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MALAWI INVESTMENT CLIMATE

MALAWI WELCOMES PRIVATE INVESTORS

The Government of Malawi encourages local and foreign investment in any sector of the economy, with no restrictions on ownership.

This Guide presents information or the incentives and other advantages available to investors.  Malawi offers an attractive investment climate, featuring:

• A stable political and economic environment
• Competitive investment incentives
• Minimal requirements for company incorporation
• Low cost, productive labour force
• Modern telecommunications
• Daily international flight conations
• Industrial estates and prospective export processing zones
• Preferential access to regional and international markets

ONE-STOP ASSISTANCE TO INVESTORS

The Malawi Investment Promotion Agency (MIPA) established by the 1991 Investment Promotion Act, is a parastatal mandated to promote, attract, encourage, facilitate and support domestic and foreign investment in Malawi. To accomplish this mandate MIPA is responsible for: -

• Developing a favourable investment image of Malawi regionally and throughout the world;
• Undertaking investment promotion missions;
• Recommending to the government changes in the statutory and administrative framework relevant to the investment climate;
• Providing courtesy services to visiting investors;
• Supplying information about Malawi;
• Identifying joint venture partners when requested;
• Working with local and international financial institutions for the benefit of investors;
• Encouraging existing investors to expand or start new investments;
• Consulting with private sector organizations so that better informed recommendations concerning the investment climate can be made;
• Facilitating all aspects of the investment process, including relations with government.

Government approved that MIPA should operate as a One Stop Investment Centre on 24th April 2001.

STATEMENT OF INVESTMENT POLICIES

This policy statement sets forth the Malawi Government's principal policies of encouraging and assisting private investment.  The Government is fully committed to enacting these policies and will take whatever measures may be necessary to ensure their prompt implementation.  The Investors Guide containing detailed information of importance to investors supplements this statement.

The Government seeks to encourage the private sector to assume the leading role in developing the national economy.  The thrust of the Government's efforts will be to facilitate, rather than to regulate private investment.  This is consistent with the Statement of Development Policies issued by the Government in 1987.

To create a more conducive investment climate, the Government will continue to pursue stable macro-economic policies by exercising fiscal and monetary, discipline and maintaining a realistic exchange rate of Malawi Kwacha (MK), the country's currency.  Specific measures to deregulate the private sector and create new investment opportunities have already been enacted, including elimination of price controls; termination of import restrictions and of the accompanying need import licenses, divestiture of state-owned companies and steps to rectify the external transport situation.

To further encourage and assist private investment, the Government announces the following new initiatives:

FREEDOM TO INVEST

Investors, both domestic and foreign, may invest in any sector of the economy, with no restriction on ownership.  Further there are no restrictions on the size of investment, the source of funds or whether products are destining for export or for the domestic market.  Domestic investors are encouraged to join with foreign investors to pursue investment opportunities in Malawi.

INDUSTRIAL LICENSING AND COMPANY FORMATION

The industrial license is to be eliminated, except for investments in such industries as the Government may place on a short negative list.  Procedures for company formation and business registration will be simplified to permit prompt establishment.  Investors will only be required to provide the Registrar of Companies with basic information on proposed business activities.

TRANSFER OF LAND

The Government is committed to ensure that land for industrial and commercial uses is readily available to investors.  Accordingly, the Government will accelerate land transfer procedures to expedite granting approvals and consents.  To better provide serviced land to investors, the Government will develop new industrial sites.  In addition, the Government will provide the necessary framework to enable private investors to develop industrial sites, including sub-leasing to other investors.

TAXES AND DUTIES

To further enhance Malawi's investment climate and international competitiveness, the Government is committed to continue the process of reducing rates of taxes and duties. This is to be achieved through the ongoing tax and trade reform programmes.

EXTERNAL TRANSPORT ROUTES

The government is aware that access to efficient and secure transport routes, both within the country and to foreign markets, is of vital importance. To ensure such access, the Government is undertaking a number of initiatives, including the expansion of the domestic transportation network, the development of the Northern Corridor route to the port of Dar-Es-Salaam in Tanzania and the rehabilitation of the Nacala Railway Line to the port of Nacala in Mozambique and the Shire-zambezi waterway, which is under construction.

AVAILABILITY OF FOREIGN EXCHANGE

The Government recognizes that the availability of foreign exchange is critical to investors. The Government will, therefore, ensure that foreign exchange is available for business transactions and remittances. The Reserve Bank of Malawi has granted, and will continue to grant, commercial banks the authority, as foreign exchange dealers, to approve such transactions and remittances according to set procedures.

ACCESS TO LOCAL FINANCING

The Government has embarked on a reform programme to modernize and liberalize the financial sector. With the enactment of the Capital Market Development Act, 1990, both foreign and domestic investors will have greater access to sources of local financing. The Government is committed to foster competition in the banking sector, including the establishment of new banking institutions.

LABOUR PRACTICES

The Government is not interfering in employers' choice of workforce. Further, the Government recognizes that investments may require expertise not available in Malawi. Accordingly, it continues to make Temporary Employment Permits (TEP) for expatriate personnel readily available for key positions in investments.

ENCOURAGEMENT HAVE SMALL-SCALE AND MEDIUM-SCALE ENTERPRISES

Malawi's small-scale and medium-scale enterprises hold great potential for rapid economic growth and. employment creation. The Government is, therefore, dedicated to continuing with various programmes to assist these enterprises, including Entrepreneurship training and technical and financial assistance.

ENCOURAGEMENT OF EXPORT-ORIENTED INVESTMENTS

To encourage export-oriented investments, the Government offers incentives competitive to those found in other countries. At present, these incentives include:-

(a) an income tax allowance based on export sales of non-traditional products (i.e. products other than tobacco, tea, sugar and coffee);

(b) rebates of import duties, surtaxes, and local taxes on most inputs used in production of export.

In addition, The Government establishes other incentives, including export financing and guarantee schemes, further developing a manufacturing-in-bond programme, creating export processing zones, and introducing measures to eliminate the payment of duties at the time of importation.

INVESTMENT ASSISTANCE OF PROMOTION

In order to increase awareness of the investment opportunities in Malawi, as well as to provide greater assistance to existing and potential investors, the Government has established an Investment Promotion Agency. This Agency has sufficient authority and operational autonomy to fulfill its mandate of promoting investment and assisting investors.

INVESTMENT PROTECTION

The Government recognizes that the security of assets is of primary importance to investors. The Malawi Constitution and existing laws and regulations provide further assurance that investors' assets are protected. In addition, the Government actively pursues the process of concluding bilateral investment treaties with other Governments. Malawi is also a member of the Multilateral Investment Guarantee Agency (MIGA), and is an eligible country under a number of other investment insurance programmes.

ACCESS TO INTERNATIONAL ARBITRATION

The Government acknowledges that investors must have an acceptable forum to resolve disputes that cannot be settled amicably. Parties to disputes may agree to pursue arbitration and to choose an appropriate forum, including international arbitration. The Government is a member of the International Centre for the Settlement of Investment Disputes (ICSID).

INVESTMENT APPROVAL COMMITTEE PROCEDURES

The Investment Approval Committee comprises all relevant stakeholders in the investment approval process. There are liaison officers, at a senior level, in cooperating institutions whose job descriptions clearly state that they shall expedite their relevant investment process;

The following are members of the Investment Approval Committee:

PERMANENT MEMBERS

1. Ministry of Industry, Trade and Private Sector Development 1
2. Malawi Investment Promotion Agency 4
3. Ministry of Lands 1
4. Malawi Revenue Authority 1
5. Department of Immigration 1
6. Ministry of Finance 1
7. Registrar General's Department 1
8. Ministry of Home Affairs and Internal Security 1
9. Ministry of Labour 1

A Senior Officer from the Ministry of Industry, Trade and Private Sector Development chairs the Investment Approval Committee meetings while MIPA serves as a secretariat. The committee meets once a month and the secretariat is responsible for all logistical arrangements.

INVESTMENT APPROVAL PROCESS UNDER ONE STOP INVESTMENT CENTRE

BUSINESS INCORPORATION

Any Investor investing an amount equal to or above US$ 50,000.00 shall be required to make an application for an Investment Licence from Malawi Investment Promotion Agency (MIPA);

. The applications shall be accompanied by a Business Proposal providing full details of the project and its requirements; (expatriate staff, land etc.)
. A non-refundable processing fee of US$ 200.00, or its equivalent, shall apply in all cases of new applications for an investment license.
. Upon receipt of the application, the Malawi Investment Promotion Agency (MIPA) shall process the application and a background check on the company shall be conducted. The application shall be summarized and sent to the Investment Approval Committee for appraisal and approval;
. When the Committee is satisfied with the application, it shall approve and issue an investment license;
. Upon approval, the investor shall be required to pay US$ 800.00 or an equivalent amount in Malawi Kwacha (MK) for the investment certificate.
. All companies shall be incorporated with the registrar of companies.

Note: New investors shall be required to state their project requirements (staffing, land, incentives applications etc.) at this stage so that issuance of the Investment License shall be complete covering all investment requirements.

BUSINESS RESIDENCE PERMIT (BRP) AND TEMPORARY EMPLOYMENT PERMIT (TEP)

The following is the procedure for obtaining a Business Residence Permit (BRP) or Temporary Employment Permit (TEP):

. Investors shall submit an application to the Malawi Investment Promotion Agency (MIPA), which is the Secretariat for either Business Residence Permits (BRPs) of Temporary Employment Permits (TEPs);
. New applications for Business Residence Permits (BRP) shall include duly completed immigration application forms for BRP, a business proposal that shall include full details of the proposed investment project, 2 passport size photos, and a police clearance report from last country of residence.
. New applications for a Temporary Employment Permit (TEP) shall include duly completed immigration application forms, 2 copies of curriculum vitae of the applicant, passport size photos, copies of certificates and the organization chat;
. The applications shall be submitted to the Malawi Investment Promotion Agency - MIPA (Secretariat) and the processed applications shall be presented before the Investment Approval Committee, which shall approve or reject, as the case may be;
. The General Manager/Chief Executive of Malawi Investment Promotion Agency (MIPA) shall immediately obtain the Temporary Employment Permit (TEP) and the Business Residence Permit (BRP) from the Chief Immigration Officer;
. Upon approval of the Business Residence Permit (BRP) or the Temporary Employment Permit (TEP), the investor shall be required to pay a processing fee of MK 3,500.00 for both permits and an issuance fee of MK 50,000.00 and MK60,000.00 for Business Residence Permit (BRP) and Employment Permit (EP) respectively.

LAND

The process shall be as follows:

. An investor shall submit an application to Malawi Investment Promotion Agency (MIPA) for allocation of land for investment;
. The application shall be accompanied by a Business Proposal that will give detailed information of the project.
. The Malawi Investment Promotion Agency (MIPA) shall process the application for the Investment Approval Committee;
. Upon allocation of land, the General Manager / Chief Executive of Malawi Investment Promotion Agency (MIPA) shall then work with Ministry of Lands for issuance of a Title Deed.
. All the payments made by investors on issuance of land shall be paid to Ministry of Lands through the Malawi Investment Promotion Agency (MIPA).

All application procedures can be obtained from the Malawi Investment Promotion Agency (MIPA) on Telephone No. : (265 - 1) 770 800, Fax No.: (265 - 1) 771 781, E-mail address: mipall@mipamw.org or write to: The General Manager / Chief Executive, Malawi Investment Promotion Agency (MIPA), Private Bag 302, Capital City