Investment Climate and Business Opportunities for Japan

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1 Investment Climate and Business Opportunities for Japan Tokyo, April 16, 2013

2 PRESENTATION STRUCTURE 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

3 WHY MOZAMBIQUE Pemba Beach Cabo Delgado Province Pemba Beach Hotel Cabo Delgado Province Train carrying coal to the port of Beira Sorghum production Manica Province Titanium mining Nampula province Artisanal fishing

4 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 Mediterranean Middle East China/ India Japan Via Johannesburg (HK, Bangkok, Neighboring Countries Singapore, Beijing, etc.) Nairobi Addis Ababa Dubai Lisbon

5 MOZAMBICAN ECONOMY AT A GLANCE Area: km 2 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

6 ECONOMIC GROWTH RATE ( ) 16,0% 14,8% 12,0% 12,3% 8,0% 7,1% 4,0% 0,0% 2,2% 1,5% 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.

7 WHY MOZAMBIQUE 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;

8 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

9 MOZAMBIQUE-JAPAN TRADE

10 1000 USD MOZAMBIQUE-JAPAN TRADE 250, , , ,000 Exports Imports 50, Source: INE Main Products Exported: Crustaceans, Sesame, Cashew, Titanium, Seafood Main Products Imported: Vehicles, Motorcycles, Wheat, Rice, Machinery and its parts, Electric conductors, Chemicals

11 FDI TRENDS IN MOZAMBIQUE

12 FDI INFLOWS BY SOURCE COUNTRY TOP 10 ( ) FDI (US$) Spain 34,411,670 Belgium 52,090,450 Italy 71,566,932 USA 73,022,398 UK 99,036,800 Mauritius 126,237,876 UAE 294,358,778 China 377,559,640 Portugal 438,200,865 RAS 469,764,632

13 FDI INFLOWS BY SECTORS 2010 TO 2012 US$ Other 289,415,347 Services 1,086,582,476 Tourism 552,943,715 Transport & Comm. 1,797,544,250 Industry 930,668,691 Energy 2,311,332,287 Construction 774,646,385 Agriculture 1,411,793,131

14 FOREIGN INVESTORS IN MOZAMBIQUE Mineral Resources Services Infrastructure

15 JAPANESE INVESTMENT IN MOZAMBIQUE Coal Mining Revuboe, Tete LNG Project Off-shore, Rovuma Basin HITACHI Technical Service Moatize, Tete MOZAL Aluminium Smelter, Beloluane, Maputo Wood chips Maputo

16 LEGAL FRAMEWORK ON INVESTMENT Investment Law; Regulation on Investment ; Code of Fiscal Benefits.

17 REGULATION ON INVESTMENT LAW (FDI MINIMUM REQUIREMENTS FOR ELIGIBILITY FOR EXTERNAL REMITTANCE OF PROFITS AND INVESTED CAPITAL) Minimum value of Foreign Direct Investment: US$ ; or Generates annual sales not less than US$ ; or Registers annual exports of goods or services not less than US$ ; or Creates and maintains at least 25 direct employment positions for Mozambicans (From 2 nd year of operations).

18 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%

19 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

20 INVESTMENT INCENTIVES SPECIFIC BENEFITS 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

21 BILATERAL TREATIES & AGREEMENTS 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.

22 Agriculture & Agro-industry Fisheries and Aquaculture Industry & Commerce Transport and Communications Special Economic Zones INVESTMENT OPPORTUNITIES Energy Tourism Mineral Resources

23 TRANSPORT AND LOGISTICS

24 GEOGRAPHICAL CONFIGURATION Road transport considered efficient for distances not exceeding 500Kms. Therefore better for the East-West Orientation Long Distances (North-South): Sea and Rail NORTH EXISTING RAIL LINES Legend RAIL LINES PLANED IN THE TRANSPORT SECTOR STRATEGY Airports Mapai Ribaue Nhamayabwe Moatize Machaila Lalaua Caia Inhangoma Nicoadala Machoca Massangena Macuse Chitobe Montepuez Murrumbala Muxungue Mueda Perre Mocimboa Namarroi Estaquinha - da Lioma Dondo Praia. - Mutuali CURRENT SITUATION OF THE COAL LOGISTICS CENTER Pre-feasibility study done SENA LINE OPERATIONAL (Capacity 6 MTPA) (UPGRADE to MTPA in 3 years) Moatize Nacala (Via Malawi) in 3 years Moatize Nacala (Bypassing Malawi) SOUTH

25 Mining, Oil & Gas

26 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.

POSSIBLE FUTURE DEVELOPMENTS IN MINING Base Metals (Cu,Ni,Zn) Viability Studies and Exploration Phosphates In Monapo - Studies and production 3.

27 POSSIBLE FUTURE DEVELOPMENTS IN MINING 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

28 SEDIMENTARY BASINS Rovuma Basin Mozambique Basin Maniamba Basin Middle Zambezi Basin Lake Niassa Basin 28

CURENT EXPLORATION CONCESSIONS Buzi M10 Sofala Area A

5%) Sasol (85%) Sasol (90%) Sasol (70%) Sasol (50%) ENH

5%) ENH (15%) ENH (10%) ENH (25%) Petronas (35%) ENH

Area 2 & 5 Area 3 & 6 Anadarko (35.7%) Anadarko (36.

Prom (24%) Mitsui (20%) ENH (10%) ENH (10%) Total (40%)

29 CURENT EXPLORATION CONCESSIONS Buzi M10 Sofala Area A P&T PSA 16 & 19 Buzi Hydroc. (75%) Sasol (42.5%) Sasol (85%) Sasol (90%) Sasol (70%) Sasol (50%) ENH (10%) Petronas (42.5%) ENH (15%) ENH (10%) ENH (25%) Petronas (35%) ENH (15%) IFC (5%) ENH (15%) Onshore Rovuma Area 1 Area 4 Area 2 & 5 Area 3 & 6 Anadarko (35.7%) Anadarko (36.5%) Eni (70%) Statoil (65%) Petronas (50%) Maurel & Prom (24%) Mitsui (20%) ENH (10%) ENH (10%) Total (40%) ENH (15%) PTT (10%) ENH (15%) Bharat (10%) Videocon Galp (10%) Kogas (10%) Tullow (25%) ENH (10%) (10%) PTT (8.5%)

30 LNG FUTURE OPPORTUNITIES IN NATURAL GAS DOWNSTREAM LNG Export 7,000 Ha Social Infrastructure Housing Schools Training Centers 18,000 Ha Infrastructure Development Hospitals Ports Roads Petrochemical Industry Bulk Infrastructure Fertilizers Rail Network Airports Methanol Power GTL Plastics Fuels Pharmaceuticals

31 ENERGY

32 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

2 kwm 2 /day Growing Electricity Needs: more than 12 % per annum Regional market

33 OPPORTUNITIES Hydro potential: MW Natural gas: reserves & exploitation Coal: reserves/exploration Potential for Renewable Energy development: approx. 5.2 kwm 2 /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 Benga (2000 MW) Lúrio (180 MW) Cahora Bassa North (1245MW) Alto-Malema (50 MW) Mphanda Nkuwa (1500 MW) Moatize (2400 MW)

34 GENERATION PROJECTS: GEOGRAPHIC LOCATION Benga (2000 MW) Lúrio (180 MW) Cahora Bassa North (1245MW) Alto-Malema (50 MW) Mphanda Nkuwa (1500 MW) Moatize (2400 MW) Mavuzi 2 & 3 (60 MW) Boroma (200 MW) Lupata (600 MW) Kuvaninga (40 MW) EDM / SASOL (160 MW) Massingir (25 MW) Temane (50 MW) Gigawatt (100 MW) Aggreko (100 MW) Hydro Gas Coal

35 AGRIBUSINESS INVESTMENT OPPORTUNITIES

36 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 MAIN PRODUCTS CORRID ORS Pemba- Lichinga Nacala Zambezi Valley COUNTRIES LINKED Malawi Malawi, Zambia Malawi, Zambia KEY PRODUCTS cotton, cashew nuts,

37 DEVELOPMENT CORRIDORS & PRODUCTS CORRIDORS MAIN PRODUCTS CORRID ORS Pemba- Lichinga Nacala Zambezi Valley COUNTRIES LINKED Malawi Malawi, Zambia Malawi, Zambia KEY PRODUCTS cotton, cashew nuts, sesame, beans, maize and timber cotton, cashew nuts, beans, sesame, maize and timber cotton, cashew nuts, sesame, beans, maize, rice, teas, coconuts and timber Beira Zimbabwe rice, sugar, horticultures, poultry products, chicken and eggs Limpopo RSA, Zimbabwe Maputo RSA, Swaziland rice, sugar, horticultures, poultry products, chicken and eggs horticultures, chicken and eggs, fruit and sugar

38 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;

39 WHAT CAN CPI DO FOR YOU 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. Assist through investment process & aftercare Assist company registration, visa, etc. Provide information on economy, industry & legislation CPI Mandate Facilitation of National & Foreign Investment Introduce potential projects, sites, business partners Arrange meetings with Government officials Issue concession of fiscal/custom incentives

40 ARIGATOU GOZAIMASHITA! Rua da Imprensa 332 R/C Caixa Postal 4635 Maputo, Mozambique Tel: Fax:

Business and Investment Opportunities in the Industrial Sector

REPUBLIC OF MOZAMBIQUE MINISTRY OF INDUSTRY AND TRADE NATIONAL DIRECTORATE OF INDUSTRY Business and Investment Opportunities in the Industrial Sector Mozambique Business Luncheon JHB 28 th June 2012 By:Dr.