Identifier
Created
Classification
Origin
05ALGIERS1624
2005-08-08 08:24:00
UNCLASSIFIED
Embassy Algiers
Cable title:  

ALGERIA 2005 INVESTMENT CLIMATE STATEMENT

Tags:  KTDB AG OPIC USTR 
pdf how-to read a cable
This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 09 ALGIERS 001624

SIPDIS

DEPT PLEASE PASS USTR

E.O. 12958: N/A
TAGS: KTDB AG OPIC USTR
SUBJECT: ALGERIA 2005 INVESTMENT CLIMATE STATEMENT

REF: 04 STATE 250356

Attached is post's submission for the Algeria 2005 Investment
Climate Statement (ICS). The ICS text is being emailed in
its Country Commercial Guide format, with active URL links,
to EB/IFD/OIA as per reftel request.

Begin text.

Algeria 2005 Investment Climate Statement

Summary
--------------

Algeria,s market of 32 million inhabitants and its growing
demands for modern infrastructure have generated immense
interest from governments and companies around the world. A
modern legislative framework, Algeria,s continued progress
in the WTO accession process, and the 2005 ratification of an
EU Association Agreement that will gradually lower trade
barriers over 12 years all indicate that the Algerian market
is willing and ready to accept foreign investment across most
sectors.

There are practical obstacles to investing in Algeria, most
notably the lack of a modernized banking sector and a large,
"legacy" bureaucracy which presides over a broader patchwork
of business and investment rules and regulations. The
government of Algeria has announced plans to privatize some
of the public banks over the coming year as a first step to
reform the banking and financial industry and make it conform
to international standards, which will facilitate the
establishment of businesses in Algeria. The government's
sizable bureaucracy means that it can still take much time
and energy to set up a business in Algeria, even for seasoned
multinationals.

This Investment Climate Statement provides a general outline
of the most recent developments in Algeria,s investment
codes, and highlights some of the major policies, events, and
statistics that would be of interest to the U.S. business and
investment community.


Openness to Foreign Investment
--------------

Seeking to diversify and modernize the Algerian economy, the
Algerian government has embarked on an aggressive
liberalization program to attract foreign direct investment.
New legislation continues to affect nearly all sectors,
including mining, power, banking, telecommunications,
pharmaceuticals, transportation, and tourism. While there
are still many bureaucratic hurdles to starting a business in
Algeria, the investment code clearly lays out the rules for
investors.


Algeria has a legislative framework for encouraging
investment. In 1993, the government adopted its primary
investment code under legislative decree No 93-12,
guaranteeing investment advantages, free transfers of income,
and equal treatment for domestic and foreign investors. In
August 2001, the government adopted a new ordinance No. 01-03
to further develop and promote investment, replacing the
legislative decree No. 93-12.

There are three national organizations responsible for
investment guidance and policy. The first is the National
Agency for Investment Development (ANDI)
(http://www.andi/dz),which is responsible for facilitating
investments, granting fiscal and parafiscal exemptions,
conferring investment advantages, and assisting investors to
receive special authorizations for unique investments. ANDI
has a network of regional offices throughout Algeria to
assist investors.

The second organization is the National Investment Council
(CNI),which was created to strengthen the legal and
regulatory investment framework. The CNI is in charge of
defining the investment strategy and its priorities, for
approving special investment incentives in each sector, and
for giving final authorization to special investment schemes.

The third organization is the Ministry for Participation and
Promotion of Investment. The Minister for Participation and
Investment Promotion (MPPI) (http://www.mdppi.dz/) manages
two distinct offices within the Ministry, one for investment
policy and the other for the privatization process. MPPI is
coordinating the on-going privatization of state-owned
companies, organized by sector into groupings managed by
"participation management companies" (socits de gestion de
participation, SGP). The government has refocused its
efforts on large-scale privatization in order to remove
itself from supporting loss-making enterprises.

An earlier privatization program was launched in 1995 under
law No. 95-22 and came into effect in 1998. The law lacked
transparency and created procedural difficulties for
evaluating state-owned firms and the modalities of
privatization. In August 2001, a new privatization law was
passed aiming at accelerating the privatization of public
enterprises in Algeria. The government,s intention is to
privatize the remaining 1,200 state-owned enterprises.
In March 2005, the Algerian parliament adopted a new law to
further liberalize the hydrocarbons sector. This new law
separates the commercial role of Sonatrach
(http://www.sonatrach-dz.com/),the state-owned hydrocarbons
company, from its previous regulatory and
procurement/contracting functions. (An early version of the
law is available in English at http://www.mem-algeria.org/
legis/prem hydroc.htm. The official published Arabic version
is available at http://www.mem-algeria.org/fr/
legis/hydrocarbures-5-7-ar.pdf.)

Sonatrach is now required to bid on domestic projects
alongside foreign firms; it will no longer be an automatic
partner in all projects. In tenders that Sonatrach does not
win, the company will retain a right to exercise an option of
20-30% of the equity of the project, allowing it to become a
regular stakeholder with the same responsibilities. The
Regulatory Agency for Hydrocarbons (ARH) will monitor
compliance by foreign firms with various health, safety, and
environmental regulations as well as use of the pipeline
transport system. A new contracting organization, the
National Agency for Contracts (or "ALNAFT"),will be
responsible for bidding, concluding and supervising contracts
with engineering and procurement (E&P) investors. These
reforms will enable Algeria to encourage greater foreign
investment in oil and gas, leading to greater production
capacity.


Conversion and Transfer Policies
--------------

Algeria began liberalizing its foreign trade in 1991, at
which time the Algerian dinar (officially the Dinar Algerien,
or "DA") became fully convertible for all commercial
transactions. Only registered economic operators may have
access to foreign currency to make payments, which are
subject to domiciliation rules. In 1995, the rules were
modified to permit payments in foreign currency for
individual Algerian citizens for special medical needs,
education, and, since 1997, a very limited amount (DA 15,000
per year, or about $200) for travel abroad. This limited
exchange capability has created a highly visible black market.

The same transfer procedures apply to both goods and
services, including insurance, transportation, maintenance,
technical assistance, and even training contracts. However,
for other categories of services, transfers can be more
difficult and usually require several justifications and
permissions from the Bank of Algeria (La Banque d,Algerie,
which is the nation's central bank).

Algerian exporters must repatriate their receipts and can
only convert 50% of those receipts into hard currency.

The Central Bank (http://www.bank-of-algeria.dz/) controls
foreign exchange and manages Algeria,s foreign exchange
reserves. Transfers of revenue can sometimes be problematic,
such as in the case of franchising revenue. Residents are
prohibited from making hard currency transfers abroad of
revenues from certain activities, including areas such as
investment property income. However, it is possible to
obtain authorization from the Central Bank to transfer funds
abroad to conduct activities that support business activities
in Algeria.

According to the investment code and the 2003 Law on Money
and Credit (ordinance No. 03-11),foreign investors are
allowed to repatriate their profits within 60 days, even if
revenues exceed the original amount invested. Foreign
workers in Algeria can transfer a portion of their salaries
abroad (generally about 50%). Due to the inefficiency of the
banking system, it may take longer than the legally-mandated
60 days to obtain official permission from the central
bank,s General Directorate of Exchange to make
transfers/payments.

These strict foreign exchange controls serve to restrict the
movement of capital and prevent illegal activities (such as
money laundering). The controls are also intended to
maintain a balance of payment during oil price shocks, since
some 98% of the nation,s hard currency comes from exports of
hydrocarbons.

Expropriation and Compensation
--------------

The government of Algeria has not engaged in expropriation
actions against U.S. or other foreign firms, nor have they
otherwise discriminated against foreign firms.


Dispute Settlement
--------------

Algeria is a signatory to the convention of the Paris-based
International Center for the Settlement of Investment
Disputes (http://www.worldbank.org/ICSID/). Algeria has
ratified its accession to the New York Convention on
arbitration (http://arbiter.wipo.int/arbitration
/ny-convention/index.html) and is a member of the
Multilateral Investment Guarantee Agency
(http://www.miga.org/). The Code of Civil Procedures allows
both private and public sector companies full recourse to
international arbitration. Algeria permits international
arbitration clauses. With more than 400 legislative and
regulatory texts, investors consider the Algerian commercial
law difficult to understand, leading investors to rely on
local counsel and agents to ensure compliance with all
procedures and rules. The government of Algeria is revising
its commercial law to conform to WTO requirements.


Performance Requirements
and Incentives
--------------

For an investment to be considered foreign, it must meet a
minimum threshold level of foreign equity relative to the
total value of the investment. For investments less than or
equal to $25,000, the threshold is 15%. For investments
between $25,000 and $125,000, the threshold is 20%. For
investments greater than $125,000, the threshold is 30%. The
central bank monitors all foreign direct investment involving
foreign currency transactions.

Incentives under the new investment code are offered on a
case-by-case basis by the approval of the National Investment
Council. General incentives may include:

-- Exemption from property taxes;
-- Exemption from corporate income taxes;
-- VAT exemption for goods and services directly related to
the investment; and
-- Exemption from transfer taxes for real estate purchases
directly related to the investment.

In addition to the above mentioned incentives, special
incentives are also offered for investments in special
development zones and for privileged investments that utilize
environmentally-friendly or energy saving technologies.

Special incentives may include:

-- Partial or total state funding for infrastructure
investments;
-- Application of reduced customs duties on imported goods
directly related to the investment;
-- Exemption for ten years from the corporate income tax
(IBS),Gross Income Taxes (IRG),flat rate payment (VF) and
Tax of Professional Activity (TAP);
-- Exemption for ten years from property taxes; and
-- Additional incentives to improve or facilitate the
investment, such as the carry-forward of losses and
depreciation.

Additional incentives may be offered to companies whose
production and investment are export-oriented.


Right to Private Ownership
and Establishment
--------------

Foreign and domestic private entities may establish and own
businesses as well as engage in all forms of business
activity. Private entities may freely establish, acquire and
dispose of interest in business enterprises. Private
enterprises have equal status with public enterprises and
compete on an equal basis with respect to access to markets,
credit, and business operations.

Protection of Property Rights
--------------
As part of Algeria's negotiations for WTO accession, the
government adopted new laws in July 2003 for copyright and
related rights, trademarks, patent and integrated circuits.
To reinforce existing laws, three decrees related to
trademarks, patents and integrated circuits were adopted in

2004. These laws are in compliance with the WTO,s TRIPS
Agreements.

Algeria is a signatory of the Paris Industrial Property
Convention on Copyrights, the Berne convention for the
protection of literary and artistic works, as well as the
Madrid Arrangement and Lisbon Agreement for the protection of
appellations of origin and their international registration.
As of May 2005, Algeria intended to ratify the 1996 WIPO
Copyright Treaty (WCT) and the WIPO Performance and
Phonograms Treaty (WPPT) during the course of 2005. Patents,
copyrights, trademarks and integrated circuits are currently
protected under 2003 laws, industrial designs and models
under 1966 laws, and appellations of origin under 1976 laws.

The Government introduced a new order on July 15, 2002,
(article 22 of the Customs Code) which seeks to stop the
entry of counterfeit goods at ports and borders.

Sector Specific Comments:

Pharmaceuticals: Current laws do not provide data exclusivity
protection for pharmaceutical products/molecules. The
government,s official policy is to encourage the domestic
production of generics. There are concerns that Algeria does
not properly recognize registered patents and protect them
from premature generic competition.

Software: To stop the use of non-licensed software within
government and other public entities, the Prime Minister
circulated a February 2005 directive to prevent government
use of pirated software and initiated a formal software
licensing process through procurement channels. The National
Algerian Institute for Industrial Property (INAPI)
administers patents, trademarks, integrated circuits,
appellations of origin, design and industrial models, and
geographical indicators. The National Copyright Office
(ONDA) administers copyrights and related rights.

While the legal framework for intellectual property rights
(IPR) has improved, the enforcement of these rules is still
generally inadequate due to lack of public knowledge about
counterfeiting and a lack of training in the customs services
and the judiciary. Few foreign firms have sought legal
recourse, which would require establishing the patent,
trademark, or copyright in Algeria before filing suit. As a
result, counterfeiting is common, especially in cosmetics,
automotive aftermarket products, computer hardware components
and software, some consumer and food products (such as
shampoo and baby formula),and even medicine. In software,
only an estimated 20% of users pay licensing fees. The
Business Software Alliance estimates software piracy in
Algeria to be 84% (2003 data). (For comparison, the BSA
estimated software piracy in Morocco and Tunisia to be 73%
and 82% respectively.) According to Algeria's ONDA, the
piracy rate for music and video works on cassette is about
37%, and has been estimated to be 87% for CDs. Solid piracy
statistics are difficult to gather.

The anti-counterfeiting office within the Ministry of
Commerce operates through seven regional offices. In 2004,
more than 10 informal marketplaces were replaced gradually by
authorized public markets. The same year, 100 counterfeit
claims were registered, half of which were brought before the
courts.

To reinforce inter-agency cooperation, ONDA has prepared a
draft decree proposing the creation of an inter-agency
National Council on Counterfeiting and Piracy with
representatives from Customs, Police, and the Ministries of
Commerce, Interior, Justice, and Finance, among others.

The government of Algeria is working with U.S. firms in
Algeria, the Business Software Alliance, and the U.S.
government to reduce the rate of counterfeiting in Algeria
through seminars and specialized training programs for judges
and customs officials. In 2004, a private "business
protection group" led by major U.S. companies in Algeria and
other foreign firms was created to fight counterfeiting.

Transparency of
Regulatory System
--------------
The government adopted a new directive in July 2003 to define
the conditions of competition practices in the market and
prohibit restrictive practices.

Created in 1995, the Competition Council continues to play a
role in the regulatory system. Reporting to the Head of
Government, the group makes proposals and recommendations,
including provisions for sanctions, to maintain a competitive
market system. The Council also regulates prices for some
goods and services that are considered strategic (such as
prices for bread),but otherwise allows prices to be freely
determined by market forces. Energy prices will eventually
be freely set by the market over a gradual period, beginning
after the passage of the hydrocarbons reform in 2005. In
other sectors, such as telecommunications, Algeria is moving
toward a more transparent regulatory system. Regulation of
the health sector, particularly pharmaceuticals, is not
transparent.


Efficient Capital Markets
and Portfolio Investment
--------------

The banking and financial market has been open for private
and foreign investment since 1995. In 2003, the Government
adopted a new law on money and credit and has since engaged
in a reform program to improve the underdeveloped banking and
financial systems.

The banking system continues to be dominated by the six major
public banks, although there are about 10 foreign, 3 private
banks, and 8 other financial institutions operating in
Algeria (http://www.bank-of-algeria.dz/ banque.htm). The
number of private banks, however, continues to dwindle as
managers come under scrutiny for improper actions and banks
struggle to keep pace with changes in the banking law, such
as exchange reserve requirements.

In 1996, the central bank started open market operations with
the establishment of an inter-banking currency exchange
market. This market is widely dominated by the intervention
of the central bank that is the sole supplier of hard
currency for the partially-convertible Algerian dinar. To
improve the payment system, the central bank is introducing a
real time gross settlement (RTGS) system with World Bank
assistance.

The Treasury Bond market was initiated in 1995. The Algerian
Treasury authorized 13 primary dealers (called "SVT"),
including state-owned banks, state-owned insurance companies,
and one private insurance company (Citigroup). In 2004,
Algerie Clearing, a joint stock company, was officially
established as the central depository for all securities in
Algeria. Algerie Clearing monitors a computerized settlement
and delivery system.

The stock exchange was established in 1998 but remains in an
embryonic stage, with only four companies listed: Saidal
Group, Eriad Setif, and the El Djazair and El Aurassi Hotels.
As part of the Government,s ambitious privatization program,
11 other state-owned companies are expected to trade on the
stock exchange.

To absorb the over-liquidity in the market estimated at $10.0
billion, some stated-owned companies including the national
airline Air Algerie, the state-owned hydrocarbons giant
Sonatrach, the state-owned energy utility Sonelgaz, and an
assortment of others, have launched corporate bonds to
finance their development projects.


Political Violence
--------------

Political violence continues to recede following the peaceful
April 2004 reelection of President Bouteflika to a second
5-year term. The government,s dual approach to reducing the
terrorist threat through military engagement and a general
amnesty plan has achieved significant results. While
security conditions are stable in the capital city and other
major cities, the U.S. Embassy in Algiers maintains a high
level of security, and security preparation must be
considered when doing business in Algeria. Visitors should
read the State Department,s Consular Information Sheets and
Travel Advisory before traveling to Algeria, at
http://travel.state.gov/.

Corruption
--------------

Fighting corruption is a priority for the Algerian
government. In January 2005, an anti-corruption bill was
adopted by the Government Council and was passed by both
Parliament and the Senate in June 2005. The law reinforces
existing legislation to comply with the U.N. Convention
against Corruption, which Algeria ratified on August 25,

2004. The law contains five main provisions to promote
transparency in government and public procurement and also
introduces new crimes such as illicit enrichment. It will
also reinforce existing penal sanctions and allow for the
creation of a national organization to design and implement a
national anti-corruption strategy. In April 2005, the
Ministry of Justice investigated 40 judges for corruption and
abuse of power, dismissing eight of them. Similar actions
were taken in the Customs office.

Algeria is not a financial center and the extent of money
laundering through formal financial institutions is believed
to be minimal because of stringent exchange control
regulations and an antiquated banking sector. Despite money
laundering controls, official statistics show that
approximately 500 million Euro leave the country illegally
every year in part due to over-invoicing.

On January 5, 2005, the government adopted a new law
pertaining to money laundering and terrorist financing to
comply with international standards and measures against
organized crime. The new law will require the use of checks,
rather than cash, above a certain sum as yet unspecified. It
also requires banks to verify the identities and addresses of
clients before opening bank accounts or completing any
transactions. The legislation gives wide-ranging powers to
the banking commission of the Bank of Algeria (the central
bank). In an effort to fight money laundering and terrorism
financing, a Financial Intelligence Unit (CTRF) was
established in 2002.

The Transparency International Corruption Perception Index
(CPI) for 2004 ranked Algeria number 97 out of 145 countries.

Algeria is a signatory of the OECD Convention to Fight
Bribery.

The following is a link to the Department of State's 2005
International Narcotics Control Strategy Report, whose Part
II on Money Laundering includes a chapter on Algeria:
http://www.state.gov/g/inl/rls/nrcrpt/2005/vo l2/


Bilateral Investment
Agreements
--------------

On July 13, 2001, the U.S. and Algeria signed a Trade and
Investment Framework agreement (TIFA) to create a forum for
involved discussion. The first TIFA Council meeting was held
in Algiers on April 8, 2001, and the second one was held in
Washington D.C on December 2-3, 2004. The discussions could
eventually lead to a Bilateral Investment Treaty (BIT) and a
Free Trade Agreement.

In December 2001, Algeria and the EU concluded negotiations
on the Association Agreement that was ratified by the
Algerian Senate on March 31, 2005 and, as of May 2005, by all
but one of the EU member state parliaments. The Association
Agreement (http://europa.eu.int/comm/
external relations/algeria/ docs/index.htm) will commit both
sides to further liberalization of bilateral trade and is
intended to make Algerian businesses and consumers benefit
from the development of trade and investment ties. The
Agreement provides for the gradual removal of import duties
on EU industrial products over twelve years, and removes
duties immediately on 2,000 other products. The Agreement
will lay an important foundation for economic liberalization
in Algeria. It also provides for an exchange of concessions
regarding trade in services. On December 12, 2002 a joint
declaration of cooperation was signed between the European
Free Trade Association (EFTA, http://www.efta.int/) with the
European Union providing for expanded and liberalized trade
with EFTA members Iceland, Liechtenstein, Norway and
Switzerland.

Algeria has signed bilateral investment agreements for the
protection and promotion of investments with the following
countries in the indicated years: Belgium/Luxembourg (1991),
Italy (1991),France (1993),Romania (1994),Spain (1994),
China (1996),Germany (1996),Jordan (1996),Mali (1996),
Vietnam (1996),Egypt (1997),Bulgaria (1998),Mozambique
(1998),Niger (1998),Turkey (1998),Denmark (1999),Yemen
(1999),Czech Republic (2000),Greece (2000),and Malaysia
(2000). There is no bilateral investment treaty between
Algeria and the United States. Prospects for a U.S.-Algeria
BIT were discussed at the December 2004 TIFA meetings.

Algeria has also signed bilateral treaties to prevent double
taxation with the following nations: United Kingdom (1981),
France (1982),Tunisia (1985),Libyan Arab Jamahirya (1988),
Morocco (1990),Belgium (1991),Italy (1991),Romania (1994),
Turkey (1994),Syrian Arab Republic (1997),Bulgaria (1998),
Canada (1999),Mali (1999),Vietnam (1999),Bahrain (2000),
Oman (2000),Poland (2000),Ethiopia (2002),Lebanon (2002),
Spain (2002),and Yemen (2002). There is no double taxation
treaty between Algeria and the United States.

In 1990, Algeria signed both investment protection and double
taxation agreements with the Arab Maghreb Union (UMA)
countries (Libya, Morocco, Mauritania and Tunisia).


OPIC and Other Investment
Insurance Programs
--------------

The U.S. Overseas Private Investment Corporation (OPIC)
(http://www.opic.gov/),the U.S. Export-Import Bank (Ex-Im)
(http://www.exim.gov/),and the U.S. Trade and Development
Agency (USTDA) (http://www.exim.gov) are increasing their
support of U.S. trade and investment in Algeria.

Beyond the oil and gas sectors, Ex-Im is working on expanding
its activities in sectors including telecommunication,
capital equipment, and pharmaceuticals. Ex-Im Bank remains
one of Algeria,s leading creditors. Its exposure in Algeria
is USD 1.65 billion as of July 2004. In 2004, Ex-Im Bank
expressed its readiness to make available to Sonatrach, the
state-owned oil and gas company, a USD 1 billion credit
facility intent for its five-year procurement plan. U.S.
firms intent on bidding on tenders in the Algerian energy
sector must inform Ex-Im of their wish to make a credit offer
to Sonatrach, which Ex-Im then must authorize. For more
details, please visit http://www.exim.gov/portals/
usexporter/index.cfm. In December, 2003, Ex-Im announced a
USD 176 million long-term loan guarantee (U.S. content only)
for the Skikda Power Project. Because of current high oil
revenues, Sonatrach's need for financing applies more to
large-scale, long-term projects than to short-term,
small-scale procurements.

OPIC continues to evaluate projects in Algeria in 2005 for
potential financing. In January 2005, OPIC approved $200
million in loans for Ionics (now part of G.E. Infrastructure:
Water and Process Technologies),for a 25-year
build-own-operate (BOO) seawater desalination project in
downtown Algiers, Hamma district. OPIC will provide the
loan to the project company, Hamma Water Desalination SpA
(HWD),owned 70% by G.E. Ionics and 30% by the Algerian
Energy Company (AEC) (http://www.aec.dz/). The project
contracts were signed in Algiers on June 25, 2005.


Labor
--------------

Algeria,s labor code sets minimum work standards, including
a minimum work age (16 years),a 40-hour workweek, and rates
for overtime pay. Employers pay 26 percent of gross salaries
in social security taxes, including provisions for both
retirement and health/accident insurance.

To reduce labor costs, the government since 2001 has exempted
employers from paying family allowances, estimated at USD 377
million. However, the government decided in 2005 that
employers will pay these charges, but no timetable for
implementation has been set.

Algeria,s labor force in 2003 was 8.7 million people. (The
2004 total population was 32.6 million, with annual
population growth of 1.52%, down from 1.8% in 2003.)
According to the National Office of Statistics, 63.8% of the
population is under age 30. The monthly minimum wage was
raised to DA 10,000 (USD $140) from DA 8,000 (USD $100) in

2004.

The Algerian labor market is very competitive given the
depreciation of the Algerian currency since 1994. Reducing
high unemployment rate and strengthening social protection is
a key objective in the government,s reform program.
According to Algerian official statistics, the unemployment
rate decreased from 23.7% in 2003 to 17.7% in 2004, and the
government expects it to reach 13% by 2005. However, some of
the jobs included in this calculation are temporary and are
funded mainly through government programs.

US companies have been able to hire trained technical staff.
However, English speakers remain difficult to find. Arabic
is the official language, and French is the de facto language
of business. There are no restrictions on the number of
expatriate supervisory personnel a company may bring. Entry
visas for foreign workers must be requested through the
Ministry of Employment and Social Solidarity
(http://www.massn.gov.dz/). Foreign workers must then obtain
work permits from the Ministry of Labor
(http://www.mtss.gov.dz/) and a residency card from the local
police office where they will be working. The Employer is
responsible for submitting all tax payments for individual
workers to the proper local tax collection authorities.

Algerian regulations allow foreigners to repatriate 50% of
their salaries.

Algeria has ratified social security contribution conventions
with France, Belgium, Romania, Tunisia and Egypt, effectively
exempting workers from two different sets of social security
taxes. There is no social security convention between
Algeria and the United States.


Foreign-Trade Zones/
Free Ports
--------------

On December 1, 2004, the government of Algeria signed an
executive decree to dismantle its only free trade zone, at
Bellara, in preparation for WTO accession. This zone had
never been operational since its creation in 1997. Bellara
has since been transformed into an industrial zone for
regional development.


Foreign Direct
Investment Statistics
--------------

According to Foreign Direct Investment (FDI) statistics
released by the National Agency for Investment Development
(ANDI),the total value of investment declarations in 2004
was $3.5 billion, of which $2.0 billion was in
non-hydrocarbons areas.

The National Agency for the Development of Investment
recorded 105 foreign investment projects in 2004, out of
which 40 are partnership projects and the rest are 100%
foreign owned. Foreign investment projects that contributed
to this positive performance include the $260 million El
Hamma desalination plant; the second GSM license awarded to
the Kuwaiti company El Wataniya for $1.2 billion (of which
$421 million is for the purchase of the license and the
remainder for investment in equipment); and two cement plants
(one by Swiss Olcim valued at $180 million and the second one
by the Egyptian company Orascom Cement Algeria valued at $260
million). A third cement unit is underway for an investment
of $190 million. Hotel chain Accor/Ibis has announced plans
for 36 hotels across Algeria over the next 5 years. The
value of the pharmaceuticals market is estimated at $850
million. Pfizer and the GlaxoSmithKline (UK) / Asac Pharma
(Spain) partnership are the primary domestic investors.

Hydrocarbons FDI registered $1.8 billion in 2003, up from
$671 million in 1999. This amount represents 10% of all FDI
inflows in Africa (excluding South Africa). The state owned
oil and gas company Sonatrach signed 8 contracts during 2004.
Norwegian Statoil and the Australian firm BHP Billiton
started production in 2003.

From 1999 to 2003, more than 50 foreign companies, in
partnership with Sonatrach (State-owned Oil & Gas Company)
invested $8.6 billion (of which 89.5% for field development
and 10.5% for exploration). For exploration, U.S. firms are
the most active with 35% of the market, followed by Italy
(14%),Australia (9%),UK, Canada, Indonesia (8% each),
France (7%) and the remaining for Russia, Spain and others.
Field development projects worth USD 7.7 billion were
conducted during this period by British, American,
Australian, and Spanish companies.

Total FDI in the mining sector reached $33 million in 2003.

The U.S. Trade and Development Agency (http://www.ustda.gov/)
has been actively involved in Algeria.

Web Resources
--------------

Algerian Government:

Algeria Energy Company (AEC): http://www.aec.dz/
Algerian Embassy in Washington, D.C.:
http://www.algeria-us.org/
Bank of Algeria (central bank): http://www.bank-of-algeria.dz/
Ministry of Employment and Social Solidarity:
http://www.massn.gov.dz/
Ministry of Energy and Mines: http://www.mem-algeria.org/
Ministry of Finance: http://finances-algeria.org/
Ministry of Labor and Social Security: http://www.mtss.gov.dz/
Ministry of Participation and Investment Promotion:
http://www.mdppi.dz/
National Investment Development Agency: http://www.andi.dz/
Sonatrach: http://www.sonatrach-dz.com/

United States Government:

U.S. Department of State: http://www.state.gov.
-- (For travel information, please visit
http://travel.state.gov/.)
U.S. Embassy Algiers: http://algiers.usembassy.gov/ (links to
the Economic and Commercial Sections are contained within the
link "Embassy News/About the Embassy")
U.S. Department of Commerce: http://www.export.gov/
Export Import Bank: http://www.exim.gov/
Overseas Private Investment Corporation (OPIC):
http://www.opic.gov/
U.S. Trade and Development Agency: http://www.ustda.gov/

Non-Governmental:

Business Software Alliance (BSA): http://www.bsa.org/
U.S.-Algeria Business Council: http://www.us-algeria.org/

International:

E.U. Association Agreement:
http://europa.eu.int/comm/ external relations/
euromed/med ass agreemnts.htm
European Free Trade Association (EFTA): http://www.efta.int/
IMF Algeria information: http://www.imf.org/external/
country/DZA/index.htm
International Monetary Fund (IMF): http://www.imf.org/
Multilateral Investment Guarantee Agency: http://www.miga.org/
United Nations Conference on Trade and Development:
http://www.unctad.org/
-- View the 2003 UNCTAD Investment Policy Report on Algeria
(in French) here:
http://www.unctad.org/fr/ docs/iteipc20039 fr.pdf
World Bank: http://www.worldbank.org/

Laws:

Hydrocarbons reform law (non-final English version):
http://www.mem-algeria.org/ legis/prem hydroc.htm.
Hydrocarbons reform law (final, official Arabic version):
http://www.mem-algeria.org/fr/legis/ hydrocarbures-5-7-ar.pdf

Conventions:

New York Convention on the Recognition and Enforcement of
Foreign Arbitral Awards http://arbiter.wipo.int/arbitration
/ny-convention/index.html
Paris-based International Center for the Settlement of
Investment Disputes: http://www.worldbank.org/ICSID/

ERDMAN