Parliament moves to amend investment law

Parliament has started amendments to the law governing investments promotion and facilitation that seeks to encourage more public-private partnerships. The amendments will help government achieve its medium term Development Strategy (2013-2018) of having average growth rate of 11.5 per cent, from the current 7 per cent. In the 2005 law that is still in force, a foreign investor and their expatriate(s) are entitled to a free initial work permit and a free residence visa valid for a year. An investor who deposits an amount equivalent to $500,000 on an account in one of the commercial banks in Rwanda for a period not less than six months is also entitled to the right of acquiring permanent residence status in the country. But the draft ded law provides for more incentives to be created among priority sectors such as energy, manufacturing, agriculture and tourism, and it expected to attract more investors hence accelerating the national development agenda. Some of the incentives will be a preferential corporate tax of 15 per cent, mainly in energy, tourism and manufacturing. The new law will also provide clearly defined tax holidays of five to 10 years of heavy investments ranging from $50 million and beyond in some sectors. Defending the amendments before the parliamentary Standing committee on Economy and Trade, on Tuesday, Francis Gatare, the chief executive of Rwanda Development Board (RDB), said current economic trends require modification in the old law. “When we speak of investment promotion, we are speaking of lowering the costs of doing business in Rwanda which will attract domestic and foreign investment, and that’s what we are doing,” Gatare told the legislators. No clear incentives According to Gatare, the existing law on investment promotion was designed to attract investment and promote exports, but did not include clear incentives for priority sectors. “From 2005 to-date, many things have changed in the economic circles; we have to change the way we operate by setting up favourable economic environments for investment promotion,” Gatare said. According to the 2015 World Bank’s Doing Business report, Rwanda ranks top in the ease of Doing Business in East Africa, third overall in Africa, and 46th in the world out of 186 countries. Connie Bwiza, the chairperson of the Committee on Economy and Trade, said the intentions to amend the law were welcome as it would facilitate private sector development, which is among the objectives underlined in the country’s Vision 2020. “The available investment incentives only favoured a few major companies and discouraged small and medium investments. This, however, reduced the tax base hence creating a huge loss of government revenues,” Bwiza said. Constance Mukayuhi Rwaka, the chairperson of the parliamentary Standing Committee on National Budget and Patrimony, told The New Times on the sidelines of the session that removing some incentives that created loopholes would increase government revenues. “The Bill, once passed into law, will favour SMEs, which will definitely increase government revenue, in the long run, hence economic and human development,” Mukayuhi said. Speaking at the iPad Power and Infrastructure Investment Forum earlier this week in Kigali, Gatare said the incentive will, among others, help government to achieve its energy target of generating at least 563MW on the national grid by 2017. Rwanda currently has a capacity of 155MW. editorial@newtimes.co.rw

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Parliament moves to amend investment law