United Nations Conference on Trade and Development (UNCTAD) Investment Policy Reviews

2414-5475 (online)
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The United Nations Conference on Trade and Development´s Investment Policy Reviews provide an objective evaluation of the country´s legal, regulatory and institutional framework for FDI to attract increased foreign and direct investment, as well as how to maximize the benefits from it. The review includes FDI entry and establishment, treatment and protection of investment, taxation, the business environment and sectoral regulations. The strategic analysis is tailored to country needs. Recommendations are concrete and action-oriented.
Investment Policy Review

Investment Policy Review

Mozambique You do not have access to this content

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31 Dec 2012
9789210556699 (PDF)

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The Investment Policy Review recommends that the Government of Mozambique widen the scope of its investment promotion efforts and further improve its regulatory framework in order foster economic activity, job creation and sustainable development. It encourages the authorities to look beyond mega-projects and investments in the mining sector for sources of job creation, economic diversification and poverty reduction. It warns against the potential pitfalls of relying excessively on mineral resources for development, while stressing the need to maximise the positive impact of investment in extractive industries. It also suggests concrete ways through which the business environment could be further improved to foster economic activity.
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  • Preface
    The UNCTAD Investment Policy Reviews (IPRs) are intended to help countries improve their investment policies and to familiarize governments and the international private sector with an individual country’s investment environment. The reviews are considered by the UNCTAD Commission on Investment, Enterprise and Development. The recommendations of the IPR are then implemented with the technical assistance of UNCTAD. The support to beneficiary countries is delivered through a series of activities which can span over several years.
  • Abbreviations
  • Executive summary
    Structural reforms, sound macro-economic policies, an opening to the global economy and political stability have generated strong growth since Mozambique emerged from the civil war and started its transition from planned to market economy. As a result, the poverty rate has declined and significant progress has been achieved towards attaining the Millennium Development Goals.Yet, the overall picture is mixed and progress achieved so far insufficient. Mozambique remains one of the world’s poorest countries, the decline in poverty appears to have stalled in recent years and income inequality remains high. The country is now confronted with an issue of “quality of growth” and it needs to consider measures to ensure that growth is pro-poor, inclusive and environmentally sustainable.
  • FDI trends, impact and prospects
    Mozambique has been one of the fastest-growing least developed countries (LDCs) over the past two decades. Combined with sound macro-economic management, this has enabled the country to initiate a gradual decline in poverty, improve long-term development prospects and attract rising interest from foreign investors. Mozambique nevertheless remains one of the poorest countries in the world and social indicators highlight the poor living conditions of the majority. The challenges ahead therefore remain formidable and it will take decades of sustained and inclusive growth for absolute poverty and income inequality to be reduced sharply.
  • The investment framework
    Mozambique operated as a planned economy from independence in 1975 until 1987, when President Joaquim Chissano started the transition to a market economy and initiated the political reforms that led to the General Peace Agreement. Initial reforms were supported by a structural adjustment programme with the World Bank and lending from the International Monetary Fund (IMF). Mozambique has continued to benefit from the strong support of the donor community ever since.
  • Investment strategy
    Chapter I showed that mega-projects have contributed significant benefits to Mozambique over the past decade and a half, but stressed their intrinsic limitations and the dangers of relying on them excessively to achieve the country’s development goals. The transformational nature of smaller foreign investments was also highlighted and it was underscored that SME foreign investors could provide an excellent match given Mozambique’s needs and stage of development.
  • International corporate tax comparison
    UNCTAD developed a simple modeling tool to assess the burden of corporate income taxation on investors. It measures the amounts paid in corporate taxes as a percentage of the total cash received from the project by a foreign investor, in net present value terms (see annex II on methodology). The model uses hypothetical business plans in 13 sectors and enables international comparisons on a comprehensive and objective basis, going well beyond simple comparisons of headlines corporate income tax rates. The modeling is based on projects fully financed by a foreign investor, which means that withholding taxes on dividend payments abroad play an important role, in addition to income taxes paid at the company level.
  • Methodology of international corporate tax comparisons
    The Comparative Taxation Survey compares taxation on investment in several sectors in Mozambique with taxation in other selected countries – neighbours and countries elsewhere that have succeeded in attracting FDI to the sectors concerned. These comparisons enable Mozambique to assess the competitiveness of its taxation.
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