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DJIBOUTI A beacon for the region A business-friendly government, strategic location, and world-class port, make Djibouti an excellent prospect for companies wishing to tap Asian and African markets.
he tiny desert nation of Djibouti, situated on the Horn of Africa, is easily the most politically stable country in the region and has its most liberal economy, thanks to the government of President Ismail Omar Guelleh and the Port of Djibouti, upon which the future of its 500,000 inhabitants largely rests. Indeed, the country largely exists because of the development of the port at the mouth of the Red Sea linking Europe and Asia, 111 years ago. “There is no Djibouti without the port. Everything revolves around it; it is the economy of the country, our portal to the world and provider of job opportunities,” says President of Djibouti Ports and Free Zones Authority (DPFZA) Abdourahman Boreh, a Djiboutian who realized the potential of the under-utilized installations whilst working in Dubai. In 2000, Boreh convinced one of the world’s biggest port operators, DP World, to embark on its first international venture, a 20-year operational concession, which has recently been increased to 30 years, and, since then, the port’s use and upgrades to its infrastructure have grown exponentially.
biggest container vessels for the next 30 or even 50 years. No-one else in the region will be able to match DP World’s investment.” Boreh’s plan is for Djibouti to act as a distribution hub for goods coming from the Far East in high-volume. “Importers can keep their goods in the free zone or under warranty and stored, while orders are placed in the U.S. or Europe and payment sent to Asia. Delivery from Djibouti will obviously be quicker as products will be closer to their market,” he says. Djibouti is also set to become a regional sales hub, beginning with second-hand vehicles via the Dahez project, an initiative which is seeing trade already passed from its previous hub in Dubai. “People from all over, especially from our neighboring countries, will be able to come here incurring far less expense on travel and hotels to buy trucks and cars,” says Boreh. “Customers will be able to find all makes here and we are also looking at the assembly of heavy trucks here too with companies like Iveco, which has shown interest. Again we are looking at a warranty system with big companies shipping here and stocking their
“The port is the economy of the country, our portal to the world, and a provider of job opportunities.” Abdourahman Boreh, President of Djibouti Ports and Free Zones Authority
At present, facilities include the original four-quay port, with the closest container terminal to Ethiopia and its 75 million inhabitants, and also one of Africa’s most efficient, Djibouti Free Zone, housing more than fifty multinational and national companies and managed by JAFZA, the world’s number one duty-free manager and the massive new development at nearby Doraleh. A new oil terminal has been operational since 2005 with a storage capacity of 370,000 cbm and two berths of 20 m water depth. A huge new container terminal was begun in 2007 in consort with Odebrecht and will already be operational by the beginning of 2009. The terminal will have a quay length of 1,050 m, 16 quays for general cargo, 18 m water depth, deeper than Africa’s currently largest port, Durban. The capacity will be 1.5 million TEUs (twenty-foot equivalent units) in the first phase and expanded to 2,000 m in a second phase with 3 million TEUs capacity. There will also be a new free zone, also to be managed by JAFZA. “When we open the first phase, our container capacity, already increased by 1,000%, will be filled in a year and we will begin on the second phase, which will make us bigger than any other port in Africa by far, including Durban,” says Boreh. “Unlike South Africa, we will also have the additional advantage of being on the route to Europe and America, apart from being able to attract the
goods whenever customers place orders and then delivering through the warranty. My intention is for Djibouti to excel in providing good services as we don’t have natural resources.” Besides the port’s natural and logistical advantages, the country also has the region’s most investor-friendly business climate by farCompanies are totally exempt from tax, duty taxes, patents and taxes on profit for 50 years and have the possibility of renewal. An investor can transfer capital freely, without having to pay customs duties. Free zone laws are the same as in Dubai. There is also minimal bureaucracy, as a company can be started within 24 hours of arrival in Djibouti, solely through the DPFZA. This one-stop shop registers businesses and can also organize visas or translation of documents. At Doraleh port, industrial, trading, general trading and services licences are available and a free zone establishment can be created with a single shareholder and U.S.$140,000 of capital, or a free zone company, with two to five shareholders and U.S.$10,000. Although Chinese investment in Djibouti to date has been limited to U.S.$92 million in desalination projects, Boreh is proud that he has pioneered Chinese products at Djibouti port and throughout DP World’s ports, with all cranes purchased from the Chinese ZMPC. Besides the obvious east-west transport links, 85% of Djibouti’s imports
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The inauguration ceremony of the Port of Doraleh
currently are transported to its large, landlocked southern neighbor, Ethiopia, only one and a half hours’ drive away. Djibouti has acted as this country’s port since the independence of coastal Eritrea, as well as importing and exporting for Somalia, Sudan and Eritrea. “Nowadays everybody is buying goods from China, which are more accessible costwise for Africans, and so the port has massive potential for moving Chinese goods into the whole of East Africa and for hosting showrooms for goods where our neighbors from unstable or landlocked countries can easily access them,” says Boreh. Despite Djibouti’s privileged position with regard to Ethiopian trade, the country is never taken for granted. “Of course, Ethiopia’s development is taken into consideration here in all that is built, but we also want to give them the best services and gain their goodwill, so that, if other alternatives do exist one day they will still choose to use Djibouti,” Boreh comments. Trade will receive an additional boost from the rehabilitation of the Djibouti-Ethiopia railway which is underway, while Boreh is also ready to construct a pipeline to transport fuel southwards, which would save Ethiopia vast sums of money in transportation costs. “What we have done so far in Djibouti is just the tip of the iceberg. DP World brought the necessary expertise, but we have only used perhaps 12% of our potential to date. The state of Djibouti is trying to use the remaining 88%, taking advantage of our strategic position as a gateway to Africa, the Middle East and Europe and at the mouth of the Red Sea,” Boreh concludes.
A haven for tourism The Djibouti government is also encouraging the growth of other service industries, the most promising of which is tourism. While it would like to develop the sector to become the new Dubai, sustainability is important; new coastal developments must either avoid or replant mangrove systems, for example. The safe and politically-stable country has a wealth of natural attractions. An unspoilt divers’ paradise, Djibouti is one of the few places where tourists can swim with the planet’s largest fish, the harmless whale shark, which feeds off the coast. It is filled with the kind of virgin volcanic desert vistas that formed the setting for the 1968 film ‘Planet of the Apes.’ It is also home to the eerie salt lake, Lake Assal. To boost tourist numbers by 50% in the next three years from around 30,000 currently, of whom two-thirds are from France, the government has embarked on an ‘open skies’ policy and offers additional investment incentives. Tourist visas will be available on arrival at the airport, which itself will be increased in capacity, and tax exemptions are available for 25 years to hoteliers as well as discounted electricity. Paving the way for further development in the sector is the recentlyopened luxury Djibouti Palace Kempinski hotel, financed by Dubai Al Nakheel, the wealthy Emirate’s premier development company and part of Dubai World. “We have turned the impossible into a luxurious
Djibouti Palace Kempinski, where the impossible becomes a luxurious reality
reality as this hotel was designed, built and opened in nine months,” says general manager Bugra Berberoglu. Near to the airport, port and business district, the hotel is located on its own private beachfront between the Red Sea and the Indian Ocean, in a secluded setting of palms and bourgainvillea. It boasts every luxury expected of an international, 5-star hotel. Besides 177 luxuriously equipped and spacious rooms and suites with Wi-Fi connection, the hotel hosts North Africa’s largest conference center and a comprehensive business center. Leisure facilities include a private beach, pool, fully-equipped fitness center, spa, water sports, entertainments program, and a wealth of dining and bar options. A marina is the latest addition to this palatial hotel, and Chinese visitors —which account for 15% of the total—are catered for with three Mandarin-speaking staff. “Our efforts have already been recognized, as we have been nominated in the Best 5-Star New Hotel of the Year 2007 category of the Middle East North Africa Travel Awards, and are the first hotel in Africa to have received the excellence hospitality award from the globally renowned 7 Stars & Stripes, which awards hotels above the 5-star level,” says Berberoglu. The Djibouti Palace Kempinski is also opening a training center for the country’s hotel industry to boost standards and employment in the sector, and is developing a nearby paradise island in a sustainable way. “We have two objectives,” concludes Berberoglu: “To be the best hotel in Africa, and to put Djibouti on the tourist map, albeit an eco-friendly, selective one.” The first objective has arguably already been achieved; the second, with effort and investment, should happen very soon.
Djibouti at a glance Location: Horn of Africa, at the mouth of the Red Sea and the Indian Ocean Total area: 23,200 km² Population: 500,000 approx. Official Languages: Arabic and French GDP: U.S.$1.878 billion GDP per head: U.S.$2,070 Inflation Rate: 3% Currency: Djibouti Franc pegged to U.S. dollar Business Focus
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For further information contact DPFZA: DJIBOUTI PORTS & FREE ZONES AUTHORITY P.O. BOX 197, Djibouti, Djibouti.
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Djibouti Ports and Free Zones Authority
As the one-stop shop for administrative requirements for companies and investors of the free zone, it offers a clear legal and institutional framework, representing a solid guarantee for investors in the free zones. The one-stop shop set up by the PFZA ensures that investors obtain on the one hand, approval for the creation and the registration of their company in the free zone, and on the other hand, a wide range of services such as: • Issuance of visas and residency permits • Issuance of work permits and residency cards • Any other service necessary for companies, all of them under the same roof within the free zone.
Djibouti Free Zone
In partnership with JAFZA International, Dubai, Djibouti Free Zone has been set up to position Djibouti as the regional logistics & marketing hub for import, warehousing, processing and re-export of goods to and from the neighbouring countries. To achieve that objective, Djibouti Free Zone offers the right business environment for investment and trade: • A partnership with JAFZA International offering expert free zone management techniques. • Readily available warehousing facilities, office units and land plots for faster business start up. • A one-stop shop approach for company formation and licensing, customs formalities and other company services. • Fiscal and non-fiscal incentives to enhance the cost competitiveness of the free zone companies.
Port of Djibouti and Port of Doraleh With the advantage of the port being freely open to the outside world, the goal is to turn the complex of Doraleh, Djibouti autonomous port and the dry port into a regional centre for international trade and an important hub for traffic from the Red Sea all the way to the Arabian peninsula through the Horn of Africa.
Port of Doraleh The first phase of the port of Doreleh will consist of a 2 million EVP container terminal and will be operational at the end of 2008. • Super Post Panama • Length of the quay: 1050m • Water depth: 20m
DJIBOUTI FREE ZONE BP 198, Djibouti Tel: +253 359 049 Fax: +253 359 039 firstname.lastname@example.org www.djiboutifz.com
PORT OF DJIBOUTI P.O. Box. 2107, Djibouti Tel: +251 153 37 44 Fax: +251 154 659 Addis Ababa Port office Tel: +253 35 7372 Fax: +253 35 5476 email@example.com
HORIZON DJIBOUTI TERMINALS Doraleh B.P. No.: 2630 Djibouti Tel: +253 32 30 00 Fax: +253 36 11 00
DP WORLD Tel: +971 4 881 1110 Fax: +971 4 881 1331 www.dpworld.com
JAFZA INTERNATIONAL BP 17000, Dubai Tel: +971 4881 9063 / 8818 758 Fax: +971 4881 6714 firstname.lastname@example.org www.jafza-intl.com
DUBAI CUSTOMS www.dci-dubai.ae Fax +971 4 34 50 164
Horizon Djibouti Terminals • Storage of liquid products and gas. • Oil products, petrochemicals, chemicals, vegetable oils, molasses. • Local and Ethiopian markets, trade with Eastern Africa, the Red Sea, the Middle East • 31 tanks, 370 000 m3 capacity • Two quays: 15m and 22m depth • Loading and unloading of trucks (220/day)
DJIBOUTI CONTAINER SERVICES Tel +253 35 56 94 Fax +253 35 09 56
Djibouti Automobiles & Heavy Equipment Zone (DAHEZ) By 2009, Djibouti will become THE regional hub for all varieties of vehicle and heavy equipment with showrooms, warehouses and assembly facilities.
AIRPORT PO Box 204, Djibouti Tel +253 34 16 47 Fax +253 34 07 23 email@example.com
Tel: +253 35 90 70 Fax: +253 35 90 59 Email: firstname.lastname@example.org
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Djibouti Report June 2008