Mauritius National Budget Highlights 2017/2018
I am pleased to introduce the special edition of the Board of Investment’s newsletter focused on the 2017/18 Budget presented this afternoon by Honourable Pravind Kumar Jugnauth, Prime Minister and Minister of Finance and Economic Development.
The measures enunciated are grafted on those announced in last year’s budget, reflecting a continuation of the Government’s vision to ward off the middle-income trap through sustainable actions aimed at improving our productive capacity.
There are key recurring themes that will support and accelerate the transition of the Mauritian economy to one driven by efficiency and innovation, allowing us to further build our resilience against global uncertainties and impulsive movements of markets. They also purport a clear sense of direction that will position Mauritius as an economy of the future through the creation of a dynamic ecosystem for innovation-based activities.
More than ever, the paradigm shift in our structure is warranted, since our present economic model nears the end of its fruitful cycle.
This imperative change is typified by a revolution at institutional level, namely the creation of the Economic Development Board (EDB) which will be one of the most potent instruments in operationalizing the Government’s vision and ensuring swift implementation of policies.
The EDB will include a directorate that will specifically be entrusted with economic planning functions. The mandate of this directorate will be to devise Government’s economic strategy with a view to achieving our ambition of graduating to a high-income economy. Its role will extend towards sector and product development, advocacy and visioning.
Another directorate will include the Board of Investment, the Financial Services Promotion Agency, Enterprise Mauritius and the Mauritius Africa Fund. This unit will focus on investment and export promotion, and will work in close collaboration with the economic planning directorate for sector and market development.
It will also maintain effective communication channels with a third directorate focusing on licensing and offering one-stop-shop facilities. This is yet another landmark in the business facilitation agenda following the Business Facilitation Act promulgated last May. Investors need clarity. And the Licensing directorate is a signal that the Government means business.
The rationale for the integration of several institutions reflects the need to achieve convergence in terms of policy-making to improve their cost effectiveness and output, thus continuing the institutional alignment agenda broached in last year’s budgetary announcements.
Also, it has become important to have a strong single entity to oversee our future development model, an institution endowed with the necessary and adequate firepower to promote economic growth, create jobs and make appropriate policy recommendations to the Government to ensure that the implementation of a coherent approach to expedite the affairs of the country.
The EDB will also be entrusted with several key initiatives in this new economic playing field. One of its main tasks is to drive the Fintech revolution in Mauritius, and position the country as a hub for Africa. A Fintech Association will be created to tie up with internationally recognized Fintech think tanks and design and implement the blueprint for this sector.
EDB will furthermore pursue the openness of Government’s strategy with a view to alleviating the burden that an ageing population imposes on public finances and eliminating the constraints that a small domestic market poses for local businesses. Several criteria for the issuance of occupation permits have been reviewed. This move will attract a new breed of innovators with their mint of ideas, capital and network.
The desire to upgrade our product offerings by encouraging leaner government structures is also reflected in the redefinition of the role of the Mauritius Research Council, henceforth revamped as the Mauritius Research and Innovation Council. The institution will now spearhead and coordinate research and development among academia, public institutions and the private sector. The principal objective will be to encourage research that can be converted into commercialized projects and products.
Furthermore, to complete this research and innovation microcosm, the IP box has been announced to attract more enterprises and ensure that the results of research are registered in Mauritius itself. The preferential tax regime of the IP box will complement the Regulatory Sandbox License and the adhesion to international conventions such as the PCT announced last year.
SMEs are also given due consideration. For long touted as the backbone of the economy, small and medium enterprises will be called to play an even more important role in the transition of Mauritius to a high-income economy. Several opportunities have been announced for such enterprises to scale up in terms of quality and quantity. SME Mauritius will oversee that the measures announced are swiftly implemented to allow these enterprises to play a greater role for the dawning of the Mauritius of tomorrow. Several other sectoral measures have been announced that will improve existing sectors of activity such as manufacturing, agro-industry, financial services and construction.
On the other hand, proactive measures have been put forward for emerging sectors, in particular the digital industry, biotechnology and ocean economy. The new incentives will further enhance the Mauritian destination for investment, with ripple effects on the economy as a whole in terms of value-added and job creation.
This budget also recognizes the importance that the appropriate infrastructure can play in the materialisation of businesses. The metro express project and the road development programme are among the features which will transform Mauritius into a construction site over the next few years.
In addition, to ensure that existing conurbations do not fall prey to urban or rural decay following the rise of Smart Cities across the island, Landscope Mauritius has been entrusted with the responsibility of preparing an Urban and Rural Regeneration Masterplan to transform Ebene Cybercity into a modern town. Landscope will also spearhead the establishment of the Côte d’Or City, which will include, amongst others, a state-of-the-art sports complex that will be used for the forthcoming ‘Jeux des Iles de l’Océan Indien’.
The Government is also engaged in this reinvention process, harnessing opportunities that new technologies present to improve service delivery. A cloud-based repository of personal information, which will act as a platform aimed at storing personal documents and certificates in a digital way, will see the day. Known as Mauricloud, it will eliminate the use of physical documents by citizens for their daily transactions, hence contributing to an improvement in their quality of life.
In a bid to reduce income inequality, the budget also puts forward bold measures to eradicate poverty, including a more progressive income tax regime. The negative tax will provide significant relief to those at the lower rungs of the income ladder, while the solidarity levy of 5 % for high-income earners will allow the Government to invest more funds in the fight against poverty. This will have the effect of reducing the Gini Coefficient.
The budget contains all the ingredients to achieve what it sets out to do, namely help the nation rise to the challenges of our ambition.
The Board of Investment assesses the budget as a fiscally responsible one, for it prepares Mauritius to face the challenges of the future by putting in place the right environment to foster innovative businesses while empowering vulnerable groups to benefit equitably from the new business model.
Finally, you will find, as we endeavour to do every year, an analysis of the main budgetary measures proposed in the 2017/2018 Budget.
We wish you a pleasant read.
Download the BOI National Budget Highlights 2017/2018
View the Budget Highlights Video