TUNISIA COUNTRY PROFILE
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GENERAL INFORMATION
- Official name: Tunisia;
- Tunisia surface: 163.610 km2;
- Population: 10.480.934 million of which 17.7% is labour force;
- GDP: 45.407 million $
- GDP per capita: 4.213 $
- GPD forecasted growth: more than 3.3% ;
- Capital: Tunisi around 2 million citizens;
- Other cities: Hammamet, Susa, Tabarka, sea cities with a high flow of tourists, industrial Sfax, Qayrawan (Kairouan), religious capital, Tozeur, Gabéz, Biserta, last city before the desert, Douz (also known as “The desert door”);
- Government: Unitary semi-presidential republic;
- Main religions: Muslim, Catholic minority, Jewish;
- Languages: Arab, French (around 63% of the population speak it);
- Currency: Tunisian dinar
TUNISIA POLITICAL FRAMEWORK
CHANGES AND POSITIVE ASPECTS
- Political changes and the Revolution have been made in order to ensure stable conditions ;
- Economic and policy reforms;
- The economic opening-up supports foreign investments ;
- Important strategic position due to its geographic position as an access to Africa and “zero problems with neighbours”
- Actions in order to intensify and diversify foreign relations;
PROBLEMS AND NEGATIVE ASPECT
- The democracy is “in progress”;
- Risk of terrorist attacks.
MACROECONOMIC FRAMEWORK AND TUNISIA OUTLOOK
LEGAL ASPECTS
The economic dynamism of Tunisia has developed important production plants, very productive, especially in the service sector. Currently trade and tourism sectors are the main puller of a fragile economy.
Other important sectors are agriculture and the transformation of agricultural products, local craftsmanship, and mineral extraction (oil,lead, silver, zinc and mercury).
Other important aspects :
- Sing up of the FTA (Free Trade Agreement) in 1995.
- Inflation around 6%;
- The relation between foreign trade volume and GDP is around 49,5%; Tunisia integration in the international trade system is excellent.
It is important to underline that Tunisia economy rely a lot on foreign trades. According to world report on Davos competitiveness, Tunisia ranks among first places for its competitiveness( 40th in 133 countries for and 35th for infrastructure quality); the report Index of Economic Freedom, ranks Tunisia 95th on 179 countries and 12th on 17 Middle-East and North Africa countries, with a “mostly unfree” Index of Economic Freedom.
Moreover Tunisia has started to liberalise foreign trade since 1990, becoming member of G.A.T.T. Currently, foreign trades are based on the law n.94-41 of 07/03/1994.
TUNISIA has also signed many bilateral trade agreements that contribute to consolidate the position and the subscription of the international framework, in particular:
• Bilateral agreement that creates a free trade zone in Tunisia;
• Agadir fee trade agreement between Jordan, Egypt, Morocco and Tunisia
Signed and subscribed in 2004;
• Bilateral agreements with Libya Iraq and agreement with Gulf countries to create a free trade zone.
TUNISIA is a CIRDI member and supported in May 2012 the OECD declaration for international investments and multinational companies.
STRENGHTS
- Balanced country and commercially attractive;
- Structural reforms implementation;
- Basic economic indicators are solid;
- Strategic geographic position;
- Access to many markets and diversification through different bilateral agreements with African countries;
- Growing domestic market and young population;
- Tourism sector has a continuous growing.
WEAKNESSES
- Young democracy;
- Dependence increased by foreign capital flows and investors trust;
- Tunisia depends on foreign energy supply;
- Deficit of current accounts;
- Corruption.
GROWING SECTORS
- Clothes/textile;
- Iron and steel sector;
- Car sector;
- Banks;
- Costruction of big infrastructures;
- Air and sea transport
- Environment and Ecology;
- Renewable energies and sources;
- Personnel training;
- Tourism;
- Craftsmanship;
- Agriculture.
REAL ESTATES AND CONSTRUCTIONS
The construction industry is one of the most important sectors in Tunisia.There are around 20.000 companies with a turnover of 3.000 million € per year.
That is 10% of Tunisia turnover and around 7% of its GDP, for this reason the construction sector is the fourth most important sector of Tunisia economy ( after textile, clothes, agri-food and agricultural sectors). However cements is the most exported good.
FINANCIAL SECTOR
Since 1995, after the have signed up the Association Agreement with EU (in effect since 1998), the Tunisia opening to the foreign trade has progressively increased in order to prepare the country to the definitive access at the free trade zone with the European Union which has been completed, for industrial products, in 2008. Tunisia has created a series of important structural reforms in order to improve the competitiveness of its economy, to support private investments, to rely more on its business and to modernise its financial and bank systems.
From several years the Italian cooperation has contributed to supports the balance of payments; a 95 million € credit program that has started in 2012. Despite important reform progresses in order to rebalance development banks and policies against laundering, Tunisia financial system does not completely answers to investors expectations, because there isn’t competition nor innovation.
Tunisia Central Bank has started a decreased the regulation system giving to credit companies a higher flexibility in the classification of risky loans. In this way, it has given considerable amount of money to te financial system.
This politics has created a re-financing dependence between many companies and the Central Bank. Risky credits, represented around 13% of the loan portfolio of the banking system.
The banking system is divided, with more than 20 credit companies that represent 100% of the GDP, with a 11 million people population.
In Tunisia the government controls around 40% of the sector, this has negative effects on productivity, overall efficiency and the creation of innovative structures.
A risk for the Tunisian economy is the increase of the deficit, due not only to the increase of interests on public debt, which is constantly increasing, but in particular to “peace” policies of temporary governments that have indulged the increase of minimum wage, created thousands of new jobs in the public sector, post-crisis compensation costs, and supported retail prices for commodities.
In 2013 the value of Tunisian dinar have decreased of 12%. It was due to unbalances between demand and offer (weaken because of the crisis of the biggest export companies) and the demand of foreign currency (increased by higher imports). The crucial variable for the development of Tunisian economy in short and medium period is the recovery of social and political balance and adequate security conditions. Because of the continuous Tunisian export market fragility, this recovery will have to be based on the main components of the domestic demand (families consumption and investments).
Consumption is subjected to a negative influence both from uncertain salary prospects and from the decreased availability of finances from banks. Tunisia is committed to take important actions to improve the banking system. The main problems are assets quality weakness and limited levels of capitalisations, especially for public banks. The public bank consolidation strategy wants to create an Asset Management Company (AMC) that has to absorb non-performing loans of the sector. The AMC will be on effect for nine years but is not certain whether it will work on NPL or just those linked to tourism sector.
ENERGY
After a series of bilateral agreements (also with the EU) Tunisia can be considerer an excellent access to the North Africa area; in Tunisi there is the Mediterranean Centre of Renewable Energies (MEDREC) IMET, which is a perfect context fro contacts and information on renewable energy sector in the wide Maghreb area.
Indeed the Maghreb region has an high potential for renewable energy development, especially for solar and wind-power energy. It is foreseen that the use of these energies will strongly increase in the near future.
Renewable energy projects, currently in the framework of bilateral agreements between IMET and Tunisia, will be part of the MEDREP. Future projects will focus on the electricity distribution to rural isolated populations, thorough a small scale electricity network. It is important to pursue an increased and accelerated integration of renewable energies in the national electricity network, with the goal of reaching a balance on the network, between demand and offer.
The idea is indemnify the global approach of the introduction of renewable energies (in particular solar and geothermic energies) in the construction sector according to the norms in force for energy efficiency: MEDA results programs for the integration of solar technologies in the sector. Moreover, focus on the sea water desalination, in order to increase potable water stocks and the availability of water resources for irrigation. Increase the use of pumps that work with solar, wind-power, biomasses energies in the farming sector.
Another area of interest is the diffusion of refrigeration systems for food storage, renewable energy systems, in farms and fish shops; the goal is promoting in urban areas the use of solar system at home, the installation of small wind-turbines or energy technologies that work with biogas and biomasses;
PHARMACEUTICAL AND SANITARY SECTORS
The progressive improvement of socio-economic conditions, even if slowly and with limits in the real access for the entire population to fundamental services, and an increased attention to health topic, are important factors for healthcare , sanitary and pharmaceutical markets in which work the main multinational companies of this sector. The current Tunisian government is improving healthcare establishments, extending, among the other things, also services opening hours. Industrial Tunisian pharmaceutical production regards around fifty companies with 50.000 employees. The production is focused on therapeutic and preventive drugs 45% are generic drugs.
Tunisian drugs production covers 50% of the domestic real needs. Added to the Tunisian national production, Tunisia has to import drugs from France (44% of imports), Germany, Switzerland and Italy (6%) for a total amount of 550 million TND (270 million €), with an average rate growth of 10% per year. 98% of imported drugs have a therapeutic purpose. Tunisia export are around 15 million €, 60% is exported to North Africa, in part in Europe (France, Belgium; Switzerland) and only a few to other African countries. Recent evolution, concern the development of a cooperation agreement between the Tunisian government and the British company”Hygiene Worldwide” in order to supply to the healthcare national service a liquid with bacterial properties “Genie” which doesn’t contain alcohol in order to respect Koran rules.
SERVICES
Currently the main branch of service sector are the telecommunication and IT (Information technology) that in the last years have been supported by the government, in order to make Tunisia a regional hub, capable of linking the African continent, Middle-East, Europe thanks to its strategic position in the Mediterranean Basin. Currently trade is the second sector, followed by tourism that despite the decrease after the 2011 revolution , is an important sector for Tunisia future. Bank and finance sectors liberalisation and privatisation processes are an obstacle to the attraction of new foreign capitals and to improve the access to the credit by companies, despite past improvements.
TEXTILE SECTOR
Textile and clothes are 35% of the overall Tunisian production and attracts investors for 15% of the overall manufacturing sector. Around 90% of Tunisian companies working in the textile sector works in the clothing sector and in the knitwear packaging. In this branch work thousands of companies, of which around 2000 have more than 10 or more employees. Among those 83% are exporting companies, which is 41% of the manufacturing industry. Tunisia is a large producer of clothes for third parts, thanks to its low cost labour and for its strategic position in the middle of the Mediterranean, moreover, near to a wide and rich market of potential buyers. Companies with more than 10 employees are around 200.000 and 178.000 are totally engaged in the export and 17.000 employees work in companies with a partial export, this underlines the Tunisian vocation for exports.
2/3 of foreign capital companies are owned by foreign people. 350 from France, 240 from Italy, 82 from Germany and 120 from Belgium. The division and distribution of countries that invest in the textile sector in Tunisia represent its political and economic relations. In 2010 before the “Jasmine Revolution”, that have slowed down the main sectors of the economy, the Tunisia textile sector export toward the most important Tunisian market, the European Union, it reached 2.3 billion €. Even if Tunisia has less citizens than Morocco, it is the 5th largest EU supplier , after China, Turkey, India and Bangladesh. The main EU clients of Tunisia are France (36%) Italy (32%) and Germany (10%)
AGRI-FOOD SECTOR
Agri-food sector is a strategic sector for Tunisia. Companies of this sector are around 1000 and 18% work only in the export. There is a national inclination for agricultural production , food transformation and food for domestic consumption. Employees working in companies with more than 10 employees are 70.000. One of the features of this sector that we signal is that 11% of agricultural sector companies and food transformation , are supported by foreign finances,only 2.8% is totally owned by foreign investors. Italy has 40% of foreign participations in this sector, France around 35%. As it is for other sectors of the country the proximity with our country is at the same time and advantage but also a limit for the competition with our companies.
There are several ways to penetrate the agri-food sector, however the best two are bought local companies or participate in existing companies. Currently the agri-food sector situation doesn’t allow an horizontal expansion with the buying market quotas, but is better to enter in local companies specialised in food transformation and production processes mechanisation. There are many investment projects in this sector, some of those collected 2 million €. However, it is important to underline that the territorial proximity, excellent trade political and cultural relations, could persuade soma Italian companies to modernise the Tunisian industry through a continuous growth, the creation of high-tech machineries in order to transform, store and package products. 
BUSINESS ENTITIES
Analysis of the creation of a society in Tunisia. Tunisian trade code has 6 kinds of business entity:
- S.A – Anonym society
- S.A.R.L. – (limited reliability companies)
- S.U.A.R.L. – ; Limited reliability one-man company
- S.N.C – General partnership;
- S.C.S – Limited partnership companies;
- S.C.A. – Limited partnership joint-stock companies
Most spread business entities in Tunisia are Anonym Society (S.A.) Limited Reliability Societies (S.A.R.L.) and Limited Reliability One-man Company (S.U.A.R.L.); these societies are ruled by laws alike to European laws, in particular French ones.
For societies with a foreign participation, the Tunisian investment code supports the creation of:
- Foreign company branches: in order to establish a branch it is necessary to create and give to the authorities the original copy of the company statute or the equivalent certificate of corporation, with attached the company address or the address of the main bureau;
- Partnership: there is no limitation for number of partners; however every partner is responsible for company debts. The law does not provide the obligation of account revision and it is not necessary to publish budgets;
- Joint venture: This type is supported through government agencies, and JV can be created both with a partnership and as limited companies. Tunisian law rules the majority of trade activities, and JV can be established only after a formal application, and after the deposit of declaration, released by authorities:
- A.P.I.I. – Agency for the promotion of industry and innovation , for every industrial activity and services linked to industry;
- CEPEX – Center of exports promotion, for projects linked to international trade;
- A.P.I.A. – Agency for the promotion of agricultural investments, for projects in agricultural sector, agri-food and fishing sector;
- O.N.T.T. – National body for tourism, for projects in the field of tourism;
- O.N.A.T. – National body for craftsmanship, for craftsmanship activities;
SUBSIDIES
Law number 93-120 regulates subsidies for entrepreneur investments in Tunisia, Tunisian or foreign investors, resident or not, also in the joint-venture form. JV are supported by government agencies and they can be established with a partnership or by limited companies.
Moreover it is important to underline that the Tunisian fiscal system has been reformed. The 16th May 1979 the Italian and Tunisian Republics have signed and subscribed in Tunisi the Agreement to avoid double taxations on the revenue, in order to avoid tax evasions, through a protocol, in force since 17th September 1981.
The agreement on double taxation is adopted to residents in one or both signing States (Italy and Tunisia) and it is applied on revenue taxations withdrew for every signing country, through administrative or political subdivisions, whatever the withdraw system is.
Taxes on the overall revenue, taxes on the purchase of movable or immovable assets, taxes on the total amount of salaries paid by companies, and taxes on added value. It is interesting to underline subsidies for export societies.
Society that only export are:
- Societies whose production is intended only for exports;
- Societies that work abroad or in Tunisia but giving services abroad;
- Societies that work only with foreign companies or in free zones or with foreign financial institutes;
Export companies have a taxation similar to those of the free zones except for administrative orders limitations after 2015.
Best subsidies give the possibility of a total exemption from revenue taxes and revenues of first ten years of activity and a 50% reduction for the following years. Extension of the period in which the revenue deduction is in effect (and export profits).
Fiscal relief on revenues and profits re-invested in the initial capital or to increase on condition of minimum taxation.
Fiscal relief on profits re-invested in the company, on condition of minimum taxation.
Faculty and possibility of import (total exemption of rights and taxes) goods needed for the company production.
Total exemption from registration rights and VAT on company activities.
Possibility of earning on the domestic market 30% of the income.
Possibility of hiring at most 4 foreign employees or workmen.
TRADE AGREEMENTS
- Trade agreement with 41 countries;
- Free trade zone agreement with 11 countries;
- Multilateral agreements with 50 countries;
COUNTRIES WITH FREE TRADE ZONE AGREEMENT (IN EFFECT)
- Bilateral agreement to create a free trade zone with Turkey;
- Agadir free trade agreement with Jordan, Egypt, Morocco and Tunisia signed in 2004;
- Bilateral agreements with Libya, Iraq, and other agreement with Gulf Countries in order to create a free trade zone;
- Arab League multilateral agreement;
- Arab-Mediterranean free trade zone;
- Free trade agreement between Tunisia and EU.
DEFENSE AND JUSTICE
The Tunisian judiciary system is based on French right.
2014 Constitution is very advanced compared with near countries constitutions. It has been drafted according to democratic constitutionalism and parties request, inspired to Islam, in the Constituting Assembly.
Tunisian judiciary institutions are:
- 1 Court of Cassation;;
- 10 Appellate Courts;
- 23 Courts of first Instance;
- 83 Cantonal Courts;
