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By Shapi Shacinda


LUSAKA, February 19 (Reuters) – Zambia expects foreign direct investment to reach $2.7 billion in 2009 despite the global economic downturn as investors rush to take up tax breaks, the government’s trade minister said.


Trade Minister - Hon Felix Mutati

Trade Minister - Hon Felix Mutati

Zambia has in the last five years liberalized its investment policies, awarding tax incentives to foreign companies in a bid to grow the economy and create wealth and employment.


Mutati said the country’s five ‘multi-facility economic zones’ (MFEZ), created as tax free zones for mainly foreign firms planning to invest in manufacturing, had already attracted a number of investors, particularly from China.


“The current MFEZ’s in Zambia, once fully developed, will create more than 14,000 jobs with investment flows exceeding $2.7 billion (in 2009),” commerce and trade minister Felix Mutati told a conference of local business people in the capital Lusaka.


He said the government in the copper rich southern African country would provide $100 million for infrastructure development, including roads and office buildings, in the MFEZs, where a number of Chinese firms have already started to invest.


“This is part of the plans to migrate from a single commodity (copper) country to value addition,” Mutati said.


The government is waiving a 25 percent customs duty and 16 percent value added tax on imported equipment and machinery and several other taxes for periods up to 10 years for firms investing in MFEZs, to attract foreign direct investment.


In the Chambishi MFEZ, China Non-ferrous Metals Corporation (CNMC) has already invested $300 million in a new copper smelter.


President Rupiah Banda in January launched the Lusaka East MFEZ, where Chinese investors have pledged to put $1.2 billion into high-tech industry, a modern five start hotel and conferencing facilities.

The government says most firms investing in the MFEZs will manufacture cables from copper and cement from copper slag, agricultural products and high-tech equipment such as radios and television sets.


Mutati said the government would also reduce the number of business licenses required to operate in Zambia, under broader economic reforms and also following complaints that it was expensive to start up a business in the country due to bureaucratic red tape.


“In some instances, investors require 21 licenses to set up a business and what we are now saying is that all this is unnecessary if we are to be competitive with other countries in the region. Reforms are already under way,” Mutati said. (Editing by Toby Chopra)

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