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FOREIGN
INVESTMENT LEGISLATION
INVESTMENT
POLICIES
Foreign
investors in Tanzania operate under the Tanzania
Investment Act of 1997. This Act, together with
specific contractual agreements made between respective investors,
provides limited
guarantees and incentives to foreign investors by ensuring, for
example, prompt and fair compensation in the event of nationalisation
together with the right to repatriate
profits and dividends. Thus, Government also ensures that such investments
would foster domestic and economic development as well as Social
welfare.
The
specific national economic objectives that the Government wishes
to further through such promotion of foreign investment are:-
1.
Maximum utilization of the nation's natural and other resources:
2.
Maximize foreign resource inflows through export-oriented activities
to compete domestic resources;
3.
Encouraging non-debt-creating foreign investment;
4.
Achievement of identifiable and substantial foreign exchange savings
through efficient import substitution activities;
5.
Increase in food production;
6.
Provision of services, or the production of goods, which improve
linkages among the various economic sectors;
7.
Encouraging the transfer of appropriate technology and human resources
development, including the enlargement, development of local scientific
technological capacity;
8.
Promotion of balanced and equitable growth throughout the country;
9.
Enhancement of economic co-operation and development within
Southern
African Sub-region.
INVESTMENT
APPROVAL
"TANZANIA
INVESTMENT ACT 1997"
Application
for approval of enterprises and areas of investment
10.
After the effective date any local or foreign
investor may invest in a new enterprise to which this Act applies
only where:-
(a) the investment
is with respect to an enterprise other than one in
an area reserved exclusively for the public sector as specified
in the Schedule;
(b)
he has received a Certificate of Approval with respect to the enterprise;
(c)
he has fulfilled all other conditions provided for under this Act.
11.
An application for a Certificate of Approval shall be made to the
Centre by a national only where he wishes
to invest in an approved enterprise:
(a)
in any new enterprise other than one in
an area reserved exclusively for the public sector;
(b)
in the rehabilitation and expansion
of an existing enterprise.
12.
An application for Certificate of Approval shall be made by a
foreign national to the Centre in respect of an investment:
(a)
in any enterprise other than one
in an area reserved exclusively to the public
sector;
(b)
in any of the enterprises specified in paragraph 2 of Part
C of the Schedule where the investment is
not less than amount therein specified.
13.
(1) Applications shall be made in
accordance with such procedures and form as may
be prescribed by the Centre and shall be accompanied by a
statement on the likely contribution of the enterprise to
the objectives set out in subsection
(1) of Sections
13 and such other information as may be required by the
Centre.
(2)
Every application shall be accompanied by such fee as may
be prescribed from time to time.
(3)
The Centre shall submit within ten days
of receipt of an application a copy thereof to the Ministry,
Government Department or Agency with sectoral
responsibility for enterprises of such nature.
(4)
Any Ministry, Government Department or Agency to which a copy
of the application is submitted shall, within
14 days of receipt thereof, submit to the Centre
any comments on the application which shall
be considered by the Centre in determination of the
application but if at the expiry of
such fourteen days no comments are received
by the Centre it shall proceed to deal with the application, and
its decision shall be final and binding.
(5)
The Centre shall consider an application made
to it within sixty days after the receipt of the application
and may, subject to the provisions of this Act, in its discretion,
grant or refuse the application.
13.-(1)
In considering application made under sections 10,11 and 12,
the Centre shall satisfy itself of the likely contribution by
the enterprise to the economic development
and benefit of Tanzania, in particular, with respect
to the following objectives :-
(a)
the maximisation of foreign exchange earnings and savings;
(b)
the enhancement of import substitution
activities which achieve identifiable substantial foreign
exchange savings;
(c)
the expansion of food production;
(d)
the achievement of a high degree of technology transfer;
(e)
the creation of employment opportunities and the development
of human resources;
(f)
the efficient utilisation, expansion and diversification
of the productive capacity of existing enterprises;
(g)
the provision of services or the production of
goods which improve linkages between the various sectors of
the economy.
(2)
In addition to the objectives specified in subsection (1) the Centre
shall have regard to :-
(a)
the capital, technical skills and raw materials available
to the applicant;
(b)
the local materials' supplies and services to be used by the
applicant;
(c)
interests and conditions of service of the labour employed or
to be employed by the applicant;
(d)
the general promotion and development of enterprises
within Tanzania and the need to generate constructive
competition among enterprises;
(e)
the potential demand, both within the United
Republic and elsewhere, for the product or services
of the enterprises;
(f)
the siting or proposed siting of the enterprise in relation
to the availability of power, fuel,
labour, transport, raw materials, land and water;
(g)
the promotion of balanced and equitable growth throughout the country;
(h)
the interest of potential consumers from investment
in the enterprise being undertaken.
14.
In the event that an application is approved by the
Centre, the Centre shall grant a Certificate of Approval specifying:-
(a)
the name, nationality and other particular of
the investor and in the case of a company,
the nationality and number of shareholders;
(b)
the name, description and location of the enterprises;
(c)
the approved enterprise and, where appropriate, the size and
approved capacity of the enterprise;
(d)
the amount and source of capital including
the relevant foreign currency;
(e)
in the case of a foreign national, the form of assets
other than foreign currency to be invested and the value of
such assets as approved by the Centre;
(f)
the proportion of the foreign capital invested
or to be invested to the total assets of the enterprise
whether the investment consists of the acquisition
of shares or stock in body corporate the number
or and description thereof;
(g)
particulars of any technology agreement, its duration
and payments to be made thereunder;
(h)
any loan with respect to the enterprise and the currency
in which repayments are to be made;
(i)
the period within which the investment is to be made and the
date of issue and expiry of the certificate;
(j)
such other matters as may be necessary or desirable
having regard to the provisions of the Act.
15.-(1)
A Certificate of Approval shall not
be transferred without the approval of the Centre.
(2)
Every application for approval of a proposed transfer
of a Certificate of Approval shall be made to
the Centre in the prescribed form and the
Centre may, in its discretion grant or refuse the application
and may, if the approval is given, attach terms
and conditions of the Certificate to be transferred
or, where terms and condition are already attached,
may vary the existing terms and conditions.
16.
The Centre, may amend a Certificate of Approval granted under
section 14:-
(a)
In any case in which it is satisfied that some other national
or foreign national has succeeded
to the interest in the enterprise
of the holder of the Certificate, by substituting for the
name of the holder the name of the successor;
(b)
In any case where the name of the enterprise is
altered by substituting the name as so altered;
(c)
with the written consent of the holder,
by varying the relevant foreign currency;
(d)
by extending the period during which the investment
or the investment of foreign capital is to be made;
(e)
by varying the amount thereof, in any case
in which no foreign capital is to
be invested in the enterprise by the
holder, subject to the approval required under this Act;
(f)
in any case where the investment consists of the acquisition
of shares or stock of a body corporate, and new shares
or stock are acquired otherwise than by the invetment of foreign
capital, by varying the number, or amount and the description thereof;
(h)
subject to the foregoing provision and to the written consent of
the holder, in such other manner as may
be necessary or desirable.
Suspension
and Cancellation of Certificate
17.-(1)
The Centre may suspend or cancel
a Certificate of Approval where the holder of the Certificate:
(a)
obtained such Certificate on the
basis of fraud, or deliberate or negligent
submission of false or misleading facts or statements;
(b)
assigned such Certificate without the prior written
consent of the Centre;
(c)
fails without reasonable cause stated in writing to establish the
approved enterprise within the time
stipulated in the Certificate or any extension thereof;
(d)
fails without reasonable cause stated in writing
to comply with the terms of the Certificate, or
the provisions of the Act and any Regulations or request
of the Centre made thereunder within such
reasonable period as may be stipulated by the Centre in a
notice to the holder of the Certificate
specifying the failure to comply.
(2)
The Centre shall, before taking any action under subsection
(1), notify the holder in writing of its intention to cancel
the Certificate and the ground therefore and allow
such holder not less then thirty days
to show cause in writing why
his Certificate should not be suspended or cancelled
and the Centre may, for such purpose, hold such inquiry as it thinks
fit.
(3)
The Centre shall give due consideration to any representation made
by holder and any action taken to remedy
the ground for suspension or cancellation taking into account
the nature of such ground.
(4)
If a holder notified under subsection (2)
fails to show cause, or fail to do so
to the satisfaction of the Centre, the Centre may suspend
or revoke the Certificate or take such other action as it
may think fit including the suspension of any or all incentives
o r benefits under the Act.
(5)
Where a Certificate of Approval is suspended
the holder thereof shall cease to be
entitled to rights and benefits conferred
under this Act for the period of the suspension.
(6)
Where a certificate of Approval is cancelled:
(i)
the holder thereof shall sense to be entitled to the benefits
conferred under this Act as from the date of such cancellation
and shall return the certificate to the centre:
(ii)
the centre may require the holder thereof to sell the approved
enterprise.
(7)
Any person who is aggrieved by any decision taken by the Centre
under this section may appeal to the Minister.
18.
The Centre shall cause to be maintained proper records of:-
(a)
all application for Certificate of Approval: Records of
application and Certificates
(b)
all approved enterprises and whether the approval was in respect
of a new enterprises or the rehabilitation expansion
of an existing enterprise;
(c)
all amendments, suspensions or cancellations of certificates;
(d)
such other particulars relating to certificates of approval
as may be necessary or desirable;
(e)
all registered certificates and licences.
19
- (1) As from the operative date:- Areas of investment
(a)
the enterprises in areas specified in part A of the Schedule
to this Act shall be accorded priority for private investments,
but noting herein contained shall preclude an application by
investor in respect of any other enterprise;
(b)
the enterprise in the areas listed in part B of the schedule shall
be reserved for the public sector except where under special circumstances
the Minister may grant a special
licence for investment
in this area;
(c)
the enterprises in the areas listed in Part C of the schedule
are
reserved for nationals.
(2)
The Minister may, on the recommendation of the centre amend the
schedule from time to time.
Provided
that where as a result of an amendment made an approved enterprise
in respect of which an investment was made by a foreign national
is reserved for nationals the approved enterprise shall continue
as such notwithstanding the amendment and the holder of a certificate
of approval with respect to such enterprise shall continue to enjoy
the benefits conferred by such certificate.
REAL
ESTATE INVESTMENTS
Land
is owned by the Government and can be leased on short, medium and
long term basis. In certain cases, land under lease may be subleased.
However, village land is not available for commercial activities,
except by the village itself, or for joint ventures with the Village
Government or the village's Co-operative Society. Similarly,
village land may be sub-leased by the village for small or medium
scale, private or public, economic activities. It should be
emphasized that there are extensive areas of arable land, outside
designated village land, which are still available for lease by
private or public investors.
BILATERAL
OR MULTILATERAL INVESTMENT GUARANTEES IN FORCE
Tanzania
will join the International Centre for Settlement of Investment
Disputes (ICSID), the Multilateral Investment Guarantee Agency (MIGA),
as well as other relevant international agencies, for the purposes
of consolidating guarantees and confidence to private investors.
PROCEDURES
FOR REPATRIATION OF PROFITS/INVESTMENT
Overseas
Remittances
The
Government is cognisant of foreign exchange constraints facing the
economy, but also recognizes that investors need assured capabilities
to effect certain remittances overseas in connection with their
investments. In this connection, the coverage of the retention
scheme will be extended to allow holders of retention scheme account
to utilize, for any one year, up to 50 percent of such accounts
for purposes of effecting overseas
remittances.
TYPES
OF INVESTMENT PERMITTED
Investments,
wholly owned privately, are welcome whether domestic or foreign
in origin. Joint Ventures between local and foreign investors (public
and private) are also encouraged. The Government will, in particular,
encourage joint venture undertakings between the following groups
Foreign
investors and local co-operative organisations.
Foreign
investors and local private investors.
Domestic
private investors and/or co-operative organisations.
There
are some 24 listed business enterprises thet are reserved for Tanzanians
only and 13 others which foreigners can run if 50% or more of the
shares are owned by Tanzanians.
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