In May 2012, Tunisia became the 44th country to adhere to the OECD Declaration on International Investment and Multinational Enterprises. This adherence bears witness to the determination that Tunisia holds towards strengthening the liberalisation of investment, increasing its integration into the world economy and promoting responsible business conduct

The revolution of 14 January 2011 has thrust Tunisia into a new phase of its history. The country is now striving to design and implement a development model that is inclusive, fair and equitable and based on good governance, transparency, citizen participation, regional development, innovation and regional and international integration. Tunisia is beginning its transition with a number of obvious assets. It is an upper-middle-income country, with a fairly sound macroeconomic framework, a relatively well diversified economy and human development indicators that are above the regional average and close to those of OECD countries. Yet Tunisia faces some serious socioeconomic problems, most notably unemployment and regional economic and social disparities, compounded by the dysfunctional elements that characterised the former regime, such as corruption and nepotism.

The January 2011 revolution reshaped the political, economic and social landscape of Tunisia. The transitional period has been marked by major political advances, but also economic difficulties and a tense social climate. Despite higher levels of unemployment and deficits, there are a few signs of recovery. After a decline in foreign direct investment of almost 26% in 2011, the Foreign Investment Promotion Agency has observed a 19% increase during the first four months of 2012. Tunisia’s potential for attracting investment is today linked to the improved business climate and renewed confidence of investors. Foreign investment accounts for the lion’s share of privatisations (almost 90% of total income from privatisation and restructuring). The new authorities have announced their intention to pursue their programme, to privatise certain enterprises confiscated after the revolution, and to consolidate public-private partnerships.

The 1993 Investment Incentives Code applies to both national and foreign investors. It has institutionalised an asymmetrical regime between enterprises wholly engaged in exports (offshore) and those geared towards the domestic market (onshore), under which the former benefit from tax exemptions and numerous incentives. The Code guarantees freedom of investment and nondiscriminatory treatment, although there are horizontal and sectoral exceptions to national treatment. Tunisia rates relatively high on the OECD FDI Regulatory Restrictiveness Index because of the obligation for foreign investors to obtain prior authorisation of their acquisition of securities or shares in established companies or in order to operate in service sectors when their holding exceeds 50% of capital. The new authorities have announced a revision of the Investment Incentives Code and a review of the approval and incentives system.

The new government, as well as enterprises and civil society, consider that strengthening business contribution in economic, social and environmental progress is a priority. While Tunisia has adhered to multilateral instruments on which the standards set out in the OECD Guidelines for Multinational Enterprises are based, their application in certain areas such as human rights, the environment or consumer protection should be improved. In terms of fighting corruption, a national body has been set up and is responsible for designing and implementing a strategy. The creation of new unions, non-governmental organisations and consultation mechanisms allows civil society to be more closely involved in the design of public policies. In order to promote the Guidelines and ensure that they are used, Tunisia will set up a National Contact Point in the Ministry of Investment and International Co-operation.

This chapter analyses the investment policy and promotion of Tunisia. The new authorities have announced a number of measures aimed at improving the investment climate, including the revision of the legal framework which had become complex and had yielded fairly inconclusive results, the simplification of procedures, expropriation mechanisms of the old regime’s assets, development of PPPs, business linkages between local and foreign enterprises, and more-targeted FDI promotion. This chapter also analyses other aspects that are impacting upon investment operations, i.e. trade policy and facilitation efforts, competition policy of which effectiveness needs bolstering, and development of infrastructure and the financial sector – two stated priorities of the new Tunisian authorities.

Tunisia has not established a green growth strategy, but the new government has announced its determination to undertake a more sustainable form of economic development. A sustainable development strategy for 2012-16 was made subject to a public inquiry and a study on the green economy is about to be launched, which could help formulate measures to foster green investment. As Tunisia is becoming increasing more dependent on imported fossil fuels, since the 1990s, it has been a pioneer in the region in promoting energy efficiency and more recently in the realm of renewable sources of energy. Measures have been introduced gradually to facilitate the private sector’s participation in renewable energy sources and waste management. The government is also committed to reporting on the improvement of the framework for investment in support of green growth and to sharing the experience it has acquired.