WHAT ARE YOU NOT ALLOWED TO DO ?

In Mauritius, the idea of attracting foreign investors has long been associated to ‘selling the country’ to those capable of buying it.   When the Business Facilitation Act was enacted in 2006, general perception assumed that the humble Rupee finally succumbed to the Dollar and Euro power.  Once the government announced it possible for foreigners to acquire land in the country, an air of worry started blowing in our face.  But we were wrong. 

The laws that allow foreign people to settle in our small island should not be interpreted as ‘Invasion allowed’.  There are many restrictions on non-Mauritians.  It is important that one understands the fundamentals of such restrictions before taking any decisions.  I’ve, many times, seen people selling their properties, landing with huge sum of money and then sweat their guts out because the project is legally not acceptable.

Property acquisition, for instance, is a very sensible issue. Land space is limited, you may rightly guess, in the country where 1.2 million inhabitants share 2040 m² of land.  The Non-Citizens (Property Restrictions) Act prevents acquisition of residential property by foreigners, except in certain circumstances.  The luxury villa schemes (Integrated Resort Scheme and Real Estate Scheme) are accessible to non-Mauritians.  They are pre-approved complexes regrouping several high-end villas into one compound.  Getting your hands on one villa for a minimum purchase price of US$500,000 gives you a Permanent Resident status.   Once you sell it, you lose the residency.  It can also work the other way round:  get a Permanent Resident status through your business or profession (3 years minimum stay in the country & rigorous conditions imposed) and then freely purchase a residential property with no strings attached.

If you do not fall in any of the cases mentioned above, you can only resort to rental solutions. 

Business restrictions can take various forms.  General commercial activities (import/export, wholesale, distribution, etc) are accessible to everybody – but they do not give you access to residence permit.  Again, preserving part of the cake for locals seems to be the main reason behind such policy.   Allowing any foreigner to open a grocery store, for example, would definitely kill the business of teeny-meenie-little-Mauritian-shopkeeper.  Viewed from that angle, I would tend to agree.  Still, I am of the opinion that each and every case should be assessed distinctively – we cannot just say ‘general commerce = no residency permit’. 

Tourism is delicate business.  Isn’t it fair to leave most of the benefits to Mauritians?  The right policy would be, and is, to apply the right dosage between foreign and local-owned operators.   Many of the locals do not possess the appropriate resources to sustain development and keep the pace with fast-developing destinations around the world.  Without the intervention of foreign brain, our hotel industry would be a total fiasco.  We learned from the great minds in the business – but since learning is an on-going process, we still need to keep those great minds at eye sight.   Small businesses in the tourism industry are somewhat reserved for Mauritians.  To start a tour operator business, a foreigner would be required to invest at least Rs5 million while no such restrictions apply to Mauritian.  For Pleasure Craft (boats, catamarans, etc), the minimum investment is Rs10 million.  The signal is clear: either you do it big, or you don’t do it at all.

Same policy applies to hotel operation.  Foreigners are no longer able to operate guest houses or tourists residence – but are free to invest in hotels.  A guest house can be a mere regrouping of apartments or bungalows for holiday rental.  A hotel is a formal structure designed exclusively for holiday rental and able to provide ‘services’ to its residents.  Basically, a hotel needs to have a minimum of 25 rooms, entertainment (swimming pool, disco, bar..), food (restaurant, breakfast..), housekeeping and similar services.

Above are examples where foreigners need to be cautious before venturing out.  Conceiving a project is bringing a dream to near reality.  It can all be shattered with a blunt ‘No’.  I let you guess the impact on your environment: financial, emotional and social.  

The nuances can be subtle and misunderstood, but when you fire a bullet - it's a bullet used.  Now the question is : how much ammunition left?  It’s always good to seek advice before venturing, and we are here for that!

I created this blog some couple of years ago, but couldn’t keep it alive.  A busy professional life, two kids on board and so little time!  From 2006, when the doors were first open, up to date many have found a new life under the sun.  Some complaints, some success stories, and life went on.  On average, the strategy to attract capital and competencies has been working fairly well.  Foreign Direct Investment (FDI) reached new records, and some fresh air blew over the economy.

We were all living a happy business life, until the financial crisis took the world by storm.  Less harm in Mauritius, but the general investment phobia played its role on our side also.   Over-prudence led to hesitation, and then to mental anesthesia!  No risks, no decisions and no moves.  Stalemate!   The number of Occupation (professional residence) permits never matched the number of business created.  Clearly it meant that many foreigners settled in but never launched their business activities. 

Four years from there – it is quite understandable that the government comes out with some adjustments.   First, it had to pay the price of its success.   It was too easy to get a residence permit:  you simply need to fill-in the required forms, show your birth certificate and declare that you are able to meet the conditions imposed.  You’re set for the next three years!  

From April 2010, however, things are not that easy.  If you are planning for a residence permit as ‘investor’ you would be required to show USD100,000 and if you are going for a self-employed permit, you’ll need to show USD35,000 along with your professional qualifications.  The USD100,000 and USD35,000 are meant to be minimum investments in the respective cases.  One thing though:  as these are investments the government is unable to ‘block’ the funds …  So if we think well, I can borrow USD100,000 – show it to the government and once I get my permit I can return it to its legitimate owner.  Where’s the control?  I can’t see any.  It’s more a complicated procedure than an intelligent one!   The complication lies in finding a true friend to lend you USD100,000 – that much.

Oh, and they also require that you present a business plan.  A big leap for the business-mankind!  We all know what business plans are:  optimistic where you want it to be, pessimistic to show how good it can be in the worst situation.  After all they are only plans.  No one knows the future, so nothing compels me to ‘obey’ a business plan.  Again, more a complicated procedure than an intelligent one (I love this sentence!).  The complication here is finding a good consultant and spending some bucks on him. It’s simply a waste of time, honestly.

The increasing influx of foreign people in a country where land and resources is limited somewhat poses a delicate problem.  It gives the impression of an unfair competition between those having Euros and Dollars and those living on the small Rupee.

 The common Mauritian, after being hesitant, accepted the fact that we do require foreign expertise and capital if we wanted to bring sustainable solutions to our economy.  There has been increasing pressure from opposition parties (those who always find reasons to blame others) claiming that we were selling our country to foreigners, precisely pin-pointing to the famous exclusive IRS villas.  Nothing doing:  the population worked along the government to welcome those willing to leave their homes and try doing something on our land.  It did work well in some cases, and it didn’t in others.  Some foreigners simply came here thinking that we were some desperate nation willing to be conquered by others.  Nope, we aren’t …and we’re happy that the incentives given to foreigners are working fine.