Mauritius: Global Business: Facing The Challenges And Threats Ahead

Last Updated: 4 February 2009
Article by KC Li, LLM, TEP

The Year 2008 has been a fairly good year for global business, with new company set-ups reaching record level for GBL1 treaty-using companies and funds, surpassing for the first time the number of GBL2 companies created during the year. Until the collapse of the investment banking business in the US in October last, leading to the credit crunch and the massive redemption of global equity funds, global business was enjoying another bull year on the back of an all-time high in India inbound and outbound investments coupled with a commodities boom in Africa, generating financial transactions of increasing volume and sophistication for our jurisdiction.

The acquisition of the FSC of its brand-new ample Office Tower at the Cybercity in Ebene and the relocation of the major global banks and management companies into various owner-occupied and custom-designed Houses in the Ebene business park are hallmarks of a vibrant bullish sector looking to expand and ascend new heights in the brave new world of services-exports.

However, challenges still abound for the sector and are rendered even more daunting by the global financial crisis which is currently wreaking havoc in our traditional and emerging markets and clogging the global economic machinery in deep recession, turning soon into deflation. What lies in store of the sector in the coming Year of the Ox?

The weaknesses of the sector have in fact worsened with the rising economic might of India and China and the emergence of Africa as the last frontier for lucrative business developments. The huge business potential that remains to be tapped with regard to India and the unique advantages that Mauritius enjoys as an offshore tax-efficient centre for investments into Africa have increased the concentration of global business in a narrow range of products and services based mostly on the Double Tax Treaty of India. While there is nothing wrong in optimising our use of that Treaty, it has called for such an attention to ensure its perennial nature as to neglect and under-rate other potentially beneficial products and services for development. It is even argued that there has been serious loss of business to other jurisdictions, especially in the case of private wealth management, as shown for example by the fall in new GBL2 companies in this year. This is likely due to our lack of competitiveness in terms of product licensing, regulations, fees and other service offerings. While product concentration is unhealthy and unsustainable, conducive to rent-seeking from a Sugar Protocol-like mentality of dependence on the India DTA, the biggest challenge is to make that strategic shift from low-value, passive back-office administration of entities structured, designed and planned elsewhere to more knowledge-based, value-added and proactive treaty and wealth planning and management.

A Report by the Commonwealth Secretariat following a Symposium on Exports of Financial Services from Mauritius in January 2008 made the following apposite observations:

" Mauritius needs to develop private banking, wealth management and asset management capabilities as a matter of urgency.....Whilst banks are an important part of the industry, they still only provide basic services and support, and generally lack an understanding of the true nature and needs of the industry.

PBWM and AM need a policy-cum-implementation push jointly from: (a) government –taking policy measures to facilitate the rapid emergence of specialised firms, private banks and asset managers; and (b) from private foreign and domestic participants in the financial services industry to upgrade and transform their presently limited capabilities for International Financial Services. It requires a concerted industry effort to realise the potential that exists. "

The Report also identified other areas offering potentials for development, such as Transfer Pricing and Global Tax Management to a larger universe of TNCs/MNCs, Risk Management & Complex Financial Engineering relating to M&As and PPPs (public-private-partnerships), especially for financing infrastructure in Africa.

Another weakness from which the industry has been suffering over the years is the shortage of qualified and trained manpower, which has severely limited the scope for expansion and upgrading of services. Though Mauritius claims to have 99% literacy and a large pool of graduates and professionals, it has always lacked the skills set and know-how to meet the world-class needs of the global business industry. There has not been a concerted public-private effort to provide structured academic and skills training to newcomers and practising professionals in the industry. This has led to sporadic, ad-hoc short-course theoretical and practical training by a variety of providers, so that the inevitable outcome has been desperate salary hikes and wide-scale poaching by larger and multinational firms from domestic smaller ones which have been painstakingly building up their team. The longer term effect of this malpractice is deleterious to the industry as it raises unreasonable expectations and perceptions of the financial services sector, which has now come to grief worldwide, with more scandals and excesses to unfold. The challenge for Mauritius is to devote more financial and human resources to develop training facilities at all levels and in practical terms to meet the increasing needs of the sector for multi-disciplinary and multi-lingual professional skills and knowledge. Otherwise, the image will linger of a glorified back-office sector speckled with flashy over-sized office towers harbouring a coterie of over-paid clerical elite, aided and abetted by the global professional firms to hoot.

We are already labouring under poor physical and electronic connectivity with the rest of the world, with telecommunications and air-connection costs still far too high by international standards, or at least compared to other established jurisdictions like Jersey & Singapore. The traffic congestion to reach CBD ( central business district), the slack-days required to get flight connections to Asian and African capitals, the infrastructure and bureaucratic bottlenecks and other market failures are all overwhelming signs of a Third World island struggling to play in the uneven field of First World operators. These are challenges that need to be embraced without any more delay for creating the right environment to attract the niche and chosen markets for making more substantive, higher value and optimum use of our competitive advantages. This will hopefully dispel for good the trite image of Mauritius as a laid-back destination for high-end tourism and not for 24/7 financial services, which we are finding difficulty to stave off in our roadshows.

The Year 2009 will be the year of great dangers but tremendous opportunities for our sector owing to the "economic hell" banged up by the global credit crisis and its systemic implosions relentlessly sparked off by financial scandals unfurling one after another, with Madoff scam rivalling Satyam fraud. On the one hand, IPOs, M&As, FDIs and portfolio investments in our traditional markets are dwindling, while the global scene is set for more State control, more Government equity participation and more regulation, which all hamper private initiatives for crossborder investments. On the other hand, this presents a rare opportunity for Mauritius to be ahead of the curve by taking innovative steps to make its domestic tax and regulatory regime more attractive, while remaining compliant with the OECD recommendations on transparency and exchange of information. A comparative study is being planned to assess the global competitiveness of Mauritius so as to decide upon the adoption of a partial or full territorial tax system within a tax treaty network, or a participation exemption system for foreign dividends and foreign-source interest and royalties, or a regulatory framework for transfer pricing management. In the same breathe, the opportunity should be seized to upgrade Mauritius to the status of a full-fledged established financial centre by amending existing regulations and introducing new legislation for promoting E-business and developing new products, like limited partnerships, shariah-compliant trusts, tax-exempt ( non-Treaty deriven) funds, Headquarters & principal companies, foundations ( for Civil-Code based clients) and other ISDA-related products & services. The Association of Trust and Management Companies (ATMC) has set up a Working Committee that is contributing valuable suggestions to Government on making this qualitative jurisdiction shift.

Our Association is also aware of the looming risks of the US and EU financial centres to look for scapegoats in their current quagmire and start branding smaller jurisdictions like Mauritius as tax-haven or secretive offshore centres for allowing tax fraud and eroding their tax base. Following the OECD Conference on the fight against international tax evasion in October 2008, Mauritius was not named as tax haven, but was cited an example of a jurisdiction which has accepted official commitments in 2000 but failed to carry them out. This is being strongly disputed by Government, as there is adequate regulation and enforcement of control by an independent regulator under our Financial Services Act. The ATMC unreservedly supports the stand of Government on affirming the integrity of our jurisdiction as no evidence has ever been proved to find Mauritius at fault in any form of tax evasion or money laundering. However, this unblemished track record does not deter us from entering into any Convention or implementing any requirements to meet the OECD standards on transparency and exchange of information. The ATMC is of the view that it is in our broad interest to sign Tax Information Exchange Agreements with the US and other EU states and by the same token, develop as many Double Tax Agreements with them. Mauritius must aim to be a treaty-planning base in the region and expand our Treaty network to cover all Africa and Asia. This will give our jurisdiction the breadth and substance to serve the region with tax effectiveness in full transparency. In this context, the ATMC is revamping its Code of Conduct to further professionalise the industry and ensure integrity within the profession. In the same spirit, it has also formalized collaboration with the University of Mauritius and the Human Resources Development Council to launch training courses in Global Financial Services for staff in the industry.

The current turbulence in the global financial world may be a godsend for fundamental and innovative rethinking and reshaping of our global business sector.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.