I.                   introduction

I.1   Geographical overview, working language, currency

1.                   Gabon has an area of 267,667 km², a little over two-thirds of which is forested.  The population is estimated at around 1,520,000.  It is bordered to the north by Cameroon and Equatorial Guinea, to the east and south by the Republic of Congo and to the west by the Atlantic Ocean. The country is crossed East-West by the equator and is 85 per cent forested.  Gabon is a former French colony and has been independent since 17 August 1960.  The working language is French.  The currency of transaction in Gabon is the CFA franc (CFAF), which is pegged to the euro.

I.2   Evolution of Gross Domestic Product (GDP)

2.                   Despite the fact that real growth in 2006 was positive at 1.2 per cent, it was weaker than in 2005.  This was due to the collapse of the oil sector (-10.4 per cent) as a result of the ageing of fields which have reached maturity and technical problems encountered by certain operators (surface accidents related to general upkeep and maintenance of wells).  On the other hand, the non-oil sector remains lively and posted growth of 4.5 per cent.

3.                   It must be said that the contribution of the non-oil sector to wealth creation is remarkable, making up for the poor performance in the oil sector where production has been in steady decline, from 18 million tonnes in 1995 to 12.5 million tonnes in 2006.

4.                   Buoyed by this finding, the Government's current economic reforms seek to prepare for diversification of the economy.

5.                   To this end, sectoral strategies have been drawn up.  They are set out in the Growth and Poverty Reduction Strategy Paper (GPRSP) adopted by the Government in 2005.

6.                   The sectors identified as engines of growth are:  forestry, mining and hydrocarbons, tourism, fisheries and fish-farming, agriculture and livestock.  The Government's objective is to increase their contribution to GDP considerably between now and 2015.  It is worth mentioning that these sectors would not only generate growth but are also important pillars of job creation to combat poverty.

I.3   Evolution of public finances

7.                   Efforts to control and consolidate public finances, while preserving the benefits of reforms (Gabon-IMF Confirmation Agreement 2004-2005) are ongoing.  This led the Government to embark on an austerity policy covered by a triennial programme with the IMF, which took the form of an Agreement signed on 7 May 2007.  As a result, several reforms were initiated to improve the management of public finances and enhance the quality and effectiveness of public spending.

8.                   These reforms cover the preparation, presentation, implementation and monitoring of the budget, and administration of oil revenues.

9.                   Budget preparation will be improved thanks to the work currently in progress.  The Government is working on the implementation of a triennial medium-term expenditure framework which will be adopted in 2007.  This budgetary programming, which is based on sectoral priorities, will allow more precise evaluation of recurrent costs related to capital and current account expenditure and subsidies and strengthen the process used to set public spending priorities.  Furthermore, the transparency and presentation of the budget will be improved in order to provide more information on previous budget performance, including tax expenditure, in the annual budget documentation submitted to Parliament.  In addition, work is in progress to establish a functional classification of expenditure which should be available by the end of 2007.

10.               Decisive steps have been taken to improve the monitoring and effectiveness of budget implementation.  In 2007, the Government managed to deliver an operational budget at the end of January, a major step forward on the road to more efficient implementation during the financial year.  In future, it is planned to reform the monitoring systems to strengthen treasury management and to publish reliable budget performance reports in a timely fashion.  As regards payments, measures were taken at the end of 2006 to reduce from 120 to 90 days the time taken for Treasury settlement payments, the objective being further reduction to 60 days by the end of 2007 and to 30 days in 2008.

11.               The quality and reliability of economic statistics will be enhanced in order to improve the monitoring and analysis of economic policy.  To that end, the Government has launched a National Statistical Development Strategy (SNDS) which will conclude in 2008.  This is a medium-term reference framework which redefines the institutional environment (Statistics Law, National Statistical Council, statutes of the Directorate-General of Statistics and Economic Studies (DGSEE)) and sets out a work programme for the same time horizon.

12.               In the 2008 Finance Law, the Government will establish a budget appropriation based on a detailed formulation of needs.  By the end of 2007, it will publish a new price index, the CEMAC Harmonized Consumer Price Index (HCPI).  Subsequently, the national accounts will be remodelled on the basis of the new United Nations system of national accounts (SCN93).  The first useable results are expected for 2009-2010.

13.               The decline in oil production and compliance with the State's undertakings to international donors oblige the Government to redouble its efforts in the areas of revenue optimization, control of public spending, debt relief and structural reform.

I.3.1       Budgetary revenues

14.               As regards oil revenues, Gabon decided in 2004 to participate in the Extractive Industries Transparency Initiative (EITI).  The aim was to increase transparency and accountability in the oil sector.  Since then, the authorities have published two reports, the latest of which, published in early April 2007, is devoted to the flow of oil revenues in 2005.  To strengthen the State's capacity to monitor oil revenues, the Government appointed a firm of international repute,  following a bidding process, to develop a reliable monthly revenue accounting model.  This model will enable projections and checks to be made on the basis of contractual parameters, broken down by field, taking into account output, prices and costs.  It should also make it easier to include in the State budget certain revenue flows and the related expenses which are currently not included, in particular provisions for diversified investment  and provisions for hydrocarbon investment.  The Government expects this mechanism to be applicable from the beginning of 2008.

15.               In the context of enhancing transparency in the management of oil revenues, the EITI Report 2004 highlighted the need to strengthen the administration of oil revenues so as to ensure that all oil revenues due under current legislation and existing contracts are collected.  To this end, the Government set up the Oil Revenues Monitoring Commission (COSUREP) on 10 July 2006, comprising the administrations responsible for finance and hydrocarbons.  The chief missions of this Commission are:

-                      To identify all State oil revenues;

-                      to satisfy itself that all revenues identified are actually received by the State;

-                      to assist the authorities in preparing oil revenue budgets;

-                      to identify measures to be taken to facilitate sharing of information between the administrations involved in the management of oil resources;  and,

-                      to verify the consistency of oil data.

16.               Finally, COSUREP will also put in place a mechanism for regular monitoring of transactions relating to the State's  participation as shareholder in Exploration and Production Sharing Contracts (CEPP).

17.               The basket of non-oil revenues will be expanded thanks to a national strategy of mobilization of tax resources by:

-                      Seeking to formalize revenue systems in tax collecting ministries;

-                      strengthening the Directorate of Large Enterprises;

-                      installing the ASTER software package for execution and accounting of budgetary and financial operations;  and

-                      developing a single statistical and tax identifier.

18.               The Directorate of Large Enterprises (DGE), which was formed in September 2004, is now operational.  It has been entrusted with the task of collecting taxes from companies whose turnover is greater than CFAF 1.5 billion before tax.  The new General Tax Code, which will take account of all changes effected in recent years, is currently being finalized.  It will be submitted to Parliament by the end of September 2007.  In this connection, discussions have begun concerning the various exemptions in force which reduce the taxable base for value added tax (VAT), personal income tax and customs duties.  The aim is to undertake a thorough reform of exemptions and tax expenditure in 2008 based on an inventory of all tax expenditure prepared by the end of 2007.  The implementation of returns to the State of the first wave of forestry permits where the holders are in arrears with tax will have a positive impact on the collection of taxes in the sector.

I.3.2      Budgetary expenses

19.               With respect to expenditure controls, the Government's policy is to control certain items of fixed expenditure under the headings "permanent balance", "public services and communications", "scholarships", "pensions" and "security and sovereignty".

I.3.3      Debt

20.               Management of public debt comes under enforcement of the new and very strict government policy in this area, but also takes account of undertakings to the IMF.

21.               Cooperation with the IMF allowed Gabon to reschedule €717 million (CFAF 470 billion) of debt in the Paris Club in 2004 and to obtain a loan of US$112 million from the African Development Bank.

22.               This rescheduling allowed a temporary relaxation of external constraints.  For the period from 1 May 2004 to 30 June 2005, debt servicing fell from CFAF 625 billion to CFAF 177 billion.

23.               Domestically, in order to revive the economy and restore the State's credibility, discussions with private sector partners led to the establishment of an informal intermediation body known as the Libreville Club.  The Club is a group of economic operators who are owed more than CFAF 50 million by the State.  In January 2005, this body was replaced by the Libreville Club 2 followed by the Libreville Club 3.  The State is currently working to establish a Libreville Club 4.

24.               Based on this common platform, the State now makes regular and transparent payments on all its debts to local businesses.

25.               In 2005, the State repaid a total of CFAF 386.7 billion to all its creditors, representing 28.4 per cent of its own revenues and 8.5 per cent of GDP.

26.               The pattern of debt reduction observed in 2005 is continuing.  The rate of indebtedness in 2006 was 44.1 per cent of GDP while debt service  amounted to CFAF 629.6 billion, almost double the level for 2005.

27.               In order to achieve debt viability in the long term, a new management policy has been put in place with the following targets:

-                      The choice of projects to be implemented with external financing must fall within the Government's development policy.  Commitments under this programme must be subject to desk audit (service performed) in order to certify the effectiveness of the expenditure;

-                      sources of financing must come as a matter of priority from official development aid (ODA) and to a lesser extent from loans from multilateral institutions specializing in development finance;

-                      seeking concessional terms becomes an absolute necessity.  Borrowing at market rates will in future be prohibited.  Likewise, repayment periods must exceed fifteen years.

28.               Efforts to minimize costs will now be the basis of all Gabon's borrowing negotiations.

I.4 Investment

I.4.1       Marked increase in investment financed from external sources

29.               After the expiry of the confirmation agreement 2004-2005 and the normalization of relations with its creditors, Gabon contracted new foreign loans, mostly on commercial terms, to finance various projects (chiefly roads, hospitals and defence).  The total debt contracted in 2005-2006 was CFAF 275 billion, or some 5.5 per cent of GDP for 2006.  Corresponding annual expenditure was limited to approximately 1 per cent of GDP.  Public investment in the period 2001-2005 was fairly modest.

30.               On the other hand, capital expenditure estimates for 2007 (draft Finance Law, rectifications 2007) amount to some CFAF 241.6 billion, an increase of 20.4 per cent compared with the initial Finance Law.  This increase is explained by the Government's desire to intensify development financing by implementing the priority projects identified in the Growth and Poverty Reduction Strategy Paper (GPRSP) in the short and medium term.  The increase in investment expenditure in 2007 can then be explained by the integration into the rectified budget of all the projects financed externally by grants or loans.

I.4.2       Measures to enhance the quality of public investment

31.               Firstly, the Government has adopted measures to enhance the efficiency of public procurement procedures while at the same time strengthening implementation controls.  Since 30 September 2006, the Government has published all invitations to tender for public contracts and the awards on the web site of the Directorate-General of Public Procurement (DGMP) and in the national press.  To facilitate wider dissemination of this information in the national press, a public procurement journal will be published by the end of 2007.

32.               The Government's objective is to ensure that in future all contracts exceeding CFAF 30 million are processed by the DGMP.  In this way it hopes eventually to achieve a significant reduction in the proportion of public contracts awarded by private treaty, bringing it down to less than 50 per cent of the total value of contracts exceeding CFAF 30 million by the end of 2007 and 30 per cent by the end of 2008.

I.5 Structural reforms

33.               Gabon is pursuing its structural reform policy with the support of international financial institutions, notably the IMF.  Apart from seeking to rationalize public finances by optimizing revenues and controlling expenditure, since 1997 these reforms have also covered privatization/restructuring of public enterprises.

34.               During the period 1997-2007, the Government privatized SEEG (water, electricity), OCTRA (railways), SOSUHO (sugar), Ciments du Gabon (cement), AGROGABON (oil-soap), HEVEGAB (hevea cultivation), SOGADEL (livestock), GABONTELECOM (telecommunications) and LIBERTIS (mobile telephony).

35.               During the same period, the Government wound up AIR GABON (air transport), the National Social Guarantee Fund (CNGS) and the postal service, GABON POSTE.

36.               The restructuring of SOGATRA (urban transport), CNI (river and maritime transport) and FODEX (SME-SMI) is in progress.

I.5.1       Good governance

37.               The Gabonese Government is determined to strengthen good governance.  To that end, considerable efforts are being expended to combat corruption and embezzlement of public funds, a dual scourge of development.  The role of the Court of Auditors, the highest authority for the control of public finances, has been strengthened.  In addition, the National Commission on the Prevention of Illicit Enrichment (CNLCEI), created in 2004, has already done considerable advocacy work.  However, much remains to be done, especially in the area of declarations of wealth.

38.               Internationally, Gabon participates in the African system of peer review in NEPAD.  Gabon will be evaluated in 2007 and a report will be published by the end of 2008.

39.               In 2005, the Government ratified the United Nations Convention against Corruption.

I.5.2       Enhancing transparency

40.               The second EITI report was published on 6 April 2007.  The scope of the second report was extended to all oil revenue flows, including the profit oil not included in the first report.  It was also extended to the mining sector.

41.               The Government has established a special EITI web site which contains all relevant information, including oil and mining taxation and model oil and mining contracts.  It has also launched a national initiative, Gabon – Open Government, the aim of which is to make all important documents of public interest available to the general public.  The site contains information on:

(i)         The rectified Finance Laws for 2004, 2005, and 2006;

(ii)        the reports of the Court of Auditors on budget performance in 2003 and 2004;

(iii)       the audit report on rotating regional independence celebrations (fêtes tournantes) and arrears on the Road Maintenance Fund (FER) prepared in 2005;  and

(iv)       the annual reports of the National Commission on the Prevention of Illicit Enrichment for 2005 and 2006.

42.               By the end of 2007, the Official Journal of Gabon will also be published on the Internet.

I.5.3       Poverty reduction

43.               At the beginning of 2007, the Government decided to reduce its oil price subsidy by 70 per cent.  The gain thus achieved was allocated to social actions such as:  free supply of water and electricity to the poorest, free schooling and textbooks, benefits to citizens with limited means and child mothers, an additional allocation for the purchase of antiretroviral drugs to combat AIDS, support for microcredit, and free health care in public hospitals.

44.               The recent creation of the National Health Insurance and Social Guarantee Fund will allow free medical cover for people with limited means.

45.               In addition, the Government has decided to carry out a new census of the poorest households throughout the country in order to reassess their benefits.  On the basis of the GPRSP, Gabon envisages increasing investment of a social character, especially in the fields of health, electrification and drinking water supplies in rural areas.

46.               As regards savings, the recent creation of the Gabon Housing Bank (BHG), with the introduction of a home savings scheme and, very soon, the transformation, by appropriate funding mechanisms, of the Gabon housing refinancing account (CRH-Gabon) into the Gabon mortgage refinancing account, will improve credit terms for access to ownership of subsidized housing.  It will also allow refinancing of purchase loans granted by approved banks and provide the necessary security or guarantee to these banks.

I.5.4      Administrative and legal reforms

47.               As far as the central administration is concerned, public service capacity building is based on administrative reform.  So far, three basic texts have been adopted and published, and now constitute the foundation of this reform.  They are:

-                      The Law on Civil Service General Regulations;

-                      the Law on the establishment, organization and management of the State public services;

-                      the Law establishing a Code of Ethics.

These laws should allow better management of the public services and also make them more efficient.

48.               To improve the legal system, the Government will take a number of measures, the most important of which are a capacity building programme for judges, updating of the law on the administration of justice, the Code of Criminal Procedure, the Judicial Code and the Civil Code, and the introduction of an arbitration and conciliation mechanism under the settlement procedures provided for by the Organization for the Harmonization of Business Law in Africa (OHADA).

I.6 Prices, employment, wages

I.6.1       Prices

49.               Gabon practises a policy of price liberalization.  However, the prices of certain products remain controlled, especially oil products, cement, soap, mineral water, prescription glasses, medical and surgical equipment, local beer, oil, sugar, oxygen and acetylene, pharmaceutical products, school textbooks, urban land transport, 200g loaves of bread and 125g pots of yoghurt.

50.               To combat inflation, prices are checked monthly for a sample of 100 common consumer products in 120 sales outlets in Libreville.  This allows the average quarterly, half-yearly and annual variation in the index to be determined.

51.               Since 2006, two commissions have been in place to protect the interests of consumers better:  the Consumer Affairs Commission and the Rental Housing Commission.

52.               In addition, in order to guarantee better regulation of the market by competition, the Directorate-General of Prices and Economic Surveys and the Directorate-General of Consumer Affairs were merged to form the Directorate-General of Competition and Consumer Affairs.

I.6.2       Employment

53.               The labour market in 2006 was characterized by a 1.4 per cent rise in the overall level of employment, mainly due to the increase in public sector employees, especially in the social sectors (education, health and social action), defence and security.

54.               The increase in the numbers employed in the modern private sector is low (0.8 per cent) despite job creation in certain branches of activity (especially building and public works and other industries).  This situation is due in part to the reduction in the workforce of semi-public enterprises and also to the lack of recruitment in other branches of the modern sector, despite the activity concerned being maintained.

I.6.3       Wages

55.               The overall payroll in the modern sector rose by 6.6 per cent in 2006.  This trend was due to an increase of 12 per cent in the wage bill of the State (after bargaining with the trade unions) and 3 per cent for private sector wages.  The increase in the State payroll was a result of not only the increased number of employees but also adjustments to the administrative status of staff, changes in category and revaluation of the guaranteed minimum inter-occupational wage (SMIG) (CFAF 44,000 to 80,000) and the value of the index point (CFAF 400 to 425).  The increase in wages in the private sector is probably linked to job creation in building and public works and other industries.

I.7   Balance of payments

56.               The overall balance of payments showed a significant increase in 2005.  This marked improvement is due to a net growth in current account transactions, despite a decline in capital movements.

57.               The trade surplus rose by 48.7 per cent, to CFAF 2,242.9 billion in 2005 compared with CFAF 1,508.7 billion in 2004.  The significant rise in exports (37.6 per cent) compared with imports (11.5 per cent) explains this growth.  The increase in the total value of exports was due chiefly to the 4.1 per cent rise in the price of a barrel of Gabonese oil and healthy sales of other export products, especially manganese and wood.

58.               Imports rose by 11.5 per cent to CFAF 716 billion compared with CFAF 642.2 billion in 2004, primarily on account of the increase in oil sector imports.

II.                TRADE POLICIES AND PRACTICES

II.1 General trade policy objectives

59.               Gabon continues to face structural constraints, given that it is a net importer of food products, exports are concentrated and little diversified, the cost of living is high and the economy is not very competitive.  To correct these constraints, the Government trade policy pursues the following general objectives:

-                      To satisfy domestic needs;

-                      to be competitive in foreign markets;

-                      to promote the services sector (financial, telecommunications, engineering, ...);

-                      to promote a policy of industrialization, tourism and crafts;

-                      to develop a strategy aimed at taking better advantage of the multilateral trading system.

II.2       Legal framework of trade policy

60.               Gabon's trade policy is based on domestic and external measures.

II.2.1     Domestic measures

61.               These measures relate to the legislation setting the conditions for the exercise of the activities of trader, manufacturer or craftsman, investment promotion, rationalization of public finances and withdrawal of the State from the productive sector.

II.2.2     Regulatory framework

62.               OHADA law, through its various Uniform Acts relating to commercial law, is the legal cornerstone of Gabon's trade policy.

63.               To achieve the objective of diversification of the economy, the formalities for forming a company have been simplified by the investment charter.  The exercise of activities (artisanal, industrial and commercial) is no longer subject to commercial accreditation, but rather to a single declaration to the "one-stop shop" of the Private Investment Promotion Agency (APIP).

II.2.3     External measures

64.               External measures primarily concern the tariff policy and the customs and tax regulations common to all CEMAC member countries, and secondarily the dense network of bilateral agreements which define the environment for investment and trade between Gabon and some of its economic and trading partners.

II.2.4    Bilateral trade agreements

65.               Between 2001 and 2006, Gabon concluded new trade agreements with Brazil, China, Egypt, Lebanon, Morocco, Sao Tome and Principe, and South Africa.  These agreements formalize and favour trade between Gabon and its various partners.

II.2.5     Tariff policy

II.2.5.1  Customs duties

66.               Customs duties are governed by the CEMAC Customs Code and Customs Tariff, the customs regulations of the Central African Customs and Economic Union (UDEAC), national legislation and agreements.

67.               The customs code, in particular articles 23 to 48 thereof, incorporates the provisions of the WTO Agreement on Customs Valuation.  The "transaction value" has been applied in Gabon since 12 July 2004.

68.               The tax and customs reform of the 1990s led to the adoption of the common external tariff of the Central African Economic and Monetary Community (CEMAC).  Currently, Gabon applies four rates of customs duties to imports:  5 per cent for staple commodities, 10 per cent for raw materials and equipment, 20 per cent for intermediate products and 30 per cent for wage goods.

69.               The only taxes levied on imports by Gabonese Customs are:

-                      Customs duties

-                      value added tax (VAT)

-                      excise duties

-                      temporary surcharge

-                      Community integration tax (TCI)

-                      Community integration contribution (CCI)

-                      OHADA levy.

70.               The temporary surcharge, which in 2001 concerned over twenty tariff lines, is now only applied to wheat flour.

71.               It should be noted that Gabon still applies distortions to about one hundred tariff lines.  These derogations from the CEMAC tariff are based on the desire to protect the embryonic industrial fabric and the need to help communities to obtain cheaper healthcare.

72.               As regards exports, undressed timber is subject to a duty of 17 per cent and manganese to a duty of 3.5 per cent.  Apart from these products, all other exports are free of customs duties and taxes.  Exemptions and suspensions of duties are granted under agreements or by government decision.  They are also granted in the context of investment incentives.  Sugar, refined palm oil and household soaps are subject to a de facto import ban.

II.2.6     Tax system

73.               The Gabonese tax system has traditionally been governed by the General Direct and Indirect Taxes Code, the Estates, Registry and Stamp Code,  and various other legislation.

74.               However, in 2002, the Directorate-General of Direct and Indirect Taxes merged with the Directorate-General of Estates to form the Directorate-General of Taxes, thus ending the dual management of taxes in Gabon.  The Government drew up a new General Tax Code which consolidates and modernizes the two former tax and estates codes.  This document, which will shortly be presented to Parliament, combines the provisions of the General Direct and Indirect Tax Code, the Registration Code, tax on income from securities and stamp duty.  It also takes account of international tax treaties signed by Gabon, CEMAC Community legislation and the OHADA Treaty.  Some articles relating to excessive parafiscal taxes imposed by local government and other authorities are also among the innovations in the future code.  To guarantee taxpayers' rights, the new General Tax Code provides for a Tax Procedures Manual.  The tax administration's objective is to modernize the system, optimize revenues and extend the taxable base of the non-oil sector.  It is against this background that the Directorate of Large Enterprises was created and is now in operation.

75.               The principal taxes, levies and charges in the Gabonese system are as follows:

II.2.6.1  Taxes on profits

II.2.6.1.1 Corporation tax

76.               This applies to legal persons in respect of activities carried on in Gabon.  The rate is 35 per cent, which is reduced to 20 per cent for companies specializing in the development of social housing.  In the event of a loss, a minimum tax of 1.1 per cent of the annual turnover is charged by the tax authority.

77.               Companies benefit from a mechanism of accelerated amortization as an incentive to investment.  An exemption from the minimum tax is applied for the first two years of activity.  For oil subcontractors, the tax is based on a flat rate calculation of corporation tax which corresponds to 5.25 per cent of annual turnover.

78.               French companies also enjoy favourable treatment under the Franco-Gabonese Tax Treaty which allows French companies which do not have a permanent place of business in Gabon to be taxed in France in respect of some of their revenues from Gabonese sources or to be subject to a 10 per cent withholding tax which gives rise to a tax credit in France.

II.2.6.1.2 Personal income tax

79.               This tax applies to total net income determined on the basis of the different categories of income of the tax household.  Natural persons resident in Gabon and natural persons resident abroad, but whose income arises in Gabon, are subject to this tax.

80.               The determination of the amount of personal income tax requires a prior calculation of the quotient Q, by dividing the aggregate net income by the number of parts.  The number of parts depends on the number of children included (Q= aggregate net income/number of parts).

81.               The amount of tax is read off a progressive scale containing nine tax bands from 0 to 50 per cent.  Tax households whose Q is less than CFAF 1.2 million are exempt and those with over CFAF 29,960 million are taxed at 50 per cent.

II.2.6.1.3 Oil revenues and taxation

82.               The new oil permits are placed under the system of Exploration and Production Sharing Contracts (CEPP) which have taken the place of establishment concessions.  Gabon has joined the Extractive Industries Transparency Initiative (EITI) and published its first report in 2004.  However, the question of oil revenues presents difficulties with respect to monitoring by the administration.  For this reason, in 2007, on the basis of competitive bids, Gabon contracted a firm of international repute to develop a reliable mechanism for managing oil revenues.

II.2.6.2  Taxes on goods and services

II.2.6.2.1 Value Added Tax

83.               Gabon has applied VAT since 1 April 1995 (Law 1/ 95 of 24 February 1995).  This ensures non-discriminatory tax treatment of companies in the production phase.  The standard rate is 18 per cent, but there is a reduced rate of 10 per cent for mass consumption goods and a zero rate for exports.  Any tax credits are reimbursed within a maximum of three (3) months for export, mining, oil or investment companies.  VAT has a strong potential yield, but is limited by a plethora of exemptions which affect various operations, and this creates too many economic distortions.

II.2.6.2.2 Excise duties

84.               These are charged on imports and sales of beverages and tobacco.  The chargeable base is the CIF value for imports and the sales price before tax for local production after a 30 per cent reduction.  The rates applied vary:  beer 20 per cent, wine 25 per cent, tobacco 30 per cent, perfumes and cosmetics, foie gras, caviar, salmon 25 per cent.

II.2.6.3 Forestry taxes

85.               Natural or legal persons who fell timber intended for local processing or export are subject to a felling tax and a surface area tax.

II.2.6.3.1 Felling tax

86.               The taxable base of the value of the timber is determined by its market value at the felling date applied to the felled volume.  The tax declaration must be filed not later than the 20th of the month following the month in which the timber was felled.

87.               The operation is broken down into four zones, each with its own tax rate:   zone A (9 per cent), zone B (7 per cent), zone C (5 per cent), zone D (3 per cent).  In the event of any irregularity, the rate applied is 9 per cent.

II.2.6.3.2 Surface area tax

88.               This is payable in advance not later than 31 March by the holder of the forestry operating permit.

89.               In the first half of 2007, one hundred and thirteen (113) taxpayers who were unable to pay their tax debts had their forestry permits returned to the public domain.

III.             SECTORAL TRADE POLICIES

III.1       Forestry

90.               Gabon has a potential of almost 50 million hectares of wood, the second largest in Africa after the Democratic Republic of the Congo (DRC), and produces some 2.6 million m³ per year, over 75 per cent of which is still exported in the form of undressed timber.  It boasts some 8,000 plant species, 400 of which have been identified and 60 exploited.  The exploited species are divided into two groups:  okoumé and ozigo in the first group, miscellaneous wood in the second group.  The sector currently contributes 4.5 per cent to GDP.  The Government would like to increase this rate to 10 per cent in 2020.  To exploit this wealth, the Government initiated a triennial programme in 2006, the main pillars of which are:

-                      To establish a more diversified and productive timber industry;

-                      to promote good governance by establishing transparent conditions for the exploitation of the forest resource;

-                      to achieve greater involvement of Gabonese nationals in forestry activities;  and

-                      to achieve a significant reduction in exports of undressed timber in favour of products resulting from local wood processing.

91.               Prior to the entry into force of Decree No. 000166/PR/MEFEPPN of 24 January 2007 regulating the marketing of undressed timber for export, the activities of the wood industry were dominated by undressed timber exports.  The aforementioned decree, which introduces a quota policy, seeks to raise the rate of local processing of wood from 45 per cent in 2006 to 75 per cent in 2012.  Until January 2006, the Gabon National Timber Company (SNBG) held the monopoly for marketing of okoumé and ozigo.  Since then, the business has been entirely liberalized and signature of the draft legislation on the subject, adopted by the Council of Ministers, is currently pending.

92.               It should be noted that, in cooperation with the World Bank, Gabon has adopted the practice of awarding forestry permits by tender.  By Decree No. 000666/PR of 9 August 2004, the President of the Republic temporarily suspended the issue of new forestry permits to facilitate implementation of this procedure.

93.               Under article 250 of the Forestry Code, the draft law on the establishment of a National Forestry Fund (FFN) to finance public service missions for the protection and sustainable management of Gabon's forest ecosystems and the industrialization of the wood industry is currently being debated in Parliament.

III.2       Fisheries

94.               This sector remains marginal in the national economy, contributing 1.5 per cent of GDP.  The Government's objective is to raise this rate to 4 per cent in 2012.  In order to achieve better supply of the domestic market, greater involvement of Gabonese nationals in the sector and increased exports of fisheries-based products, the Government has for some years set specific targets for the development of fisheries and fish-farming.

95.               For 2007, this policy centres on the following actions:

-                      Drafting of texts in application of the fisheries and fish-farming codes;

-                      the creation of basic infrastructure by the construction of two moles to protect fishing boats at Owendo and Port-Gentil;  three engineering workshops at Port-Gentil,  Owendo and Omboué; development of economic zones around the community fishing centres and the purchase of surveillance launches;  and

-                      building human capacity by updating the training programmes on fishing and fish-farming at the National Water Resources and Forestry School.

96.               It is to regulate these activities that Gabon has just adopted a new legal instrument (Law 15/2005 concerning the Fisheries and Fish-Farming Code of the Gabonese Republic).

97.               The low value of imports is such that the differential between imports and exports results in a trade surplus for the sector.

98.               Little is known about the status of stocks in the Gabonese exclusive economic zone (EEZ).  Gabon does not have the capacity for scientific research and possesses only isolated and fragmentary information on its resources, gathered during direct evaluation campaigns by foreign scientific vessels under bilateral cooperation schemes.

99.               Eighty per cent of small-scale fishermen are expatriates and they are highly migratory.

100.            The various campaigns to evaluate marine resources showed a decline in resources in the area north of Cape Lopez and under-exploitation in the area south of Cape Lopez.  The Government envisages redeploying fishery activities to the latter zone.

101.            With a view to training young Gabonese in fishing and fish-farming, a fishing and fish-farming training centre (CMPA) has been set up.

102.            Concerning accessory captures recorded during trawling, the Directorate-General of Fisheries and Fish-Farming (DGPA) is currently working with the NOA on a turtle excluder device (TED) on trawlers.

103.            In addition, the establishment of Community Centres for small-scale fishing, with the aid of Japanese cooperation, has made it possible to limit post-capture losses in small-scale fishing.

III.3      Agriculture and livestock

104.            The contribution of this sector to GDP is very modest, around 3 per cent.  Although Gabon is a net importer of food products, Gabonese agriculture has considerable potential.  To remedy this situation, in 2005 Gabon joined the FAO Special Programme for Food Security.

105.            The Government has also instituted a set of measures to revive development in this sector, consisting chiefly of:

-                      The new agropastoral and rural policy adopted by the Government which has the following objectives:

(i)         Ensuring the country's food security;

(ii)        helping to reduce rural poverty;

(iii)       increasing the sector's contribution to GDP;  and

(iv)       safeguarding the environment.

-                      The law applying to the agricultural sector currently under consideration in Parliament sets the priority objectives assigned to the agricultural sector and defines the major strategic guidelines and institutional, legal and economic mechanisms for its implementation.

-                      The Sectoral Investment Code recently submitted by the Government to Parliament for debate.  This Code is intended to encourage and promote national and foreign investment in the agropastoral  and rural sector in Gabon .

III.4      Oil and mining

III.4.1    Oil

106.            The lack of significant new discoveries in the Gabon oil basin after that of Rabi-Kounga in 1989, and the ageing of oil fields led to a decline in Gabonese national production in the 2000s.

107.            Since then, Gabon has made a few modest discoveries but these have not reversed the trend.  Oil production fell from 18.5 million tonnes in 2001 to 12.5 million tonnes in 2006, a drop of one third in five years.

108.            For the long term, on the other hand, Gabon has already begun new gas exploration which has resulted in the adoption of new survey perimeters both on land and at sea.

109.            The Gabonese State is also preparing between now and next year to issue an international invitation to tender for free blocks situated in the deep waters of its oil basin.  It also plans to develop a new Oil Code.

III.4.2    Mining

110.            Mining today is confined to manganese, following the exhaustion of the Mounana uranium deposit in 1999.  In 2005, production of manganese totalled 2,880,000 tonnes, with 550,000 tonnes of Manganese Bioxide.

111.            Manganese is exported primarily to the emerging economies, the countries of South-East Asia (China) and the industrialized countries. Today the market for manganese is healthy due to strong demand from the emerging countries.  Moreover, the Comilog company forecasts production of 3.3 million tonnes in 2007 and 3.5 million tonnes in 2008-2009.

112.            In the case of the Ndjolé manganese mine, work on the construction of infrastructure for exploiting this mineral began in 2006.  Production is expected to start in 2008.

113.            The Government will place special emphasis on the development of mining.  In this regard, it plans to start construction of the infrastructure necessary to begin development of the Belinga iron ore deposit.

114.            In addition, the feasibility studies on the niobium deposit at Mambounié have been completed.  The work of exploiting this deposit will start in 2008.

III.5       Transport

115.            The strategy for developing transport infrastructure encourages public-private partnership and broadly involves:

-                      Meeting demand for the transport of passengers and goods as efficiently, safely and cheaply as possible;

-                      providing support for economic activity and national and subregional integration;  and

-                      generating added value.

116.            The Government envisages promoting growth infrastructure because of its impact on the economy and employment.  The modernization and construction of new road infrastructure will lead to the development of many related activities.

117.            In the case of airport facilities, the Government has initiated studies for the construction of the new Libreville airport at MALIBE II.

118.            The Government also envisages the rehabilitation and modernization of ten provincial airports.  The policy of strengthening infrastructure will provide Gabon with roads, bridges and ports.

III.6      Tourism

119.            The Government has revised its overall vision of tourism in recent years by incorporating the "ecotourism" option.

120.            The forthcoming validation of the ecotourism master plan reconciles conservation and environmental protection aspects with economic considerations.

121.            The investment to be made in the development of ecotourism through the creation of 13 national parks gives the sector an opportunity – together with other branches such as business tourism, congress and conference tourism, cultural tourism and sports fishing – to play a key role in the diversification of the Gabonese economy.

122.            These various schemes offer new opportunities to Gabonese populations which will benefit from the direct and indirect spin-offs by positioning themselves to participate in the implementation of community tourism projects.

123.            In order to attract private investment, the Government has enacted an order on the regime applicable to investment in tourism.  The order provides tax incentives to economic promoters in the tourism sector.

III.7       Environment

124.            The Government is continuing its policy of reconciling the objectives of economic development and environmental conservation.  It therefore undertakes to continue the various strategies and planning exercises in the sector which have been in place for some years, in particular the national strategy on biodiversity which seeks:

(1)        To improve the contribution of activities for the protection of ecosystems and conservation of biodiversity with a view to increasing the participation of the environment sector in the national economy;

(2)        to incorporate environmental concerns in the management of natural resources;

(3)        to establish waste collection and processing and regular maintenance of sewage systems in urban areas.

125.            For persistent organic pollutants (POPs) regulated by the Stockholm Convention to which Gabon became a party in May 2007, a national implementation plan has already been validated.  The national biosecurity plan (control of GMOs) is currently going through the validation process.

126.            In agroforestry, Gabon, as a party to the Rotterdam Convention on the trade in hazardous chemicals and pesticides, now bans the import and use in the country of certain chemical products such as Aldrine and any containing pentachlorophenol.  Other chemical products used in the manufacture of chemical weapons are also banned under commitments entered into following ratification of the Chemical Weapons Convention.

127.            Finally, at national level, the Government is studying the introduction of an environment tax. Firstly, that it would institute a system of taxation of products which contribute to degradation of the environment.  Secondly, it would create a national environment fund to finance the national policy on protection and improvement of the environment.  At the same time, an amendment to Law No. 16/93 of 26 August 1993 on the protection and improvement of the environment (Environment Code) is under consideration.

III.8       Telecommunications

III.8.1    Telecommunications services

128.            The Gabonese telecommunications services market has undergone profound changes in 2007 with final steps being taken to privatize the incumbent operator GABONTELECOM and its mobile telephony subsidiary LIBERTIS, which has been sold to a private operator.  The State enterprise GABON POSTE was wound up to make way for a new State institution:  LA NOUVELLE POSTE.  In the mobile telephony sector, Gabon has renegotiated the licences awarded to the three private operators (CELTEL, LIBERTIS and MOOV).  The particular feature of the new licences is that they were awarded for a financial consideration, which was not the case when the market was opened a few years ago.

129.            Finally, the Government has set up two agencies to regulate the respective activities of the postal and telecommunications services.

III.9       Financial sector

III.9.1    Banking and insurance

130.            In the absence of a financial market, this sector is characterized by poor support by banks to enterprises, prohibitive interest rates and the difficulty for the banks of accepting guarantees and ensuring recovery of loans granted.  Despite the banks' excess liquidity, mobilization of long-term capital, paradoxically, is still a major obstacle to the financing of the economy.  While the insurance sector is fairly well developed, microfinance and housing finance are still embryonic.  The Gabonese Development Bank has just established a subsidiary, the Gabon Housing Bank (BHG), to finance social housing.  In 2007, Gabon began restructuring the Fund for Development and Expansion (FODEX) to support small and medium-sized enterprises and microcredit.

III.9.2    Microfinance

131.            In 2001, microfinance activity was extremely embryonic in Gabon, despite the existence of a few institutions created in the framework of cooperation between the International Fund for Agricultural Development (IFAD) and the Ministry of Agriculture.  The survey carried out during that year by the Banking Commission showed that 13 institutions entered the market, but most of them disappeared for lack of follow-up.  The loan portfolio stood at 47.2 million francs and the stock of deposits was 32.4 million for 2,449 customers.

132.            Since 2002, this activity has been governed by Regulation No. 01/02/CEMAC/UMAC/COBAC concerning conditions for the exercise and control of microfinance activity in the Central African Economic and Monetary Community.

133.            In 2005, there was an enormous increase in activity following the accreditation of three establishments, two of which were in the first tier (Caisse d'Épargne Crédit AGASS and Caisse FEMO d'Épargne et Crédit) and one in the second tier (Financière Africaine de Micro projets – FINAM).

134.            This development, which affects both gathering of resources and employment, was reflected in an increase in the number of customers to 8,670, outstanding loans of 332.5 million francs and a stock of deposits valued at 310.7 million francs.

135.            In 2006, the activity continued to grow in terms of both gathering of resources and employment.  The number of customers increased to 10,348, the loan portfolio stood at 571.6 million francs and the stock of deposits was valued at 591.5 million francs.

III.9.3    The Stock Exchange

136.            Gabon's financial marketplace hosts the Central African Stock Exchange.  Its establishment reflects the wish of the CEMAC zone authorities to complete the system for financing the economies of its member countries by establishing an instrument capable of mobilizing resources more effectively and providing businesses and governments with funding mechanisms better suited to certain investment needs.

137.            A market trading place already exists in the form of the Central African Stock Exchange (BVMAC), which is expected to commence trading in securities (primary market) in 2007, while the secondary market should be launched in 2008.  Thus, in 2007, the CEMAC adopted the regulations on the tax regime of the stock exchange.  These regulations grant temporary tax benefits (three years) to companies accepted for listing and also in respect of the products and financial instruments on the Libreville Stock Exchange.

138.            Stock exchange activity will be regulated by a Central African Financial Market Supervisory Commission (COSUMAF) whose role is to protect savings invested in financial products, monitor investor information, ensure that the financial market operates efficiently and participate in the development of financial regulations.

139.            For three years, this institution has been organizing information and training seminars in CEMAC zone countries to prepare its economic operators.  In 2006, it approved two stock broking firms (SFA Gabon and BGFI Bourse) which will act as intermediaries when the market starts operations.

IV.              GABON AND THE MULTILATERAL TRADING SYSTEM

140.            As a founder member of the WTO, Gabon is a participant in the current WTO negotiations under the DOHA Development Agenda.

141.            In this context, Gabon places special emphasis on the negotiations relating to the gradual liberalization of trade in services.

142.            Thus, an improvement to the schedule of specific commitments was made in 2004.  Gabon added the telecommunications subsector to its schedule, an unprecedented step in the Central African subregion.

143.            In addition, Gabon's unilateral action in the negotiations on trade in services is complemented by support to friendly countries, especially in the context of the African Group and the ACP countries,  as well as support to the African countries involved in the sectoral initiative on cotton.

IV.1      Implementation of the Agreements

IV.1.1    Tariff bindings

144.            It was at the end of the multilateral trade negotiations of the Uruguay Round that Gabon bound all its tariff lines, both for agricultural products (60 per cent) and non-agricultural products (15 per cent).

145.            Although Gabon has had no difficulty in respecting its bound rate commitment for agricultural products, especially those in categories 1 and 2, it is experiencing serious difficulties in doing so for non-agricultural products, since this commitment is at variance with CEMAC rates of duty.

146.            The rates applied by Gabon on some 40 per cent of tariff lines exceed those bound in Schedule XLVII.  Unfortunately, there is nothing Gabon can do about this as it does not have its own national tariff.  The CEMAC alone has the power to modify the applicable rates.

147.            Faced with this situation, Gabon must engage in new negotiations with its CEMAC partners on the Common External Tariff (CET) with a view to reducing rates.  In the past, it has been hampered in taking this step by the other States' frequently expressed fear of a fall in customs revenues, their principal source of budget finance.

148.            The negotiations conducted by the CEMAC in the framework of the EPAs may provide a definitive solution to the problem through the binding of all country tariffs at the subregional level.

IV.2      Intellectual property

149.            Gabon, along with the other member States of the African Intellectual Property Organization (AIPO), signed the Agreement Establishing the WTO on 15 April 1994 in Marrakesh and with it the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).  The TRIPS Agreement establishes rules such as the new minimum standards concerning, inter alia, the availability, scope and effective enforcement of rights.

150.            As member States are required to incorporate these rules in their legal systems, Gabon, together with its AIPO partners, immediately embarked upon a major review of the Bangui Agreement to align it with the TRIPS Agreement.  The process was concluded by the plenipotentiaries of the member States at Bangui on 24 February 1999.  The revised Agreement has been in force since 28 February 2002 and regulates industrial property in each of the 16 member States.  It should be noted that, for each of its member States, the AIPO serves as the national industrial property office and provides a common system of administrative procedures for registering the various ownership rights.

151.            To monitor implementation of the TRIPS Agreement, the Government has not only set up the Industrial Property Centre of Gabon (CEPIG) but has also converted the Anti-Counterfeiting Administrative Unit formed in 1999 into the Anti-Counterfeiting and Unfair Competition Bureau within the CEPIG.  Another Bureau has also been formed to combat piracy within the National Agency for Promotion of the Arts and Culture (ANPAC).

152.            It should be noted that the CEPIG, which is governed by Law No. 014/2002 of 28 January 2003, is responsible, among other things, for:

-                      Combating breaches of industrial property law, especially counterfeiting and unfair competition;

-                      ensuring and promoting the protection and use of industrial property throughout the national territory;

-                      organizing, coordinating and directing awareness raising and information campaigns on industrial property throughout the national territory;

-                      receiving all national requests for industrial property rights prior to their transmission to the AIPO.

153.            The task of administering and protecting copyright and related rights was entrusted to the National Agency for Promotion of the Arts and Culture (ANPAC) which was formed in 1982.  Its activities were suspended in 1997 and then resumed in 2001.  Law No. 1/87 gave the ANPAC the authority to administer copyright, although it has never used that authority.  Since 2001, however, its main task has been to establish the mechanisms necessary for effective management of copyright and related rights in Gabon.  To date, the Government has adopted two (2) texts in application of Law No. 1/87:  one establishes the tariffs and the other the general regulations governing the tripartite relations between author, user and collective management society.

154.            It should also be noted, however, that the ANPAC will not have the task of administering copyright.  Instead, the Government has opted to establish a Gabonese Copyright Bureau (BUGADA), a body better suited for the purpose.  Draft legislation on its establishment is currently under consideration.

IV.3    Agreement on Sanitary and Phytosanitary Measures (SPS) and Technical Barriers to Trade (TBT)

155.            Concerning sanitary and phytosanitary measures, Gabon received support from the FAO for the establishment and equipment of two laboratories (plant protection and food control) which require additional support to make them operational.

156.            On 30 November 2004, Gabon established a National Committee for the Registration of Pesticides, pursuant to Order No. 2149/PM/MAEDRDHM.  Draft legislation on plant protection, taking into account the new international provisions, is in course of preparation.

157.            The Ministry of Agriculture controls all imported food products, including fish products.  The Ministry also regulates exports of fish products (mainly locally processed products) to the subregion.  The sanitary status of fish products still needs to be improved, especially those which are locally produced.

158.            To enable domestic products to be competitive and to access the international market, a Centre for Standardization and Technology Transfer (CNTT) was established by Order No. 003/PR/2005 of 11 August 2005.  It is now operational.

159.            The Government set up a Quality Control Laboratory in the 1990s to control the quality of imported or locally produced food products and commodities and to prevent epizootic crises, which have been of frequent occurrence in recent years, both in Europe and in Asia (mad cow disease, avian influenza, …).  Its accreditation and certification to European Standard NF EN 17025 is currently in progress.

160.            Upon the appearance of avian influenza in the subregion, Gabon took a number of measures, namely:

-                      Establishment of an interministerial commission and, attached to it, a National Technical Commission, by Order No. 000013/PM of 11 May 2006;

-                      suspension of imports of poultry, eggs, day-old chicks, poultry products and pet birds from countries infected with avian influenza (Order No. 000174/MAEDR/SG/DG).

161.            Gabon reiterates its request for FAO and WTO assistance to enhance its capacity to implement the WTO Agreements.

 

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