With an area of 2,381,741 square kilometres, Algeria is the second largest country in Africa. It is bordered by the Mediterranean Sea to the north, Tunisia and Libya to the east, Niger, Mali and Mauritania to the south, and Morocco to the west.

Many new things have been happening under the clear and beautiful sun in Algeria. The first surprise for observers coming from India is the great success of the tourist package for the east coast and the Timgad area, which is famous for its Roman ruins. The second surprise is the current predominance of the summer tourists who are flocking to the luxurious beaches and comfortable seaside hotels to enjoy their holidays.

Investment Climate

As part of its effort to diversify and modernize the Algerian economy, the Government is placing increasing emphasis on promoting foreign investment. In October 1993, the Government promulgated a new Investment Code, which grants the same privileges both to foreign and Algerian investors, thus putting them on equal footing. The code grants new investors the following privileges: 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 percent in customs duties for 30 different products (for which duties are between 40-60%); and the right to pay a ceiling of 7 percent on social security payments for Algerian employees (the normal rate is 24%).

The incentives are more attractive for companies, which establish export-oriented projects. A sliding scale has been established whereby those firms exporting 100 percent of their production receive a 100 percent exemption on all taxes, and pay only 7 percent employer contribution on all taxes and pay the same 50 percent of their production receive a 50 percent exemption on all taxes and pay the same 7 percent social security contribution.

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 percent 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 percent.

Investment Registration Procedure - To register a proposed investment and apply for the advantages listed in the Code, investors must file a Declaration d'investissement and Demande d' Advantages with APSI. By law, these two documents must be processed by APSI within 60 days of their submission. In practice, it normally takes about one month. In determining what level of advantages to accord a given investment, APSI considers the following five criteria: whether an investor has a foreign partner; the extent of self-financing (a firm self-financing more than 30 percent of the total value of the proposed investment receives the maximum advantages); the dependence on foreign inputs (investments that use more than 50% local inputs or import substitution receive the maximum advantages); and, the extent of technology transfer, and employment creation.

Hydrocarbon Investments - Investments in the hydrocarbon sector are governed by the 1986 Law Governing Activities of Exploration, Exploitation, and Pipeline Transportation of Hydrocarbons, and subsequent amendments. The 1986 law allowed foreign companies to enter joint-venture partnerships with the state hydrocarbon company Sonatrach, and remain in a minority position. The 1986 law was amended in December 1991 to allow foreign companies to take up to a 49 percent share in production of existing oil fields. It also allows foreign participation in natural gas exploration, and provides extra tax incentives to stimulate hydrocarbon exploration.

Conversion and Transfer Policies - For investments made in hard currency, the new Investment Code authorizes the investor to repatriate, within 60 days of a request for capital repatriation, all capital, revenues, as well as the net proceeds of the transfer, even if the latter are higher than the original amount invested.

Dispute Settlement - Algeria is a signatory to the Convention of the Paris-based International Centre for Settlement of Investment Disputes. Algeria also ratified its accession to the New York Convention, and adhered to the Multilateral Investment Guarantee Agency (MIGA). The Algerian Code of Civil Procedure allows both private and public sector companies in Algeria to seek international arbitration. Algeria also allows local contracts to contain international arbitration clauses. Foreign investors have full recourse to international arbitration under Algerian law.

Performance Requirements and Incentives - As part of Algeria's efforts to develop an attractive investment promotion regime, foreign investors in Algeria are not subject to any performance requirements or incentives. Right to Private Ownership - Foreign and domestic private entities may establish and own businesses and engage in all forms of business activity.

Trademark Protection is afforded by the Laws of March 19, 1966 and of July 16, 1976. In 1986, authority for granting and enforcement of trademark protection was transferred from INAPI to the Center National du Registre du Commerce (CNRC). INAPI sources indicate that a new law is under consideration, which would transfer trademark authority back to INAPI.

Regulatory System (Laws and Procedures) - The Government has put in place the framework to transform the Algerian economy from a centrally-planned economy in which the public sector generates goals of the Government's economic reform program are reduced controls over the economy, application of market principles to the management of state-owned firms, and development of a dynamic private sector.

Algeria – India Relations 

Algeria and India relations date back to the days of the Algerian liberation struggle (1954-1962), when India advocated the cause of Algerian independence at the United Nations and other international fora. Following Algerian independence, the ruling party – Front de Liberation Nationale (FLN) – favoured a radical, socialist ideology and an active foreign policy based on third world solidarity and the creations of a new international economic order. This policy orientation brought India and Algeria closer. India-Algeria relations have been characterized by a convergence of approach on major issues of international concern. Active partnership within the Non-Aligned Movement and agreement on issues of basic importance to developing countries have been cementing factors over the years of this relationship. In the year 2001, His Excellency, M. Abdelaziz Bouteflika, President of Algeria was the first Arab leader invited as a Chief Guest of a President of India for Republic Day.

Algeria Country Data