A new investment law … Will it return foreign capital to Algeria?

Algeria / Hassan Jibril / Anatolia

President Tebboune ordered to place the “Algerian Investment Promotion Agency” under the authority of the Prime Minister
The new draft investment law provides for greater transfer of profits from foreign investors and imposes fines on the impediment of investments
– Head of a business organization: the law provides for the fight against bureaucracy by law, and sets deadlines for granting licenses and the establishment of companies
Economist: The new text gives the biggest guarantees to investors

Algeria has released a new draft investment law, which authorities say has ended the era of foreign investment barriers, in an effort to intensify the injection of foreign capital into the domestic market.

On May 19, a statement by the Algerian Council of Ministers stated that the draft version of the new investment law had been approved.

According to the statement, the new investment bill aims to embody the obligations of President Abdelmadjid Tebboune, which is related to improving the investment climate and providing the appropriate conditions for it.

** Penalties for obstructors

Under what was stated in the statement, the National Investment Support Agency (governments) will be transferred to the Algerian Investment Promotion Agency, given the role of promoter and investment facilities.

Algerian and foreign investors have often complained about the heavy bureaucratic procedures of the National Agency for Investment Promotion, which is responsible for the study and approval of projects or not.

According to the statement, it was decided to create a single window with national jurisdiction, targeting large projects and foreign investment.

The authorities intend, according to the statement, to fight the bureaucracy that inhibits investment projects by “digitizing” the procedures related to the investment process.

One of the most important measures that has always elicited criticism from foreign partners, and it relates to the “broadening of the scope of the guarantee of the transfer of invested amounts, and the proceeds resulting therefrom, to non-resident (foreign) investors. “

Foreign companies operating in Algeria say they experience problems every year with regard to the transfer of profits, and the lack of clarity on how to implement the appropriate regulatory texts.

After the cabinet’s ratification of the new text, Tebboune instructed to impose the maximum penalties on anyone who in any way impedes investment activities, regardless of their position and the nature of their responsibility.

He also ordered the “placement of the Algerian Investment Promotion Agency, under the authority of the Prime Minister”, having previously been affiliated with the Ministry of Industry.

He also emphasized the strengthening of the legal system to protect investors from bureaucratic abuse, through the creation of an independent high-level mechanism, consisting of judges and economic and financial experts, to be placed with the Presidency of the Republic, and to resolve complaints. adjudication and appeals filed by investors.

During his recent visit to Turkey, Tebboune said the new law would serve investments, open horizons and protect all investors.

** Domestic and foreign criticism

For decades, the business and investment climate in the country has been a source of criticism from public opinion, local businessmen and foreign companies, due to the complex and cumbersome administrative procedures, which have caused alienation among investors.

Reports from the World Bank’s business environment department on the business climate in countries indicate that Algeria lags behind in its annual rankings.

Algeria ranks 157th in the Doing Business 2020 report, out of 190 countries. Local businessmen also complain that their projects have been hampered and that they remain in charge of investment in the administrative bodies for years.

Among the criticisms leveled at the World Bank against Algeria for doing business are the delay and heaviness of banking procedures, bureaucratic control over it, problems with the transfer of profits abroad to foreign companies, delays in the granting of real estate (land) to establish projects, and the long period of obtaining company establishment documents, among others.

President Tebboune canceled the controversial 51/49 rule for partnering with foreigners after his December 2019 election, limiting it to certain strategic sectors such as energy and communications.

Algeria has implemented a foreign partnership rule since 2009, based on the allocation of 51 percent to the Algerian party, and 49 percent to the foreign party.

** new page

In this context, Sami Akli, head of the Algerian Confederation of Civil Employers (the largest business organization in the country), believes that the new investment law “truly represents a new page in Algeria’s economy, given the new incentives and measures it contains” . “

In an interview with Anatolia, Akli explained that the new investment law “responds in a clear way to most of the fears and obstacles faced by Algerian and foreign businessmen.”

He pointed out that the text took into account most of the proposals made by the organization, such as clarifying the fight against bureaucracy through legislation, the deadlines for granting licenses and the establishment of companies determine and the investment agency under the supervision of the Prime Minister.

He pointed out that the new project accompanies foreign businessmen and companies with regard to the transfer of profits, having determined the extension of the scope of the guarantee of the transfer of invested amounts and the resulting proceeds to non-resident investors is.

** Guarantees for investors

In turn, Algerian financial and economic expert Mahfouz Kaubi believes the new text has provided the greatest degree of guarantee to investors, whether domestic or foreign.

In an interview with Anadolu Agency, Kawpi explained that the draft investment law exceeded the phrase “foreign investor” and replaced it with “non-resident”, which he said was a “correction of concepts and had great meaning and symbolism. “

He pointed out that “the draft law clearly confirms the right of non-resident investors to transfer profits, given the problems previously raised at this point.”

He believed that the new law entrenched freedom of investment, and provided guarantees of non-review and amendment of laws, and equality between investors, with fair competition and excellence being the deciding factor.

Kaube stressed that the adoption of this new legal framework for investment, “should be accompanied by adjustment and reform processes at the level of various legislation such as banks, in particular with regard to the movement of capital to and from Algeria, which should be clear and transparent, away from opacity. “

And he added, “The departments and bodies involved in investment must keep up with the new law and be in the same format (..) as customs, taxes, the banking system, and the authorities responsible for granting Of real estate and others, so that there is an actual translation of this document on the ground. “

It is expected that the amended investment bill in both chambers will be submitted to Parliament for discussion and ratification, before it enters into force by signing it and publishing it in the Official Gazette.

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