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Industry & Construction | Global Arab Network
Recovery sign - 14 % increase in industrial investment in Tunisia
Global Arab Network - - Ahmed Gamal
Tunisia saw a 14.8% uptick in industrial investment in the first nine months of 2012 compared to the same period of 2011, a sign this important sector is beginning to recover. The government has identified manufacturing as a major employer and source of foreign direct investment (FDI) and is focused on boosting activity in the segment, Global Arab Network reports according to OBG.

The export of manufactured goods, particularly automotive parts and other mechanical products, have traditionally driven Tunisia’s industrial sector. However, investment slowed considerably in 2011 due to the uncertain economic and political climate following the revolution, as well as the effects of the economic crisis in Europe, Tunisia’s primary source of FDI.

The drop in activity by international partners led to a decrease in the number of industrial projects launched in 2011 as compared to 2010: last year saw 1998 projects get off the ground, while 2010 saw 2159 projects launched. The amount of investment in manufacturing operations was also down by 21.7%, at TND1.13bn (€552.7m) at end-2011.

The subdued performance continued into this year: manufacturing grew by 2.5% in the first quarter of 2012, below sector forecasts. In comments carried by the national press agency, Jamel Gharbi, Tunisia’s minister for planning and regional development, said the government’s immediate focus will be to stimulate growth in manufacturing, as well as other key areas like mining, to solidify economic recovery. As such, the uptick in industrial investment during the first nine months of 2012 bodes well for annual growth.

While manufacturing growth in the first quarter was slower than expected, international companies are beginning to move away from the “wait and see” stance that dominated much of 2011. Declared investment in Tunisia’s industrial sector as a whole reached TND2.75bn (€1.35bn) in the first nine months of 2012, a 14.8% increase on investment levels in the same period last year. In a positive sign for growing sector confidence, the majority of new investment came from foreign partners.

The most significant year-on-year (y-o-y) increases were seen in agro-industry, leather goods manufacturing, and rubber processing, which were boosted by the launch of several large projects. As in 2011, the highest levels of new investment were registered in agro-industry. Declared investment in the first three quarters of 2012 climbed by 81% y-o-y to reach TND1.14bn (€557.6m).

The Algerian group Cevital announced in October it plans to open a sugar refinery in partnership with local firms, for a projected joint investment of TND504m (€246.5m). Plans were also announced for the construction of a tomato paste factory for an investment of TND18m (€8.8m), as well as the expansion of an existing livestock feed plant for TND16.3m (€8m).

Investment in leather and shoe manufacturing, traditionally a smaller sector, more than tripled to reach TND44.9m (€22m), supported primarily by the announcement of a project to create a shoe manufacturing plant at a cost of TND28.9m (€14.1m), entirely from foreign capital. Moreover, the Foreign Investment Promotion Agency (FIPA) reported Italian industrial film and bag manufacturer Plastik had launched operations in the Zriba Zaghouan industrial zone in September 2012.

Growth in manufacturing industries in 2012 is primarily supported by foreign funds and oriented toward exports, two factors that have traditionally driven Tunisian industrial activity. The volume of investment in projects with 100% foreign funding nearly doubled y-o-y to reach TND445m (€217.6m) in the first nine months of 2012.

Joint ventures continue to represent a large portion of new investment: their numbers increased by over one-third y-o-y to reach TND858.9m (€420m). Furthermore, nearly all of the new projects added in 2012 are export-oriented operations, as investment in non-export industries was 8.6% lower than 2011 levels.

While the political transition is still underway, the recent spate of export-oriented projects bodes well for overall economic growth. Increased investment in the first three quarters of the year has also provided a boost to industrial-related services; according to FIPA data, industrial service activities more than doubled to reach TND655m (€320.4m) in 2012.

The state continues to offer a variety of fiscal incentives, including 10-year tax breaks on new operations and special fiscal, workforce and capital transfer incentives in industrial zones. Industrial operations launched in key development regions in the interior are also eligible for investment premiums. While sector recovery is picking up, the government will need to maintain a sufficiently attractive legal and fiscal environment to create jobs, boost exports and support overall economic growth. (OBG)

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