ANNOUNCEMENT 02 Apr 2020

In April 2020, the Ethiopian government announced Investment Proclamation No1180/2020, changing its FDI regime in several areas. 

NUMBER OF INTERVENTIONS

4

  • 2 harmful
  • 0 neutral
  • 2 liberalising

SOURCE

Proclamation No. 1180/2020. Federal Negarit Gazette. Available at: http://admin.theiguides.org/Media/Documents/Investment-Proclamation-No.-1180_2020-Copy.pdf

The New Investment Proclamation No. 1180/2020: A Brief Overview. Abyssian Law. Available at: https://www.abyssinialaw.com/blog-posts/item/1942-the-new-investment-proclamation-no-1180-2020-a-brief-overview

Investment Proclamation No. 1180/2020. UNIDO Seoul. Available at: Investment Proclamation No. 1180/2020

Ethiopian New Investment Proclamation: Key Changes. MTA Law Office. Available at: https://www.mtalawoffice.com/legal-updates/entry/ethiopian-new-investment-proclamation-key-changes-1

Inception date: 02 Apr 2020 | Removal date: open ended

Labour market access

On 2 April 2020, the Ethiopian government updated its FDI regime by announcing Investment Proclamation No. 1180/2020 (hereafter 'New Proclamation'). Of relevance to Global Trade Alert was an update of rules on work permits for expatriates and foreign investors.

The previous investment law provided that any investor may employ duly qualified expatriate experts required for the operation of its business. The New Proclamation amends this clause stipulating that the qualified expats must be in the positions of ‘higher management, supervision, trainers and other technical professions.” Further, it is provided that such expats may only be employed when it is ascertained that Ethiopians possessing similar qualifications or experiences are not available.

Furthermore, the New Proclamation grants up-to five years of multiple entry business visas to owners, shareholders, general managers, board members and top management of investors upon valid confirmation by the Ethiopian Investment Commission. It also grants the spouse of an investor or a foreign worker the right to be employed and obtain a work permit in Ethiopia.

AFFECTED SECTORS

 
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AFFECTED PRODUCTS

 
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Inception date: 02 Apr 2020 | Removal date: open ended

FDI: Entry and ownership rule

On 2 April 2020, the Ethiopian government updated its FDI regime by announcing Investment Proclamation No. 1180/2020 (hereafter 'New Proclamation'). Of relevance to Global Trade Alert was a change regarding the acquisition of existing enterprises an eligible form of foreign investment. Of related relevance is also an announcement of updating the listing of sectors open to foreign investments, see related state act. 

The New Proclamation updates acquisition as an eligible form of foreign investment. The previous definition of investment was limited to new investments in cash or in kind and the expansion/upgrading of existing investments. The New Proclamation expands this definition to include the acquisition of existing enterprises, in whole or in part, as an eligible form of foreign investment to be regulated by the New Proclamation. Further, the current definition of “capital” is expanded to include intellectual property rights and other tangible and intangible business assets as valid capital contributions.

Furthermore, the New Proclamation announces a reversal of the previous positive-listing approach to a negative listing approach whereby areas that will be restricted from foreign participation will be provided in a negative list, with the implication that all other areas will be permitted areas of investment for foreign investors. As part of the negative listing approach, the New Proclamation provides three categories of investment areas: I) areas exclusively reserved for joint investment with government; II) areas exclusively reserved for domestic investors; III) area exclusively reserved for joint investment with domestic investors. All other sectors not reserved in accordance with category 1-3 will be open for foreign investment. The implementation of this categorisation and details on sector listing can be found in Ethiopia’s ‘new regulation’, see related state act.

 
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Inception date: 02 Apr 2020 | Removal date: open ended

FDI: Treatment and operations, nes

On 2 April 2020, the Ethiopian government updated its FDI regime by announcing the Investment Proclamation No. 1180/2020 (hereafter 'New Proclamation'). Of relevance to Global Trade Alert was an update on the right to remit proceeds for foreign investors.

Unlike the previous proclamation, the New Proclamation allows a foreign investor to remit proceeds from transfers of shares or partial ownership of a business to any investor, whether foreign or domestic. Additionally, it recognises remittances of proceeds from capital reductions of businesses. However, foreign currency remitted by expatriates is restricted to non-resident employees only.

 
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Inception date: 02 Apr 2020 | Removal date: open ended

FDI: Entry and ownership rule

On 2 April 2020, the Ethiopian government updated its FDI regime by announcing the Investment Proclamation No. 1180/2020 (hereafter 'New Proclamation'). Of relevance to Global Trade Alert was an update of rules on the right to own a dwelling for foreign investors. 

The New Proclamation limits the ownership of a dwelling from all foreign investors to only foreign investors with large investments in the country. It is yet to be specified what the size of the investment must be to be considered a large investment for the purpose of this incentive.

 
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