Legally Bind­ing

Cameroon and China ben­e­fit from a new law to safe­guard and pro­mote pri­vate in­vest­ment

ChinAfrica - - Contents - By Nfor Kings­ley Monde

New law safe­guards China-Cameroon pri­vate in­vest­ment

A NEW law in­tro­duced in cameroon seeks to pro­tect and foster pri­vate in­vest­ments be­tween it and China. This comes on the back of deep­en­ing Chi­nese in­vest­ment in Cameroon.

“The co­op­er­a­tion with China has be­come very im­por­tant, mean­ing we need to open up a level play­ing field, not only for pub­lic in­vest­ment, but one that also promotes pri­vate-sec­tor in­vest­ments, trade and any kind of ex­change with China,” Pas­cal Hervé Es­sis­sima, Di­rec­tor of Re­gional Co­op­er­a­tion in the Min­istry of the Econ­omy, Plan­ning and Re­gional De­vel­op­ment, told Chi­nafrica.

The new law, drafted and sent to both coun­tries’ par­lia­ments as early as 1997, came into force only in 2014. Cameroon signed it more than a decade af­ter China did in 2000.

Ex­perts say this law will pro­vide new mo­men­tum to pri­vate-sec­tor in­vest­ment be­tween the two coun­tries. Cameroon might see a stream of Chi­nese in­vest­ment in ev­ery sec­tor in the near fu­ture.

“Due to China’s high com­pet­i­tive­ness in the global mar­ket and ac­cess to cap­i­tal and tech­nol­ogy, it is in a bet­ter po­si­tion to ben­e­fit from this law,” Theodore Besong, an eco­nomic ex­pert and fel­low at the Univer­sity of Yaounde, told Chi­nafrica. “We might see the lo­cal mar­kets in Cameroon ab­sorbed. This could ex­plain why the Gov­ern­ment of Cameroon de­layed sign­ing this ac­cord when it has no strong and com­pet­i­tive econ­omy.”

What the law says

The Law on Mu­tual Pro­tec­tion and Pro­mo­tion of In­vest­ment be­tween Cameroon and China creates a busi­ness en­vi­ron­ment where the same in­vest­ment law ap­plies for Cameroo­nian and Chi­nese in­di­vid­u­als and busi­nesses in both coun­tries. Cit­i­zens of both coun­tries can ben­e­fit from the same pro­tec­tion, obli­ga­tion, tax regime and in­vest­ment op­por­tu­ni­ties.

This law obliges both coun­tries to fa­cil­i­tate le­gal in­vest­ment pro­ce­dures and the de­liv­ery of work per­mits, while en­sur­ing eq­ui­table fairness.

With the com­plex reg­u­la­tory en­vi­ron­ment and the threat of cor­rup­tion of­ten be­com­ing ob­sta­cles for po­ten­tial in­vestors, com­pa­nies of­ten spend years ne­go­ti­at­ing deals and gain­ing fi­nal ap­provals from gov­ern­ment agen­cies.

“This law will re­duce the dif­fi­cul­ties of im­ple­ment­ing change and the time needed to close deals and trans­ac­tions as it opens up an era where cap­i­tal, div­i­dends, salaries, prof­its and trans­fer of money to and from China will be free of any form of tax­a­tion,” Besong said.

Al­though Cameroon is the gate­way to a huge mar­ket of more than 50 mil­lion peo­ple in the Cen­tral African Eco­nomic and Mon­e­tary Com­mu­nity, lim­ited ac­cess to in­vest­ment cap­i­tal and in­ad­e­quate in­fra­struc­ture and tech­nol­ogy make it dif­fi­cult for lo­cal pri­vate-sec­tor busi­nesses to flour­ish.

Es­sis­sima sees new op­por­tu­ni­ties for both the economies as growth rates will surge with this in­cen­tive for pri­vate-sec­tor busi­nesses and more em­ploy­ment will be cre­ated in Cameroon. “In­di­vid­u­als can eas­ily part­ner with Chi­nese firms and get ac­cess to cap­i­tal and tech­nol­ogy,” he said.

Grow­ing Chi­nese in­vest­ment

China has re­cently be­come Cameroon’s big­gest in­vestor, tar­get­ing im­por­tant sec­tors such as in­fra­struc­ture, en­ergy, wa­ter, trans­port and telecom­mu­ni­ca­tions. Among the land­mark projects un­der­taken by China are the con­struc­tion of the Kribi Deep Sea­port in south Cameroon, and dams for a 211-MW hy­dropower project in south Cameroon as well as a 50-MW one in east Cameroon.

Cameroon in­tends to mod­ern­ize road trans­port by con­struct­ing a 200-km Douala-yaounde High­way con­nect­ing two of Cameroon’s largest cities at a cost of about $1.1 mil­lion.

“China pro­vides Cameroon with ini­tial cap­i­tal, tech­nol­ogy and ex­per­tise, the kind of op­por­tu­nity we, as a de­vel­op­ing coun­try, need to grow. So we are pri­or­i­tiz­ing bi­lat­eral co­op­er­a­tion with China,” said Es­sis­sima.

Min­ing gi­ant Sun­dance Re­sources’ Man­ag­ing Di­rec­tor Gi­ulio Cas­sello said in a com­pany re­port that Cameroon, the Repub­lic of the Congo and Gabon have sig­nif­i­cant iron ore de­posits. But with­out in­fra­struc­ture such as a port, rail­way and road, they re­main eco­nom­i­cally un­vi­able. The strate­gic po­si­tion of the Kribi port will pro­vide Cameroon and the re­gion’s other land­locked coun­tries rapid ac­cess to trans­port to ex­port raw ma­te­ri­als. The China Har­bor Engi­neer­ing Co., which is build­ing Kribi, is seek­ing to deepen the fran­chise op­por­tu­ni­ties of the port through a strate­gic part­ner­ship deal with the Bol­lore Group, a French trans­port sec­tor multi­na­tional which man­ages part of Cameroon’s rail and sea trans­port.

(Re­port­ing from Cameroon)

Cameroon will build a mod­ern 200-km Doualayaounde High­way con­nect­ing two of its largest cities

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