Trade in Services

Multinational Trade Agreements

Active

1. Angola-United States: Angola benefits from the Africa Growth Opportunity Act (AGOA), the United States preferential trade agreement which provides duty-free status for qualifying goods exported from Angola to the United States. The Angolan government is working to diversify its economy and recently established an export promotion agency to encourage exports, including those to the United States that could take advantage of AGOA.


2. The African Continental FTA (AfCFTA): The AfCFTA was formally launched on July 7, 2019. This agreement stood out as one of the most ambitious projects of the African Union (AU) as it seeked to create the largest single market in the world by country membership. The AfCFTA would cover a market of more than 1.3 billion people with combined nominal GDP of USD2.5 trillion. Out of the continent's 55 states, 54 have signed the agreement, with Eritrea as the only non-signatory. The AfCFTA was signed in Kigali, Rwanda on March 21, 2018, and was ratified by the necessary 22 states in April 2019. According to the framework agreement, 90% of trade in goods will be liberalised over the course of five to eight years, 7% of goods will be classed as sensitive and liberalized over 10-13 years, and 3% of goods will be exempt from free trade entirely. The allocation of goods to these different categories has yet to be negotiated and regional countries and their respective customs unions are currently preparing offers for their continental counterparts to consider. The 'sensitive items' lists may differ according to each bilateral relationship.

Under Negotiation

The SADC: At a regional level, Angola is a member of the SADC, but is not party to the SADC FTA which involves 12 out of the 15 member countries with the objective of reducing trade barriers among countries in the region. The country has been unwilling to join the SADC FTA due to the government's concern that such a union would limit the competitiveness of local industries by lowering trade tariffs.

Sources: WTO Regional Trade Agreements Database, Fitch Solutions

Foreign Direct Investment Policy

1. The new administration of President João Lourenço – which took office after the 2017 general elections – has embraced reforms on several fronts to achieve macroeconomic stability and create a favourable environment for economic growth. After devaluing the currency, the government took further steps towards a more transparent and market-based foreign exchange market. Exchange rate misalignments were reduced in 2018 with greater exchange rate flexibility.
    
2. On April 1 2020, Angola's central bank introduced an electronic platform for foreign exchange transactions, which will be progressively extended for all such transactions as part of the government's response to mitigate the impact of Covid-19 on the economy. This will ease currency conversion for businesses reliant on foreign exchange amid foreign currency shortages facing the state.


3. In May 2018, with input from the private sector, the government approved a new private investment law. The new law eliminates the local partnership requirement for foreign investors, and offers greater business facilitation and tax incentives for investors. Under the new regime, local content restrictions were eliminated (except for those originating from industry specific legal statutes, such as on oil and gas, mining, banking and financial services, aviation, and shipping).


4. The government has also created the Agency for Investment and Promotion of Exports of Angola (Agencia de Investimento e Promocao de Exportacoes de Angola-AIPEX). It is a single body that aims to promote investments and exports and the international competitiveness of Angolan companies.


5. With the new 2018 investment law, Angola's limits on foreign equity participation will substantially reduce, bringing it more in line with those of its Sub-Saharan African neighbours. Foreign ownership will remain limited to 49% in the oil and gas sectors, 50% in insurance and 10% in the banking sectors. The Angolan government eliminated the 35% local content requirement in foreign investments, and it offers incentives to companies investing in the domestic economy, while maintaining minimal FDI screening processes. There are several objectives that the government seeks to accomplish through its FDI screening process: first, to create jobs for Angolans or transfer expertise to Angolan companies as part of the 'Angolanisation' plan; second, to protect sensitive industries such as defence and finance; third, to prevent capital flight or any other behaviour that could threaten the stability of the Angolan economy; and finally, to diversify the economy.


6. Further reform momentum will stem from the three-year International Monetary Fund programme as well as the planned privatisation of 195 state-owned enterprises and stakes from 2019 to 2022 – with assistance of the World Bank – in pursuit of improving competition and efficiency in the business environment. The privatisation programme is set to include the full or partial divestment of several firms including national airline TAAG, diamond company Endiama, and 50 subsidiary companies and other assets of state-owned oil company Sonangol. While the timeline for the process may be ambitious – aiming to sell 20 companies and assets by the end of 2019 and 26 over 2020 – we believe the government's reformist agenda will be regarded positively by investors.


7. According to Decree 151/17 effective from July 4, 2017, the three-year maximum duration of work permits granted to foreigners has ceased to be applicable within the Angolan jurisdiction. Instead, these work permits will from now on be granted for as long as the contracts of foreign employees are valid.


8. All companies must prepare their financial statements in accordance with the Angolan Accounting Law and the Angolan General Accounting Plan.


9. The government has made progress in the establishment of the antitrust law, followed by the creation of a competition authority.


10. Under the Land Tenure Act of 2004, all land belongs to the state and the state reserves the right to expropriate land from any settlers. The state may also allow for land usage through a 60-year lease, after which it reserves the legal right to take over ownership.


11. Angola is not a member state to the International Centre for Settlement of Investment Disputes (ICSID Convention), but has ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Its ratification was endorsed domestically via resolution No. 38/2016, published in the Official Gazette of Angola on August 12, 2016.


12. Angola plans to auction nine oil blocks in 2019 and is seeking to build new refineries as Africa’s second-biggest oil producer looks to benefit from the rise in crude prices that could boost companies’ appetite for investments. The tenders for the offshore areas are part of efforts to lure back global explorers. The nine blocks are located in the Namibe basin, and are part of 55 blocks which are expected to be auctioned through to 2025.


13. The government is offering tax concessions for companies developing smaller fields, is cutting bureaucracy and selling parts of state-owned oil company Sonangol to attract foreign companies. Some of the efforts are bearing fruit as French major Total SA and Italy’s Eni began pumping from new areas in the past year, and other blocks are set to start or resume in 2019, according to the government.


14. President João Lourenço announced in 2018 that the government aims to reform Angola's state-owned Sonangol. Several state-owned enterprises are being lined up to be privatised in the near term, in line with the government's announcement in April 2019 that it would start the privatisation programme with the sale of seven industrial units. Among the key deals include the proposed sale of a minority stake (estimated at around 45%) in Angola Telecom, currently scheduled for 2021, a holding in state-owned oil giant Sonangol in 2022 and in national air carrier TAAG. Foreign investors in the energy, telecoms, aviation and construction sectors stand to benefit the most given a relaxation of stringent local content requirements that previously were significant barriers of entry in these sectors.


15. Angola is party to several investment related treaties and conventions. In May 2009, Angola signed a Trade and Investment Framework Agreement (TIFA) with the United States, intended to provide a forum to address trade issues and to help enhance trade and investment relations between the two countries. The first meeting of the TIFA Council under this agreement took place in June 2010 with the recent meetings in 2015 and 2016 at the working level focused on a plan development, AGOA market access, and strategies to improve the business climate, but with limited engagement by the Angolan government under the then Minister of Commerce.


16. In July 2010, the United States and Angola signed a Memorandum of Understanding establishing a bilateral Strategic Partnership Dialogue, which commits the two parties to increased bilateral relations. Angola has bilateral investment agreements in force with Cabo Verde, Germany, Italy, and Russia. Angola has also signed agreements with Portugal, South Africa, Spain, Brazil, France, and the United Kingdom, but these agreements have not yet entered into force.


17. Angola is a member of the World Bank, African Development Bank, the Organisation of Petroleum Exporting Countries (January 2007), the United Nations and most of its specialised agencies - International Conference on Reconstruction and Development.


18. Angola conducts several bilateral negotiations with Portuguese Speaking countries, Cuba and Russia and extends trade preferences to Mainland China due to credit facilitation terms, while attempting to encourage and protect local content.


19. In 2009, Angola established the Luanda-Bengo Special Economic Zone. Under the new investment law, Angola is divided into four economic zones, Zone A to D, offering different incentives. Porto Caio is under construction in the province of Cabinda. The port is designated as a free trade zone and is slated to provide numerous opportunities for warehousing, distribution, storage, lay down area and development of oil, and gas related activity. The port will also serve as a new major gateway to international markets from the west coast of Angola, and the development will facilitate exports and render them more cost-effective for companies.

Sources: WTO – Trade Policy Review, World Bank, national sources

Obtaining Foreign Worker Permits for Skilled Workers

The appropriate visa allowing a foreign national to undertake remunerated activities in Angola is the Work Visa. The Work Visa is granted for the duration of the employment contract and must be applied for at the Angolan Consulate or Embassy in the applicant's country of origin or residence.

In order to employ any non-resident foreign worker, the employee must meet the following main requirements: be of age, have a technical or scientific qualification, have physical and mental ability and not have any criminal record.

In the oil sector, the employment of foreign personnel is subject to previous authorisation from the Ministry of Petroleum, and the grounds for the employment of foreign workers instead of national workers must be justified.

As of April 2017, some of these stringent visa requirements have been eased. Employers are now not limited in the time duration of the contracts that they negotiate with foreign employees, and can agree to pay employees in the foreign currency of their choice and provide incentives and allowances higher than 50% of the employee's base salary.

Temporary Visas

Various types of temporary visas may be granted to foreign nationals who intend to come to Angola. The type of visa depends on the reason and period of stay.

• Ordinary visas are granted to foreign nationals for business or family reasons. They are granted for 30 days, extendable twice, up to a maximum of 90 days. Ordinary visas do not allow its holders to perform remunerated activities in the country, for which a work visa is required, or apply for residence.


• Privileged visas may be granted to foreign investors, representatives or proxies of investing companies in order for them to implement and execute investment projects in Angola.

Resident Permits

Residence permits are granted to foreign nationals that intend to establish residence in Angola, provided that they meet the requirements imposed by the Angolan law. The application for a residence permit may include spouses, underage children and any dependents of the applicant.

The following residence permits may be granted:

• A Temporary Residence Card Type A is granted to foreign nationals with authorisation to establish residence in Angola. It allows the holder to establish residence for one year and is extendable for equal time periods.


• A Temporary Residence Card Type B is granted to foreign nationals living in the country for more than five consecutive years. It is valid for three years and is extendable for equal time periods.


• A Permanent Residence Card is granted to foreign nationals resident in the country for more than 10 consecutive years. It is valid for five years and is extendable for equal time periods.

Sources: Government websites, Fitch Solutions

Fitch Solutions Risk Summary

ECONOMIC RISK
The 2020 outlook for the economy is negative as both domestic activity and the external sector are likely to contract due to the impact of the Covid-19 pandemic. Exports should be particularly hard hit as plummeting global demand hampers oil prices. The oil sector still accounts for one-third of GDP and more than 90% of exports. Meanwhile, rising external and fiscal deficits, and mounting funding pressures threaten Angola's macroeconomic stability. While business-friendly reforms and external financing provide upside potential for investment inflows and economic growth in the long term, Angola remains highly vulnerable to external shocks that can weigh on growth prospects in the short-to-medium term.

OPERATIONAL RISK
Angola's economy is heavily dependent on hydrocarbons, with oil traditionally comprising over 40% of GDP, more than 70% of fiscal revenues and over 90% of merchandise export earnings. This has served the nation well during periods of rising commodity prices, but keeps Angola highly vulnerable to external price shocks. Businesses in Angola face a challenging operating environment over the short-to-medium term. Angola's recent economic challenges have been exacerbated by a decline in production in the economically important oil sector, foreign currency risks, structurally weaker global oil prices in 2020, the Covid-19 crisis and the impact of climate change on food security. Business operations face structural deficiencies in the country's logistics environment that will keep investment in non-oil sector activity significantly stymied by electricity, water and fuel shortages as reform and diversification efforts remain slow. Angola does, however, benefit from having a large and young pool of potential labour.

Source: Fitch Solutions
Date last reviewed: May 3, 2020

Fitch Solutions Political and Economic Risk Indices

Exchange Rate HK$/US$, average
7.75 (2015)
7.76 (2016)
7.79 (2017)
7.83 (2018)
7.77 (2019)
Sources: Hong Kong Census and Statistics Department, Fitch Solutions

Treaties and Agreements between Hong Kong/China and Angola

In October 2018, under the witness of Mainland China's president, Xi Jinping, and Angolan president, João Lourenço, the administrator of State Administration of Taxation, Wang Jun, and the minister of Angola's Ministry of Finance, Archer Mangueira, signed a bilateral Agreement for the Elimination of Double Taxation with Respect to Taxes on Income and the Prevention of Tax Evasion and Avoidance and Protocol.

The agreement will provide tax certainty for cross-border taxpayers between two countries in avoiding double taxation and play a positive role in further pushing forward the bilateral economic cooperation and exchanges of capital, technology and personnel.

Source: State Administration of Taxation of The People's Republic of China

Chamber of Commerce (or Related Organisations) in Hong Kong

Angolan Consulate General in Hong Kong
Address: Units 2302-4, 23/F, Office Tower, Convention Plaza, 1 Harbour Road, Wan Chai, Hong Kong
Email: reception@consuladogeral-angola.hk
Tel: (852) 3798 3888
Fax: (852) 3101 0873/3101 0682

Source: VisaHQ

Visa Requirements for Hong Kong Residents

An Angola tourist visa is required for HKSAR passport holders. All applicants must apply in person at the nearest Embassy of Angola. It is important to note that the Angolan embassy only accepts lodgings on a Monday and Tuesday and only allows collections on a Wednesday and Thursday.

Source: VisaHQ
Date last reviewed: April 18, 2020