A trilingual melting pot with more to offer than just sun, sea and sand
As an unspoilt archipelago that sits strategically at the point where Asia meets Africa, Seychelles has set its sights on becoming an international hub linking emerging markets in the entire region.
As recently as 2008, the International Monetary Fund (IMF) was forced to set economic reforms to rescue the archipelago nation from near collapse. However, in 2011, an IMF report declared Seychelles’ recent economic performance as favourable, and the country is today held up as an example of how things can be turned around. This tiny nation enjoys one of Africa’s fastest growing economies.
Three sectors dominate the economy – tourism, fisheries and financial services. The tourist sector provides the bulk of foreign currency inflows, while fisheries dominate the visible exports and prospects for the financial services sector are bright.
With low tax rates, attractive offshore investment opportunities and a strategic location in the Indian Ocean, Seychelles offers interesting investment opportunities in every area of the economy. According to the Seychelles Investment Board, the country has in the past years attracted over 60 billion Seychelles rupees in foreign direct investment, about USD4.3 billion.
There is also a continuous revision of the country’s laws to meet international norms. Seychelles plans to join the World Trade Organisation, and the agreement for accession is at an advanced stage.
More recently, European, Asian and US investors are entering the scene, being lured by a strong investment proposition.
Why Invest in Seychelles
The country, with a population of only 90,000, is a republic within the British Commonwealth. Independent since 1976, Seychelles has good political stability with a democratically elected government.
Citizens of the Indian Ocean archipelago enjoy a high per capita income, good health care and education. As well, 92% of the adult population is literate, speaking French and English, which further contributes to a stable political environment.
Healthy economic growth
The IMF has given Seychelles high scores for its reforms and efforts to reduce debt and set the country on a sustainable path. Though risks remain, the government has shown remarkable fiscal discipline.
Despite its openness, the economy has shown strong resilience against the global financial crisis. The economy expanded by 5% in 2011, compared to 6.2% in 2010 and a projected growth for 2012 is 4% – proof that the Seychelles is now a stable place to invest.
The unemployment rate was only 4.1% in 2011, down from 4.6% in 2010, and it is expected to fall to 3.7%, according to the IMF. Earlier this year, Fitch Ratings revised Seychelles’ Outlook to Positive from Stable, while simultaneously affirming its Country Ceiling at ”B”.
The Central Bank of Seychelles is targeting public debt to shrink to 50% of GDP by 2017, a goal that seems to be on track. After restructuring, external debt has been reduced by half, and domestic debt is being kept in check by paying it down with budget surpluses.
A country blessed by nature
The Seychelles is an archipelago of 115 islands, 1,600 kilometres off the coast of East Africa. With superb beaches, an unspoilt landscape, virgin forests, amazing marine life, lots of orchids, bougainvilleas, hibiscus, gardenias and frangipani, and an immense number of bird species, it is a nature lover’s paradise.
The islands are outside the cyclone belt and the weather is stable, amidst a humid equatorial climate where the temperature rarely drops below 24°C or rises above 32°C .
Long renowned as a luxury honeymoon hideaway, Seychelles is the ideal destination for an indulgent stay in the sun. With its natural scenic beauty, vast stretches of white sand and glittering turquoise waters, Seychelles is the perfect blend of luxury, serenity, and bliss.
But high-end luxury resorts and palm-lined beaches only represent a fraction of the myriad of experiences offered in this Indian Ocean paradise. The trilingual Creole nation is a cultural melting pot where ethnic groups and religions co-exist and mix without friction.
In addition to its distinctive cultural mix, Seychelles’ history as an isolated place means that much of its rare flora and fauna cannot be found anywhere else on Earth. The archipelago’s biodiversity is protected within two UNESCO World Heritage Sites (Vallee de Mai in Praslin and Aldabra Atoll), as well as several impressive Nature Reserves and National Parks. In 2011, the Seychelles government announced plans to extend this network to cover more than 50% of the total landmass, making Seychelles the first nation on earth to officially protect more than half of its total area.
Tourism is the backbone of the economy, accounting for 25% of GDP, 25% of employment, and 70% of foreign exchange earnings.
Total visits increased by 11% in 2010 and 11.4% in 2011, which confirms the attractiveness of the island, as well as the economic recovery of its source markets. The top five feeder markets include France, Germany, Italy, Russia and the UAE, accounting for approximately 46% of total visits. By mid-December 2012, the number of tourists to the country was 7% higher than for the same period in 2011, representing a record.
The archipelago is proving an increasingly popular twin centre holiday destination, where a Seychelles holiday is combined with an African safari, or a shopping stop in the Middle East. The twin centre possibility with Africa includes “From the Big Five to the Best Five”. Seychelles’ Best Five are a tour de force of all that is special about the islands: the diversity of the granite and coral islands, the many world-ranking beaches found throughout the archipelago, the sapphire seas, the year-round climate that has earned it the epithet of “land of the perpetual summer”, and the ethnic diversity and harmony among the people.
With the increasing numbers of visitors to the islands, there is a corresponding increase in demand for air support. Government officials in Seychelles agreed in 2012 to sell a 40% stake in Air Seychelles to Etihad Airways as part of a strategic partnership alliance initiative. Today, Seychelles is more accessible than it was a couple of years back. The integration of the networks will give Air Seychelles greater opportunity to tap into key tourism feeder markets across Europe – such as Germany, France, Italy and the UK – where Etihad Airways’ presence is strong and growing. However, the new contender in the top visiting markets is the United Arab Emirates, and the collaboration between Air Seychelles and Etihad Airways will be boosting travel from the Middle East specifically through Abu Dhabi.
With a land area equivalent to just 0.03% of its exclusive economic zone (EEZ) in the Indian Ocean, it is not surprising that most of Seychelles’ natural resources lie under the sea. The archipelago lies on an important migratory route for tuna, including the yellowfin, skipjack, and bigeye varieties sold commercially worldwide. Seychelles is home to the Indian Ocean Tuna (IOT) factory, one of the largest tuna canning plants in the world. Tuna fishing and processing accounts for close to 5% of GDP, about 7% of jobs, and around 35% of export goods. According to the National Bureau of Statistics, Seychelles shipped more than 30,000 tons of tuna in 2010, making it the second-largest export after tourism.
To further expand the fishing industry, the country is investing in improved infrastructure with the construction of quays, ice plants and processing facilities. Aiming to become the most favoured port-of-call for vessels operating within the region, a new 200-metre-long quay has been built on reclaimed land. The quay will increase berthing capacity and turnaround times, while providing modern onshore cargo handling. New repair facilities are also envisaged.
On the horizon is the island nation’s reinvention as a world-class, offshore ﬁnancial centre – a third pillar that will buoy the already successful tourism and ﬁsheries sectors.
The country’s strategic location in a time zone that overlaps the business hours of the financial centres of the Middle East, Africa, Asia and Europe makes it an ideal port-of-call between East and West.
Seychelles also enjoys a reputation as a multilingual and multicultural society that is used to cross-cultural communication. Seychelles has opened its doors, abolished foreign exchange control, and its currency is freely convertible.
More than 100,000 international business companies (IBCs) have commenced operations in Seychelles since 2004. A Seychelles International Business Company is the most popular and versatile type of offshore corporation available in Seychelles. Seychelles IBC is a tax-free corporation designed for engagement into all forms of international business, with no reporting and minimum record-keeping requirements, and comprehensive confidentiality features. An IBC is not subject to any tax or duty on income or profits, except for business tax payable on the gross amount of a dividend received from a source in Seychelles. A shareholder of an IBC is also not subject to any tax on his income derived from the IBC. Seychelles’ attractive tax regime is luring foreign investors. Its corporate tax rate is low – nominally 15%, but effectively 9% after credits. The opportunities in the offshore world are equally attractive, with its non-resident tax-free and tax resident low tax structures, a growing network of tax treaties used for investment in other countries, low government fees and international trade zone.
The Organisation for Economic Cooperation and Development (OECD) added Seychelles to its “white list” of reputable offshore jurisdictions in 2009, and it is on the OECD White List for tax transparency.
In April 2011, the financial regulator invited proposals to set up a stock exchange. Expectations are high that the exchange will quickly attract international listings, while also linking with the rest of Africa and the world.
All companies operating in the financial services sector are regulated by the International Corporate Services Act, which ensures that all service providers in Seychelles adhere to strict professional standards. Sound legal and regulatory frameworks, such as anti-money laundering provisions, are also in place.
Seychelles has a mixed legal jurisdiction based on French and English law. Its civil law is mainly of French origin, and its penal and commercial laws are of English origin – a legacy of the country’s colonial history.
A potential 4th pillar
Oil has been detected in Seychelles and, according to President James Michel, the potential is “estimated to be as large as the Saudi Arabian oil fields,” with crude flowing as early as 2015.
So far, Afren Plc and Australia’s WHL Energy are the only companies holding exploration licences in Seychelles. WHL Energy is carrying out exploration work, having completed seismic data acquisition in 2011, and in 2012 it announced that it had raised $7.9 million to fund the program.
Buying a home in Seychelles
Seychelles consists of many islands in the Indian Ocean that have long been considered some of the world’s greatest natural treasures. An archipelago nation that stretches from the east coast of Africa to the northeast island of Madagascar, Seychelles is a sought-after fishing, sailing and holiday destination.
Seychelles is the latest tropical home-owning hotspot offering a luxury castaway lifestyle. For those in the market for a paradise island holiday home, Seychelles is a low-key alternative to the Caribbean. Compared to Thailand and the Caribbean, the archipelago chain remains unspoilt, and new develop-ment is rigorously restricted. Traditionally, foreign property buyers in Seychelles come chiefly from South Africa, Italy, France, Russia and the UK.
Overseas buyers must obtain permission from the government before buying property. This is best achieved through the services of a notary. Property purchases by a non-national are processed by the Land Section at the Ministry of Land Use and Habitat. Upon approval, the foreign buyer registers the property at the Registration Office, which includes payment of registration fees and duties. Foreigners may secure residency for a fee of around 50,000 Seychelles Rupees, which means that the property will not be subject to CGT once sold.
Seychelles investments tick all the right boxes
With one of the fastest growing economies in Africa and a vision to position the country as a world-class ﬁnancial centre based on its strategic position between East and West, as well as a growing tourism sector and a potentially promising oil industry, prospects for Seychelles look good.