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Marketing Mauritius for foreign investment
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Marketing Mauritius for foreign investment
This year’s budget encapsulates innovative thinking in setting an objective founded on hope, by default, rather than on certainty of success: the initial emphasis is on attracting foreign direct investment (FDI). Nonetheless, the budget is revolutionary in initiating a process; unlike projects whose end is usually coincident with the end of term of the initiating government, a process is continuous and engages future generations. The ongoing process is one that seeks to focus effort on competing globally for survival: there is no other option for sustaining the economy of our small island. To enhance prospects, a multi-disciplinary effort engaging the whole population is required.
For its part, the government has started simplifying the regulatory environment for foreign business and has sought positive engagement in international governing arrangements such as those emanating from the International Monetary Fund, the Word Bank, the World Trade Organisation and the European Community, etc.
● <B>Life style changes are necessary at the very outset. </B>The language of international business is unequivocally Shakespeare’s rather than Molière’s. In this respect, Mauritius is disadvantaged in that its bureaucracy and media - that will facilitate foreign investment - is predominantly French although English is the official language. Whilst a business can successfully survive the predominance of French, Mauritian society will need to accommodate its foreign workers. It is a much easier and cheaper to recruit English-speaking rather than bilingual foreigners.
An equally salient characteristic of international business is that it is very formal; its religion is courtesy and its queuing system based on merit. Many observers have concluded that Mauritian society is neither courteous nor prevalently based on merit. For instance, a cursory greeting ‘Good Morning’ followed by an explanation of the transaction sought by an English visitor has but one guaranteed effect: it freezes the thought processes of the average client-facing personnel in any office, or shop. Mauritius can adapt to both these requirements as demonstrated by its diaspora in virtually every country of the world.
● <B> The primary asset of Mauritius is its people. </B>It may be expedient to rely on foreign workers initially but this will create untold pressures on the country. This phenomenon has been a characteristic of all societies, which have encouraged ethnic immigration. Land is the most precious commodity in Mauritius as it is limited and high-density housing creates social pressures and levies a high financial toll in terms of policing, transport, imports, etc.
● Our universities and training institutions have a key role to play.</B> How many applicants would I get if I advertised for C# software developers today? Mauritius needs to adapt its educational system to the needs of foreign investment to mitigate the need for foreign workers and promote local employment. In the long-term interest of social stability, the full employment of the local workforce is a more precious objective than foreign exchange.
Moreover, Mauritius needs to develop its ancillary services sectors. The golden rule of modern businesses is to concentrate on their core activity. However, all businesses rely on other services. For example, a car assembly plant may rely on robots routinely and, while it would concentrate on its core activity, it would pay for the servicing of its machinery. Equally, such a plant may elect to contract out its accounting and legal functions. Such reliance provides the opportunities for local businesses.
● <B> The government must simplify the process and terms of local recruitment and promote skills developments in line with investors’ expectations.</B> The government cannot be the competitor of local businesses in the labour market. At present, the government is the largest domestic employer and offers perks that the private sector simply cannot or will not match. Foreign businesses will operate in the interest of their clients worldwide: essentially, this means working around the clock because Mauritius cannot go to sleep when the US or Australia is waking up. The government must improve the local infrastructure (transport, policing, power and other amenities) to make it suitable for a 24-hour day.
Unlike employment in the government sector, which does not have a profit motive, businesses are driven by the productivity -which affects profits directly- of its workforce. A significant factor in the willingness of foreign businesses to recruit locally is the local legislation regarding strikes, redundancy benefits, and training costs. A foreign business that pays for local staff training in, say, software development, is investing in the domestic economy in a real sense especially if local institutions provide the training. However, the government needs to think of financial incentives to foreign investors to persuade them to put the organic growth of local skills on the agenda. Long-term sustainable growth depends on such public-private partnerships.
● <B> The government needs to clarify its stance in courting foreign investment. </B>This must include a demonstration of minimum acceptable ethical and ecological standards. It is unclear whether foreign investments in a pornographic electronic factory, a software development house, a nuclear power plant, etc. would be equally welcome in the eyes of the local population and international observers.
● <B>There is a need for specialist and broad-reaching promotion agencies. </B> At the outset, it may be economical to recruit foreign expertise for this purpose; however, the best guardians of a country’s interests are undoubtedly its own citizens.
The government or its overseas offices exist for miscellaneous purposes and cannot focus on the task of attracting foreign investment. Although dedicated agencies are required, it should not be necessary for a US or European prospective investor to visit Mauritius on a fact-finding mission to establish investment viability in Mauritius. The package Mauritius has to offer must be documented in some sort of authoritative handbook for foreign investors: this is optimal if presented on a web site.
● <B>Will this endeavour succeed? I think a more pertinent question is how well it would succeed. </B>On the one hand, it is virtually impossible to compete with China or India as they have a cheap supply of labour and started the quest for foreign investment a long time ago. Countries like the US and Singapore (its per capita income is 88% of the US) can offer facilities that Mauritius simply cannot afford.
Sceptics may well despair at the prospects of Mauritius competing with, say, an automated factory in China that produces a million pairs of socks per day with a handful of staff. However, Mauritius has run out of easy/popular options in the aftermath of the recent sugar and textile market changes. The tourism industry is notoriously fickle: these days, the hotel, landscape, prices and food in all holiday destinations is indistinguishable in comparable locations. Mauritius has nothing unique to offer tourists and does not have valuable natural resources such as ores and oil.
Besides increasing productivity to curtail its own expenditure and privatising such ventures as postal services, electricity and water supply, a parallel initiative for the government is to implement measures to reduce the reliance/demand of imported goods. A key focus in this respect is the provision of incentives to the agricultural sector to achieve self-sufficiency in food production and storage. At least, this parallel strategy can reduce some of the difficulties.
Critically, this government needs to rejuvenate its public relations activities to secure consensus on the vision of its budget. A strong legislature (the government and its opposition) is probably uppermost in the list of foreign investors’ considerations.
<B>Ajay ASKOOLUM</B>
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