Islands build third pillar for the Economy

The Seychelles’ economy, now able to attract overseas companies like American food giant Heinz, is undergoing further restructuring to meet the requirements of globalisation. The islands have for the past two decades been heavily dependent on tourism and fisheries, following the fall in importance of cash crop exports.

As other small island states dependence on only one or two industries could render the country highly vulnerable to external factors. In order to further broaden the Seychelles economic structure, the Government has put in place a diversification programme first initiated with the 1985-89 National Development Plan. Given the importance of international trade in today’s development strategy, it goes without saying that Seychelles’ application to join the World Trade Organisation constitutes one of the major components of the national programme of economic liberalisation and diversification.

The building of the third pillar of the economy also rests on a major exercise to increase investment including the development of the offshore industry. The United Nations Development Programme (UNDP) report of 1997 ranks Seychelles among the top 20 African countries attracting foreign investment.

A range of modern legislations has been introduced to set up an international business centre to provide offshore services to businesses and investors participating in these initiatives. This strategy encompasses offshore companies registered in Seychelles, an offshore trade zone, the registration of ships and aircraft, offshore banking and insurance.

Some 3000 offshore companies are already registered in Seychelles whilst others are operating in the country’s international trade zones. Apart from Heinz, other entities with names like Chelle Plastic and Gondwana Granite, the latter producing polished granite products, are operating in the international trade zones.

To facilitate international business operations in the trade zones, the Seychelles International Business Authority (SIBA) has erected huge warehouse-like buildings near the port to be rented out to manufacturing and processing companies.

Seychelles is now attracting aircraft and ship registration. Multinational boat charter companies like VPM of France and Sunsail of Britain have sent a dozen yachts each to Seychelles and have also discovered, after barely two years of operations here, that this group of Indian Ocean islands are among the most profitable among their worldwide bases.

Seychelles’ membership of the World Trade Organisation will give the country access to richer markets, notably for the goods manufactured in the islands’ international trade zones.

The country has also applied to the World Intellectual Property Organisation and modernise the Patent and Copyright laws and trade mark regulations in line with international standards. These are to make Seychelles more attractive to multinational companies and to encourage investors.

As Seychelles opens up to international business, it is also negotiating double-taxation avoidance treaties with a number of countries. The treaty on double-taxation avoidance, combined with low taxes payable by onshore and offshore entities and the existence of a favourable climate for investment could offer tremendous possibilities for international tax planning in Seychelles.

Looking beyond the year 2000, the Government is finalising plans to reclaim nearly 300 hectares of land in the Victoria harbour and much of it will be allocated to industrial zones, a new commercial port and an international oil terminal - all of these part of the infrastructure development programme to turn Seychelles into an international business centre.

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