Samy Laghouati, Partner, Gide Loyrette Nouel: Interview

Interview: Samy Laghouati

What are some of the significant implications of the Investment Law decrees from March 2017?

SAMY LAGHOUATI: The new Investment Law removed a number of constraints and uncertainties from the previous law on investments, issued in 2001, which has been significantly amended since 2009. The previous law is another manifestation of the authorities’ attempt to help ease existing rules and remove regulations that are no longer relevant.

Another positive development that illustrates the willingness of the government to facilitate increased foreign investment is the resolution of the State Holding Council, which no longer submits to the preemption right of the state for some transfers of foreign stakes within Algerian companies. In addition, the clause that stipulated that any foreign investment must generate a positive balance of foreign currency no longer exists.

There have also been significant adjustments made to the investment incentive regime. This newly gained flexibility is vitally important for investors. Until now, there was uncertainty about the terms of transfer for their investments.

To what extent will the new legal framework and incentive regime boost investments in Algeria?

LAGHOUATI: It is clear that the new texts can contribute to the promotion of investment, but this alone is not enough. Confidence must be promoted among both national and foreign investors to encourage their investment. For foreign investors in particular, the government should establish a list of countries that are attractive to invest in.

It is necessary to take into account such a ranking, as it is important to become as attractive as neighbouring countries for foreign investors. The level of attractiveness is measured by the return on investment, and consequently results from the entire legal and tax environment, and not only from the law on investments or a list of tax exemptions. For instance, the difficulties associated with obtaining a work permit for foreign executives or accessing financing locally can impact return on investment.

Therefore, improving the business environment means adjusting the whole framework. Investors need legal stability, visibility and transparency over the long run. As a consequence of this, it is necessary to avoid, as much as possible, frequent changes within short periods of time.

Given the drop in oil prices, there are less resources for investment, which is why it is crucial to encourage the public sector to team up with foreign investors to work on major infrastructure projects by implementing a public-private partnership (PPP) law. To this end, it is encouraging to see that a PPP charter could be drafted and signed in early 2018. Lastly, it is worth remembering that no specific sectors are closed to foreign investment. Benefits that derive from investment incentives are automatic, without any prior formal approval from the National Agency for Investment Development, as long as the amount of the investment does not exceed €45m.

How will the National Competition Council ensure transparency and corporate compliance?

LAGHOUATI: The establishment of the National Competition Council (Conseil National de la Concurrence, CNC) is a very good sign, as it represents another step forward for the economy, and places Algeria line with international standards.

The CNC has the sensitive task of ensuring good market practices by economic actors in the interest of the consumer, as well as working to draft a comprehensive compliance programme to help push companies to voluntarily comply with competition rules. It will be a fundamental institution for the country, and to fully fulfil its function, it needs to ensure both its autonomy and its prerogatives.