Main Characteristics of the Investment Climate Mozambique Paris 03 OCT 2003

CPI offers a package of services and support to local and foreign investors who wish to invest in Mozambique. www.mozbusiness.gov.mz

Facts & Figures Population: 17.2 million Bordering 6 Countries Area: 799,380 Km2 2700 km of coast Urbanisation Rate: 29% Over 60 Rivers and Lakes Official Language: Portuguese English is Widely Spoken

Statistics, utilities and services Foreign Trade*** Exports US$ 703 million Imports US$ 1 063 million ***) - INE 2002.

Statistics, utilities and services Main Export Products Aluminium,Tobacco,Citrus,Coal,Electricity,Cashew nuts, prawns, lobsters, cotton and wood. Main Import Products Transport & electrical equipment, machinery,food products, petroleum products and cereals.

Statistics, utilities and services Main Export Markets Spain, South Africa, USA, Japan, Portugal, Malawi,Zimbabwe,India, U.K. Main Import origins South Africa, Portugal, USA, Japan, India e France

Statistics, Utilities And Services Macroeconomic Indicators

Statistics, Utilities And Services Macroeconomic Indicators

Economic growth in Africa was dismal in 2002 (at 3.2 %) The best performers were Mozambique, Rwanda and Uganda, whose economies grew by 12%, 9.9% and 6.2% respectively Mozambique managed to attract $518m in FDI in 2001 In the past decade, Mozambican incomes have nearly doubled.

Known as the "gateway to Southern Africa” Macro-economic stability and a political environment conducive to investment. Massive rehabilitation programme of port and other infra-structural facilities No exchange controls on the repatriation of profits Ability to hold foreign currency accounts Established Export Processing Zones A large and dedicated labour force available at highly competitive rates

DYNAMIC OF FDI

Inward FDI Performance Index Rank Economy Value 1988-1990 1998-2000 18 Singapore 13.8 2.2 19 Guyana 0.7 20 Vietnam 1.0 2.0 21 Kazakhstan 3.3 22 Finland 0.5 1.9 23 Mozambique 0.3 1.8 24 Bulgaria 0.8 United Kingdom

DYNAMIC OF FDI

DYNAMIC OF FDI

Investment Priorities The Mozambican Government welcomes FDI in the following industries Manufacturing Mineral Exploration and Processing Tourism Fishing and Aqua-culture Construction Forestry

Investment opportunities Agriculture, Agribusiness & Livestock Industry, Forestry & Mining Manufacturing & Power Generation Oil & Gas Tourism & Hunting Transport & Communication Banking & Insurance Industrial Free Zones

Investment Guarantees The security and legal protection of property, rights and other assets; Unrestricted import and repayment of loan and equity investment capital; Repatriation of dividends, profits and capital; Liberalized banking and foreign exchange; Investment dispute resolution under ICC or ICSID arbitration Investment risk insurance under MIGA and OPIC facilities.

Nacala Development Corridor LILONGWE Salima Lichinga Mandimba Cuamba Malema Nampula MOZAMBIQUE NACALA BLANTYRE Tete Nacala Free Port Tourism Agrobusiness Lilongwe-Nacala Railway Upgrade (~US$250 mn) Moma Mineral Sands (~US$100 mn)

FERTILISER & EXPLOSIVES BEIRA Development Corridor ENERGY PROJECTS TOURISM PROJECTS CHROMITE BASED PROJECTS FORESTRY PROJECTS INFRASTRUCTURE Road, Rail, Electrity, Pipelines, Telecoms SUGAR PROJECTS PORT PROJECTS ASSORTED MANUFACTURING PROJECTS HOT IRON BRIQUETTED PLANT GAS BASED CHEMICAL POSSIBILITIES (methanol INDUSTRIAL PARKS FERTILISER & EXPLOSIVES PLANT Synfuel Plant diesel/petrol/waxes

Zambezi Valley SDI Moatize(~US$ 500 mn) Thermal Station (~US$ 1bn) Maravia Zumba Chifunde Macanga Angonia Tsangano Chiuta Magoe Cahora Bassa Changara Guro Moatize Tambara Mutarara Chemba Mocassa Barue Marigue Gorongosa Caia Morrumbala Milange Mocuba Lugela Maganja da Costa Mopeia Chinde Nicoadala Namacurra Quelimane Inhassunge Pebane Marromeu Cheringoma Muanza Dondo Buzi Nhamatanda Gondola Manica Sussundenga S O F A L A M A L A W I T E T E Z I M B A B W E M A N I C A Z A M B E Z I A BEIRA DONDO CHIMOIO MANICA HARARE CATANDICA GURO LUENDA CHINDE MUANZA INHAMINGA CAIA VILA DE SENA CHEMBA GORONGOSA QUELIMANE PEBANE MAGANJA DA COSTA NANTE NAMACURRA LUGELA NICOADALA MILANGE MORRUMBALA MOATIZE TETE PANDA UNCUA FURANCUNGO TSANGANO ULONGUE FINGOE CHIPERA MPHENDA SONGO CHITIMA MUTARE Zambezi Valley SDI Moatize(~US$ 500 mn) Cahora Bassa - 2 GW Thermal Station (~US$ 1bn) Peasant Agriculture Mpanda Uncua 1.2 GW Coke by rail to Beira Sena Line rehabilitation: Beira-Moatize - 580 Km Inhamitanga-Marromeu-88 Km D. Ana -Vila Nova Fteira-44 Km Cost ~342 M US$ Mutarara-1.2 GW Sena Sugar Forestry Coal Terminal (Savane)

Natural Gas Pipeline BEIRA Maputo (Mozal, MISP) Sishen Kudu Mossgas Pande/Temane Dev. & pipeline ~US$ 1bn Field Dev., Power Station, Transmission ~US$ 2 bn Maputo (Mozal, MISP) Sishen Richards Bay Pipeline ~US$ 900 mn Durban Power Station, ~US$ 0.6-1.1 bn Gas-based investment projects Cape Town

Limpopo SDI Chibuto Corridor Sands USD 1 bl GONAREZHOU ZINAVE BANHINE KRUGER NATIONAL PARK LIMPOPO VALLEY BANHINE ZINAVE GONAREZHOU Chibuto Corridor Sands USD 1 bl

LIMPOPO PARK GONAREZHOU ZINAVE BANHINE LIMPOPO VALLEY KRUGER NATIONAL

Investment Guarantees Treaties and Bilateral Agreements New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards Cotonou Agreement Investment Protection Conventions Alger, Denmark, Egypt, France, Germany, Nederlands, OPIC, Indonesia, Italy, Mauritius, People’s Republic of China,Cuba, Portugal, South Africa,Sweden, Switzerland, USA and Zimbabwe Double Taxation Treaties Portugal, Mauritius , Italy and United Arab Emirates

Investment Incentives General Benefits: Exemption from import duties on goods in customs tariff class “K”; Exemption on Stamp duty on company incorporation; 50% Reduction on the rate of real property transfer (SISA); Investment tax credit varying from 5% to 15% of total investment ; Deductible expenditure on advanced technology, professional training and construction of infrastructures of public utility; Accelerated depreciation;

Investment Incentives Special Fiscal Benefits (Rapid Development Zones): Exemption from import duties on goods in customs tariff class “K” and “I”; Exemption on Stamp duty on company incorporation; Exemption from real property transfer (SISA); Investment tax credit varying from 20% of total investment ; Deductible expenditure on advanced technology, professional training and construction of infrastructures of public utility; Accelerated depreciation (2 times the normal rate);

Investment Incentives Special Fiscal Benefits (Agriculture): Exemption from import duties on goods in customs tariff class “K”; Exemption on Stamp duty on company incorporation; 50% Reduction on the rate of real property transfer (SISA); 80% reduction in corporate tax; Deductible expenditure on advanced technology, professional training and construction of infrastructures of public utility; Accelerated depreciation (2 times of normal rate);

Investment Incentives Special Fiscal Benefits (Hotel and Tourism): Exemption from import duties on goods in customs tariff class “K”; Exemption on Stamp duty on company incorporation; 50% Reduction on the rate of real property transfer (SISA); Investment tax credit varying from 8% to 18% of total investment ; Deductible expenditure on advanced technology, professional training and construction of infrastructures of public utility; Accelerated depreciation (3 times normal rate);

Investment Incentives Special Fiscal Benefits (Large Scale projects-over US$ 500million): Exemption from import duties on goods in customs tariff class “K”; Exemption on Stamp duty on company incorporation; 50% Reduction on the rate of real property transfer (SISA); Investment tax credit varying from 5% to 30% of total investment ; Deductible expenditure on advanced technology, professional training and construction of infrastructures of public utility; Accelerated depreciation (2 times normal rate);

Investment Incentives Special Fiscal Benefits (Industrial Free Zones): Exemption from import duties, Value Added Tax, and Specific Consumption Tax on all construction material, machinery equipment and goods for the project; Exemption on Stamp duty on company incorporation; Exemption on real property transfer (SISA); 60% reduction on income tax To qualify the company should export a minimum of 85% and create jobs for Mozambican nationals

Investment Promotion Centre The Investment Promotion Centre - CPI, has the mandate to: promote and facilitate national and foreign investment in Mozambique; operates as a “one stop-shop”; receive and registration of investment project proposals; facilitate the concession of fiscal and customs incentives; identify potential partners for joint-ventures; identify and disseminate investment opportunities ; provide institutional assistance to investors in the implementation and exploration of investment projects.

www.mozbusiness.gov.mz