National Policy Dialogue on the Manufacturing Sector
Honourable Soomilduth Bholah, Minister of Industrial Development, SMEs and Cooperatives
Ms. Isatou Gaye, Chief, Sub-Regional Initiatives Section, UNECA Sub-Regional Office for Southern Africa
Mrs. Bibi Fatwma Abdool Raman-Ahmed, Permanent Secretary, Ministry of Industrial Development, SMEs and Cooperatives
Mr Robert Banamwana, Strategic Planning and Team Leader, Office of the United Nations Resident Coordinator
Mr. Ravin Rampersad, Chief Executive Officer, SME Mauritius Ltd
Mr. Kevin Ramkaloan, Chief Executive Officer, Business Mauritius
Dr. Yousouf Ismaël, Secretary General, Mauritius Chamber of Commerce and Industry
Mr. Bruno Dubarry, Chief Executive Officer, Association of Mauritian Manufacturers
Ladies and Gentlemen,
First of all, on behalf of the European Union, I would like to thank the Mauritian authorities for their unwavering support and for their consistent vote at the United Nations to denounce the Russian aggression and to call for the suspension of the hostilities in Ukraine and the respect of international rules, including basic humanitarian principles. During the coronavirus pandemic, the world needed to cooperate and to work together to conceive, produce and distribute vaccines and to keep our economies afloat; today, while the virus is still around us, we need to strongly defend our universal principles and values and to anticipate the huge economic disturbances that this unprovoked and unjustified war will create and the risk of shortage of basic food notably for millions of people in both the southern and the northern hemisphere.
Russia bears full responsibility for this unprecedented situation.
Because and within this dark context full of challenging perspectives your policy dialogue comes at a critical moment; it is therefore a real honour and pleasure for me to be here today for the Assises of the Industrial Policy and Strategic Plan for the manufacturing sector in Mauritius. This gathering acts as a follow up to the launch of the Strategic Plan on 4 December 2020. The Strategic Plan was formulated more than a year ago with the technical and financial support of the United Nations Conference on Trade and Development (UNCTAD), but as I just pointed out the world has gone through major transformations since and it is important to take stock of these changes and to see how they potentially influence the initial plan.
Several element remain however constant:
Among them one is essential for us: the EU has been and remains the main trading and investment partner of Mauritius. The EU represented in 2020 24.7% of Mauritian trade (33% exports and 21.6 % of imports) while China was at 12.6%, the United Arab Emirates at 9.1%, SA at 8.8% and India at 7.6%. The EU is therefore actively engaging and working with the public and private sector, committed to continue to share our expertise and experience to consolidate this long lasting and strong partnership.
After one year of implementation, the Ministry has deemed it necessary to have a thorough reflection on the vision, the 22 major recommendations and several sectoral action plans stated in the Strategic Plan. Such a reflection is necessary as I just mentioned given the new challenges under which the manufacturing sector is operating today and to assess whether, in the context of the dynamics on the global scene, there is the need for other recommendations for a sustained and inclusive growth of the manufacturing sector.
Let me touch here on four core issues of importance for the EU namely:
- The Trade agreements
- The transformation in the Manufacturing Industry
- The need for equipping People with the Right Skills
- And finally the EU comprehensive support to Enabling Mauritius’ Business friendly Environment
1 Let me start with Trade agreements :
As an open economy that has developed impressively over the last few decades based on Free trade agreements (FTAs) and the ease of doing business, Mauritius has embraced participation in Global value Chains (GVCs). This policy approach has served the country exceptionally well, with duty free access to the European Union market under the Economic Partnership Agreement (EPA) and which is key to the success of Mauritius.
Mauritius’ participation in Global Value Chains has clearly supported the development of its manufacturing sector. Free Trade Agreements and Economic Partnership Agreements have also permitted access to large markets and allowed Mauritian manufacturers to scale up their activities based on their defined areas of comparative as well as competitive advantage.
It is also interesting to note that Mauritius trade with the Sub-Saharan Africa markets and in particular with the SADC and COMESA region, has witnessed a substantial increase. This trend clearly reveals a shift towards participation in regional value chains which will be reinforced with application of the African Continental Free Trade Area (AfCFTA), the Comprehensive Economic Partnership Agreement (CECPA) with India and the Mauritius-China Free Trade Area. One of the regional value chain is the cotton-yarn-fabric-garment manufacturing; the other one is the pharmaceutical sector with linkages of regional knowhow and source of raw materials, manufacturing facilities in Mauritius, leveraging on the Freeport regime and marketing on the global arena.
2 The second element is the transformation in the Manufacturing Industry :
While the Mauritian manufacturing sector may be at a crossroads, there is clear evidence to suggest that it has the ability to grow dynamically and support the continued development of the Mauritian economy.
A new vision for the manufacturing sector is however required, one that embraces upgrading and technological innovation, and that focuses on realising its potential through both the domestic and international (including regional) markets.
This is why the European Union recently supported the Government in finalising the Intellectual Property regulations that have enabled the Intellectual Property Act to be proclaimed in January this year after a very long time in gestation.
As you all know, Intellectual Property drives economic growth and competitiveness. Intellectual Property is today at the heart of any successful business. All of them own some form of Intellectual Property. It could be in the form of technology, innovative designs or original works of art, music or film. Intellectual property protection not only supports the development of knowledge based industries, but also stimulates international trade and encourages foreign direct investment and technology transfer.
Enforcement of Intellectual Property Rights is therefore essential in order to preserve the legal validity of the IP rights, authenticity of the products and prevent infringement which can harm businesses by raising their costs, lowering revenue, and eroding profits. Consumers can face health or safety hazards from counterfeit pharmaceuticals and automotive products, and pirated software presents a range of threats to computer security and personal privacy.
The Intellectual Property Act makes provision for Mauritius to adhere to the World Intellectual Property Organization administered Treaties under the Patent Cooperation Treaty, the Madrid protocol and the Hague Agreement. This would provide a mechanism for single international registration of patents, trademarks and designs and eliminate the need for filing, prosecuting or maintaining separate registrations in multiple countries.
The EU can only encourage Mauritius to complete the accession procedures to those Treaties as soon as possible as simplified procedures will not only bring more clarity and predictability of the IP legal framework, but will also transform Mauritius into an innovative and competitive hub in this region where the use of Intellectual Property will be invaluable.
3 The third element is the urgent need to have People equipped with the Right Skills :
Mauritius’ existing skills development system appears unable to meet the range and depth of industry requirements. Many recent reports have highlighted the fact that Mauritian labour skills have not improved relative to global competitors, forcing an unsustainable dependence on expatriate labour for low, medium, and high skilled positions, with the latter particularly acute in Science, Technology, Engineering and Mathematics (STEM)-related occupations.
There is a clear need to focus on basic and intermediate technical education and to raise high-level STEM capabilities. While there are several institutions working to improve this identified deficiency, the firm-level evidence is that the skills development environment is deteriorating rather than improving.
Most notably, there are no post-graduate technical institutions in Mauritius providing the industry with a pipeline of advanced skills. This is stunting the availability of advanced technical skills, which is central to the development of high-value activities within most manufacturing value chains based in upper middle income and high-income economies.
The European Union on its part has provided support in developing a skills development strategy for the Mauritius Polytechnics. A Skills Needs Analysis was carried out and curricula developed for Polytechnics education in four clusters namely Tourism and Hospitality, ICT, Engineering and Health Sciences. The project also assisted in the preparation of a Strategy Plan and an Action Plan on Polytechnic.
The EU is also providing support to the Economic Development Board to develop a Luxury manufacturing sector in Mauritius. The consultant will start work in April 2022.
4 A few words about the EU comprehensive support to Enabling Mauritius’ Business friendly Environment :
In view of reducing the cost of doing business and to improve transparency with regulatory authorities, the EU has been supporting the Government since 2018 with the National E-Licencing System (NELS), which has greatly facilitated and improved the application and processing of business licences and permits. There are around 1,000 Government officers using the National E-Licencing System on a daily basis and private sector users have already reached nearly 100,000. This clearly demonstrates the impact that NELS has had in improving the ease of doing business.
Having a common perspective is critical to the future success of the manufacturing sector in Mauritius. There is a growing awareness amongst policy practitioners that the critical determinant of manufacturing policy is the strategic collaboration between the private sector and the government with the aim of uncovering where the most significant obstacles to restructuring lie and what type of interventions are most likely to remove them.
This is also where the EU is providing technical assistance with the support of the Organization for Economic Co-operation and Development, the OECD, in developing a Regulatory Impact Assessment (RIA) framework in Mauritius. This week OECD technical experts are in Mauritius precisely to enhance the capacity of Mauritian policy practitioners in fine-tuning the RIA framework.
We sincerely hope that the Government is committed to adopt the RIA framework with the required legal framework and setting up of the RIA Office. The RIA is a systematic policy tool used to examine and measure the likely benefits, costs and effects of new and existing regulations. It is an important element of an evidence-based approach to policy making and ensures efficient and effective regulations.
Conclusion
Despite challenging trends, manufacturing sector in Mauritius is still a pillar of the economy. A strong manufacturing base needs a level playing field for companies, an attractive framework for innovation, high environmental standards and good working conditions.
Having a strong manufacturing base is crucial for the Mauritian economy; with a coherent set of industrial policies, it will help to strengthen the real economy and foster competitive and sustainable industries and services.
This is why the Mauritius manufacturing strategy is so important as it will have to reflect the ongoing transformations as well as the several challenges at hand for society and industry and say how to address the competitiveness shortfall.
I wish you fruitful deliberations and look forward to the revised Strategic Plan.
The European Union will be pleased to discuss further with you the implementation of some of the actions identified in the plan for a sustainable and inclusive growth of its economy, with a special focus on Small and Medium sized enterprises and women entrepreneurs.
I thank you for your attention.