Country risk reference rating: level 8 (8/9)
Country Risk Outlook: Negative
Economic and trade risks
Chad is rich in natural resources. In recent years, the income from petroleum resource extraction has provided opportunities for Chad to accelerate its transformation from an agricultural and pastoral country to an industrial country. However, the country’s economy is obviously dependent on oil, and its balance of payments and financial conditions are subject to price fluctuations at any time. Although the pressure on external debt repayment is not great, the solvency and willingness to pay need to be improved. The bilateral economic and trade cooperation between China and Chad is highly complementary and has great potential.
Bilateral economy and trade
Since the establishment of diplomatic relations between China and Chad, with the joint efforts of the governments and enterprises of the two countries, bilateral economic and trade relations have continued to develop, and the areas of cooperation have continued to expand, including trade, assistance, contracted projects, labor export, joint venture cooperation, resource cooperation and other economic and trade Business is in full swing.
At present, Chad has become one of the important countries for China’s economic and trade cooperation in Africa, laying a solid foundation for further expanding bilateral economic and trade cooperation. The main commodities China imports from Chad are oil and cotton, and the main commodities exported to Chad include mechanical and electrical products, building materials, textile and clothing products, and tea. Chad regards China as a reliable partner. However, due to the differences in language, culture, and business philosophy between the two countries, it has hindered the development of economic and trade cooperation between the two countries to a certain extent.
The diplomacy between China and Chad is highly complementary in trade, and the development of economic and trade relations has certain potential. There is the possibility of further cooperation between the two parties in the field of oil exploration and development. In addition, infrastructure construction is the key to improving Chad’s investment environment, and cooperation between the two parties in infrastructure project contracting has good prospects.
Business environment
The Chadian government attaches great importance to economic development, encourages private investment and the development of small and medium-sized enterprises, and encourages foreign investment. To this end, the Chadian government initiated the establishment of the Chadian Chamber of Commerce, Industry, Agriculture, Mines and Handicrafts. The function of this agency is to maintain contact with the domestic and foreign business community and provide decision-making and business information to all domestic and foreign operators.
The Chadian government established the National Investment and Export Promotion Agency, which is affiliated with the Ministry of Trade and Industry. Its main functions are to attract investors to “come in”, promote local enterprises to “go out”, and expand the export of goods and services. In order to encourage foreign investment, the Chadian government provides a series of tax preferential policies for investing companies, including exemption from income tax, minimum stamp duty, business license fees, house rental tax and construction property tax within the first five years of operation.
Throughout the entire agreement stage, the company can enjoy the following tax exemptions: withholding income tax on income from variable capital, all registration fees, apprenticeship taxes, etc. due to the company’s increased capital investment, physical investment, mergers, and purchase of real estate. The business registration time has been shortened from more than 2 months to 72 hours, and the registration fee has also been reduced to 110,000 Central African CFA francs (approximately US$220).
Legal risks
Chad’s legal system is based on French civil law. At the same time, as a member of the Organization for the Harmonization of Commercial Law in Africa (OHADA), Chad’s laws and regulations bear the characteristics of those of other countries in West and Central Africa. In order to promote investment, the Chadian government has formulated the Investment Law, hoping to create a favorable business environment for domestic and foreign investors to invest in Chad. After that, the Chadian government successively promulgated special laws in mining, tourism, forestry, etc., stipulating tax and financial conditions for investment and development in specific areas. The Investment Law stipulates that foreign-invested companies cannot invest in national security and strategic industries; investment in various fields in Chad is encouraged, especially in infrastructure, electricity, transportation, education, energy development, public health and other fields. Investors must assume the responsibility of protecting health and public health and maintaining social and public economic order. At the same time, Chad attaches great importance to environmental protection and has promulgated many laws such as the Environmental Protection Law. However, currently, Chad does not have a law similar to the Foreign Trade Law, and there are only some departmental regulations for the management of trade.
(Issuing agency: China Export and Credit Insurance Corporation)
