The message to Indian businessmen who are present in droves at this event and more importantly perhaps to our African “partners” is bound to be highly negative. It may be construed as a signal that our commitment to Africa is mere lip service
The Prime Minister has been invited to the India-Africa Summit and has responded positively since many months now. The summit is an event regularly organized by the Confederation of Indian Industries (CII) and the Federation of Indian Chambers of Commerce and Industry (FICCI), the two largest private sector organizations in the subcontinent.
This year it has been scheduled for the end of October in Delhi. It will provide a golden opportunity for Sir Anerood Jugnauth to meet Shri Narendra Modi and hopefully seize the occasion to address the urgent and vexatious situation regarding the vital Double Taxation Avoidance Agreement (DTAA). The outcome should once and for all provide the requisite certainty to economic operators.
If concessions are to be made regarding the limitations of benefit, so be it as long as the necessary timeframe is provided for adjustments and provision is made for the grandfathering of existing benefits. That should indeed satisfy the concerns of the genuine critiques of the India-Mauritius DTAA who would like to see a form of graduation of the Treaty to a different level reflecting the new global realities as well as the developments in India and Mauritius over the past decades.
In any case the addition of “substance” resulting from the application of a limitation of benefits clause will take our jurisdiction even closer to the norms of an effective financial centre. Such changes while justifiable need not necessarily challenge the fundamental equation which originally motivated the arrangement and which for all intents and purposes has remained constant over the years. These relate to issues of history and geopolitical considerations which we shall not go into here. If anything these have become even more significant in the emerging world and regional order.
It is in this context that it is most disappointing that Mauritius Inc. (which here is meant to include both the private sector and government) seems to have once again missed a singular opportunity to match action with rhetoric. The authorities including the Board of Investment are fully aware of the huge challenges which lie on the road ahead for positioning Mauritius as THE business platform between Asia and Africa. Yet in their actual behaviour they give the impression of continuously labouring under the assumption that Mauritius is such an attractive business centre that investors would be queuing up to partake a piece of the action. As we are all too aware this is unfortunately a far cry from reality.
The truth is that for foreign observers including many decision-makers in global business the perception of Mauritius remains that of a highly attractive tourist destination not unlike some of Caribbean island resorts for whatever that may mean. This was indeed what I personally experienced when interacting with many Indian businessmen while in India as the Regional Director for the Board of Investments some seven years ago.
To make matters worse since then our business competitors, profiting from our lacklustre reactions to attacks have painted us into a corner with a toxic propaganda about Mauritius being an opaque tax haven and indeed the ideal destination for money laundering all the black money from the subcontinent through the mechanism of “round-tripping”. The effectiveness of these campaigns has unfortunately been so remarkable that they seem to have influenced the views in some quarters where you would least expect…
The fact of the matter is of course that this is all a pack of nonsense. Mauritius has a case to defend as a highly successful country which has done well for itself in spite of terrible resource constraints.
India is one of the largest exporters of goods to Mauritius and sits among the three first ranked foreign direct investors in our economy year in year out. The DTAA has been a mutually beneficial instrument for both economies over the past decades and will continue to be so for a long time ahead albeit with some necessary adjustments.
The strong institutions and favourable legal frameworks as well as a long tradition of international business added to our membership of African regional Free Trade Areas provide the necessary institutional soft and hardware for Mauritius to constitute the preferred base of operations for companies investing in Southern and Eastern Africa.
It is against this dramatic backdrop in the midst of a battle to set the clock right on all these issues that the Prime Minister of Mauritius has agreed to attend the India-Africa Summit this month. One would have expected Mauritius Inc. to grab this opportunity to take a psychological advantage by upfronting a solid mission with the top shots of the private and public sectors including Ministers carefully briefed and prepared to give it their best shot in order to at least dent the sordid campaigns against the Mauritius Financial Centre.
The presence of Mauritian company bosses who are already active in the African continent would have provided real time examples of the dynamism and proactive nature of our local entrepreneurs and contributed to change some the erroneous perceptions. Those who have attended previous sessions of this summit would know that there are ample opportunities over a period of three days to interact with many African delegations during a series of parallel events on the sidelines all through its duration.
Instead Mauritius Inc., which has a declared agenda of positioning itself as the “Platform between Asia and Africa”, will be absent (or at best be scarcely present) from an India-Africa Summit. The message to Indian businessmen who are present in droves at this event and more importantly perhaps to our African “partners” is bound to be highly negative. It may be construed as a signal that our commitment to Africa is mere lip service.
Such failure cannot really be blamed on any individual or organization in particular. It is rather a reflection of the lethargy which results from the absence of a coherent strategy and a well-defined road map especially under circumstances when exogenous factors tend to have disproportionate effects on our ability to achieve our objectives and such events are treated as ad hoc opportunities.
In the present case this would have implied coordinated efforts among officials of the Ministry of Foreign Affairs, the BOI (Ministry of Finance) the Ministry for Financial Services and the private sector institutions. All the indications are that such coordination which used to be one of the strengths of the workings of our institutions is presently well-nigh beyond our ability to execute.
- Published in print edition on 23 October 2015