Speaking Of Asia

The dodo-bird island that could

Mauritius' multicultural society and strong governance give the little island an edge in its bid to be the gateway to the African continent.

There is a little emerald dot in the western Indian Ocean called Mauritius that doesn't spring to the Asian mind too often. It is time it did.

The land of the extinct dodo bird, it is a slice of Asia within Africa that lies nearly a thousand kilometres south of Madagascar and comes with a long history of globalisation. Until the Suez Canal was opened, it was a key spot on the sea route from Europe to India and the Far East. It has reinvented itself several times since, moving from a sugar-based economy to one built increasingly on manufactured exports, and subsequently, services.

These days, Mauritius has ambitious plans to be the gateway to the emerging African continent, is building up its financial services industry and is as welcoming a spot for tourists as any you could find on the map. It is also a land with few enemies - the reason it has no army, only a police force and coastguard.

Last week, this strategic little spot in the ocean opened an "air corridor" connecting Singapore to Port Louis, its capital. It waits now for Singapore to reciprocate by getting one of its airlines to start flying to the island, or code-sharing with Air Mauritius. It already has granted fifth-freedom rights to airlines from the Republic, essentially allowing a Singapore carrier to operate to any other country from Mauritius.

Could this be the next Singapore?

A bit early to tell but it's time for Asia to sit up and take notice of its ambitions anyway. Perhaps even help it along. "We are a good bridge between Asia and Africa, between Europe and Asia," Mr Xavier Luc Duval, the nation's Deputy Prime Minister, told me last week over a quiet breakfast in his hotel. "We want to be the provider of expert services to Africa and we are offering you a base for that."


As a pitch line, it is not an unfamiliar one. Many visitors turn up here offering similar sentiments for their region. But there are solid reasons for Asia, particularly South-east Asia, to give Mauritius a careful look. For one thing, it is culturally a part of us: Its ethnicity is predominantly Asian, even as it has passed from Dutch to French to British hands during its long colonial history, which ended in 1968, three years after Singapore's birth as an independent nation.

Second, it is a relatively prosperous place. Measured in purchasing power parity terms, it has a per capita GDP of about US$18,000 (S$24,600), placing it somewhere between Malaysia and Thailand.

Third, thanks to investments in education and healthcare, its position on the human development index is a respectable No. 63, one place behind Malaysia.

Centuries ago, the dodo, once endemic to the island, disappeared after it lost the need for flight - it had very little to fear by way of threats. But today's Mauritius is determined to grow more wings. For all you know, this could be the little African island that could.

Most importantly though, in a continent that does not stand out for good governance, Mauritius is remarkably well-run. Contracts are honoured. Rather than look for grants or doles, it is quite happy to pay for the services it seeks.

Indeed, Singapore itself has executed three projects in Mauritius on commercial terms: a US$44 million project to give every Mauritian a unique identity card, handled by Crimson Logic, and two smaller projects involving PUB and SMRT for consultancy services for a water distribution system and a light rail network respectively. All three sailed through even as Mauritius went through a government change 15 months ago.

It is no surprise, therefore, that in the latest Ibrahim Index of African Governance, a common benchmark, Mauritius stands at the very top with a score of 79.9. That's a full 70 points ahead of the weakest performer, Somalia, and nearly 30 points above the African average of 50.1.

The African island sees its future embedded in the connectivity it provides to key economies on the continent. Already, there are direct flights to South Africa, Seychelles, Kenya and Madagascar. Soon, Maputo, capital of Mozambique, will be connected to Port Louis. Swaziland will come on the air map soon as it launches its first airline, whose inaugural flights will be to Johannesburg and Port Louis.

That's in the air. On the surface, Mauritius, although no longer the way-station for the Asia-Europe sea route, still sees some 30,000 ship movements along its coast. Hence, it is pitching to be a logistics hub, with bunkering and ship chandling services added on. The Chinese are already there in large numbers, pouring money into a special economic zone and other real estate. Mr Duval says it is more than about developing just the port.

"We are looking at doing transformational things, including in tourism. We have 11,000 hotel rooms on the island."

Besides, financial services to Africa is another area it thinks it has a niche. For long years, and until Singapore got a similar privilege in 2005, Mauritius benefited from a favourable Double Taxation Avoidance Agreement (DTAA) with India. Under the DTAA, capital gains on sale of assets in India by companies registered in Mauritius can be taxed only in Mauritius. While short-term capital gains are taxed at 10 per cent in India, they are exempt in Mauritius.

This saw huge amounts of investment into the South Asian giant getting channelled through the territory and helped midwife its financial services industry. Until Singapore overtook it recently, Mauritius reigned as the No. 1 source of foreign direct investment (FDI) into India. But India is relooking some of these tax laws and this has Mauritius worried.

"India continues to be important, but we have also moved much beyond to become a centre for the region," says Mr Duval. "And it goes beyond fiscal incentives. We are pitching our case on merit and on solid reasons for being in Mauritius, including its company law and sound legal system."

And if disputes do arise, investors can take comfort that its Supreme Court is based in London. Why so? "It was a deliberate choice," Mr Duval explains. "This is a signal of the independence of our judiciary. It adds to our credibility."

All that makes for a strong package and it is getting noticed. Last week, the International Monetary Fund said it welcomed Mauritius' commitment to raising growth and competitiveness by addressing infrastructure bottlenecks and skills mismatches, as well as reducing the cost of doing business and facilitating further diversification of the economy.

It also recommended bringing more women into the labour force and easing up on immigration for skilled workers. Has a familiar ring? No surprise, really.

For Singapore, particularly, there is an additional point of resonance with Mauritius and that is in the stable race relations enjoyed by the Indian Ocean island. About two-thirds of its 2,040 sq km area is populated by Indo-Mauritians, with Creoles of African descent constituting a quarter of the people. Another significant group are the Chinese-Mauritians, mostly Hakkas, followed by French-Mauritians. This is a multiracial society truly.

A few years ago, a case study of Mauritius for Harvard University's Kennedy School of Government mused on the ethnic diversity question and how, rather than make for dysfunctional politics, it actually brought cosmopolitan benefits to the island.

"The institutions manage to balance the ethnic groups; none is excluded from the system," wrote Jeffrey Frankel, author of the study. "It is intriguing that the three African countries with the highest governance rankings (Mauritius, Seychelles and Cape Verde) are all islands that had no indigenous population. It helps that everyone came from somewhere else."

Likewise, it has a stable outlook towards its region. It helps that its security is quietly guaranteed by friendly Western powers, and India. For the record, it still demands the return of Diego Garcia, the military base in the Chagos archipelago that Britain leased to the US in the mid-1960s. But everyone knows this is said with a wink and a nod.

Centuries ago, the dodo, once endemic to the island, disappeared after it lost the need for flight - it had very little to fear by way of threats. But today's Mauritius is determined to grow more wings. For all you know, this could be the little African island that could.

A version of this article appeared in the print edition of The Straits Times on March 25, 2016, with the headline 'The dodo-bird island that could'. Print Edition | Subscribe