FOREIGN V/S LOCAL EMPLOYEES – AVOIDING THE XENOPHOBIC TRAP

I’m wearing four hats to write this article: Mauritian citizen, entrepreneur, immigration specialist and director of an HR management agency. Of course, I’m looking at the subject from these four angles which accumulate over more than two decades of professional and personal engagement. Our articles are usually written under the banner of the Gibson & Hills Group, but this one is under my personal pen. I’m certain this will trigger different reactions, but as long as it does not leave you indifferent, I’m happy.

Local Labor Market – An Overview

From an agriculture-based economy, Mauritius shifted (rather rapidly) to a multi-fold economy through the development of industries such as textiles, tourism, financial services and IT. Education followed pace, with many of us travelling abroad for high studies and specialization in various sectors. The country opened its doors to foreign investment and capital in 2001 through the introduction of the Business Facilitation Act, the creation of the Economic Development Board (then named Board of Investment) and also, the development of a sound legal/fiscal framework. All this to ensure that the tiny island positions itself as a major business destination.

The local labor market always followed suit, until very recently. There was a notable downfall which many interpreted as a disparity between the job offer and available expertise. Plausible reasons:  training/education shortages, unwillingness or disengagement of employees, lack of ethics, inappropriate conditions of work, low salary and demand for employee loyalty, among others.. It is true that employees (backed by trade unions) have, over the last decade, been more focused on their rights rather than their responsibilities. Generally, we have done nothing than to rest on the master-slave perception, well present in our DNA, to break up enterprises. Instead of building one team under a single banner, employers and employees retrenched themselves into two separate groups. I take care in mentioning that this does not mean I warrant the abuses that employees have been subject to. But neither do I vouch for the numerous frauds and business-jeopardizing actions that many employees have led.

I fear employment was not deemed important for youngsters because most of them enjoy the ‘sponsorship of parents’ until they are settled. They do not have rents to pay, nor do they cater for their own food – as long as parents can pay, they will.

Where do we stand today? Local labor is not a favorite among local employers because of its lack of quality. You cannot correct a professional negligence or mistake without being accused of rudeness. Most common result  : seeing a resignation letter tabled in the next minute or – more often than you would think, seeing the employee packing up to leave without any word. Of course, all this is followed by the classic complaint lodged to the Ministry of Labor which, in turn, takes the employer as the de-facto defaulter. For every action, it is the employer who needs to justify himself, not the employee. I have chaired many disciplinary committees, and this has unfortunately been my experience so far.

Foreign Manpower

We gradually saw new faces on the labor market: Nepalese at restaurant fronts, Bangladeshis in textile factories, Chinese on construction sites, Europeans in management positions, or South Africans on the retail/commerce side. This is the visible scenario on the ground.

With the different permit schemes available, it became quite easy to have access to foreign expertise and at times, it is even easier than acquiring reliable local manpower. Whether Work Permits or Occupation Permits, employers simply need ‘to show’ that they are respecting the set conditions ‘on paper’ to secure them. From there, you can see foreigners in all categories of business or employment positions: hairdressers, accountants, lawyers, consultants, restaurants… everywhere. It has gone so far that foreign communities present on the island request to work only with their homies, creating a parallel economy while relocation is based on integrating the host country’s life. You want a French or South African hairdresser? A cake maker? A babysitter? Or even a maid? You have it.

It is only now that many are frowning at the situation, when everything is so utterly visible. We are not the United Arab Emirates where all Emiratis own their businesses and the only ones you find behind a counter are expatriates. This is Mauritius.

Ah, and to those princes and princesses: no, your parents are not eternal sponsors.

Enter Covid19

Sadly, now with the Covid situation many businesses are closing or narrowing their activities and resultingly, many are losing their jobs. Covid has somehow brought us back to the essence of things and helps us better appreciate their value. This includes work. Parents who were traditionally so supportive are finding themselves in tight corners as they themselves are exposed to redundancy. Families are in financial difficulties. The eternally sponsored generation now faces a different reality.  

With a smaller plate to share among locals and foreigners, the equation starts to look tricky. At this stage, I cannot say that there is a xenophobic trend, but I cannot ignore the words I’ve recently heard though my recruitment agency and through my clients. If this situation persists, these words will surely amplify and can take unpleasant dimensions.

What Has to Be Done

The government needs to work out a better strategy with regards to the employment of foreigners. The requirements should not be limited to only salary and work conditions. They should be part of a complete strategy that is able to support our fight against unemployment.

Certain professions whereby local expertise is not scarce should be protected. Examples of such professions include accountants, lawyers, administration, book-keeping, hawkers (yes), retail and commercial jobs (salesmen, after-sales, etc.). There are many areas like these, where locals should be protected. At the end of the day, we are opening our country (I said it before, many times) for the ultimate benefits of our own people; we are neither a refugee center not are we all rich pasha earning from Petro-Dollars.

If the trend continues, I warn again, it will lead to something that we will not be able to control.

I know I may be confronting my own clients (foreigners relocating) through the above statement. But there’s a need to voice out honest opinions now, rather than risking to reach a no-return point in the future.

Foreign capital and expertise are welcome to ADD to the existing capacity, not to REPLACE locals.

With the recent troubles in South Africa, I have been flooded by hundreds of employment requests. People have to understand that our immigration strategy is selective (although this is not really the case in practice) and need to stick to the principle of adding value instead of replacing local capacity.

Therefore, if you are looking for employment opportunities, make sure that you are able to adhere to the above. If you are not, then please reconsider your expectations.  You can contact us to know whether your expertise is in demand on the island, and we will give you a honest answer based on our experience on the ground; unlike many who are simply interested in selling you a residence permit.

You might find yourselves trapped in a complex situation in some years. This may include a sudden change of permit rules to politically accommodate the frustration of local unemployed people.

Nadeem Mosafeer

Gibson & Hills

www.gibsonandhills.com

Posted in Business, Business Facilitation Act, culture, Economics, Employment, Finance, Immigration, Law, Mauritius, Occupation Permit, Residence Permit, Residency | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Relocation to Mauritius : how’s life on the sunny side?

So you heard about Mauritius, the tiny little heaven-like island in the Indian Ocean. You knew already that it is one of the best tourist destinations of the world but curious to learn that it has one of the best performing economies of Africa and it has an interesting immigration policy for those who want to invest, do business, work or even retire there. But how’s life on the island? The answer to this question s essential (quintessential as would say one of our Ministers) as you choose a new life, for you and your family.

Your lifestyle may need adjustment if you are coming from a busy Europeanized or Americanized region. South Africa is part of the equation. Mauritius imports most of its commodities, point to be noted. The Mauritian Rupee is not a strong currency, the exchange rate to the USD (Rs41+-), Euro (Rs44+-) or even the Rand (Rs2.90+-) makes it look pale. You would be amazingly comfortable if you earn decent foreign currency to spend in Rupees. But earning in Rupees (through local employment, for example) to spend in Rupees requires adaptation.

Accommodation has variable prices but the simplest equation to have in mind is that nearer you are to the beach, higher will be the rental cost. Rental prices are not fixed by any means. You can get a decent urban home for around Rs30,000 (+) a month while reaching the Rs200,000 (+) per month in a luxury coastal villa. Adding a swimming pool, fenced yard or other amenities, of course, comes with additional price elements.

Non-citizens are limited by law on property acquisition. They basically have three options:

  • Luxury PDS (Property Development Scheme) Villa worth USD375,000 – with residency
  • Luxury PDS villa worth less than USD375,000 – without residency
  • Apartment worth more than Rs6 million in a Ground+2 building.

Heavy tax on vehicles (specially motorcycles) make you think twice. Many Mauritians prefer to purchase the next-to-new option, commonly called reconditioned vehicles. These are imported second-hand vehicles, refurbished and they beautifully sustain the pride of their owners for many years.  Interesting motorcycles are taxed at almost 100%, so if you are a biker, chances are that you will be chocked with the price tags.

Education and health system is normally free. However, if you are looking for quality (let’s say at least decency of service) then you will probably opt for private / paid services. Here the prices are quite high.

An expatriate child school enrolment (tuition fees, yearly fees, book fees, etc.) costs slightly more than double as compared to a local child. A quick comparison for Le Bocage International School (Secondary Education) : Mauritians pays Rs18,600 per month, while same class is at Rs34,900 for a non-Mauritian child. The capital levy (one-off fee) is Rs35,000 for a Mauritian and Rs45,000 for a non-Mauritian. Fees (lebocage.net). The quality of education cannot be disputed though. Le Bocage for instance follows the IGCSE and International Baccalaureate (IB) curriculum.  You can choose a public / Government school, which is free, but would you want your child to always answer a question by question (?). Tertiary education is well catered for, with numerous universities represented on the island. Medine (West coast region near Black River) is actually developing a new city which revolves around education. There you have primary / secondary schools of repute and a proper Middlesex University with its on-campus living. Accommodation on campus is around Rs10,000 a month for a common room with shared kitchen.

Education is a reflection of the health system. Apply the same theory to schools and you have the whole picture. Private health facilities are not expensive directly, as compared to the rates for decent service in other country. The different is between public / Government run hospitals and private hospitals. Not many Mauritians can afford the price of private hospitals. An eye cataract surgery (lens implant) costs around Rs100,000, appendix removal around same, a stent placement turns around Rs275,000. Sorry, this is not a happy paragraph.

Restaurant dining is fairly affordable, yet varies in terms of their ranking (which is not defined). Fine dining at usually in chateau-type (powered by history) places and hotels. There are some exceptions where reputed local and international chefs operate. They are branded and come with their own legacy. Food in itself is quite varied, as varied as the Mauritian culture in itself. We are a blend of people from different continents; India, China, Africa and Europe. So if you fancy a Dholl purri (Indian – Mauritian adapted street food), a Kebab, a pizza or some lobsters – you’ve got the options. Most of the times it depends on your purse, well, that you already know. If you want to cook yourself, you can find them at any decent grocery store or if you are on the high-end, you have some deli shops available at special places on the island.

The island allows for easy living, if you can control your budget. You can also spoil yourself and drown into luxury if this is your lifestyle. However, the teething problem remains adaptation. You really need to explore, see, listen and understand for yourself. The choices are there, which one suits you depends on you. Without proper understanding of this mixed Indian African culture and behavior, you may find yourself in total confusion.  You might find that you get fresh and better fish by waiting at the fish landing station, as compared to shopping in a flashy mall.  Your small grocery shop next door may be more interesting in terms of price – quality ratio than the mall where you need to fight for a parking space to get in. Well, each country has its own specifics – Mauritius no, here it is a mix of all the good and the bad of other cultures. So you need to pick and choose what suits you.

We always recommend families to come and spend some time on the island, on a short or medium stay term and see for themselves whether Mauritius delivers what they are looking for. Magazines and internet might not give you the full picture, but we are here for this !

If you require any precise information on island living, please do not hesitate to drop us an email on info@gibsonandhills.com

http://www.gibsonandhills.com

Posted in Business, culture, Economics, Employment, Finance, Immigration, Investment, Mauritius, Residence Permit, Tax | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Mauritius Residency permits, update June 2021

The Government delivered its annual budget speech for 2021 – 2022 Financial year. This exercise sets out the economic objectives, policies and strategy. As Mauritius depends heavily on foreign income, the need to have a sound and effective investment policy is essential. From 2001, the island opened its doors to foreign capital and expertise; since then it has been fine-tuning, adapting and revamping its immigration policies, which support the investment incentives.

Several changes have been brought to the available immigration and investment schemes, revamping the actual dispositions to make them more attractive to those who want to relocate, invest, retire or work in Mauritius. We provide, below a highlight of the new measures:

  • A Premium Investor Permit : new scheme which allows investor to negotiate his incentives
  • Professional Occupation Permit (Employment) is now available for 10 years (previously 3 years)
  • Dependent children age limit has been removed (previously 24 years old)
  • Medical devices & pharmaceutical manufacturing get a 3% tax rate instead of 15%
  • Foreign students can get a 10 year permit for employment after graduation
  • Self-employed are able to register a one-man company and employ administrative personnel (not possible in the past)
  • Spouse of Occupation permit holders are able to invest or work without the need for a distinct permit
  • Applicants for permits can enter the island on tourist visa. Business visa is no longer compulsory

If you have any question on the new rules, please do get in touch with our team.

Email : info@gibsonandhills

http://www.gibsonandhills.com

Posted in Business, Economics, Employment, Finance, Immigration, Investment, Law, Mauritius, Occupation Permit, Residence Permit, Residency, Retired Permit, Tax | Tagged , , , , , , , , | Leave a comment

PATRIOTISM AND LACK OF CLARITY

Covid is a word no one can avoid. Human life has never felt that much insecure, amplified of course through the enhanced information and communication facilities that link us all. We can talk about Spanish Flu or other sanitary calamities that hit planet Earth, but none were documented, presented and distorted and, above all, so rapidly disseminated as information. Too much information, unverified information rather, creates nothing else but fear among people. Self-proclaim experts have infested the social media, giving their unsolicited opinion on everything, feeding the naïve with more negatives.

Mauritius is just a small village where gossips and rumors keep people breathing. It is a kind of national sport very deeply rooted in our DNA.  All these have created a curious atmosphere among people. I am sure that this is basically the case everywhere else in the world, but the creole language (maybe) makes it all a bit more spicy than normal.  As a born and bred Mauritian, these are normal to me and are not at all a source of worry.

What worries me is the actual lack of clarify for foresightedness from our decision makers.

It seems that we have adopted the management-by-crisis model. This is not a political blog but everything in Mauritius being political, I cannot avoid the subject. It is easy to manage in the absence of major constraints, true management is revealed when storm actually hits the ship.  Today we are at this point. Nothing (for me personally) at this stage can confirm the competence of the navigating crew. I will not point to the captain as the sole responsible person. Our ship is just afloat, no specific destination has been communicated to passengers. In fact, we are being told that a wreck is possible, but we owe our existence to the masters who have so far avoided the worse. This is not normal. It could have been during the early days of Covid, but not now. When Government is telling you to start living the new normal, it is visibly having difficulties in practicing what it preaches.

Most private businesses have, by now, figured out how to work-from-home. Employees are already performing well under the new conditions, from their homes. We thought this was going to be difficult, with family members, children and specially in-laws around. It wasn’t; we have adopted the concept wholeheartedly knowing that without it many enterprises would be at a complete halt. Entrepreneurs and private operators are doing their best to readapt their business, devising new strategies to live with the new normal. Unfortunately, this is not the case with Government officials.

They are still living their old normal, sitting on hefty usual salaries and perks ;  shouting their false desperation and understanding of the dire economic situation we are in. Some are even warning of unavoidable crash coming soon. Efforts and comprehension is needed from the population, they say, while on the other side, they are openly enjoying the same benefits as in normal situation.

Why an entertainment allowance in a period of lockdown, for instance? Why should there be cold clothing allowance for an Ambassador posted in a country bordering the Equator? There are many such questions but since the aim of my blog is not political, I would stop it here.

The annual budget speech is due for presentation by start / mid June 2021. I am sure many unpopular measures will be implemented, using Covid as excuse. The fact is that mismanagement has depleted the cash reserves (including Foreign Currency). Banks are unable to finance foreign currency transaction because of lack of availability of Dollars and Euros. Exchange rate is getting to ridiculous proportion. The Euro is at MUR48+-, a rate I remember more than 20 years ago. Western Union is no longer able to make payouts. Public Debt is around 91%. Of course, beyond the debt that every Mauritian and his future generation will carry, we will also be called to finance the present situation.

There is no miracle to it. Every country is suffering. However, being on a small island, the equation must be simpler. We already have the biggest number of ministers per person in the world. We have one of the highest paid Prime Minister worldwide, overmatching giants like Putin or Modi. Economically this is not sustainable. Politically, perhaps.

The forthcoming budget speech is being awaited with much apprehension. Already, we have seen the implementation of Contribution Social Generalisée (CSG) which has increased the cost of manpower on the island. Employers, business promoters and foreign investors have frowned at it. But again, the difficult situation of Covid was brought forward as excuse. Personal tax has been subtly changed to hit those earning more than MUR3 million annually, fair enough. But to finance what? The lavish lifestyle (not to say indecent) of many? To finance unnecessary projects? Some political nominees sitting at the head of various important organizations are blatantly incompetent and this can be observed through the decline in effectiveness, efficiency and public perception. Yet these are the princes of the island, both in terms of wealth and power. I am being overly critical and probably harsh in my observation. Probably because I am a son of this soil and my only concern is to see my country shine… and I am mad at the inequality and lack of clairvoyance from decision makers.

We are all worried about the tourism industry. For more than 20 years, we have not implemented any strategy that makes sense to the modern world. We have been sitting there, relying on sun, beach and natural beauty. We built up a hotel industry instead of tourism. So easy, today, to put all the blame on Covid. The virus is just the straw that broke the camel’s back.

Some of the measures that would seem plausible and would avoid us falling into economic nonsense, in my humble opinion and experience:

  • Temporary freeze on all unnecessary / superfluous perks
  • Freezing of all unnecessary pensions to retired parliamentary members.
  • Reduction of ministers’ salary from 5-15%
  • Reduction of number of ministers
  • No duty-free concessions to ministers for the next 2 years
  • Freeze on all unnecessary projects.

Freezing or stopping unnecessary wastage will surely not be sufficient to compensate the loss of income, but it will send the right signals to the population. It will further trigger a sense of patriotism helping all of us participate in saving the country.

Decision makers are at crossroads. Here, they can either prove their worth or confirm their incompetence. It is time now that competence takes the lead over relationship and nepotism.  If the population has to understand that we are living in a difficult situation and has to make sacrifices; then the overpaid government officials not delivering have to understand too.

http://www.gibsonandhills.com

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Mauritius is not the center of the world

This article is a translation an article published in French on 8 November 2018. There are, of course, slight changes but overall the situation is the same.

By constantly repeating that Mauritius is a world center of excellence (in almost all sectors), our people seems to have been seduced by their own words. Believing, in a quite simplistic manner, that the world is dying to come to Mauritius is a gross mistake. It is just a complete waste to spend money in roadshows and international events while we maintain our pretentious attitudes to those who finally decide to invest in Mauritius. The (abusive) use of words such as ‘center of excellence, ‘hub’, ‘world class’ has to stop until we realize that we are not to the level yet. There’s lots to be done, at all levels; private or public sector.  Civil servants should understand that private companies are not their enemies but their allies in promoting the island. The ultimate objective, when we open the doors to foreign investment is the creation of a national economic wealth, which includes the growth of local businesses and service providers. Any country opening its frontiers to foreigners does it with the objective to enhance the quality of life of its locals.

In Mauritius, the official website of an authority discourages foreign investors from using local consultants and professionals. If only that authority was competent in delivering its own services, it would somehow justify this piece of free advice.

The foreign investor landing on our soil is very quickly confronts a different reality to that he’s told of, in glossy paper magazines, online sites and official communications. Many have known unbearable frustration and left the island without turning their back.

The first real obstacle comes from organizations created to facilitate foreign investment and expertise. Many of their officers have clearly not understood the strategy of the government and the stakes on the table. The investor is first seen as a ‘suspect’ and, many a times, has to answer embarrassing and silly questions – from an officer having no knowledge of the business world. Many officers believe that their job is limited to ticking boxes on a questionnaire. The career plan is simple : sitting behind a desk whole life and pretending to know everything. And when nepotism no longer surprises us, do not be surprised that uncle appointed his nephew / niece in an important role in a big governmental organization

An example :

A officer insisting arrogantly the disclosure of shareholders and directors in a Self-employed entity. I am an officer here; you pretend to know better?

The self-employed permit is for those in liberal professions (doctors, lawyers, consultants, etc.). This type of permit is specifically for those who do not require a special legal entity such as a company. The person is the enterprise. And when officers appointed to deal with such operations does not understand the basics… things will not be simple.

There are other authorities, operating with an stinking over-zealous attitude; sometimes just to hide their incompetence. They even impose rules that do not exist and go as far as challenging (behind their desks) the documents issued by other jurisdictions. In one case, I was scolded because official company documents from another country, in original, were not according to an officer’s taste. You cannot negotiate or give an explanation, you have to abide by the person’s mood of the day.

Many projects have been turned down, just like that. We shouldn’t be surprised if there’s no major developments in leisure sector, tourism, sports facilities and entertainment. These are mostly regulated by one authority, which is itself regulated by incompetency at its head. (this has changed now – remember this article was first published in 2018)

And you also have those officers claiming to have their own style. They have their own rules too. Will not hesitate in trespassing their boundaries with silly / stupid questions, request documents out their minds and make observations from another planet. You do not want to comply to his whims? Your project stays in his drawer. Superiority complex of the Alpha male (rarely female, I admit) at its best.

Such officers are present in every institution and seem to work completely the opposite of what the island wants to achieve, strangely against what the government wants to achieve. These people believe they hold the key to Mauritius; many showing a very sadistic approach while receiving a visitor at their desk.

I remember one immigration officer doing his worst to deny the foreign spouse of a Mauritian citizen the constitutional right of residency. That officer even asked Mauritian lady the reason behind marrying somebody of a different religion.

This attitude is what we need to get rid of. Only then we can pretend to walk towards excellence. We are not a buzzing city of Europe or America; we are a lonely and tiny island, lost amidst the ocean – but we are pretentious.  We have no natural resources, not even a domestic market which can sustain the economy on its own. We tend to believe that we have a brilliant future (like a super ambitious teen, full of pimples) but we’re doing nothing to reach that expected brilliance.

Unfortunately, this cancer is not only rotting the public sector, but the private operators are also affected too. On the first rank is banks. After numerous scandals, and our black / grey ranking, these banks have become a deterrent to investment opportunities. They have played it big time with big shots, and the ones to experience difficulties are genuine investors. Allow anything between 4-6 weeks to get a bank account opened, while you only have 120 days (maximum) in a year on a business visa. To complete within that 120 days : company registration, opening of bank account, transfer of investment (minimum USD50,000 for an investor permit) and application for trade / operational licenses. Anticipate request for documents which are not listed on official documents and guidelines.

At this stage, we are not even talking about the technicalities of the project : presence of qualified manpower, recruitment, finance, premises, market & feasibility studies, etc. Mission impossible: come back next year to complete the set-up. And we are still being pretentious…

If I had to write the ridiculous experiences I’ve witnessed over the years, I’d easily compile a book. But I’ll keep myself to the source of everything: the attitude.

Professionals, those with experience and competence, have a wider perspective and are able to understand the different elements behind an investment or a relocation project. They are, unfortunately, very seldomly consulted to work out the appropriate strategy and its implementation. As long as officers sitting behind the desk will play their Pasha role, we cannot pretend to reach excellence in any area where we have such claims. The failure of the word hub is clear… it has been used so many times unsuccessfully. After ‘Knowledge hub’, ‘IT hub’, ‘Seafood hub’, ‘FinTech hub’ I’m waiting for a new buzz word to appear soon.

We’ll be happy to hear from you, if you identify yourself with any of the above.

http://www.gibsonandhills.com

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Investment opportunities in Mauritius

Mauritius is right now at crossroads. The Covid19 pandemic has disturbed all plans and forced a different outlook on the future. We cannot rely on usual strategy to sustain the economic life. We cannot expect tourism to have an immediate return as the world dynamics has been completely altered.

Investors surely do not look at the island with the same perspective, mostly when we have been hit with the second wave just when we were getting our heads out of the first one. Looking at the whole situation as an investor / entrepreneur myself, I see opportunities.

That’s what we do as entrepreneurs, don’t we? See opportunities where others cannot.

While having a deeper look at economic sectors I do not see any single one reaping decent returns on their own. Well, returns can be expected if one is prepared for a long wait. In usual context, a longer wait would generally mean a more interesting return. This equation, unfortunately, does not hold anymore. Placing your bets on a single horse is not the ideal strategy right now.

The investment theory

The basic theory I learned is to check bank interest rates. If they are more attractive than the identified investment, put your money at the bank. Sadly, bank interests are hitting a low and in foreign currency cases, the rates are in negative. If you want a return on investment, bank is no longer a place to go.

Business Scenario

The domestic business environment is broken down, we know. This situation is not the result of commercial equation or a change in consumer behavior, but because of movement restrictions due to a global pandemic. People have taken habits which are not expected to change so abruptly. In Mauritius, many are waiting like lions in a cage, waiting just a gap to rush out and have their usual coffee or meal at their favorite hang-out place. Some have itching bodies waiting for fitness centers to open their doors again. The beauty parlors are like mirage in the desert for many others. I cannot imagine the rush once this mirage becomes a reality.

I was listening to an economist recently and he justly mentioned that we have adopted a certain lifestyle, it can only get more sophisticated. Almost impossible for people to make concessions on their habits as needs and wants no longer to have a clear demarcation line between them.

Therefore, it sums up to the fact that, at this moment, many businesses are suffering. There is an apparent lack of cash flow as fixed overheads have been creeping over like a dark shadow. These businesses require fresh money to tackle the present crisis. There lies an interesting investment opportunity with expected higher returns than bank deposits.

Market and purchasing power

There is a purchasing power waiting to be unleashed. I have the habit (probably not a good one) to gauge general wealth of a population by looking at the brands of cars on the roads and in parking slots. If you know Mauritius, you will know that the car park says much about purchasing power. Concentrated to few, probably; but few enough to confirm the presence of a certain wealth.  This segment is the market driver (sorry I couldn’t avoid the link with cars). They are more brand conscious. They are frequent travelers and visit duty-free shops quite often, have a wide exposure on international trends and would not hesitate to open their wallet. Now with Covid, traveling is next to impossible, so this market is available if supplied with the right offers.

The second segment is non-negligible. It is composed of the majority of consumers, ranked in the middle-class to upper middle-class range. This constitutes a lesser purchasing power individually but, collectively, represents an important volume. It includes people who have a certain taste of quality and who are quite conscious of their lifestyle. They would still dine in restaurants / food courts, bring their family to shopping, spend time in mall alleys. In brief, they are in touch with the commercial offerings. With the right pitch, they are your customers.

The future

Once the lockdown is lifted, we expect life to be as normal as possible. We have seen that last year. Mauritius being a tiny island, the Covid pandemic is relatively easy to contain. The 2020 experience was revealing in many aspects. We boasted our status of Covid free island and made many envious around the world. Unfortunately, we lowered our guards and had the second wave in uppercut. Mauritius is getting over this too.

The future of certain sectors, mostly those related to international access, does not look bright. We cannot pretend that tourism, for example, will be out of muddy waters soon. Our second wave of Covid has taught us lessons which cannot be disregarded at any cost.

Those operating on domestic retail market are expected to survive, or even do better. I’m particularly referring to the following, as an indication:

  • Food: restaurant, fast food, coffee shops, bakeries
  • Lifestyle: clothing & accessories, sportswear, jewelry, eyewear / optics.
  • Leisure: sports & fitness centers, recreational parks,
  • Electronics / technology: mobile phones and accessories, laptops, consumer electronics
  • Vacation : short stay rental (hotels and private villas) adapted to the local market
  • E-commerce businesses and intermediaries: commerce, inland logistics, payment management, etc.

Operating on an international marketing seems to be more daunting. It depends on the sector and how we adapt to the situation. There has been a boom in e-commerce service providers, IT services and finance-related activities. As long as it does not involve human mobility, it requires a little bit of creativity to keep afloat.

The period of adaptability, which many call the new normal, is a matter of time. We are looking at one single key here : adaptability. Any business, with the right dose of creativity and proper professional guidance will work its way through.

Two facts to retain: the Mauritian consumer market is waiting to bounce back and international market needs a slight change in approach.

How and where to invest

Now that we know banks are not the most interesting place to put your money. The second choice, albeit with some risks, is investment into business. The third choice is keeping your money at home and expecting some miracles for it to grow.

I would never recommend going ‘All-in’ in one particular business or sector. A diversified portfolio would mitigate risks and ensure a wider range of returns. A portfolio also allows shifting investment weights and counterbalance whenever required. With a single investment, the only choice is withdrawal and in negative scenario, it necessarily means withdrawal with loss.

We are working on a diversified portfolio that takes on board businesses with the following features :

  • Pre-Covid healthy situation
  • Established relationship with local market (retail businesses)
  • Established clientele on the international front (international service providers)
  • Product and services
  • Medium and long terms prospects
  • Strategy and objectives
  • Complexity of control

This portfolio, unlike the classic investment schemes, will impose effective control and decision-making participation. The advantage, working with small to mid-size organizations, is that it allows for quicker implementation of strategies, less complex merger / takeover process and has controllable parameters.  The portfolio will be a holding company with a diversified interest leading to a growth, both as an investment and also as an operating entity. The investments will not be passive but allow us to actively participate in operations.

Expected returns on investment

This portfolio being different from classic / passive investment schemes, will allow not only a financial return on investment in the long run but also provide all the features that one would wish for when opening a stand-alone business.

Investors to the portfolio will therefore access many interesting features :

  • Possibility to sit on the management or Board of directors
  • Investor permit or other residency permits schemes
  • Employment for qualified people
  • Benefit from an established business and its existing pool of competence
  • No fixed investment requirements. Acquire the level of stake you desire
  • Dividends
  • Disposable interest
  • Growth in investment value

Should you be interested in investing in Mauritius, please do contact us on info@gibsonandhills.com

This may be an interesting opportunity to mitigate your investment risks and set a foot on the island without burning your house.

http://www.gibsonandhills.com

Posted in Business, culture, Economics, Finance, Immigration, Investment, Mauritius, Occupation Permit, Residence Permit, Residency, Tax | Tagged , , , , , , , , , , , , , , , , , , , , , | 2 Comments

Mauritius, post-Covid 2021. What has to change?

What will be the economic future of Mauritius after our second Covid 19 wave? The island, without any natural resources, rely solely on Foreign Direct Investment (FDI) to sustain its socio-economic life. We have so far operated different programs, all based on FDI : exports, tourism, financial services, immigration schemes and luxury real-estate, for instance.

For around 12 past months, we have been shouting our Covid-free status on all roofs – and we have been very naïve in forgetting that the virus is still very active everywhere else. The population led its life as normal and even the Government seemed to have been trapped in the prevailing nonchalance. Despite the existence of well-defined protocols around our international frontier, many have been able to sneak in without any other formalities than a normal flight. No quarantine for diplomatic missions or other personalities, as if having a certain status also comes with immunity against Covid 19. The population has been questioning the protocols applicable to passengers of private jets. Well, I felt interesting to mention this despite it not being the subject of this article.

How will Mauritius survive? The question is here. The common Mauritian is an expert in everything: football, other sports, politics, geopolitics, economy & finance, management, anything – you name it. If you do not believe me, let’s meet on a bar terrace someday (after the lockdown, of course). This huge reservoir of grey matter tends to convince me that there’s no reason to panic. We will find the solution or it will flow down from heaven. Well, I feel everybody thinks the same, even decision makers.

There is a total absence of real decisions, strategic thinking and vision.  Now that our ‘Covid-safe’ argument is busted, it seems we are in a vacuum, devoid of any thinking faculty. Even those who get (I’ve not used the word ‘earn’) hefty pay just to think are not able to perform – well, they rarely do.

Tourism is in a coma and nearing death. It is useless to lament ourselves on the reasons, using of course Covid as the main element. The truth is that Covid was just one of the visible excuses of a death announced well in advance. I said it before, we do not have a tourism industry, we have had, so far, a hotel industry. We built hotels, took away public beaches from Mauritius. Besides the concrete walls of hotels and beaches, we did not take the time to develop anything else. No leisure industry development, no infrastructure or attraction for tourists. Nothing… not even an aquarium that deserves the label. All this because some of our licensing bodies (mostly those at their heads) believe that the island is their property. For an insight, how relevant are the rules: any restaurant having more than 40 seats has to get a Tourism License to operate. How relevant is a Tourism License based on the number of seats? And how relevant this is now, when there’s no tourist on the island ?  This all stems out from incompetent people sitting on the wrong chairs, taking decisions arbitrarily, most of the time depending on their mood of the day. These are people nominated for their proximity with the ruling party or because of their relationship – They have spent all their days sitting behind desks and yet act like the all-knowing Pashas. Nothing else. International flights to Mauritius have always been treated like a ‘God-only’ subject under the hands of some who vomit big, but meaningless, words. The excuse was protection of our national airline, which in meantime, caused its own death. So much hypocrisy. Air Mauritius committed suicide through its nonsensical overheads mostly constituted of hefty paychecks to, again, incompetent people. I’m not familiar with those big words and equations but I could clearly see the national airline killing itself softly over time.

Financial services has the same fate. Big words, nothing else. We ended up of different blacklists, including the European Union’s. We started the offshore sector knowing well what this entailed. Why did we spend so much energy on a sector that was known to carry certain risks, knowing that it was based on huge doubtful money transaction, opaque finance movements, and above all knowing that secrecy and low fiscal regime is what offshore operators look for ? Why this hypocrisy in defending our classification as tax haven and denying the loopholes through which major financial scandals have occurred? We have lied to ourselves so much that we started believing we were right. We are always right, defending the undefendable. We could have developed a proper financial sector, based on transparency and modern products / services. It would not be that attractive for many, I bet.

We wanted to be Switzerland, but ended up in a Russian Roulette game, waiting for the next bullet.

That same energy, investment and effort would have been better used if engaged in technology sector, for instance. I am not referring exclusively to information technology (I have to mention this as many of those political nominee limit their understanding of technology to this).  Licensing authorities, again, have failed to appraise good projects in their usual attitude of favoring only their relations. We have issued numerous online gambling license to ‘Mauritians’ operators with no prior experience of such business and in the same breath created a large population of betting-addicted people. On the other side, we rejected many online casino licenses from established brands, which were to operate on an international market with a certain purchasing power. FinTech or Blockchain … just look around. So many excuses for our officials to travel abroad for conferences, roadshows and other gimmicks while they do not understand the basics. Are you surprised to see almost no business initiatives around these? Robotics, medical and scientific research, biotechnology, anyone?

During my 27 years in business creation and management services, I have seen so many incoherence, stupidity and incompetence that I could write a book. I will someday (after retirement, if that happens). We can have lengthy theories, calculations and hypothesis but all this will not work if do not have have the guts to nip it from the bud. The foundation of everything has to be reviewed and this involves:

Reinventing our institutions by appointment proper and competent people at their head

Revoke political nominees who do not have a CV to fit their posts

Active participation of players and entrepreneurs on a strategic board to define the achievable goals over the medium and short terms

Review the system behind Government tenders and bids process

Review the whole system appointing advisers of the Government and publication of the CV of appointed ones.

Nothing will be achieve unless transparency prevails. Government may well implement schemes and beg our fellow countrymen to come back (and serve) the island they left decades ago. Give them duty-free incentives and what not… it hasn’t worked and won’t. These decent professionals will not return to a rotten system and work under the directives of incompetent nominees.

Let alone progress, we cannot expect survival unless the whole system is reviewed.

Nadeem Mosafeer

http://www.gibsonandhills.com

Posted in Business, Business Facilitation Act, culture, Economics, Employment, Finance, Investment, Mauritius, politics, Tax, Tourism | Tagged , , , , , , , , , | 2 Comments

Doing business in Mauritius – the domestic retail market

Probably the most critical element of a business is its market. You can have a world class product or service, or a super brilliant business concept, but if it does not suit the market, it won’t work. Foreigners are welcome to set or relocate their business on the island and it seems that the features of Mauritius as a peaceful, stable and beautiful island tend to surpass the reality of doing business here. Those relocating to Mauritius through a business idea need to ascertain that the idea stands its value, precisely that there is a market for the proposal. Many also tend to replicate a successful business model in their own country, which, not in all cases, is a good idea.

A market is defined by various parameters, among which is its cultural build-up. Mauritius is quite an interesting playfield. The island is a rich blend of cultures from different parts of the world (India, China, Africa & Europe). Over the years this mix has transformed itself into a unique identity – all Mauritians form one culture but each one keeps its origin alive. Now, like every other country on the east side of the globe (yes, I know the world is not flat!), the island is westernizing itself. The Europeanized Mauritian culture is something, I tell you. Easy to recognize: the Europeanized Mauritian will have English, French and Creole words in one single sentence. This translates into a Mauritian keeping his origin while trying to ape other cultures; not really a specialized characteristic as similar phenomenon is observed in many other Asian / African / Arab countries.

Adding to the cultural complexity is the apparent lack of volume and purchasing power of the Mauritian retail market. This all makes the market bland for big brands.

We all want to emulate what is being done elsewhere; an English pub to hang out after work, but we do not have the same purchasing power or culture to sustain the business model. We want Starbucks but still wondering why they have not set foot on the island (despite several invitations and franchise proposals). Big brands deploy important market research, analysis and come up with quite precise intelligence. They know. McDonalds and KFC came in with the right pricing strategy and could afford to play on their usually insistent visibility and marketing ; forcing their way to the consumers’ behavior. The ingenuity of the brands makes them succeed in any market anyway.  Their financial and organizations resources can stand the weight on cash flow over years until a decent return on investment starts kicking in.

You’ve got to have a strong back.

Not many could survive on this market. Examples: Pick ‘N’ Pay, Game, Wimpy, Mr Price…

Irrespective of the industry, commerce and retail environments can be very daunting unless it comes with a proper strategy, adapted to the market. Mauritians know why Toyota and Nissan were among the most sold cars on the island for decades relegating the best German brands far behind. There are different plausible answers, but the reality is that the different ethnic communities associated themselves to the ethnic origin of the dealership owners. Believe it or not, everything at some point was based on ethnicity on the island: sports (football teams), Coke or Pepsi, corporate colors, and so many other things. It did not go as far as racism but there was a concept of community based on communalism. Happy to observe that this is eroding but still there, present in our genes. Hopefully, this will be wiped out in the coming generations.

Entering the retail market of the island is challenging in all aspects. A successful brand (see the examples above) or business model is not a guarantee of success everywhere. As consultants, we often carry out market studies for our clients. The most interesting case we worked on was the setting-up of the first coffee-shop on the island. Coffee culture was not present at that time but the branding, the concept and the products attracted people – literally it ‘spoke’ to people. It was not only for the coffee but the general vibe of the place that made its success. Several brands then followed, with the same success. The interesting fact was that the market finally had the possibility to ape western culture, with the right pricing and concept.

This was just a brief overview of the domestic consumer market of Mauritius. There are of course deeper and lengthier analysis, but the idea here was just to throw the basics for those who want to set up retail businesses on the island. It is important that specialists are consulted before venturing out in the unknown. Each country has its own specifics and so does Mauritius.

Talk to us if you have any idea or concept you would like to develop. We handle all aspects of doing business in Mauritius. From the set-up to management and development.

http://www.gibsonandhills.com

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Immigration to Mauritius : the new rules, active from 2 September 2020

Following enactment of the new laws governing Immigration, precisely Occupation and Residence permits, the following new conditions are now applicable to those who want to invest work or retire in Mauritius. We bring you the major changes and remain at your service for any question you might have.

 

What is an Occupation permit (OP) ?

The Occupation Permit (OP) is a combined work and residence permit which allows foreign nationals to work and reside in Mauritius under 3specific categories namely:

  1. Investor including Investor for innovative start-ups
  2. Professional
  3. Self-Employed

Retired residence permit (Foreign nationals, above the age of 50 years, may also choose to retire in Mauritius under a Residence Permit (RP).)

An Occupation Permit (Investor and Self-employed) and a Retired Residence Permit shall be issued for a maximum period of ten years, renewable thereafter as per established criteria.

 

INVESTOR OP

An Investor, as defined under the Immigration Act, is a shareholder and director in a company incorporated in Mauritius under the Companies Act 2001. Three options are now available to Investors:

 

Option 1 :

Transfer of USD50,000 or its equivalent in freely convertible currency in the bank account of the company under which the application will be made.

 

Option 2 (Net Asset Value):

Net asset value of at least USD 50,000 or its equivalent its equivalent in freely convertible foreign currency, for existing businesses and businesses inherited and a cumulative turnover of at least 12 million rupees during the 3 years preceding the application.

 

Option 3 (High Technology Machines & Equipment) :

An initial investment of USD 50,000 or its equivalent in freely convertible currency, of which:

(a) a minimum transfer of at least USD 25,000 to the bank account of the company under which the application will be made.

And

(b) the equivalent of the remaining value in high technology machines and equipment, subject to such criteria as the Chief Executive Officer may determine, such as:

  1. The high technology machines and equipment will be evaluated based on the invoice issued by the supplier and a report from a recognized Chartered Valuator in the country of origin.
  2. In case the high technology machines and equipment is yet to be shipped to Mauritius, the investor should submit the bill of lading to the Occupation Permit Unit at time of submission of the application.
  • Investment in high technology machines and equipment must be in a qualifying activity including but not limited to agro-industry, aquaculture, healthcare, ICT-BPO, fin-tech, life sciences, biotechnology, manufacturing, ocean economy and renewable energy.

 

Investor for Innovative start-ups

Foreign nationals are eligible to apply for an innovator OP under the following 2 options:

 

Option 1:

No minimum investment required and submission of an innovative project to the Economic Development Board.

 

Option 2:

Registered with an incubator accredited with the Mauritius Research and Innovation Council.

 

Eligibility

The business plan should clearly depict all expenditures related to R&D activities.

The scheme applies to companies conducting R&D in qualifying sectors including but not limited to life and health sciences, technology, ICT, fintech, biotechnology, nano technology, light manufacturing, pharmaceuticals and design. The R&D expense component should constitute of at least 20% of total operational expenditure during the research phase.

The Economic Development Board will assess, on a case to case basis, each project on its own merit to determine its eligibility to the scheme

 

Qualifying Expenditures

The following costs may qualify as Research and Development:

  1. Direct R&D staff costs
  2. Subcontracted R&D costs
  3. Externally provided R&D staff
  4. Clinical trial volunteer costs
  5. Prototypes
  6. Software directly used in R&D
  7. Consumable items
  8. Any other expenditure deemed to have been incurred with the prospect of gaining new scientific or technical knowledge and understanding

For greater clarity, the following costs will not be considered as R&D expenditure:

  1. The production and distribution of goods and services
  2. Capital expenditure
  3. iii.    The cost of land
  4. Expenditures incurred for the use and the creation of patents and trademarks, as these are the cost of protecting the completed R&D

 An investor who invests at least USD 375,000 in a qualifying business activity is also eligible to apply for the 20-year residence permit. Qualifying activities: Agro-based industry, Audio-visual, Cinema and Communication, Banking, Construction, Education, Environment-friendly and green energy products, Financial Services, Fisheries and Marine Resources, Freeport, Information Technology, Infrastructure, Insurance, Leisure, Manufacturing, Marina development, Tourism and Warehousing, Initial Public Offerings.

 

PROFESSIONAL OP

A Professional, as defined under the Immigration Act, is an expatriate employed in Mauritius by virtue of a contract of employment.

A Professional should earn a monthly basic salary of at least MUR 60,000.

For Professionals in the sector of information and communication technologies (ICT), business process outsourcing (BPO), pharmaceutical manufacturing and food processing, the monthly basic salary should be at least MUR 30,000.

Professionals may also apply for a Short-term Occupation Permit for a period not exceeding 9 months. The OP may be extended only once for a period not exceeding 3 months.

 

Right to Invest by Professional

A holder of an Occupation Permit as Professional may invest in any business provided that: –

  1. he/she is not employed in the business
  2. he/she does not manage the business
  3. he/she does not derive any salary or employment benefits from the business

Notwithstanding the above, a Professional may hold shares in a business where he/she is employed provided that the Occupation Permit holder is not a majority shareholder.

 

Note:

  1. An application for a Professional should be submitted by the Employer (either Director or HR representative) on behalf of the Professional.

 

  1. The contract of employment, duly signed by both parties, should clearly mention the following: applicant’s full name as per the birth certificate, company’s name, Job Title, Duration of the contract of employment and Monthly basic salary.

 

  1. The Employer is also required to sign the Undertaking form as per section 5 of the Occupation Permit application form.

 

  1. The Professional should be accompanied by the Employer (either Director or HR representative) on the appointment date.

 

SELF-EMPLOYED

  1. A Self-Employed is defined as a non-citizen engaged in a professional activity under the services sector only and registered with the Registrar of Businesses under the Business Registration Act 2002.
  2. A Self-Employed should operate a one-person business activity, working exclusively for his/her own account.
  3. A Self-Employed should make an initial transfer of USD 35,000 or its equivalent in freely convertible foreign currency to his/her local bank account in Mauritius.
  4. For renewal, the business activity should generate a business income of 800,000 rupees per year as from the third year of registration.

 

RETIRED NON-CITIZENS

  1. A Retired Non-Citizen is defined as a person who is not a citizen of Mauritius and aged 50 years or above.
  2. A Retired Non-Citizen should make an initial transfer of at least USD 1,500 or its equivalent in freely convertible foreign currency to his/her local bank account in Mauritius.
  3. Thereafter, the Retired Non-Citizen should transfer at least USD 1,500 monthly or the aggregate of at least USD 18,000 per year or its equivalent in freely convertible foreign currency during the 10 years’ validity of the residence permit.
  4. At the end of each year, the Retired Non-Citizen should submit to the Economic Development Board, the evidence of transfer of funds into his/her local bank account.

 

Right to Invest by Retired Non-Citizen

A holder of Residence Permit as Retired Non-Citizen may invest in any business provided that:

  1. he/she is not employed in the business
  2. he/she does not manage the business
  3. he/she does not derive any salary or employment benefits from the business

 

Note:

The Retired Non-Citizen should also provide information on other residences that he/she may have in other jurisdictions, including tax residences. This information will be shared with the Mauritian Tax Authority to be in line with the prevailing Common Reporting Standard (CRS) adopted by the Republic of Mauritius

  

PERMANENT RESIDENCE PERMIT (PRP)

A holder of an Occupation or Residence Permit is eligible to apply for a 20-year Residence Permit provided the following specific conditions are met:

  1. Investor: Holds an OP for at least 3 years with:
  • a minimum annual gross income of at least MUR 15M; or
  • an aggregate turnover MUR 45M, for any consecutive period of 3 years.
  1. Professional: Holds an OP for at least 3 years with a basic monthly salary of at least MUR 150,000 for 3 consecutive years.
  2. Self-Employed: Holds an OP for at least 3 years with an annual business income of at least MUR 3 million for the 3 consecutive years.
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