VZCZCXYZ0001
PP RUEHWEB

DE RUEHTU #0037/01 0151744
ZNR UUUUU ZZH
P 151744Z JAN 10
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 7157
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY
RUCPCIM/CIMS NTDB WASHDC
RUCNMGH/MAGHREB COLLECTIVE

UNCLAS TUNIS 000037 
 
SENSITVE 
SIPDIS 
 
STATE FOR EEB/IFD/OIA AND NEA/MAG 
STATE PASS USTR (BURKHEAD) AND USAID 
USDOC FOR ITA/MAC/ONE (MASON), ADVOCACY CTR (TABINE), AND CLDP 
(TEJTEL AND MCMANUS) 
CASABLANCA FOR FCS (KITSON) 
 
LONDON AND PARIS FOR NEA WATCHER 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ETRD OPIC KTDB USTR TS
SUBJECT: TUNISIA: 2010 INVESTMENT CLIMATE REPORT 
 
Sensitive but unclassified; please protect accordingly. 
 
------------------------------ 
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, aerospace and aeronautics, 
automotive parts and textile manufacturing.  The Government 
encourages export-oriented FDI and screens any potential FDI to 
minimize the impact of the investment on domestic competitors and 
employment. 
 
Foreign investment in Tunisia is regulated by Investment Code Law 
No. 93-120, dating from December 1993, and was last amended on 
January 26, 2009.  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 (with some exceptions for the agricultural 
sector), 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 
purchased a 35% stake, valued at US $2.25 billion, in state-owned 
Tunisie Telecom.  In July 2008, French company Groupama won a bid to 
purchase 35 percent of the Societe Tunisienne d'Assurances et de 
Reassurances (STAR) for 70 million Euro (around $100 million).  In 
2008, the French bank Caisse Gnrale 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 that 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 Geant in 2005.  Until 
then, Monoprix, a French grocery franchise, dominated the retail 
grocery market.  In August 2009, the Tunisian Government adopted a 
new law to regulate domestic trade, which includes a new legislative 
framework for franchising -until recently franchise status was only 
granted to businesses on a case-by-case basis.  Thanks to this new 
law, franchises now have the ability to set up shop like any other 
business serving the Tunisian market.  Although some issues still 
need to be clarified through the upcoming implementation decree, 
such as the details of royalty repatriation, the law will likely 
encourage investment, create additional jobs and boost knowledge 
transfer.  Many Tunisian business groups have already started 
looking for international franchisors and are confident the market 
exists for franchises to thrive. 
 
Since 2007, there have been numerous announcements of significant 
Arabian Gulf company investments in the real estate sector but due 
to the international economic crisis, some investments have been 
postponed and possibly cancelled.  Sama Dubai, which was set to 
build the Mediterranean Gate mega-construction project, has halted 
their operations.  Investment has not come to a complete standstill, 
however:  Another such investment, the Bukhatir Group's Tunis Sports 
City, a sports and recreational complex, is moving forward as 
planned, 
 
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 full convertibility of the dinar 
by 2014. 
 
Non-residents are exempt from most exchange regulations.  Under 
foreign currency regulations, non-resident companies are defined as 
having: 
 
- Non-resident 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 
$19,250) 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 $3,850). 
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 2009 
(up to November 25), the Tunisian Dinar appreciated 2.8 percent 
against the USD and depreciated 3.1 percent against the Euro. 
 
------------------------------ 
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, such as tax breaks and social security assistance; 
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. 
 
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. 
 
The new Customs Code, which went into effect on January 2009, allows 
customs agents to seize suspect goods in the entire country for 
products under foreign trademarks registered at INNORPI.  Tunisian 
Copyright Law (No. 94-36, dated February 24, 1994) has been amended 
by law No. 2009-33, dated June 23, 2009, and includes literary 
works, art, scientific works, new technologies and digital works. 
However, 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 and 
entertainment 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. 
Some amendments to the Investment Code have substantially improved, 
standardized, and codified incentives for foreign investors. 
However, some aspects of existing tax and labor laws remain 
impediments to efficient business operations. 
 
Tunisia's ranking improved from 73 to 69 of 183 economies regarding 
the ease of doing business in the World Bank's Doing Business 2010 
report.  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 51 companies.  The 
Government offers substantial tax incentives to encourage companies 
to join the exchange, and expansion is occurring.  In September 
2009, the stock market capitalization of listed companies in Tunisia 
was valued at TND 11.209 billion (US $8.689 billion), approximately 
21% of 2009 GDP, up from TND 8.301 billion (US $6.723 billion) in 
December 2008.  Over the first nine months of 2009, Tunindex, the 
stock market's benchmark index, grew by 40.5 percent, up from 28.6 
percent growth in 2008 for the same period.  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.  Given the current pace of reforms, the 
banking sector actually weathered the international economic crisis 
and resisted serious adverse effects visible in other countries. 
Reform is underway, however.  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 (societes de recouvrement de creances) to buy the 
non-performing loans (NPLs) of commercial banks.   The current ratio 
 
of NPLs to total loans is around 15 percent although the 
Presidential electoral program, announced in October 2009, targets a 
7 percent ratio by 2014.  Although in recent years the Government 
has undertaken a number of banking privatizations and 
consolidations, the Government is the controlling shareholder in 10 
of the 20 major banks.  The estimated total assets of the country's 
five largest banks are about TND 24.482 billion (roughly US $19.83 
billion).  Foreign participation in their capital has risen 
significantly and is now well over 20 percent. 
 
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. 
 
On June 12, 2009 the GOT passed legislation addressing access to 
financial services for non-residents (law No. 2009-64).  Financial 
authorities aimed essentially to address regulatory gaps in the 
existing system by giving an appropriate framework for financial 
transactions between non-residents, introducing new financial tools 
attractive to foreign investors, defining new rules for monitoring 
and supporting the creation of the Tunis Financial Harbor project (a 
US $3 billion Bahraini project inaugurated on June 12, 2009 and 
envisioned to include banks, real estate firms, investment 
companies, commercial centers, housing units and tourism areas). The 
code allows non-resident individuals or companies to use financial 
products and services as well as perform other relevant financial 
operations.  Non-resident financial service providers may, in some 
cases and under certain conditions, provide services to residents. 
Regarding financial products, the code distinguishes between two 
types: securities and financial contracts.   Both must be issued in 
Tunisia or negotiated on a foreign regulated market member of the 
International Securities Commissions Organization. 
 
Concerning financial services providers, the code established two 
categories of status regarding activities: banking (deposits, loans, 
payments and exchange operations, acquisition of capital in 
operating companis or companies in current creation) and investment 
services (reception, transmission, orders executin and portfolio 
management).  Non-resident finanial entities, namely lending 
institutions authorzed to act as banks, investment companies and 
potfolio management companies are considered by the cde 
non-resident investment service providers. 
Among the conditions required,  non-resident finanial service 
providers must present initial minimm capital (fully paid up at 
subscription) in conertible currency equivalent in dinars to 25 
millin for a bank (US $19.25 million), 10 million (US $.7 million) 
for a financial institution, 7.5 milion (US $5.775 million) for an 
investment compan and 250,000 (US $192,500)  for a portfolio 
manaement company. 
 
------------------ 
Political Vilence 
------------------ 
 
Tunisia is a stable ountry, and incidents involving 
politically-motiated damage to economic projects or infrastructure 
are extremely rare.  In April 2002, al-Al-Qa'ida 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-Qa'ida in the Islamic Maghreb claimed 
responsibility for kidnapping two Austrian tourists along Tunisia's 
southern border with Algeria. They were released in Mali 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 65, in 2009 with a score of 4.2. 
 At the regional level, Tunisia is ranked 8th among MENA countries, 
before its direct competitor, Morocco (10), and its neighbors 
Algeria (11) and Libya (15). 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.   Some analysts believe corruption, or the perception of 
corruption, has affected domestic investment rates. 
 
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 Superieure des Marches) 
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, most recently in March 2008.  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 Investment Insurance 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 August 
3, 2009, although negotiations on sectoral wages are still underway. 
  The official minimum monthly wage in the industrial sector is 
225.160 TND (about US $173.37) for a 40 hour week and 260.624 TND 
(about US $200.68) 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'Activites 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 Investment Code. 
 
------------------------------------ 
Foreign Direct Investment Statistics 
------------------------------------ 
 
Total foreign investment during the first 10 months of 2009 was TND 
1.77 billion (US $1.36 billion), which represents a 36.4 percent 
drop (when calculated in USD, the drop is 39.55 percent) compared to 
the same period last year.  This decline in foreign investment is 
the result of 34.4 percent decrease in foreign direct investment 
(TND 1.7 billion (US $1.3 billion) down from TND 2.6 billion (US 
$1.36 billion), and a 63.72 percent drop in portfolio investment 
(TND 70.7 million (US $54.43 million) down from TND 194.9 million 
(US $157.869 million).  Over the third quarter of 2009, foreign 
investment in portfolio was marked by an ongoing withdrawal of 
foreign investors from the Tunis Stock Market as well as flat volume 
of transactions on their behalf.  This withdrawal was likely due to 
the liquidity squeeze in foreign financial markets.  The downward 
trend in FDI is attributable to a drop in investment flows for the 
sectors of energy and services as well as well as the effect of the 
international economic crisis.  Some decline is attributable to a 
delay in disbursement of the investment announced by the 
Divona/Orange France Telecom consortium, which won the third telecom 
operator license valued at TND 257.251 million (US $198.08 million). 
 Although this investment occurred during 2009, the consortium only 
disbursed a first tranche, TND 92 million (US $70.84 million), in 
August and has yet to disburse the rest. 
Over 2,966 foreign or joint capital companies are operational in 
Tunisia and employ 303,142 people.   Foreign investments generate 
about one-third of exports and one-fifth 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.  The 
largest single foreign investment was Turkish company TAV's 550 
million euro (US $792 million) construction of the Enfidha 
International Airport, which is operating on a 40-year concession. 
Major foreign presence in other key sectors includes 
telecommunications and electronics (Lucent, Lacroix Electronique, 
Sagem, Alcatel, Stream, Siemens, Philips, Thomson), the automotive 
industry (Lear Corporation, Draxlmaier, Valeo, Toyota Tsusho, 
Pirelli), food products (3 Suisses, Danone) and aeronautics (Zodiac 
Aerospace, Eurocast, SEA Latelec). 
 
Major US company presence in Tunisia includes: Citibank, Cisco, 
Coca-Cola, Crown Cork, Eurocast (a joint venture with Palmer), 
Hewlett-Packard, Johnson Controls, Lear Corporation, Pioneer Natural 
Resources, Microsoft, Pfizer, Sara Lee (represented in Tunisia under 
the name of Essel Tunisie/DBA), and Stream.  JAL Group, 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 over 4,600, 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. 
 
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Web Resources 
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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 Trade Zone 
www.bizertaeconomicpark.com.tn 
 
Zarzis Free Trade Zone 
www.zfzarzis.com.tn 
 
Stock Exchange 
www.bvmt.com.tn 
 
Privatization 
www.privatisation.gov.tn 
 
National Statistics Institute (INS) 
www.ins.nat.tn 
 
GRAY