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Travel Safety Update - Africa / Middle East.

New York, Geneva (AirGuide - Travel Safety Update Africa / Middle East) May 20, 2012

Eurocast Tourists and investors cautiously returning to Tunisia. At its factory on the outskirts of Tunis, US company Eurocast is gearing up for expansion. The maker of parts for airplane engines plans to invest $2 million in its plant in late 2012, allowing it to process a new range of superalloys. OFrom our standpoint, business is good. We are growing at 30 per cent a year,O director general Thomas Wendt said. OWe were only shut down one day and that was January 14, the day of the general strike. Were we at full force after? No, but we were able to produce and overperform our regional target.O It has been a bumpy ride for Tunisia, where a January 2011 revolt ousted veteran dictator Zine al-Abidine Ben Ali and triggered OArab SpringO uprisings across the region. Amid the messy work of building a new democracy, the economy shrank 1.8 per cent last year. Strikes by newly emboldened workers led to factory closures that slowed the recovery. Tourists, whose spending accounted for around 6.5 per cent of gross domestic product of about $44 billion, cancelled bookings, fearing violence. Foreign direct investment and portfolio investment inflows sank nearly a third, according to TunisiaOs Foreign Investment Promotion Agency (FIPA), as companies were unsure whether the uprising would bring democracy or chaos. More than a year after the revolution and almost six months on from TunisiaOs elections, which were declared largely free and fair by election monitors, investors and tourists are tentatively returning. FIPA data shows new foreign direct investment rose 35.2 per cent in the first two months of this year from the same period of 2011, and 5.9 per cent from two years earlier. Most of that money has gone into energy and industry; the recovery in tourism, which earned some $2 billion a year and employed 400,000 people before the revolt, has lagged. But Tourism Minister Elyess Fakfak said last month he expected the number of visitors to rise 20 per cent this year. That would still fall a million short of the near seven million visitors who holidayed in Tunisia in 2010. But it could begin to cut unemployment, which was a key complaint of protesters who launched the revolt and has now climbed from 13 to 18 per cent. The governmentOs early hopes that the economy would bounce back with 4.5 per cent growth in 2012 have faded; Tunisia now forecasts more modest 3.5 per cent growth. But local businessmen are gaining confidence that democracy and an end to Ben AliOs grip over the economy, where competition was restricted as lucrative contracts and licences were parcelled out to members of his extended family, will eventually pay dividends. With a gross domestic product about the same size as the Dominican Republic, Tunisia is not a global player. But it could be a bellwether for how econ omies fare in bigger states recovering from the Arab Spring, particularly Egypt. OEveryone sees things improv ing day by day. Tourism bookings have increased from spring to summer. The social situation is improving, with a fall in the number of strikes and the number of factories that are closed,O said Houssein Mouelhi, director general of Banque Tuniso-Koweitienne. OIOm optimistic for Tunisia. We have a peaceful image. The elections took place in good conditions. We are beginning to feel stability return.O For many foreign investors, Tunisia has a lot going for it. It is close to Europe, offers tax breaks to foreign companies, and has plenty of cheap labour as well as a large pool of highly educated and multilingual young people to fill skilled roles. Eurocast, which first arrived in Tunisia in 2001, employs a modest 140 people, but many are engineers. OAll of our staff are Tunisians and that is the way it will be. We do our own marketing and engineering. We do everything ourselves. As a corporation out of Phoenix, Arizona, we have faith in what can be accomplished here,O Mr Wendt said. OWe have transferred a lot of technology here. We have technological people employed at every level and we are looking for engineers because of our growth.O Eurocast did not suffer from the labour unrest that brought some plants to a standstill for much of 2011, but many did. German automotive cables maker Leoni, TunisiaOs largest private sector employer, faced wildcat strikes that descended into violent unrest in February and forced it to close one of its factories in Mateur for a few days. The situation was resolved when the strike leader, who Leoni says presented no clear demands for negotiation with management, was dismissed. Despite such challenges, Leoni has hired 2,000 staff since the revolution, raising its workforce to 14,000. OWhen the revolution started, at first we were surprised, like everyone. We said we had to watch carefully but quickly found out that things were going well and we would stay,O said company spokesman Sven Schmidt. OThe things we saw are not nice to see but it is normal for a country in this situation. But in the long run, we think the situation will be fine for foreign companies. People need employment.O Strikes continue in central regions of the country, where unemployment is higher and young people feel they have yet to taste the fruits of the revolution they sparked. But they have eased somewhat since the first half of 2011, when travelling through Tunis often meant running a gauntlet of picket lines. The government has set aside part of its budget for regional development and boosted unemployment benefits and aid to poor families. It promises to invest in poor areas and create 25,000 public sector jobs. But its policies will take time to bear fruit, and some workers say they are sick of waiting. TunisiaOs main phosphate producer in Gafsa is grappling with a severe strike, which is hurting exports and robbing the economy of a key revenue source at a time of soaring global phosphate prices. In Redyef, a hotbed of industrial action since a 2008 mining strike, a general strike is set for Thursday to protest a breakdown in talks with the government over jobs. OIt is a one-day strike so far, but this is a warning. If it continues we may announce civil disobedience,O local union leader Adnane al-Haji said. That threat highlights the persistent risk of flare-ups of industrial action, and at least 182 foreign investors have left Tunisia since the revolt, more than the usual number of around 120 departures annually. Some Tunisian economists and businessmen are therefore pressing the government to move beyond past policies designed to attract large-scale foreign investment and to do much more to encourage the creation of smaller, home grown companies. One organisation pushing for this is Wiki Start Up, founded by a dozen Tunisian businesspeople last July in the wake of the revolution. It aims to provide business advice and seed capital to local start-up companies focusing on science and technology. Mondher Khanfir, a founder of the organisation, said the revolution had encouraged fresh private initiatives but there had been few deeper changes to the investment climate so far. Tunisian firms still suffer from a lack of access to finance, since banks will not lend to small entrepreneurs perceived as high-risk, while little has been done to improve their access to markets, he said. OThere is no private sector in Tunisia because of the domination of the public sector, except in offshore investment,O he said. OWe need to encourage foreign capital investment in Tunisian companies that aid development. The government should liberalise the market and limit itself to being a regulator.O The government, elected in October, is working on economic reforms but these are proving slow. An anti-corruption body has focused on the big scandals of the Ben Ali era, when investors, local and foreign, were often pressured to partner with his family. The pall of big-ticket official corruption has lifted, but weeding out the petty graft that pervades the economy, and creating a culture of transparency and accountability, will take years. The government is also working on a new investment law, though not fast enough for some businessmen. OThey should simplify the investment law and make it more transparent. It should not take too long,O said Mr Mouelhi. OIf we reform the investment and exchange laws and transparently sell off assets confiscated (from the old regime), we can bring back investor confidence, even in 2012.O Source: May 15, 2012 1544-3760

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Comment:Travel Safety Update - Africa / Middle East.
Publication:Airguide Online
Geographic Code:6TUNI
Date:May 21, 2012
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