Algeria: Industry Minister Threatens to Close Car Assembly Plants

Algeria’s Industry Minister Bedda Mahjoub expressed frustration at his country’s policy of attracting car assembly plants and threatened to close these factories due to their low  integration rates.

“We should put an end to the production model as most manufacturers have not improved their integration rates, he told the press after speaking to MPs.

While venting his frustration at a failed industrial policy set by his predecessors, the Minister failed to consider the deep causes of the low integration rates in Algeria, which lie deep in a legal framework interactive to foreign direct investments

The perception of Algeria’s unfriendliness towards foreign investors is worsened by recent investment reforms that left unchanged a rule requiring 51% of national ownership of any projects.

The 51/49 rule provides that at least 51% of the shares of Algeria-based companies must be owned by Algerian nationals residing in Algeria or by companies which are wholly-owned by Algerian resident shareholders.

The archaic banking system has also been pushing investors away. Algeria’s banks remain state-dominated and highly corrupt thus thwarting foreign direct investments.