Tunisia aims for foreign investment jump with new law

TUNIS (Reuters) - Tunisia hopes to double annual inflows of foreign investment over the next five years by pushing through legal reforms and reducing industrial unrest, its investment minister said.

Yassine Brahim said Tunisia would issue a new investment law early next year to “help the pace of investment with incentives and by reducing administrative procedures and bureaucracy.”

The new law will contain financial incentives for investors, especially companies intending to export from Tunisia, and those which plan to invest in the interior of the country. The government is keen to reduce the wealth gap between relatively affluent coastal regions and the impoverished interior.

The law will give foreign investors more flexibility to transfer funds, including profits, out of the country, Brahim said.

This may benefit international car companies, which want to expand their activities in Tunisia, he said without giving details.

Foreign direct investment has been sluggish since the ousting of Tunisia’s authoritarian leader Zine al-Abidine Ben Ali in January 2011 ushered in an era of political and industrial unrest.

Now the government is hoping it has bought industrial peace. After negotiations with the powerful labor union UGTT, it agreed in September to raise the wages of 800,000 public sector employees for the second time this year.

Officials said this would cost the cash-strapped Treasury about $1.2 billion, but Prime Minister Habib Essid said the deal was essential to calm tensions and stop strikes, and to raise the confidence of foreign companies.

“We aim to attract investments worth 2.8 billion dinars ($1.4 billion) in 2016 compared with 2.5 billion dinars this year with the increasing climate of social peace,” Brahim, who is also development minister, said in an interview at the Reuters Middle East Investment Summit.

“With new measures and economic reforms, we aim to double foreign investments in 2020 to $2.5 billion.”

Brahim said the new law, which needs approval by parliament, would reduce administrative obstacles to foreign investment by creating a body designed to smooth companies’ path.

He said Tunisia would hold an international conference next year to attract investors from the West and the Gulf.

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Editing by Andrew Torchia and Adrian Croft