• Venezuela has raised royalty rates for multinational enterprises that operate joint ventures in the heavy-oil sector from 1% to 16.67%. The increase will be applied to oil companies operating under joint venture agreements along the Orinoco River basin in the south-east of the country. The 1% level was granted by the previous government in the mid-1990s to attract foreign investment.

 

  • Indonesia has enacted two regulations to attract investment in the oil and gas sector. One, which governs the upstream sector, allows oil companies to enter into production-sharing contracts with the government for up to 30 years, with the option of a 20-year extension. Production-sharing contractors will not be allowed to sell their majority stakes during the first three years of exploration. They must also offer a 10% interest to companies owned by provincial governments in the first year of production. The second regulation, which governs the downstream sector, permits foreign investment in oil and gas distribution, refining and storage – areas previously under the control of state-owned oil and gas company Pertamina.

 

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  • India is planning to introduce legislation to create bio-technology parks and free trade warehouses as special economic zones, which will allow FDI with ownership up to 100%, as well as the real estate development of the zones. The zones will provide state-of-the-art infrastructure facilities. The country has also increased the limit on foreign equity participation in domestic airlines from 40% to 49%. The limit is applicable to individuals and institutions. Foreign airlines are still not allowed to buy stakes in local carriers.

 

  • South Africa has eased foreign exchange limits on South African companies, which restricted them from investing abroad. However, under the new foreign exchange regime, South African companies must get approval of their investment by the Reserve Bank of South Africa by demonstrating that their proposed projects will be of economic benefit to the country. Large investment outflows will be staggered to minimise any adverse impact on the foreign exchange market.

 

  • Mauritius is allowing foreign ownership of residential property under its new Integrated Resort Scheme. The scheme requires foreign owners of residential property to create a resort-type environment that could include private villas, hotels and golf courses. Previously, foreign investors were only permitted to purchase property if they invested a minimum of $500,000 via a business or other form of financial investment.

 

  • In Kazakhstan, an amendment to the tax law has raised the government’s share of oil income from 65% to 85%. The amendment has also removed a clause guaranteeing investors that the tax rate will not be increased further throughout the duration of their contracts.

 

  • The Democratic People’s Republic of Korea (North Korea) has endorsed regulations allowing firms from the Republic of Korea (South Korea) to lease land at the Mount Kumgang resort. The law allows foreign firms from South Korea to acquire the rights to use land or buildings in the resort area. North Korea has also approved rules on insurance for South Korean companies building plants at an industrial complex in the city of Kaesong.

 

  • Israel is discussing changes in its Law for the Encouragement of Capital Investments.

 

  • Zambia intends to revise the Zambia Export Processing Zones and introduce additional incentives to create a more attractive environment.

 

  • US multinational enterprises will be able to pay tax at 5.25% on profits brought home by the end of 2005, if the money is reinvested in the country.

 

  • New Zealand is considering a bill that will make it more difficult for foreign investors to purchase special heritage sites and sites of special environmental value.

 

  • The Philippines is rationalising fiscal incentives granted to foreign and domestic investors.

 

  • China is allowing foreign media companies to purchase minority shares (up to 49%) in television production ventures, with effect from last month.

 

  • New bilateral investment treaties (BIT) and double taxation-avoidance treaties (DTT) have been drawn up between:

- Singapore and Malaysia (DTT)

-Malta and Iceland (DTT)

- Azerbaijan and Romania (DTT)

-Ukraine and Thailand (DTT)

-Taiwan ROC and Belgium (DTT)

-Israel and South Africa (BIT)

- US and Uruguay (BIT).