submitted by - gujarat technological university pdf 2013/767 madagaskar 15...tanna divya...
TRANSCRIPT
1 | P a g e
A
GLOBAL / COUNTRY STUDY AND REPORT
ON
Madagascar.
Compiled Report of both Semester III & IV
Submitted to:
Gujrat Technological University
In partial fulfillment of the
Requirement of the award for the degree of
Master of Trade administration
In
Gujrat Technological University
UNDER THE GUIDANCE OF
Asst. Prof. Mr. Dasrathsinh Rathod
Submitted by:
Sr_No. Student Name Enrollment
No 1 Bhunvar Jarina 117670592001.
2 Shah Jay 117670592002.
3 Tanna Divya 117670592003.
4 Purohit Pratik 117670592005.
5 Tejani Hiren 097670592032
Shree Brahmanand Institute of Management – Chaprda (767)MBA
PROGRAMME
Affiliated to Gujarat Technological University
Ahmedabad
2012 - 2013
2 | P a g e
Students’ Declaration
We the student of Brahmanand Institute of Mgt, hereby declare that the report for Global/ Country
Study Report entitled study of ―Tourism sector‖ in (Madagascar) is a result of our own work and
our indebtedness to other work publications, references, if any, have been duly acknowledged.
Place :
Date :
3 | P a g e
Institute’s Certificate
―Certified that this Global /Country Study and Report Titled ―Tourism Sector in
Madagascar‖ is the bonafide work of Mr./ Ms:
Student Name Enrollment
No Bhunvar Jarina 117670592001.
Shah Jay 117670592002.
Tanna Divya 117670592003.
Purohit Pratik 117670592005.
Tejani Hiren 097670592032
who carried out the research under my supervision. I also certify further, that to the
best of my knowledge the work reported herein does not form part of any other
project report or dissertation on the basis of which a degree or award was conferred
on an earlier occasion on this or any other candidate.
Guide Signature
H.O.D Signature
4 | P a g e
PREFACE
Now a day‘s practical training has become the part of any kind of study. It is necessary to
blend the theoretical knowledge with practical knowledge in order to know the actual Trade.
Our country, India is an industrial development country where vast opportunities exist for
professional managers and administrators. Moreover many collages offer various course in Trade
management.
My study at Tourism sector in Madagascar successful being in service sector, the study
became more exciting. We had pleasure of being in the actual learn Trade environment, where I
learned number of things. The co operation of staff made this visit more exciting. The matter
contained in this project report is true as per my knowledge and information that I have gathered.
5 | P a g e
ACKNOWLEDGEMENT
Every work that one completes successfully stands on the constant encouragement, goodwill and
support of the people around. Through this, we would like to express our gratitude to all those who have
contribute to our project.
We would like to convey our gratitude to Mr. Dasrathsinh Rathod (Project Guide) for giving us an
opportunity to work with Cheese Industry. We are also thankful to guide at GTU Ahmedabad for their
guideline about the Global Country Report.
It give us great pleasure and deep satisfaction in presenting this report of our project work at
Tourism sector in Madagascar as part of M.B.A. course, arrange in order to gain practical knowledge. We
are thankful to our faculty,for their suggestions and feedback andfor their constant support and
encouragement.
We, all are special thanks to our external guide Mr. Dasrathsingh Rathod under whose constant
direction and guidance, We have been able to complete our Project meaningfully. We really admire his
professional attitude.
6 | P a g e
Work done in semester III
7 | P a g e
INDEX
Sr_No Particular Page
No.
1 PART I – PESTAL Analysis 11
Demographic profile of the country 18
Economic Overview of the country 25
Overview of Industry Trade and commerce 42
Overview different economic sectors of
Madagascar
49
Overview of Trade and Business at
International Level
58
Analysis of other Factors
Political
Legal
Social
Technological
Environment
60
List of Tables
Sr.No. Particulars Table No. Page No.
1 Largest City of Madagascar
1.1
2 Population data 1.2
3 Birth & death data 1.3
4 Trade of Industry 3.1
5 Imported product 3.2
6 Export Import data 3.3
7 Export Import data 3.4
8 Import from India 3.5
9 Export to India 3.6
10 Survey Data 5.1
8 | P a g e
Introduction To Madagascar
Madagascar is the 4th biggest island in the earth, and has been word a "biodiversity hotspot"
by ecologists, as 80% of the plant and animal species are only one of its kind to the island - a result
of its 80 million year separation. In the hot sea off the southwest seashore of Madagascar lies one
of these main coral reef in the world. The Blue Ventures sea mission site is situated next to it, on
the most westerly point of the island.
Formerly an free empire, Madagascar became a French ci ty state in 1896 but
regained freedom in 1960. During 1992-93, open presidential and National Assembly
elections were apprehended ending 17 years of single -party rule. In 1997, in the
second presidential race, Didier RATSIRAKA, the chief during the 1970s a nd 1980s,
was returned to the presidency. The 2001 presidential election was contested between
the followers of Didier RATSIRAKA and Marc RAVALOMANANA, almost causing
secession of half of the country. In April 2002, the High Constitutional Court
announced RAVALOMANANA the winner. RAVALOMANANA achieved a second
period following a landslide success in the generally free and fair presidential
elections of 2006. In early 2009, protests over rising restrictions on conflict press and
actions resulted in RAVALOMANANA stepping down and the presidency was
conferred to the mayor of Antananarivo, Andry RAJOELINA. Several attempts have
been made by regional and international organizations to resolution the subsequent
political gridlock by forming a power-sharing government. As of late 2012, the
country to be moving towards new elections sometime in 2013.
9 | P a g e
Part I -
PESTAL Analysis
of Madagascar
10 | P a g e
Chapter 1
11 | P a g e
Demographics of
Madagascar
12 | P a g e
This object is about the Demography skin texture of the population of Madagascar
including population thickness and society education level, health of the people, economic
status, holy affiliation and other aspects of the population.
Madagascar's population is mostly of mixed Austronesian and East African origin.
Demography data of Madagascar:
Gender ratio:
at origin: 1.03 male(s)/female
under 15 years: 1.01 male(s)/female
15-64 years: 0.98 male(s)/female
65 years and over: 0.89 male(s)/female
total population: 0.99 male(s)/female (2000 est.)
Life hope at birth:
total people: 59.45 years
male: 57.72 years
female: 61.33 years (2006 est.)
Nationality:
The people stays there or belongs to Madagacar their nationality is Madagassy.
intellectual groups:
Malayo-Indonesian (Merina and related Betsileo), coastal ethnics (mixed African, Malayo-
Indonesian, and Arab ancestry - Betsimisaraka, Tsimihety, Antaisaka, Sakalava), French,
Desi, Creole, Comorian, Chinese
Belief:
original way of life 52%, Christian 41%, Muslim 7%
13 | P a g e
Languages:
Malagasy (certified , and public language), French (certified al), English (certified)
Education:
classification: age 15 and over can read and write
total residents 80%
male: 88%
female: 73% ( as per 1990 )
Largest cities:
Largest cities of Madagascar region are:
Rank City Name Region Population
1 Antananarivo Analamanga 1 391 433
2 Toamasina Atsinanana 206 373
3 Fianarantsoa Haute Matsiatra 167 227
4 Mahajanga Boeny 154 657
5 Toliara Atsimo-Andrefana 115 319
6 Antsiranana Diana 82 937
7 Antanifotsy Vakinankaratra 70 626
8 Ambovombe-
Androy Androy 66 818
9 Amparafaravola Amparafaravola 51 519
10 Tolanaro Anosy 45 141
(Table 1.1)
14 | P a g e
Other Important points:
1 People
According to the 2010 repeatation of the World Population forecast the total population
was 2,07,14, 000 in 2010, compared to only 40,84, 000 in 1950. The part of children
under the age of 15 in 2010 was 43.1%, 53.8% was among 15 and 65 years of age, while
3.1% was 65 years or elder.
Year
Total
population (x
1000)
Population
aged 0–14 (%)
Population
aged 15–64
(%)
Population
aged 65+ (%)
1950 4 084 38.2 58.6 3.2
1955 4 548 40.2 56.6 3.2
1960 5 104 42.6 54.1 3.3
1965 5 764 44.6 52.0 3.4
1970 6 549 45.1 51.3 3.6
1975 7 502 45.6 50.6 3.8
1980 8 609 45.9 50.5 3.6
1985 9 785 45.1 51.6 3.3
1990 11 281 44.7 52.1 3.2
1995 13 129 44.5 52.4 3.1
Cotent....
1) Population
2) Vital Statistics
3) Ethnicity
4) Religion
5) Largest Cities
15 | P a g e
2000 15 364 45.3 51.6 3.1
2005 17 886 44.6 52.3 3.1
2010 20 714 43.1 53.8 3.1
(Table 1.2)
2. Very important data
List of very important events is in Madagascar not complete. The Population section of the
United Nations prepared the following estimates.
Period Live
births
per year
Deaths
per year
Natural
change
per year
CBR* CDR* NC* TFR* IMR*
1950-1955 2,12,000 1,19,000 93,000 49.0 27.5 21.5 7.30 181
1955-1960 2,36,000 1,25,000 1,11,000 48.8 25.8 23.0 7.30 167
1960-1965 2,62,000 1,30,000 1,32,000 48.3 24.0 24.3 7.30 155
1965-1970 2,95,000 1,36,000 1,59,000 47.9 22.1 25.7 7.30 143
1970-1975 3,39,000 1,45,000 1,94,000 48.3 20.6 27.7 7.30 132
1975-1980 3,79,000 1,52,000 2,27,000 47.0 18.8 28.2 7.00 122
1980-1985 3,88,000 1,52,000 2,37,000 42.2 16.5 25.7 6.10 111
1985-1990 4,74,000 1,73,000 3,07,000 45.0 16.4 28.6 6.30 110
1990-1995 5,45,000 1,74,000 3,71,000 44.7 14.3 30.4 6.14 96
1995-2000 6,09,000 1,61,000 4,48,000 42.8 11.3 31.5 5.80 76
2000-2005 6,49,000 1,43,000 5,05,000 39.0 8.6 30.4 5.28 58
2005-2010 6,98,000 1,31,000 5,67,000 36.2 6.8 29.4 4.83 45
(Table 1.3)
* CBR = crude birth rate (per 1000); CDR = crude death rate (per 1000); NC = natural
change (per 1000); IMR = infant mortality rate per 1000 births;
16 | P a g e
TFR = total fertility rate (number of children per woman.)
3 Ethnicity
Current study suggests that the island was empty until Austronesian seafarers at home
around the initial century A.D., most likely by way of southern India and East Africa. Other
historians think that the Malays crossed the Indian Ocean and only reached the African
mainland after establishing durable communities on Madagascar. Following migrations
from both the Malay Archipelago and Africa further consolidated this original mixture, and
18 separate tribal groups emerged. Austronesian features are most prime in the central
high ground people, the Merina (3 million) and the Betsileo (2 million); the remaining 16
tribal groupings are coastal peoples who are predominantly of East African, origin, with
various Malay, Arab, European and Indian admixtures. The largest coastal groups are the
Betsimisaraka (1.5 million) and the Tsimihety and Sakalava (700,000 each). Malagasy
culture has long been polarized between the politically and economically advantaged
highlanders of the central plateaux and the people along the seashore. For example in the
1970s there was common opposition among coastal ethnics against the policy of
Malgachisation which intended to chapter out the use of the French language in public life
in favour of a more famous location for the Malagasy language, whose orthography is
based on the Merina tongue. Identity politics were also at the middle of the brief public
unrest during 2002.
The Malagasy language is of Malayo-Polynesian source and is verbal throughout the
island. French also is spoken among the learned population of this former French colony,
primarily as a impressive second language.
Indians in Madagascar descend mostly from traders who at home in the newly-
independent country looking for superior opportunities. The best part of them came from
the west seashore of India known as Karana (Muslim) and Banian (Hindu). The best part
speak Hindi or Gujarati, although some other Indian dialects are also spoken. Nowadays
the younger generations chat in at least three languages, including French, Gujarati and
17 | P a g e
Malagasy. A large number of the Indians in Madagascar have a high level of culture,
particularly the younger generation.
A large number of Europeans also exist in in Madagascar, mostly of French fall.
4 Religion
Most people practice customary religions, which be likely to highlight links among the
living and the dead. They think that the dead join their relatives in the ranks of religion and
that relatives are extremely worried with the luck of their living children. This spiritual union
is notable by the Merina and Betsileo reburial perform of famadihana, or "rotating over the
dead." In this custom, family what's left are detached from the family tomb, rewrapped in
new silk shrouds, and returned to the tomb following joyful ceremonies in their respect. In
the celebrations, they eat, drink, and literally dance with the dead. After one or two days of
celebrating, they wash the body with gifts and re-bury it.
In relation to 41% of the Malagasy are Christian, separated almost evenly between
Roman Catholic and Protestant, but there are also traditional Christians. Many integrate
the alternative of the dead with their other spiritual way of life and bless their dead at
church before arranged with the habitual burial resources. They also may invite a priest to
attend a famadihana. A historical competition exists between the predominantly Catholic
masses, considered to be disadvantaged, and the mostly Protestant Merina upper class,
who be likely to prevail in the civil service, business, and professions.
Islam has been well-established in what is now known as Madagascar for centuries and
today Muslims symbolize just about 7 percent of the population.
18 | P a g e
Economy of Madagascar
19 | P a g e
The economy of Madagascar is tremendously farming, mainly of a survival type; the most
excellent farmland is in the east and northwest. The main cash crops are coffee, vanilla,
sugarcane, cloves, and cocoa. The most important cook crops are rice, cassava, beans, bananas,
and peanuts. In accumulation, large numbers of poultry, cattle, goats, sheep, and hogs are raised.
Fishing and forestry are also important.
After removal collective economic policies in the mid-1990s, Madagascar followed a World
depository- and IMF-led rule of privatization and liberalization that has been damaged since the
start of the political emergency. This policy placed the country on a measured and solid growth
path from an tremendously low level. Farming, as well as fishing and forestry, is a carry of the
economy, office for more than one-fourth of GDP and employing 80% of the residents. Exports of
clothes boomed in up to date years first and foremost due to duty-free right of entry to the US,
however, Madagascar's breakdown to submit with the necessities of the African growth and
Opportunity Act (AGOA) lead to the execution of the nations's duty-free access in January 2010
and a sharp fall in textile manufacture. Deforestation and wearing away, motivated by the utilize
of fuel as the prime resource of fuel, are severe concerns. The present political disaster, which
began in early 2009, has dealt extra blows to the economy. Visiting the attractions drop more
than 50% in 2009 compared with the previous year, and many investors are suspicious of entering
the uncertain investment environment.
Structural reforms started in the late 1980s, originally under force from international
financial institutions. An original privatization program (1988-1993) and the development of an
export processing zone (EPZ) government in the early 1990s were enter milestones in this
attempt. A era of important stagnation from 1991-96 was followed by 5 years of hard economic
growth and accelerating foreign investment, ambitious by a second gesture of privatizations and
EPZ development. Although structural reforms advanced, governance remained weedy and
supposed fraud in Madagascar was very high. throughout the era of hard development from 1997
through 2001, shortage levels remained high, specially in countryside areas. A 6-month political
crisis triggered by a fight over the outcome of the presidential elections held in December 2001
almost halted economic action in the first half of 2002.
20 | P a g e
Following the 2002 political crisis, in organization with international financial institutions and
the giver society, the government attempted to set a new rule course and build business self-
assurance. Madagascar developed a improvement plan in partnership with the private sector and
donors and offered it at a 2002 "Friends of Madagascar" conference in Paris organized by the
World Bank. Donor countries verified their self-assurance in the new government by pledging $1
billion in help over 5 years. The Malagasy Government recognized road road and rail network as
its principal right of way and underlined its promise to public-private joint venture by establishing
a joint public-private sector routing group.
In 2000, Madagascar set a Poverty Reduction Strategy Paper (PRSP) in the Heavily Indebted
Poor Countries (HIPC) Initiative. The boards of the International Monetary Fund (IMF) and World
Bank granted in December 2000 that the country had reached the judgment point for liability
release under the HIPC Initiative and clear a set of circumstances for Madagascar to accomplish
the conclusion end. In October 2004, the boards of the IMF and the World Bank determined that
Madagascar had reached the completion point under the improved HIPC plan.
The Madagascar-U.S. Business Council was created in Madagascar in 2002. The U.S.-
Madagascar Business Council was created in the United States in May 2003, and the two
organizations carry on to discover ways to work for the profit of both groups. An American
Chamber of Commerce was launched at the end of 2008 and remains full of life even after the
2009 takeover d'etat.
Madagascar’s continuing political disaster continues to harmfully crash explanation
economic indicators and the business segment. Due to the procedures of the HAT rule,
Madagascar no longer met eligibile necessities for the African Growth and Opportunity Act
(AGOA) as of the end of 2009, a position which resulted in the beating of thousands of jobs.
Swaths of the nation have returned to a exchange economy, and standards of living have little by
little declined since the takeover.
21 | P a g e
GDP (Purchasing power parity):
$20.66 billion (as per2011)
country comparison to the world: 127
$20.55 billion (as per2010.)
$20.44 billion (as per2009.)
(Figure are in US dollars)
GDP (U.S.$, 2009 ., official exchange rate): $8.6 billion.
GDP per capita (2009 ., official exchange rate): $438.
GNI per capita (2009., purchasing power parity): $990.
Natural resources means which are produced or get after some process on material got from
nature. They are:
Graphite, chrome, coal, bauxite, ilmenite, nickel, gold, oil, tar sands, uranium, precious and
semiprecious stones, and hardwoods.
Agriculture (29% of GDP, 2009.): Products--rice, livestock, seafood, coffee, vanilla, sugar, cloves,
cotton, sisal, peanuts, and tobacco.
Industry (15.9% of GDP, 2008.): Types--processed food, clothing, textiles, mining, paper, refined
petroleum products, glassware, construction, soap, cement, tanning.
Trade: Exports (28% of GDP, 2009): vanilla, coffee, cloves, shrimp, graphite, essential oils, apparel,
industrial minerals and gemstones. Main export markets--France, U.S., Germany, Italy,
U.K. Imports (52% of GDP, 2009 est.): foodstuffs, fuel and energy, capital goods, vehicles,
consumer goods and electronics. Main suppliers--France, China, Iran, Mauritius, Hong Kong.
22 | P a g e
GOVERNMENT
The main institutions of the Republic of Madagascar are a president, a parliament, a
prime ministry, an independent judges and cabinet, this are the person who involve in
government of nation. The president is elected by straight common election for a 5-year term,
renewable two times. The very last presidential election was held on December 3, 20011.At
present there is no legal sitting president or government in Madagascar. The subsequent
paragraphs describe the arrangement of Madagascar's government as laid out in Madagascar's
establishment.
In Madagascar, the parliament has 2 chambers; the National Assembly and the Senate.
The most recent National Assembly election was held on September 23, 2007, and marked a
important modification to the parliament. The National Assembly has 127 members, elected for a
4-year term in single-member and two-member constituencies. The Senate has 33 members, with
22 members elected for a 6-year term, 1 for each region by regional electors, and 11 members
appointed by the president. Following the 2009 takeover d'etat, the Malagasy National Assembly
and Senate were dissolved by the de facto establishment. Thus, there is currently no legal
governmental body in Madagascar.
The prime minister and members of assembly start legislation, and the government
executes it. The president can dissolve the National Assembly. For its part, the National Assembly
can overtake a movement of reproach and need the prime minister and council of ministers to
stair downward. The Constitutional Court approves the constitutionality of fresh laws.
In an attempt to spread out management, the nation's six provinces were dissolved in
the legal referendum of 2007, in good turn of 22 regions. Decentralization is an continuing
procedure, and was a key element of Madagascar's development plans past to the 2009 takeover
d'etat.
23 | P a g e
Principal Government Officials
HAT (High Transitional Authority) President--Andry Nirina RAJOELINA (self-appointed)
HAT Prime Minister--Omer BERIZIKY
HAT Vice Prime Minister for Economy and Industry--Pierrot BOTOZAZA
HAT Vice Prime Minister for Development and Planning--Hajo Herivelona ANDRIANAINARIVELO
HAT Minister of Foreign Affairs--Pierrot RAJAONARIVELO
HAT Minister of Finance and Budget--Hery RAJAONARIMAMPIANINA
HAT Minister of Mines--Tolotrandry Rajo Daniella RANDRIAFENO
HAT Minister of Hydrocarbons--Bernard MARCEL
HAT Minister of Armed Forces--General of the Army Andre Lucien RAKOTOARIMASY
HAT Minister of Trade--Olga RAMALASON
HAT Minister of Justice--Christine Harijaona RAZANAMAHASOA
HAT Minister of Environment and Forests--Omer BERIZIKY (acting)
HAT Minister of Internal Security--Arsene RAKONTONDRAZAK
Ambassador to the U.S.--vacant
Ambassador to the UN--Zina Andrianarivelo-Razafy
Madagascar maintains an delegation in the United States at 2374 Massachusetts Avenue NW,
Washington, DC 20008 (tel. 202-265-5525).
Madagascar’s economic independence gain is 62.4, making its economy the 75th freest in
the 2012 Index. Its gain has improved by 1.2 points from last year, reflecting improvements in
business independence and the organization of government spending. Madagascar is ranked 6th
out of 46 nations in the Sub-Saharan Africa region, and its in general achieve is above the world
standard.
Madagascar has implemented a few famed reforms to enhance its entrepreneurial
environment. Procedures for launching a trade have been smooth, and lowest amount capital
necessities have been abolished. Tax charge on entity and business profits have been lowered,
and the generally tax structure has been simplify.
24 | P a g e
In regard of such growth in much-needed economic reform, the joint impact of a still-
deficient institutional structure and the continuing threat of political volatility carry on to weaken
much of the progress made in falling poor quality. The legal system is underdeveloped, and
elaborate managerial events assist fraud, weakening the fundamentals of free of charge economic
activity. Policies needed to maintain open markets are not firmly institutionalized.
The top income and business tax rates are 23 percent. Other taxes include a value-added tax
(VAT) and a capital gains tax, with the overall tax burden amounting to 10.5 percent of total
household income. Government expenditure is equal to 14.6 percent of total household yield.
The budget stability has been in deficit, and public liability is at a level equal to 34 percent of
GDP.
Actions for locate up a business have been easy, and no minimum capital condition is now
compulsory. Licensing necessities are now less burdensome. The outmoded work laws are
preventive and not encouraging to the growth of a self-motivated labor market. The price rises
has declined somewhat but still averaged a high 9 percent over the most recent three years. The
government influences prices through condition owned project.
25 | P a g e
OVERVIEW OF
INDUSTRIES TRADE &
COMMERCE
26 | P a g e
Madagascar is an self-governing island republic with a self-governing government which lies
in the Indian Ocean and forms part of the Indian Ocean Islands collected works linked with Africa.
The capital city is Antananarivo. Other main towns are Antsirabe and Fianarantsoa and the
waterfront of Toamasina (Tamatave).
The official languages are Malagasy and French. The economy of Madagascar is primarily
based on agricultural. The local currency is the Malagasy franc (FMG). (US$ / FMG - current
exchange rate).
The international time zone for Madagascar is GMT +3 and the dialling code is +261.
Separately from Air Madagascar, the national carrier, Air France and Air Mauritius fly to
Madagascar. While the mid 1990, air transport in Madagascar has been liberalised and a number of
new private airlines now serve both domestic and international routes. Below the World Bank
sectoral program, the fuel business should be liberalised soon. As at September 1995 all nationals
need visas in order to visit the nation.
Malaria, tuberculosis, hepatitis A, typhoid fever and schistosomiasis this all disease may be
tight while doing journey in Madagascar. Travellers should be conscious that progress payment for
medical services may be needed. Prescription medicines should be accepted in their original
containers collectively with the prescription.
Madagascar undertook a logical Trade Integration Study ("DTIS") which was validated in
July 2003. Subsequently, Madagascar implemented 2[ Window II projects which included; (i)
Enhancement of trade capacity; and (ii) Export development support. Madagascar's DTIS
recommendations were included in Madagascar's 2003 Poverty Reduction Strategy Paper
("PRSP"), and many of the DTIS priorities incorporated in the Madagascar Action Plan ("MAP")
under activities related to countryside development and high economic growth pillars. Under the
EIF, Madagascar with the hold up of the EIF ES and TFM, is preparing a multi-year Tier 1 project
to support the National Implementation Arrangements ("NIAs"), and, formerly finalized, would be
submitted for approval. To ensure that stakeholders are fully engaged on the trade priorities, the
EIF is planning a Familiarisation Workshop in 2012.
27 | P a g e
UNDP helps national stakeholders to propose and implement a strategy for mainstreaming
trade in order to enhance policy coherence and the development impact of trade policies, usefulness
of institutional mechanisms and general rights of initiatives supported by the Enhanced Integrated
Framework (EIF)and Aid for Trade.
Mainstreaming trade is defined as the procedure of integrating trade into national and sectoral
growth setting up, policymaking, realization and appraisal in a reasoned and intentional manner.
This means taking trade-related issues into explanation when planning and executing broader
development objectives. It additional implies using trade proactively to manage specific national
development goals, including poverty reduction. Mainstreaming takes place at three levels:
1) policy;
2) institutional; and
3) international cooperation.
Madagascar Trade of Industry
Madagascar‘s Total employment in the Year 2008 was to the adjust of US$ 5.51 Billon show a
development of 45.55% over previous year. The table below shows trend in Madagascar‘s Total
Trade and Trade with India over the last 3 Years : -
Details Year 2006 Year
2007 Year 2008
CAGR 2006 – 08 Value in
USD Billion
Madagascar's Total Trade with the
world 2.77 3.78 5.51
41.04
% growth Over Previous Year 10.28 36.67 45.55
Madagascar's Total Imports from
world 1.76 2.44 3.84
47.71 %age Share of imports in Total
Trade 63.58 64.50 69.74
28 | P a g e
(Table 3.1)
%age Growth Over Previous Year 4.76 38.64 57.38
Madagascar's Total Exports from
world 1.01 1.34 1.67
28.56 %age Share of exports in Total
Trade 36.42 35.50 30.26
%age Growth Over Previous Year 21.45 33.23 24.05
Madagascar's Total Trade with
India 0.062 0.087 0.19
74.90 India's %age Share in Ghana's Total
Trade 2.25 2.30 3.46
% Growth Over Previous Year
39.80 118.81
Madagascar's Total Imports from
India 0.051 0.07 0.18
87.60 India's %age Share of imports in
Total imports 2.92 2.88 4.71
%age Growth Over Previous Year - 36.65 157.57
Madagascar's Total Exports to India 0.01 0.017 0.01
-4.65 India's%age Share of exports in
Total Exports 1.09 1.27 0.60
%age Growth Over Previous Year - 54.55 -41.18
29 | P a g e
African countries Trade Agreement
Till the early 1990s, many nations in Africa have made important development in opening up
their economy to external opposition do business and barter rate liberalization, frequently in the
context of IMF and World Bank‘s sustain programs. At the similar point in time, with the
construction or development of a number of area trading collection in other parts of the world,
numerous African nations have also worked towards this, ensuing in the founding or revitalization
of such trading arrangement in Africa too. The continent is now habitat to a few 30 local trade
agreements (RTAs) or trade blocs, many of which are piece of deeper regional incorporation
schemes.
While some RTAs have been revitalized, some other have been broadened and deepened. The
major trading agreements in Africa following are included:
Ordinary Market for Eastern and Southern Africa (COMESA) Angola, Burundi, Comoros,
Democratic Republic of Congo, Djibouti, Arab Republic of Egypt, Eritrea, Ethiopia, Kenya,
Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Swaziland, Uganda,
Tanzania, Zambia & Zimbabwe Agreements African Co Trade Agreements
Southern Africa development Community (SADC)- Angola, Botswana, Democratic Republic of
Congo, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland,
Tanzania, Zambia & Zimbabwe
South Africa Customs Union (SACU)- Botswana, Lesotho, Namibia, South Africa & Swaziland
West Africa Economic and Monetary Union (UEMOA)-Benin, Burkina Faso, Cote d'Ivoire,
Guinea-Bissau, Mali, Niger, Senegal & Togo
Economic Community of west Africa States (ECOWAS)- Benin, Burkina Faso, Cape Verde, Cote
d'Ivoire, the Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Mauritania, Niger, Nigeria,
Senegal, Sierra Leone & Togo
Central Africa Customs and Economic Union (UDEAC)- Cameroon, the Central Africa Republic,
Chad, the Republic of Congo, Equatorial Guinea & Gabon; Economic Community of Central
30 | P a g e
Africa States (ECCAS)- Angola, Burundi, Cameroon, the Central Africa Republic, Democratic
Republic of Congo, the Republic of Congo, Equatorial Guinea, Gabon, Rwanda and Sao Tome &
Principe
East Africa Community (EAC)- Kenya, Tanzania and Uganda; Cross border Initiative Burundi,
Comoros, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Swaziland,
Tanzania, Uganda, Zambia & Zimbabwe; Economic and Monetary Community of Central Africa
(CEMAC)- Cameroon, the Central Africa Republic, Chad, the Republic of Congo, Equatorial
Guinea, Gabon, and Sao Tome & Principe; Economic Community of the Countries of the Great
Lakes (C E P G L ) - Burundi, the Democratic Republic of Congo & Rwanda
Indian Ocean Commission Comoros - Madagascar, Mauritius, Reunion & Seychelles
Mano River Union (MRU) - Guinea, Liberia & Sierra Leone.
These trade planning are envisaged to promote do business and savings relation amongst member
countries by removal of tariffs and other impediments to intra-regional trade flows. In some cases,
the collection also aims at nurturing familiar economic and fiscal union amongst component of
states, as also a universal currency. The victory of these preparations in fostering intra-regional do
business has been varied, with SADC, ECOWAS, COMESA, Cross boundary Initiative and
UEMOA being the more victorious ones.
In this we also include investment criteria and information.
Investment and Business Opportunities
Madagascar's several normal treasures, the presently very ready for action
labor expenses, and the organized convenience of trainees and entrance- to mid-
level human resources should verify very attractive to investors. Now may sound
be the top time to invest in the country.
The main opportunities are in the sector such as mining, infrastructure,
31 | P a g e
agriculture, light manufacturing, tourism, and information communication technology sectors. The
Malagasy government has rationalized the actions to set up and conduct business in the country,
exclusively in order to support foreign investors. The recently-created Economic Development
Board of Madagascar (also known as the "EDBM") is the executive one-stop-shop for all
authorized papers requisite for business transactions, where a potential foreign investor can
1)generate a company in less than 3 days, as well as listing, filing of the statutes, obtaining a dues
classification number, and make sure the business officers are alert of the appropriate financial
laws;
2) obtain the needed visas for all foreign personnel, in less than 5 days;
3) record leased or purchased actual mansion in 60 days or less from the date of function;
4) obtain information with reference to the rationalized reporting necessities for the movement of
capital into and out of the nation.
The office of EDBM is situated in the middle of Antananarivo in Ampefiloha, near the Carlton (ex-
Hilton) hotel
Incentive policy for private Investment
The Malagasy establishment foresees free of charge project and free of charge movement of
goods, persons and funds. So as to cheer
private investments, a number of actions were taken by set a range of structures such as:
easing the government events by setting of an EDBG …
safeguard of the intellectual property through the Malagasy Industrial Protection Office
(OMAPI)
The tracking behind of the reforms by the Chamber of Commerce and Industry, as
well as the enlarge of the chambers of trade the judiciary reforms of the commerce
rights in the course of the group backing of the Reforms expenses of the trade rights
(CRDA) and by the passing of a new bill on business companies , people and civil
culture contracts, shared measures and fraud fighting;
The liberalization of the economy during the liberalization of capital transfer;
32 | P a g e
Establishing of the 00 year long rent system, which is to be discussed and freely
moveable;
Development of an enough economic road and rail network, which should reduce all
constraints in the development of the private sector, notably regarding road matters,
industrial parks and planning of sites for building.
The conference of the making of the Multilateral Agency for the investments Guarantee
(MIGA or AMGI), to which Madagascar is participant since 1988, foresees for universal
guarantees for foreign investments such as:
The independence to invest for any authorized person, human being of corporation,
without union or earlier permission, respecting laws and the narrow policy;
Capital and investment safety measures;
Free shift of all input in capital done by non habitation or foreign residents;
Free running of enterprises as per the statuary policy;
Free organization of human resources in the structure of the Malagasy industry Law
and community security provisions;
The same behavior of investors on the nationalized area;
Removal of non-tariff barriers
Till 1996, Madagascar subscribed the requirements of the piece of writing 8 of the IMF
statutes guaranteeing the without charge exchange of
transfers. Besides, other usual provisions include:
The financial safety is necessary by the world-wide financial population as regards
the free transport of foreign currencies overseas
In case of business conflicts the regulation connected to adjudication provides for
the start of juridical occurrence, with the finishing of the sentences.
Fiscal measures for reason investments:
The free zone system: the Free Zone act observe to actions, connected completely to
send abroad offers attractive reward such as tax settlement and attractive traditions
tariffs for investors;
Special traditions and lawful requirements relevant to main mining investments are
set up in the law on the bulky Mining Investments (LGIM) offering a ready for
action, incentive and secure authorized structure.
33 | P a g e
The top 20 item for consumption groups contributed to 81.8% of total imports of
Madgascar in 2008. Most important supplier countries to Madagascar were China, France,
Bahrain, South Africa, Europe Othr Nes, United States of America, India, Germany, Japan and
Mauritius in that order. Top 10 supplier countries constituted 68.78% share in Madagascar Total
Imports in 2008.
Imported products are:
Rank in
Global
imports
of
Egypt
in 2008
HS
Cod
e
Description
Value
of
impor
ts in
2008
(US D
Millio
n)
%
shar
e of
prod
uct
grou
p in
worl
d
impo
rt
year
2008
%
chang
e of
produc
t
group
in
world
import
year
200
Major
suppliers
(Top 3
suppliers
)
% share
of
major
supplier
countrie
s
%
Change
in
imports
from
Major
supplier
2008/20
07
Ran
k
%
Shar
e in
worl
d
Imp
ort
200
8
%
change
in
Import
s 2008
-
TO
TA
L
All products
3,845.
89
100.
00 57.27
China 21.03 73.14
7th 4.70 157.58 France 8.92 31.11
Bahrain 7.96 -17.86
1 84
Nuclear
reactors,
boilers,
machinery,
etc
573.8
0
14.9
2 143.58
China 31.71 403.91
10t
h 2.24 596.64
United
States of
America
9.37 87.21
Germany 8.59 112.13
2 27 Mineral fuels,
oils,
510.1
4
13.2
6 25.52
Bahrain 59.84 -18.00 2nd
14.2
5
35,887.India 14.25
34 | P a g e
distillation
products, etc
35,887.6
2
62
Saudi
Arabia 9.49 356.57
3 85
Electrical,
electronic
equipment
306.3
3 7.97 44.10
China 28.40 51.92
11th
1.76 196.49 Europe
Othr. Nes 14.52 281.27
France 12.26 3.67
4 73 Articles of
iron or steel
304.0
0 7.90 279.33
China 46.46 669.71
12t
h 1.13 226.83
South
Africa 12.58 34.16
Republic
of Korea 8.92
27,844.3
3
5 87
Vehicles
other than
railway,
tramway
236.8
4 6.16 64.73
Japan 31.75 89.50
15t
h 0.62 5.87
China 13.01 89.02
France 9.06 22.81
6 52 Cotton 158.4
6 4.12 40.81
France 24.70
1,508.75 9th 2.09 -35.71
Area Nes 19.09 108.32
China 17.65 -25.64
7 10 Cereals 122.2
8 3.18 38.20
Pakistan 35.01 11.04
2nd 18.3
2 42.64
India 18.32 42.64
Argentin
a 17.02 720.14
8 72 Iron and steel 111.0
6 2.89 137.41
China 17.89 105.32
3rd 15.7
3 59.25
South
Africa 16.32 99.99
India 15.73 59.25
35 | P a g e
9 39
Plastics and
articles
thereof
100.6
7 2.62 44.13
United
States of
America
15.30 813.40
15t
h 1.72 -2.43
China 11.27 36.18
South
Africa 10.35 105.77
10 51
Wool, animal
hair,
horsehair yarn
and fabric
thereof
92.05 2.39 -17.00
China 78.68 -22.04
N/
A N/A N/A
Mauritius 10.85 5.37
Italy 4.69 -25.45
11 54 Manmade
filaments 86.42 2.25 303.03
Germany 73.63
3,18,050
.00 8th 1.35 -10.61
China 8.37 11.22
France 2.82 -1.69
12 15
Animal,veget
able fats and
oils, cleavage
products, etc
83.80 2.18 47.78
Argentin
a 42.11 17.10
24t
h 0.01 150.00
Brazil 18.14 N/A
Indonesia 12.83 N/A
13 48
Paper &
paperboard,
articles of
pulp, paper
and board
69.97 1.82 11.38
South
Africa 24.58 30.76
6th 4.70 59.27 China 23.15 1.76
Indonesia 6.77 22.45
14 30 Pharmaceutic
al products 66.59 1.73 31.61
India 22.32 5.09
1st 22.3
2 5.09
France 21.27 -22.32
Europe
Othr. Nes 16.28
242.93
15 58 Special 65.52 1.70 254.04 France 82.04 13t 0.16 -36.25
36 | P a g e
woven or
tufted fabric,
lace, tapestry
etc
2,127.56 h
China 10.23 -16.17
Mauritius 1.71 50.67
16 60
Knitted or
crocheted
fabric
57.98 1.51 -23.12
China 68.37 -24.28
12th
0.09 -55.83 Mauritius 14.26 -15.40
Chinese
Taipei 13.99 -17.30
17 25
Salt, sulphur,
earth, stone,
plaster, lime
and cement
57.43 1.49 149.77
China 36.73 273.39
6th 2.46
2,672.5
5
Indonesia 34.22 67.75
Philippin
es 8.78
1,263.51
18 88
Aircraft,
spacecraft,
and parts
thereof
51.83 1.35 768.66
United
States of
America
85.37 992.27
N/
A N/A N/A
South
Africa 4.69
3,426.09
France 3.39 35.94
19 17
Sugars and
sugar
confectionery
51.01 1.33 17.71
South
Africa 32.03 65.63
5th 9.73 44.71 Brazil 20.28 149.94
Swazilan
d 19.23 -34.55
20 38
Miscellaneou
s chemical
products
39.48 1.03 48.29
Malaysia 21.78 141.98
13t
h 1.33 66.88
France 13.79
43.09
Area Nes 10.37
4,831.33
(Table3.2)
Export Import data:
37 | P a g e
All value in USD Billion
Rank Year 2008 Year 2007 Year 2006
Exporters Imported Value Exporters Imported Value Exporters Imported Value
- World 1.76 World 2.45 World 3.85
1 China 0.31 China 0.47 China 0.81
2 Bahrain 0.29 Bahrain 0.37 France 0.34
3 France 0.23 France 0.26 Bahrain 0.31
4 South Africa 0.10 South Africa 0.13 South Africa 0.23
5 USA 0.06 USA 0.09 USA 0.19
(Table3.3)
All values in USD Billion
Rank Importers Exported value in 2006 Importers Exported value in 2007 Importers Exported value in 2008
- World 1.01 World 1.34 World 1.67
1 France 0.40 France 0.59 France 0.75
2 USA 0.15 USA 0.24 USA 0.36
3 Germany 0.06 Germany 0.07 Germany 0.11
4 Italy 0.04 Italy 0.05 China 0.05
5 UK 0.03 UK 0.04 Italy 0.04c
(Table3.4)
Now we see the trade relation of Madagascar with India or Gujarat
Present Trade Relations and Business Volume of different
Products with India/ Gujarat
38 | P a g e
Here we discuss the trade relation of Madagascar and India. So, following product are such product
which is import by India and export from India.
Madagascar‘s Top 10 product Import From India:
Ran
k
HS
code Description
Madagasc
ar Import
from
India
2006
Madagasc
ar Import
from
India
2007
Madagasc
ar Import
from
India
2008
%Growt
h
2007/20
06
%Growt
h
2008/20
07
CAG
R
Over
3
year
-
TOTA
L All products 51.36 70.18 180.76 36.65 157.58 87.61
1 27
Mineral
fuels, oils,
distillation
products, etc 2.59 0.20 72.70 -92.20
35,887.6
2
429.8
9
2 10 Cereals 3.41 15.70 22.40 361.15 42.64
156.4
7
3 72
Iron and
steel 9.11 10.97 17.47 20.49 59.25 38.52
4 30
Pharmaceuti
cal products 9.80 14.14 14.86 44.28 5.09 23.13
5 84
Nuclear
reactors,
boilers,
machinery,
etc 1.99 1.85 12.87 -7.05 596.64
154.4
7
6 85
Electrical,
electronic
equipment 0.90 1.82 5.40 102.90 196.49
145.2
7
7 17 Sugars and 0.50 3.43 4.96 581.71 44.71 214.0
39 | P a g e
sugar
confectioner
y
8
8 73
Articles of
iron or steel 0.62 1.05 3.44 70.62 226.83
136.1
4
9 52 Cotton 4.72 5.14 3.31 9.08 -35.71
-
16.26
10 48
Paper &
paperboard,
articles of
pulp, paper
and board 1.64 2.07 3.29 25.84 59.27 41.57
(Table3.5)
Madagascar top 10 Product Export to India.
Ran
k
HS
code
Descriptio
n
Madagasc
ar Export
from India
2006
Madagasc
ar Export
from India
2007
Madagasc
ar Export
from India
2008
%Growth
2007/200
6
%Growth
2008/200
7
CAG
R
Over
3 year
1
TOTA
L
All
products 11.97 17.88 10.51 49.41 -41.22 -6.29
2 72
Iron and
steel 5.48 5.73 5.24 4.51 -8.50 -2.21
3
9
Coffee,
tea, mate
and spices
2.91 8.72 1.94 199.52 -77.80 -
18.46
4
7
Edible
vegetables
and
certain
roots and
0.07 0.25 0.56 253.52 122.31 180.3
4
40 | P a g e
tubers
5
78
Lead and
articles
thereof
0.00 0.00 0.50 N/A N/A N/A
6
33
Essential
oils,
perfumes,
cosmetics,
toiletries
0.41 0.47 0.50 13.77 5.73 9.68
7
25
Salt,
sulphur,
earth,
stone,
plaster,
lime and
cement
0.06 0.21 0.48 263.16 129.47 188.6
8
8
71
Pearls,
precious
stones,
metals,
coins, etc
2.29 1.49 0.27 -34.62 -81.66 -
65.37
9 52 Cotton 0.00 0.00 0.24 N/A N/A N/A
10
8
Edible
fruit, nuts,
peel of
citrus
fruit,
melons
0.33 0.22 0.14 -33.03 -36.53 -
34.80
44
Wood and
articles of
wood,
0.02 0.23 0.10 1,343.75 -58.44 144.9
5
41 | P a g e
wood
charcoal
(Table3.6)
To do a trade means import or export it is at international level because it was between 2 country
India and Madagascar. So the tariff rule have to be laid. Tarrif are as follow:
Tariffs
Tariff levels are an significant factor for sectors such as textile, apparel, horticulture and food and
beverage dealing out, most sub-Saharan African countries have tariff-free access to a number of
main markets within a wide range of export yield. It is, for this explanation, that tariffs are not a
universal worry for investors in Africa. Among the more popular trade agreements are the African
Growth Opportunity Act (USA), the Cotonou Agreement (EU), the Everything But Arms (EBA)
amendment to the EU‘s Generalized System of Preferences (EU), the Common Market for Eastern
and Southern Africa (COMESA), the East African Community(EAC), the Economic Community
of West African States (ECOWAS) and the Southern African Development Community (SADC).
42 | P a g e
OVERVIEW OF
DIFFERENT ECONOMIC
SECTOR IN SELECTED
COUNTRY
43 | P a g e
Agriculture is the major business in Africa, and it employs 60 percent of the
employees in Africa. The land of Africa boasts giant summation of usual property such as
oil, diamonds, gold, iron, cobalt, uranium, copper, bauxite, silver and petroleum and also
woods and tropical fruits all natural resources and some base on agriculture. However,
there are still huge amount of resources which are unexploited, due to need of road and
rail network.
The services which have seen major growth in recent years consist of banking
and fiscal services, communiqué and information technology, and going to places
of interest.
Tourism theater a main role in boosting the economies of Africa. South Africa is
one of the most visited country in Africa with more than 860,000 visitors per month,
and almost a divide into four parts is from non-African countries. In 2010, tourism
contributed 3 percent to South Africa's total GDP.
Principle economic sector in Madagascar:-
The main sectors of the of Madagascar's economy are agriculture and moving,
accounting for 26.9% and 23.7% percent of GDP in 2007, industry was 12% and public
management had a 5% share. Among the most important crops grown are rice,coffee,
cotton, tobacco, sugarcane, cloves, cocoa, tapioca, vanilla, bananas and peanuts. The
natural resources which are extracted are fish, graphite, bauxite, salt, quartz, gold,
semiprecious stones, timber and hydropower some we got directly and some after
process. The automated sector of Madagascar is conquered by light industries segment
such as the food meting out (including meat and seafood), brewing, tanning and textiles.
There are also cement and paper facilities. Madagascar has no major home-grown
sources of coal or natural gas and produces just 90 barrels of oil a day. About 60 percent
of power is generated by hydropower.
44 | P a g e
Agriculture Forestry and Fishing Sector
In agriculture sector, rice occupies the biggest share of totality crop estate Many varieties
of dry, wet and irrigated rice are grown-up in the middle flat terrain. Wet rice is grown-up in
the minor canal valley and dry rice is grown-up in eastern forests. Costly imports are
motionless required.
Sugarcane is grown-up in the northwest around Mahajanga and on the east seashore
near Toamasina. Cassava (manioc) is a clip crop grown-up all in excess of the island and
potatoes and yams are cultured mainly in the raised ground region of Ankaratra.
Forestry
A important amount of region under forestry is corrupted and the left behind is either wet
or dry humid forest. Major efforts for reforestation have been undertaken but because with
more than four-fifths of household fuel wishes supplied by wood and charcoal, the
country’s total forested area continues to decline severely.
Fisheries
Madagascar’s waters are prosperous in a range of fish, shellfish and crustaceans. The
country’s manufacturing fisheries sector has qualified great volume of extension. The
export of shrimp and prawns in particular provides a significant source of income Fishing
and over fishing unlawfully remainder difficult. The government of Madagascar mainly
lacks the possessions to contest the issue. Although fish agricultural, especially along the
western seashore, has been progressively more developed as an alternative. There is still
a considerable amount of fish in the irrigated rice fields, mostly for home utilization.
Transportation Sector
45 | P a g e
Transport facilities serve first and foremost the eartern seashore and the raised ground.
Facilities are less urbanized on the western half of the island, even though the country’s
best natural harbors are located there. Greater part of roads are unpaved, roads down the
eastern escarpment and across the western coastal strip.
Tourism Sector
The climate, beaches with a shoreline of 4,827 kilometers and unique natural balance
make tourism one of its most active and talented sectors in Madagascar. The sector not
only has a giant possible to create employment for the people but also could generate
possessions and could turn Madagascar's strange and endanger environment into a
creative asset. Although the nation has a total of nearly 14,000 rooms (all classes), it is
still an inadequate amount in the sight of the stable growth of tourism quantity. The many
accepted tourist sites take in places like as Nosy-Be, Sainte-Marie, Andakana but many
sites which still have prospective still remains unused. This can be explained by difficulties
of right of entry and be deficient in communications networks. Though problems are still
negligible because of compared to the likely return on investment.
The right of entry to property in Madagascar is cheering set that the public property can be
used in rent and private property acquired at very reasonably prices. Presently there are
five airlines through which Madagascar is connected to the world. These are Air France,
Corsair, Air Madagascar, Air Austral and Kenya Airways.
well as minor roads all over the place, become blocked during the wet season.
Financial Services
The confines present in the financial sector continue to obstruct growth. The country's
assets are restricted by the central bank and 5 commercial banks, the major of which,
BNI-Credit Lyonnais. Few Malagasy, though, qualify for these banks' services. The
problem is specially acute in the countryside areas where only 1.5 percent of small
farmers have right to use to credit, the agriculture sector itself receives only 5 percent of
total lending. High interest on loan rates and fees has also depress business borrowing.
46 | P a g e
The require of a stock exchange and shareholding traditions has further restricted
financing option.
Mining Sector
A small but on the go up piece of the economy is based on mining of ilmenite, with
investments increasing in new years, mainly near Tulear and Fort Dauphin. Mining
business Rio Tinto Group continuing production at its Fort Dauphin mine in January
2009, following a numeral of years of infrastructure research. The mining project is
extremely divisive, with associates of the Earth and other ecological organizations filing
information to detail their concern about effects on the local background and
communities. Gemstone mining is also an central part of Madagascar's economy.
Several major projects are on the move in the mining and oil and gas sectors that, if
victorious, will give a important boost. In the mining sector, these include the growth of
coal at Sakoa and nickel near Tamatave. The Ambatovy nickel mine (Sherrit International
40%, Sumitomo 27.5%, Korea Resources 27.5%, SNC Lavelin 5%) is a huge operation
having cost $4.76m to date and is due to start production in 2011. In oil, Madagascar
Oil is developing the huge onshore heavy oil field at Tsimiroro and ultra heavy oil field at
Bemolanga.
Madagascar has a wide series of gems and semiprecious stones that include the garnet,
amethyst, tourmaline and beryl . The finding of sapphires in Madagascar in the late 1990s
was particularly significant. As in the start of the 21st century, about half of the world’s
sapphires were mined in Madagascar.
Agriculture is important object so we see other information related to agriculture:
Agriculture, including fishing and forestry, is the mainstay of the Madagascar
economy and the country has a great possible for growth in the sector. In 2009,
agriculture accounted for 24% of Gross Domestic Product (GDP), while business and
services accounted for 55%. Agriculture employs more than 70% of the labour force and
provides livelihoods to the enormous bulk of about 20 million inhabitants, contributing
47 | P a g e
more than 70% to export earnings, mostly through the export of seafood(mainly
shrimps), vanilla, coffee, cacao, litchi, pepper, cotton, tobacco, groundnut, sisal, clove an
d ylang-ylang. Manufacturing features textile manufacturing and the handing out of
agricultural products. Expansion in output in 1992–97 averaged less than the growth rate
of the population. Expansion has been in custody back by a turn down in world coffee
demand, and the irregular obligation of the government to economic reform. Redoubtable
obstacles situate in the way of Madagascar's realizing its significant growth potential; the
extent of government reforms, outside financial aid, and foreign investment will be type of
determinants.
Madagascar is an island gifted with a hot type of weather along the coasts, a
moderate type of weather in the high ground and an dry type of weather in the south. The
variety of its environmental science and climate makes it possible to grow mild crops such
as apples, pears, plums, grape and citrus fruits and tropical products such
as mangoes and litchi, as well as a wide variety of other crops
including coffee, cloves, sisal, maize, tubers and various spices.
Other Resources of growth:
Madagascar's sources of development are tourism; textile and light manufacturing exports
(notably through the EPZs); agricultural products and mining. Madagascar is the world's
most important producer of vanilla and accounts for about half the world's export market.
Tourism targets the niche eco-tourism market, capitalizing on Madagascar's sole
biodiversity, pure natural habitats, nationwide parks and lemur species. Exports from the
EPZs, situated around Antananarivo and Antsirabe, consist the most part of piece of
clothing manufacture, targeting the US market under AGOA and the European markets
under the Everything But Arms (EBA) agreement. Agricultural exports consist of low-
volume high-value products like vanilla, lychees and necessary oils. Madagascar has the
biggest cinnamon market in Africa. Madagascar also is a huge exporter of coffee.
Investment Climate
48 | P a g e
Former President Marc Ravalomanana of Madagascar
The government of former President Marc Ravalomanana was uncompromisingly seeking
foreign investment and had considered to engage in many of the obstacles to such
venture, including fighting fraud, reforming land-ownership laws, heartening study of
American and European business techniques, and full of life search of foreign investors.
President Ravalomanana rose to distinction through his agro-foods TIKO company, and is
known for attempting to apply many of the teaching cultured in the world of business to
running the government. Prior to Ravalomanana's acknowledgment, concerns had arisen
about the clash of interest between his policies and the actions of his firms. Most famous
among them the preferential treatment for rice imports initiated by the government in
behind 2004 when responding to a production shortfall in the country.
Madagascar’s demand to investors stems from its aggressive, trainable work force. More
than 200 investors, particularly item of clothing manufacturers, were prepared under the
country’s send out of the country meting out zone (EPZ) system since it was established
in 1989. The want of quota restrictions on cloth imports to the European promote under
the Lome Convention helped motivate this growth.
49 | P a g e
Overview of Business and
Trade at international level
50 | P a g e
A) Overview of Business and Trade at international trade Business outline for Madagascar Main
Industry Sectors The most important sectors in Madagascar are agriculture and product of
agriculture like (cotton, rice, wood, vanilla, minerals) and services (tourism).
B) Economic Overview Madagascar's market had a strong short form in 2009 (-3.7%) and in
2010 (-2%). The severe political crisis that the nation is currently in front of is the explanation of
this reduce speed. The power of the countryside was taken by strength by Andry Rajoelina in
March 2009 and it was predestined by the international society which provoked a negative impact
in some sectors such as tourism, building and construction and the main financial support sponsors
balanced their attachment in the country. The growth drivers such as personal investment which
consists of large mining projects have slowed down and the volume of the GDP's growth should be
harmful again in 2011.
C) FDI in Figures FDI inflows in Madagascar have powerfully dropped in 2010 due to the
property of the global disaster, but most of all due to the main political dilemma that the nation is
going through since 2009 and this is impressively separating it from the global
prospect. Madagascar has a wonderful natural possible, but the low quality and high cost of its
infrastructures (roads, electricity, telecommunications, ports, air freight), the insufficient right of
entry to acknowledgment and financial instruments as well as the poor explanation of its
belongings titles are all barriers to investment. The political explosive nature, a customary problem
in the country since several years, has get worse and has become another major obstacle: the
upcoming into power by force of the actual Malagasy leader has blocked all foreign aid which has
blocked all public investments and forced the going away of many investors. The extreme drop for
the support of a "green revolution" had dramatic punishment in the agricultural sector which
represents 28% of the GDP and 20% of its exports. France, Mauritius, China and the United States
remain the main investors in Madagascar.
D) FDI Government Measures Make possible the enterprise manufacture. Creation of the
Economic Development Board Madagascar.
E) Country Strong Points The most important tough points are: - important natural resources
(mines, woods, water); - clever and low-cost work force; - Its open to cost-cutting measure.
51 | P a g e
F) Country Weak Points The weedy points of the country are: - Political and social volatility; -
dishonesty; - Poor state of infrastructures.
G)Foreign Trade Overview Madagascar was, just awaiting freshly,a country very open to
foreign trade. The country is a member of the WTO, and of Comesa (Common Market for Eastern
and Southern Africa). However, since the country's power was taken by force by the present
Malagasy leader, savings totally stopped and the country's imports and exports were cheap
considerably. Madagascar does not have major non-tariff barriers, but they still remain very
tall. The government has established a Free Zone Industrial (ZFI) to re-launch exports, in
particular in the clothing manufacturing sector. Equipment and other import resources that will be
used in this zone are free from of tradition duties. Moreover, most of the goods can be imported
without an import license. The import of equipment goods for the removal projects remain very
important and the trade deficit has increased. In due time, this deficit is expected to reduce thanks
to the potential increase of mining exports.
The major trading associates of Madagascar, that stays in normal periods, are the
European Union, the United States and China. The country exports mainly coffee, vanilla,
shellfish, sugar, cotton clothing, oil and mining products towards France, the United States and
Germany. The country imports capital goods, oil, convenience goods and foodstuff from China,
Bahrain, France, South Africa, the United States and India. Website:-
http://www.globaltrade.net/m/c/Madagascar.html BUSINESS IN INTERNATIONAL LEVEL
MADAGASCAR With residents of around 20 million citizens, Madagascar is a country where a
important number of the residents lives under the official poverty line. The economy of
Madagascar has been helped by the Heavily Indebted Poor Countries initiative of the International
Monetary Fund and the World Bank, but the economy has suffered in current years due to political
volatility. Investment opportunities survive for enterprises doing business in Madagascar in sectors
such as agriculture, food processing, mining, infrastructure, textiles and light manufacturing,
tourism, oil, gas and petroleum. Tourism is an important industry yet to be paid to Madagascar‘s
climate, beaches and rare wildlife including many types of mammals (e.g. lemurs) and birds which
are distinctive to the island.
52 | P a g e
The Tsingy de Bemaraha environment preserve is a UNESCO World Heritage Site. There
is therefore scale for the development of hotels and resorts in the tourist sector. For the same
reason, there are opportunities for enterprises in the film and entertainment industry to take
advantage of the natural property by investing in Madagascar. In the power sector, Madagascar has
a high budding for hydroelectric power and is also looking to develop further into the areas of solar
power and wind power for which there is also great possible. Manufacturing industries on
Madagascar include food handing out which uses the food yield available on the island such as
seafood (e.g. seaweed), dairy products and the bottling and can of drinks. The textile industry on
Madagascar can take advantage of the low water costs and the comparatively low wage rates. Light
manufacturing industry on Madagascar produces goods such as paper tissue, fertilizer, soap,
cigarettes and sugar. FOREIGN RELATIONS Madagascar, which has in history been supposed as
on the margin of majority African dealings, willingly rejoined the African Union (AU) in July 2003
after a 14-month space triggered by the 2002 political crisis, and joined SADC in 2006. From 1978
until 1991, then-President Ratsiraka emphasized self-government and detachment and followed an
"all points" policy stressing ties with collective and fundamental regimes, including North Korea,
Cuba, Libya, and Iran. Taking office in 1993, President Albert Zafy expressed his desire for
political relations with all countries. Early in his possession, he established official ties with the
Republic of Korea and sent emissaries to Morocco.
Starting in 1997, globalization confident the government and President Ratsiraka to hold
on to market-oriented policies and to appoint world markets. External relationships reflected this
trend, although Madagascar's substantial separation and strong traditional insular orientation have
incomplete its activity in regional economic organizations and dealings with its East African
neighbors. During his term, President Ravalomanana welcomed associations with all countries
interested in helping Madagascar to develop. He willfully sought to strengthen relations with
Anglophone countries as a means of complementary in olden times strong French influence.
Following the 2009 takeover d'etat, Madagascar was balanced from participating in AU and SADC
actions until legal order is restored. The majority donors in Madagascar, with the United States and
the European Union, have balanced support programs to the Government of Madagascar. The
United States at present undertakes only concerned hold programs that have a straight impact on
civilian residents in need. The AU formed an International Contact Group to bring together global
community action to ensure a return to legal rule as quickly as possible, and SADC appointed
53 | P a g e
former Mozambican President Joaquim Chissano as a intermediary in the effort to find a
consensual, negotiated answer to the current political crisis. Additionally, the AU and others have
enacted confident embattled sanctions or travel limitations on members of the HAT regime who are
impeding a return to free of charge, fair-haired, and durable democracy in Madagascar. Investment
and Business opportunities Madagascar's frequent natural riches, that present very aggressive labor
costs, and the prepared availability of trainees and entry- to mid-level workers should prove very
striking to investors.
Now may well be the best time to invest in the nation. The main opportunities are in the
mining, infrastructure, agriculture, light manufacturing, tourism, and information that is
communication technology sectors. The Malagasy management has rationalized the procedures to
establish and conduct trade in the nation specifically in order to encourage foreign investors. The
recently-created Economic Development Board of Madagascar (also known as the "EDBM") is the
official one-stop-shop for all legal documents essential for business transactions, where a
prospective foreign investor can:
1) create a business in less than 3 days, including registration, filing of the statutes, obtaining a
taxes classification number, and making sure the corporate officers are aware of the applicable
fiscal laws;
2) obtain the necessary visas for all foreign workers, in less than 5 days;
3) register leased or purchased real estate in 60 days or less from the date of claim;
4) obtain information about the rationalized reporting necessities for the movement of capital into
and out of the country.
The EDBM office is located in the center of Antananarivo in Ampefiloha, near the Carlton (ex-
Hilton) hotel. Investment consideration for Foreign A peaceful country: The Global Peace
directory, a alliance between the Economist Intelligence Unit and the Institute for Economics and
Peace that seeks to measure the level of social, economic and political peace in the world's diverse
countries, ranked Madagascar 41st in the world in 2007 (ahead of Botswana, Brazil, China, the UK
and the USA), and 72nd in the disaster year of 2009 (still ahead of Brazil, China and the USA).
Language: Madagascar is one of the few countries in the world where every person basically
speaks the same language. Though there are various ethnic groups and dialects spoken,
communication is still possible crossways groups because of the team spirit of the basic Malagasy
language.
54 | P a g e
French is the first foreign language but the use of English is becoming more extensive
than in the past. Infrastructure: The road set of connections has seen extraordinary and sustained
improvement (in the size of the set of connections and in the level of continuation) due to the
official respect of its importance to the economy. Flights to and out of Madagascar currently
include 6 weekly long-haul Air Madagascar flights (to Paris, Marseille, Bangkok and
Guangzhou/Canton), 3 weekly Air France flights to Paris, a daily South African Airways flight to
Johannesburg, and more than a few weekly regional options. Current government labors are
focusing on improving oversight of the public usefulness company in charge of water and power,
and also encouraging more private participants within the region.
Communication within the country has improved through readily obtainable internet access
with multiple providers as well as more than a few cellular phone networks. Incentive for foreign
investment incentives: In addition to the clear language in the foundation favoring free enterprise
and the free movement of goods, persons and capital, several measures were recently passed by the
government to cheer private investment, including: the formation of the EDBM one-stop-shop to
support foreign investors with all legal dealings and necessities the formation of the Malagasy
Arbitration and Mediation Center (known by its French acronym CAMM), a private organization
to encourageand facilitate the use of arbitration to resolve marketable disputes a privatization law
with a explicit section declaring that the Government of Madagascar accepts obligatory
international arbitration of investment disputes between foreign investors and the State. The courts
identify and maintain foreign arbitral awards, and international adjudication is accepted as a means
of settling investment disputes between private parties assembly adopted a new law in December
2008 yielding exporters specific benefits including a reduce of the background tax rate on imported
raw resources and capital goods to 5% (from the previous 10% to 20% range).
Additional refund consist of export tax exemptions, the self-government for Malagasy
companies to open bank accounts out of the country, and the formation of an export agency under
the Ministry of the Economy to make trouble-free and endorse exports a new investment law
authorizing foreign investors to increase admission to land through long-term leases a new rule
creating particular Export Processing Zones and granting EPZ companies the following advantages
and tax incentives: 15-year tax release, discharge from any Value-Added-Tax or traditions duties
on imports of raw materials, release from listing taxes, discharge from traditions tax on exported
55 | P a g e
commodities, and free access to foreign currency deposits the creation of the Malagasy Industrial
Protection Office (OMAPI) and the Malagasy Copyright Office (OMDA), in charge of defensive
academic property human rights All rights are reserved under the government of madagascar The
American Chamber of Commerce in Madagascar is formed on December, 2008, in the look
forward to of further increasing trade and investment between the USA and Madagascar The
Malagasy government has a solid track record of commitments connecting to trade and foreign
investment. Some of these commitments are alert on being clear surrounded by the international
instruction surroundings, such as amalgamation with the World Bank's Multilateral Investment
Guarantee Agency. Madagascar has also subscribed to the requirements of Article 8 of the IMF
statutes guaranteeing the free circulation of transfers,and is a signatory to the International Center
for the Settlement of Investment Disputes (ICSID) Convection. In 2008, Madagascar joined the
Extractive Industries Transparence Initiative, having joined the World Trade Organization and
being bound by the WTO Trade Related Investment Measures. http://www.madagascar-
embassy.org/embassy/biz.htmlhttp://www.madagascar-embassy.org/embassy/biz.html Now we see
the ―Multilateral Investment Guarantee Agency‖ As part of MIGA‘s global Enterprise
Benchmarking Program
(EBP), a study was conducted in sub-Saharan African countries among six industries to compare
the operating costs and conditions for investors located in nine sub-Saharan African countries:
Ghana, Kenya, Lesotho, Madagascar, Mali, Mozambique, Senegal, Tanzania and Uganda. This
report summarizes the study‘s findings, and presents the result of the sub-Saharan Africa EBP,
adhering to the location benchmarking approach commonly used by foreign investors to evaluate
alternative global investment sites. As an analytical tool, location benchmarking enables an
investing company to narrow its site selection options to a short-list of locations best suited to the
requirements of the investment project.
Countries were evaluated based on the actual costs and operating conditions reported by
existing investors with facilities in these countries. The study was conducted by the Multilateral
Investment Guarantee Agency of the World Bank Group, with the financial support of the
Government of Madagascar in association with the Private Sector Development Project II
56 | P a g e
(International Development Association [IDA]), the Swiss State Secretariat for Economic Affairs
(SECO), the Austrian Development Agency (ADA), United States Agency for International
Development (USAID) and Japan Policy and Human Resources Development Trust Fund
(World Bank). It can collecting information regarding operating conditions and investment
motivation, the Africa study relied mostly on first-hand information obtained through company
interviews. This was due to the difficulty of finding consistent and comparable data through
desktop research sources. The research team conducted a total of 297 company interviews with
foreign and local investors in the 6 industries. Among the surveyed companies, 37 percent were
locally owned, 29 percent were joint ventures between local and foreign firms, and 34 percent were
foreign owned.
The primary data collected from company interviews using a standard questionnaire was
supplemented with secondary data obtained from unfashionable, national and international sources.
With its membership in a large number of regional (SADC, Indian Ocean Commission, COMESA)
and global trade agreements (AGOA,Cotonou), Madagascar has the capability of becoming a
viable investment and export location. Compared to other countries of similar income, Madagascar
is relatively integrated into the global economy. Economic Priority Zones, referred to as Zones
Franches, have raised the output levels of industries and facilitated the establishment of businesses
especially with foreign capital. FDI into Madagascar has little by little enlarged since the early
nineties, with net inflows totaling US$ 45 million in 2004 compared with US$ 13 million in 2003.
Estimates for 2005 suggest that inflows will amount to over USD 80 million. Most FDI origins
from France, followed by Mauritius, China, Luxembourg, Switzerland, Bermuda, Canada, the US,
India and Sri Lanka. In 2004, the total assets of foreign companies represented just about US$ 3
billion. The primary sectors in receipt of investment include textile and apparel, where Madagascar
has seen an increase of Asian investment, seafood (shrimp), agro-industries and wood yield. The
Government of Madagascar is ongoing to advance the country‘s investment type of weather as
evidenced by current efforts to modify the Investment Code and to create an investment
endorsement agency, in order to enlarge its full Foreign Direct Investment possible.
57 | P a g e
Full ownership of property is allowed in Madagascar and most sectors are open to 100
percent foreign ownership. There are no limitations on expenses or transfers, though profits must
be repatriated within 30 days. The sectors that are highly traded at international level in
Madagascar are as follow: Textile Sector Apperal Sector Horticulture Sector Food & Bevrages
Process Service Sector Tourism Sector Now we discuss Tariff because it is needed for doing
business at international level means needed in Imports & Exports. Tariffs Tariff levels are an
significant factor for sectors such as textile, apparel, horticulture and food and beverage dealing
out, most sub-Saharan African countries have tariff-free access to a number of main markets within
a wide range of export yield.
It is, for this explanation, that tariffs are not a universal worry for investors in Africa.
Among the more popular trade agreements are the African Growth Opportunity Act (USA), the
Cotonou Agreement (EU), the Everything But Arms (EBA) amendment to the EU‘s Generalized
System of Preferences (EU), the Common Market for Eastern and Southern Africa (COMESA), the
East African Community(EAC), the Economic Community of West African States (ECOWAS)
and the Southern African Development Community (SADC).
According to survey investors for this six sectors are are as: No. Textile Apparel
Horticulture Food & Beverage Shared Services Tourism Factors related to quality 1 Access to
market & supply Access to market & supply Access to market & supply Access to market &
supply Access to market & supply Access to market & supply 2 General Business environment
General Business environment General Business environment General Business environment
General Business environment General Business environment 3 Local potential to recruit staff
Local potential to recruit staff Availibility of real estate/ Arable Land Local potential to recruit staff
Local potential to recruit staff Local potential to recruit staff Factor related to Cost 1 Wages Levels
Wages Levels Wages Levels Wages Levels Wages Levels Cost of real estate 2 Cost of real estate
Cost of real estate Cost of real estate Cost of real estate Tele-communication Wages levels 3 Cost
of water & power Cost of water & power Cost of transport Cost of construction Cost of real estate
Cost of construction (Table5.1) Now we see the survey profile of top most sector of industry:
Textile sector: (For this survey 42 companies are interviewed.) Average Investment Characteristics
Ownership: 47% local owned 24% joint ventures 29% completely foreign owned Investment size:
US$ 15.8 million Factory floor space 23,559 m² Number ofemployees: 591 Sales: US$ 13.2
million Company exports: Cotton yarn organic cotton cotton fabric printed fabrics polyester fabrics
58 | P a g e
blankets bed sheets Apperal Sector (For this survey 57 companies are interviewed.) Average
Investment Characteristics Ownership: 37% local owned 45% joint ventures 18% completely
foreign owned Investment size: US$ 4.1 million Factory floor space 15,224 m² Number
ofemployees: 708 Sales: US$ 5.9 million Company exports: Casual wear, jeans, sports wear, ethnic
wear, uniforms, shirts and bottoms, shoes, underwear, socks, jackets, sweaters Horticulture (For
this survey 57 companies are interviewed.) Average Investment Characteristics Ownership: 51%
local owned 21% joint ventures 28% completely foreign owned Investment size: US$ 4. million
Factory floor space 195 ha Number ofemployees: 462 Sales: US$ 18.7 million Company exports:
Roses beans vanilla mangoes tomatoes cashews live plants pineapples citrus fruit banana baby corn
peppers Food & Beverage Processing Sector (For this survey 52 companies are interviewed.)
Average Investment Characteristics Ownership: 37% local owned 25% joint ventures 38%
completely foreign owned Investment size: US$ 38.1 million Factory floor space35795 m² Number
ofemployees:598 Sales: US$ 52.9 million Company exports:Dried fruits and vegetables bottle
beverages and fruit juices palm oil peanut oil sugars jellies and jams powdered milks biscuits
cookies and candy Service sector (For this survey 51 companies are interviewed.) Average
Investment Characteristics Ownership: 31% local owned 25% joint ventures 44% completely
foreign owned Investment size: US$ 1.8 million Factory floor space1093 m² Number
ofemployees:135 Sales: US$ 12,7 million Tourism Sector (For this survey 48 companies are
interviewed.) Average Investment Characteristics Ownership: 23% local owned 27% joint ventures
50% completely foreign owned Investment size: US$ 14.6 million Factory floor space17,789 m²
Number ofemployees:215 Sales: US$ 5.3 million This is all about international level because of
time and some other causes we include only some topic of trade at international level.
snapshot_africa_madagascar(1).pdf.
59 | P a g e
Analysis of other factors of
Country
60 | P a g e
Main aspects of PEST analysis.
(1) Political Factor
Madagascar's first President, Philibert Tsiranana, was chosen when his Social
Democratic Party gained power at independence in 1960 and was again choosen without
conflict in March 1972. However, he resign only 2 months soon after in reply to huge
revolutionary demonstrations. The conflict continued, and Tsiranana's successor, Gen.
Gabriel Ramanantsoa, resigned on February 5, 1975, handing over managerial power to
Lt. Col. Richard Ratsimandrava, who was assassinated 6 days later. A provisional military
directorate then ruled until a new government was formed in June 1975, under Didier
Ratsiraka.
During the 16 consequent years of President Ratsiraka's rule, Madagascar's
government was devoted to revolutionary communalism based on the 1975 formation that
established a well centralized state. Elections in 1982 and 1989 returned Ratsiraka for a
second and third 7-year presidential word. For much of this period, only limited and
reserved political conflict was tolerated, with no direct disapproval of the president
permitted in the press.
61 | P a g e
In the late 1980s, the Ratsiraka rule came under increasing stress to make essential
changes. With a weakening economy, mass demonstrations, and crippling universal
strikes, the restricted economic and political reforms Ratsiraka enacted were inadequate
to calm a increasing conflict movement known as Hery Velona or "Active Forces." A
number of already presented political parties and their leaders, among them Albert Zafy
and Rakotoniaina Manandafy, host this movement. In a bid to calm this conflict, Ratsiraka
replaced his prime minister in August 1991 but suffered an severe setback soon thereafter
when his troops passionate on quiet demonstrators marching on his uptown palace, killing
more than 30. In an increasingly damaged position, Ratsiraka acceded to negotiations on
the structure of a intermediary government. The resultant "Panorama Convention" of
October 31, 1991, exposed Ratsiraka of nearly all of his powers, shaped temporary
institutions, and set an 18-month timetable for completing a conversion to a new form of
legal government. The High legitimate Court was retained as the final judicial arbiter of the
process. In March 1992, a widely representative National Forum organized by the
Malagasy Christian Council of Churches (FFKM) drafted a new structure, which was put to
a nationwide referendum in August 1992 and permitted by a wide margin, in spite of
efforts by pro-Ratsiraka "federalists" to disturb balloting in several coastal areas.
The election for Presidential were held on November 25, 1992, after the High
Constitutional Court had lined, over "Active Forces" objections, that Ratsiraka could
become a nominee. Surplus elections were held in February 1993, and the leader of the
Hery Velona movement, Albert Zafy, beaten Ratsiraka. Zafy was under oath in as
President on March 27, 1993. After President Zafy's prosecution by the National
Assembly in 1996 and the short quasi-presidency of Norbert Ratsirahonana, the 1997
elections once again potholed Zafy and Ratsiraka, with Ratsiraka this time emerging
victorious. The National Assembly, subject by members of President Ratsiraka'a political
party AREMA, consequently passed the 1998 constitution, which considerably
strengthened the work of presidency.
In December 2001, a presidential election was held in which both most important
nominees claimed victory. The Ministry of the center stated present Ratsiraka of the
62 | P a g e
AREMA party victorious. Marc Ravalomanana contested the outcome and claimed victory.
A political disaster followed in which Ratsiraka group cut major transportation routes from
the major port city to the capital city, a monopoly of Ravalomanana sustains it. Periodic
hostility and considerable economic trouble continued until July 2002, when Ratsiraka and
a number of of his famous supporters fled to exile in France. In addition to political
differences, cultural differences played a role in the crisis and carry on to play a role in
politics. Ratsiraka is from the coastal Betsimisaraka tribe, and Ravalomanana comes from
the upland Merina tribe.
After the end of the political crisis in 2002, President Ravalomanana began many
reform projects, advocating "rapid and durable development" and introduce a clash
against fraud. December 2002 governmental elections gave his newly formed TIM (Tiako-
i-Madagasikara--I Love Madagascar) Party a strong majority in the National Assembly.
November 2003 municipal elections were conducted freely, returning a majority of
supporters of the president, but also important numbers of self-governing and regional
conflict figures.
On 17, March 2009, after demonstrations in the investment, President
Ravalomanana signed over authority to the military, which in revolve conferred the
management on opposition leader Andry Rajoelina, the mayor of Antananarivo and leader
of the demonstrations. Rajoelina confirmed himself “President of the High Transitional
Authority” and pledged to hold presidential elections by October 2010 (a promise that he
did not complete), following a constitutional referendum and modification of the electoral
code. The United States destined the unauthorized and autocratic change of power in
Madagascar and considers the chain of events of early 2009 that led to the setting up of
the de facto leadership to be a military takeover d'etat.
On September 17, 2011, government of mainly of Madagascar's most important
political factions signed a "Roadmap for Ending the Crisis in Madagascar," authorized by
the Southern African Development Community (SADC), which aimed at ending the long
political emergency through the arrangement of a more unbiased, power-sharing
provisional government that would arrange the country for elections. Rajoelina has not yet
63 | P a g e
implemented the necessary measures and reforms to conform with his--and his regime's--
commitments under the SADC-endorsed "Roadmap."
In 2002 political crisis occured, the government attempted to put a new line and
assemble self-assurance, in management with global monetary institutions and donors.
Madagascar urbanized a recovery plan in relationship with the private sector and donors
and offered it at a "Friends of Madagascar" discussion organized in Paris by the World
Bank in July 2002. Donor countries established their assurance in the new management
by pledging $1 billion in assistance over five years. The Malagasy Government
recognized road infrastructure as its standard main concern and underlined its promise to
public-private company by establishing a joint public-private sector steering group.
These refer to government policy such as the degree of intervention in the economy.
What goods and services does a government want to provide? To what extent does it
believe in subsidising firms? What are its priorities in terms of business support? Political
decisions can impact on many vital areas for business such as the education of the
workforce, the health of the nation and the quality of the infrastructure of the economy
such as the road and rail system.
The thesis of this essay is that African countries will continue to be racked by
conflicts unless leaders be of the same mind about how to rule their multi-faceted nation-
states and how to allocate their economic resources equitably. Without a give and take
that would make certain "ethnic justice", neither so-called "liberal democracy", nor any
other species of government will succeed in Africa.
(2) Technological Factor
New technologies create new products and new processes. MP3 players, computer
games, online gambling and high definition TVs are all new markets created by technical
advances. Online shopping, bar coding and computer aided design are all improvements
to the way we do trade as a result of better technology. Technology can reduce costs,
64 | P a g e
improve quality and lead to innovation. These developments can benefit consumers as
well as the organisations providing the products.
(3) Environmental factor
Environmental factors include the weather and climate change. Changes in
temperature can impact on many industries including farming, tourism and insurance.
With major climate changes occurring due to global warming and with greater
environmental awareness this external factor is becoming a significant issue for firms to
consider. The growing desire to protect the environment is having an impact on many
industries such as the travel and transportation industries (for example, more taxes being
placed on air travel and the success of hybrid cars) and the general move towards more
environmentally friendly products and processes is affecting demand patterns and
creating business opportunities.
(4) Social factors
Changes in social trends can impact on the demand for a firm's products and
the availability and willingness of individuals to work. In the UK, for example, the
population has been ageing. This has increased the costs for firms who are committed to
pension payments for their employees because their staff are living longer.
(5) Legal factors
Below is a detailed summary of the legal rules or sometime a hurdles which have to
faced by entrepreneurs wishing to consist of and list a fresh firm in Madagascar. It
examines the procedures, time and charge involved in initiation a profitable or trade firm
with up to 50 workers and start-up capital of 10 times the economy's per-capita gross
national revenue.
This information was collected as part of the Doing Business project, which
procedures and compares regulations relevant to the life cycle of a small- to medium-
sized domestic business in 185 economies. The most fresh round of data collection was
finished in June 2012.
65 | P a g e
These are related to the legal environment in which firms operate. In recent years in
the UK there have been many significant legal changes that have affected firms'
behaviour. The introduction of age discrimination and disability discrimination legislation,
an increase in the minimum wage and greater requirements for firms to recycle are
examples of relatively recent laws that affect an organisation's actions. Legal changes can
affect a firm's costs. (e.g. if new systems and procedures have to be developed) and
demand (e.g. if the law affects the likelihood of customers buying the good or using the
service).
66 | P a g e
Work done in IV semester
67 | P a g e
INDEX
Sr_No Particular Page No.
2 PART – II INDUSTRY / SECTOR /
COMPANY / PRODUCT/ SERVICE/ NEW
VENTURE SPECIFIC STUDY
Introduction of the selected Company /
Industry / Sector and its role in the
economy of specified country.
70
Structure, Functions and Business
Activities of selected Industry / Sector /
Company
75
Comparative Position of selected Industry
/ Sector / Specific Company / Product
with India and Gujarat
86
Present Position and Trend of Business
(import / export) with India / Gujarat
during last 3 to 5 years
88
Policies and Norms of selected country
for selected Industry/company for import
/ export including licensing / permission,
taxation etc
90
Policies and Norms of India for Import or
export to the selected country including
licensing / permission, taxation etc
109
Present Trade barriers for import / Export
of selected goods(if any)
111
Potential for import / export in India /
Gujarat Market
114
Business Opportunities in future 116
Conclusions and Suggestions 124
Bibliography 125
68 | P a g e
Part II
Industry Specific Study
69 | P a g e
Tourism Sector Study
70 | P a g e
Chapter 2
71 | P a g e
Introduction of tourism in Madagascar
Time GMT/UTC+3
Population 16.9Million
Seasons Wet (November to March), dry (May to
October), hot (October to April)
Telephone Country code 261; international access code00
ATMs In all major towns
Budget US$25 to US$30 per day
Capital Antananarivo
Visa One-month, single-entry visa US$32; issued on
arrival
Languages French, Malagasy
Area 587, 401 sq km
Money Ariary; US$1 = 1983A
(table 2.1)
Travel and tourism continue to be one of world largest industries. Total impact of
industry means in ; it contribute 9% of global GDP, or value over US $ 6 trillion, & accounted for
255 million jobs.
In next 10 year this industry is expected to grow by an average of 4% annually,
taking it to 10% of global GDP, or some US industry is expected to grow by an average of 4%
annually, taking it to 10% of global GDP, or some US $10 trillion.
By 2022, it anticipated that it account for 328 million jobs.And cultural resources to
support tourism.it is surprised that 200000 visitors are there an this island every year, only about
60,000 come for tourism. Other may be for tourism activity.
72 | P a g e
Madagascar has potential to welcome many more tourist. If sector growth is well planned in
broad multi sectoral way focus of economy, infrastructure and social concerns.
Economic Role :
Travel and tourism is important economic activity is most countries around world.
Also its direct economic impact, industry significant indirect and induced impacts.
Travel & Tourism is an important economic activity in most countries around the world. As well as
its direct economic impact, the industry has significant indirect and induced impacts. The UN
Statistics Division-approved Tourism Satellite Accounting methodology (TSA:RMF 2008)
quantifies only the direct contribution of Travel & Tourism. But WTTC recognises that Travel &
Tourism's total contribution is much greater, and aims to capture its indirect and induced impacts
through its annual research.
Key factors for checking the economic role are as follow:
GDP : Direct Contribution
The direct contribution of Travel & Tourism to GDP was MGA1,095.8bn (5.4% of total GDP) in
2011, and is forecast to rise by 13.9% in 2012, and to rise by 4.4% pa, from 2012-2022, to
MGA1,924.8bn in 2022 (in constant 2011 prices).
GDP : Total Contribution
The total contribution of Travel & Tourism to GDP was MGA3,005.2bn (14.9% of GDP) in 2011,
and is forecast to rise by 11.6% in 2012, and to rise by 4.3% pa to MGA5,086.2bn in 2022.
Employment : Direct Contribution
In 2011 Travel & Tourism directly supported 197,500 jobs (4.3% of total employment). This is
73 | P a g e
expected to rise by 13.6% in 2012 and rise by 2.8% pa to 297,000 jobs (4.8% of total
employment) in 2022.
Employment : Total Contribution
In 2011, the total contribution of Travel & Tourism to employment, including jobs indirectly supported by the industry, was 12.5% of total
employment (577,000 jobs). This is expected to
rise by 11.2% in 2012 to 642,000 jobs and rise by 2.7% pa to 835,000 jobs in 2022 (13.5% of total).
Visitor Exports
Investment
Direct Contribution:
Direct contribution contain following thing.
Direct travel & tourism contribution
Commodities Indusries Sources of spending
Accomodation Accomodation
service
Resident‘s
domestic T&T
spending
Transportation Food and
beverages
services
Businesses‘
domestic travel
spending
Entertainment Retail trade Visitor Exprots
Attractions Transportation
Service
Individual
government T&T
spending
(Table2.2)
74 | P a g e
The direct contribution of travel and tourism to GDP reflet internal spending on travel
and tourism as well as government individual spending – spending by government on travel and
tourism service directly linked to visitor such as cultural or recreational.
The direct contribution of travel and tourism to GDP is calculated to be consistent
with output, as expressed in national accounting, of tourism and characteristics sectors such as
hotels, airlines, airport, travel agent, leisureand recreation service deal directly with tourists.
This is calculated from total internal spending by ―netting out‖ the purchases made by
different tourism sectors.
Direct contribution of tourism and travels to GDP
The direct contribution of Travel & Tourism to GDP in 2011 was MGA1,095.8bn
(5.4% of GDP). This is forecast to rise by 13.9% to MGA1,247.7bn in 2012.This primarily reflects
the economic activity generated by industries such as hotels, travel agents, airlines and other
passenger transportation services (excluding commuter services). But it also includes, for example,
the activities of the restaurant and leisure industries directly supported by tourists. The direct
contribution of Travel & Tourism to GDP is expected to grow by 4.4% pa to MGA1,924.8bn (6.1%
of GDP) by 2022.
Total Travel and Tourism Contribution:
Total travel and tourism contribution contain following thing.
Total travel & tourism contribution
Total travel & tourism contribution
To GDP
To employment
75 | P a g e
Total contribution of travel and tourism includes its ‗wider impacts‘ on economy.
The ‗indirect‘ contribution include the GDP & Jobs supported by :
Travel & Tourism investment spending – An important aspect of both current and
future activity that includes investment activity such as purchase of new aircraft and
construction of new hotels.
Government “collective” spending with help of travel and tourism activity in
many different ways as it is made on behalf of “community” at large – E.g
tourism marketing and promotion, aviation, administration, security services, resort
area security services, resort area sanitation services etc.
Domestic purchases of goods & services by sectors dealing directly with tourist
– including for example purchase food and cleaning services by hotels of fuel &
catering services by airline & IT services by travel agent.
The total contribution of Travel & Tourism to GDP (including wider effects from investment, the
supply chain and induced income impacts, see page 2) was MGA3,005.2bn in 2011 (14.9% of
GDP) and is expected to grow by 11.6% to MGA3,353.4bn (16.1% of GDP) in 2012.
It is forecast to rise by 4.3% pa to MGA5,086.2bn by 2022 (16.1% of GDP).
Travel and Tourism contribution to employment
Direcct contribution of travel and tourism to employment
Travel & Tourism generated 197,500 jobs directly in 2011 (4.3% of total employment) and this is
forecast to grow by 13.6% in 2012 to 224,500 (4.7% of total employment).
76 | P a g e
This includes employment by hotels, travel agents, airlines and other passenger transportation
services (excluding commuter services). It also includes, for example, the activities of the
restaurant and leisure industries directly supported by tourists.
By 2022, Travel & Tourism will account for 297,000 jobs directly, an increase of 2.8% pa over the
next ten years.
The total contribution of Travel & Tourism
The total contribution of Travel & Tourism to employment (including wider effects from
investment, the supply chain and induced income impacts, see page 2) was 577,000 jobs in 2011
(12.5% of total employment). This is forecast to rise by 11.2% in 2012 to 642,000 jobs (13.6% of
total employment).
By 2022, Travel & Tourism is forecast to support 835,000 jobs (13.5% of total employment), an
increase of 2.7% pa over the period.
Structure, Function and Activities of Tourism sector
The Ministry of Tourism has capable people in its leadership echelons, but a low budget
that renders it ineffective. The Ministry has also not succeeded in convincing other branches of
Government of tourism‘s significance and contribution to the economy, i.e., in classifying
tourism as an export industry or attracting additional resources for infrastructure and promotion.
The Association Nationale pour la Gestion des Aires Protégées (ANGAP) has been an
effective enough manager of the national parks and reserves, has built a solid reputation and
works effectively with NGOs but faces funding shortfalls in the short run. Given the critical role
of the national parks and reserves for conservation and for tourism, ANGAP urgently requires
77 | P a g e
resources to enable it to continue its operations. GEF is working with ANGAP to create a trust
fund and to increase its revenue generation from park fees.
The private sector consists of a large number of small enterprises, which reduces its
capacity to act in unison or in a harmonized way on issues affecting the tourism sector.
Nonetheless, the Maison du Tourisme (MDT), set up as a private sector umbrella organization
with European Union (EU) support, offers the potential to bring the various branches of the
industry together, if its organization is streamlined and its financing set on a firmer footing. The
78 | P a g e
Government is said to be considering leaving the MDT to become a purely private association
and creating an Office du Tourisme, to promote the country. The important issue is to create a
space where the private sector and government can discuss policy and operational issues in a
mutually reinforcing environment – this could be achieved by a restructuring of MDT or by
creating a new Office, the former being possibly more efficient. Inasmuch as the government
puts an Office in place, it would be useful to revisit the functions of the ministry with a view to
the ministry focusing on policy, the Office focusing on regulatory and operational matters and
inter alia redynamizing the Comité national de développement du tourisme (CNDT).
Sector administration lacks effective partnerships between the public and private sectors.
Only a continuing dialogue between the public and private sectors can lead to successful tourism
management. Despite some progress, that dialogue is not yet in place. A strengthening of public
and private sector institutions, combined with a strengthening of coordination mechanisms
among them, should facilitate the process but specific procedures should be put in place as soon
as possible to formalize the dialogue.
Strucuture
External Access
Airfares are among the highest in the world because of lack of competition among the
few air carriers that serve Madagascar. As a consequence, the airfare weighs heavily in
the total tourist package (at least 50%)
International access is inconvenient for all tourists except residents of France (and South
Africa) because of the few gateway cities in tourist supplier markets. It would be
interesting to review existing bilateral agreements in Africa and to open several airports
in Madagascar to international flights and thus diversify the supply of air services.
79 | P a g e
Internal Travel
From January to March, the wet season brings heavy rain, flooded rivers and damaged
roads that can make some overland travel impossible. Rough seas can delay or make
dangerous inter- island travel.
Only 7,000 km out of the 35,000 km road network are weatherproof. Road infrastructure
is inadequate on even the most traveled internal routes and is absent for many less visited
sites with high tourist potential.
Internal air flights are costly and unreliable, with frequent cancellations or rescheduling.
Accommodation
There are too few good hotels, lodges, and camps in the main tourist destinations.
Group travel is a characteristic of international tourism today and most hotels outside
Antananarivo cannot accommodate even the small groups of 16 people and less that
travel to Madagascar.
The only ―name‖ hotels in Madagascar are the Hilton hotel in Antananarivo and the
Venta Club in Nosy Be. The presence of an internationally recognized flagship resort
hotel or ecotourism lodge in Madagascar would bring name recognition, would raise
standards through technology transfer, and would promote the island.
Functions
Government Policies and the Business Environment
80 | P a g e
Investors, whether foreign or local, for tourism or any other sector, will look for a
stablmacro-economic framework conducive to private sector investment and one that fosters
stability, confidence and predictability. The following need to be addressed:
The Government does not classify tourism as ―an export industry‖ and promote it
actively and provide incentives as it does its export zones for industry.
Tortuous and uncertain procedures and processes for land acquisition, lack of
transparency about case by case investment incentives, absence of financing, and lack of a
one-stop investment shop continue to deter new investors.
Local tour operators and hotel managers must commit a year ahead to a price structure in
their brochures and in their contracts with international tour operators and, consequently,
cannot pass on any sudden cost increases. In the past, the private sector has watched
investment incentives revoked unpredictably and suddenly because of purported abuses and
VAT imposed without sufficient lead-time to be able to pass the increased costs on to clients,
leading to a climate of uncertainty among investors.
In 1999, local inflation and a depreciating exchange rate led to an increase in up to 50%
in the cost (then) in French Francs of the package local operators had advertised and they had
to absorb the shortfall in local currency payments. More and more, international packages are
offered in Euros, thus avoiding the local depreciation issue.
Today, the industry complains about the sheer number of taxes to which their businesses are
subject. The impact of duties and taxes on vehicles, mainly 4 wheel drives, can increase the
f.o.b. price by as much as 130%. These costs are passed on to the consumer, increasing the cost
of the total tourism package Red tape, unpredictable and arbitrary decision- making, and
rent-seeking behavior, deter investors from investing in or to staying in the country. For
example, permits for expatriates are withdrawn unexpectedly and without warning, leading the
manager to drop everything until the matter is resolved. Interviews in Madagascar suggest that
investors find the constraints discussed in this section insurmountable.
81 | P a g e
Telecommunications
All firms, not just IT firms, are hurt by the high cost of communications, but it is a
particular burden for small ones, such as the handicraft firms trying to advertise their products
and find new markets. Few small companies can afford Internet sites, which would make it
much easier for foreign buyers to learn about them. The item that received the most criticism in
the 2000 visitor survey was ―communications ‖.
Health and Safety
The absence of medical facilities in a destination with malaria, in a country where there was a
serious outbreak of cholera, and where adventure travel is significant, is of concern to
international tour operators. Personal safety is not regarded as a serious problem in most of
Madagascar, except in Antananarivo, where tourists can experience petty theft.
A Proposed Strategy for Tourism
Tourism may be an efficient development tool for Madagascar because it can be a
catalyst for economic growth, much of it in rural areas, and can create a number of positive
externalities to alleviate poverty and protect the environment. As several other countries have
done, Madagascar intends to complete master plans for its tourism zones (some are already
underway) and, with the support of GATO AG (a German apex organization for tourism),
develop a ―concept for tourism‖ in order to provide short- and long-term frameworks for tourism
development. These studies should examine tourism‘s potential externalities and integrate
tourism within the macro-economic framework to create linkages to other productive sectors.
The study should also identify poles for development, ways to eliminate constraints and barriers
to growth, encourage sustainability through physical planning and community participation, as
well as on an analysis of demand and proposals for appropriate tourist accommodation and
services.
82 | P a g e
Local communities are to be included in a participatory process at an early stage and
the study should also address the policy framework, financing of tourism, the ―greening‖ of the
island, pro-poor tourism, and creating clusters of high-quality accommodation and services to
upgrade the product. The study is to be completed by the end of 2003.
Motives for Tourism
The 2000 visitor survey, which is a sample surve y financed with assistance from the European
Union (EU), determined the percentage of different activities on which tourists had spent their
time in Madagascar:
§ Ecotourism 55%
§ Sun, sea and sand resort tourism 19%
§ Cultural 15%
§ Sporting/adventure 8%
§ Other 3%
The survey demonstrates that Madagascar is primarily an ecotourism destination (see
also Box 1). Because of its high endemism, Madagascar‘s ecotourism assets are literally unique.
Its sun, sea and sand assets are outstanding but compete with the other better-known
resort destinations in the Indian Ocean.
Ecotourists, one of the fastest growing segments of international tourism demand,
are also the largest segment of tourists visiting Madagascar. The principal travel motive,
reiterated by local tour operators, is to see lemurs in the wild. Birders travel to view the 106
endemic birds out of the 250 on the island. Big game fishing has already recorded a world
record marlin catch. Scuba divers consider the coral reefs on a par with the Red Sea and
other diving areas worldwide. Tourists interested in sun, sea and sand enjoy the impressive
resort assets.
Cultural tourists are interested in the local people, their living traditions and
villages, richly decorated tombs, sculpted totems and carvings in honor of the dead, as well as
the Queen‘s Palace, or Rova de Manjakamiadana, in Antananarivo, which was almost
83 | P a g e
completely destroyed by fire in 1995. Adventure travel, though small in numbers, attracts
mountain climbers and trekkers, and abseiling/rappelling enthusiasts to its canyons and
volcanic ranges. White water rafting on the west coast, canoe, barge trips and sailing attract
others. The variety of assets, and their quality, in one country is remarkable. This ensures that
touris ts can indulge several interests when traveling to Madagascar, which is often not the case in
islands.
The media in Europe and the USA create a mixed image of Madagascar. Recent media
reporting has portrayed Madagascar‘s wonderful flora and fauna and the country as a new
destination for adventure travel, but it also describes the poverty, the health risks, and the
cyclone of 2000. Not surprisingly, therefore, according to the visitor survey most tourists had
been influenced in their decision to travel by word of mouth recommendations from friends and
family members. While this reflects the positive image of those who know the country, it
confines the potential tourism market, given the absence of marketing and promotion efforts by
Madagascar, to those with friends and family who have already visited Madagascar. The
growing influence of the Internet in travel decisions is helping to expand knowledge about
Madagascar—but it is about all other tourism destinations.
According to the survey, 67% of foreigners arriving in Madagascar were first time
visitors in 2000. Of the nearly one third who were returning to Madagascar, 30% said they visit
Madagascar annually, while the rest said with no particular frequency. (Annual visits to a
destination to which access is so expensive are unusual. A portion of those returning annually
could be visiting friends and relatives or could be returning nationals resident abroad with
foreign passports.) Of those returning, about half were repeating a previous good experience and
the rest were returning to visit new sites. This repeat tourism confirms tour operators‘
assessments of their clients‘ high levels of satisfaction with the country‘s natural and cultural
resources.
In Madagascar, ecotourism or adventure tourism is the largest segment and some argue
for foregoing the ―resort market‖ (beach or mountain based). This requires closer analysis, for
84 | P a g e
many countries find that their product line is made up of a variety of segments. It does not mean
that Madagascar should forego the resort market in favor of ecotourism – quite the contrary,
Madagascar needs an internationally recognized brand name hotel or two to put it on the tourism
map. In many successful tourism countries the tourism product mix is quite varied (see footnote
15 for the case of Turtle Island, Fiji); in Senegal where the government argues only for ―high
end‖ tourists, in fact there are many backpackers, assumed to be low spenders; similarly,
Mauritius, although known for its superlative five star hotels, is seeing a rapid growth of (often
unregulated) villa and self-catering accommodation. There needs to be careful analysis of the
product mix within Madagascar and attention should also be given to creating regional circuits in
the Indian Ocean community.
85 | P a g e
Chapter 3
86 | P a g e
Comparative Position of selected Sector
Competitiveness of the Tourism Product
The constraints discussed above, have a direct impact on the competitiveness of
the tourism product in Madagascar. One international tour operator explained that he
paints any potential client interested in traveling to Madagascar a grim picture of the state of
infrastructure, health, climate and aforesaid facilities, as well as the uncertainty about
timetables and availability of hotels. Only if interest does not fade, does the tour operator
not try to divert the tourist to another destination. Madagascar does not feature in the
itineraries of Abercrombie & Kent, among the most exclusive of the international tour
operators, who noted the inadequacy of hotels for their high-spending clients. Madagascar is
also excluded from Kuoni‘s catalogue, a large tour operator that handles middle-income
tourists. Low margins require the bigger tour operators to transport large numbers of
tourists to each advertised destination in order to make a profit.
One tour operator who specializes in adventure travel for high- income tourists sums
up the international tour operators‘ views about Madagascar‘s competitiveness. The
elegant brochure has a relatively short section on Madagascar, the opening paragraph
of which is dedicated to preparing tourists for their visit: ―A visit to Madagascar is a very
special experience and the people, despite terrible poverty in certain areas, are very friendly.
Naturally, the standard of accommodation is not up to western standards and the
infrastructure quite often unreliable with a poor domestic flight service and rough roads. An
open mind and sense of humour, as well as a realistic approach and genuine desire to see
strange and wonderful wildlife, will ensure an incomparable holiday…Whilst tourist
accommodation in Madagascar is more than adequate, it lacks the sophistication and
refinement one has come to expect elsewhere in the Indian Ocean.
The three properties featured are of a higher standard and offer the definitive
Malagasy experience.
While the cost of the overall package is quite expensive for the tourist, it is weighted
by the high cost of airfares. The cost of accommodation, food and other facilities is
generally lower than in other Indian Ocean islands.
It is a remarkable tribute to Madagascar‘s assets and its people, that despite lack
of competitiveness in quality of accommodation and services and in airfares, tourists express
a high degree of satisfaction with their visit. The number of return tourists also confirms
the level of satisfaction. Clearly, if the above constraints could be resolved, Madagascar
could become a major tourist destination.
87 | P a g e
Now comparision between India and Madagascar
Madagascar India
Tourist Arrive
2003 139000 2726000
2004 229000 3457000
2005 277000 3919000
2006 312000 4447000
2007 344000 5082000
2008 375000 5283000
2009 163000 5168000
2010 196000 5776000
2011 225000 6309000
Rank in world Tourist arrival 111 38
88 | P a g e
Comparative Position of selected Sector in last 3 years
Madagascar Trade of Industry
Madagascar‘s Total employment in the Year 2008 was to the adjust of US$ 5.51 Billon show a
development of 45.55% over previous year. The table below shows trend in Madagascar‘s
Total Trade and Trade with India over the last 3 Years: -
Details Year 2006 Year 2007 Year 2008 CAGR 2006 – 08 Value in USD
Billion
Madagascar's Total Trade with the world 2.77 3.78 5.51
41.04
% growth Over Previous Year 10.28 36.67 45.55
Madagascar's Total Imports from world 1.76 2.44 3.84
47.71 %age Share of imports in Total Trade 63.58 64.50 69.74
%age Growth Over Previous Year 4.76 38.64 57.38
Madagascar's Total Exports from world 1.01 1.34 1.67
28.56 %age Share of exports in Total Trade 36.42 35.50 30.26
%age Growth Over Previous Year 21.45 33.23 24.05
Madagascar's Total Trade with India 0.062 0.087 0.19
74.90 India's %age Share in Ghana's Total
Trade 2.25 2.30 3.46
% Growth Over Previous Year
39.80 118.81
Madagascar's Total Imports from India 0.051 0.07 0.18
87.60 India's %age Share of imports in Total
imports 2.92 2.88 4.71
%age Growth Over Previous Year - 36.65 157.57
Madagascar's Total Exports to India 0.01 0.017 0.01
-4.65 India's%age Share of exports in Total
Exports 1.09 1.27 0.60
%age Growth Over Previous Year - 54.55 -41.18
89 | P a g e
Chapter 4
90 | P a g e
Policies and norms of Madagascar in tourism
To consider the policies rules and norms for particular business in Madagascar we see the
following point.
1) Taxation:
As per law 89-026 of December 25 1989 concerning the investment code & establish general
guarantee investment in Madagascar.
Article 1 Provision of law no. 89-026 of 25 december 1989 concern the investment coach as
amended & supplemented by law 91-019 of 12 August 1991 are repeated
All rights and benefit to businesses in country are govern by common law except for business
free zone regime Malagasy remained governed by law n 89-027 of 29 december 1989
amended and supplemented by law No. 91 – 020 of 12 August 1991 on free zone regime in
Madagascar.
Article 2 Publication of this law, any natural or legal person possible in reference with law
regulation invest in country freely without approval or authorization of investment which is
imposed under specific rules governing exercise of activity.
Provision for there is do not prejudice rights & benefit extended to which investor is entitled
under agreements or treats between republic of Madagascar and other countries.
Article 3 Guarantee given by state securities of capital of investment and provide freedom to
transfer capital inflows by non-residents and residents of foreign nationality after, where
applicable, payment of duties an taxes.
91 | P a g e
Article 4 State shall respect the rights of individual or collective property. Event for reason of
public utility, by virtue of law expropriation or requisition have been taken, they eligible for
compensation assessed on the basis of invested capital and methods generally used for
auditing.
Article 5 The State shall ensure equal treatment of investors in the country. In the exercise of
their professional activities in Madagascar, and subject to the measures on all foreign
nationals or measures of reciprocity between states, individuals or foreign corporations may
be subject to different tax and social measures those imposed on persons or entities
Madagascar.
Article 6 The State shall ensure the free operation of the company in accordance with its
statutory rules and recognizes it free personnel management within the framework of the
Code of Labour and Social Insurance Code.
Article 7 All applications already filed under Law No. 89-026 of 29 December 1989 referred to
above and pending at the Directors fall from the publication of this Act under the common
law. However, companies have obtained the temporary exemption before the date of
publication of this law shall not be affected by this provision: the Administration will continue
to process their requests.
The certified companies under Law No. 89-026 of 29 December 1989 included -
mentioned continue until their approval unless they want to use the common law to receive
various benefits and guarantees defined by the orders or partnership agreement granting
them preferential treatment, and remain subject to the obligations under this law.
No recertification will be granted, however, the company is located, following its
approval, automatically replaced under the common law.
92 | P a g e
Article 8 The regulations will be taken as necessary to define the conditions of application of
this Act.
Article9 Due to the urgency and in accordance with the provisions of Article 4 of Ordinance
No. 62-041 of 19 September 1962, this Act takes effect immediately and will be advertised by
all means, including broadcast or posting, regardless of its inclusion in the Official Gazette of
the Republic of Madagascar.
Article10 This Act shall be published in the Official Gazette of the Republic.
It will be enforced as a law of the State
Now the general points which covered the all rules and regulation of Madagascar trade.
GENERAL PROVISIONS
Scope and application criteria
Article1 : This Act establishes the system of Free Zone in Madagascar.
The scheme applies to investments made by domestic and foreign developers, or combination
of both, in export-oriented activities, and the categories of undertakings referred to in Article
It is understood by the export sales abroad of goods and services originating in or
thoughtfulness of Madagascar. Also considered export operations, direct sales industries
beneficiaries Free Zone regime.
93 | P a g e
Article 2 Companies benefiting from the regime of free zone practicing within a physically
defined area called "Industrial Free Zone", hereinafter referred to by the abbreviation "EPZ".
The conditions of realization of EPZs are established by the texts implementing this Act.
In the meaning of this Act, the portion of the national territory is not subject to the regime of
free zone is designated "national customs territory."
Article 3 - EPZ companies into four categories:
1. promotion companies operating, designated by EPA and are responsible for a share of the
development and construction work, and secondly the management and promotion of EPZs
which are respectively assigned to them, and may in process-development work and
construction required under their own responsibility:
2. industrial processors;
3. business services;
4. companies intensive production base.
The industrial processing, intensive production base and those services are hereinafter
referred to as "business users".
Article. 4 Under the conditions specified by the regulations implementing this Act, the Free
Zone regime can be applied outside the EPZ any business in categories 2, 3 and 4.
One such company is called "free enterprise".
It has the same rights, benefits and obligations that EPZ firms in the same category, the
settlement area must be physically demarcated.
94 | P a g e
Article 5 - Except where service activities are an integral part of the EPA or industrial
processing company or business intensive production base and works exclusively on behalf of
the company, the functions each respective business category defined in Article 3 above,
remain distinct and can not be exercised by the same entity.
Under conditions which will be specified by decree of the Council of Government, service
companies of national customs territory are allowed to move within a EPZs they can not claim,
therefore, benefit from the advantages the regime established in this Act.
Article 6 An Office administrative coordination on the regime of free zone will be created by
decree of the Council of Government. This decree will define its role, responsibilities and
mission.
Eligibility - Approval
Article 7 Any company wishing to take advantage of the free zone regime must apply to the
Office of Administrative coordination, this application must be accompanied by a dossier
which conforms to the standard plan set by decree of the Council of Government.
Article 8 To benefit from the scheme Free Zone:
- A FIE must prove financial and technical capacity to perform the functions assigned to it for
the development of EPZs;
- An industrial process or a business intensive production base must devote all of its
production for export;
- A service company must devote its activities exclusively for export.
The eligibility criteria for each business category will be defined by decree of the Council of
Government.
Article 9 - For each category of business:
- If the capital is wholly owned by domestic and / or foreign residents, the initial investment,
including initial working capital may be covered by contributions in Malagasy franc or in kind;
95 | P a g e
- If the capital is wholly owned by foreigners, not residents, the entire initial investment costs
including initial working capital to be covered by foreign exchange inflows;
- In the case of an association of non-resident aliens with domestic and / or foreign residents:
- The capital contribution is governed by the common law,
- All foreign exchange costs of initial investments, including initial working capital, must be
covered by foreign exchange inflows.
The concept of resident will be specified by decree of the Council of Government.
Article 10 - The authorization is granted for promotional companies operating (EPE) and free
enterprises, by decree of the Council of Government and business users, by order of the
Minister of Industry.
Under the conditions set by the regulations implementing this Act, the file created with the
approval decision is specifications.
Article 11 - Any diversification of activity and / or changes on the bottom of the approved
program must be subject to further approval as provided by this Act without the further
approval may lead to lengthen the period tax exemption previously granted.
The concept of diversification of activity and / or changes on the bottom of the approved
program will be specified by decree of the Council of Government.
Article 12 - Approval of companies is a decision within thirty (30) days counted from the filing
date of the complete file.
In case of refusal of approval, the applicant may file an administrative appeal under the
conditions that will be specified by decree of the Council of Government.
96 | P a g e
Article 13 - Any business, whether or not the beneficiary of special tax treatment under a
special agreement concluded with the State, may at any time request, subject to meeting the
conditions laid down by this Act, granting free zone regime.
Approval under the free zone regime supersedes the plan previously granted without such
changes can lead to:
- Provide benefits with retroactive effect;
- Lengthen the period previously granted tax exemption;
- Combine the advantages;
- Renew the benefits already obtained for the same investment.
Currencies - Financial Statements - Transfers
Article 18 - As provided for by the provisions of art. 26 below, the beneficiaries of the scheme
are required to domicile from local banks, all export transactions, and to repatriate export
revenue within a maximum of one hundred and ninety (190) days the date of shipment.
Article 19 - Every company benefiting from the Free Zone regime is required to open a special
account in Malagasy Franc from a local bank.
This account is credited exclusively by:
- Flows of foreign currency accounts;
- Contributions in local currency made by nationals and residents as part of their subscription
to the capital and the financing of foreign investments;
- Where appropriate, the various appropriations duly granted by banks and financial
institutions and local tax rebates by the Administration.
97 | P a g e
Regulations pertaining to local costs and charges, services of local borrowings, amounts due to
Directors and resident shareholders are performed solely by the flow of the special account in
Malagasy Franc.
Article 20 - Any operation manual exchange or sale of foreign currencies against the local
currency, is subject to the regulations.
Article 21 - The financial statements of companies benefiting from the regime of free zone
shall be established by the standards of accounting system in Madagascar.
The first accounting period not exceeding eighteen (18) months, ending on December 31, and
the other accounting periods run from 1 January to 31 December of the same year.
The financial statements must be submitted before April 30 following the year, the Office of
Administrative coordination is responsible for transmitting them to the authorities concerned.
RIGHTS AND BENEFITS OF BUSINESS Currency - Transfers
Art. 25 - Any company benefiting from the regime of free zone may contract, under his own
responsibility, borrowing abroad.
Art. 26 - Companies benefiting from the regime of free zone are allowed to open foreign
currency accounts with local banks.
Under the provisions of this Act, the custodian is required to ensure, at all times, the
availability of foreign exchange to the customer that it will be deposited.
Art. 27 - In the event of termination of activities, subject to the full payment of debts in the
country and the regularization of the situation visible screw the tax and customs
98 | P a g e
administrations, the State provides free transfer any funds generated by non-resident
foreigners.
Social security scheme for expats
Art. 28 - All freedom is given to the company benefiting from the free zone regime for the
management of its staff as part of the Labour Code and the Code of Social Welfare and the
specific provisions of this Act.
Art. 29 - The enterprises benefiting from Free Zone is responsible for determining the number
of expatriate coaching they need.
The procedure for granting work permits are set by the legislation implementing this Act.
Art. 30 - The State shall ensure the free transfer of wages actually paid to Madagascar by
expatriates working in companies benefiting from the free zone regime.
The legislative purpose of this law shall lay down the rules.
Art. 31 - A tourist visa valid for the duration of the work permit is granted to expatriate staff of
enterprises benefiting from the Free Zone, and his (her) self spouse and minor children
legitimate, recognized or adopted, usually living with him, and in accordance with the rules set
by the regulations implementing this Act.
Art. 32 - For the foreign shareholder holding positions or director, or general manager or
manager of a company benefiting from the free zone regime, the act of registration of the
company and allows the interested the family members mentioned in the previous article
beneficiary of the grant of a long-stay visa.
Art. 33 - The residence visa is null and void when the question no longer has a director,
general manager, manager or employee of the company for which the visa was granted.
99 | P a g e
BUSINESS TAXATION AND EXPATS
Art. 34 - Free Zone companies benefit from the following tax regime:
1. Taxes on corporate profits (IBS)
Any company benefiting from the regime of free zone is subject to tax on corporate profits,
fixed at 10 percent. However:
1. - The EPA exempted for a period of fifteen (15) years counted from the start of construction
in the area;
2. - Industrial processing companies and businesses intensive production base exempted for
five (5) first exercises effective operation;
3. - Service companies are exempt for two (2) first exercises effective exploitation.
How effectively excludes the period of industrial development and the vocational training, in
all cases, the duration of these periods may not exceed twelve (12) months from the date of
commencement of activities.
Subject to fully realize the investment and hiring national staff accredited programs in the file
extension of the period of tax exemption under the conditions determined by law, is granted.
2. Discounts IBS
After the grace period, the investments made during operation, subject to the completion in
full of the approved program, are eligible for tax reductions equal to the tax benefit equal to
75 percent of the amount of new investments. It is understood by those new investments
made in expanding the program initially approved.
Rights not used may be carried forward to reduce clearance.
In case the approved company has not achieved its objectives with respect to the
specifications at the end of the exemption period, the regulations laid down by decree will be
applied.
100 | P a g e
3. Rule base, liquidation and recovery
The rules base, liquidation and recovery prescribed by the Tax Code remain applicable to
companies benefiting from the free zone regime. However, the minimum fee is set at two
hundred thousand more than 1.4 per thousand of sales for the year Malagasy francs (FMG
200,000).
4. Tax on dividends
Any company benefiting from the regime of free zone is subject to a tax on dividends at a
fixed rate of 10 percent, with no grace period
Means all dividends and values are defined in Articles 01.04.03. 01.04.04 and the General Tax
Code.
5. Property tax on land (IFT)
The EPA and the EPZ landowners are subject to property tax on land (IFT) as provided by the
Tax Code.
Art. 35 - The EPA has within the free zone its own distribution network of electricity and / or
water and / or telecommunications is exempt from excise duty and value added tax ( VAT).
Companies operating within such an area is benefiting from these services, are also exempt.
Art. 36 - No other tax law and tax or cess tend to aggravate the tax burden under the
foregoing provisions, or to establish a discrimination between companies of the same class
can be applied to companies benefiting from the free zone regime.
These provisions do not exempt these companies reporting obligations in accordance with the
requirements of the Tax Code.
Art. 37 - The amount of tax on wage income expatriates working in companies benefiting from
the regime of free zone should not exceed 35 percent of the tax base.
101 | P a g e
Art. 38 - Companies benefiting from the regime of free zone benefit from more favorable than
the state could grant other Free Zone companies operating in the same sector provisions.
Policies and norms for Tourism
OBJECT - DEFINITIONS
Article 1 - This law, constituting the Tourism Code, the rules that are likely to promote
integrated development, orderly and harmonious tourism, as well as part of the national land
than in safeguarding environment. This development must comply with the elements of our
national identity and our customs.
Article 2 - Under this Act and its implementing regulations, the tourism industry is mainly
export regard all economic activities providing services to tourists
- Tour operators are physical or legal service providers who are involved in tourism including
accommodation, catering and selling tourism products, tourist entertainment and anything
that can be linked;
- Travelers means any person traveling to a country or place other than where they have their
habitual residence;
- Tourists refer to temporary travelers staying at least 24 hours in the country or place visited,
for reasons of pleasure, professional (business tourism) or personnel;
- Hikers refer to temporary travelers whose stay does not exceed 24 hours in the country or
place visited;
- The tourist areas designate tracts of land demarcated for the implementation of tourism
businesses;
102 | P a g e
- The establishment of a business is physically realized in a particular place the realization of
the company's business;
- The opening of a business is to start the operation of its business;
- License, rating or ravinala is a categorization of the various tourist activities designed to
ensure the quality of services offered to consumers.
RIGHTS AND OBLIGATIONS OF TOURISTS
Art. 11 - Every traveler, whether tourist or hiker is required to comply with laws and
regulations and in particular those relating to:
- Public order;
- Regulations relating to the stay of foreign tourists;
- Respect for local customs and traditions;
- Morality and public health;
Travelers must participate with a positive attitude to environmental protection. Any
intentional damage can lead to penalties in accordance with legal and regulatory provisions in
force.
Boaters are required to comply with safety rules for boating prescribed by the Maritime Code
and Codes Waterways and their implementing regulations.
Art. 12 - They are entitled to the security of property and persons throughout the territory,
including the movement of any kind, assistance in case of need, including health, to all
measures for consumer protection and more particularly to a clear disclosure of prices.
TITLE II
103 | P a g e
TERMS OF IMPLEMENTATION
Art. 13 - Exercise of all activities in the tourism sector is subject to prior authorization from the
Ministry of Tourism.
The terms of settlement companies that provide services related to tourism will be
determined by regulatory pathways.
The Ministry of Tourism is consulted prior to the submission of a building permit for buildings
and facilities for tourism. It is associated with the certificate of compliance.
Art. 14 - The boundaries and classification of tourist areas are determined by inter-regulation.
Each zone will be a development plan and specifications approved by decree.
CONTROL OF TOURIST ACTIVITIES
Art. 17 - Any person or entity engaged in tourism activities is subject to an administrative
control to ensure compliance of its activities with the provisions of this Act and its
implementing regulations.
Art. 18 - Officers authorized to control referred to above and duly authorized by the Minister
of Tourism shall include the verification of compliance with the conditions prescribed by this
Act and its implementing regulations.
They will be sworn in verbalizations deemed necessary.
SPECIAL PROVISIONS
Art. 19 - Tour operators can freely form associations or professional groups, who may ask to
be legally recognized.
104 | P a g e
They are represented in the national tourism authorities to hear their proposals and
suggestions, through their professional associations.
Art. 20 - Committees at different levels for the development of tourism and whose mission,
composition and operation are set by regulation can be created. In particular, a structure for
consultation with all concerned Ministries will have a power to propose and harmonization of
different actions.
Art. 21 - The Ministry of Tourism may appoint a recognized public interest and involving
tourism operators associative structure, mission promotion.
Funding may be provided in part of the revenue collected in the course of one or more
services in this sector.
India has also norms and policies like above to do import and export.
GUARANTEES REQUIRED
Article 19: Any person or entity that the operations mentioned in Article I is fully responsible
for the performance of obligations relating to benefits even if they are performed by other
providers, notwithstanding its right to action against them.
Article 20: Any tourism operator, regardless of the nature and mode of operation of its
business, are subject to mandatory purchasing insurance against the financial and damaging
consequences of professional liability.
The tour operators, receptive and travel agencies must also provide evidence of financial
security the amount of which is determined by order of the Minister of Tourism.
This warranty is the result of a written commitment to guarantee made:
1 / Or by a collective guarantee body with legal personality, through
a guarantee fund established for this purpose;
2 / Or by a credit institution or an insurance company authorized to give
105 | P a g e
financial security;
3 ° by a professional association with mutual guarantee or a
group of associations and non-profit organizations who have character
subject to special authorization by order of the Minister of Tourism and with
a fund sufficient solidarity.
It may also result from the existence of an adequate reserve fund.
Article 21: The financial guarantee extends to activities that are carried out by companies such
as side branches, approved enterprises.
Article 22: Any tourism business, with the exception of accommodation and catering
establishments must clearly indicate in its contractual documents the risks covered under the
contract of insurance and professional liability insurance is purchased.
BUSINESS TRAVEL AND TOURISM SERVICES
I - DEFINITION
A - TOUR OPERATORS AND TOUR OPERATORS AND INCOMING
106 | P a g e
Article 69: The tour operators or tour operator are natural or legal persons who design and
organize individual or group trips or stays sold to travel agents established in Madagascar and
/ or abroad.
However, if the tour operator wants to practice direct sales to customers, it must be in
possession of the license A.
Article 70: Their performance, sold at a fixed price, the result of the pre-arranged combination
of at least two respectively on transport, accommodation or other tourist services not
ancillary to transport or accommodation and a representative from significant in the package.
This more than twenty-four hours or includes overnight accommodation.
Article 71: The receptive are individuals or legal providers of tourist services, as agents, and
ensure local arrangements for products sold by tour operators.
B - TRAVEL AGENCIES
Article 72: Travel agents are intermediate companies operating in the country:
- Between the customer and the tour operators or tour operator;
- Between customers and carriers.
They ensure the sale of the products of these operators and carriers settled in Madagascar or
abroad.
They provide all ticket service:
- During travel or tourist stays issuing tickets, seat reservations or room rental transportation,
delivery good accommodation and food;
107 | P a g e
- Related to the reception of tourists in particular as regards the organization of visits and
guidance.
Article 73 shall not be considered as travel agencies, tourist establishments that sell their own
products, such as hotels, transport companies.
C - COMPANIES SPECIALIZED SERVICES TOURIST
Article 74: Companies specialized tourist services design, manufacture, organize their own
tourism products in the form of precise and well defined benefit and have specific tourist
facilities. They sell their products to tour operators, travel agents or directly to customers.
D - BUSINESS LOCATION
Article 75: Companies rental cars, boats, or other gear motor for travelers are institutions that
have activities for the rental of these materials without the organization, or circuits or stay
travelers.
II - CATEGORISING
Article 76: For each type of activity is a specific license.
. License A: - Travel agency
. License B: - Tour or tour operator - Incoming
. License C: - company specialized tourist services
108 | P a g e
- Enterprise rental cars, yachts or
other transport equipment, motorized or not
Article 77: Any natural or legal representative of a legal person wishing to obtain permission
to open individual must meet specific criteria for each license.
Article 78: The composition of the application for opening and provisions governing the
undertakings referred to in Article 76 and the professional skills of the manager or director
and technical managers are determined by order permit.
Article 79: Any change of eligible activities in licenses A, B, C must be the subject of an
application according to the procedure defined by decree.
Article 80: The opening of a branch shall be subject to an application to open.
109 | P a g e
Present trade Barriers for Import Export of Tourism:
1. Informal export barriers like transport costs, cumbersome, customs
practices, costly regulation bribes.
2. If there is not providing of any certificate relating to standard testing &
certifications procedures than it is roadblock.
3. Technical regulations and standards are important by thet change from
country to country. So it is difficult for exporters and importers.
4. Services in which there are restrictions include: insurance, banking,
securities motion pictures accounting retailing and telecommunication.
5. Non- tariff barriers is the prohibition or restriction on imports maintain
through import licensing requirement.
6. If this sector is well planned in broad multi sector way focusing on
economic aspect; infrastructure & social concern for community
participation. So because of these report set a program to equitable
development of sector and evaluates opportunity for growth and barriers
that can block the progress currently.
110 | P a g e
Chapter 5
111 | P a g e
Potential for Import and Export in India
Madagascar has considerable potential for tourism to address poverty alleviation and
more equitable growth in some disadvantaged regions of the country over time. This will
require targeted programs designed to remove market failures and integrate those regions
into the mainstream of economic activity by encouraging linkages to other sectors of the
economy. Such projects are often only partial solutions or components in a larger set of
activities that make up the full product line. economy. Such projects are often only partial
solutions or components in a larger set of activities that make up the full product line.
A comprehensive strategy for the sustainable development of the sector that evolves in
close consultation with local stakeholders is needed. The Master Plans
currently underway will contribute much in this sense (Section 14). The Master Plan
should at least set out a business plan for tourism, an appropriate environmental
program and a framework for social inclusion.
Tourism is highly competitive in some markets, particularly the international beach resort
market; (Madagascar‘s endemism varied and unusual natural resources means that is has
some unique potential to tap for tourism development. In any event, the country will need
to establish a product line that offers diverse experiences. There is also the opportunity to
create regional markets with neighboring islands and countries on the African continent
and thus produce a product line with very high value added for the country.
Reallocation of available funds under on-going projects could help to remove constraints
on the sector and increase the outreach of tourism to rural areas, where it can help to
alleviate poverty, if components are adjusted to focus on tourism, as discussed in Section.
112 | P a g e
IFC has just completed a mission to Madagascar – its support and that of MIGA would
enhance support for accommodation and services financing and, possibly, for continuing
privatization efforts.
A donor consultation process should be established for the tourism sector. Such a system is
already in place for the financing of the national parks through ANGAP, which
manages the ecotourism plans for the parks. That consultation process could be extended to
cover the tourism sector more broadly.
The Government recognizes the need to improve the statistical base for tourism but is
constrained by lack of financing. There are significant opportunity costs attached to not
knowing the size of a sector that has the potential to become a significant generator of jobs,
foreign exchange and taxes, as well as to stimulate production of goods and services in other
sectors. These costs may persuade the Government to find the resources to assist with this
important task of improving the tourism database.
The hotel classification system needs urgent updating as it is key to the improvement of
standards in existing and new hotels. Madagascar cannot hope to launch an expansion of
tourism without an expansion of accommodation appropriate for international tourism.
Given its varied tourism product, Madagascar needs to establish standards for ecotourism
lodges, for campsites within the national parks, and for resort lodges. Furthermore, to
preserve its image as an eco-tourist destination new construction must meet strict
environmental norms. The guidelines should allow new investors the flexibility to
develop individual products within their framework. An EIA would be required for each
construction in an ecologically sensitive area, i.e., in National Parks and the coastal zone.
113 | P a g e
A study to assess the current size and the costs and benefits of cruise tourism, as well as its
potential, needs to be undertaken. From this study the elements of a strategy for cruise
tourism, with priority ports of call identified after a survey of cruise lines, will emerge. The
cruise tourism study is an important element in the overall strategy for tourism. The
Government, in consultation with the private sector and local communities in areas now
visited by cruise passengers, needs to decide whether to expand facilities for cruise ships and
promote this decision to the cruise industry or whether to restrict the visits of cruise ships to
Madagascar
114 | P a g e
Business Opportunities in Future
Prospects of Tourism
Tourist numbers cannot continue to grow at the pace of recent years for much longer,
unless some of the constraints are removed. Demand is not the constraint on tourism
growth. Madagascar‘s outstanding and varied natural resources will be in demand by an
ever-greener tourist market for the foreseeable future. Capacity constraints that are likely
to kick in at some point soon are, principally, the availability of quality accommodation and
services and seats on internal and international flights. Without a more detailed survey
of the many destinations visited by tourists, the exact timing of when such constraints will
restrict tourist numbers cannot be forecast. But, there is evidence today of scarcity of
quality lodging in the peak season in the main destinations and of lack of seats on
international flights. Consequently, without targeted interventions, Madagascar is unlikely to
be able to increase the numbers of tourism arrivals much beyond present levels for the
foreseeable future.
The potential for growth, if current constraints are addressed, is almost
unlimited. Madagascar has sufficient and varied assets that can be brought on stream
successively over time to cater to different segments of the tourism market and to help
create development poles in different regions of the country. Unfortunately, no
quantitative assessment of that potential growth is currently feasible. The current time
series of visitor arrivals includes all foreign visitors, consequently neither the absolute
numbers of tourists nor their rate of growth are known. Furthermore, more
information is needed on the number of rooms suitable for international tourism and
their distribution. The various constraints already discussed seriously limit the growth of the
sector and its expansion to new areas in Madagascar.
The main limiting factor on the quality of those assets may well be effects induced
by poverty. Deforestation in Madagascar is a continuing threat to the habitat of the wildlife
and to the sites that attract tourists. The deforestation reflects the desperate attempt at
survival by very poor rural populations, with few economic alternatives to subsistence
115 | P a g e
agriculture and the use of trees as fuel wood. Poverty that leads to over-fishing and
population pressures that induce migration to the coast are among the threats to the
sustainability of the coastal zone. Consequently, the very economic activity that could
alleviate poverty throughout the island is
itself threatened by that poverty. In Madagascar there is, therefore, a race
against time to alleviate poverty, which of itself requires no justification, in tandem with a
race to preserve the island‘s world class and unique bio-diversity by also alleviating
poverty. The potential of any expansion is evident when tourism today, with all its
constraints, is even now one of the top three foreign exchange earners.
Tourism may be the ideal development tool for Madagascar because it can be a
catalyst for economic growth and can create a number of positive externalities to alleviate
poverty and protect the environment. Like all export industries, tourism generates foreign
exchange, as well as employment and Government revenues through taxes. Tourism already
absorbs local inputs in hotel construction and in the operations of accommodation
entities throughout the country. Tourism stimulates production of goods and services in a
wide range of sectors and sub-sectors, e.g., construction, furniture and fittings,
agriculture, fisheries, food processing and light manufacturing, handicrafts, and
gemstones, as also transport, telecoms and financial services. The dispersion of tourist assets
throughout the island creates pockets of economic growth in each of these destinations.
Madagascar should also explore options for creating regional tours as
suggested above with other islands in the Indian Ocean and neighboring countries on
the continent, building on its own comparative advantage and harnessing that of other areas
to create superior circuits.
116 | P a g e
Conclusion and Recommendations
A number of recommendations have been made throughout this report. These would
help to achieve a ―step-change‖ in the size of the tourism sector and in the quality of the
tourism product and, consequently, in the benefits that could be derived from
tourism. These recommendations require to be prioritized and after discussion with the
Malagasy authorities, will be reordered to reflect these priorities – critical bottlenecks are
an overall Master Plan to identify strategy, and would likely include increased access and
increased lodging capacity and all measures to support that. Finally, it will also be
important to focus on a limited set of interventions in a pilot program – probably building
on the early successes that Madaga scar has undoubtedly had. All recommendations are
summarized below.
A comprehensive strategy for the sustainable development of the sector that evolves in
close consultation with local stakeholders is needed. The Master Plans
currently underway will contribute much in this sense (Section 14). The Master Plan
should at least set out a business plan for tourism, an appropriate environmental
program and a framework for social inclusion.
Tourism is highly competitive in some markets, particularly the international beach resort
market; (Madagascar‘s endemism varied and unusual natural resources means that is has
some unique potential to tap for tourism development. In any event, the country will need
to establish a product line that offers diverse experiences. There is also the opportunity to
create regional markets with neighboring islands and countries on the African continent
and thus produce a product line with very high value added for the country.
Reallocation of available funds under on-going projects could help to remove constraints
on the sector and increase the outreach of tourism to rural areas, where it can help to
alleviate poverty, if components are adjusted to focus on tourism, as discussed in Section
117 | P a g e
IFC has just completed a mission to Madagascar – its support and that of MIGA would
enhance support for accommodation and services financing and, possibly, for continuing
privatization efforts.
A donor consultation process should be established for the tourism sector. Such a system
is already in place for the financing of the national parks through ANGAP, which
manages the ecotourism plans for the parks. That consultation process could be extended
to cover the tourism sector more broadly.
The Government recognizes the need to improve the statistical base for tourism but is
constrained by lack of financing. There are significant opportunity costs attached to not
knowing the size of a sector that has the potential to become a significant generator of
jobs, foreign exchange and taxes, as well as to stimulate production of goods and services
in other sectors. These costs may persuade the Government to find the resources to assist
with this important task of improving the tourism database.
The hotel classification system needs urgent updating as it is key to the improvement of
standards in existing and new hotels. Madagascar cannot hope to launch an expansion of
tourism without an expansion of accommodation appropriate for international tourism.
Given its varied tourism product, Madagascar needs to establish standards for ecotourism
lodges, for campsites within the national parks, and for resort lodges. Furthermore, to
preserve its image as an eco-tourist destination new construction must meet strict
environmental norms. The guidelines should allow new investors the flexibility to
develop individual products within their framework. An EIA would be required for each
construction in an ecologically sensitive area, i.e., in National Parks and the coastal zone.
A study to assess the current size and the costs and benefits of cruise tourism, as well as
its potential, needs to be undertaken. From this study the elements of a strategy for cruise
tourism, with priority ports of call identified after a survey of cruise lines, will emerge.
The cruise tourism study is an important element in the overall strategy for tourism. The
Government, in consultation with the private sector and local communities in areas now
118 | P a g e
visited by cruise passengers, needs to decide whether to expand facilities for cruise ships
and promote this decision to the cruise industry or whether to restrict the visits of cruise
ships to Madagascar.
Policy formulation for the sector needs to be based on a better understanding of the costs
and benefits of different types of tourism and policies should incorporate an
understanding of how to stimulate the backward and forward linkages to other production
and service sectors. A study of the linkages between tourism and agriculture would help
understand the demand from the tourism sector for agricultural produce; a study of
handicrafts would help strengthen linkages between tourism and that sector and promote
higher value added from tourism.
Most visitors to parks from abroad will be conservationists and will be willing to pay
more either through a fee or a voluntary contribution to help support Madagascar‘s
National Parks and the people who live in their periphery. Therefore, the level of
entrance fees paid in Madagascar at all parks needs to be reviewed. The entrance fee
could vary for each park depending on the level of facilities offered.
Madagascar has a considerable incentive through tourism to strengthen and coordinate a
national effort to keep alive its rich and diverse traditional cultures. With an integrated
and well-designed policy for cultural heritage and the arts, implemented at the national
and provincial level, Madagascar would be able to offer tourists a more vibrant cultural
experience. This would attract visitor expenditures, and, in the process, give value to and
help preserve the island‘s built and living cultural heritage, as well as enhance the income
generation potential of villages, particularly remote ones.
119 | P a g e
Madagascar has considerable potential for tourism to address poverty alleviation and
more equitable growth in some disadvantaged regions of the country over time. This will
require targeted programs designed to remove market failures and integrate those regions
into the mainstream of economic activity by encouraging linkages to other sectors of
theeconomy. Such projects are often only partial solutions or components in a larger set
of activities that make up the full product line.
If information about Pro-Poor Tourism (PPT) were centralized, it would assist
the Government and, principally, the Ministry of To urism to analyze the
experiences, develop policies for PPT and incorporate these into its sector
planning. It would also provide a source of information for new communities
that are eager to incorporate tourism into their economic activities. A small and
technically orientated ―Ecotourism and Village-based Tourism Committee‖ could
be established to liaise with the various agencies engaged in ecotourism, collate
information about the activities, and monitor their development.
To enhance the island‘s image, as well as help preserve the natural resource base,
the larger accommodation units and, particularly those in sensitive ecological areas,
should begin to aim for hotel accreditation that signifies that the unit has met
clearly defined environmental standards. Most large hotels seek international
accreditation, either from the non-profit International Standards Organization (ISO)
for 14,001 status, or Green Globe status, which was launched by the World Travel
and Tourism Council (WTTC) and has now become independent.
Only a continuing dialogue between the public and private sectors can lead to
successful tourism management. Despite some progress, that dialogue is not yet
in place – the Maison du Tourisme offers that opportunity with restructuring and
dyna mization of its functions. A strengthening of public and private sector
institutions, combined with a strengthening of coordination mechanisms among
them, should facilitate the process but specific procedures should be put in place as
soon as possible to formalize the dialogue.
120 | P a g e
Tourism is not classified as an export industry and cannot succeed as long as this
remains the case -- some documents refer to it as ―an in-country export sector‖
(exportation sur place) but it has to become explicit that tourism is an export
industry, if invisible. The Export Promotion Zones (EPZs) receive effective
incentives. There is a strong case for applying comparable incentives to tourist.
The RFTs could be extended the same incentives as the EPZs and become zones
franches touristiques. As a strategy, RFTs should be confined to areas of high
tourism potential, the number of RFTs should be limited and the number of sites
within them must also be limited to make initial investments profitable. The
target should be to create a cluster of high quality accommodation and tourist-
related services that make the RFT a major tourist attraction.
Air travel to Madagascar is ultra expensive, inflexible, and limits the number of
tourists who can afford to travel as well as the main source markets from which
tourists come. Part of this is due to the distances but part is also due to high fares.
An expansion of demand from European countries other than France and from other
supplier markets will require better air access, cheaper fares and direct marketing.
Moreover, the international airport in Antananarivo needs upgrading to permit the
landing of larger planes and for greater passenger comfort. It would be interesting to
review existing bilateral agreement
The Government should focus on streamlining procedures to reduce transactions
costs for investors and operators. Red tape, unpredictable and arbitrary
decision- making deters investors from pursuing their intention to invest or to
continue in the country. Many firms reported increasing difficulty in obtaining
permissions from the Ministry of Labor for expatriates to work in a timely
manner.
121 | P a g e
An effective promotion and marketing campaign is needed to support
Madagascar‘s efforts to expand tourism. This requires that the current financial
shortfall of the Maison du Tourisme be resolved and measures introduced to
ensure transparency in its financial operations taken. If the MDT is to become a
purely private association, the proposal to create an Office du Tourisme needs to
be analyzed thoroughly. Simply creating a new organization will not resolve the
issues that beset the MDT.
122 | P a g e
The poor state of the roads has an impact on the condition of the vehicles used
and, therefore, on costs. The Government has recently agreed to use donor funding to
improve the road network. Tourism will benefit only if its needs are included among
the priorities of the road sector.
The tourism sector is highly dependent on almost every component of
national infrastructure. The efficiency of such infrastructure also affects the
operating profits of the establishment and its ability to dispose of waste benignly
and avoid pollution of natural assets.
While there are many constraints, Madagascar does not need to resolve all of
them simultaneously to achieve progress – judicious choice of sites should minimize
the cost of removing constraints.
The lack of training and skills is a major impediment in all industries and all
sectors, including the handicrafts sector. To expand Madagascar‘s tourist markets, a
substantial effort must be made to teach languages in schools and to local people
who have frequent contact with tourists.
It is a remarkable tribute to Madagascar‘s assets and its people, that despite lack of
competitiveness in quality of accommodation and services and in airfares, tourists express a high
degree of satisfaction with their visit. The number of return tourists also confirms the level of
satisfaction. Clearly, if the above constraints could be resolved, Madagascar could become a
major tourist destination.
123 | P a g e
BIBLIOGRAPHY
Refrences:
http://en.wikipedia.org/wiki/Demographics_of_Madagascar
http://www.theodora.com/wfbcurrent/madagascar/madagascar_economy.html
http://www.infoplease.com/encyclopedia/world/madagascar-economy.html#ixzz2Fqh0JsyU
http://www.factmonster.com/encyclopedia/...
http://www.bartleby.com/cgi-bin/texis/we...
http://www.stat.gov.outofdate/bgn/madag/...
http://relocatingtoafrica.com/country-pr
https://www.cia.gov/library/publications/the-world-factbook/geos/ma.html
http://www.indomadagascar.com/home.html
http://www.mbendi.com/indy/agff/af/md/index.htm
http://ebookbrowse.com/madagascar-investment-booklet-v3-16may2008-pdf-d118072565
http://focusafrica.gov.in/Trade_overview...
http://focusafrica.gov.in/Country_at_gla...
http://focusafrica.gov.in/Trade_Agreemen...
http://www.africa.airtel.com/wps/wcm/con...
http://www.madagascar-embassy.org/embass...
http://www.edbm.gov.mg/Laws-regulations/Tourism
http://siteresources.worldbank.org/INTRANETTRADE/Resources/Internal-
Training/Porto_Moldova_paper.pdf
http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm4_e.htm#TRS
http://www.globaltrade.net/m/c/madagasca...
124 | P a g e
http://www.stategov/e/eb/rls/othr/ics/2...
http://zunia,org/node/171546
http://www.worldbank.org/projects/search?lang=en&searchTerm=&countryshortname_exact=Madagasca
r
125 | P a g e