Is the decision to deny foreigners the right to acquire freehold properties in Seychelles in the nat

11.03.2013

I would like to offer my congratulations to President James A. Michel for the State of the Nation address which he delivered on February 19, 2013.

All points in his address duly considered – the President comes out as a leader committed to the welfare of the Seychellois people and determined to be guided by the principle of “overriding national interest” at all times.

However, I was somewhat dismayed with his statement that “individuals who are not Seychellois citizens will no longer be allowed to buy State land freehold. The same principle will apply to privately-owned land. Foreigners will no longer be allowed to buy properties freehold but they may be permitted a long-term non-renewable lease of 70 years.”

My first question is whether this decision is one which can be “constitutionally” sustained? – Abrupt and precise, the President’s statement was certainly “short on details.”

But after listening to the youthful Minister of Land Use and Housing, Christian Lionnet’s interview with Ms Georgette Hoareau on SBC’s News Extra programme – I was sadly left in a confused state of mind.

Meanwhile, I have been receiving several phone calls from overseas enquiring about what is going on in Seychelles. Many of these calls were from Seychellois, who went in exile overseas for political reasons and sold the land they had at low value because of prevailing political conditions and who are now citizens of USA or United Kingdom, other European Nations or Australia, wondering to what extent this new policy will affect them.

Sadly to say, concerns were not only being expressed by individuals but also by foreign entity, like Vladi Private Islands GmbH – a company of international repute, seriously involved in islands and property development on a worldwide basis – see website www.vladi.de
On March 6, 2013, Farhad Vladi, the founder and owner of Vladi Private Islands GmbH, wrote to me as follows:-
“Dear Jimmy
Hope you are doing well. I understand that you are very active in the World Future Council and I am very proud of you.

I have just received the enclosed copy of the speech of your President and from that I understand that he wants that foreigners no longer own freehold property but rather a 70 year lease. This will definitely have an impact on the real estate market. I would be interested to learn how serious this is and what you think about this new policy. A lease would mean that the purchaser would not own the property, but just have the right of use. This is very important discussion topic for resort owners in particular. They will not be able to get many insurances.
In any case, I would appreciate to hear from you.
Best regards

Farhad Vladi.”
It is my conviction that a Government’s decision going along the lines of the President’s declaration and as explained by Minister Lionnet, will definitely discourage Direct Foreign Investment (DFI) in Seychelles and is, considering our circumstances, not in the overall national interest.

When living in exile, in UK, I was retained by Brauhaase GmbH of Hamburg, to find opportunities to build breweries in Africa generally and in Nigeria in particular. The Chairman of Brauhaase was, in fact, the late Joachim Haase, who had founded Seychelles Breweries in Seychelles. The Board of Directors of his Group had allocated several million of dollars for the purchase of land in Nigeria upon which to build three breweries. But when we got to Lagos, we were informed that no foreigner or foreign entity could buy land but that the Government was ready to give a 99 year lease for a nominal annual rental. Of course, the German investors were jubilant about this decision. The millions they had earmarked in their budget for the land remained in their bank’s account in Germany – and thus was the Nigerian economy denied the opportunity of collecting a considerable capital inflow in one go.

It is to be remembered that when dealing with land and other immovable properties, the Lex Situs (i.e. the law of the place where the land is situated) remains paramount. The purchase of land by itself does not convey permission to a foreign buyer to develop or to neglect the land according to his own wish, fancy or pleasure. He has to abide by planning laws and regulations or any other law operational in the country. In this respect, if a foreigner had bought 20 acres of land in Seychelles and wanted to develop it into a housing estate for sale in the open global market, nothing could stop Government to request the developing party to release, say 5 acres, of this land, into a “Seychellois Land Bank” as a condition precedent to okaying the project. Certainly a foreigner who invests millions in real property in Seychelles is showing a lot of confidence in the future good governance of the country because for sure he is never going to be able to put the land on his shoulders and take it with him overseas.

The explanation tendered by Minister Lionnet certainly sends the wrong vibes when it comes to Seychelles being seen as a friendly, accommodating and sharing nation. This is certainly a disturbing factor as far as tourism goes. We tend to forget that all citizens of Seychelles are of “foreign origin”. We tend to forget that our economic well-being and betterment is very much dependent on outside factors and resources. We tend to overlook what is going on around us - Sri Lanka, after the civil war, is busy attracting direct foreign investment by offering freehold properties for development. Have we really considered the impact of this new policy on the leverage value of a Seychelles property vis-à-vis the bank, insurance companies and other lending institutions? Have we stopped to consider its implication vis-à-vis the Stock Exchange we are supposed to launch? Will the State of Monaco be considered today as representing the “most expensive piece of real estate in the world” if outsiders were not allowed to buy and to sell according to market demand and value? We tend to forget what is happening in Mauritius or in the United Arab Emirates, where foreigners can, for example, arrive in Dubai one morning, register a company, buy two or three apartments and leave for home in the same evening, encouraged by the Government’s decision to adopt an enlightened approach to direct foreign investment in offering one-shop facilities.

After listening to Minister Lionnet, it would appear that he is interested to investigate who are the beneficial owners of “offshore companies.” This, of course, would be opening-up of another “powder keg” but may be through this initiative, the Seychellois people would be able to know who are those people who have made millions of dollars over the last 30 years.

In his address, President Michel spoke about the rights of the “Seychellois” people without defining what he means by “Seychellois”. Are all holders of a Seychelles passport “Seychellois”? Does a “Jamaican” become an “Englishman” when he obtains British nationality? Or does he not only become a “British citizen”?

The issue of citizenship will always remain a very emotive one – and we should avoid opening the “powder keg” as to who is a genuine Seychellois and who is not. Surely, the question of citizenship calls for full transparency and should fall within the parameters of defined criteria and not be a matter vested within the discretion of an individual Minister.

Fortunately for Seychelles, we have in President Michel a leader with strength, of character and courage to alter course as and when he realises that a charted route is unlikely to be in the national interest.

James R. Mancham