Identifier
Created
Classification
Origin
09MAPUTO771
2009-07-10 09:09:00
CONFIDENTIAL
Embassy Maputo
Cable title:  

U.S. COMPANIES STILL FACE WORK PERMIT CHALLENGES

Tags:  ELAB EINV EAGR EMIN EPET ECON ETRD EAID PGOV 
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RR RUEHBZ RUEHDU RUEHMR RUEHRN
DE RUEHTO #0771/01 1910909
ZNY CCCCC ZZH
R 100909Z JUL 09
FM AMEMBASSY MAPUTO
TO RUEHC/SECSTATE WASHDC 0497
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHLO/AMEMBASSY LONDON 0435
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RHEHNSC/NSC WASHDC
RUEHC/DEPT OF LABOR WASHDC
C O N F I D E N T I A L SECTION 01 OF 02 MAPUTO 000771 

SIPDIS

E.O. 12958: DECL: 07/09/2019
TAGS: ELAB EINV EAGR EMIN EPET ECON ETRD EAID PGOV
PREL, AMGT, MZ
SUBJECT: U.S. COMPANIES STILL FACE WORK PERMIT CHALLENGES

REF: A. MAPUTO 626

B. MAPUTO 610

C. MAPUTO 493

Classified By: Pol/Econ Chief Matthew Roth, Reasons 1.4(b+d)

C O N F I D E N T I A L SECTION 01 OF 02 MAPUTO 000771

SIPDIS

E.O. 12958: DECL: 07/09/2019
TAGS: ELAB EINV EAGR EMIN EPET ECON ETRD EAID PGOV
PREL, AMGT, MZ
SUBJECT: U.S. COMPANIES STILL FACE WORK PERMIT CHALLENGES

REF: A. MAPUTO 626

B. MAPUTO 610

C. MAPUTO 493

Classified By: Pol/Econ Chief Matthew Roth, Reasons 1.4(b+d)


1. (C) Summary: Labor issues continue to frustrate foreign
investors in Mozambique. Anadarko, a Texas-based oil company
and largest U.S. investor in Mozambique, and Chiquita Brands
International recently reiterated to Econoffs that the
erratic enforcement of the new labor law (reftels) is an
impediment to their investments in the country. Despite
assurances to the contrary, Anadarko is still struggling to
attain the necessary work permits to bring in their much
needed technical experts to perform oil exploration.
Chiquita's in-country partner Matanuska recently received a
USD 200,000 fine, and had its expat staff threatened with
passport seizure. The Embassy's upcoming U.S. Investment and
Trade Conference in Maputo July 15-16, for which President
Guebuza is scheduled to give the opening address, will offer
another opportunity for senior GRM leaders to hear directly
from existing and prospective investors about the
difficulties encountered with the existing labor law. End
Summary.

--------------
Chiquita
--------------


2. (C) In late May, labor inspectors imposed USD 200,000 in
fines against Chiquita's Zimbabwean partner Matanuska in
Mozambique, only days after the President of Mozambique,
Armando Guebuza, visited its facilities outside of Nampula,
Mozambique. The labor inspectors claimed that Matanuska was
in violation of a number of provisions of Mozambique's new
labor law. In addition, the labor inspectors attempted to
seize the passports of the six expatriates who were on a

visit to Matanuska's facility. Chiquita refused to hand over
the passports of the expatriates. The labor inspectors took
no further action to seize the documents. On June 4,
Matanuska met with the Minister of Labor Maria Helena Taipo
who informed them that while the inspectors were within their
rights according to the updated labor law to inspect
Matanuska, she believed that the fine was not justified.
However, Taipo informed Matanuska she was not prepared to
intervene with the labor inspectors in Nampula. Taipo said
Matanuska had to go through the judicial process on a
provincial level to appeal the USD 200,000 fine. Chiquita's
country director informed Econoff on July 8 that the USD
200,000 fine is still pending against Matanuska.

--------------
Anadarko
--------------


3. (C) Anadarko executives informed Econoff on June 30 that
the company continues to struggle with getting its technical
experts work permits to perform essential functions for its
oil exploration in the country, despite having unlimited
access to foreign labor under its "mega-project" agreement
with the GRM. The executives indicated that the Ministry of
Labor and the Ministry of Mineral Resources asked their
respective permanent secretaries to fast-track special
regulations for the oil and gas industry, given the extensive
exploratory drilling expected to begin in the Rovuma Basin in
late-2009 or early-2010. Anadarko commented that Minister
Taipo has assured them that she is working to get
approximately 140 expatriate workers into the country in the
next three months, although no visas have yet been issued.
Anadarko remains hopeful that the work permits will be
granted, but is frustrated with how time-consuming and
difficult the process has been, and is increasingly concerned
that the work permits will not be issued before the October
28 national elections, though the company had hoped to start
sooner.

--------------
COMMENT: Elections Hinder Quick Solutions
--------------


4. (C) The Embassy continues to press the GRM at the highest
levels to illustrate how Mozambique's labor regulations are
impeding U.S. assistance and private sector efforts to
bolster economic growth. In a recent meeting with the
Charge, Prime Minister Luisa Diogo showed concern and
awareness of the problems that the new labor law was

MAPUTO 00000771 002 OF 002


creating, but said the GRM had not yet found a satisfactory
solution. Other Ministers assure us that action will be
taken, but probably only after the elections. The Embassy's
upcoming U.S. Investment and Trade Conference in Maputo July
15-16, for which President Guebuza is scheduled to give the
opening address, will offer another opportunity for senior
GRM leaders to hear directly from existing and prospective
investors about the difficulties encountered with the
existing labor law.
CHAPMAN