Noureddine Hajji, Managing Partner, EY Tunisia, on reforms to the Tunisian regulatory system: Viewpoint

Five years after the revolution of January 2011, Tunisia has yet to return to the dynamic growth it used to have in previous decades. The economy was quite flat in 2015, with 0.8% growth, and only a moderate growth of 2.8% is planned for 2016. The business community is still concerned about the slow path of structural reform implementation and the reaction time of the administration. Business leaders are also still waiting for strong measures to fight corruption and reduce the spectrum of the informal economy. The political transition took more time than expected, but the good news is that we succeeded in implementing it. In this respect, Tunisia clearly stands out among all the other countries that went through the Arab Spring uprisings that began in early 2011.

With the new constitution in force, several successful elections that have taken place since 2011, a peaceful spirit and mutual respect between major political parties, powerful independent media channels and the maturity of civil society, it is now unlikely that the country will return back to any form of dictatorship or limitation of liberty. Freedom and democracy are the two values that the Tunisian people have definitely gained from the revolution and they will never give up that achievement. The reality is that, like political transition, real economic progress will also take some time. No doubt, we could have delivered better and saved time on moving forward. It is a fact that the Tunisian economy is now recovering slowly but surely, and the virtuous momentum is expected to be reached in the next couple of years.

Meanwhile, several reforms are taking place. The public-private partnership law was voted in late 2015 and a new investment code is currently under discussion within the parliament. In summary, significant changes are expected in the legal investment framework. Firstly, access to the market will be easier, the list of activities subject to prior agreement is expected to be significantly reduced and the process of setting up new businesses is set to be simplified. The new investment code includes several measures to protect foreign investors, including the equal treatment applicable to domestic investors and the repatriation, at any time, of annual dividends, and also initial investments. It also introduces more flexibility for companies to hire foreign workers.

Regarding tax incentives, the new model to be introduced underlines the principle of connectivity between the incentives to be granted, the ability to match with national priorities and the effective achievement of an investment with regard to its initial objectives. The national priorities include the shift to high added-value activities that increase the competitiveness and technology content of the economy, job creation and skills upgrading, sustainable development of interior regions and the expansion of the green economy.

In terms of governance, the new code establishes the principle of the transformation of the structures in charge of the investment. A wave of consolidation is expected to happen in the coming months and years, and new governance structures are to be created. The goal of these structures is to increase the reaction speed of several public administrations and create a single point of contact to deal with investment affairs and provide investors with suitable support.

My view is that the coming months will be the turning point for the economy. The country as a whole, and its businesses, have shown a robust capacity for resistance during the adverse times post-revolution. This has provided us with confidence in the future. We urge business leaders and foreign investors to look at the promising opportunities, rather than the threats. Now is the time.