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Executive Summary
Seychelles is an island nation located off the eastern coast of Africa in the Indian Ocean with a population of 94,600. Seychelles gained its independence from the United Kingdom in 1976, at which time the population lived at near subsistence level. Today, Seychelles’ main economic activities are tourism and fishing, and the country aspires to be a financial center. Although the World Bank has designated Seychelles as a “high income” country, its wealth is not evenly distributed. The United Nations Development Program’s Human Development Report for 2016 found that Seychelles experiences income inequality, with a Gini coefficient of 46.8. However, this is a significant improvement from 2015.
Seychelles experienced a socialist coup in 1977 which resulted in a centrally planned economy and, in the short term, rapid economic development. However, serious imbalances such as large deficits and mounting debts contributed to persistent foreign exchange shortages and slow growth that plagued Seychelles through the first decade of the 21st century. After defaulting on interest payments due on a USD 230 million bond in 2008, the Government of Seychelles (GOS) turned to the IMF for support. To meet the IMF’s conditions for a stand-by loan, the GOS implemented a program of reforms, including a liberalization of the exchange rate regime, devaluing and floating the Seychellois Rupee (SCR) and eliminating all foreign exchange controls. As a result, the country has experienced economic growth, lower inflation, a stabilized exchange rate, declining public debt and increased international reserves.
According to the Central Bank of Seychelles, real GDP grew by 4.2 percent in 2017 compared to 4.6 percent in 2016. The IMF forecasts a positive growth outlook for 2018, although growth is vulnerable to external shocks that can affect the tourism industry. The reduction in yellowfin tuna catch enforced by the Indian Ocean Tuna Commission (IOTC) is also expected to affect the Seychellois economy.
Despite GOS attempts to diversify the economy, it remains focused on fishing and tourism. Seychelles’ vast Exclusive Economic Zone (EEZ), which encompasses 1.3 million square kilometers of the western Indian Ocean, is a potential source of untapped oil reserves and represents potential business opportunities for U.S. companies. Seychelles also has a small, but growing, offshore financial sector. There is also potential for U.S. investment in renewable energy as Seychelles seeks to reduce its heavy dependence on imported fossil fuels while preserving its naturally beautiful environment.
Seychelles welcomes foreign investment. The country’s investment policies encourage the development of Seychelles’ natural resources, improvements in infrastructure, and an increase in productivity levels, but stress that this must be done in an environmentally sound and sustainable manner. Indeed, Seychelles puts a premium on maintaining its unique ecosystems and screens all potential investment projects to ensure that any economic, social or industrial benefits will not compromise the country’s international reputation for environmental stewardship.
Politically, Seychelles’ first multiparty presidential election was held in 1993, after the adoption of a new constitution. In September 2016, the opposition coalition Linyon Demokratik Seselwa (made up of the three main opposition parties: the Seychelles National Party, the Seychelles Party for Social Justice and Democracy, and the Seychelles United Party) won the legislative elections for the first time. Before the elections, the ruling Parti Lepep held all 25 directly elected seats in the national assembly and an additional seven proportionate seats, leaving just one seat for the opposition. Currently, and for the first time since the return of multi-party democracy in 1993, Parti Lepep does not have a parliamentary majority having only 14 of 33 seats.
Table 1
|
Measure |
Year |
Index/Rank |
Website Address |
|
TI Corruption Perceptions Index |
2017 |
36 of 180 |
|
|
World Bank’s Doing Business Report “Ease of Doing Business” |
2018 |
95 of 190 |
|
|
Global Innovation Index |
2015 |
65 of 141 |
https://www.globalinnovationindex.org/ |
|
U.S. FDI in partner country (M USD, stock positions) |
2016 |
USD 758,146 |
|
|
World Bank GNI per capita |
2015 |
USD 15,410 |
1. Openness To, and Restrictions Upon, Foreign Investment
Policies Toward Foreign Direct Investment
Seychelles has a favorable attitude toward foreign direct investment. The Seychelles Investment Bureau (SIB) is the national single gateway agency for the promotion and facilitation of investment in Seychelles. The government’s objective is to promote economic and commercial relationships to diversify the economy, as well as to sustain its tourism and fishing industries, which are currently the main drivers of economic growth.. However, the GOS reserves certain types of business activities for domestic investors only. The Seychelles Investment (Economic Activities) Regulations provides a detailed list of such activities as well as those businesses foreigners can invest in. This list is available here: http://www.sib.gov.sc/index.php/info-centre/downloads/legislations-and-policy.
Limits on Foreign Control and Right to Private Ownership and Establishment
The Seychelles Investment Act of 2010 and Seychelles Investment (Economic Activities) Regulations 2014 govern foreign direct investment (FDI) in Seychelles, copies of the Act and Regulations can be found online at: http://www.sib.gov.sc/index.php/info-centre/downloads/legislations-and-policy. Since the financial crisis of 2008 and the implementation of IMF reforms, Seychelles has successfully attracted FDI. According to the Central Bank of Seychelles, gross FDI inflows in 2017 amounted to USD 129 million, up from USD 114 million in 2016. The Seychelles Investment Board (SIB), the investment promotion agency for Seychelles, advises foreign investors on the laws, regulations, and procedures for their activities in Seychelles.
The Seychelles Investment (Economic Activities) Regulations of 2014 list the economic activities in which only Seychellois are allowed to invest. Seychelles also places financial limits on foreign equity in certain types of resident companies – these limits are detailed in the Seychelles Investment (Economic Activities) Regulations 2014. While SIB and the government of Seychelles encourage foreign investors to collaborate with a local partner, there is no formal requirement.
SIB also assists in screening potential investment projects in cooperation with other government agencies. The GOS is keen to ensure that business activities are not conducted at the expense of Seychelles’ natural environment. For a business to operate, investors need to apply for a license from the Seychelles Licensing Authority. The GOS established an Investment Appeal Panel in 2012 to provide an appeal mechanism for investors to challenge GOS decisions regarding investments or proposed investments in Seychelles. More information is available at http://www.sib.gov.sc/index.php/investment-guide/investment-appeals.
Other Investment Policy Reviews
To date, Seychelles has not conducted an investment policy review through the Organization for Economic Cooperation and Development (OECD), or the United Nations Conference on Trade and Development (UNCTAD). Seychelles became the 161st World Trade Organization (WTO) member in April 2015.
Business Facilitation
The Government has committed to improving the business environment through measures such as using public-private partnerships (PPP) to upgrade the country’s infrastructure. To this end, a draft PPP law will reportedly be presented to the National Assembly for consideration in 2018. In the 2018 budget speech, the Minister of Finance announced that the Customs Department will be restructured in order to modernize its activities and to facilitate trade. It was also announced that Seychelles is reviewing its Customs Management Tariff Classification of Goods Regulations in order to adopt the 2017 version of the Harmonized System of classification.
Seychelles is ranked 95th in the World Bank’s 2018 Ease of Doing Business Report. It takes eight days to obtain a Certificate of Incorporation and 14 days on average to obtain a business license in Seychelles. Details on starting a business in Seychelles are available on the World Bank website (http://www.doingbusiness.org/data/exploreeconomies/seychelles).
Information on registering a business in Seychelles can be obtained on the SIB website (http://www.sib.gov.sc/). Companies, including foreign ones, can register online through the SIB business registration portal (http://www.sib.gov.sc/index.php/info-centre/others/online-business-registration).
The Small Enterprise Promotion Agency (SEnPA) is responsible for promoting small enterprises in Seychelles. Services provided by SEnPA include business planning, training, mentoring, marketing expertise and identification of business opportunities for SMEs.
Outward Investment
The GOS does not promote or incentivize outward investment. However, it does not restrict local investors from investing abroad.
2. Bilateral Investment Agreements and Taxation Treaties
BITs or FTAs
Currently, the United States and Seychelles do not have a bilateral investment agreement. However, the United States signed a Trade and Investment Framework Agreement (TIFA) with the Common Market for Eastern and Southern Africa (COMESA) in 2001, and Seychelles is a COMESA member. Seychelles has signed Bilateral Investment Treaties (BITs) with China, Cyprus, Egypt, France, and India. As of March 2018, only the BITs with Cyprus and France were in force: http://investmentpolicyhub.unctad.org/IIA/CountryBits/188.
Seychelles became the 161st World Trade Organization (WTO) member in April 2015. Seychelles is a member of the following trade blocs: the Common Market for Eastern and Southern Africa (COMESA), European Union- Eastern and Southern Africa States Interim Economic Partnership Agreement (EPA), the Indian Ocean Commission (IOC), and the Southern African Development Community (SADC).
Bilateral Taxation Treaties
There is no bilateral taxation treaty between the United States and Seychelles as of April 2018.
Seychelles has signed Tax Information Exchange Agreements (TIEAs) with the following countries: Denmark, Faroe Islands, Finland, Greenland, Guernsey, Iceland, India, Netherlands, Norway, Sweden and the Swiss Confederation.
Seychelles has signed a total of 28 Double Taxation Avoidance Agreements (DTAAs) with the following countries: Bahrain, Barbados, Belgium, Bermuda, Botswana, China, Cyprus, Ethiopia, Guernsey, Indonesia, Isle of Man, Jersey, Kenya, Luxembourg, Malaysia, Mauritius, Monaco, Oman, Qatar, San Marino, Singapore, South Africa, Sri Lanka, Swaziland, Thailand, United Arab Emirates, Vietnam, and Zambia. Updated information on TIEAs and DTAAs can be accessed here: https://www.src.gov.sc/pages/resources/dtas.aspx.
3. Legal Regime
Transparency of the Regulatory System
Although the government has made considerable efforts to liberalize the economy, Seychelles continues to suffer from overregulation. Concerns over government corruption have focused on the lack of transparency in the privatization and allocation of government-owned land and businesses. However, following the last election in 2016, the new government, pressed by the opposition majority in Parliament, has taken a number of measures to combat corruption and nepotism. For example, an Anti-Corruption Commission has been set up, and President Danny Faure has appointed supporters of the opposition in positions such as Ombudsperson.
In an attempt to promote greater transparency in the public procurement system, Seychelles’ National Tender Board publishes all its tenders on its website (http://www.ntb.sc) and local newspapers. It also publicizes the contracts that have been awarded, including the name of the successful bidder as well as the bid amount in all local newspapers. The government has also set up a Procurement Oversight Unit (POU), which serves as a public procurement policy and monitoring body (http://www.pou.gov.sc/).
During the September 2016 parliamentary elections, the opposition alliance won a majority in the National Assembly for the first time in 40 years, resulting in significant procedural changes. In 2017 there was considerably more legislative debate about the 2017 Budget than in prior years. Similarly, in preparation for the 2017 and 2018 budgets, a series of focus group discussions were held with stakeholders such as the business community and NGOs.
Proposed laws and regulations, as well as final laws, are published in the Official Gazette on a monthly basis. Regulatory transparency has improved with the new administration which has proposed a number of new laws, including a Freedom of Information Act. Additionally, Ministries are now required to submit white papers and consult with stakeholders before legislation is adopted.
International Regulatory Considerations
Seychelles has signed trade agreements with regional blocs such as the Common Market for Southern and Eastern Africa (COMESA), Southern African Development Community and the Interim Economic Partnership Agreement with the European Union.
Seychelles joined the WTO in 2015, becoming the 161st member. Seychelles does notify draft technical regulations to the WTO Committee on Technical Barriers to Trade. In 2016, Seychelles ratified the Trade Facilitation Agreement (TFA) and has notified regarding their Category A, B, and C commitments.
Legal System and Judicial Independence
Seychelles’ legal system is a blend of English common law, the Napoleonic Code, and customary law. Civil matters, such as contracts and torts, are governed by the Civil Code of Seychelles, which is derived from the French Napoleonic Code. However, the Company Law and criminal laws are based on British law. In both civil and criminal matters, the procedural rules derive from British law. Under the current government, the perception among Seychellois that the judiciary is no longer influenced by the executive. Seychelles does not maintain a specialized commercial court. Judgments of foreign courts are governed by the Foreign Judgments (Reciprocal Enforcement) Act of 1961, Section 3. The World Bank ranked Seychelles 130th out of 190 in enforcing contracts in its 2018 Ease of Doing Business Report.
Laws and Regulations on Foreign Direct Investment
The Government of Seychelles (GOS) established the Seychelles Investment Board (SIB) as a one-stop shop for all matters relating to business and investment in Seychelles. The SIB’s main functions are to promote investment and facilitate the investment process within the administrative and legal framework. The SIB also assists in screening potential investment projects in cooperation with other government agencies. The GOS is keen to ensure that business activities are not conducted at the expense of Seychelles’ natural environment. For a business to operate, investors need to apply for a license from the Seychelles Licensing Authority. The Embassy has received no negative comments from U.S. businesses in Seychelles with regard to the foreign direct investment screening mechanism. The GOS established an Investment Appeal Panel in 2012 to provide an appeal mechanism for investors to challenge GOS decisions regarding investments or proposed investments in Seychelles (http://www.sib.gov.sc/index.php/investment-guide/investment-appeals).
Competition and Anti-Trust Laws
The SIB reviews all transactions for competition-related concerns, whether domestic or international in nature.
Expropriation and Compensation
The Lands Acquisition Act 1978, last amended in 1990, states that when the government takes possession of property, it must pay prompt and full compensation for the property. The GOS may expropriate property in cases of public interest or for public safety. Following the 1977 coup, the new GOS engaged in expropriation of land for redistribution or for use by the state. With the return of a multi-party political system in 1993, the GOS compensated some of those who had lost land to expropriation/redistribution in the late 1970s. There have been no expropriations since the 1990s aside from public works and infrastructure projects, and in these cases there is a process for obtaining compensation. We see no indications of possible major expropriation in the future and no pattern of discrimination against U.S. persons.
Dispute Settlement
ICSID Convention and New York Convention
In 1978, Seychelles joined the International Centre for the Settlement of Investment Disputes (ICSID Convention). Seychelles has not signed the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention).
Investor-State Dispute Settlement
The Embassy is not aware of any investor-government disputes in the past year. Parties involved in investment disputes are encouraged to resolve their disputes through arbitration and negotiation. The Seychelles Investment Act created an Investment Appeal Panel to which aggrieved investors may appeal for a review of a decision made by a public sector agency with regard to their investments or proposed investments in Seychelles. In addition, investors may appeal to the Supreme Court (Court of Appeal) in the event they are not satisfied with the decision of the Investment Appeal Panel. In the World Bank’s 2018 Ease of Doing Business Report, Seychelles ranked 108th out of 190 for protecting minority investors.
International Commercial Arbitration and Foreign Courts
Due to Seychelles’ small size and relatively short recent history with foreign direct investment, there is no precedent for international arbitration in Seychelles, although the legal framework exists through the Seychelles Investment Act.
Bankruptcy Regulations
Bankruptcy in Seychelles is governed under the Insolvency Act of 2013 (https://www.seylii.org/sc/legislation/act/2013/4). According to the Act, an individual may be discharged from bankruptcy three years from the date of its declaration. Bankruptcy is not criminalized in Seychelles. According to the 2018 World Bank Doing Business Report, Seychelles ranks 67th out of 190 countries on the resolving insolvency index. It takes on average two years to complete a bankruptcy.
4. Industrial Policies
Investment Incentives
The Government of Seychelles (GOS) has enacted legislation providing for incentives for investment in several sectors. Examples include the Fisheries Incentives Act, the Tourism Incentives Act, the Seychelles International Trade Zone Act, and fiscal incentives under the Investment Code. Incentives under these laws most often take the form of tax credits, tax holidays, duty-free access for the import of materials required for initial investment, and expedited work permits for foreign employees that move to Seychelles. The Seychelles Investment Board (SIB) has the mandate to promote investments in Seychelles and assists in screening potential investments into the island. In the 2018 national budget speech, the Minister of Finance highlighted that the SIB will work toward attracting investment in sectors like telecommunication and the blue economy, in addition to its usual focus on tourism, agriculture, financial services, energy and fisheries.
Foreign Trade Zones/Free Ports/Trade Facilitation
The Seychelles International Trade Zone (SITZ) Act of 1995 provides for the establishment of free trade zones, which aim to combine the benefits of a freeport and an export processing zone. So far a number of locations have been declared International Trade Zones. A wide range of export oriented business activities is permissible. The concessions available to license holders at the SITZ include the following:
• Exemption from customs duties on capital equipment to be used in SITZ;
• Exemption from business tax, trades tax and withholding tax;
• Exemption from social security contributions;
• Exemption from fees with respect to work permits;
• Entitlement to full foreign ownership;
• Entitlement to employ 100 percent foreign labor.
The activities of the SITZ are regulated by the Seychelles Financial Services Authority, formerly known as the Seychelles International Business Authority. Foreign-owned firms benefit from the same incentives as local firms operating in the SITZ. In the 2018 budget speech, the Minister of Finance announced that a comprehensive assessment of the sector will be carried out and consequently the International Trade Zone Act of 1995 will be reviewed.
Performance and Data Localization Requirements
The government of Seychelles does not mandate local employment, nor are there local employment mandates for senior management or directors. Visa, residence, and work permit requirements are not excessively onerous. However, investors operating in Seychelles are expected to abide by the following obligations:
• To comply with the provisions of the governing laws on investment procedures and to carry out investment activities correctly in accordance with the approvals granted. This includes the responsibility of the investor for accuracy and truthfulness in materials submitted in investment proposals and registration;
• To discharge fully their financial obligations, including taxation, in accordance with the law;
• To carry out the provisions of the laws on accounting and auditing;
• To carry out the provisions of the laws on registration of companies and other legal entity; and
• To carry out the provisions of the employment laws and regulations.
Seychelles does not have a single comprehensive law that addresses the collection and use of personal data. The Data Protection Act (DPA) was enacted in 2003 to provide individuals with privacy rights regarding processing of their personal data, but as of April 2018 it has not entered into force. Other sectoral laws that include data protection provisions are: Civil Code of Seychelles (1976), Computer Misuse Act (1998), Electronic Transactions Act (2001), Financial Institutions Act (2004), Central Bank of Seychelles Act (2004), Anti-Money Laundering Act (2006), Financial Services Authority Act (2013), Anti-Corruption Act (2016), and International Business Companies Act (2016).
The Embassy has no information regarding the requirements, if any, for foreign IT providers to turn over source code or to provide access to surveillance. Similarly, the Embassy has no information on the mechanisms which are used to enforce any rules on maintaining a certain amount of data storage in Seychelles.
The Embassy is not aware of any investment performance requirements.
5. Protection of Property Rights
Real Property
The courts enforce interests in real property. Mortgages and liens are enforced and the land registrar resolves land disputes. All lands in Seychelles are either publicly or privately held. According to the World Bank’s 2018 Doing Business Report, Seychelles ranked 62nd out of 190 countries in the Registering Property index. In 2014, the GOS discontinued selling state land to non-Seychellois.
The introduction of an immoveable property tax on property owned by foreigners originally scheduled for July 2017 was deferred. In the 2018 budget speech, it was stated that the Immoveable Property Tax Bill will be introduced as part of the budget process. Beginning January 2018, a tax of 0.25 percent is charged on the capital improved value of property owned by all foreigners. The tax is applicable to the following: foreign owned residential or business properties, and leased properties of more than 25 years.
Intellectual Property Rights
The Government of Seychelles respects intellectual property (IP) rights and regards laws and other measures to protect them as crucial for long-term economic development. The GOS considers efficient and effective protection of intellectual property rights to be vital for promoting foreign investment, the transfer and dissemination of technology, and protecting local business and artists as well as facilitating the integration of Seychelles' into the regional and global economies.
Seychelles joined the World Intellectual Property Organization (WIPO) in March 2000. In addition, the country became a contracting party to the Paris Convention for the Protection of Industrial Property and the Patent Cooperation Treaty (PCT) in November 2002. Seychelles is also a member of the African Regional Intellectual Property Organization (ARIPO). In the 2018 budget speech, the Minister of Finance announced that that Government will develop a modernized Intellectual Property Office that will serve as a “one stop shop” for IP issues. The C********et of Ministers has also approved plans for Seychelles to accede to the Madrid Convention.
The Copyright Act and the Industrial Property Act contain provisions that set forth the laws relating to infringement of intellectual property rights. In compliance with WTO principles, foreign nationals and Seychellois citizens are treated equally in regard to IP laws. Enforcement of IPR protection laws is limited due to the fact that very few international brands and trademarks have local or even regional representatives.
While no statistics are publicly available, the Seychelles Revenue Commission’s customs officials monitor incoming shipments for counterfeit goods. However, their focus is on counterfeit products that pose a public health risk, such as medications and electrical appliances. Counterfeit apparel, CDs, and DVDs are generally available.
Seychelles is not listed on USTR’s 2017 Special 301 Report or in the State Department’s Notorious Markets Report.
For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.
Embassy Contact for IPR:
Shariff Jathoonia or Smita Bheenick
Economic/Commercial Specialists
U.S. Embassy Port Louis, Mauritius
+230 202 4464/4430
jathoonisx@state.gov or bheenicks@state.gov
Some Law Firms in Seychelles also handling IPR:*
KAREN DOMINGUE
Room 8, Trinity House
Huteau Lane 41
Victoria, Mahe
Seychelles
+248 422 6243
icsey@sechelles.net
A.G. AMESBURY
Room 104, Premier Building
Victoria, Mahe
Seychelles
+248 423 28 41
a.g.amesburyattorney@gmail.com
ANTONY G. DERJACQUES
Suite 5 & 6, Trinity House
Huteau Lane
Victoria, Mahe
Seychelles
+248 432 19 00
dec@seychelles.net
FRANK ALLY LAW CHAMBERS
Suite 213, Premier Bldg.,
Albert Street
Victoria, Mahe
Seychelles
+248 432 30 80
frankally@seychelles.net
*List for convenience only, not intended to imply endorsement by the U.S. Government.
6. Financial Sector
Capital Markets and Portfolio Investment
Seychelles welcomes foreign portfolio investment. The Seychelles Securities Act (http://www.fsaseychelles.sc/images/files/Securities_Act_2007.pdf) provides the legal framework for the Seychelles stock market. The Seychelles Securities Exchange (Trop-X), owned by South Africa’s Quote Africa Group, has operated since 2012. Listing and trading is available in U.S. Dollars, Euros, Pounds Sterling, Seychelles Rupees and South African Rand. Portfolio investment in Seychelles is limited by the small size of the economy and banking sector. The buying and selling of sizeable positions may have an outsized impact on the Seychelles Rupee and the economy in general. By end-2017, the shares of 24 companies were listed on the three equities boards of Trop-X and total market capitalization amounted to USD 259 million. Trop-X is also a partner exchange of the Sustainable Stock Exchanges Initiative. In the 2018 budget speech, the Minister of Finance stressed the importance of further developing the capital market in order to modernize the economy and improve access to finance.
Existing policies do facilitate the free flow of financial resources in and out of the economy. The government of Seychelles respects IMF Article VIII by refraining from restrictions on payments and transfers for current international transactions. Foreign investors are able to obtain credit on the local market and through the Seychelles banking system, and a variety of credit instruments are available to both local and foreign investors.
Money and Banking System
Seychelles has a two-tier banking system that separates the central and commercial bank functions and roles. The commercial banks, both domestic and foreign, are regulated and supervised by the Central Bank of Seychelles (CBS). According to the Central Bank of Seychelles Act 2004, the CBS is responsible for the formulation and implementation of the Seychelles' Monetary and Exchange Rate policies. The Central Bank of Seychelles is the only administrative body responsible for receiving applications for banking licenses, whether domestic or offshore, and issuing the corresponding licenses.
As of March 2018, there were nine commercial banks in operation: Bank of Baroda, Barclays Bank, Habib Bank, Mauritius Commercial Bank, Nouvobanq, Seychelles Commercial Bank, Al Salam Bank Seychelles Ltd, Bank of Ceylon, and Bank Al Habib Ltd. SBM Bank (Seychelles) received its banking license in December 2016 and might commence operations soon. According to 2016 report on the Central Bank of Seychelles website, 94 percent of Seychellois use banks and half of those who do not are aged 18-29 years. Seychelles also has three non-banking financial institutions. The Seychelles Credit Union and the Development Bank of Seychelles provide flexible financing for businesses and projects to promote economic growth and employment. Additionally, the Housing Finance Corporation is a government-owned company that provides financing to Seychellois for the purchase of land, the construction of houses and financing home improvements.
Seychelles has a number of laws that govern the financial services sector: Financial Institutions Act 2004, Anti-Money Laundering Act 2006, Data Protection Act, Mutual and Hedge Fund Act 2007 and Central Bank Act 2004. The Seychelles banking sector is generally healthy, though it is limited by small size and reliance on correspondent bank relationships. Due to concerns about money-laundering and illicit finance in the Seychellois financial sector, some local banks have lost their correspondent bank relationship with foreign banks, a phenomenon known as derisking, making it difficult for local banks to perform international transactions. In 2017, the Central Bank and the Financial Services Authority visited foreign financial centers to address derisking. The government is actively working with international experts to ensure that Seychelles is not perceived as high risk jurisdiction. According to the Central Bank of Seychelles’ Annual Report 2017, long term measures will be implemented to ensure that a robust framework is present to combat money laundering and financing of terrorism.
According to the Central Bank, in January 2018 non-performing loans to total gross loans in the Seychelles banking sector stood at 6.4 percent, and foreign currency deposits at 6,356 million Seychelles Rupees (USD 481 million).
A wide range of financial services such as checking accounts, savings accounts, loans, transactions in foreign currencies and foreign currency accounts are available in the banking system. Foreigners and foreign/offshore firms must establish residency or proof of business registration to obtain a bank account.
Foreign Exchange and Remittances
Foreign Exchange Policies
Since the IMF reform package of 2008-2013, the GOS places no restrictions or limitations on foreign investors converting, transferring, or repatriating funds associated with investment. Funds are freely converted. Seychelles maintains a floating exchange rate for the Seychelles Rupee (SCR), which has mostly fluctuated between SCR 11 and SCR 15 to USD 1 over the past five years. In 2017, the SCR remained fairly stable against the USD with an average exchange rate of SCR 13.6 to USD 1.
Remittance Policies
Foreign exchange controls were removed in 2008 and foreign investors are free to repatriate their profits and other incomes. The Embassy is unaware of any planned changes to remittance policies, time limits on remittances, or use of any legal parallel market.
Sovereign Wealth Funds
Seychelles does not maintain any sovereign wealth funds. However, in his State of the Nation address in March 2018, the President mentioned that a law will be presented to the National Assembly later during the year in order to establish a sovereign wealth fund.
7. State-Owned Enterprises
Seychelles is one of 14 countries participating in the State Owned Enterprises (SOE) Network for Southern Africa, which was launched in 2007 to support, in collaboration with the OECD, the southern African countries in their efforts to improve the performance of SOEs.
In Seychelles, there are currently 21 state-owned commercial public enterprises, which have been established using public financial resources. These government-owned organizations are responsible for the delivery of both commercial and social objectives. They offer a range of essential services, including electricity, water, roads, seaports, fuel supply, import/export, retail, transport, civil aviation, housing, and tourism. The government also has shares in a number of enterprises, including Air Seychelles, the Indian Ocean Tuna Company, Seychelles Commercial Bank, and Seychelles Trading Company.
SOEs are free to purchase and/or supply goods and services from private sector and foreign firms, depending on the sector and situation. However, there is a growing concern in the business community that SOEs such as Seychelles Trading Company (STC) have been allowed to exceed their explicit mandate and compete unfairly. For example, STC has expanded its operations in the retail business with the opening of a hypermarket, a hardware store, and even a luxury goods department selling perfumes and designer bags. Most SOEs and parastatal bodies maintain a board of directors and make regular reports to the corresponding Ministry. The Public Enterprise Monitoring Commission (PEMC), set up in 2013 through the PEMC Act, is an independent institution that is responsible for monitoring financial, governance and transparency issues in relation to public enterprises. Governance and operational assessments of six major SOEs were conducted in 2016 with World Bank assistance. On this basis, an implementation plan for governance and operational review of public enterprises for the period 2017-2019 was prepared and approved by the C********et of Ministers. To improve transparency and risk management, the PEMC is expected to prepare a Fiscal Risk Statement to show the effect of the performance of public enterprises on the budget by December 2018.
Asset registers of SOEs are published annually on the PEMC website (http://www.pemc.sc/index.php). The GOS has published a Code of Governance for Public Entities to provide guidelines to improve the governance, monitoring and control of the public entities in Seychelles. The Code, which was developed by the PEMC along with other stakeholders, can be accessed on its website (http://www.pemc.sc/images/downloads/guidelines/Guidelines%20on%20the%20Good%20Governance.pdf).
Privatization Program
In his 2018 budget speech, the Minister of Finance announced that his Ministry will call on private sector investors to enter into public-private partnership initiatives or partial privatization of the following SOEs: (i) L’Union Estate Company, (ii) Indian Ocean Tuna, (iii) Land Marine Ltd., (iv) European Investment Bank’s shares in Development Bank of Seychelles, (v) Agence Francaise de Developpement’s shares in Development Bank of Seychelles. In his March 2018 State of the Nation address, the President announced that 20 percent of the Seychelles Petroleum Corporation will be privatized beginning November 2018. This investment opportunity will be available exclusively to Seychellois. Similar privatization plans were announced in previous years but progress has been slow. The Embassy is not aware of any other formal legal barriers to foreign investors participating in privatization.
8. Responsible Business Conduct
Seychelles society has a high level of awareness of Corporate Social Responsibility (CSR), especially in environmental protection and social programs, but CSR is generally regarded as a function of government. Since 2013, the Seychelles Revenue Commission has been collecting a CSR tax of 0.5 percent on monthly turnover for businesses with an annual turnover of SCR 1 million or more. Officially, there are no waivers available for foreign investors with regard to labor, employment rights, consumer protection, or environmental protections.
The Citizens Engagement Platform Seychelles (CEPS), an umbrella organization for Seychelles’ NGOs, provides a list of NGOs active in the country to the Ministry of Finance, which then decides which organizations would benefit most from the CSR tax revenues. The GOS revised the CSR guidelines in January 2017, with focus on programs linked to social needs. In particular, the following five sectors benefit from the CSR fund: environment; health and social; community, youth, sports and arts; and drug rehabilitation and substance abuse.
Seychelles currently has no production in the extractive sector, but international companies have undertaken petroleum exploration activities off-shore. The Extractive Industries Transparency Initiative (EITI) accepted Seychelles as a candidate country in August 2014 and Seychelles’ validation against the standard began in January 2018. The 2016 EITI annual progress report published in July 2017 can be accessed at: https://eiti.org/document/seychelles-eiti-annual-progress-report-2016.
9. Corruption
Ruling with transparency and accountability are stated priorities of the current government. In 2016, the GOS established the Anti-Corruption Commission of Seychelles (ACCS) under the Anti-Corruption Act, which gives it authority to investigate, detect and prevent corrupt practices. The ACCS is now fully functional and, though small, has carried out a number of investigations. Also, a local chapter of Transparency International, Seychelles Transparency Initiative (TI), was set up in 2017. TI currently has five employees and plans to expand. Their focus is currently on increasing transparency in three sectors: tourism, finance, and fisheries.
In his March 2018 State of the Nation address, the President stated that the government will review anti-corruption laws and provide more resources to the ACCS to empower it to fulfill its mandate. The revised law is expected to be presented to the National Assembly for approval before September 2018.
Seychelles signed the UN Convention against Corruption in February 2004 and ratified in March 2006. Seychelles is not party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
In 2003, the government of Seychelles published the Public Service Code of Ethics and Conduct, the stated purpose of which is to provide guidance to public sector employees on the standards of behavior required of them. The Public Officer’s Ethics Act of 2008 prohibits personal enrichment through public office, defines and outlaws bribery, provides guidelines for avoiding conflict of interest, and mandates declaration of financial assets for public officials including members of the National Assembly. The government does not require private companies to establish internal codes of conduct.
Resources to Report Corruption
Anti-Corruption Commission
May De Silva
Chief Executive Officer
Docklands Building, Latanier Road
Victoria, Mahe
Office of the Ombudsperson
Nicole Tirant
Room 306, Aarti Chambers, Mont Fleuri, Mahe
+248 225147
ombuds@seychelles.net
10. Political and Security Environment
The constitution provides citizens the right to change their government peacefully, and citizens exercise this right in practice through periodic elections based on universal suffrage. Seychelles has not experienced large-scale political violence since the late 1970s. The People’s Party, commonly known as Parti Lepep, governed Seychelles following the 1977 coup and won every election from the introduction of multi-party democracy in 1993 until 2016, when a coalition of opposition parties won the majority of the National Assembly seats. Shortly afterward President James Michel resigned in favor of his Vice President, Danny Faure. The current era of divided government, with one party in the Presidency and another in control of the legislature, has so far resulted in political stability.
11. Labor Policies and Practices
Total employment as of the third quarter of 2017 stood at 47,214, according to the central bank. The national unemployment rate was 4.1 percent, 0.4 percentage points lower than a year prior. About 51 percent of the unemployed population were female. At 12 percent, the highest unemployment rate was among youth below 25 years of age.
The private sector accounted for 64 percent of formal employment in 2017. Within the private sector, the majority of individuals were employed in accommodation and food services activities (30 percent), construction (17 percent), and manufacturing (14 percent). Major challenges faced in the labor market included difficultly recruiting locals for certain jobs and low productivity level.
Seychelles has long been an importer of foreign labor due to its small population and low human resource base. Foreign labor makes up 25 percent of the labor force, working mostly in the fishing and construction sectors. Since 2014, a quota system has applied to industries for which demand for foreign labor is high.
Seychelles has been a member of the International Labor Organization (ILO) since 1977, and has ratified all fundamental International Labor Organization (ILO) conventions. Under Seychellois law, all workers, with the exception of police, military, prison, and firefighting personnel, have the right to form and organize unions of their own choosing, to participate in collective bargaining, and to conduct legal strikes. However, these rights are limited or restricted by other provisions of law. Although collective bargaining is legal it rarely happens because the law gives the right to the government to review and approve all collective bargaining agreements in both the private and public sector. Strikes are illegal in Seychelles unless all other arbitration procedures have been exhausted. About 15 percent of the workforce is unionized.
Seychelles has a government-mandated minimum wage of SCR 5,050 (USD 370) per month based on a 35-hour work week. In his March 2018 State of the Nation address, the President announced the minimum wage will increase to SCR 5,250 (USD 385) per month beginning January 2019. In his 2018 budget speech, the Minister of Finance announced the government will re-introduce the Unemployment Relief Scheme (URS). Unemployed individuals who are on welfare will be placed on the URS program.
In the event of layoffs where there is no employee misconduct, the employer must provide the worker with one month’s notice or the equivalent of one month’s salary. Additionally, for workers that have been employed for five years or more, the employer is obligated to pay a day’s pay for each month that the employee has worked for the employer. There is no distinction between layoffs and firing with severance.
The Employment Tribunal handles employment disputes for private-sector employees. The Public Services Appeals Board handles employment disputes for public-sector employees, and the Financial Services Authority deals with employment disputes of workers in the Seychelles International Trade Zone. The law authorizes the Ministry of Employment, Entrepreneurship Development and Innovation to establish and enforce employment terms, conditions, and benefits, and workers frequently obtain recourse against their employers through the Ministry or Employment Tribunal.
The Government of Seychelles introduced the Occupational Safety and Health Decree in 2012 and the Prohibition of Trafficking in Persons Act in 2014. Seychelles Police and Customs personnel have traveled to U.S. Government-led training at the International Law Enforcement Academy in Gaborone, Botswana. However, there are very few health or labor inspectors in Seychelles and they are limited by meager public resources and the vast ocean distances they are expected to cover.
In November 2011, Seychelles and the ILO signed the 2011-2015 Decent Work Country Program, which seeks to address such issues as employment creation, consolidation and protection of workers’ rights, enhancing social protection, and strengthening social dialogue. Compliance with international labor standards has in recent years been sufficient such that business in the country should not pose a reputational risk to investors. Concerns about trafficking in persons, however, do exist. There is no trade agreement between the United States and Seychelles.
12. OPIC and Other Investment Insurance Programs
Seychelles and the United States signed an OPIC investment agreement in 2012, the text of which is available on OPIC’s website (https://www.opic.gov/sites/default/files/docs/africa/Seychelles-signed-02-03-2012-entered-into-force-10-05-2012.pdf). Due to the small size of the economy, there is limited potential for OPIC programs in Seychelles. Nevertheless, Seychellois firms and U.S. investors may seek OPIC financing or insurance for joint ventures elsewhere in Africa and Asia.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
|
Host Country Statistical Source* |
USG or International Statistical Source |
USG or International Source of Data: |
|||
|
Economic Data |
Year |
Amount |
Year |
Amount |
|
|
Host Country Gross Domestic Product (GDP) (M USD) |
2016 |
USD 1,450 |
2016 |
USD 1,427 |
|
|
Foreign Direct Investment |
Host Country Statistical Source* |
USG or International Statistical Source |
USG or International Source of Data: |
||
|
U.S. FDI in partner country (M USD, stock positions) |
NA |
2016 |
USD 35 |
BEA data available at |
|
|
Host country’s FDI in the United States (M USD, stock positions) |
NA |
2016 |
USD 0 |
BEA data available at |
|
|
Total inbound stock of FDI as % host GDP |
NA |
2016 |
207.6% |
http://unctad.org/Sections/dite_dir/docs/ |
|
*Seychelles in Figures, Edition 2017, National Bureau of Statistics, Republic of Seychelles, https://www.nbs.gov.sc/news/91-seychelles-in-figures-2017.
Table 3: Sources and Destination of FDI
|
Direct Investment from/in Counterpart Economy Data |
|||||
|
From Top Five Sources/To Top Five Destinations (US Dollars, Millions) |
|||||
|
Inward Direct Investment* |
Outward Direct Investment** |
||||
|
Total Inward |
873 |
100% |
Total Outward |
Amount |
100% |
|
Mauritius |
323 |
37% |
N/A |
||
|
Cyprus |
190 |
22% |
|||
|
Russian Federation |
111 |
13% |
|||
|
United Kingdom |
45 |
5% |
|||
|
British Virgin Islands |
41 |
5% |
|||
|
"0" reflects amounts rounded to +/- USD 500,000. |
|||||
hubei@investgo.cn