Doing Business
According to the US State Department, Algeria is the epitome of a high-risk, high-reward economy. While the GoA is enthusiastic toward FDI, a difficult business climate, an inconsistent regulatory environment, and a government that seems torn between protecting the status quo and liberalizing the economy hamper foreign investment. There are business opportunities in nearly every sector, including but not limited to energy, power, water, health care, telecommunications, transportation, recycling, and agribusiness. The drop in oil prices since 2014 has highlighted Algeria’s over-dependence on hydrocarbons and increased calls to open and diversify the economy.
The U.S. government’s pro-investment policies make it a leader in the reception of international investment. As a signatory to many Free Trade Agreements, the U.S. is a strong believer in the idea that the free movement of capital stimulates economic growth. It is this belief that drives the U.S. to promote investment within its borders. U.S. laws on incoming FDI are designed to encourage stability and to create opportunities that will gain positive returns. FDI of any type is welcomed, with the exception of those that compromise U.S. National Security.
Invest in America, an agency under the umbrella of the U.S. Department of Commerce, is the body in charge of promoting FDI within the U.S. The agency provides valuable information for potential investors. Invest in America’s List of Comprehensive Investment Guides for Investing in the U.S. should help answer all the questions you may have regarding the investment of your funds in the U.S.
The followingU.S. Investment Guides can be found at the Invest in America site:
- Baker & McKenzie Legal Guide to Doing Business in the U.S.
- HLB International Doing Business in the United States
- KPMG Guide to International Business Location
- KPMG Investing in the U.S.- A Guide for Foreign Companies
- Deloitte International Tax and Business Guide for the United States of America
The PricewaterhouseCoopers website also contains an abundance of information for helping start your business.
Other useful links for investing in the USA :
A. Legal information
U.S. Government Printing Office
B. Business Information Sources
C. Available assistance for companies in the US
- The Small Business Administration (SBA) is a U.S. government organization aimed at assisting small business owners in the U.S. They can help you get the necessary funds to start your business, help increase minorities’ access to the business field, and provide other vital information. Their website can be found at: http://www.sba.gov/
- Chambers of Commerce are very helpful in networking and assisting you to find the right contacts to get your business up and running. You can find the listing of State, County, Town, City, and Regional Chambers of Commerce.
- Banks all around the U.S. strive to assist their customers’ needs. Banks can help with everything from financing to accounting. The list of U.S. banks is available at this link: US Banks.
- Attorneys are necessary and extremely helpful in aiding the legal aspects of your business. A list of lawyers is available at this link: findlaw. If you are planning on establishing a company in the U.S., the first thing you should do is consult a lawyer. He or she will help you draft the necessary legal documents and advise you on proper and coherent business operations.
- As in most countries around the world, there are multiple forms for your business to take. In the US, the most common are: corporation, limited liability corporation (LLC), S Corporation, partnership, limited liability partnership and sole proprietorship.
a) Corporation – The Corporate form of business is designed to attract as much capital as possible through the sale of its company’s shares. Additionally, investors are liable only up to the amount they invested in the corporation which serves to make investing safe. Additionally, the company gets a wide range of opinions on business operations from shareholders and expertise advice from the Board that represents share holders. However, the founder of the company loses control once he sells 50% or more of the stock. Also, corporations are taxed double in the sense that the corporation is taxed and then so are the shareholders on their dividends.
b) Limited Liability Corporation –retains the same key advantages as the traditional corporation but, differs in some small ways.
c) S Corporation –is a variety of the corporate business form where double taxation is avoided. The cost of starting a corporation varies from state to state, it is also recommended to hire an experienced lawyer to aid in the process.
d) Partnership – Just as the word says, the partnership is comprised of two or more members. Benefits include: increased control over direction of the company and lower taxes (a partner is taxed as an individual). Each individual member is equally responsible for the economic well-being of the corporation.
e) A limited partnership –Can avoid being liable for their other partners decisions. There are minimal fees for beginning a partnership besides notarizing an agreement and perhaps hiring a lawyer to make sure the agreement is sound.
f) Sole Proprietorship –Where the owner manages their business and they accept all liabilities associated with the business. The advantages to such ventures are their ability to start and close the business. Second, the taxes are lower than the corporate form, since they are taxed as regular income, which varies according to income. Another benefit is that profits are not split among partners. However, a sole proprietor can be held liable for more than what was invested by them in the company. There is no cost to starting up a sole proprietorship.
Several sites are available for tenders such as Algeria Tenders (http://www.algeriatenders.com/appeloffres), DZ Tenders (http://www.dztenders.com/), and Rhino Tenders (http://www.rhinotenders.com/).
Federal Business Opportunities is a Federal Government website in which government buyers publish their business opportunities.
According to Export.gov (part of the International Trade Administration), franchising by foreign companies is limited in Algeria, largely due to strict foreign exchange controls that prohibit the repatriation of royalties. The Algerian government has been considering a franchise law to make franchising possible in Algeria, though no timeframe has been set for its implementation.
Several European companies operate what appear to be franchise stores in the fast food, clothing, jewelry, cosmetics, and retail sectors, and international hotel names are licensed in Algeria. European companies manage their franchises in Algeria through the invoicing of goods and/or technical assistance services imported by the franchisee, rather than through the payment of royalties or other franchise fees. There are currently only three U.S. franchises (in the education & training services sector) operating in Algeria.
Nevertheless, the development of American franchises in Algeria remains a key interest for AmCham Algeria, and we are happy to discuss with Algerian and American parties that wish to invest in this area.