* Algeria seeks to diversify economy
* Tax benefits in draft law
* Bureaucracy among hurdles to investment
By Hamid Ould Ahmed
April 27 As part of steps to open up its economy
after a sharp fall in energy earnings, Algeria's government has
drafted a new investment law offering incentives to local and
foreign businessmen in its non-oil sector.
The draft, a copy of which was seen by Reuters, includes tax
breaks and measures to ease bureaucratic procedures that have
been one of the main hurdles to investment over the past years
in the North African OPEC state.
Introducing changes into the country's investment law comes
within wider reforms promised by government since mid-2014 when
oil prices started to fall, slashing state energy revenues by
almost half and forcing budget cutbacks.
The government has already cut spending by 9 percent for
this year, approved increases in subsidised fuel and gas prices
and vowed further measures to seek new financing sources,
including a domestic bond sale.
"The bill provides for new mechanisms to ensure support to
investors, the improvement of the business climate, local
decision making and the creation of a new one-stop shop," said
Industry Minister Abesslem Bouchouareb.
Under the draft law, all imported goods and services
intended for investment projects will be exempted from customs
duties and value-added tax (VAT).
Investors will get 10-year exemptions from tax on property
needed for a project. The text also includes free-tax on company
profits for three years from the start of the exploitation of a
Among other incentives, infrastructure needed for any
investment project will be partially or totally financed by the
Investment in sectors such as industry, agriculture and
tourism will enjoy "additional benefits", it said, without
giving additional details.
Algeria's high imports of goods, food and services caused a
trade deficit of $13.71 billion in 2015 after a $4.306 billion
surplus the previous year.
The current investment law limits partnerships between local
private and state companies and with foreign firms, and
centralises decisions linked to approval of investment projects.
Approved by the government before parliament's final
endorsement later this year, the draft removes some of those
barriers to ease business applications and reduces periods for
dealing with investment requests.
The draft stresses "public authorities' commitment to
bureaucracy reduction and improvement for efficiency of services
provided by administrations, especially those involved in the
promotion and development of investment activities".
Government officials have repeatedly pledged to remove
bureaucracy in Algeria, where layers of red tape and paperwork
can add months of delays to projects from building to oil and
"I think there is a political will," said Algerian business
consultant Abdelmalek Serrai. "But things will move slowly."
(Editing by Patrick Markey and Tom Heneghan)