Mauritius: Mauritian Freeport – A Bridge Into Africa

The Mauritius Freeport is a duty-free logistics, distribution and marketing hub for the African / Asian region. Logistics and warehousing facilities are readily available for the transshipment, consolidation, storage and minor processing of goods. Setting up a company in the Mauritius Freeport is simple and the procedures have been streamlined with the implementation of an electronic licensing system, with applications for a Freeport Certificate being processed within 48 hours. Dedication to efficiency and customer service has played an important part in Mauritius’ Freeport’s continuing growth and success.

In order to operate in the Mauritius Freeport zones, a company, registered under the Mauritius Companies Act 2001 must be set-up with a minimum of one shareholder. No minimum capital is required for the incorporation of the company. A foreign company registered under the Companies Act 2001 can also apply for a Freeport license by merely registering a local branch of their in order to operate in the Mauritius Freeport, hence no minimum capital requirement for foreigners.

As of December 2006, 344 companies were licensed to operate in the Freeport. Out of these, about 234 were operational in such activities as:

• Re-export
• Transshipment
• Minor processing
• Assembly

Main products re- exported include machinery and electronic equipment (41%), textiles (22%), seafood (13%), chemical and pharmaceutical products (5%), with textile accessories, plastic goods and foodstuffs making up the remainder. The principal export markets for the Freeport were the United Arab Emirates, France, Madagascar, Italy, Reunion Island, Spain, and Japan.

Finland, China (including Hong Kong), Taiwan, Spain, South Africa, and India are the main sources of supply for traders involved in the Freeport. The main products traded include telecommunication equipment, textile fabrics and accessories, ready-made garments, electrical goods, bicycles, hardware, footwear, cosmetics, chemicals, industrial sewing machines, and plastic products.

The Freeport facilities for warehousing, breaking bulk, and re-export should be of particular interest to American / European / African companies. These services enable businesses to ship containerized goods to Mauritius, warehouse them in secure low-cost facilities, then break bulk and re-export them in an efficient and timely manner to African and Indian Ocean rim destinations. Goods can also be assembled in the Freeport for export to the African and Indian Ocean markets. Current assembly and processing activities in the Freeport include jewelry and precious stones, PET plastic bottles, transformation of fish into fillets, aluminum frames and fittings, sorting and packing of spices.

Three U.S. companies are present in the Mauritius Freeport:

• Expeditors International (Mauritius) Ltd, a subsidiary of Expeditors International of Washington Inc. Expeditors International (Mauritius) Ltd is a freight logistics company, providing freight forwarding services, supplier consolidation, and quality control
• Boxmore Plastics (Mauritius) Ltd, with significant U.S shareholding, produces PET plastic bottles for the local soft drink industry and for export to neighboring Reunion island, Madagascar, Tanzania, and Kenya
• Casamar (Mauritius) Ltd., a subsidiary of U.S.-based Casamar Holdings, Inc. specializes in the assembly and repair of nylon-braided tuna purse seine nets

The government, in collaboration with the private sector, is also promoting the Freeport as a seafood hub, in particular the transshipment, processing, storage, distribution, and re-exportation of high value-added seafood products using the modern port, Freeport facilities and logistics. In June 2005, a leading Mauritian company in partnership with Spanish investors, opened a tuna loin processing plant (Thon des Mascareignes Ltd.), with a capacity of 25,000 tons of tuna loin annually, for export to Europe and the U.S. for final processing and packaging. Bumble Bee, a U.S company, has a tuna supply and processing agreement with Thon des Mascareignes Ltd.

The Board of Investment (in collaboration with Airports of Mauritius Ltd) plans to develop an air cargo logistics center at the airport. The main activities targeted include re-export of high value/low volume products, light assembly operations, warehousing, labeling and repackaging, sea-air/air-sea and transshipment cargo, express courier, and freight forwarding services.

Permissible Freeport Activities include:

• Warehousing and storage Breaking bulk
• Sorting, grading, cleaning and mixing
• Labelling, packing, repacking and repackaging
• Light assembly
• Minor processing
• Ship building, repairs and maintenance of ships and aircraft
• Storage, maintenance and repairs of empty containers 
• Freight forwarding services
• Quality control and inspection services 
• Export and re-export oriented airport and seaport based activities

Incentives:

• Dividends not taxable
• 0% tax rate on corporate profits (Low Corporate tax of 15% for processing and transformation activities)
• Exemption from Customs duties and VAT on all goods and equipment imported into the Freeport zone
• Reduced port handling charges for all goods destined for re-export
• Free repatriation of profits
• 100% foreign ownership allowed (No immovable property to be held in Mauritius)
• Possibility to sell a quota of 20% of total goods re-exported on local market. (normal tax rate will apply)

Mauritius benefits from trade agreements such as the Cotonou Agreement, the Generalised System of Preferences (GSP) and the Africa Growth & Opportunity Act (AGOA) which provide preferential access for goods of Mauritian origin to the European Union and the United States, respectively. Furthermore, Mauritius offers preferential access to the 425 million consumers of Eastern and Southern Africa, representing an import potential of USD 100 billion, through its membership of two regional blocs, namely the Common Market for Eastern and Southern Africa (COMESA), and the Southern African Development Community (SADC).

Freeport operators in the Mauritius Freeport must undertake substantive value addition to be eligible for COMESA Certificate of Origin. Under the COMESA tariff reduction programme, all goods satisfying the value addition criteria of 35%, are eligible for COMESA duty free tariff, for re-export in all member states of the COMESA.  

Mauritius has built the largest logistics centre in the Indian Ocean to provide Freeport operators with fully integrated supply chain solutions in accordance with international standards. Over 120 000 m2 of Freeport infrastructures are available including dry warehouses, cold rooms, processing units and integrated logistics facilities.

A wide range of value-added services are offered at competitive costs including:

• Computerised stock management and order processing modules that operate in real time;

• Access to information about stock level at any time via Internet;
• Plug-in facilities for reefer containers;
• Container yards for storage of containers
• Inspection and verification of containers;
• Repairs and maintenance of containers;
• A complete "Garment on Hangers" (GOH) service designed for the textile industry;
• Transfer of cargo from the container terminal to the Freeport Zone and vice versa;
• Unstuffing and palletizing of cargo, repacking, labelling, shrink wrapping;
• Paperless environment with an electronic declaration system and a computerised licensing system;
• E-Market place for on-line marketing and trading of goods;
• Some specific light processing, assembly, tests and packaging services are also available in the Freeport.

Tailor-made logistics infrastructures have been developed in the port and airport proximity. The strategic location of Freeport zones in the port and airport area has enabled the development of competitive logistics services, in terms of shorter and efficient movement and access to Port container terminal and fishing quays, as well as efficient transfer of air cargo from Freeport zones to Ground Handling Agents.

Mauritius is increasingly being used by major shipping lines (Maersk/Sealand, P&O Nedloyd, and MSC) as a regional container transshipment hub. Mauritius has air connections with major business centres boasting more than 100 weekly international flights.  A purpose-built cargo terminal at the international airport caters for the existing export and transit traffic.

The Mauritius Freeport offers the possibility to Freeport operators of carrying out paper trade activities under stipulated terms and conditions. 

The Freeport operator is authorised to make shipment directly from the shipper in the original exporting country to the final importer in the importing country, without goods being physically landed in Mauritius.

It can thus be seen that The Mauritius Freeport provides for a liberal and comprehensive package of both fiscal and non-fiscal incentives for companies looking for a cost-effective logistics platform to tap the vast African market.

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.