Government moves to protect investors

Malawi Government has said it is pushing for the protection of investors in the country by ensuring that it negotiates and concludes Investment Promotion and Protection Agreements (IPPAs) with key partners.

Commenting on the status of key bilateral IPPAs, Ministry of Industry and Trade spokesperson Wiskes Nkombezi said they have negotiated a number of the agreements and some are in their final stages.

Experts contend that IPPAs give confidence to investors which in turn encourage foreign direct investment into the country.

Nkombezi said Malawi has recently negotiated an IPPA with India and is only awaiting Delhi to finalise the process.

“Bearing in mind the importance of IPPAs in assuring investors protection, especially here in Africa, we are also negotiating with other key countries where a lot of investors come from. We are negotiating with key emerging markets, including China and Brazil, for instance the Vale railway line project, because these are major sources of investment,” he said.

He argued that investment to Malawi from Asia and the Middle East is rising after the world’s most developed economies experienced the financial crisis.

He, however, noted that Malawi already has IPPAs with the Netherlands, Italy, Zimbabwe, Germany and Mauritius.

Malawi received on $129 million (about K55.5 billion) worth of Foreign Direct Investment (FDI), about 2.4 percent of Southern Africa in 2012 as indicated by the United Nations Conference on Trade and Investment (Unctad) 2013 World Investment Report.

However, Chancellor College professor of economics Ben Kalua earlier explained that huge investments into some of the countries were mainly in extractive industries, including in Mozambique, which has huge deposits of coal.

Kalua noted that Malawi has incentives for investment but need to reduce bureaucracy and maintain a competitive environment.

Malawi slipped 10 steps to 171 out of 189 economies on the World Bank’s Doing Business 2014 report.

Specifically on the doing business pillars, out of 189 economies, Malawi is ranked 80 on protecting investors, 149 on starting a business, 183 on getting electricity, 81 on paying taxes, 145 on enforcing contracts and 150 on resolving contracts.

In the 2013/14 budget statement, government put in place incentives to attract investments in mining, agriculture, tourism and energy.

In construction industry, government removed taxes on crane lorries, concrete mixer lorries, mobile drilling derricks and track laying tractors for the construction industry to boost it.

In the budget, government reintroduced an exemption of taxes on importation of specialised mining and exploration machinery and equipment in order to encourage exploration and mining activities in the country.