Mauritius Island’s economy on the rise for 2016

Mauritius Island’s economy on the rise for 2016

As the tourism industry provides large windows of opportunity for economic growth for islands, Mauritius has set a precedent for other small countries to follow in 2016.

Mauritius Island has long been seen as a small island in the Indian Ocean, somewhat difficult to gain access to, and not quite a significant player in regional politics and the economy. With its paradise-like beaches, luxurious hotels, rich culture, and entertainment, the island has been known as an expensive destination for honeymooners and families. However, in recent years, Mauritius has proven to investors, politicians, and tourists that it is more than that.

Indeed, by the end of 2015, Mauritius attracted 1 million tourists, showing that it had adapted to tourists’ more sophisticated demands by diversifying its entertainment and other offerings. Not only that, Mauritius has also secured more open air policies with major countries, including Australia, China, and Singapore, where it recently signed an agreement to create an air corridor between Asia and Africa by way of the island. This agreement would allow Mauritian tourism and the hospitality sector to benefit directly from a windfall of passenger traffic.

According to the Mauritius Prime Minister Sir Anerood Jugnauth, the hospitality and the tourism sector became a vital economic pillar for the island over the years, and are two of the key drivers in advancing Mauritius towards a high income economy in the near future. The Prime Minister and the Mauritius government have been looking at tapping into European and Asian tourism markets and consolidating its traditional hospitality markets.

In particular, Sir Anerood Jugnauth mentioned initiatives that could impact the hotel sector positively by allowing the participation of both local and foreign individual investors in financing new hotel developments and refurbishment of existing hotels.

Mauritius has also been promoting commerce and investment initiatives to show that it is more than just a tourist destination. The country has been looking into reinforcing partnerships in the region in order to tap into the ecological tourism industry, renewable energy, and digital connectivity, and has been in talks with China to find ways to extend the 21st Century Maritime Silk Road to the small Indian Ocean island.

In addition, the government has been setting up a Mauritius Commodities Exchange, and will start automatic exchange of tax information with other countries in September 2018. This initiative reflects the desire for Mauritius to become a key player in regional politics, and aid one of its closest allies, India, in monitoring some entities that are rooting illegal funds from Mauritius into India. The Dubai Multi Commodities Centre has been assisting the Mauritius government in developing the Spot Trading Market for Gold, Diamond, and other precious metals in Mauritius, and soft infrastructure to support the Trading Market, an initiative that will provide further prospect and growth to the island.

As the Mauritius government expects its economy to expand to 3.8 % this year, it has launched the sale of a two-year Bank of Mauritius bond worth 2 billion rupees (56.43 million), and will receive bids on March 1 this year. This key event exposes the island’s desire to advance its economic and political standing in the region.

Moreover, as Mauritius has enjoyed a positive relation with the EU for the past 40 years – the EU accounts for 70% of the country’s export industry – and the government prioritized access to the EU market in its economic policies. Indeed, through Sir Anerood Jugnauth’s leadership, Mauritius strengthened its long-standing partnership with the EU by increasing development cooperation, trade relations, business and foreign and direct investments, education, and scientific exchanges.

However, the small island still faces challenges in tapping into the EU market, as it is blacklisted by some EU countries as a non-cooperative tax jurisdiction. Difficulties in the negotiations on the full Economic Partnership Agreement between the EU and the Eastern and Southern African region are limiting Mauritius in its economic endeavors, and the island is still facing trade and tariff issues imposed by the EU, including its policy to abolish sugar quotas by 2017, as well as tariffs imposed on certain fisheries products.

Regardless of these bumps on the road, Mauritius managed to become more economically and politically powerful over the years, and has become an example for other islands to follow.

About Author

Alicia Chavy

Alicia Chavy has provided analytical and strategic support for Fortune 500 companies working to expand their business presence in the Asia-Pacific region at The Asia Group. Prior to her consulting experience, Alicia worked at non profit organizations where she conducted detailed assessments on foreign policy, security and economic issues in Latin America, Europe, and the Middle East. Alicia Chavy graduated from Georgetown University's School of Foreign Service, earning a Bachelor of Science in International Politics.