Saturday, September 6, 2008

SWAZILAND – AN INVESTMENT DESTINATION OF CHOICE

Ever since independence, government has always realised that while growing internal businesses through the development of Small and medium enterprises was important for sustainable economic growth, it also understood that foreign direct investment just as critical to enhance further this growth.

It is for that reason that government has intensified the drive to get more investors to come to the country, and has recently established the Swaziland Investment Promotion Authority (SIPA), to facilitate investment, and to impress it upon the world why Swaziland is a haven of investors.

Swaziland is envied with her strategic location in Southern Africa, as it is positioned between South Africa and Mozambique, thus being at the centre of the transport grid within this block. The country’s well developed road and rail network ensures that exports are able to reach regional markets hassle-free, and on top of that boasts one of the best infrastructures in Africa. There are inter-linkages in terms of telecommunications, rail and road networks, which connect with SADC, COMESA and beyond. Exporting products from Swaziland is made easier by the proximity of seaports from neighboring countries. The Durban and Richards Bay seaports are just 600km and 400km away from Swaziland, respectively. Swaziland has developed an inland dry port, where goods are cleared for exports outside the country, thus making exporting from Swaziland, no different from being at either ports mentioned above.

Comprehensively, Swaziland offers investors, safe, secure, stable and profitable business environment, good market access covering Africa, USA, Europe and beyond strategic location in Sub Saharan Africa and investor safety, as Swaziland has low incidents of violent crimes in the region. Swaziland also boasts superb physical infrastructure, comparatively low cost base and investment protection.

The Kingdom also offers developed financial services sector, attractive investment incentives, educated, skilled, and readily available workforce and institutional support.

Such immediacy to the seaports makes it easy to import machinery, raw materials and basic inputs for production. An advantage to such is the capabilities of train operations in Swaziland.

The country’s rail infrastructure operates both vacuum and airbrake trains. Currently, the airbrake trains are 75-80 wagons with gross tonnage of about 6,000, and the vacuum trains have a maximum of 40 wagons per train. The trains utilize a Track Warrant System (TWS) – a computer based communication system.

The availability of fully serviced industrial sites and purpose-built factory shells for rental at competitive rates has made Swaziland a right choice investment destination in the region.

Exporters in Swaziland are afforded an efficient external trade mechanism within SACU, which includes an automatic duty-exemption system based on bonded warehouse arrangements.

Being a landlocked country, Swaziland has established an Inland Dry Port, which provides exporters a hassle-free customs clearance.

Investment Incentives

Incentives on investing in Swaziland can be deemed to be comprehensive, in that they address almost every aspect of the investment process. Most importantly, issues of taxation are given due consideration. The corporate tax rate is 30% for all companies although an incentive rate of 10% is conferred on qualifying investments within the areas covered earlier. There is also a provision for loss cover. In that regard, the unlimited loss-carry forward allows a company to carry forward its loss (given that it incurs a loss in the year of assessment), and set it off against future assessable income.

Investment inducements in Swaziland with regards to additional productive capacity are given by way of special deductions allowed in respect of new industrial buildings and of new plant and machinery brought into use in a process of manufacture, and any other similar process, or the hotel industry.

PROMOTED AREAS

OF INVESTMENT

The Marketing and promotion of investments, particularly foreign direct investments (FDI), will be based on Swaziland’s competitive and comparative advantages, whilst slowly developing national competencies in medium to high skill investments. The area of focus comprise of Food processing and Agro-business, Value Addition to Timber and Sugar, International Financial Services, Bio-Energy and Energy Investments, Information Communication and Technology (ICT), Call centers and Outsourcing opportunities, Light engineering, and Pharmaceuticals.

Others include Biotechnology investments, Mining investments, White goods & Electronic components assembly (refrigerators, TV’s, washing machine, micro wave ovens, solar energy (geysers & panels for lighting, etc), Tourism infrastructure development and Textile and leather products manufacture.

With all these incentives in place, Swaziland is clearly the investment destination of choice, offering best returns.