Doing Business in Sudan

Annual indicators

Net international reserves in mid-2009 were less than one month of imports.

Main exports: Crude oil, sesame, livestock, cotton, gum arabic

Main imports: Machinery and Equipment, manufactures, transport equipment, chemicals, cereals

2008 GDP = Agriculture (31%, Industry 35%, Services 34%)

Sudan’s main sources of imports in 2008 were China, India, Saudi Arabia, Egypt, Japan, France, Italy, UK.

Despite its substantial natural resources (including 200 million acres of arable land of which only a fifth is presently exploited) Sudan is still classified as a Least Developed Country (LDC).

Doing business with Sudan is exciting, rewarding and uncertain. Most major projects need some kind of financing (preferably concessional). However, we advise commercial prudence and Indian exporters and investors should stay in touch with the Embassy.

Exports should be ONLY against full advance payment or letters of credit confirmed by first class international banks.

The 2008 Corruption Perceptions Index of Transparency International ranks Sudan as one of the most corrupt countries in the world – 173/180 (at the same level as Afghanistan and below Zimbabwe) while the World Bank ranks Sudan at 151/155 countries in its 2008 “Ease of Doing Business” Report.

Notwithstanding the negative perceptions, we encourage Indian companies to explore commercial possibilities in Sudan. 

As this country develops, there will be opportunities for Indian companies in railways, roads, automobiles, power generation, telecommunications, water treatment, human resource development, agriculture, pharmaceuticals and IT. Import demand is surging as reconstruction moves into high gear.

 Pattern of bilateral trade

(In US$ million)

The Mission’s target for 2009 is a 50% increase in India’s exports

 To give a sustained focus to India-Sudan trade relations, the Mission’s commercial policy since October 2005 is a non-exclusive five-plus-one policy. The five priority sectors in which India can respond to Sudan’s developmental requirements are infrastructure, agriculture, human resource development, information & communications technologies, and small & medium industries. The “plus-one” is commercially viable investment in the energy sector (oil, electricity, gas). To achieve this, the Embassy has a Target and Introduce Programme (TIP) from January 2006 under which one new Indian export is introduced into Sudan every semester.

Tariff and non-tariff issues

In 1992, Sudan abolished most export and import licensing requirements. It has also eliminated most export taxes although some have been reintroduced from May 2009 (especially in raw materials) following the country’s poor economic situation.

Importers must present an import declaration, commercial invoice certificate of origin, quarantine license (where necessary), Sudanese Standards and Metrology organization (SSMO) requirements or other documents for specific type of goods, and completion of bank formalities. Importers must pay the required duties, taxes and fees and receive an official release for the goods.

Setting up of offices/firms/companies for trade and manufacturing purposes 

A request is made to the Union of Chambers of Commerce and the Ministry of Foreign Trade conveying the intent to establish offices or firms/companies, etc. There are no special rules for renting office spaces or residential accommodation or hiring of local staff.

WTO

Sudan applied to join the WTO in 1994 and had completed the basic fact-finding stage of negotiations but is unlikely to be given entry to WTO while US sanctions are in place.

Doing Business in Sudan

A business may be a sole trader, partnership, registered limited liability company (private or public), or branch in the Sudan of a foreign registered company. The significant advantage of forming a local company is limited liability status.

A company can have 100% foreign shareholding if it does not engage in commerce (import and export). To trade, it must have majority Sudanese shareholding.

Tax concessions under the Investment Encouragement Act are being phased out under IMF pressure.

Foreign Exchange Regulations

The draconian "Dealing in Foreign Exchange Control Act”, 1979 (introduced when Sudan had no reserves) has given way to a system free of restrictions on payments and transfers for current international transactions. However, intensified US sanctions since 2007 inhibit dollar denominated transactions at present.

Visitors can bring in any amount of foreign currency. Private financial transfer firms such as UAE Exchange can presently remit up to US$ 3,000 per transaction.

In practice, repatriation of foreign capital and profits (dividends) requires the approval of the Central Bank and tax clearance certificates.

Import Regulations

The importer should be registered with the Ministry of Foreign Trade.

Permission may be granted for temporary import of machinery and plant without customs duty against a letter of guarantee to the Customs Department. At the time of re-export, the difference in value of the goods at the time of import and subsequent re-export is calculated and custom tariff levied.

Sudan is founding member of the 20 member COMESA (Common Market for Eastern and Southern Africa) and all imports from and exports to member countries are exempt from customs duties.

Encouragement of Investment Act 1999 (amended in 2001, 2002, 2003, 2006, 2008)

The Act provides for specific additional benefits to encourage investment and classifies investment into strategic and non-strategic. Significant features include:  

Ø  1-3 year profit tax holiday

Ø  No discrimination for being of local, Arab or foreign origin in the public or private sector

Ø  Level playing field for analogous projects in terms of privileges and guarantees 

Ø  Permission to expatriate staff to remit their post-tax savings

Ø  Carry forward of losses incurred during the exemption period

Ø  Customs exemption for strategic projects

Ø  Land free (strategic projects) or at concessional rates (non-strategic projects)

Ø  Transfer of profits and the cost of finance in the currency of import

Ø  No need for a local partner

Investment guarantees

            In theory, there are several investment guarantees: 

Ø  Real estate (property) shall not be nationalized, expropriated or confiscated

Ø  Moneys shall not be seized, impounded, frozen or sequestered

Ø  Invested funds are remittable

Ø  Profits and import costs arising from the invested capital are remittable

Ø  Machineries, equipments, instruments, transport means etc can be re-exported 

A social insurance scheme requires contributions from both employees and employers. Expatriate staff, if they receive part or whole of their salaries in the country (irrespective of whether they enjoy tax exemption) are also subject to social insurance.

Banking

While North Sudan conforms to shariat banking laws, the South follows conventional banking norms.

Free Zones 

There are two free zones: Suakin on the Red Sea near Port Sudan and Garri near Khartoum. The 1994 Free Zones and Markets Act permits fill possession for foreign investors, exemption from income tax for non-nationals working in the free zones, tax exemption for companies, free capital and profits transfer, no restrictions on entry and residence visas. 

Preferred sectors for private investment  

a)     Meat processing

b)     Jam, juice and tomato-paste concentrates

c)      River and rail transport

d)     Food processing

e)     Grain silos

f)      Water bottling plants

g)     Refrigerated warehouses

h)     Gum Arabic cultivation

i)      Poultry farming

j)      Animal husbandry

k)     River transport

l)      Roads and bridges

m)    Sugar

n)     Meat and fish processing

o)     Wood industries

p)     Rice cultivation

q)     Forest development

r)      Apiculture

s)     Telecom services

t)      Hotels and resorts

u)     Airports

Taxation  

Sudan has direct and indirect taxation. The direct tax system comprises personal income tax, business profit tax, land tax, and capital gains tax. Indirect taxation includes value added tax, development tax and customs duties.

The Government of Sudan has double taxation avoidance agreements with various countries including India.

The January 2005 Comprehensive Peace Agreement offers South Sudan a self-determination referendum in January 2011 with unity and secession as the options.

For further information contact the Embassy of India in Khartoum. We respond to all email commercial queries within eight working hours.