VZCZCXYZ0012
PP RUEHWEB

DE RUEHTU #0054/01 0231204
ZNR UUUUU ZZH
P 231204Z JAN 09
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 5925
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY
RUCPCIM/CIMS NTDB WASHDC
RUCNMGH/MAGHREB COLLECTIVE

UNCLAS TUNIS 000054 
 
SENSITVE 
SIPDIS 
 
STATE FOR EEB/IFD/OIA AND NEA/MAG (PATTERSON AND HAYES) 
STATE PASS USTR (BURKHEAD) AND USAID (MCCLOUD) 
USDOC FOR ITA/MAC/ONE (MASON), ADVOCACY CTR (TABINE), AND CLDP 
(TEJTEL AND MCMANUS) 
CASABLANCA FOR FCS (ORTIZ) 
CAIRO FOR FINANCIAL ATTACHE (SEVERENS) 
LONDON AND PARIS FOR NEA WATCHER 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ETRD OPIC KTDB USTR TS
SUBJECT: TUNISIA: INVESTMENT CLIMATE REPORT 
 
------------------------------ 
Openness to Foreign Investment 
------------------------------ 
 
The Tunisian Government actively encourages and places a priority on 
attracting foreign direct investment (FDI) in key industry sectors, 
such as call centers, electronics, automotive parts and textile 
manufacturing.  The Government encourages export-oriented FDI, 
screening potential FDI to minimize the impact of the investment on 
domestic competitors and employment. 
 
Foreign investment in Tunisia is regulated by the Investment Code 
Law No. 93-120, dating from December 1993.  It covers investment in 
all major sectors of economic activity except mining, energy, the 
financial sector and domestic trade. 
 
The Tunisian Investment Code divides potential investments into two 
categories: 
 
-- Offshore, in which foreign capital accounts for at least 66 
percent of equity and at least 80 percent of production is destined 
for the export market, and 
 
-- On-shore, in which foreign equity is limited to 49 percent in 
most non-industrial projects.  On-shore industrial investment can 
have up to 100 percent foreign equity. 
 
The legislation contains two major hurdles for potential FDI: 
 
-- Foreign investors are denied national treatment in the 
agriculture sector.  Foreign ownership of agricultural land is 
prohibited, although land can be secured through long-term (up to 40 
years) lease.  However, the Government actively promotes foreign 
investment in agricultural export projects. 
 
-- For onshore companies outside the tourism sector, government 
authorization is required if the foreign capital share exceeds 49 
percent and can be difficult to obtain. 
 
Investment in manufacturing industries, agriculture, agribusiness, 
public works, and certain services requires only a simple 
declaration of intent to invest.  Other sectors can require a series 
of Government of Tunisia authorizations. 
 
The Government of Tunisia allows foreign participation in its 
privatization program and a significant share of Tunisia's FDI in 
recent years has come from the privatization of state-owned or 
state-controlled enterprises.   Privatizations have occurred in 
telecommunications, banking, insurance, manufacturing, and petroleum 
distribution, among others.  Major FDI entered the financial sector 
via the privatization of Banque du Sud, since renamed Attijari Bank, 
in late 2005.   In 2006, TECOM Investments and Dubai Investment 
Group (DIG) purchased a 35 percent stake, valued at US $2.25 
billion, in state-owned Tunisie Telecom.   In July 2008, French 
Groupama won a bid to purchase 35 percent of the Socit Tunisienne 
d'Assurances et de Reassurances (STAR) for 70 million Euro (around 
$100 million).  In 2008, the French bank Caisse Generale d'Epargne 
purchased 60 percent of the Tunisian Kuwaiti Bank (BTK) valued at US 
$249 million. 
 
Tunisia's investment promotion authorities have established a system 
of regulations that has received favorable feedback from established 
US companies it has assisted. 
Nevertheless, there are difficulties, particularly when US companies 
have attempted to launch projects in sectors in which the Government 
of Tunisia does not actively promote.  Until recently the Government 
discouraged foreign investment in service sectors such as 
restaurants, real estate, and retail distribution.  Many of these 
issues are expected to be addressed in the context of ongoing 
negotiations between Tunisia and the European Union over 
liberalization of services sector under the EU/Tunisia Association 
Agreement. 
 
Indeed, FDI in retail distribution is gradually expanding.  French 
multinational retail chain Carrefour opened its first store in 2001, 
followed by the entry of French retail company Gant in 2005.  There 
has also been significant Persian Gulf investment in the real estate 
sector.  Currently, Tunisian law does not authorize franchising, but 
the GOT has authorized, on a case by case basis, franchising 
projects with demonstrated job creation potential.  The Government 
of Tunisia in 2007 drafted an amendment to its law on distribution, 
which could ease restrictions on franchise operations that is 
awaiting approval. 
 
FDI in certain state monopoly activities (electricity, water, postal 
services) can be carried out following establishment of a concession 
agreement.  There are also certain restrictions on trade activities. 
 With few exceptions, domestic trading can only be carried out by a 
company set up under Tunisian law, in which the majority of the 
share capital is held by Tunisians and management is Tunisian.  An 
additional barrier to non-EU investment results from Tunisia's 
Association Agreement with the European Union.  The EU is providing 
significant funding to Tunisia for major investment projects, but 
clauses in the agreement prohibit non-EU member countries from 
participation in many EU-funded projects. 
 
Each year in June, the Ministry of Development and International 
Cooperation and the Foreign Investment Promotion Agency (FIPA) hosts 
an investment promotion event called the Carthage Investment Forum. 
The purpose of the event is to introduce visiting foreign investors 
to the Tunisian investment environment and local business 
opportunities. 
 
-------------------------------- 
Conversion and Transfer Policies 
-------------------------------- 
 
The Tunisian dinar is not a fully convertible currency, and it is 
illegal to take dinars in or out of the country.  Although it is 
convertible for current account transactions (i.e. most bona fide 
trade and investment operations), Central Bank authorization is 
needed for some foreign exchange operations.  The Government of 
Tunisia has publicly committed to eventual full convertibility of 
the dinar. 
 
Nonresidents are exempt from most exchange regulations.  Under 
foreign currency regulations, nonresident companies are defined as 
having: 
 
-- Nonresident individuals who own at least 66 percent of the 
capital, and 
-- Capital financed by imported foreign currency. 
 
Foreign investors may transfer returns on direct or portfolio 
investments at any time and without prior authorization.  This 
applies to both principal and capital in the form of dividends or 
interest.  US companies have generally praised the speed of 
transfers from Tunisia, but lamented that long delays may occur in 
some operations. 
 
There is no limit to the amount of foreign currency that visitors 
can bring into Tunisia and exchange for Tunisian dinars.   Amounts 
exceeding the equivalent of 25,000 Tunisian dinars (approximately US 
$20,750) must be declared at the port of entry.   Non-residents must 
also report foreign currency imports if they wish to re-export or 
deposit more than 5,000 Tunisian dinars (roughly US $4,150). 
Tunisian customs authorities may require production of currency 
exchange receipts on exit. 
 
The dinar is traded on an intra-bank market.  Trading operates 
around a managed float established by the Central Bank (based upon a 
basket of the Euro, the US dollar and the Japanese yen).   In 2008, 
the dinar registered a depreciation of 3.1 percent against the Euro 
and 7.1 percent against the USD. 
 
------------------------------ 
Expropriation and Compensation 
------------------------------ 
 
The Tunisian Government has the right to expropriate property by 
eminent domain; there is no evidence of consistent discrimination 
against US and foreign companies or individuals.  There are no 
outstanding expropriation cases involving US interests and such 
cases are rare.   No policy changes on expropriation are anticipated 
in the coming year. 
 
------------------ 
Dispute Settlement 
------------------ 
 
There is no pattern of significant investment disputes or 
discrimination involving US or other foreign investors.  However, to 
avoid misunderstandings, contracts for trade and investment projects 
should always contain an arbitration clause detailing how eventual 
disputes should be handled and the applicable jurisdiction.  Tunisia 
is a member of the International Center for the Settlement of 
Investment Disputes and is a signatory to the 1958 New York 
Convention on the Recognition and Enforcement of Foreign Arbitral 
Awards. 
 
The Tunisian legal system is based upon the French Napoleonic code. 
There are adequate means to enforce property and contractual rights. 
 Although the Tunisian constitution guarantees the independence of 
the judiciary, the judiciary is not fully independent of the 
executive branch.  Local legal experts assert that courts are 
susceptible to political pressure. 
 
The Tunisian Code of Civil and Commercial Procedures does allow for 
the enforcement of foreign court decisions under certain 
circumstances.  Commercial disputes involving US firms are 
relatively rare.  In cases were disputes have occurred, US firms 
have generally been successful in seeking redress through the 
Tunisian judicial system. 
 
 
 
--------------------------------------- 
Performance Requirements and Incentives 
---------------------------------------- 
 
Performance requirements are generally limited to investment in the 
petroleum sector or in the newer area of private sector 
infrastructure development.  These requirements tend to be specific 
to the concession or operating agreement (e.g., drilling a certain 
number of wells or producing a certain amount of electricity).  More 
broadly, the preferential status (offshore, free trade zone) 
conferred upon some investments is linked to both percentage of 
foreign corporate ownership and limits on production for the 
domestic market. 
 
The Tunisian Investment Code and subsequent amendments provide a 
broad range of incentives for foreign investors, which include tax 
relief on reinvested revenues and profits, limitations on the 
value-added tax on many imported capital goods, and optional 
depreciation schedules for production equipment. 
 
In order to encourage employment of new university graduates, the 
Government will bear the full cost of the employee's salary for the 
first two years of employment, and then a portion of the salary for 
the next five years.  The Government will also pay initial training 
costs for new graduates. On December 23, 2008, the GOT announced 
that it would bear 50 percent of employers' contributions to the 
National Social Security Fund (CNSS) during period of partial 
layoffs due to the international financial crisis. 
 
Large investments with high job creation potential may benefit, 
under certain conditions determined by the Higher Commission on 
Investment, from the use of state-owned land for a symbolic Tunisian 
dinar (less than one US dollar).  Investors who purchase companies 
in financial difficulty may also benefit from certain clauses of the 
Investment Code; these advantages are determined on a case-by-case 
basis. 
 
Additional incentives are available to promote investment in 
designated regional investment zones in economically depressed areas 
of the country, and throughout the country in the following sectors: 
health, education, training, transportation, environmental 
protection, waste treatment, and research and development in 
technological fields. 
 
Further benefits are available for investments of a specific nature. 
 For example, companies producing at least 80 percent for the export 
market receive tax exemptions on profits and reinvested revenues, 
duty-free import of capital goods with no local equivalents, and 
full tax and duty exemption on raw materials and semi-finished goods 
and services necessary for the business. 
 
Foreign companies resident in Tunisia face a number of restrictions 
related to the employment and compensation of expatriate employees. 
Tunisian law limits the number of expatriate employees allowed per 
company to four.  There are lengthy renewal procedures for annual 
work and residence permits.  Although rarely enforced, legislation 
limits expatriate work permit validity to a total of two years. 
Central Bank regulations impose administrative burdens on companies 
seeking to pay for temporary expatriate technical assistance from 
local revenue.  For example, a foreign resident company that has 
brought in an accountant would have to document that the service was 
necessary, fairly valued, and unavailable in Tunisia before it could 
receive authorization to transfer payment from its operations in 
Tunisia.  This regulation prevents a foreign resident company from 
paying for services performed abroad. 
 
The annual ceiling for foreign investments is currently one million 
TND (about US $830,000) or three million TND (about US $2.49 
million) for exporting companies.  Greater investments require a 
special authorization from the Ministry of Finance and the Central 
Bank.  According to the recently announced measures, companies 
registered domestically will no longer need permission to increase 
their capital and non-residents will be allowed to freely manage 
their corporate accounts. 
 
For US passport holders, a visa is not necessary for stays of up to 
four months; however, a residence permit is required for longer 
stays. 
 
-------------------------------------------- 
Right to Private Ownership and Establishment 
-------------------------------------------- 
 
Tunisian Government actions clearly demonstrate a strong preference 
for offshore, export-oriented FDI.  Investors in that category are 
generally free to establish and own business enterprises and engage 
in most forms of remunerative activity.  Investment which competes 
with Tunisian firms or on the Tunisian market or which is seen as 
leading to a net outflow of foreign exchange may be discouraged or 
blocked. 
 
Acquisition and disposal of business enterprises can be complicated 
under Tunisian law and depend on the nature of the contract specific 
to the proposed transaction. 
 
Disposal of a business investment leading to reductions in the labor 
force may be challenged or subjected to substantial employee 
compensation requirements.  Acquisition of an on-shore company may 
require special authority from the Government if it is an industry 
subject to limits on foreign equity shareholding (such as in the 
services sector). 
 
----------------------------- 
Protection of Property Rights 
----------------------------- 
 
Secured interests in property are both recognized and enforced in 
Tunisia. Mortgages and liens are in common use.  Tunisia is a member 
of the World Intellectual Property Organization (WIPO) and has 
signed the United Nations (UNCTAD) Agreement on the Protection of 
Patents and Trademarks.  The agency responsible for patents and 
trademarks is the National Institute for Standardization and 
Industrial Property (INNORPI - Institut National de la Normalisation 
et de la Propriete Industrielle).  Foreign patents and trademarks 
should be registered with INNORPI. 
 
Tunisia's patent and trademark laws are designed to protect only 
owners duly registered in Tunisia.   In the area of patents, US 
businesses are guaranteed treatment equal to that afforded to 
Tunisian nationals.   Tunisia updated its legislation to meet the 
requirements of the WTO agreement on Trade-Related aspects of 
Intellectual Property (TRIPS).   Copyright protection is the 
responsibility of the Tunisian Copyright Protection Organization 
(OTPDA - Organisme Tunisien de Protection des Droits d'Auteur), 
which also represents foreign copyright organizations.   New 
legislation now permits customs officials to inspect and seize goods 
if copyright violation is suspected. 
 
Tunisian Copyright Law (No. 36/1994) has been updated to cover new 
technologies, but its application and enforcement have not always 
been consistent with foreign commercial expectations.   Print audio 
and video media are considered particularly susceptible to copyright 
infringement, and there is evidence of significant retail sale of 
illegal products in these media.  Illegal copying of 
software/CDs/DVDs is widespread. 
 
Although the concept and application of intellectual property 
protection is still in the early stages, the Government is making an 
effort to build awareness and has increased its enforcement efforts 
in this area.  These efforts have led a major supermarket chain to 
halt the sale of pirated audio and video goods. 
A US Government-backed initiative, operated by the Department of 
Commerce in conjunction with United States Patent and Trademark 
Office (USPTO) provides training for Tunisian officials in the field 
of IPR regulation enforcement.  The Government of Tunisia has 
announced that new IPR legislation is being drafted which will 
improve enforcement capabilities and strengthen punishment for 
offenders. 
 
--------------------------------- 
Transparency of Regulatory System 
--------------------------------- 
 
While the Tunisian Government has adopted policies designed to 
promote foreign investment, it continues to enact legislation and 
implement protectionist measures to safeguard domestic industry. 
Although the 1994 amendment to the Investment Code substantially 
improved, standardized, and codified incentives for foreign 
investors, some aspects of existing tax and labor laws remain 
impediments to efficient business operations. 
 
Tunisia earned high marks in the World Bank's Doing Business 2009 
report, especially in the area of starting a business.  That said, 
some bureaucratic procedures, while slowly improving in some areas, 
remain cumbersome and time-consuming.  Foreign employee work 
permits, commercial operating license renewals, 
infrastructure-related services, and customs clearance for imported 
goods are usually cited as the lengthiest and most opaque procedures 
in the local business environment.  Investors have commented on 
inconsistencies in the application of regulations.  These cumbersome 
procedures are not limited to foreign investment and also affect the 
domestic business sector. 
 
--------------------------------------------- ----- 
Efficient Capital Markets and Portfolio Investment 
--------------------------------------------- ----- 
 
The mobilization and allocation of investment capital are still 
hampered by the underdeveloped nature of the local financial system. 
  Tunisia's stock market "Bourse de Tunis" is under the control of 
the state-run Financial Market Council and lists approximately 50 
companies. The Government offers substantial tax incentives to 
encourage companies to join the exchange, and expansion is 
occurring.   The stock market capitalization of listed companies in 
Tunisia was valued at US $6.63 billion in 2008, 16.45% of 2007 GDP. 
 Tunindex, the stock market's benchmark index, increased 10.65 
percent in 2008, down from 12.14 percent in 2007.  Capital controls 
are still in place.  Foreign investors are permitted to purchase 
shares in resident firms (through authorized brokers) or to purchase 
indirect investments through established mutual funds. 
 
The banking system is considered generally sound and is improving as 
the Central Bank has begun to enforce adherence to international 
norms for reserves and debt.  Recent measures include actions to 
strengthen the reliability of financial statements, enhance bank 
credit risk management, and improve creditors' rights.  Revisions to 
banking laws tightened the rules on investments and bank licensing, 
and increased the minimum capital requirement.  The required minimum 
risk-weighted capital/asset ratio has been raised to 8 percent, 
consistent with the Basel Committee capital adequacy 
recommendations.  Despite the strict new requirements, many banks 
still have substantial amounts of non-performing or delinquent debt 
in their portfolios.  The Government has established debt recovery 
entities (socits de recouvrement de crances) to buy the 
non-performing loans (NPLs) of commercial banks.   According to the 
IMF, the current ratio of NPLs to total loans is 17.3 percent. The 
authorities target 15 percent ratio for 2009.  In recent years, the 
Government has undertaken a number of banking privatizations and 
consolidations.  Even after recent privatizations, the Government is 
the controlling shareholder in 10 of the 20 banks.  The estimated 
total assets of the country's five largest banks are about TND 20.17 
billion (roughly US $16 billion).  Foreign participation in their 
capital has risen significantly and is now well over 20 percent. 
 
Credit is available locally to foreign investors, but some industry 
observers assert that there exists a well-established collusion 
among the principal banks to set common interest rates. 
 
In the last five years regulatory and accounting systems have been 
brought more in line with required international standards.  Most of 
the major global accounting firms are represented in Tunisia. 
Tunisian firms listed on the stock exchange are required to publish 
semiannual corporate reports audited by a certified public 
accountant. 
 
------------------ 
Political Violence 
------------------ 
 
Tunisia is a stable country, and incidents involving 
politically-motivated damage to economic projects or infrastructure 
are extremely rare.  In April 2002, al-Qaeda took responsibility for 
at an attack at the synagogue on the island of Djerba that claimed 
20 victims, 14 of them German tourists.  This resulted in a 
significant reduction in the number of European visitors in the 
immediate aftermath of the attack, but the sector has now recovered. 
  In December 2006 and January 2007, Tunisian security forces 
disrupted a terrorist group, killing or capturing many individuals 
who reportedly planned to carry out acts of violence in Tunisia. 
The US Embassy in Tunis was reportedly among the group's intended 
targets.  In February 2008 al-Qaeda in the Islamic Maghreb claimed 
responsibility for kidnapping two Austrian tourists along Tunisia's 
southern border with Algeria. They were released in September, 
reportedly after payment of a ransom. 
 
---------- 
Corruption 
---------- 
 
Tunisia's penal code devotes 11 articles to defining and classifying 
corruption and to assigning corresponding penalties (including fines 
and imprisonment).  Several other legal texts also address broader 
concepts of corruption including violations of the commercial or 
labor codes, which range from speculative financial practices to 
giving or accepting bribes.  Detailed information on the application 
of these laws or their effectiveness in combating corruption is not 
publicly available.  There are no statistics specific to corruption. 
 The Tunisian Ministry of Commerce publishes information on cases 
involving the infringement of the commercial code, but these 
incidents range from non-conforming labeling procedures to 
price/supply speculation.  The print media report abuses of 
fiduciary authority by public officials only on rare occasions. 
Anecdotal reports from the Tunisian business community and US 
businesses with regional experience suggest that corruption exists, 
but is not as pervasive as that found in neighboring countries. 
After several years of steady improvement, Tunisia's ranking on 
Transparency International's (TI) Corruption Index dropped from 43 
in 2005 with a CPI score of 4.9 to 62, in 2008 with a CPI score of 
4.4.   At the regional level, Tunisia is ranked 6th among MENA 
countries, before its direct competitor, Morocco (8), and its 
neighbors Algeria (10) and Libya (14). According to the TI 
Corruption Index scale, a score of ten indicates extremely little 
corruption and a score of zero means very serious corruption. 
 
Most US firms involved in the Tunisian market have not identified 
corruption as a primary obstacle to foreign direct investment.  Some 
potential investors have asserted that unfair practices and 
corruption among prospective local partners have delayed or blocked 
specific investment proposals, or there has been an appearance that 
cronyism or influence peddling has affected some investment 
decisions. 
 
The Government's recent efforts to combat corruption have 
concentrated on ensuring that price controls are respected, 
enhancing commercial competition in the domestic market, and 
harmonizing Tunisian laws with those of the European Union.  Since 
1989, the public sector is governed by a comprehensive law designed 
to regulate each phase of public procurement and established the 
Higher Market Commission (CSM - Commission Suprieure des Marchs) 
to supervise the tender and award of major Government contracts. 
The Government publicly supports a policy of transparency and has 
called for it in the conduct of privatization operations.  Public 
tenders require bidders to provide a sworn statement that they have 
not and will not, either themselves or through a third party, make 
any promises or give gifts with a view to influencing the outcome of 
the tender and realization of the project.  Pursuant to the US 
Foreign Corrupt Practices Act (FCPA), the US Government requires 
that American companies requesting US Government advocacy support 
with foreign states certify not to participate in corrupt 
practices. 
 
------------------------------- 
Bilateral Investment Agreements 
------------------------------- 
 
A Trade and Investment Framework Agreement (TIFA) between Tunisia 
and the United States was signed in 2002 and three TIFA Council 
meetings have taken place.  A Bilateral Investment Treaty between 
Tunisia and the United States took effect in 1991.  A 1985 treaty 
(and 1989 protocol) guarantees US firms freedom from double 
taxation. 
 
Tunisia has concluded bilateral trade agreements with approximately 
81 countries.  In January 2008, Tunisia's Association Agreement with 
the EU went into effect eliminating tariffs on industrial goods with 
the eventual goal of creating a free trade zone between Tunisia and 
the EU member states.  In addition, Tunisia is signatory of the 
multilateral agreements with the Multilateral Investment Guarantee 
Agency (MIGA). Tunisia has signed the Agreement on WTO, bilateral 
agreements with the Member States of the European Free Trade 
Association (EFTA), bilateral and multilateral agreements with Arab 
League members, and a bilateral agreement with Turkey. 
 
-------------------------------------------- 
OPIC and Other Insurance Investment Programs 
-------------------------------------------- 
 
OPIC is active in the Tunisian market and provides political risk 
insurance and other services to a variety of US companies.  OPIC 
supports private US investment in Tunisia and has sponsored several 
reciprocal investment missions.  The 1963 OPIC agreement with 
Tunisia was revised and signed in February 2004. 
 
 
 
 
 
 
----- 
Labor 
----- 
 
Tunisian labor is readily available.  Tunisia has a labor force of 
approximately 3.5 million and a national literacy rate of about 75 
percent.  About 90 percent of the work force under 35 is literate. 
The official unemployment rate is 14.1 percent (although this is 
considerably higher in some regions). The figure does not include 
many who are underemployed. 
 
Nearly 80,000 new jobs must be created each year to keep 
unemployment at current levels, while sustained annual GDP growth of 
about 7 percent would be required in order to make significant 
inroads into the chronic unemployment figure.  The structure of the 
workforce has remained stable over the past 20 years (19 percent 
agriculture, 32 percent industry, and 49 percent commerce and 
services). 
 
The right to form a labor union is protected by law.  There is only 
one national labor confederation, the General Union of Tunisian 
Workers (UGTT - Union General des Travailleurs Tunisiens).  The UGTT 
claims about one third of the labor force as members, although more 
are covered by UGTT-negotiated contracts.  Wages and working 
conditions are established through triennial collective bargaining 
agreements between the UGTT, the national employers' association 
(UTICA - Union Tunisienne de l'Industrie, du Commerce et de 
l'Artisanat), and the Government of Tunisia.  These agreements set 
industry standards and generally apply to about 80 percent of the 
private sector labor force, whether or not individual companies are 
unionized.  The most recent wage agreements were completed on May 2, 
¶2008.   The official minimum monthly wage in the industrial sector 
is 217.880 TND (about US $181) for a 40 hour week and 251.880 TND 
(about US $209.06) for a 48 hour week. 
 
------------------------------------ 
Foreign Trade Zones/Free Trade Zones 
------------------------------------ 
 
Tunisia has two free trade zones, one in the north at Bizerte, and 
the other in the south at Zarzis.  The land is state owned, but the 
respective zones are managed by a private company.  Companies 
established in the free trade zones, officially known as "Parcs 
d'Activits Economiques," are exempt from most taxes and customs 
duties and benefit from special tax rates.  Goods are allowed 
limited duty-free entry into Tunisia for transformation and 
re-export.  Factories are considered bonded warehouses and have 
their own assigned customs personnel. 
 
However, companies do not necessarily have to be located in one of 
the two designated free trade zones to operate with this type of 
business structure.  In fact, the majority of offshore enterprises 
are situated in various parts of the country.  Regulations are 
strict, and operators must comply with the 1993 Investment Code. 
 
------------------------------------ 
Foreign Direct Investment Statistics 
------------------------------------ 
 
Through November 2008, total FDI in Tunisia is expected to total TND 
30 billion (approximately US $25 billion).  Total foreign investment 
during the first 11 months of 2008, increased 42.5 percent 
year-on-year to TND 2.6 billion (US $2.16 billion) from TND 1.825 
billion (US $1.44 billion) during the same period the year before. 
Foreign direct investment rose 39.7 percent to TND 2.4 billion (US 
$1.99 billion) from TND 1.72 billion (US $1.36 billion), in 2007. 
The investment portfolio also increased 87 percent, TND 197.1 
million (US $163.59 million) up from (US $105 million) because of 
the stock operations related to the acquisition of a 35 percent 
stake in the state owned insurance company STAR, the purchase of the 
French Renault branch in Tunisia by the Tunisian private car 
distributor ARTES and the capital increase of the French Bank 
Socit Gnrale on behalf of its Tunisian subsidiary Union 
Internationale de Banques. Over 2,953 foreign or joint capital 
companies were operational in Tunisia at the end of November 2008, 
employing 296,000 people.   Foreign investments generate one-third 
of exports and 1/5 of total employment.  In recent years, however, 
FDI in real estate, infrastructure, and the energy sector has been a 
significant source of growth. 
 
Tunisia's largest single foreign investor is British Gas, which has 
developed the Miskar offshore gas field (US $650 million) and is 
investing a further US $500 million for new development.  Major 
foreign presence in other key sectors include telecommunications and 
electronics (Lucent, Alcatel, Ericsson, Siemens, Sony, Philips, 
Thomson, Huwaei, ZTE), the automotive industry (Lear Corporation, 
Isuzu, Pirelli, Fiat, Idec), and food products (Nestle, Danone, 
Chambourcy). 
 
Major US company presence in Tunisia includes: Citibank, Cisco, 
Coca-Cola, Crown Can, Eurocast (a joint venture with Palmer), Ford, 
General Motors, Hewlett Packard, Johnson Controls, Lear Corporation, 
Merck, Microsoft, Oracle, Pfizer, Sara Lee (represented in Tunisia 
under the name of Essel Tunisie / DBA), and Stream.  EVOL, 
originally part of an Italian-owned group producing safety footwear 
for the export market, was recently purchased by US investors and, 
with a staff of 4,000, is now the largest US employer in Tunisia. 
Over the past few years, Pioneer Natural Resources continued to 
expand its oil and gas drilling and production operations in 
Tunisia, bringing its total investments in Tunisia to approximately 
US $160 million. 
 
------------- 
Web Resources 
------------- 
 
Foreign Investment Promotion Agency (FIPA) 
www.investintunisia.com 
 
Central Bank of Tunisia 
www.bct.gov.tn 
 
General Information about Tunisia 
www.tunisie.com 
 
Tunisian Industrial Promotion Agency 
www.tunisieindustrie.nat.tn 
 
Bizerte Free Zone 
www.bizertaeconomicpark.com.tn 
 
Zarzis Free Zone 
www.zfzarzis.com.tn 
 
Stock Exchange 
www.bvmt.com.tn 
 
Privatization 
www.privatisation.gov.tn 
 
National Statistic Institute (INS) 
www.ins.nat.tn 
 
GODEC