 STRATEGY |
| INTERVIEW of Mr.
D. Bikoo, Director of the Mauritius Offshore Business Activities Authority |
3rd of November 1998
There is no doubt that your Authority is very well known in
Mauritius but could you give to our readers a brief historical background of your
Authority?
We were created by law of Parliament, namely the "Mauritius
Offshore Business Activities Act", which was enacted in July 1992. We are the
supervisory and regulatory body for non-banking offshore business. We started operations
in November 1992. Apart from our supervisory and regulatory role, we also act as a
"One-Stop Shop" for any business related to offshore. Like, you know, if you
apply for a work permit to operate in offshore, you have to channel it through us. All
dealings with all Government authorities relating to offshore goes through us. We are also
mandated to promote the offshore sector abroad and obviously, we advise Government on any
matter relating to offshore. These are basically our four main roles. But, over the years,
over the past six years, the Authority has come to occupy a prominent place, basically
because the offshore sector is considered to be a successful sector here. Today we have
about 8000 offshore entities on our register and the MOBAA authority has played a
tremendous role in enhancing the image of Mauritius as an offshore sector.
I will explain later our supervision role, how we do it in practice but
these are basically our main activities in Mauritius,
Mauritius is like a bridge between Asia and Africa, do you think
Mauritius is already a Financial Centre in the region?
Well, we are quite young, only six years old, but let me give you the
historical background, why we consider us as a bridge. Initially, when we started with
offshore banking in 1988/89, we wanted Mauritius to be the platform to Africa, specially
for Southern Africa, and then in 1992, when we went into non-banking offshore, it came out
that Mauritius became the road to India, because of a favourable tax treaty with India.
You know Mauritius is used for international tax planning. Investors going to India
combine the flexibility and the conducive business offshore regime here with the advantage
of the double taxation treaty and the treaty with India is a very good one. It was signed
way back in 1983, years before we went into offshore and when Mauritius launched
non-banking offshore in 1992 it started to be used very quickly. We had specially planned
to go to Africa, then India came into limelight and the launching of our non-banking
offshore framework coincided with the opening of the Indian economy. That’s why,
overnight, Mauritius became the route to India and in the last couple of months, we are
re-focussing towards Africa, specially South Africa. So, because of that, first Africa,
and then India - not only India, we also went to China, Singapore, Indonesia with which we
have ratified treaties and now re-focussing towards South-Africa - so that’s why
Mauritius is called a bridge between Asia and Africa
Could you tell us what are, at the present time, the main guidelines of
your strategy and the best opportunities for the future growth of the offshore activities
in Mauritius?
Over the past six years, our dealings with India has given us some
experience and expertise in dealing with offshore funds, investments funds and Mauritian
professionals are now attuned to this type of business. So, I think now we can move beyond
that sort of passive role of using Mauritius to go into other countries, now we can make
Mauritius a more active offshore financial service centre, using the expertise, experience
and the human resources we have here. What I am trying to say is that, if here in
Mauritius we can have more structured financing, like those funds that are mobilised in
Mauritius, for captive insurance business or investment funds business, these funds can be
used more actively here, for structuring the financing of aircraft, or investment banking
and other things like that. So our strategy here, which we elaborated a month ago in a
Strategic Conference we held here,is that we should make Mauritius more active and develop
more structured financing. This will enhance financial services as a whole giving it more
substance, and create more sophisticated jobs and at the same time it will make Mauritius
the service provider for the region in terms of investment financing.
Because, I think that the Private Sector is very dynamic here and has a
lot of interest in the region. Do you support those initiatives, like the project in
Mozambique, Madagascar, Seychelles ...
Definitely yes, because what I am saying is that by using Mauritius as
a base for financing investment in these countries, that is going to enhance our role as
an offshore centre. The fact that we can be used to do that means that we support these
Private Sector initiatives.
Do you already feel the influence of the South East Asian Crisis?
Well, we still see investments going to India, for example, through our
offshore sector, its going on. We ratified a treaty with Indonesia just before the start
of the Crisis, but we see some investments going there now, because may be investors find
that it is the time to invest there because the shares have done down. So there might be
an impact in the long run but basically, at the time as the crises started, we started to
focus on South Africa and we see a big chunk of business coming to the Mauritian offshore
business from South Africa. So in terms of numbers we have not seen much of the effect of
the crisis, taken globally, but in the long run there might be some effect. Even in
Indonesia, we are still seeing investment going there through the Mauritian offshore
centre.
What are the main measures of the MOBA to attract investments through
the offshore jurisdiction?
As I said, we are mandated to promote the Mauritian Offshore Sector, so
there is an awareness creation to be done in centres where investors are going out, to
make them aware of opportunities, that we have 22 double taxation treaties in force, we
don’t see ourselves as a rock island offshore, it is a real economy with a base, with
financial services and there is a tax rate applicable to offshore business, so it’s
not like coming here just to dodge tax but to do real financial services activities and to
exploit the regional opportunities. So we have this awareness creation and the
professionals in Mauritius themselves do their own marketing and obviously we participate
in road shows, international seminars to explain the opportunities that Mauritius can
offer.
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Are the United States of America present in your Sector? Are they big
investors?
Definitely, as you are aware, many American companies that invest in
India have set up offshore companies in Mauritius. The big names are there – the big
multinationals are there – they have used Mauritius to invest in India. Now that
America is looking towards Africa, we can be a base from where to structure investments in
different African countries, using our experience in offshore financing services. So,
definitely, Mauritius can be of interest to the United States and big multinationals going
global, whether in Africa or other countries, could use Mauritius in terms of its flexible
and conducive regime for offshore business and the tax planning opportunities they can
obtain from there.
Our readers are always interested in new business opportunities; in
which area of your activities are you interested to attract partners, to attract
investments, more precisely?
There are two areas we are developing over the last couple of months:
they are Captive Insurance Business and Aircraft Financing business.
Captive Insurance Business: as you know there are few centres in the
World, and the leading centre is Bermuda. But Mauritius is trying to become the captive
domicile of the Indian Ocean and we have revamped the administrative procedures, we have
got a legislation in place and already quite important Captive Insurance Managers have
come here including an American Company called Carlson. They have set a Captive Management
Company here.
The Aircraft Financing: we are seeing the opportunities now and
actually the Minister has announced in Parliament the introduction of a Bill, being the
"Aircraft Legislation Bill", "Foreign Equipment Legislation Bill" and
we know that many airlines will be renewing their fleet. In many African countries they
can’t even do it for Privatisation as such, because they don’t have the
mechanisms to invest, so by using the Mauritian framework and the financing facilities
from here, we can help also in that context. So Americans going into Africa for this type
of activities can use Mauritius as a base.
One of the main aspects of the MOBAA is promotion. As we said in the
United States contacts often mean contracts, so, more precisely, what is the MOBAA going
to do in order to improve the contacts between world-wide investors, specially American
investors?
We have the American Embassy in the U.S., we have a Web Site also. So
the Mauritian offshore sector is normally known World wide. But it is basically a question
of trying to answer to specific aspects of the business. How can it be done here; and our
offshore Management Companies here they are offshoots of big international Accounting
firms: Arthur Andersen for example. So, internally they know what Mauritius can offer, so
when Americans approach these big multinational firms, obviously they are referred to
their local branch here and their queries are answered; but on our side, we may conduct a
road-show in the U.S. to deepen awareness and create the necessary communications. But our
Web Site is probably our first point of contact.
Now, may be a more personal question. Can you give to our readers a
historical background of your own professional experience?
I am an economist by training. I was actually trained at the London
School of Economics. When I came back in 1976, I joined the Central Bank as a Research
Officer, then I moved to the position of Assistant Director of Research. I had the
specific responsibilities for offshore banking development, as the Central Bank was –
and is still – responsible for Offshore Banking. Then when MOBAA was created in 1992,
I joined MOBAA as a Deputy Director and in January 1996, I became Director here. So I have
a keen interest in promoting Mauritius as a base for international business, either
offshore or non-offshore banking business and we are quite happy with the progress we have
done so far. We also feel that Mauritius can capitalise on some of its natural advantages.
Let me give you one example: We have a time-zone advantage; when the U.S goes to bed, we
work here in a way and many of the back office work in the U.S. can be done here, at
cheaper costs than in the U.S. and with modern communications facilities, Mauritius can do
the back office work. And in that context, we are setting up a Financial Services Park
with all these modern communication facilities which allow this type of back office
operations to be done in this country. So we are thinking globally and as you know, the
main resource of Mauritius is the Human Resources base. And offshore is a brain intensive
industry. We feel that by developing offshore, we are providing opportunities for our
graduates and young professionals. And this is the way Mauritius will go now: a small
country providing opportunities to do global business.
As a final issue, what would be your final message to our Readers?
That although Mauritius is small, it’s not a country that should
be overlooked and it is a very serious regional hub. It’s growing at a regional
level, it has offshore facilities, free-port facilities. It has a Stock Exchange which is
open to foreign investors, it is a democratic country, there is a free press and it’s
one of the fastest growing economies in this region of the world. So if it is to be called
"The Star and Key of the Indian Ocean" , it’s going to assert itself as a
modern Star & Key of the Indian Ocean. Your readers should never forget about it, and
don’t confuse it with Mauritania! |
