Macroeconomics
After nearly 10 years of social unrest in the 1990s, Algeria’s social situation has stabilized and its economy is in dire straits. After taking office in 1999, Algerian President Bouteflika successively implemented the three-year economic revitalization plan from 2001 to 2004 and the supplementary plan from 2005 to 2009, as well as the plateau and southern region development plans, and the economic development was relatively stable. After the 2009 financial crisis, Algeria strengthened the supervision and guidance of financial institutions, increased investment in the oil and gas field, accelerated the implementation of the energy diversification strategy, and actively developed nuclear energy, solar energy and other resources.
According to statistics from the Ministry of Commerce of China, China’s non-financial direct investment in Algeria in 2011 was 114 million yuan. By the end of 2011, China’s non-financial direct investment in Algeria was US$1.059 billion. The investment of Chinese enterprises in Algeria was mainly concentrated in the oil, gas and mining sectors.
Advantages of attracting investment
Thanks to the surge in international oil prices, Algeria’s economy has maintained rapid growth in recent years, and the country’s financial resources have become increasingly strong. On the one hand, the government invests heavily in infrastructure construction and creates a large number of market opportunities. On the other hand, it also improves the investment environment through various channels and adopts a series of preferential measures in the fields of trade, investment and engineering to encourage foreign companies to participate in the country’s economic construction.
Policy support, amend the investment law, grant different levels of tax incentives to investment projects, and the preferential years for important projects approved by the National Investment Commission can be up to 10 years. At the same time, formulate investment land policies to encourage investors to rent year-round; market-oriented reforms, Promote the privatization of state-owned enterprises, reform the banking and financial system to bring it in line with international standards, introduce competition mechanisms in important industries such as energy, telecommunications, and industry; promote opening up to the outside world, sign an association agreement with the European Union, gradually establish a free trade area, and actively join the WTO wait. Foreign investors enjoy national treatment and all investment projects that comply with the provisions of the law are exempted from customs duties on equipment imported directly for investment during the investment implementation stage after being declared and approved by the Investment Development Authority of Afghanistan. Value-added tax on products and services imported or purchased locally is exempt from paid transfer tax on all real estate purchased within the scope of investment. After the tax department certifies that the investment project has entered the operating stage (within 3 years), it will be exempted from company profit tax (IBS) and practice activity tax (TAP).
Industry and demand
The hydrocarbon industry is Algeria’s pillar industry, with output accounting for 45% of GDP, taxation accounting for approximately 55% of national fiscal revenue, exports accounting for 97% of total national exports, and 70% of the annual fiscal budget. Algeria’s oil reserves are approximately 7.2 billion tons, its recoverable reserves account for 1% of the world’s total reserves, and its natural gas reserves are approximately 5 trillion cubic meters.
There is a huge gap between urban and rural consumption in Algeria. Although residents’ living standards have gradually improved in recent years, the overall consumption level is not high, and residents’ consumption is still dominated by daily necessities.
Production and Financing
The Algerian government carried out privatization reforms in the telecommunications field in 2001, formulated industry regulations, established the Communications Management Committee and the Algerian Post Company and Telecommunications Company, separated telecommunications business management and operations, and encouraged foreign investment in the telecommunications field. With private investment, it is allowed to participate in the operation of Afghanistan Telecom Company, and actively promotes the concept of global business services to achieve networking with other countries in the world. Algeria’s electricity production capacity is 8,502 megawatts, and the electricity market is oversupplied.
In 2009, Algeria’s new policy stipulated that in all foreign investment projects or cooperative investment projects, Algerian shareholders or companies must hold a controlling stake (accounting for more than 51% of the shares), and foreign investment projects must be beneficial to Algeria’s foreign exchange collection during the entire project operation period. Afghanistan implements national treatment for foreign investors. Except for relevant legal restrictions or investment activities that do not comply with environmental protection regulations, there are no restricted areas for foreign investors. The government encourages investment in non-hydrogen sectors, especially in industry and agriculture.
