Mauritius appoints minister for financial services
When Delta, a South Africa-based property investment fund, decided to switch the offshore domicile of its international operations from Bermuda to Mauritius a year ago, it gained unexpected benefits, reports the Financial Times.
“We’ve been very pleased,” says Bronwyn Corbett, head of Delta, as she reflects on the success of the operation.
She points to the depth of domestic investment capacity, citing 35 groups who attended its recent results presentation in Port Louis. “Mauritius has been a lot more advantageous than we originally thought,” she says.
Over the past two decades, the country’s role as a financial centre has grown significantly on the back of deep links to India. But Delta has been part of a second, Africa-focused wave on which Mauritius is keen to capitalise.
In a sign of its commitment to the financial services sector, the new government has appointed a minister for financial services, Sudarshan Bhadain.
Things have come a long way since the 1990s, when Rama Sithanen, finance minister, at the time, diversified into offshore services at a time when “sugar was becoming sour, not sweet”.
He says: “We created the ecosystem for global business, a regulatory, legal and incentive framework for people to invest via Mauritius.”
India was opening up its economy, and the two countries — with long historical connections — signed a treaty that offered mutual investment protection and substantial tax benefits.
But if New Delhi thought the arrangement would primarily help Indian companies expand abroad, Port Louis offered a framework for what would prove to be a far bigger attraction: US and European investment in India.
Ben Lim, head of Intercontinental Trust, a financial services company, recalls rapidly shifting one India-focused fund to Mauritius from a domicile in Netherlands Antilles in order to trim costs and improve returns.
“Mauritius offered a favourable tax regime, no exchange controls, no capital gains tax and no hefty stamp duty,” he says.
Today, India still represents the bulk of the offshore financial sector by volume, says Mr Sithanen, who now runs International Financial Services, a management company.
Yet, like Mr Lim, Mr Sithanen says there has been growing interest in investment funds linked to Africa, such as Delta.
Robin Mardemootoo, a lawyer specialising in financial services in Port Louis, says an additional attraction is the country’s strong legal system, a legacy from the British colonial period.
There are some problems — the government has been criticised by some for its handling of Bramer Banking Corporation, a subsidiary of British American Investment (BAI). Bramer was suspected of being involved in a Ponzi scheme. The government launched an investigation, revoked its licence and has taken over its activities.
“We had no choice,” says Vishnu Lutchmeenaraidoo, the finance minister. “We faced an earthquake and we had to reassure investors.”
But the government’s stance on tax havens shows the clearest indication of how it wishes to position itself for the future.
Mr Lutchmeenaraidoo stresses: “Mauritius is no longer and will no longer be a destination for shell companies. It will become a legitimate, transparent international financial centre.”
