Investment Climate and Business Opportunities for Japan

Tokyo, April 16 , 2013

• I – Why should you invest in Mozambique

• General aspects and strengths

• II – Mozambique-Japan Trade

• III - FDI Trends in Mozambique

• IV – Legal Framework on Investment

• V – Investment Opportunities

• Transport & Logistics

• Mining, Oil & Gas

• Energy

• Agribusiness

PRESENTATION STRUCTURE

WHY MOZAMBIQUE

Pemba Beach – Cabo Delgado Province Pemba Beach Hotel – Cabo Delgado Province

Sorghum production – Manica Province Titanium mining – Nampula province Artisanal fishing

Train carrying coal to the port of Beira

Neighboring

Countries

Mediterranean

Middle East China/ India

WHERE IS MOZAMBIQUE? - Strategic & Privileged Location-

Mozambique has an advantageous geographic positioning, providing an ideal gateway to both international and regional markets

From Japan to Mozambique

Via

Johannesburg (HK, Bangkok,

Singapore, Beijing, etc.)

Nairobi

Addis Ababa

Dubai

Lisbon

Japan

MOZAMBICAN ECONOMY AT A GLANCE

Area: 799.380 km2

Population: 23 million

Population Growth Rate: 2.8

GDP (Nominal): USD 14.5 billion

Per capita: USD 614

GDP Growth Rate: 7.5%

Trade:

Exports (2011): USD 3.6 billion

Imports (2011): USD 6.3 billion

• Inflation (CPI): 2.09

• Unemployment Rate: 22%

• Literacy Rate: 50.4%

• Exchange Rate MT/USD (2012):

28.4

2,2%

14,8%

1,5%

12,3%

7,1%

0,0%

4,0%

8,0%

12,0%

16,0%

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

ECONOMIC GROWTH RATE

(1995-2011)

8,1%, annual growth rate, one of the fastest among developing countries due to increase in domestic savings, access to international finance, tehcnology transfer, FDI flows.

Rich and Diverse Natural Resources Base: Large

tracts of arable land, forests, natural reserves of

mineral resources, hydrocarbons, water and historical

& cultural heritage;

Increasing investment in infrastructures across the

country (roads, airports…);

Stable Investment Legislation (Predictable, Consistent

Transparent and Protective for Investors);

Political and social stability;

WHY MOZAMBIQUE

100% of investment ownership and control;

Access to preferential markets: SADC, USA, EU,

China, India;

Competitive, educated & easily trainable labor force;

One of Africa‘s most attractive economies for FDI；

Welcoming attitude: hospitality, sincerity, friendliness

WHY MOZAMBIQUE

MOZAMBIQUE-JAPAN TRADE

MOZAMBIQUE-JAPAN TRADE

Main Products Exported:

Crustaceans, Sesame, Cashew, Titanium,

Seafood

Main Products Imported:

Vehicles, Motorcycles, Wheat, Rice, Machinery

and its parts, Electric conductors, Chemicals

0

50,000

100,000

150,000

200,000

250,000

2007 2008 2009 2010 2011

10

00

USD

Exports

Imports

Source: INE

FDI TRENDS IN MOZAMBIQUE

FDI INFLOWS BY SOURCE COUNTRY

TOP 10 (2010-2012)

469,764,632

438,200,865

377,559,640

294,358,778

126,237,876

99,036,800

73,022,398

71,566,932

52,090,450

34,411,670

RAS

Portugal

China

UAE

Mauritius

UK

USA

Italy

Belgium

Spain

FDI (US$)

FDI INFLOWS BY SECTORS

2010 TO 2012

1,411,793,131

774,646,385

2,311,332,287

930,668,691

1,797,544,250

552,943,715

1,086,582,476

289,415,347

Agriculture

Construction

Energy

Industry

Transport & Comm.

Tourism

Services

Other

US$

FOREIGN INVESTORS IN MOZAMBIQUE

Mineral

Resources

Services

Infrastructure

JAPANESE INVESTMENT IN MOZAMBIQUE

HITACHI Technical Service

Moatize, Tete

Coal Mining

Revuboe, Tete

MOZAL Aluminium Smelter,

Beloluane, Maputo

LNG Project

Off-shore, Rovuma Basin

Wood chips

Maputo

Investment Law;

Regulation on Investment ;

Code of Fiscal Benefits.

LEGAL FRAMEWORK ON INVESTMENT

Minimum value of Foreign Direct Investment: US$ 100.000; or

Generates annual sales not less than US$ 300.000; or

Registers annual exports of goods or services not less than US$ 50.000; or

Creates and maintains at least 25 direct employment positions for Mozambicans (From 2nd year of operations).

REGULATION ON INVESTMENT LAW (FDI MINIMUM REQUIREMENTS FOR ELIGIBILITY FOR EXTERNAL REMITTANCE OF PROFITS AND INVESTED CAPITAL)

TAXATION SYSTEM

IMPORT CUSTOMS DUTIES

Equipment 5.0% Raw Material 2.5% Semi-finished products 7.5% Finished products 20.0% VAT 17.0%

Corporate Tax

• General 32.0 %

• Agriculture 10.0% Personal Income Tax

• Minimum 10.0% • Maximum 32.0%

Withholding Tax 20.0%

INVESTMENT INCENTIVES GENERAL

Exemption of customs duties and VAT on the importation of equipment contained in class “K” of the customs tariff

Fiscal Credit

• Maputo City 5%

• Other Provinces 10%

Professional Training: 5% deducted from the

taxable income - IRPC

Creation of Basic Infrastructures

Trade and Industry in Rural Areas

Manufacturing & Assembly Industry

Agriculture and Fisheries

Hotels and Tourism

Science and Technology Parks

Large Scale Projects

Rapid Development Zones

Industrial Free Zones

Special Economic Zones

INVESTMENT INCENTIVES

SPECIFIC BENEFITS

Investment Promotion and Reciprocal Protection Agreements:

South Africa, Germany, Algeria, Belgium, China, Cuba,

Denmark, Egypt, USA, USA (OPIC), Finland, France,

Indonesia, Italy, Mauritius, Netherlands, Portugal, Sweden,

United Kingdom, Vietnam, India, Switzerland, Zimbabwe and

Spain, Japan (to be signed in 2013).

Agreements to prevent Double Taxation and Fiscal

Evasion:

Portugal, Mauritius, United Arab Emirates, the Autonomous

and Special Administrative Region of Macau, Italy and South

Africa.

BILATERAL TREATIES & AGREEMENTS

INVESTMENT OPPORTUNITIES

Agriculture

&

Agro-industry

Industry

&

Commerce

Transport

and

Communications

Energy

Fisheries

and

Aquaculture

Special Economic

Zones

Mineral

Resources Tourism

TRANSPORT AND LOGISTICS

NORTH

CENTER

SOUTH

Mapai – Machaila – Massangena –

Chitobe – Muxungue – Estaquinha

- Dondo

Legend

Nhamayabwe – Inhangoma –

Murrumbala – Perre – Namarroi –

Lioma - Mutuali

Ribaue – Lalaua – Machoca –

Montepuez – Mueda – Mocimboa

da Praia.

Moatize – Caia – Nicoadala – Macuse

GEOGRAPHICAL CONFIGURATION

Long Distances (North-South):

Sea and Rail

Road transport considered efficient for distances not

exceeding 500Kms. Therefore better for the East-West Orientation

Moatize – Nacala (Via Malawi)

in 3 years

Moatize – Nacala (Bypassing Malawi)

EXISTING RAIL LINES

RAIL LINES PLANED IN THE TRANSPORT

SECTOR STRATEGY

CURRENT SITUATION OF THE COAL

LOGISTICS

SENA LINE OPERATIONAL (Capacity 6 MTPA) (UPGRADE to 20 - 25 MTPA in 3 years)

Pre-feasibility study done Airports

Mining, Oil & Gas

PETROLEUM AND MINERAL RESOURCES

ACTIVITIES IN MOZAMBIQUE

Top 12 countries with biggest gas resereves in the

world (25% of Africa’s total reserves);

1,000 mining titles granted to national and foreign

entities;

More than 20 billion metric tones of confirmed

coal deposits.

Base Metals (Cu,Ni,Zn)

Viability Studies and Exploration

Phosphates

In Monapo

- Studies and production

3.5 million tons/annum of phosphates

1,5 million tons/annum of iron

Magnetite and ilmenite

Studies for iron production

1. Coal

2. Titanium

3. Construction Material

4. Precious Stones

5. Heavy Sands

1. Natural Gas

2. Alminium

3. Phosphates

4. Tantalite

5. Others

POSSIBLE FUTURE DEVELOPMENTS IN

MINING

SEDIMENTARY BASINS

28

Rovuma Basin

Mozambique Basin

Maniamba Basin

Middle Zambezi Basin

Lake Niassa Basin

Buzi

Buzi Hydroc.

(75%)

ENH

(10%)

M10

Sasol

(42.5%)

Petronas (42.5%)

ENH

(15%)

Sofala

Sasol

(85%)

ENH

(15%)

Area A

Sasol (90%)

ENH

(10%)

P&T PSA

Sasol (70%)

ENH

(25%)

IFC

(5%)

16 & 19

Sasol (50%)

Petronas (35%)

ENH

(15%)

Onshore Rovuma

Anadarko (35.7%)

Maurel &

Prom (24%)

ENH

(15%)

PTT

(10%)

Area 1

Anadarko (36.5%)

Mitsui (20%)

ENH

(15%)

Bharat

(10%)

Videocon

(10%)

PTT

(8.5%)

Area 4

Eni

(70%)

ENH

(10%)

Galp

(10%)

Kogas

(10%)

Area 2 & 5

Statoil (65%)

ENH

(10%)

Tullow

(25%)

Area 3 & 6

Petronas

(50%)

Total

(40%)

ENH

(10%)

CURENT EXPLORATION CONCESSIONS

LN

G

LNG Export

Petrochemical Industry

Infrastructure Development

Social Infrastructure

Housing

Schools

Training Centers

Hospitals

Bulk Infrastructure

Ports

Roads

Rail Network

Airports

Power

GTL

Fertilizers

Methanol

Plastics

Fuels

Pharmaceuticals

FUTURE OPPORTUNITIES IN NATURAL

GAS DOWNSTREAM

7,000 Ha

18,000 Ha

ENERGY

EXISTING POWER INFRASTRUCTURE

(GEN & TRANS)

Cahora Bassa (2075 MW) Chicamba & Mavuzi (90 MW)

Matambo - Caia HV

Transmission lines

Transmission lines from 66 to 400 kV in AC: 5216 Km and 900 Km in DC at ± 533 kV,

including Substations with a total capacity of 5350 MVA;

OPPORTUNITIES

• Hydro potential: 12000 MW

• Natural gas: reserves & exploitation

• Coal: reserves/exploration

• Potential for Renewable Energy development: approx. 5.2 kWm2/day

• Growing Electricity Needs: more than 12 % per annum

• Regional market (SAPP): energy shortage around 2000MW per annum

SAPP (Southern African Power Pool)

GENERATION PROJECTS: GEOGRAPHIC LOCATION

Moatize

(2400 MW)

Mphanda Nkuwa

(1500 MW)

EDM / SASOL

(160 MW)

Boroma

(200 MW)

Lúrio

(180 MW)

Cahora Bassa North

(1245MW)

Lupata

(600 MW)

Massingir

(25 MW)

Benga

(2000 MW)

Mavuzi 2 & 3

(60 MW)

Alto-Malema

(50 MW)

Kuvaninga

(40 MW)

Gigawatt

(100 MW)

Aggreko

(100 MW)

Temane

(50 MW)

Hydro Gas Coal

AGRIBUSINESS INVESTMENT

OPPORTUNITIES

LAND

Land Ownership: State owned (cannot be bought, sold, mortgaged or

alienated)

Land Concession: 50 years, renewable for an equal period

DEVELOPMENT CORRIDORS & PRODUCTS

CORRIDORS

CORRID

ORS

COUNTRIES

LINKED

KEY PRODUCTS

Pemba-

Lichinga

Malawi cotton, cashew nuts, sesame,

beans, maize and timber

Nacala Malawi,

Zambia

cotton, cashew nuts, beans,

sesame, maize and timber

Zambezi

Valley

Malawi,

Zambia

cotton, cashew nuts, sesame,

beans, maize, rice, teas,

coconuts and timber

Beira Zimbabwe rice, sugar, horticultures, poultry

products, chicken and eggs

Limpopo RSA ,

Zimbabwe

rice, sugar, horticultures, poultry

products, chicken and eggs

Maputo RSA ,

Swaziland

horticultures, chicken and eggs,

fruit and sugar

MAIN PRODUCTS

PERSPECTIVES AND CHALLENGES

Investment in the gas field will double the GDP;

To improve the economy’s competitiveness;

To process the natural resources locally;

To improve the agricultural sector yield and increase productivity;

To invest in quality training, particularly in technical areas;

To improve logistic infrastructure networks that link to the interior of the

Country;

To increase domestic savings, enabling the expansion of domestic

investment;

OFFERS A PACKAGE OF SERVICES TO ASSIST NATIONAL AND FOREIGN INVESTORS

FACILITATING ACCESS TO INCENTIVES OFFERED BY THE GOVERNMENT AND THE

ESTABLISHMENT OF THEIR BUSINESSES.

WHAT CAN CPI DO FOR YOU

CPI Mandate

Facilitation of National & Foreign Investment

Assist through

investment process

& aftercare

Provide information

on economy, industry

& legislation

Issue concession

of fiscal/custom

incentives Arrange meetings

with Government

officials

Introduce potential

projects, sites,

business partners

Assist company

registration, visa, etc.

ARIGATOU GOZAIMASHITA!

Rua da Imprensa 332 R/C

Caixa Postal 4635

Maputo, Mozambique

Tel: +258 21313310

Fax: +258 21313325

Email: galves@cpi.co.mz

bcapitini@cpi.co.mz

srohit@cpi.co.mz