• The budget is coming out this evening. As a financial analyst, what are your expectations of it?

We hope the budget will be full of bold initiatives this time round. One thing I will say off the top of my head is that, in my capacity as a financial analyst and banker, I was asked to contribute my views to the drawing up of the budget. I must say that this consultative process by which the budget is drawn up is quite intriguing and helpful.

• Is this the first time you’ve been asked to contribute your views?

Well, I think it’s always been a consultative process but this one has felt more substantial than many of us remember and we are quite appreciative of that.

• What are the major concerns of your sector?

The concerns are really that we should not let the African opportunity slip by. Mauritius should really be the head office and treasury centre for Africa. Previously, we had the India tax treaty and now we feel that with all the huge investments going into Africa, this is the next big opportunity. I think that Mauritius can bring a lot of services: we have a stock market that can be much bigger and more liquid and there is an urgency to develop our banks and take stakes in banks across the region. In that sense, we feel that we should have one, the legislation, two, the products and three, the people to really make use of Mauritius as a regional centre for financial services and banking.

• What sort of legislation do you expect the minister of finance to come up with?

We were very happy that the limited partnership bill was finally passed through parliament.

A lot of measures that we are asking for are capacity building initiatives and policy making. This is not just for the financial sector I believe we will see steps to give the Board of Investment more muscle to offer more financial services. So despite all Mauritius has accomplished as a financial services centre – and it is substantial – it’s still kind of not well understood. What we can be is a true financial centre for Africa and manage the huge financial flows out of Asia. So, we have to position ourselves much more substantially and make sure that the market is aware of what we are doing.

• Do you see sufficient readiness for us to go down the Africa route?

As recently as three or four years ago, when we set up our bank, AfrAsia, people here were not looking at Africa at all at the time. A little investment here and there. But since then the story of Africa has become much more mainstream. I would say we are starting to get ready psychologically. Tangibly, in terms of actually going there and bringing in investments via Mauritius, that’s still all to play for and develop. Mauritius needs to position itself much like Singapore or Hong Kong, as a place to do business.

• I’ve been hearing this talk about becoming a hub for Africa for a long time. What is actually preventing us from getting there?

There is a lot more to do to make sure that we have the base. We need to hire more foreign professionals. People should look at Mauritius and say that this is the place where you will find more people who know how to handle and do business with than anywhere else in Africa.

• Don’t you think that our laws have already opened up to foreign talent? Some people say a bit too much.

I would say that depends what we are trying to achieve. If we believe that our growth will come from the region, then more talent is more desirable than less. We need a collection of experts with experience in those markets. That would be much more conducive to developing ourselves much like Dubai or Singapore. Mauritius is a very welcoming place and I’m sure we will be able to manage it. Now, I’m not talking about changing the population base overnight but we will have to acknowledge that we will need certain skills that are not readily available here. We need to think how to attract expatriates and talented Mauritians who are now abroad to come back. There is a pool of talented Mauritians working in financial services in France, Sydney, Montréal and so forth. Many probably feel that Mauritius is simply not big enough a market to have a specialized career. Once Mauritius becomes more visible, then you will have people coming back.

• Some people say that the real reason why our talented professionals are not coming back is that there is no real meritocracy here. Is that a major consideration?

(Laughs) I can’t say what happens in the political or government process but the financial sector is more market-driven. We need to create the opportunities for Mauritians who want to come back. If they have to give up a settled life and career abroad you have to offer them something.

• Apart from the banking sector, what other sectors do you think the budget should focus on and help to emerge?

I think one of the issues is training and skills. That cuts across all industries. We should provide the kind of qualifications here which will take people places. We should build up the talent pool. We should ensure that infrastructure is adequate, that there is airline access, ports and all those little areas that make Mauritius a services ecosystem. It’s not just one sector but a lot of common issues.

• To move away from the budget, there has been a lot of talk about the necessity to depreciate the rupee. As a banker, how do you feel about that?

Well, we live in a democracy. We’ve got an open capital market. There’s only so far that we can drive currency in one direction. It’s all about supply and demand. The more a currency depreciates, the more expensive everything else gets so it’s not win-win. If it goes up, a lot of manufacturing will suffer. It’s a delicate balancing act that policy makers have to keep in mind.

• How about foreign investment? Do the decreased figures worry you?

Well, it’s hard to measure. Sometimes it comes in big batches over time and sometimes in comes in for certain projects. Whether investment is foreign or local isn’t the issue. There should be investment period. We see big projects cropping up all over the place.

• Are they sustainable?

Big projects are. Not all of them will survive but which ones will only time will tell. Let’s not forget that these projects only got the go-ahead after investors and bankers went over them with a calculating eye. But probably a lot of those returns are based on growth. We can only hope that that growth continues. Like tourism for example.

• Do you mean that many of these centres depend on tourists for their survival? Do you see a lot of tourists travelling 20,000 miles to buy brands here?

Tourists come here anyways. One of the good things is that Bagatelle for example sells dholl-puris and a lot of local dishes. That’s offering tourists exposure to Mauritian culture. The extent to which tourists want to experience local culture is surprising. I’m not saying that it should be all high end branded, but if you have a lot of interesting Mauritian handicraft besides the brands, that makes an attractive shopping experience.

• Will there be enough tourists to buy these brands?

Yes, I think so. You have business tourists as well who come through and want to do more than just stay in the hotel. I see a few shops in Bagatelle selling designer label clothes 15-20% cheaper than what you would find in Singapore. That’s a plus.

• While these centres hope tourists will come by, many hotels sell all- inclusive packages and keep the tourists locked up, force-feeding them four times a day. Is that going to hurt this industry?

Well, you also have a lot of people renting bungalows at, say, Pointe-aux-Piments and Flic en Flac.

• But those aren’t the people who will buy brands, are they?

There’s more purchasing power there than you might think. They might not choose to pay for a luxury hotel but travel around the island. We have to be careful not to assume that tourists with significant purchasing power are just at five star hotels. That would be an incorrect assumption. That’s just a part of the tourist market. We have to ensure also that local entrepreneurs/ SMEs have opportunities to go after those adventure or cultural tourists who don’t want all-inclusive packages.

• Coming back to the budget, is the business community looking at the budget for some reduction in taxes or maybe doing away with some?

They will be looking at measures that support growth on the tax side. No one minds paying tax but it’s frustrating when it changes too quickly. But as long as we are having a consistent methodology and people know that they are still having a good growth rate, I think we will continue to get a lot of investment.

• Did you actually advise on taxes? I mean when you were consulted, did you voice out an opinion on taxes?

(Laughs) I have to be careful not to go towards privileged information but it’s important to have a transparent tax strategy that does not change too much in terms of rates or types. There are implementation costs as well. Every time a tax is changed, a banking system has to be recoded, you have to retrain people and these things can also make entrepreneurs feel overwhelmed with keeping up with the complexity. What I love about Mauritius is as a personal tax payer, at lunch time once a year, I can take three or four pieces of paper and quickly do my taxes. I’m very happy to pay my 15%. I think what I get in Mauritius for infrastructure is wonderful and I think it is a real role model just to keep taxes at a fair level which people feel they get good value for.

• You mean the uniform 15%?

I’m not saying that across all sectors but as a personal tax payer, I find that the tax rate is very fair.

• When taxpayers think that the government is being fair to them that means they are not paying enough.

I think if people feel the government is being unfair, they will actually pay a lot less because they under declare.

• Many will under declare anyway.

No, I don’t think so.

• You think it’s only when the rates are high that people under declare?

It’s a matter of collection efficiency as well and there’s VAT which is another way the government collects tax.

• What about VAT? Don’t you think that reducing it would alleviate the suffering of the poor?

That’s a very interesting question.

• What is the answer?

I’m not sure the poor drive the bulk of consumption. You have to be careful with fiscal and tax measures and I think there are other ways to direct other offsets or credits to the lower income. You can’t help lower income people by magic. Whether it is by more tax on everyone or waiving taxes for them, it would still have to be paid for somehow. The challenge is finding the right measure by which people would pay and still feel it’s fair.

• You think uniform 15% tax is fair?

I don’t know whether it is fair or not but I think that a fl at tax that is simple and easy to understand is not a bad thing. If you tried to pay taxes in a lot of countries now, you would pay thousands of dollars in accounting fees, and then you come up with all kinds of cottage industries to try and figure out ways to save tax. Clearly, if it’s not just a high rate, but it’s too complex, you risk loss of revenue, so I just think fair, simple and transparent is the way to go.

• You’ve expressed your views on which way the budget should go. What do you think the budget will really be about?

I think the budget is going to be a budget of action. I think a lot of things we are going to see in there are areas where there have been a lot of inconsistencies which would hopefully be smoothed out. My view is that whatever the tax structure, it is there and we should avoid endless lobbying to make it higher or lower. If we need money []taxes], we need to raise that money. But let’s make it a thing which is understood. I think it is going to be a budget that brings out capacity building and investment.

• What kind of initiatives do you think Xavier Duval will take?

Initiatives that get us more tax treaties into Africa, things that get us connectivity in Africa and India. Initiatives that make sure that we are seen as the tourism, educational and business hub for the region.

• Do you expect any social measures in this budget?

I think there should be steps taken to make sure again that people are not left behind but if the country’s economy is to continue to grow, it can’t always be about redistribution. It also has to be about finding the right balance.

• Do you think the Corporate Social Responsibility (CSR) scheme is working well? Some companies are complaining, are you one of them?

No, we’re paying our share and we’re delighted to do it. We’re very active. In fact, it gave us a lot of pride to get hands on and get involved. And I think that’s part of what makes Mauritius quite special so I don’t think it’s necessarily something that businesses are complaining about. I think it’s one of those things people get used to.

Touria PRAYAG
(l’express Weekly, Friday 4 November)

Touria PRAYAG