INVESTMENT CLIMATE IN SUDAN

  INTRODUCTION:

The National Salvation government has  seriously endeavoured to utilize to the utmost all available potentialities in the Sudan by creating favourable investment conditions that attract the adequate capitals for his purpose. In Order to encourage both national and foreign capitals to invest in Sudan , the state has taken the following steps:-

(a)           Procedural reforms were stipulated. For instance: abrogation of state monopoly of agricultural and industrial products, the economic services sector and marketing. The state has also withdrawn from            some public-sector corporations and institutions. Radical reforms of investment Acts and laws regulating all economic activities have lead to the complete lifting of any clauses that hinder the private sector’s contribution in investment, thus increase productivity.

      A similar economic, trade and financial policies that run in the same       course, and back the new orientation of the Sudanese economy towards    the free market economy were also adopted. As examples for these       policies:-

-  Lifting of major consumer -goods subsidies.

- Freeing and floating of the Sudanese Dinar against the dollar. Thus,     allowing the foreign exchange values of the dinar to vary freely according to  the values of other international currencies.

-  Freeing of prices for all agricultural and industrial commodities as an     impetus for production and producers.   

-  With exception to the following commodities, all kinds of commodities may be improted. The banned commodities are: clothes, textiles, ready - made clothes, sauces, slaughtered and alive animals, chichen and eggs, natural leather, sugar, alcoholic beverages and drugs, fire arms and ammunition (except with a permit). However , there are plans to shorten the   above list by  lifting the import ban from some of these commodities.

(b)   The National Salvation Government has adopted a national ten-year work plan (1992-2002) , during which all the possible potentialities and energies of the nation shall be mobilized in order to realize the strategy’s desired aims and goals in accordance with the findings of a studied futuristic perspective, hence the adopted programmes turned out to be genuine strategic break through not merely late reactionary decisions.

-      This plan is in fact a means of striking a deep root for the cultural and intellectual resurrection and remobilization of the society and an overall planning that includes all sectors of the Sudanese society. It has also been a comprehensive plan for the most ideal utilization of all sorts of human and natural wealth in Sudan.

-      the comprehensive National Strategy was designed to have sectorial sub-strategies for the ten years of the plan. The sectors concerned are the following:

-      The Social Development Sector.

-      The Human Resources Development Sector.

-      Culture and Information Sector.

-      Sicences and Culture.

-      Politics and the Jurisdicitional System .

-      Security and Defence.

-      Economy.

-           Agriculture, Animal Wealth and Natural Resources.

-           Cartography maps and underground wealth data.

-      Industry, Energy and Mining.

-      Transport, Communication, Telecommunication and Warehousing.

-      Foreign Relations.

(c)   The government is earnestly endeavouring for finding a radical solution for the southern question in order to maintain peace in the southern states.

(d)   The 1999 investment Act is the legal base for investment that gives it ease in procedure and flexibility in handiling of investment affairs, thus  encourages investment in projects that lead to promotion of the domestic income and expand  the national economic base and realizes the goals of economic and social development particularly in the rural areas. Such projects should also care for the ecological balance and emphasize utilization of local raw materials as inputs for their products specially the ones that uses new and renewable energy sources and lead to greater co-operation and integration amongst Islamic, Arab , African and friendly countries.

        The 1999 Investment Act has also encouraged investment in the agricultural (animal and crop), the industrial, the mining, trasport, tourism, warehousing, housing, contracting and basic services sectors for national, Arab  and foreign private sectors besides the co -operative, joint- venture and public sectors without any bias or favouritism. The Investment Act also grants the investors addditional privileges and facilities if their projects are among those that realize the objectives of the development plans. Some of these facilities are the following:-

1. Exemption from business profit taxes for not less than ten years as effective the year that follows commercial production or commencement of activities for strategic projects.

2. Tax and export duties reduction for the finished and semifinished products of the project in question. There shall also  be further duties and tax-cuts during the tax -exemption period.

3. Total or partial exemption from customs and excise or any other duties pertaining to imports related to the project’s requirements.

4.     Production and consumption tax-cuts.

5.     Projects  that realize food security, investments in the less developed areas, projects that realize housing, medicinal or clothing securities, projects  that aim at promotion of export  capabilities; generate more work vacancies and help in redistribution of wealth, projects that endeavour to provide local alternatives for the basic imports or that depend on local raw materials  for ther inputs, projects that re -invest their profits and projects that invest in the mining sector; all such projects shall be granted preferential  privileges.

The 1999 Investment Act also grants your project the following facilities:

(a)   Foreign capital proprietors may transfer their profits and initial financing costs or debts provided that all the legally-binding commitments pertaining to the project are met and settled. The back-transfer shall be in the original currency or currencies the capital was transacted in.

(b)   Import of raw materials for the sake of the project during the tax exemption period without being restricted by the procedures of importers -exporters registrars.

(c)   Transfer of expatriates’ savings, or those working for the project in accordance with the acts imposed in such cases.

(d)   Freedom of movement, residence or transfer of the project’s expatriate employees is guaranteed in accordance with the prevailing laws.

        Some of the the most significant guarantees that the 1999 Investment Act grants the investor:

(a)   That the investor’s project shall not be liable to nationalization or confiscation.

(b)   That the project’s funds shall not be distrained, seized, freezed, confiscated, provisionally  seized or sequestrated unless there is a warrant issued by a court for taking such a step.

(c)   That any estates owned by the project shall not be expropriated whether in whole or partially except for the common cause in accordance with the law. In such case, the investor shall be justly compensated on basis of the market price of the estate at time of expropriation.

(d)           Remittance of invested capital in its currency or currencies of origin in case the project has not started, or in case the project got liquidated or disposed of wholly or partially, provided that all legally- binding commitments were met.

( e)  As Sudan is one of the signatories to several international and regional organizations concerned with investment disputes, this factor can also be added to the assurities and guarantees provided . For instance Sudan is a signatory to:

        The 1980 Unified agreement on Investment of Arab capitals, the 1974 agreement on Settlement of Investment Disputes Arising Between Host Arab States and Nationals of Other Arab countries, the 1965 Agreement on Settlement of Investment Disputes Between Host States and Nationals of other countries, the 1977 General Agreement on Economic, Technical and Trade Among Member States of Organization of Islamic Conference, or any other agreemet in this regard, in which Sudan is a signatory partner in case a direct legal dispute arises from interpretation of the stipulatins of any of the above mentioned agreements. (REFER TO THE 1999 INVESTMENT PROMOTION  ACT).

        However, Sudan is a member of the Arab Corporation for Investment Guarantee, and is also a member of the International Agency for Investment Guarantee.

  THE INVESTMENT AUTHORITY :       

   The Investment Authority was established by  a decision of the Council of Minsters as the organ responsible for setting up adveretising and publicity campaign for investment in Sudan. It is also put in charge of creating an ideal investment climate that attracts national, Arab and foreign capitals in the Sudan and eliminate all obstacles that might hinder them .  Besides all that, it is the organ that draws encouraging investment policies, simplify procedures for investors, issue licences of investment projects and the relevant facilities and guarantees in addition to follow up of the actual execution of the proposed projects, prepare investment maps and save the investors the trouble of data collecting by providing them with all the necessary information and data. The Authority shall also follow up all the procedures of the investment licence at the various government circles on behalf of the investor.

            The Investment Authority enjoys close relations and jointly co-operate with local, regional and international corporations and organizations concerned with investment such as:

            The Arab Organization for Investment Guarantee, The United Nations Industrial Development Organization (UNIDO), The International Investment Guarantee Agency and  other Arab , Islamic, African and international organizations in which sudan is a member.

SUAKIN FREE-TRADE ZONE:       

            The government has established a free-trade zone at the old town of Suakin in the Eastern State, and declared Osman Digna Port on the Red Sea a free-port for the following reasons:-

1. To promote, diversify and create new markets for the Sudanese Exports, and transform some of them from raw to finished or semi-finished products and advertise for them within the Free Zone.

2. To avoid the time-consuming process of  importing commodities from abroad for the local market, thus the turnover shall be positively directed towards industry and commerce.

3.  To attract Arab, Islamic, African and foreign capitals to Sudan.

4.   To introduce modern production and marketing techniques .

5.   To create work vacancies for the Sudanese nationals.

6.   To establish a free industrial zone and a free Trade Zone.

      The total area is designed to be 600 Km2, but the first phase started at one square km and has already drawn a number of foreign investors.

  AL GAILI FREE ZONE:

      located (60) km. North of Khartoum (Capital of Sudan). This area is demarked and now being planned to cover (20) sq.km. This area is significant in:

* located within a fast economic booming circle accessed to the country’s main Oil  Refinery Station.

*    Linked with active business and industrial communities in Khartoum , the heart of the nation’s  economy.

*  Communicated with traffic networks of air, highways  and railways extending beyond Sudan’s boundaries into the African  markets. 

   PRIVATIZATION:

-  Some of the guidelines and directives of the Economic Salvation programme in Sudan, is to free the Sudanese economy from domination and bureaucratic control, an let it depend on market mechanism in handling all affairs related to the administration of economy . Besides, more open policies towards the private sector are recommended.

-      Under the canopy of the above apprehension, the State Monopoly of the most vital economic fields such as: agricultural and industrial Products, the economic services, internal and external marketing has already been abrogated, and the government has actually begun to pull-out from many public sector corporations, establishments and companies operating in these fields.

-      The government has conducted radical amendments in all acts pertaining to investment and all economic activities in order to give access to greater and open private sector contribution in order to boost productivity in all sectors.

-      The government has placed on the market some state assets and public sector companies for sale, partnership or transfer. Some of these units operate in the agricultural and industrial sectors (spinning and weaving, ready -made clothes, food industries and tanneries); other units operate in the services sector (hotel-keeping, transportation, communication and telecommunication services, and some trading and marketing corporations).

-      Whereas the privatization process is such a large-scale operation for redistribution of wealth and restructure of Sudanese economy;therefore, three different guidelines shall be observed:

(i)    competitive bidding in ownership of the public sector’s shares that shall be transferred to the private sector.

(ii)   Sale, disposal of or partnership in any of the state-owned corporations or companies of the public secror shall receive full publicity and shall be widely advertised for, prior to taking any step. This is to ensure the element of justice in the whole affair.

(Iii)  Some sort of balance shall be reached between the prompt implementation of privatization, and justice in distribution of the privatization units.

          LICENSING AND FACILITATION PROCEDURES FOR AN INVESTMENT 

1. The investor shall submit a technical and economic feasibility study of the project.

2. The investor shall fill in a special form of application pertaining to claims for licensing, privileges or facilities for an investment project  against payment of prescribed fees. The form shall be issued by the investor’s services section in the Ministry.

3. The Investment Authority in the Ministry shall review the application form and consult the competant technical organs if necessary.

4. Upon receipt of the provisional approval from the Ministry of Industry and Investment, regarding the particular project, the  investor shall then register a business name or company whose activities shall be limited to its specific field of licensing only.

5. Upon approval of the business name or company, the invesor shall submit all the relevant documents to Ministry of Industry and       Investment in order to be issued the licence which covers the       facilities granted and location of the plot where the premises of the project in question shall be sited.

6.  Upon completion of all licencing procedures and issuance of the licence, the investor may then import the project’srequirements from       abroad in accordance with “an itemized requision list” which the  ministry  must consent to in advance.

7. The Ministry of Industry and Investment shall then contact the customs duties , upon clearance of the project’s imported items through the customs’ coordinator in the Ministry.

8. The Ministry of Industry and Investment shall also contact the taxation authorities to exempt the project from tax duties in accordance with the granted privileges.

          TYPE OF COMMERCIAL COMPANIES IN SUDAN AND THEIR REGISTRATION PROCEDURES:

The laws in Sudan permit companies and practice all sorts of activities . An whether they are national or foreign companies, they are granted the same rights . The only exception is that these companies can not operate in the import-export arena except on their own products. Otherwise, foreign and national companies enjoy similar rights including the registration procedures, and the prescribed fees in such cases are also the same.

            All companies incorporated in Sudan are referred to as “limited Liability Company ( abbr. Ltd.) is a businesss company whose shareholders are liable for its debts only to the extent of the capital sum they have provided.

            Companies in Sudan are either Public or Private Companies.

a.  PUBLIC COMPANY:

A public company incorporates of at least seven shareholders or more, an it never commences work prior to issuance of the certificate of the Registrar General for Commerce which authorizes and initiates operations. However, this cerificate is never issued before payment of the minimum sum of the capital.

The company’s articles of incorporation and statute (if available ) shall be signed by the founders or their representatives, then submitted to the Registrar Ceneral for Commerce where a small sum of money is paid as licensing fees.

b.  PRIVATE COMPANIES:

A private Company incorporates of a minimum of two shareholders and the number of its shareholders may never exceed 50 partners (minimum of 2 maximum of 50) .

Subscription  of a private company’s shares and stocks shall be limited to its shareholders then submitted to the Register General for Commerce, hence a licence shall be issued against payment of a small sum of money as licensing fees.

No cocessions of the shareholders’ shares- which are considered as their quotas - may be made without the shareholders’ prior consent or the step thus taken is backed by the the stipulation of the company’s articles of incorporation or statute (if available).

The private company does not require any initiation  certificate in order to commerce its activities as in the case of the public company, but it may start work right after issuance of its incorporation certificate.

c.  FOREIGN COMPANIES:

Foreign companies intending to conduct any kind of business or businesses in Sudan must register branches of their own in Sudan. Should the work assigned to the company be very specific and takes only a short  period of time, the licence issued thereof shall be a temporary one. For example a company with a contract to built a road or assemble a factory, shall be issued a licence limited with the time allowed for the particular job. In  such case, the registration form should be supported by the following documents prior to submitting the application to the Registrar General for Commerce:

1. A certified copy of the company’s decree of initiation and articles of incorporartion and statue (if available ) issued in country of base. Should the documents be issued in a language other than Arabic, a certified translation into Arabic shall also be requested.

2.  A List with the names of the members of the Board of Directors.

3.  Name and address of one  authorized representaitve of the company - or more than one -residing in the sudan to whom notices and other legal documents which the authorities in Sudan want the company be informed about shall be addressed.

4. A copy of the legal deputation which empowers one of the representiatives- usually residing in Sudan - to conduct the company’s business and act on behalf of the company in Sudan.

d. PUBLIC CONCESSION COMPANIES:

   They are companies incorporated in accordance with the articles of the Act of Companies ‘but have been granted specific concessions by ministerial decree issued by the minister concerned thereof. The concession thus granted is renewable in adherence to the conditions stipulated in the decree. However, only joint- stock companies conducting activities which the country is in need  of in its deveopment plan, shall be granted such specific concessions.

e   COPARTNERSHIP:

Copartnership incorporates by two or more partners with the intention of conducting any commercial enterprises, and share the generated profit amongst themselves.

To officially register a copartnership, an authenticated statement signed by all the associates in the particular copartnership shall be submitted to the Registrar for Companies. The statement shall specify the following:

Name of the company and nauture of business nature of the business it shall conduct; names and addresses of the associates and the sums of money paid by each etc.

2.8  BUSINESS NAME:

 Business name means the name given to or the way any sort of enterprise is conducted whether it is a copartnership or not. The busines name shall be registered at the Registrar General for Commerce and Attorney General;s Chamber. The latter shall be handed a statment of the prescribed  form with the following data:

a.            Name of the business.

b.            The general nature of the business.

c.            The head office.

d.            All other places where business might be conducted.

     NATIONAL -FOREIGN CAPITALS JOINT -VETURE:

 Although there is no stipulated act that restricts the participation of the national capitals with the foreign ones in incorporating companies or engaging in any other sort of joint-venture business, but no shares shall be relinquished or appropriated to none Sudanese nationals “aliens” without a prior written approval by the Attorney General.