingbusiness.org/en/data/exploreeconomies/morocco.

[1] World Bank Group (2020), “Economy Profile: Algeria”, Doing Business, https://archive.doingbusiness.org/en/data/exploreeconomies/algeria#DB_gc.

[11] World Bank Group (2020), Enterprise Surveys: Tunisia (2020), https://www.enterprisesurveys.org/en/data/exploreeconomies/2020/tunisia.

[7] World Bank Group (2019), Enterprise Surveys: Jordan (2019), https://www.enterprisesurveys.org/en/data/exploreeconomies/2019/jordan.

Notes

← 1. In June 2020, after data irregularities on Doing Business 2018 and 2020 were reported internally, the World Bank management paused the next Doing Business report and initiated a series of reviews and audits of the report and its methodology. Data irregularities were subsequently corrected. The World Bank Group is currently working on a new project (Business Ready, B-READY) to assess the business and investment environment worldwide annually (forthcoming). World Bank Doing Business data was used in this Report only for illustrative purposes, and corresponds to corrected data by the World Bank Group. For more information, see: Doing Business.

← 2.  Egypt has been working on a regulatory reform program for a number of years, including in respect of the development of an Egyptian Legislation Register. It remained unclear at the time of writing in September 2023 whether this platform is operational.

← 3.  The Investment Promotion Strategy (2023-2026), published in June 2023, provides that the MoI “will completely revamp its website drawing from multiple examples of good practice IPA websites around the world” and is expected to launch an electronic platform entitled ‘Invest in Jordan’ (Invest.Jo) which, among others, will highlight the advantages and incentives granted according to the Investment Environment Law, alongside other relevant information on the country’s investment framework (p. 21).

← 4.  See, Open Government Partnership, Tunisia Action Plan Review 2021-2023, Developing a range of online administrative services at the sectoral level (last accessed on 11 September 2023).