POLICY FORUM

TOWARDS A GLOBALLY COMPETITIVE INDUSTRIAL SECTOR IN MAURITIUS

Subcommittee on Industrialisation – Prepared by Thiruthiraj A.Pather, July 2016

I. Introduction

From a monocrop economy in the 1960s and destined to doom by reputed economists, including the
Nobel Prize winner James Meade, Mauritius has over the past decades, successfully positioned itself
as a competitive and diversified middle-income economy in Africa. An export-oriented development
strategy coupled with an adaptable human capital, advantages offered by preferential trade
agreements, effective macroeconomic policies and a strong partnership between the public and
private sectors has enabled the country to set the foundation for the “Mauritian Economic Miracle”.

Between 1970 and 2015, real Gross Domestic Product (GDP) increased by a CAGR of 5.1%. Real
GDP in 2014 was almost nine times higher than in 1970, primarily sustained by the manufacturing,
the financial services, the tourism and the ICT sectors. Yet, a more in-depth analysis of time-series
data on GDP contribution also indicates the declining importance of the industrial sector, a pivotal
sector in the country’s past economic performance. In 2015, manufacturing, which is the main
component of the industrial sector, accounted for a GDP-contribution of only 16.1% compared to
24.5% in 1987.

As rightly highlighted in the Economic Mission Statement-Vision 2030 presented by the Mauritian
Government in August 2015, “few countries in the world can progress without a sustainable
manufacturing base”. Mauritius’ quest towards its inclusion in the group of developed economies
requires a solid, vibrant and competitive industrial sector.

In this context, this paper aims at proposing key policy recommendations to revive the industrial
sector in Mauritius, taking into consideration both the local realities and the fast-changing global and
technological environment.

Francesca Guadagno from the Maastricht University refers to industrialisation as “the shift from
agriculture to manufacturing” whilst the International Recommendations for Industrial Statistics 2007
released by the United Nations defines the industrial sector as consisting of “mining and quarrying”,
“manufacturing”, “electricity, gas, steam and air conditioning supply” and “ water supply sewerage,
waste management and remediation activities”.

For the purpose of this paper and given the specificities of Mauritius, we shall, however, focus on the
manufacturing sector.

II. The Manufacturing Sector, the Engine of Growth

Manufacturing is considered by many an expert as the wealth-producing sector or the engine of

economic growth. The main arguments in favour of the development of the manufacturing sector,
according to Adam Szirmai from the United Nations University, are as follows:

 Empirical studies indicate a positive correlation between the importance of the manufacturing
sector and per capita income in developing countries.

 The manufacturing sector provides higher productivity as compared to the agricultural sector.

 The shift of resources from the manufacturing sector to the services sector coupled with an
increasing GDP share of the services sector causes a slowdown in aggregate per capita growth.

 Given the nature of manufacturing activities, this sector offers unique opportunities for capital
accumulation, economies of scale and adoption and diffusion of technological advances, which
are key to sustained economic growth.

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 The manufacturing sector has strong positive spill-over effects on both the agricultural and the
services sectors.

 A solid manufacturing base provides the opportunity to tap into the expanding world market for
manufacturing goods.

Certain of the above arguments are more and more debatable, notably with the advent of the
Information & Communication Technologies (ICTs) which have transformed the structure of the
services sector and powered up its potential contribution in terms of productivity gains and economic
growth.

Yet, manufacturing remains a powerful value-creation sector that Mauritius cannot shun, all the more
demand for manufactured goods is projected to rise in the neighbouring African countries.

III. A Weak Manufacturing Base in Mauritius

Though independent as from 1968, Mauritius started its industrialisation journey (Figure 1) in the early
1960s on the basis of an Import-Substituting Industrialisation (ISI). A dedicated legislation, the
Development Certificate Scheme, was enforced in that regard in 1964, and tariffs and non-tariffs
barriers to imports were also put in place. At the start of 1970, the failure of the ISI was evident.
Unemployment had reached 20% at that time and only 70 firms were engaged in import-substituting
activities.

Figure 1. Evolution of the Manufacturing Sector in Mauritius

Based on data from Statistics Mauritius

In the face of such a situation and further to studies conducted on Export Processing Zones in East
Asia, Mauritius decided to shift to a mix of ISI and Export-Oriented Industrialisation (EOI). An Export
Processing Zone (EPZ) was created in 1971 following the adoption of the EPZ Act. Strong incentives
such as a ten-year tax holiday and duty-free import of raw materials were consequently made
available to export-oriented manufacturers with the primary intention to boost the domestic textile
industry through foreign investment. The adaptable and low-cost labour force coupled with the Multi-
Fibre Agreement (MFA) in 1974 and the signing of the Lomé Convention in 1975, which gave
Mauritius preferential access to the US and European Community markets, further reinforced the
attractiveness of the Mauritian EPZ.

Foreign investors, originating notably from Hong Kong, gave a definite boost to the take-off of the
Mauritian EPZ. Textile and clothing manufacturers from Hong-Kong relocated to Mauritius with a view
to:

 Circumventing limiting export quotas imposed on them by the European Community and USA
under the MFA.

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  Moving out of Hong Kong in the midst of the negotiations for the retrocession of the colony to
China (July 1983).

In the 1980s, the ten-year tax holiday given to EPZ companies was replaced by a low-tax rate of 15%.
In addition, the Government encouraged small domestic companies to enter the EPZ through
unsecured loans offered by the Development Bank. The Mauritius Development and Investment
Authority (MEDIA), later renamed Mauritius Industrial Development Agency (MIDA), was also
established to develop industrial sites and promote export-oriented manufacturing companies.

At the end of 1990, 568 companies were operating in the EPZ in Mauritius (Figure 2) compared to 32
in 1973. They represented 63% of total exports in value, 51.1% of the manufacturing value added
and 12.5% of the country’s GDP. Unemployment rate in the country had fallen to about 5%.

Figure 2. EPZ Sector, 1973-1990

No. of Enterprises No. of Employees

700 100,000
600 90,000
80,000
500 70,000
400 60,000
50,000
300 40,000
200 30,000
20,000
100
10,000
0 0
1976

1981

1986
1973
1974
1975

1977
1978
1979
1980

1982
1983
1984
1985

1987
1988
1989
1990

1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
Based on data from Statistics Mauritius

In 1992, the Export Processing Zone Development Authority (EPZDA) was created to support the
move of EPZ enterprises towards more skill-intensive and technology-based activities and to promote
clustering in the textile segment.

Albeit growing at a slower pace compared to the 1980s, the EPZ continued to be the mainstay of the
manufacturing sector through the 1990s, contributing on average to more than 50% of the country’s
manufacturing value added. Over this period, the share of the manufacturing sector remained above
the 23% mark.

However, whilst the success of the mix ISI-EOI strategy and the EPZ were undeniable, this model
started to show its limitations at the turn of year 2000 with the liberalisation of world trade and
increasing labour costs.

The end of the MFA on 31 December 2004 prompted major foreign-owned EPZ enterprises engaged
in the production of textile and apparel articles to close down their activities in Mauritius whilst
Mauritian companies shifted their labour-intensive production processes to Madagascar to take
advantage of the cheap labour force.

Despite the adoption of the African Growth and Opportunity Act (AGOA) in 2000, which granted
Mauritius preferential access to the US market, the number of total EPZ employees decreased by
26% between 2000 and 2005; from 90,682 in 2000 to 66,931 in 2005. Over the same period, the
share of the EPZ in manufacturing value-added dropped from 50.7% to 40.2% and the GDP share of
manufacturing moved down from 23% to 19%.

In 2005, the competencies and experiences of the MIDA, the EPZDA and Subex-M were pooled into
a new institution, Enterprise Mauritius, with a view to providing enhanced support to export-oriented
manufacturing companies. A year later, the Government ended the EPZ scheme. Benefits available to
EPZ enterprises such as tax incentives and duty-free imports of equipment were removed to level the

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playing field for all manufacturing companies. Thereafter, manufacturing companies have been
classified as Export-Oriented Enterprises (EOEs, include former EPZ companies) and Domestic-
Oriented Enterprises (DOEs).

As from 2000, in the midst of the fading trade preferences, the Government opted to accelerate the
country’s move towards further economic diversification. More efforts were laid on the reinforcement
of the services sector (tourism, financial services and ICT). In addition, seafood emerged as a major
activity within the manufacturing sector. Leveraging on the 1.9 million km2 Exclusive Economic Zone
(EEZ) and the existing port and freeport facilities, Mauritius was positioned and promoted as a
regional seafood hub. Consequently, between 2000 and 2014, the share of seafood products in the
total value of exports generated by EOEs surged from 3% to 23%.

Analysis of the evolution of the manufacturing sector in Mauritius over the past decades shows that
the country has established and consolidated its manufacturing base upon benefits provided by its
preferential access to major export markets, notably the European Community/EU and the United
States, and its relatively cheap and adaptable labour force.

In the midst of the current highly competitive and fast-moving global business environment, such a
strategy and the failure to upgrade and diversify towards innovation-driven and high-value density
activities have rendered the Mauritian manufacturing sector highly vulnerable to international trade
liberalisation and to the emergence of low-cost manufacturing economies.

Table 1. The Manufacturing Sector at a Glance, 2010-2014

Annual Average
Indicator Unit 2010 2011 2012 2013 2014
Growth 10-14

MVA MUR M 39,042 39,319 40,186 41,936 42,870 2.4%

Annual Real Growth % 1.9 0.7 2.2 4.4 2.2 2.4%

of which:
Sugar Milling % -4.0 3.8 -6.4 -1.0 -0.6 -1.1%
Food (Excl. Sugar) % 4.1 -1.4 7.6 -0.3 2.6 2.1%
Textile % 0.0 3.0 -1.1 2.6 1.0 1.4%
Other % 2.0 0.6 0.0 12.7 3.0 4.0%
EOE % 6.4 6.1 1.4 -3.0 0.3 1.1%
Non-EOE % -1.4 -2.4 3.4 10.1 3.5 3.6%

No of Large Establishments No. 671 651 632 615 597 -3%

of which:
Food Products No. 109 107 106 106 104 -1%
Wearing Apparel No. 177 164 154 149 139 -6%

Employment No. 75,832 73,569 73,065 73,206 73,414 -1%

of which
Food Products No. 10,440 10,661 11,009 11,225 11,474 2%
Wearing Apparel No. 40,806 38,207 37,048 36,803 37,124 -2%

EOE Total Exports F.O.B, MUR M 41,622 43,100 45,606 46,778 49,069 4%
of which:
Textile & Apparel % Share 59% 60% 55% 54% 55%
Fish & Fish preparations % Share 20% 19% 24% 23% 20%
Other % Share 22% 22% 21% 23% 25%

Based on data from Statistics Mauritius

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As shown in Figure 3, the current export structure of Mauritius remains heavily concentrated both in
terms of type of goods and markets. Export statistics show that:

 Articles of Apparel & Clothing, Textile and Fabrics represented 55% of exports from EOEs
and 41% of domestic exports in 2015
 Fish and fish preparations accounted for 20% of domestic exports in 2015
 Exports of fabrics, articles of apparel and clothing to UK, USA and South Africa accounted for
31% of domestic exports.
 Exports to the Eurozone accounted for approximately 54% of domestic exports.

This high concentration increases the sector’s vulnerability to external shocks and its exposure to
fluctuations in export earnings.

Figure 3. Mauritius: Domestic Exports by Main Country and Type of Good (2015,Value Share)

Exported Goods

Pearls, precious or
Fabrics, articles of
Export Prep. of meat and Sugars and sugar semi-precious
apparel & clothing Other Total
Markets seafood confectionery stones, metal clad,
accessories
imitation jewellery

UK 9.8% 4.7% 2.3% 0.0% 1.0% 18%

USA 11.6% 0.2% 0.9% 0.6% 14%

South Africa 9.5% 0.0% 0.0% 0.0% 1.2% 11%

France 5.3% 0.7% 0.3% 1.5% 3.5% 11%

Belgium 0.9% 0.4% 0.6% 0.8% 0.0% 3%

Spain 0.1% 2.5% 1.8% 0.2% 5%

Italy 0.7% 2.5% 4.1% 0.0% 0.5% 8%

Madagascar 1.6% 0.0% 0.2% 0.0% 2.6% 5%

Vietnam 0.0% 5.0% 0.1% 5%

Netherlands 1.2% 2.1% 0.2% 0.2% 4%

Total 41% 13% 10% 8% 10% 83%

Based our research findings and data from Statistics Mauritius

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VI. A Comparative Analysis of Singapore and Mauritius

Singapore is very often referred to as a model for Mauritius. In spite of its limited land area of 714 sq
km and its lack of any natural resource, Singapore has effectively overcome its natural constraints to
position itself as one of the most competitive and performing economies in the world. Between 1970
and 2014, Singapore’s economy grew at a CAGR of 7.1%. The country reported a GDP per capita of
nd
USD 56,286 in 2014, higher than that of the United States and Germany. Singapore ranks 2 on the
st
Global Competitiveness Index 2015 published by the World Economic Forum, 1 on the Ease of
th
Doing Business Index 2016 released by the World Bank Group, 10 worldwide on Deloitte’s 2016
th
Global Manufacturing Competitiveness Index, and 7 worldwide in terms of global competitive
industrial performance according to the United Nations Industrial Development Organisation (UNIDO).

The manufacturing sector has been a mainstay of Singapore’s economic performance. Since 1990
and despite the revisited strategy of Singapore for a knowledge and innovation- intensive economy
with focus on the services sector, particularly at the turn of the millennium, Singapore has maintained
its global industrial competitiveness, as measured by UNIDO’s competitive industrial performance
index.

A comparative analysis of the industrialisation journeys of Singapore and Mauritius unveils the
following findings (see Annex 1 for comparative data):

An Entrepreneurial Government with Consistent Vision

The rapid and impressive economic progress of Singapore over the past decades is the result of a
planned and consistent vision (Annex 2), which is not the case in Mauritius.

In Singapore, the Government effectively steered, on the basis of a planned and consistent vision,
a city-state having no natural resource, no natural access to water and mostly reliant on entrepôt
activities in the 1960s to the second most competitive economy worldwide in 2015. Backed by
internationally recognised foreign advisors, the Government adopted a pro-active and outward-
looking development approach to continually uplift Singapore’s capabilities towards higher-value
added activities and consolidate its international position as a highly competitive business platform
to create value.

A conducive regulatory and institutional framework for manufacturing businesses to prosper was
put in place. In addition, the Government tactfully intervened in strategic foundation sectors such
as transportation and banking, through autonomous government-owned enterprises, to support
and enable the country’s economic progress.

In Mauritius, the economic vision and earmarked strategic projects to sustain the country’s
economic development tend to dramatically change according to the administration in place.

Sustained Growth of the Manufacturing Sector

In both countries, the GDP share of the manufacturing sector has followed an inverted U curve
pattern over time. A sudden increase can be observed in the 1970s for Singapore and in the
1980s for Mauritius. In the early 2000s, as these countries put more emphasis on the development
of the services sector, the GDP share of the manufacturing sector has witnessed a significant
decrease.

Such pattern is usual in countries experiencing late industrialisation. However, in spite of its
declining GDP share, the manufacturing sector in Singapore has steadily and substantially
increased its absolute GDP contribution. Between 1990 and 2012, the Manufacturing Value Added
(MVA) of Singapore grew at a CAGR of 6.5% compared to 3.3% for Mauritius. Singapore’s MVA is
currently about 32 times higher than that of Mauritius.

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Single Promotion Institution

In both countries, government and public institutions have played a key role in kick-starting the
take-off of the manufacturing sector through the establishment of the enabling infrastructures and
business environment and in facilitating foreign investment.

Yet in Singapore, the promotion of the sector was steered by a single institution as from the
beginning, the Economic Development Board (EDB). On one hand, the EDB aggressively
developed its marketing network across the globe. On the other, it ensured close cooperation with
relevant local agencies for the overall alignment with the Government’s vision.

In the case of Mauritius, several institutions such as the MIDA, EPZDA, MFA, SUBEX-M were set
up and entrusted the mission of sustaining the development of the manufacturing sector.

Focus on Innovation-Driven and Technology-Based Activities

The efforts of the Mauritian Government to transition to innovation-driven and technology-based

activities as from the 1990s have remained vain. According to data published by the UNIDO,
production of machinery, equipment and medical & precision instruments accounted for only 3% of
the total output of the domestic manufacturing sector in 2012 compared to 41% for Singapore
(Annex 1).

As from the 1980s, Singapore rightfully recognised the importance of research & development and
innovation to move towards higher-value added manufacturing activities and therefore reinforced
th
the wealth-creation potential of its manufacturing sector. Singapore is currently ranked 7
th
worldwide as compared to 49 for Mauritius on the Global Innovation Index jointly prepared by
Johnson Cornell University, Insead and WIPO.

As depicted in Figure 4, the consulting firm McKinsey & Company segments the manufacturing
sector in 5 categories. The segmentation matrix clearly shows that Singapore is positioned on
higher R&D-intensity and higher value-density activities.

Mauritius remains focused on labour-intensive tradables and regional processing activities which
are more reliant on labour and have much lower value-creation potential.

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Focus on Innovation-Driven and Technology-Based Activities (Continued)

Figure 4. Segmentation of the Manufacturing Sector

An Enabling Human Capital and Research & Development Strategy

Singapore invested heavily in human capital development and research & development to enable
the move of its manufacturing sector from labour-intensive activities to innovation-driven and
technology-based activities. The education system was continually reviewed and revamped.
Partnerships in capacity-building and R&D were established with internationally-recognised
institutions.

According to scores from 2011 Trends in International Mathematics and Science Study (TIMSS)
and the 2012 Programme for International Student Assessment (Pisa), Singapore students are
among the best performers internationally in Mathematics and Science. In addition, the National
th
University of Singapore ranks 26 on the 2015-2016 Times Higher Education World University
Rankings.

Furthermore, low-skilled to high-skilled foreign talents were welcomed to complement and reinforce
the country’s human capital, whilst ensuring transfer of knowledge and competencies to
Singaporeans in key sectors such as financial services, aerospace engineering and research &
development. As a consequence, the share of foreign workers, excluding permanent residents, in
the country’s labour force increased from 3% in 1970 to 35% in 2010 (Annex 3). In spite of its
aggressive immigration policy, the unemployment rate in Singapore has remained on the low side
since 1990, with a peak of 5.2% in 2003.

The successful strengthening of Singapore’s human capital and the focus of the country on high
value-added manufacturing activities are reflected in official labour cost data. In 2013, the hourly
labour cost in the manufacturing sector in Singapore was USD 23.95 compared to USD 2.57 in
Mauritius (Annex 4).

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 Competitiveness and Trade Preferences

Whilst Singapore’s industrialisation strategy was based on a continuous quest for enhanced
international competitiveness, Mauritius established and consolidated its manufacturing base upon
benefits offered by its preferential access to major export markets, notably the European
Community/EU and the United States. Such a strategy has rendered the Mauritian manufacturing
sector highly vulnerable to the erosion of trade preferences and the emergence of low-cost
manufacturing economies.

A Strategically Located City-State

In the 1970s, in the face of the eroding cost-competitiveness of their domestic market, a number of
Japanese firms engaged in labour-intensive manufacturing activities relocated to neighbouring
Singapore to benefit from the low-cost labour and pro-business environment. Japanese
manufacturing firms have since then maintained their presence in Singapore whilst shifting their
investments to higher value-added activities, thus contributing to the successive industrialisation
waves. Panasonic, Fujitsu, Hitachi and Toshiba continue to be present today in Singapore.

Furthermore, the strategic location of Singapore in the South East Asian region, at the crossroads
of major maritime routes permitted the city-state to position itself as a competitive maritime hub,
leveraging on its historic role as an entrepôt port. In 1972, the country inaugurated the Tanjor Paga
Container Port, the first container port of South East Asia. This maritime connectivity factor
provided a unique competitive edge to Singapore in its efforts to attract foreign manufacturing firms.

V. A New Business Paradigm for the Manufacturing Sector

A joint paper published by Bank of America and Merrill Lynch in April 2015 asserts that we are
entering a new phase of creative disruption – a business term inspired from the theory of creative
destruction developed by the economist Joseph Schumpeter to highlight the destructive yet overall
transformative and creative process triggered by innovations – led by three distinct “ecosystems”,
namely the “Internet of Things” (IoT), the “Sharing Economy” and “Online Services”. It is expected that
these three “ecosystems” will be the catalysts for accelerated economic and business transformation.
Accenture projects that the IoT, which refers to networks of connected and interacting intelligent
devices, has the potential to boost China’s annual Gross Domestic Product (GDP) by 1.3% by 2030,
adding up to USD 1.8 trillion to the country’s cumulative GDP over this period.

A report released in January 2016 by the World Economic Forum on the Future of Jobs claims that
“we are at the beginning of a Fourth Industrial Revolution. Developments in genetics, artificial
intelligence, robotics, nanotechnology, 3D printing and biotechnology, to name just a few, are all
building on and amplifying one another. This will lay the foundation for a revolution more
comprehensive and all-encompassing than anything we have ever seen.”

Such transformations will determine and shape the new driving forces of the manufacturing sector.
Linkages with the services sector will be further reinforced.

KPMG’s 2015 Global Manufacturing Outlook highlights the following:

 The development of new products and R&D efficiency are the top-most priorities of
manufacturing firms. Funds are being increasingly invested in R&D activities and the pace of
innovation will continue to accelerate. Firms will have to continually review and reinvent their
business model, bringing in new technological advances and producing innovative products.

 In the face of intense competition, cost-reduction will remain high on the agenda although
companies will have to deal with more complex supply chains.

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  Partnerships are regarded as a cost-efficient mode to drive innovation and also increase the
speed to market.

 The capacity and performance of suppliers are a key concern for manufacturing firms as they
strive to deal with an increasingly demand-driven supply chain powered by greater
technological inputs.

 Firms will have to invest heavily in talents to win “the coming competition for growth”.

In addition, McKinsey & Company in its report “Manufacturing the future: The next era of global
growth and innovation” asserts that:

 1.8 billion people will enter the global consuming class over the next 15 years, opening new
business opportunities for manufacturing firms.

 The manufacturing and the services sectors are getting intertwined. In effect, manufacturing
companies require more and more inputs from the services sector to produce their goods.
Telecom and travel services, logistics providers, banks and IT service providers are playing
an increasing role to support manufacturing firms in their strategy. The development of the
services sector will also create new demand for the manufacturing sector.

 However, the above transformations will also impose critical changes on manufacturing
companies if they want to remain globally competitive. The manufacturing sector has entered
an era marked by the importance of global business agility, enterprise networking, talents,
innovation, automation and expert use of information, data analytics and machinery.
Companies will have to evolve and look beyond the simple impact of labour cost and consider
the total factor performance (transportation, leadership talent, materials, energy, capital,
regulations, trade policy…) when selecting their locations.

 Manufacturing firms will have to heavily invest in the acquisition of new talents and skill-
development programmes. Experts in big data, product design and supply chain, skilled
production workers and executives with thorough understanding of emerging markets will be
in demand.

 Manufacturing will cope with increasingly complex and integrated supply chains in a global
environment, raising the importance of risk management and scenario planning.

 Policy makers must view the manufacturing sector as a critical driver for innovation,
productivity and competitiveness, and not as a source of mass employment. They must have
a thorough understanding of the new drivers and forces shaping the competitiveness of
manufacturing sector.

 Governments must assess their respective global competitiveness and accordingly upgrade
their existing competitive advantages and build new ones in order to retain and attract
globally-competitive manufacturing companies. Efforts will particularly have to be directed
towards access to talent, reliable infrastructure, labour flexibility, access to materials and low-
cost energy supplies. Regulatory barriers to growth will have to be removed and the required
environment, infrastructure and enablers for R&D, innovation and talent development will
have to be strengthened.

 Education and skill development is a priority for policy makers as companies compete for
access to more creative and diverse talent pools.

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VI. Policy Recommendations

In order to attract globally-competitive and productive companies and revive its manufacturing sector,
Mauritius must critically appraise its current competitive advantages and build the necessary enablers
and environment in line the emerging global imperatives.

According to a study conducted in 2015 by the consulting firm Deloitte, the 12 key competitiveness
drivers for the manufacturing sector, in order of importance for Global CEOs, are as illustrated in
Figure 5. The top-three most important drivers are namely: talent, cost competitiveness and workforce
productivity.

Recommendations to position Mauritius as a globally-competitive manufacturing platform have

consequently been structured on the basis on these key drivers, for a holistic approach.

Figure 5. Drivers of Global Manufacturing Competitiveness

Driver Recommendation

General  To adopt an aggressive pro-business, pro-foreign and local investment and

an export-oriented industrialisation strategy involving all stakeholders
concerned, public and private sectors, under the umbrella of one decision-
making, implementation and monitoring body.

 The mission of the latter shall be to proactively push the domestic

manufacturing sector towards innovation-driven and technology-based
activities and to increase the MVA by 6% annually over the next 10 years.

 The public institutional framework should be revamped in order to remove

duplication/overlapping of responsibilities and align responsibilities with the
new industrialisation strategic and global business paradigm. The
performance of each and every institution should be continually monitored
on the basis of set KPIs.

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  High potential sectors and KPIs for each sector should be clearly identified.
Sectors to be considered include: Agro-Industry, Precision Engineering,
Clothing & Apparel and Biotechnology.

Talent Search  To redefine the country’s immigration policy to rapidly strengthen the
country’s human capital, both in terms of technical and intellectual talents,
in the required areas with a view to boosting the global competitiveness of
the manufacturing sector.

 High-calibre foreign experts in data analytics, supply chain, research &

development, product design, automation and other relevant fields should
be enticed to relocate to Mauritius and transfer their knowledge and
competencies to Mauritians.
 To review the branding of Mauritius and market the country as a vibrant
place for foreign entrepreneurs and professionals in the manufacturing
domain to live and create “competitive value”.
 To implement a national sensitisation programme to change the negative
bias of the Mauritian population vis-à-vis the manufacturing sector and
technical jobs. Such programmes may include interventions by recognised
leaders/experts from countries such South Korea and Germany.

 To implement a national sensitisation programme to promote a “Smart

Work Culture”

 To introduce an apprenticeship programme (Alternance) including

academic and vocational education and practical training in manufacturing
companies for pupils who have failed CPE. Labour Act will have to be
reviewed in that regard.

 Mauritius should be branded as a cost competitive and innovative industrial

Cost Competitiveness
platform for Asian and European companies, with highly attractive fiscal
and connectivity/freight incentives, to target the emerging middle class in
Africa.

 To offer low-cost financing and consultancy facilities to the private sector to

accelerate the adoption and diffusion of technological advances and the
automation of their operations.

 To set up training schemes to uplift the capability of manual workers with

Workforce
regard to the use of the latest production machinery and equipment.
Productivity
 To establish training programmes, knowledge sharing and business
networking platforms with selected Multinational Corporations (MNCs).

 To foster clustering initiatives of SMEs with a view to facilitating the supply

Supplier Network
of materials to export-oriented manufacturing firms.

 To proactively appraise the business-friendliness of the legal & regulatory

Legal & Regulatory
system against competing economies and to continually make the
System
necessary adjustments to remain among the top 10 countries for the Ease
of Doing Business ranking.

 To restrict selected Government’s financial and support schemes to

enterprises having a minimum level of value addition in Mauritius to avoid
subsidisation of importers/traders.

 To agree on a single Made in Mauritius label for all products manufactured

Page 12 of 16
 in Mauritius with strict standards.

 To implement proper product control/inspection for fake Made in Mauritius

products

 To implement a new education system where Science, Technology,

Education
Engineering and Mathematics (STEM) as well as Business and
Infrastructure
Entrepreneurship are major subjects at an early age.

 Every school must have active and interactive laboratories properly

networked with local and foreign institutions to produce practitioners.

 To equip public universities with high quality hardware and software for
optimal and practical training of their students.

 To have public universities and vocational education institutions to

establish partnerships and exchange programmes with reputable
international education institutions and MNCs.

 To review and upgrade the Public Physical Infrastructure on a major scale

Physical
in line with the commitment of the Economic Mission Statement 2015-2030
Infrastructure
in terms of transport, external connectivity (air & maritime) and internet
connectivity and other key infrastructures for manufacturing businesses.

 To establish intelligent industrial parks with the appropriate common

support infrastructure, services and incentives offered by Government.
Each industrial park should be focused on one specific sector.

 To review and further improve the trade, financial and tax incentives in
Economic, Trade,
order to attract foreign industrial groups in selected sectors, bearing in
Financial & Tax
mind the huge market potential presented by Africa.
System
 Strong incentives should be granted to such foreign groups in order to
significantly reduce their cost of investment, subject to set criteria: number
of jobs created for Mauritians, sub-contracting to domestic SMEs, transfer
of technology and competencies…

 To foster R&D collaboration programmes between manufacturing

Innovation Policy and
companies and universities./research institutes
Infrastructure
 To overhaul the research policy at the University of Mauritius, University of
Technology and Open University to ensure that MPhil/PhD students and
Professors focus on practical research works in close collaboration with
Mauritian manufacturing companies (both large and SMEs).

 To ease the access of manufacturing firms to enhanced Intellectual

Property Protection.

 To evaluate and review the national energy policy in line with the
Energy Policy
requirements of emerging industries over the next fifteen years. In the
short/medium-term existing old turbines should be replaced and additional
ones be installed to double the current national production capacity to
around 1 GW.

 To develop and strengthen the network of trade/G-to-G agreements

Local Market
notably with the African continent.
Attractiveness incl.
Export Market Access  To assess the “competitive position” of Mauritius with regard to the
emerging value chain supplying African countries with a view to identifying
sectors holding long-term “value creation” potential for the country.

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  To further improve the public health system with Quality Health Care to all.
Healthcare System
 To control the price of basic foods as is the case in Australia and Canada
so that to ensure the country’s people can afford healthy food habits.

 To ensure that each and every person in Mauritius has a regular

monitoring test of his health at least once a year.

 To launch national nutrition and lifestyle sensitisation programmes for a

healthy and productive labour force.

 Mauritius should be positioned on the international scene as an

unparalleled place to work, live and play.

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VII. Annexes

Annex 1. Singapore v/s Mauritius

MANUFACTURING SECTOR: SINGAPORE V/S MAURITIUS

A land area = 1/3 of Mauritius 4.3 times more inhabitants than in Mauritius

24 times the GDP of Mauritius 32 times the MVA of Mauritius

SINGAPORE MAURITIUS

Area 714 sq km 1,969 sq km

Population (2014 est.) 5.6 million 1.3 million

Stage of Industrialisation Industrialised Economy Emerging Industrial Economy

2015 GDP (2010 USDm) 275,850 11,508

2015 MVA (2010 USDm) 52,212 1,639

2015 MVA per Capita (2010 USD) 9,292 1,307

Share of MVA in 2015 GDP 19% 14%

Office, accounting & computing

machinery (32%) Chemicals & Food & beverages (46%)
Major manufacturing activities (VA in %
chemical products (24%) Wearing apparel, fur (25%)
to total MVA)
Machinery & equipment n.e.c. Textiles ( 5%)
(12%)

Competitive Industrial Performance

7th out of 143 countries 82nd out of 143 countries
Rank

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Annex 3. Singapore: Foreign Workers, 1970-2010

1,200 40%
35%
35%
1,000
28%
30%
800
25%

600 16% 20%

1,089
15%
400
7% 616 10%
200 3%
248 5%
119
0 21 0%
1970 1980 1990 2000 2010

No. of foreign workers* '000 % of Total Labour Force

* Excl. Permant Residents Based on data from Migration Policy Institute

Annex 4. Hourly Labour Cost* in the Manufacturing Sector, in USD

23.11 24.16 23.95

18.86 19.41
17.54
15.70
12.75 13.20 13.24 13.76

1.43 1.53 1.66 1.61 1.57 1.79 1.78 1.99 2.19 2.48 2.57

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Mauritius Singapore

Based on data from Statistics Mauritius

*Includes direct pay, social insurance expenditures, and labour-related taxes

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