Over the last decade Angola has been the stage for many legislative reforms. The legislative activity in Angola has manifestly increased, mostly aimed at developing and protecting local intervention in crucial sectors and promoting local entrepreneurship. Last year, the enactment of a New Private Investment Law (Law 20/11, of 20 May 2011) ("NPIL") was no doubt an important landmark. The NPIL introduces several and substantial amendments to the former private investment regime, the following being highlighted for their meaning, practical importance and major impact in the way foreign investment is conducted, structured and planned.
The new regime is an almost complete overall of the legal framework for foreign investment in Angola. This article highlights some of the most important changes:
- The NPIL covers all "qualified private investments" made in the Angolan territory by either Angolan investors or foreign investors. An investment is "qualified" if its value is equal to or greater than USD 1 million (or the local currency equivalent). With this increase in the minimum investment amount, only large-scale investment projects are now eligible to benefit from the guarantees and rights set forth in the NPIL, which means that smaller players may be, in principle, prevented from competing for some of the business opportunities that Angola presents.
- The above does not mean that investments below the USD 1 million threshold are no longer accepted. Although possible, investments under USD 1 million fall outside the NPIL, meaning that that they are not eligible for the tax and other incentives as further described below, nor is the investor entitled to repatriate profits or other funds. Also outside the NPIL are investments (irrespective of their value) in certain specific sectors such as the oil industry, diamond industry and the banking/ finance sector. These areas are subject to specific legislation, albeit the NPIL can apply on a default basis where the specific legislation is silent.
- As regards repatriation of profits, this right is no longer automatically granted to foreign investors (as was the case under the former Private Investment Law - Law 11/03). The NPIL requires that the investment is effectively implemented as proposed by the investor as a condition for any profit repatriation to take place. In addition, a number of limitations may be imposed including a "no-repatriation" period after investment start-up, phased repatriation and other constraints, to be decided on the basis of factors such as the investment value, location, social-economic impact, Angola’s hard currency reserve levels, etc.
- Investments under the NPIL are illegible for a broad range of incentives, exemptions and other facilities in terms of tax and customs charges. The crucial aspect, though, is that the granting of incentives is now subject to stricter requirements and ultimately depends on a case-by-case negotiation between the investor and the Angolan authorities, in particular Angola’s Foreign Investment Agency ("ANIP"). A number of factors must be weighted in the decision to extend incentives to an investment project, including its likely impact in local development, job creation, exports increase, know-how transfer and local content.
- In terms of process, the NPIL is markedly different from the previous regime. Whilst under Law 11/03, investments were approved on the basis of an application submitted to ANIP except if they exceeded USD 5 million (in which case the negotiation of an investment contract was required), the NPIL mandates that any investment irrespective of value must be negotiated with ANIP and an "investment contract" must be entered into between the investor and ANIP. The final approval authority lies with ANIP Board for investments of up to USD 10 million and with the President of the Republic if above that threshold.
- Existing investments approved under Law 11/03 are grandfathered and thus remain subject to the law / contract under which they were sanctioned. However, investors can bring their existing investments under the umbrella (and potential incentives) of the NPIL by applying to ANIP to that effect.
All in all, these are the main amendments brought about by the NPIL and its key highlights. However, of no less importance is now to be alert as to the practices adopted by the authorities that are, directly or indirectly, involved in the enforcement of the new statute
Alberto Galhardo Simoes
Ana Margarida Maia