Georges Chung was chairman of Mauritius’ Financial Services Promotion Agency (FSPA) before it was merged with the country’s Board of Investment. Chung is now chairman of Kross Border Trust Services, a fiduciary services provider, and also serves as economic advisor to the Mauritian minister of finance and economic development. He spoke with China Economic Review about where Mauritius’ financial services sector is headed.
Q: Why Mauritius?
A: Many reasons. We’re located in the Indian Ocean, so India, Southeast Asia and Africa are all within easy flying distance. We’re also a very well-governed jurisdiction. Mauritius has been ranked number one in Africa for governance by the Mo Ibrahim Foundation for three years running, and the economist Joseph Stiglitz has held out the country as a model for the US. I think just as important are our network of double taxation treaties (DTTs) with 39 countries and growing. We’re an investment platform into many countries – we’re a place of substance.
Q: What is Mauritius’ relationship with China?
A: I think Hu Jintao’s state visit to Mauritius a couple years ago was very important and symbolic. Mauritius was one of the first countries to recognize the People’s Republic of China, and is a preferred destination for Chinese investment. A key component of what Chinese investors are looking for is a low tax liability, and Mauritius has some of the lowest tax rates in the region. At the same time, the government is very efficient in its public expenditure and in collecting tax revenue, so the country can afford a welfare state with free education and free healthcare for all. Even more so, Mauritius’ strong tax treaty network in Africa can be very beneficial for Chinese firms looking to invest there.
Q: There’s been a lot of fuss in the Indian press over Mauritius and its DTT with India. What’s your take?
A: Mauritius is to India what Hong Kong is to China – we’re the investment platform of choice. I used to own a newspaper in Mauritius, and I know what the media can be like. I think that a certain part of the Indian media likes to engage in Mauritius-bashing every time a scandal crops up, and the recent telecoms scandal is no exception. Remember to keep the India-Mauritius DTT in perspective with the two countries’ special political, economic and cultural ties. The treaty has been in place for more than 25 years, and Mauritius has been very forthcoming in tax information-sharing requests.
Q: Are you worried about India’s impending Direct Taxes Code?
A: I think decision makers in India are reasonable people. I can’t see everyone involved taking steps that are very detrimental to the economy of India. India needs multinationals, which rely on Mauritius as an investment platform; they won’t operate against their own interests. I think whatever comes out will be of mutual interest to everyone.
Q: What’s been the investment impact on Mauritius of the recent OECD peer review report?
A: No impact whatsoever. If you read the OECD report carefully, it really boils down to just one or two issues of implementation. We came out top of about 25 prominent jurisdictions from around the world that have been assessed by their peers. The framework is there – the OECD isn’t saying the infrastructure itself is weak. It’s worth noting that we are on the OECD “white list” of jurisdictions. We are a well-regulated country, and business levels are up.
Q: What do you see as the future for Mauritius?
A: Mauritius has a beautiful story to tell. It’s one of the best-governed countries and fastest-growing economies in the region. It has a very efficient tax structure, and fast-growing trade links with China and Southeast Asia. I think Mauritius is very well-positioned to be an investment platform for Asian investors looking to invest in their African holdings and for the setting up of their regional headquarters. At the end of the day, I’m very optimistic about our future, and the future of the financial services we offer.