The Chief Executive Officer of Intercontinental Trust, York Shin Lim Voon Kee, familiarly known as Ben Lim, discusses t the strengths of Mauritius as an international finance centre and its role in channelling investment into Africa.
As a major player within the Mauritius International Finance Centre (MIFC), how attractive is the Mauritian jurisdiction and can you elaborate on your relationship with other regions, and specifically Africa and Asia?
ITL has a proven track record that spans nearly two decades and we have, over the years, expanded our global presence in countries like Singapore, Seychelles, South Africa and Kenya.
We accompany our clients throughout the lifecycle of their projects, from offering the relevant advice on structuring matters at the inception stage to providing solutions at the exit stage. We have also assisted many of our clients in achieving their growth strategies whilst contributing to the positioning of Mauritius as an attractive listing, trading and capital-raising platform for both local and global issuers.
We are the only service provider in Mauritius to have listed global business companies as a full listing on the Stock Exchange of Mauritius and on the Johannesburg Stock Exchange.
Over the years, we have witnessed one extremely positive thing. Our jurisdiction is being increasingly used by the international investor community as an investment platform for Africa. According to the statistics compiled by the FSC, there has been a 9.8% rise in the value of the investments held by global business companies in Africa in 2017 compared to 2016.
Tax advantages are important to investors but non-tax benefits are also of prime importance. In Mauritius, these include the ease of doing business; the absence of any exchange controls; investment protection treaties that offer protection against the risk of nationalisation; a reliable and sophisticated banking system; an educated workforce and an enabling regulatory and legal framework, amongst others.
Endowed with all these attributes, and many more, Mauritius has certainly positioned itself as the international financial centre for the African region.
The Central Bank Governor stated his wish to keep MIFC as a “clean jurisdiction” at his annual dinner for economic operators. How you assess his statement?
It is a reaffirmation of what the government and economic operators have been advocating for years. In fact, Mauritius is strongly committed to keeping our jurisdiction clean and transparent.
In response to the concerns raised by the OECD and the European Commission with regards to harmful tax practices, the government has introduced a harmonised fiscal regime for domestic and global business companies. Subsequently, in its progress report released in November 2018, the OECD confirmed that Mauritius meets all the international requirements of the BEPS Action 5 and does not have any tax malpractices.
At all times, we have also given meaningful weight to our national strategy and legal arsenal to combat financial crimes, from money laundering to financing of terrorist activities.
Mauritius was one of the first countries in the Eastern and Southern African Anti-Money Laundering Group to develop a policy of anti-money laundering and the combating of financing of terrorism. We were among the first countries to regulate trust companies. New regulations are now being drafted under the Financial Intelligence and Anti-Money Laundering Act.
These are clear indications of the national willingness and commitment to stay a clean and transparent jurisdiction, as the MIFC emerges as a real destination of international repute aiming to play an important role in attracting world renowned investors to support the developmental process in the Africa-Mauritius-Asia corridor where opportunities for investments and businesses look very promising.
The Double Taxation Avoidance Agreement (DTAA) with India has been revisited. Is this a welcome move for the MIFC?
The protocol amending the India-Mauritius DTAA has certainly allayed doubts that have been hovering over the industry for many years.
It will be recalled that in 2005, the India-Singapore DTAA was amended such that the benefits pertaining to capital gains would be co-terminus with the similar benefits offered under the India-Mauritius DTAA. It therefore came as no surprise that the India-Singapore DTAA was subsequently revised in 2016.
However, Mauritius is steering away from being a treaty-centric jurisdiction as it is vital to avail international investors of non-tax advantages. Furthermore, the full implementation of the OECD Multilateral Instrument will probably reduce our competitiveness vis-à-vis other jurisdictions.
With regard to MIFC’s contribution to GDP, including the financial sector in general, what are your forecasts for the next couple of years?
As of 2016, Mauritius had a gross national income per capita of $9,740, which represented 79% of the high-income threshold of $12,260. The government’s aim is to bring Mauritius to an inclusive high-income status by 2030.
In 2017, investor focus was primarily on the manufacturing, infrastructure and power generation sectors. Many of the international investors choose to invest in Africa through the MIFC and in 2017, the value of direct investments held by global business companies in Africa rose by 9.8%.
Aside from an efficient tax system, Mauritius has indeed a lot to offer to international investors, including a highly educated and bilingual workforce, a sophisticated banking and judicial system, political stability and a network of investment promotion and protection agreements with other African countries, amongst others.
Many investors also seek to achieve their growth strategies by listing their structures on the Stock Exchange of Mauritius (SEM), which provides a multi-currency listing and trading platform. The MIFC is also widely used by Private Equity Firms for their investments into Africa since the introduction of the Limited Partnership Act in 2011.
As investment opportunities continue to unfold, we are seeing an increasing trend for intra-African investments. We are confident that Africa will keep on attracting international investment in the many years to come and that Mauritius will continue its journey to permanently establish itself as the IFC of choice for the region.
The financial services sector, which is one of the main pillars of the economy, is naturally flagged as one of the sectors that have the potential to accelerate further growth. The sector has witnessed a growth of 5.5% in 2017 and contributes to about 12% of the GDP. It is poised to double in size by 2030 whilst boosting IFC-related employment by 1.5 times. We are confident that these objectives are achievable. However, the government and industry operators will need to ensure that the right education and training are delivered to the local workforce.
We will also need to import the relevant skills to further develop financial markets that remain largely untapped, such as wealth management – especially following the retreat of European banks from Africa due to the rising cost of compliance.
Amid the various developments in the fintech industry, it is important that we leverage on technology and introduce new investment tools and products geared towards international investors’ demands.
Is continental Africa a still-untapped ground for progress and development?
Africa currently boasts a population of around 1.2bn which is set to double by 2050. For many investors around the world, this represents an unprecedented opportunity to tap into a booming consumer market where their investment can find long-term value. This is a stark contrast for many investors who are often faced with economic turmoil and stagnation in their home countries.