Algeria’s market of 35 million inhabitants, energy wealth, and growing demands for modern infrastructure have generated interest from governments and companies around the world. On one hand, Algeria’s economy is expected to grow at a healthy rate of 3-5% over the next several years based on higher world prices for oil. High level Algerian government officials and businessmen have outwardly expressed their desire for greater U.S. business collaboration and involvement in water resources, environmental technologies, safety & security equipment, agriculture, petrochemicals, public works projects and medical equipment. Air Algerie remains an almost all-Boeing fleet for now, and U.S. firms dominate the hydrocarbon sector. As Algeria is a non-traditional market for many U.S. exporters, CS Algeria can open doors in several new sectors such as health & nutrition, franchising, and home & housewares. The placement of an American Commercial Counselor at the U.S. Embassy has created an added stir in the business community towards American commerce.
Algeria is a market that requires patience and determination, and U.S. firms are advised to demonstrate a long-term commitment to maximize their chances of success. Algeria remains one of the few countries on earth not to have joined the WTO, and USTR placed Algeria on the Special Watch list in 2008 for ineffective protection of pharmaceutical tests and data. Lengthy Algerian Customs delays also present a serious obstacle to trade.
New policies were announced in February 2009 by the Algerian Government that will impact trade & investment in Algeria. They are summarized as follows:
New FDI Algerian Majority Rules (all sectors included)
1 Any investment in Algeria must be majority-owned by Algerian companies, individuals or entities. The 51 percent majority Algerian ownership does not have to be held by one single Algerian company, but rather will be distributed amongst several Algerian companies to ensure the foreign partner controls the management of the investment.
2 The Algerian Development Bank may take a share to help satisfy the 51percent rule in the absence of adequate alternative Algerian partners.
3 All financial credits required for the investment project must be obtained via Algerian banks.
Positive Foreign Currency Balance & Profit Repatriation
1 The foreign investor must demonstrate a positive balance of foreign currency for the entire life of the project.
2 The profits that are eligible for repatriation outside of Algeria are the annual profit MINUS the amount of any advantages provided by the Algerian Government (e.g. any tax exemptions, customs reductions or any other financial incentives).
Investment Applications Response Time
ANDI (Algeria’s investment promotion body) will now take around 10 days to reply to investment applications registered. (It used to respond within 72 hours.) Now, applications must also pass a second tier of bureaucracy: the National Investment Council (CNI) must also approve of investment applications. (No estimated time frame for approval is provided.)
Buy Algerian
1 Whenever domestic production is equal quality to imported products and equipment, the Algerian Government will now enforce a “Buy Algerian” policy with a preference rate of 15 percent on prices.
2 For Government office supply and equipment (at all levels) only locally-made goods will be eligible for purchase.
Import Rationalization
1 As of January 10, 2009 Customs and Banks will require a new tax ID from all importers. The list of all authorized importers will be completed and updated by May 31, 2009
2 New foreign import companies must demonstrate a 30 percent minimum Algerian partnership effective March 1, 2009.
3 General toughening of standards for imported equipment goods and services effective February 2009. (To be determined in more detail.)