the gambia investment law regulation (giepa presentation)

Omar E. Garcia-Bolivar omargarcia@bg-consulting.com

www.bg-consulting.com

Gambia Investment and Export Promotion Agency Act 2010

June 13, 2011.Banjul.

Best international practices for investments.

Issues with the GIEPA Act. Some recommendations.

BEST MARKETING TOOL

Sound business climate

SOUND BUSINESS CLIMATE

Business opportunity. Easy to do business. Low cost. Good infrastructure. Access to credit. Rule of law.

A COUNTRY IN AFRICA

Small. Difficult to reach. Not well known. Competition by close larger

countries.

MAURITIUS

Population 1,275,323 Doing business rank: 20/183 FDI inflows 2006-2010: US $

256,680,712 GDP: US $ 8,588,729,727 GNI Per Capita

(US$)7,240.00

IN ADDITION TO…

Foreign investment policy: Investment law as a goodwill sign. Plan investment treaties (BITs,

FTA):ContentCountries to target

Double taxation treaties. A rational system of incentives. Promotional strategy.

TAX INCENTIVES Limited in time for beneficiaries and for

granting agency. Granted automatically upon meeting the

requirements, e.g.: claim at time of tax return.

Contributor not relieved from compliance, e.g.: file tax return.

Subsequent supervision. Administered by revenue authority. Tax credits and investment allowances

directly related to the amount invested are better options.

EXPORT PROCESSING ZONES

Hassle free regime. Trade facilitation measures in place. Imports free of duties and VAT. Simplified tax regime. Exports not subject to tariffs or

restrictions. Effective monitoring and supervision

by Customs authority. No subsidies in utilities,

communications or infrastructure.

WHAT NOT TO DO“ The Gambia’s investment promotion authority

confers a special status on investors, who are then awarded special investment certificates that entitle them to benefit from incentive packages. The investment promotion authority also states that, ‘Apart from these specific incentive packages, others can be negotiated with the Agency depending on the strategic nature of the investment.’

To the extent possible, qualification for incentives should be automatic, with investors receiving them if they satisfy the conditions required by tax and other laws. Investors’ costs increase if they are asked to go through an approval process. Moreover, most investment promotion agencies lack the capacity to administer incentives —especially tax incentives.”

Source: Incentives and Investments:Evidence and Policy ImplicationsInvestment Climate Advisory Services of the World Bank Group. December 2009

The business climate in The Gambia

Opinion of the business community: Too many and high taxes. Expensive and unreliable electricity. Difficulties to access to credit. Access to/from the world: hard.

Doing business indicator: 146/183

THE GIEPA ACT

• It is an average law.• Some terms need to be defined.• Although it intends to create a rule based

incentive system, some discretion is present.• According to the Act, GIEPA receives and process the applications and if

approved, it recommends the Minister to grant the certificate to the applicant. This procedure involves discretion of the Board of GIEPA and it is very likely to cause delays and excessive costs for the applicants.

• GRA in turn recommends to Minister of Finance for the tax or export component of incentive package.

• No general time limit to cap the incentives.• Excessive, distortive and contradictory

incentives, e.g. tax holiday and tax depreciation.

• Universal arbitral consent.• MSME component.

How to attract business?

Sound business climate

Regulati

REGULATIONS

Recommendations

Look closely at the law again. Others:

Streamline the process of incentives. Have GRA actively involved. Try to emulate one-stop shops. Diminish discretion. Subsequent supervision. Database of MSME to matchmake. Play “dummy” with other MSME

provisions.

Thank you.

the gambia investment law regulation (giepa presentation)

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