Algeria: Business environment at a glance

Algeria: Business environment at a glance. Check it out:
(EIU Viewswire Via Thomson Dialog NewsEdge) COUNTRY VIEW

FROM THE ECONOMIST INTELLIGENCE UNIT

Policy towards private enterprise and competition

2006-07: Privatisation of some state-owned firms may proceed, including some banks and Algerie Telecom.

2008-10: There is a good chance that further major privatisation deals will have been completed by the end of this period.

Policy towards foreign investment

2006-07: Foreign investment will be encouraged in most areas of the economy, in a bid to develop the private sector. However, the business environment for foreign firms will remain opaque.

2008-10: Foreign investors will continue to be courted. Deregulation will expand, and transparency will improve further.

Foreign trade and exchange controls

2006-07: The Association Agreement with the EU will force some rationalisation and reduction of tariffs.

2008-10: Reforms of the trade system and the financial services industry will accelerate as Algeria prepares for accession to the World Trade Organisation.

Taxes

2006-07: Corporation tax lowered from 30% to 25% with retroactive effect from January 1st 2006. Exemptions remain widespread. Few efforts to widen the tax base and improve collection, given strong levels of hydrocarbons revenue.

2008-10: Value-added tax will be expanded, and corporate and income tax rates may be reduced further.

Financing

2006-07: Banking sector reform will gradually pick up pace, focusing on staff training and strengthening the balance sheets. The role of foreign banks is likely to increase.

2008-10: Further efforts will be made to modernise and recapitalise the banking system, with further divestments expected.

The labour market

2006-07: Organised labour will remain resistant to privatisation, although a shift in attitude is discernible, offering room for negotiation and compromise. However, progress will be slow, with little movement on liberalising restrictive labour laws.



2008-10: Growth in the private sector will be too slow to create a sufficient number of sustainable jobs. Although there will be some progress on labour legislation reform, implementation will remain patchy.

Infrastructure

2006-07: There will be increasing use of build-operate-transfer schemes in the power and water sectors. The government will also step up public investment in areas such as housing, transportation and telecommunications.

2008-10: A broader array of public works projects will be opened up to foreign private capital.

Copyright 2006 Economist Intelligence Unit
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