facilitation by transporting imported rawmaterials straight from customs post to factory through a bonded export factory scheme. Developers of industrial parks are exempted from income tax for 10-15 years depending on the location of the park. The developers are provided with essential infrastructure, including dedicated power substations. Regulatory Incentives (Legal Protections): The Ethiopian Constitution, investment laws, bilateral investment treaties and other laws provide legal protection for individuals and companies engaged in the business sector. Investors are offered special incentives and legal guarantees that protect their investments. The main guarantees include: • No Nationalization or Expropriation – all investments in Ethiopia are protected against nationalization and expropriation by the government unless they are for a public purpose, as defined and executed by the law. In such occasion, the Investment Proclamation Law states that adequate compensation will be paid to the investor. • Repatriation/Remittance of Funds – discussed further below. Immigration, Employment and Local Content EEmployment in private business is regulated by the Labour Law, the Civil Code of the Empire of Ethiopia and the Pension Proclamation. The Labour Law sets out minimum conditions and guarantees basic rights such as the right to have a safe working environment, right to form trade unions and membership protection in a trade union. The principle of equal pay for equal work for female employees, maternity and sick leaves, maximumworking hours, weekly rest and public holiday and rights of young workers are also governed by the Labour Law. In respect of employment contracts, the Labour Law guarantees against unlawful termination of contract and compensation for work-related injuries. The Pension Proclamation entitles private sector employees to benefit from the pension scheme. Based on the salary of the employee, both the employer and the employee are required to make a contribution of 11% and 7% respectively. An expatriate can be employed in Ethiopia once they secure a work permit issued by the Ministry of Labour and Social Affairs ( MOLSA ). The permit is to be renewed annually and is valid for three years for a particular work.
Expatriate employees deemed as “experts” and are working for an expatriate’s business must be replaced by Ethiopians within a certain period of time. However, this does not apply to expatriate workers in top management positions, as they can work with the approval of the EIC responsible for issuing work permits for expatriates working for a foreign investor. Upon obtaining a work permit, an expatriate must request a residence permit from the Ethiopian Immigration Authority. According to MOLSA, this requires the completion of an application letter that formally requests for the permit, travel documents, visa, health certificate and other required documents as specified below. Employment and Foreign Nationals Any investor may employ duly qualified foreign nationals to work in their business provided that each foreign national obtains a work permit from either the EIC or MOLSA. Save for foreign nationals employed in managerial positions, the investor is responsible for training Ethiopian employees to take over the role of a foreign national employed in his or her business within a stated period of time. The MOLSA Directive stipulates the following conditions under which a foreign national can be employed in Ethiopia: • Proof that the foreign national has the required set of skills for the work and that MOLSA has approved the need to employ the foreign national; • The foreign national is employed in a charity organization and his/her work is deemed necessary for the country; • The foreign national is a representative of a foreign company that is operating in Ethiopia and his/ her employment in Ethiopia does not block job opportunities for Ethiopians; • The foreign national is a part owner of the company operating in Ethiopia and is also a paid employee of that company; • The foreign national is employed in accordance with a bilateral or multilateral agreement that the Ethiopian government has signed; • The foreign national is to be employed in a high level management position by a company owned in partnership between an Ethiopian and a foreign national and has been granted approval to work in Ethiopia; and • A domestic Ethiopian investor enters into a trade agreement with a foreign-owned business and proves that the employment of a foreign national is necessary for the work the business carries out, and obtains the EIC ‘s approval for the employment.
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