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Why Tunisia Continue to Attract More Investment from Europe?

Tunisia is starting the road to inclusive and sustainable development on the consecration of democracy had made it possible to increase the confidence of its partners .The country has many benefits that make the nation very appealing for investors. 

The country’s central Mediterranean position, its competitiveness and growth and its preferential treaties with numerous partner countries, Tunisia offers access to numerous markets for companies that desire to develop their activities.

Tunisia is a privileged partner of the European Union. Its geographic proximity to Europe is also an advantage for Tunisia. The relationship is a close one economically, culturally and socially.From January 1st, 2008, Tunisia was the first country of the southern Mediterranean shore to join the Free Trade Area of the European Union.

The negotiations for a Deep and Comprehensive Free Trade Area (DCFTA) between the EU and Tunisia were launched on 13 October 2015. One negotiating round has taken place so far, in April 2016. The EU and Tunisia concluded an Association Agreement in July 1995. The DCFTA build on the existing EU-Tunisia Association Agreement, which entered into force in 1998 and created a Free Trade Area between the EU and Tunisia.

The overall goal of the negotiations is to create new trade and investment opportunities and ensure a better integration of Tunisia’s economy into the EU single market. The DCFTA also aims at supporting ongoing economic reforms in Tunisia and at bringing the Tunisian legislation closer to that of the EU in trade-related areas.

Discussions cover a wide range of issues including agriculture, services, and sustainable development. The EU and Tunisia published a joint report, the EU-proposed negotiation texts and explanatory factsheets following the round.

  • The EU is Tunisia’s largest trading partner, accounting for 64% of its trade in 2017: 78,5% of Tunisia’s exports went to the EU, and 54,3% of Tunisia’s imports came from the EU. Tunisia is the EU’s 34th trading partner representing 0.6% of the EU’s total trade with the world.
  • Total trade in goods between the EU and Tunisia in 2017 amounted to €20,5 billion.
  • The EU’s imports from Tunisia are mostly made up of machinery and transport equipment (€3,8 billion, 41,3%), textiles and clothing (€2,2 billion, 23,7%) and agricultural products (€0,5 billion, 6,1%).
  • The EU’s exports to Tunisia are dominated by machinery and transport equipment (€3,9 billion, 35,1%), followed by textiles and clothing (€1,3 billion, 12,3%), chemicals (€1,2 billion, 11,0%), and fuels and mining products (€1,2 billion, 11,6%).
  • Two-way trade in services amounted to €4,8 billion in 2016 with EU imports of services representing €3,3 billion and exports €1,5 billion.
  • Flows of foreign direct investment to Tunisia are concentrated on the development of the infrastructure network as well as of the textiles and clothing sectors.

The North African nation has undergone huge alterations over recent years and when this is combined with the factors that have always been appealing for Tunisia, it’s no surprise to see that so many people are taking their money to the country in a bid to reap the rewards.

Tunisia boasts several impressive infrastructure facts. For instance, there are approximately one hundred industrial zones, while the fact that Tunisia ranks above the likes of Italy and Egypt in terms of the quality of its infrastructure is very impressive. The government has pledged major investment to improving roads, industrial areas and technology regions and this is also hugely significant for the country.

Investors have also been provided plenty of incentives to take their money to Tunisia. Tunisia  have startup legislation to create a better local environment for innovation and entrepreneurship. As new companies will be exempt for ten years of income tax, while those which are situated in certain areas of the country will receive a state subsidy for employer contributions.

Foreign Direct Investment (FDI) decreased to USD 845 million in 2019, compared to USD 1 billion in 2018 (-18%) according to UNCTAD’s World Investment Report 2020. Tunisian FDI stock was about USD 29 billion in 2019. The main investors in Tunisia are France, Qatar, Italy and Germany. The majority of FDI in 2019 was allocated to industry ($450 million), followed by energy ($300 million) and services ($95 million). Furthermore, there has been a substantial decline in investment in the services sector.

The main sectors that attract investment are energy, electronics, tourism and mechanical manufacturing. France is by far the largest investor in the country, followed by Qatar, Italy and Germany. Investor confidence is recovering with the end of terrorist attacks, as evidenced by the growing number of international tourist arrivals. Furthermore, Tunisia gained 2 places in the World Bank’s Doing Business 2020 report and is now ranked 78th out of 190 countries. The Tunisian government adopted laws allowing to start a business more easily (more services are available into the one-stop shop, fees decreased) ; registering property is now faster and more transparent and ; paying taxes is easier (implementation of a risk-based tax audit system). These improvements in return boosted portfolio investments and helped Tunisia progress in World Bank’s ranking.

The European Commission informed the Tunisian Embassy in Brussels, June 9, 2020 of Tunisia’s official withdrawal from the list of countries with inefficient anti-money laundering and counterterrorist financing (AML-/CFT) measures.
The move comes three years after Tunisia was included on the list, on Feb. 7, 2017, when the country was grappling with a serious economic crisis due to money laundering crimes and high rates of corruption in major state institutions and sectors including customs. This is not to mention tax evasion and e-crimes, as well as hacking of financial accounts and bank cards abroad.

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