August 17, 2009 / 7:47 PM / 10 years ago

Algeria woos investors to unlock tourism potential

ALGIERS (Reuters) - Algeria announced on Monday it was slashing taxes on tourism projects to persuade investors that the country, emerging from years of violence, could become a hot new holiday destination.

A general view of the Algerian city of Ghardaia, December 27, 2008. REUTERS/Louafi Larbi

Algeria has thousands of kilometers (miles) of Mediterranean coastline a short flight from Europe and vast tracts of Saharan desert wilderness — yet only a trickle of foreign tourists.

Attacks by Islamist militants, though dramatically reduced in the past few years, have kept many visitors away, along with a lack of investment that has left oil-producing Algeria with a shortage of high-quality restaurants, resorts and hotels.

Tourism and Environment Minister Cherif Rahmani unveiled reforms that included tax cuts for tourist firms, low-interest bank loans for tourism investments, reduced customs tariffs, subsidised land and streamlined bureaucratic procedures.

“Of course we are aware that we are not yet at a world-class level, but we are in the process, little by little, of building Algeria as a destination,” he told a conference.

“We are going to put ourselves in a competitive position in relation to our neighbors, in terms of Algeria’s attractiveness,” he said.

Despite increases in tourist numbers in the past few years, Algeria lags far behind neighboring Tunisia and Morocco.

Eight million people visited Morocco in 2008, while Tunisia recorded 7 million tourists. The two countries have attracted millions of dollars in foreign tourism investment, much of it from Europe and the Gulf states.

Algerian government figures show that in 2006, the latest year for which data was available, there were 1.64 million tourists. Only 29 percent were foreigners, while the rest were Algerian emigres visiting relatives.

Algeria’s government is keen to diversify its economy away from oil and gas, which accounts for 97 percent of its exports. It also wants to create jobs — 7 out of 10 people under the age of 30 are unemployed.

The economy is heavily regulated by the state and has seen only modest investment outside the energy sector.

Some investors questioned the government’s commitment to encouraging private investment after it capped foreign stakes in Algerian firms and this month banned banks from issuing consumer loans.

Editing by Kevin Liffey

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