US embassy cable - 04KINSHASA1407

UNCLAS SECTION 01 OF 03 KINSHASA 001407 
 
SIPDIS 
 
STATE FOR EB/IFD/OIR, STATE PASS TO USTR, COMMERCE PASS TO 
CIMS NTDB WASHDC 
 
E.O. 12958: N/A 
TAGS: ECON, EINV, KTDB, PGOV, PREL, CG, OPIC 
SUBJECT: INVESTMENT CLIMATE STATEMENT APPENDIX 2004 
 
REF: STATE 141379 
 
1. Per Reftel, Post submits ICS appendix below. 
 
DEMOCRATIC REPUBLIC OF CONGO: July 2004 Appendix to 2003 
Investment Climate Statement. 
 
This appendix serves as an update to the 2003 Investment 
Climate Statement for the Democratic Republic of Congo. It 
has been provided to assist investors in the interim period 
resulting from the U.S. Government's decision to begin 
publishing the Country Commercial Guide (of which the 
Investment Climate Statement is a chapter) on a calendar 
year basis, in January instead of August. 
 
The United States Government has reviewed the 2003 
Investment Climate Statement for the Democratic Republic of 
Congo, and has noted the following changes that have 
occurred since its publication. In most circumstances, if a 
portion of the Investment Climate Statement has not been 
modified in this appendix, it is because the U.S. Government 
is satisfied that it continues to accurately reflect the 
state of affairs in the Democratic Republic of Congo as of 
July 2004. 
 
Openness to Foreign Investment 
------------------------------ 
 
Since 2003, two positive developments have marginally 
improved the investment climate in the Democratic Republic 
of Congo. First, the Port of Matadi has almost completed 
upgrades to comply with International Shipping and Port 
Facility Security guidelines, as mandated by the 
International Maritime Organization. This combined with 
slightly improved functioning of the "Guichet Unique" - a 
one-stop electronic customs and fees payment bureau 
developed by the World Bank - allow for greater ease in 
transport of goods to the Democratic Republic of Congo. 
 
Second, after one-year of operations, the Cadastre Minier 
(Cami - Mining Concessions Authority) appears to be 
functioning reasonably well. Although currently not 
accepting new applications, major international mining 
companies have lauded Cami's performance to date. Decisions 
appear to have been made fairly and according to the law. 
 
Conversion and Transfer Policies 
-------------------------------- 
 
The Congolese Franc continues to remain stable at 
approximately 390 Francs to the U.S. dollar. Exchange rates 
on the informal market in the former rebel controlled areas 
(Equateur, Kivus and Oriental Provinces) have largely 
converged with those of the former government controlled 
areas (Kinshasa, Katanga, the Kasais and Bas-Congo 
provinces). 
 
The IMF believes the Congolese Central Bank (BCC) has done 
an adequate job managing monetary policy. It was able to 
release larger denomination 200 and 500 Franc notes during 
2003-2004 without experiencing bouts of speculation against 
the Franc. 
 
Expropriation and Compensation 
------------------------------ 
 
In early-2004, one claimant under the U.S.-Zaire Bilateral 
Investment Treaty won a settlement from the International 
Center for the Settlement of Investment Disputes (ICSID). 
However, the claimant has not yet been able to collect the 
payment from the Congolese government. 
 
Nevertheless, threats of expropriation or of a 
disadvantageous "revision" of a contract or concession are 
always present. 
 
Dispute Settlement 
------------------ 
 
No significant changes since 2003. 
 
Performance Requirements and Incentives 
--------------------------------------- 
 
No significant changes since 2003. 
 
Right to Private Ownership and Establishment 
-------------------------------------------- 
No significant changes since 2003. 
 
Transparency of the Regulatory System 
------------------------------------- 
 
Only one significant change in the regulatory environment 
has taken place since 2003. The establishment of the 
aforementioned "Guichet Unique" at Matadi (and also at 
Kinshasa) has helped to streamline customs and fees payments 
when importing or exporting goods. The "Guichet Unique" is 
not yet fully functioning - some government services are 
still trying to escape incorporation into the system and 
technical/electronic difficulties resulting from poorly 
trained personnel - however, it is a step in the right 
direction. 
 
Capital Markets and Portfolio Investment 
---------------------------------------- 
 
No significant changes since 2003. 
 
Political Violence 
------------------ 
 
Congo has suffered periodic bouts of widespread looting 
initiated by the military, including in 1991, 1993, and 1996- 
1997. There was also limited widescale looting initiated by 
civilians in 2004. Due to civilian frustration as well as 
poor military pay and discipline, the possibility of future 
widespread looting cannot be ruled out. 
 
In June 2003, a transitional government was established to 
prepare the country for multi-party elections in 2005 or 
2006. The central government exercises limited control in 
eastern Congo, and armed skirmishes continue in parts of 
Katanga, Orientale, and North and South Kivu provinces. 
 
Corruption 
---------- 
 
No significant changes since 2003. 
 
Bilateral Investment Treaties 
----------------------------- 
 
No significant changes since 2003. 
 
OPIC and Other Investment Insurance Programs 
-------------------------------------------- 
 
OPIC is currently accepting applications for political risk 
insurance for companies operating in the Democratic Republic 
of Congo. It is presently reviewing several applications 
submitted in the first half of CY 2004. 
 
Labor 
----- 
 
No significant changes since 2003. 
 
Foreign Trade Zones/Free Ports 
------------------------------ 
 
No significant changes since 2003. 
 
Foreign Direct Investment Statistics 
------------------------------------ 
 
The following are Congolese Central Bank (BCC) estimates of 
FDI for 2001 and 2002. The quality of these statistics is 
undetermined. 
 
Total Flows (U.S. dollars million): 
 
          2001    2002 
In DRC:   82.0    141.1 
Abroad:    0.0     16.5 
Net:      82.0    124.5 
------------------------------------ 
Source: BCC Annual Report 2002-2003 
 
MEECE