General Information

Economic Indicators

Trade Indicators

Economic Overview

The Mauritian economy is based on export-oriented manufacturing, sugar and tourism. It has a strong private sector as well as some state-owned enterprises. 1

The ultimate objective of mauritius is to establish a dynamic and outward-looking economy with a diversified base. This objective is expected to achieved by liberal economic policy and through the liberalisation of foreign trade. 2 Much of the current economic debate in Mauritius is centred on how to diversify agriculture - which is still dominated buy sugar - and how to diversify the industrial base of the Export Processing Zone (EPZ) sector that is still dominated by clothing and textiles industry. 3

Structurally, Mauritius has a strong private sector and state-owned enterprises. Unemployment is not problem, due to the rapid expansion of the export processing zone (EPZ) during the last 10 years as well as to the government's success in curbing population growth. Skilled labour shortages now are evident in industry, and a small amount of labour is imported. 4

During the second half of the 1980s, manufacturing emerged as the most important sector in the Mauritian economy, surpassing the traditional sugar sector in terms of gross foreign exchange earnings, job creation, and contribution of GDP. 5 The composition of GDP (at current prices) illustrates the important structural changes that have taken place in the Mauritian economy. The share of agriculture in GDP declined from 12.5% in 1989 to C.9.3% in 1997. In contrast the EPZ sector has boosted the contribution of manufacturing to an average of more than 23% of GDP since 1993. 6

However, sugar is still the most important commodity in net foreign exchange earnings, as it has a lower import content (about 20%) than that of manufactured exports (about 70%) in the EPZ sector. Under the Lome Convention, Mauritian exports have guaranteed access to the European Economic Community market at a remunerative price for up to 507,000 metric tons, equivalent to about 75% of local production. 7

Inward foreign investment fell during the 1990s, as both local and foreign investors based in Mauritius directed funds into other countries in the region although the capital account remain in surplus. 8

Regulatory Environment

Import quotas and controls have been relaxed although stamp duty on imports is levied at varying rates as is the "fiscal duty" on "low priority" imports. There are preferential duties on imports from the EU, USA and Commonwealth countries. 9

Tariffs are applied mainly on an ad valorem basis. Although the average tariff is 24%, nearly 28% of all tariff are zero while around two-thirds of all tariffs are 20% or less. The average effective rate if duty is 12.4%. High tariffs and tariff "peaks" occurs in a number of manufacturing branches, with the majority in the apparel sector. 10

Since the early 1990s investment has been promoted in those industrial sectors defined as priorities by the Government, including information technology, pre-press and printing, light engineering, electronics, jewellery, pharmaceuticals, argo-based industry and all key areas of modern manufacturing technology and supporting services.

Generous fiscal incentives are given to firms to set up in offshore banking and business services and the freeport sector. Companies holding export or development certificates are exempted from import duties on their imported inputs and capital goods and their company dividends are income tax exempt for ten years. 11

Current Process of Liberalisation

In the past decade, Mauritius' trade regime has been extensively liberalised. In 1983 quantitative restrictions and price controls affected a large majority of imports, tariff were were as high as 600%, and the effective rate of protection to manufacturing was estimated at 89%. In 1984 and 1985 quantitative restrictions were dismantled, price controls lifted on all but essential items on the export tax on sugar was reduced and subsequently abolished in 1994. In 1991 import licensing, which had applied to the vast majority of imports, was eliminated for all but a limited range of products subject to health, sanitary or strategic controls. In 1994 a three-column tariff consisting of the fiscal duty, the general customs duty and the preferential duty was consolidated into one column, and the number of tariff rates reduced from 60 to eight. At the same time, the maximum customs duty was lowered to 100%, the import levy abolished, and the incidence of specific duties was reduced to two items. 12

Despite the impressive economic performance of Mauritius, there remain several challenges in the economy due to country's over-dependence on exports of exports of textile products and sugar and to vulnerability to climatic conditions and unforeseen fluctuations in export prices. As Mauritius enters the second phase of its industrial development, the government plans to reduce theses vulnerabilities through aggressive industrial and export market diversification. Accordingly, the government is now promoting investment in electronics, light engineering, computer software, pharmaceuticals, plastics, leather, jewellery, and printing and publishing operations, while at the same time consolidating the textile sector. 13

The government has also taken measures to develop Mauritius as a regional financial centre. In 1989, the government set up both offshore banking centre and the Port Louis Stock Exchange. Ten offshore banks now operate in Mauritius. The stock exchange, starting with only 5 companies, has expanded its activities and now has 47 public companies on the "official list." The government also lanuched on Offshore Business Centre in 1992 to promote the establishment of offshore companies in business activities including fund management, consultancy, and services. 14

Mauritius is cognisant of the fact that the sustainable growth of its economy inevitably depends on the development of its human resources, efficient allocation of resources and the use of modern technology. 15

1. 1996-197 World Trade Almanac, (World Trade Press, California, 1996), p.485.
2. WTO Trade Policy review, Mauritius, (Government of Mauritius, Mauritius, 1995), p.3.
3. Country Profile: Mauritius, Seychelles: 1999-2000 (Economist Intelligence Unite, London, 1999), p.14
4. Tradeport, (U.S. Department of Commerce national Trade Bank, http://www.tradeport.org/ts/, 06-11-98).
5. Ibid..
6. Country Profile....1999-2000, p.17.
7. TradePort...
8. Country Profile...1999-2000, p.27
9. Ibid..,p.28.
10. WTO Trade Policy Review..., p.36.
11. Country Profile... 1999-2000, p.28
12. WTO Trade Policy Review..., p.35
13. TradePort...
14. Ibid..
15. WTO Trade Policy Review..., p.20.