November 3, 2007 -- As Thai companies scour the globe in pursuit of the right destinations for investments, Algeria, a relatively unknown country but one full of potential opportunities, is offering itself as the destination of choice.

"There are lots of opportunities that Thai businessmen can tap into out there and we are trying to encourage them to take advantage," said Rachid Bouzennoun, the regional representative of the National Democratic Rally, or Rassemblement National et De'mocratique (RND), the ruling party in Algeria.

The African continent's second largest economy after South Africa, Algeria has been relatively unknown to Thai businessmen except for PTT Exploration and Production, which only recently ventured into the oil and gas exploration and production business in the country and is now exporting back to Thailand to meet the country's ever-growing demand for energy. The firm has invested about $45 million in the Algerian operations and more investments are expected going forward.

"The nearly four decades of relationship between Thailand and Algeria is fostering now with business deals and two-way trade rising rapidly although currently the trade in the favour of Algeria as oil is the key export," he says. Currently two-way trade between Thailand and Algeria stands at around $200 million annually.

"What we want is to see a lot more Thai companies invest in Algeria, as there's huge potential that they can tap, especially with the government's plans to spend heavily on infrastructure and housing developments over the next couple of years," he says.

Mr Bouzennoun added that for the next three years the government had allocated about $150 billion in the infrastructure-development field and more of this kind of investments are likely to follow.

As Algeria celebrates its 53rd anniversary of the revolution that brought independence to the country, a lot has changed in the country where literacy rate has reached nearly 90%, while 70% of the landmass of the country has access to basic needs.

This would mean that construction-related industries have great potential to go there and participate in the construction of roads, rails, airports, mass transit, tramways, and housing developments for the masses.

All these, Mr Bouzennoun says, are a gold mine for investors who are looking to go there. Topping this off is the fact that there are more than 10,000 items that can be exported tax free to the European Union which will be expanded to a total tax-free zone for Algerian-made products into the EU by 2017.

"This is the reason why we have so many companies from other parts of the world who are investing heavily there, with some committing up to $20 billion (Emmar group from the United Arab Emirates)," he said.

Although terror problems may deter most Thais from investing in the country, the problems have started to die down after the government granted amnesty and started to push for development of the country to benefit all parties.

Some of the incentives offered for investors in Algeria are:

- a three-year exemption from the value-added tax on goods and services acquired locally or imported;

- an exemption on property taxes;

- a two- to five-year exemption from corporate income taxes;

- the right to pay just 3% in customs duties for 30 different products (for which duties are between 40% and 60%); and

- the right to pay a ceiling of 7% on social security payments for Algerian employees (the normal rate is 24%). Export-oriented companies, i.e. companies that export 100%, receive a 100% exemption on all taxes, and pay only the 7% employer contribution.

As part of its efforts to improve investments, the Algerian government in 1995 also established an agency similar to Thailand's Board of Investment, calling it Agence de Promotion, de Soutien et de Suivi des Investissements, (Apsi), which is attached to the office of the Prime Minister, to register all investment applications, accord the advantages listed by the Code, and streamline the investment process. Government officials point out that all investments are pro-approved; Apsi's only role is to determine what advantages a particular investment should receive under the law.

As part of its investment promotion efforts, the government issued a decree in October 1993 which reduced the income tax paid by foreign technical and supervisory personnel. Whereas most foreign workers previously paid taxes of up to 70% on their salaries, personnel employed by foreign companies working in most industrial sectors whose monthly salaries are in excess of 80,000 dinars (approximately $1,600) will now pay a flat rate of 20%.

For more details go to Embassy of Algeria, Kuala Lumpur, Malaysia