Post on 24-Dec-2015
Malawi•Introduction•Investment Climate•Doing Business•Key Sectors•Key Takeaways
Introducing Malawi•Key Facts, Geographic and Demographic Highlights•Political and Economic Highlights•Resources and Infrastructure
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Key Facts, Geographic and Demographic Highlights
Population: 15,897,252 (July 2011 est.)Population: 15,897,252 (July 2011 est.)
World Population Rank: 63World Population Rank: 63
Population Growth Rate: 2.76%Population Growth Rate: 2.76%
Population Growth Rate Rank: 17 Population Growth Rate Rank: 17
Urban Population:
20%
Urban Population:
20%Rural
Population:80%
Rural Population:
80%
Sources: African Economic Outlook 2011 (Malawi); CIA World Factbook
IntroductionIntroduction Investment Climate
Doing Business Key Sectors Key
Takeaways
4,140,874 4,140,874
4,155,015 4,155,015
65 years and above
243,065
3,586,696 3,586,696
3,571,298 3,571,298
0-14 years 15-64 years
Literacy Rate: 76.1%
Literacy Rate: 49.8%
MA
LEFE
MA
LE
182,304
Malawi Key Facts
Area sq km 118,484
Capital Lilongwe
Languages Chichewa (official) 57.2%,Chinyanja 12.8%, Chiyao 10.1%, Chitumbuka 9.5%, Other 10.4%
Ethnic Diversity
Chewa 32.6%, Lomwe 17.6%, Yao 13.5%, Ngoni 11.5%, Tumbuka 8.8%, Nyanja 5.8%, Sena 3.6%, Other 6.6%
Religion Christian 82.7%, Muslim 13%, Other 4.4%
Currency Malawian kwacha (MWK)
Dialing Code
265
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Political and Economic Highlights
IntroductionIntroduction Investment Climate
Doing Business Key Sectors Key
Takeaways
Sources: African Economic Outlook 2011 (Malawi); Unctad Stat
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Political and Economic Highlights
Sources: African Economic Outlook 2011 (Malawi); Unctad Stat; IMF
IntroductionIntroduction Investment Climate
Doing Business Key Sectors Key
Takeaways
Exchange Rates ( June 2012)
100 MWK = US$ 0.370
100 MWK = INR 20.59
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Resources and Infrastructure
IntroductionIntroduction Investment Climate
Doing Business Key Sectors Key
Takeaways
Railways 797 kms
Sources: AICD Report World Bank 2011
Total Road 15.451 kms
Paved 6,956 kms
Total Airports (with paved runways)
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Investment Climate of Malawi•Investment Scenario •Indian Investments in Malawi•Key Government Initiatives•Agreements and Associations
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Investment Scenario
Sources: UNCTAD World Investment Report 2011; Board of Investment
Investment Climate
Investment ClimateIntroduction Doing
Business Key Sectors Key Takeaways
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Indian Investments in Malawi
Investment Climate
Investment ClimateIntroduction Doing
Business Key Sectors Key Takeaways
Sources: Reserve Bank of India; Ministry of External Affairs, India; UNCTAD LDC Profile
Sectors attracting FDI from India (July 2007-May2011)
Total amount (US$ million)
Community Social and Personal Services
1.11
Electricity, Gas and Water 0.18
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Government Initiatives
Investment Climate
Investment ClimateIntroduction Doing
Business Key Sectors Key Takeaways
Source: Malawi Investment Promotion Agency
• Private investment in Malawi is regulated by the Investment and Export Promotion Bill 2012• The Act states that investors, both domestic and foreign are allowed to invest in any sector of
the economy, with no restriction on ownership• Further it puts no restrictions on the size of investment, the source of funds or whether products
are destined for export or for the domestic market• The Act also established of Malawi Investment and Trade Centre (MITC) which acts as a One-
Stop Shop Investment and Trade Centre for all investors and exporters
FDI Policy
The Malawi Government through Taxation Act, VAT Act, and Customs and Excise Act offers the following fiscal incentives:•100% Investment allowance on New and Unused Industrial Buildings ,Plant and Machinery•No Minimum Tax Based on Turnover•25 % Export Allowance on revenue for non-traditional exports •No Taxes on Gains from sell of Shares that are held for more than 1 year.•40% Investment Allowances for used Buildings, Plant and Machinery •Transport tax allowance of 25% on international transport costs, excluding traditional exports •Allowance for manufacturing companies to deduct all operating expenses incurred up to 25 months prior to the start of operations •Exemption of Duty, Excise and VAT on raw materials used in manufacturing • Exemption of Duty, Excise and VAT on Industrial Machinery and Equipments•Carry forward of loss, up to seven years, enabling companies to take advantage of allowances •Additional allowance of 15% for investment in designated areas of the country •Exemption of duty on importation of buses with a seating capacity of 45 persons and above•Exemption of duty on direct importation of goods used in the tourism industry
Tax benefits
There are no restrictions on remittance of foreign investment funds (including capital, profits, loan repayments and lease repayments) as long as the capital and loans that were obtained from foreign sources and registered with the Reserve Bank of Malawi (RBM).
Repatriation of Capital
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Government Initiatives
Investment Climate
Investment ClimateIntroduction Doing
Business Key Sectors Key Takeaways
Legislation for the establishment of EPZs came into force in 1995. All companies engaged exclusively in manufacture for export can apply for EPZ status. As of December 2010, 16 were operating under the EPZ scheme. The incentives under this scheme include:
• Exemption of corporate tax • Exemption of withholding tax on dividends • Exemption of duty on capital equipment and raw materials • Exemption of excise tax on the purchases of raw materials and packaging materials
made in Malawi • Exemption of value added tax
Export Processing Zones (EPZ)
Manufacturing Under Bond (MUB) scheme offers incentives to those companies that export some, but not all, of their products. These incentives include:•Export allowance of 25% on revenue for non-traditional exports •Transport tax allowance of 25% on international transport costs, excluding traditional exports •Exemption of duties on imports of capital equipment used in the manufacture of exports •Exemption of surtaxes •Exemption of excise tax on the purchase of raw materials and packaging materials •Timely refund of all duties (duty drawback) on imports of raw materials and packaging materials used in the production of exports
Manufacturing under bond Incentives
• Malawi's constitution prohibits deprivation of an individual's property without due compensation. There are effective laws that protect both local and foreign investment
• The likelihood of direct expropriations has been further reduced since the repeal of the forfeiture act in 1992
Expropriation and Compensation
Source: Malawi Investment Promotion Agency
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Investment Climate
Investment ClimateIntroduction Doing
Business Key Sectors Key Takeaways
Agreements and Associations
Malawi is a member of/ signatory to the following:• South African Development Community (SADC)• Common Market for Eastern and Southern Africa (COMESA)• African Growth Opportunity Act (AGOA)
Regional Trade Regional Trade Associations and Associations and
BlocsBlocs
Important bilateral treaties and agreements are: • Memorandum of Understanding (MoU) on cooperation in the
field of Agriculture and Allied sector (2010) • Agreement on Protocol for Consultations (2010) • Agreement on Cooperation in the development of small scale
enterprises in Malawi (2010) • MoU on Human Resources and Development (2010) • Agreement for Mineral Resources Development (2010)
India extended a US$50-million Line of Credit (LoC) to Malawi in 2009–10 for its developmental projects. In February 2008, India extended an LoC of US$30 million for irrigation, grain storage, tobacco threshing and one-village, one-product projects.
India MalawiIndia MalawiRelationsRelations
Sources: UNCTAD WIR 2011; Ministry of External Affairs, India
Malawi is a member of/ signatory to the following:•Multilateral Investment Guarantee Agency (MIGA), which provides guarantee against non commercial risks•International Center for the Settlement of Investment Disputes (ICSID)
International International Investment Investment
Guarantees and Guarantees and AgreementsAgreements
The Government has concluded 9 DTTs as of December 2010.•These include DTTs with Sweden, UK, Denmark, France, Norway, Switzerland, Netherlands, South Africa and Norway
Double Taxation Double Taxation Treaties (DTT)Treaties (DTT)
Malawi has signed 6 BITs as of December 2010.•These include treaties with Taiwan, Malaysia, Egypt, Italy, Netherlands and Zimbabwe
Bilateral Bilateral Investment Treaties Investment Treaties
(BIT)(BIT)
Doing Business In Malawi•Investment Options•Investment Laws and Regulations•Investment Funding Options•Taxation
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Overview
Malawi ranks 145th on the 2012 World Bank’s index of 'Ease of Doing Business‘. Key reforms undertaken by the country during last one year include implementation of new rules providing clear procedural requirements and time frames for winding up a company, and adoption of a new law under which it would create a private credit bureau in the country.
Parameter Doing Business 2012 Rank
Doing Business 2011 Rank
Attractiveness
Starting a Business 139 132
Dealing with construction permits
167 167
Getting electricity 177 178
Registering property 95 80
Getting Credit 126 116
Protecting Investors 79 74
Paying Taxes 23 22
Trading Across Borders 164 163
Enforcing Contracts 121 122
Closing Business 132 131
Comparison of Malawi with regional economies on ease of doing business ranking
Ease of doing business rank of Malawi
1-46
47-92
93-138
139-183
Average doing business rank
Key Sectors Key TakeawaysIntroductionIntroduction Investment
ClimateDoing
BusinessDoing
Business
Sources: Doing Business, World Bank
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Overview
Investment options
Investment funding options
Taxation
An investor can conduct business in Malawi using any of the following forms public/private limited company, partnership, sole trader and branch of foreign company. Foreign investors are required to register their amount of capital inflow with the Reserve Bank of Malawi through a commercial bank.
Important sources of finance in Malawi include commercial banks, stock exchange, microfinance institutions, leasing companies and discount houses. Informal financial arrangements also play a important role in the economy
Malawi’s tax regime is quite favorable towards foreign investors. Key taxes applicable in the country include personal income tax, corporate tax, withholding tax, value added tax and payroll tax.
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DOING BUSINESS IN MALAWI
Key Sectors Key TakeawaysIntroductionIntroduction Investment
ClimateDoing
BusinessDoing
Business
Investment laws and regulations
The Investment and Export Promotion Act 2012 regulates both investments and trade in Malawi. The country offers several investment and trade incentives under various legislations including the Export Processing Zone (EPZ) Act, the Customs and Excise Act, and the Income Act.
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Investment options
Investment funding options
Taxation
A foreign investor in Ghana may form a trading company or may team up with a Ghanaian entrepreneur for a joint venture, usually in the form of a partnership or a limited company. The investor is required to register his/her business at GIPC and Registrar General’s Department.
An investor has several funding options in Ghana, including shares issuance on Ghana Stock Exchange, commercial loans, micro-financing, and low interest loans available through Ghana Venture Capital Fund.
Ghana has a competitive taxation system with corporate tax rate of 25% and maximum rate for personal tax rate at 25%.Other taxes in the system include rent tax, capital gains tax, mineral royalties and value added tax. A division of a foreign company is taxed like any corporate entity in Ghana.
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Investment laws and regulations
The Ghana Investment Promotion Center (GIPC) Act is the main law that governs investment in Ghana. Mining and oil and gas sectors are governed by a separate set of laws. Further, sector specific regulations exist for industries such as financial services, fishing and telecommunications.
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Sources: Malawi Investment Promotion Agency; EY Analysis
Investment Options
Key Sectors Key TakeawaysIntroductionIntroduction Investment
ClimateDoing
BusinessDoing
Business
through a commercial bank in Malawi.
An investor must invest at least US$50,000
Submit an application at the Malawi Investment and Trade Centre (MITC), accompanied by a complete business proposal. A non-refundable fees of US$200
or Malawi Kwacha equivalent shall apply for applying new investment license
Business incorporation procedures
MITC processes the application and sends it to Investment Approval Committee for appraisal and approval
Committee, if satisfied, issues an investment license. Upon approval, the investor shall be required to pay US$800 or Malawi Kwacha equivalent for obtaining an
Investment Certificate
Companies are required to register with the Registrar of Companies
Companies are also required to register with the Malawi Revenue Authority (MRA) for the payment of taxes
Open a bank account with a Malawi commercial bank. The account can be transacted after the completion of registration process
Investment Laws and Regulations
Key Sectors Key TakeawaysIntroductionIntroduction Investment
ClimateDoing
BusinessDoing
Business
Investment options
Investment funding options
Taxation
A foreign investor in Ghana may form a trading company or may team up with a Ghanaian entrepreneur for a joint venture, usually in the form of a partnership or a limited company. The investor is required to register his/her business at GIPC and Registrar General’s Department.
An investor has several funding options in Ghana, including shares issuance on Ghana Stock Exchange, commercial loans, micro-financing, and low interest loans available through Ghana Venture Capital Fund.
Ghana has a competitive taxation system with corporate tax rate of 25% and maximum rate for personal tax rate at 25%.Other taxes in the system include rent tax, capital gains tax, mineral royalties and value added tax. A division of a foreign company is taxed like any corporate entity in Ghana.
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Investment laws and regulations
The Ghana Investment Promotion Center (GIPC) Act is the main law that governs investment in Ghana. Mining and oil and gas sectors are governed by a separate set of laws. Further, sector specific regulations exist for industries such as financial services, fishing and telecommunications.
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100% investment allowance on qualifying expenditure for new building and machinery
stage of investment.
The Government of Malawi encourages foreign direct investments by offering several
Allowance up to 40% for used buildings and machinery
Allowance for manufacturing companies to deduct all operating expenses incurred up to 25 months prior to the start of operations
Free repatriation of dividends, profits and royalties
General incentives for investors
100% exemption of corporate income tax
No withholding tax on dividends
No duty on capital equipment, machinery and raw materials
0% value added tax
Key incentives under the Export Processing Zones Act
Sources: Malawi Investment Promotion Agency; EY Analysis
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Key Sectors Key TakeawaysIntroduction Investment
ClimateDoing
BusinessDoing
Business
Investment Funding Options
Drivers`
Stock MarketEstablished in 1994, the Malawi Stock Exchange (MSE) started equity trading in late 1996. As of March 2011, the MSE listed shares for one foreign and 14 national companies
Microfinance Institutions
Micro-finance in Malawi is still in its early stage of development. The country has several microfinance institutions (MFIs) including:•Malawi Rural Finance Company•Small Enterprise Development Organization of Malawi (SEDOM)•Credit Cooperatives (MUSCCO)
the economy due to low penetration of financial services, especially in the rural regions.
Banks
Around 11 commercial banks operate in Malawi, with the three largest banks accounting for over 60% of the sector’s deposits and assets. Some of the important banks in the country include:•National Bank of Malawi Limited•Standard Bank of Malawi Limited•First Merchant Bank of Malawi Limited•Nedbank
Investment options
Investment funding options
Taxation
A foreign investor in Ghana may form a trading company or may team up with a Ghanaian entrepreneur for a joint venture, usually in the form of a partnership or a limited company. The investor is required to register his/her business at GIPC and Registrar General’s Department.
An investor has several funding options in Ghana, including shares issuance on Ghana Stock Exchange, commercial loans, micro-financing, and low interest loans available through Ghana Venture Capital Fund.
Ghana has a competitive taxation system with corporate tax rate of 25% and maximum rate for personal tax rate at 25%.Other taxes in the system include rent tax, capital gains tax, mineral royalties and value added tax. A division of a foreign company is taxed like any corporate entity in Ghana.
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Investment laws and regulations
The Ghana Investment Promotion Center (GIPC) Act is the main law that governs investment in Ghana. Mining and oil and gas sectors are governed by a separate set of laws. Further, sector specific regulations exist for industries such as financial services, fishing and telecommunications.
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Sources: IHS Global Insight; EY Analysis
Key sources of finance
Others
Other financial institutions offering financing facilities include leasing companies (such as Leasing and Financing Company Limited) and discount houses (such as First Discount House Limited, Continental Discount House Limited)
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Taxation
Investment options and business registration
process
Investment funding options
Investment laws and regulations
Taxation and business environment
Key forms of business enterprises in Kenya are partnerships, sole proprietorships, co-operatives and branch offices. Private LLC is the most favored vehicle for foreign investors, as the tax payable is less than that for a foreign branch.
A foreign investor has several financing options in the country. Key sources of finance include commercial banks, microfinance institutions, stock issue, and development banks.
The Foreign Investments Protection Act (Chapter 518, Laws of Kenya)seeks to protect foreign investment made in Kenya. Clearance is required from parent ministries for investments in restricted areas before KIA approval is granted.
Kenya has a developed taxation system, and offers several fiscal incentives to foreign investors. Capital deductions are available on industrial buildings, hotels, plant and machinery and mining investment.
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Key Sectors Key TakeawaysIntroductionIntroduction Investment
ClimateDoing
BusinessDoing
Business
Key Taxes
Type Rate
Corporate Income Tax Standard rate of 30%; investment income of pension funds is subject to tax rate of 15%
Foreign branch tax 35%
Value-added tax 16.5%, however, banking and life insurance services are exempted
Dividends withholding tax 10% unless reduced under an applicable tax treaty
Interest withholding tax20% applies to residents; 15% applies to interest payments made to non-residents, unless reduced under an applicable tax treaty
Royalties withholding tax 20% applies to residents; 15% applies to interest payments made to non-residents, unless reduced under an applicable tax treaty
Personal income tax First MWK180,000 income is tax free; thereafter, next MWK is taxed at 15% and excess at 30%
Payroll tax1% tax-deductible levy of payroll costs is payable to Technical, Entrepreneurial and Vocational Education and Training Authority
Sources: EY Analysis; IHS Global InsightExchange rate: MWK1 = US$0.00596
Key Sectors•Agriculture •Mining and Quarrying•Manufacturing•Tourism
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Key Sectors
Key Takeaways
Key TakeawaysIntroduction Investment
ClimateDoing
Business Key Sectors
Sources: EY Analysis; African Statistical Yearbook 2011; African Economic Outlook; Malawi Investment Promotion Agency (MIPA)
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Key Sectors
Key Takeaways
Key TakeawaysIntroduction Investment
ClimateDoing
Business Key Sectors
Domestic: 83%
Foreign: 17%
Supply chain: 26.8%
Investment: 4.2%
Government collective: 2.3%
The total contribution of travel and tourism to GDP in 2011 was 3.7% in
2011
Economic contribution of Travel & Tourism in 2011
Sources: EY Analysis; African Statistical Yearbook 2011; African Economic Outlook; Malawi Investment Promotion Agency (MIPA); Malawi Tourism Association; WTTC
Key Takeaways•Investment opportunities for Indian Investors•Key Contacts
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Investment opportunities for Indian Investors
Key Takeaways
Key TakeawaysIntroduction Investment
ClimateDoing
Business Key Sectors
UK
TOP INVESTORS
INDIA
UAE
SPAIN
US
FRANCE
POTENTIAL SECTORS FOR INVESTMENTS
Sector Sub SectorsAgriculture • Cash crops,
particularly tobacco
• Farm crops
Mining and Quarrying
• PGM’s• Uranium• Other minerals like
coal, bauxite etc
Manufacturing • Agro-processing• Textile and
garment manufacturing
• Light manufacturing
Travel and Tourism
• Eco-Tourism
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Organization Address Web address Contact details
Malawi Investment and Trade Centre (MITC)
Lilongwe OfficeAquarius House – First floorPrivate Bag 302Capital City Lilongwe 3
Blantyre OfficeUnit House – Fourth Floor Private Bag 131Blantyre
E-mail : mitc@mitc.mwWeb:www.malawi-invest.net
Tel:+265-1-770-800/ 265-1-771-315Fax:+265-1-771-781
High Commission of the Republic of Malawi in India
C-6/11, Vasant Vihar,New Delhi – 110057
Email: malawindia@airtelmail.in
Tel: +91-11-26706000Fax:+91-11-26706010
Key Takeaways
Key TakeawaysIntroduction Investment
ClimateDoing
Business Key Sectors
Key Contacts