WT/TPR/S/197/Rev.1 Trade Policy Review
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IV. TRADE POLICIES AND PRACTICES BY SECTOR 
(1) INTRODUCTION  
1. Madagascar has considerable agricultural poten tial, although it is little exploited.  The 
farming population is estimated  to be around 13.3 million (some three quarters of the total 
population), but is generally poor because of rudime ntary cultivation techniques and low crop yields.  
Nevertheless, since the first review of Madagascar's  trade policy (TPR), the authorities have redefined 
the country's economic and social development strate gy in the hope of achieving a "sustainable green 
revolution".  Rapid progress has been made with th e policy to ensure more secure land tenure.  
Although the State no longer intervenes in the prices  paid to farmers, it does subsidize the supply of 
seed and inputs.  In order to facilitate public-private  interaction, the authorities have set up forums for 
consultation by branch of agriculture (rice, litchis and vanilla).  In the case of ri ce, a basic foodstuff, a 
monitoring centre keeps an eye on prices on local mark ets and gives out information in order to help 
these markets to function better.  A number of proj ects financed by external funds support rural 
development.  One of the objectives of agricultural po licy is to improve food security and to generate 
surpluses that can be exported to subregional markets. 
2. The fisheries and aquaculture subsector (together  with the mining and tourism subsectors) are 
three of the major activities on which the authoriti es are relying to boost the country's medium-term 
economic development.  Shrimps are one of Madaga scar's most important export products and appear 
to be produced in accordance with  the sanitary requirements in fo rce on the European market, which 
is their main destination.  Tuna resources are expl oited under bilateral agreements with the European 
Union and Japan.  Timber in the rough has not been exported since 2007 in order to encourage 
processing. 
3. The mining sector has attracted large-scale inv estment since the introduction of an incentive 
framework and a sharp increase in the production of mineralized sands, cobalt and nickel is expected 
in the near future.  In accordance with current provisions, such inv estment must meet environmental 
protection criteria.  Investment is needed in the country's rail transport infrastructure and in building 
new mineral ore ports.  Madagascar is still a la rge producer of chromium (under a State monopoly) 
and of gemstones. 
4. Since the first TPR, the manufacturing sector has grown, particularly those companies 
manufacturing textiles and clothing under the free zone  regime and enjoying preferential access to the 
United States market under the AGOA.  Despite the ta x and customs incentives they have been given, 
Madagascar's manufacturers complain, inter alia , of the recurrent electricity supply problems.  Since 
2004, Madagascar has opened up activiti es downstream of the petroleum subsector by eliminating the 
ceiling prices on petroleum products, although these are still monitored. 
5. Since 2003, there has been a shar p rise in tourism, partly as a r esult of the open skies policy.  
The authorities are also hoping to develop ecotourism by creating réserves foncières touristiques 
(tourism land reserves), although the supply of th e requisite water, internal transport and 
telecommunications services is not satisfactory.  Fi nancial services (banks, micro-finance institutions 
and insurance) are open to competition from foreign suppliers.  Under the GATS, however, 
Madagascar only bound measures concerning th e supply of certain tourism services. Madagascar WT/TPR/S/197/Rev.1 
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 (2) A
GRICULTURE AND RELATED ACTIVITIES  
(i) Overview1 
6. Madagascar's surface area is 595,790 km2, and it has 4,500 km. of coastline.  Its exclusive 
economic zone (EEZ) covers 1,225,259 km2, giving Madagascar the fourteenth largest EEZ in the 
world.  It has natural resources and a climate condu cive to agriculture (including raising livestock, 
fishing and forestry), and its contribution to the GDP  is substantial (Chapter I(1)).  Some 60 per cent 
of the agricultural GDP comes from crops, 25 per cent from raising livestock and fishing and 15 per 
cent from forestry.2  Agricultural products (shrimps, van illa, litchis and cloves) are also among 
Madagascar's important exports (Chapter I(3)(i)). 
7. The farming population is estimated to be ar ound 13.3 million (around three quarters of the 
total population).  Each farm covers an average area of 0.87 hectares.  Cultivation techniques are 
rudimentary and there is little mechanization (the angady , a type of spade, is still the tool most 
commonly used on family farms) and there is little use of inputs (improved seeds, fertilizer, pesticides).  The production zones are isolated, whic h makes it difficult to reach the crops and market 
them.  The rural population mainly produces for its own consumption and is us ually poor.  Because of 
the relatively high demographic growth there is grow ing demand for food, which in turn has an effect 
on the means of production, particularly land tenure, wa ter and financing.  It should also be noted that 
70 per cent of household spending is on food, so its  price has a marked impact on purchasing power 
and the level of poverty. 
8. Madagascar is an agricultural producing country with some 36 million hectares of arable land 
(out of 58 million hectares)
3, but only just over 2 million hectares are under crops.  The three major 
crops are:  rice, the basic foodstuff, roots and tubers;  industrial crops (groundnuts, sugar cane, cotton, 
tobacco), which provide the raw material for local ag ro-industrial units produc ing edible oils, sugar, 
cotton lint and cigarettes (see section (4));  and cash crops mainly intended for export (vanilla, cloves, 
pepper, coffee, cocoa).  Since the first TPR of Madagascar in 2001, rice production has increased, 
whereas the production of industrial crops has sta gnated and cash crops have shown a downward 
trend with the exception of cocoa (Table IV.1).  There has been an increase in the production of fruit 
and vegetables, particularly in outlying areas.4 
9. Madagascar also has considerable potential fo r raising large and small ruminants.  The 
majority of households in rural areas raise livest ock and look on their herds as a source of food and 
the prime source of savings.  Bovine cattle are the large animals most commonly raised and, together 
with pigs, are increasingly being reared.  Madagascar has a herd composed of 9.7 million bovine cattle;  1.3 million pigs;  700,000 sheep;  1.3 milli on goats;  and 29 million head of poultry.  Milk 
production does not meet national needs so a la rge volume of powdered milk is imported. 
                                                     
 
1 The main source for this section is:  Ministry of Agriculture, Livestock and Fisheries (2006). 
2 Over the period 1984-2005, the primary sector was made up of crop production (on average 47 per 
cent of the agricultural GDP), livestock  breeding and fishing (42 per cent), and forestry (11 per cent).  Since 
1984, crop production has therefore increased its share of the agricultural GDP, notably as a result of the 
expansion of rice growing caused by growing demand from the population, to the detriment of forestry, 
livestock and fishing. 
3 Embassy of France in Madagascar, Economic Mission (2006d). 
4 Embassy of France in Madagascar, Economic Mission (2006a). WT/TPR/S/197/Rev.1 Trade Policy Review
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Table IV.1 
Production of food crops, 2001-2005 
(Tonnes)  
 2001 2002 2003 2004 2005 
Coffee 64,530 61,520 70,315 67,780 55,474 
Tea 441 516 570 365 351 
Cocoa 4,410 4,413 4,410 4,410 6,470 
Oilseeds 35,240 .. 35,610 34,590 64,841 
Fresh vegetables .. .. .. .. 263,659 
Dried grains (leguminous vege tables) 82,450 77,550 77,660 77,300 166,064 
Tropical fruit .. .. .. .. 1,041,424 
Temperate fruit .. .. .. .. 33,722 
Rice 2,662,465 2,603,965 2,800,000 3,030,000 3,392,460 
Other cereals .. .. .. .. 397,171 
.. Not available. 
Source : Malagasy authorities. 
Table IV.2 
Trend in the food balance sheet for rice, 2000-2005 
(Tonnes)  
 2000 2001 2002 2003 2004 2005 
Production of paddy rice 2,480,500 2,662,500 2,604,000 2,800,000 3,030,000 3,400,000 
Equivalent in milled rice 1,637,130 1,757,250 1,718,640 1,848,000 1,999,800 2,244,000 
Population 14,814,000 15,229,000 15,655,000 16,093,000 16,908,000 18,040,300 
Requirements 2,074,000 2,132,100 2,191,700 2,253,000 2,367,100 2,525,600 
Imports 207,700 330,300 170,500 283,800 151,400 278,000 
Source : Malagasy authorities. 
10. Fishing and aquaculture potential amounts to around 480,000 tonnes annually, of which 
300,000 tonnes are of commercial inter est.  In 2005, Madagascar's total exports of fisheries products 
were some 34,515 tonnes (Table IV .3), not including deep-sea fishi ng by foreign ships under bilateral 
agreements.  The overall value of these exports w as MGA 358 billion, mostly shrimps (around 60 per 
cent) and different types of fish (32 per cent). 
11. According to the FAO5, forest covers some 22 per cent of Madagascar's land area.  Around 
80 per cent of this is classified as "primary" forest.  Total forest cover is receding despite reforestation 
because demographic pressure continually raises the de mand for land.  Primary forest is inhabited by 
exceptional fauna and flora that are the basis fo r ecotourism (see section (5)(ii) below).  The 
exploitation of forest resources provides wood and by-products that meet most of households' energy 
needs.  There is also a flourishing trade in processed tropical wood (section (v) below). 
                                                      
5 FAO (2006). Madagascar WT/TPR/S/197/Rev.1 
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Table IV.3 
Trend in the export of fisheries products, 2003-2006 
(Tonnes)  
Product 2003 2004 2005 2006 
Shrimps  15,255  13,650  11,716  12,218 
Crabs  492  852  1,228  775 
Spiny lobsters  383  555  565  222 
Beches de mer  205  300  223  243 
Cephalopods  999  1,668  1,606  1,237 
Shark fins  18  43  58  26 
Fish  2,796  891  1,900  19,773 
Eels  12  8  7  5 
Other  565  31  258  17 
Total  20,726  17,999  17,561  34,515 
Source : Malagasy authorities. 
(ii) Agricultural policy6 
12. The Ministry of Agriculture, Livestock and Fi sheries (MAEP) is responsible for drafting, 
implementing and coordinating the Malagasy State's policy on agriculture, livestock and fishing, as well as that on State-owned and private land.  This  policy was redefined in the 2003 poverty reduction 
strategy (Chapter II(2)).  The Programme national pour le développement rural  – PNDR (National 
rural development programme), adopt ed in 2005, focuses on raising inco me in rural areas, in principle 
taking into account the environmental aspects.  According to the "Madagascar Action Plan" (MAP)
7 
concerning the country's economic and social deve lopment strategy for the period 2007-2011, rural 
development will consist of a "sustainable green revolution" and agri-business centres will be set up 
to assist in training and in meeting needs such as irrigation, seeds, fertilizer and storage facilities.  The 
expansion in production needed to accomplish the green revolution will be achieved through more 
intensive cultivation, expansion of the area unde r crops, as well as the supply of seeds and fertilizer 
and assistance in using them.  The authorities hope that  this green revolution will lead to greater food 
security and to surpluses that can be exported to su bregional markets.  A transport policy aimed at 
ending the isolation of production zones and supporting entrepreneurship in agriculture complements 
this effort. 
13. The MAP has defined six main challenges:  to achieve secure land tenure;  to improve access 
to rural financing;  to launch a sustainable green re volution;  to promote market-oriented activities, in 
both internal and external markets;  to diversify ru ral activities;  and to incr ease the agricultural value 
added and promote agri-business.  In order to meet  these challenges, the State intends to make the 
sector's institutional framework more effective and mo re efficient;  to facilitate access to capital and 
production factors;  to improve food security, expa nding production and agricultural processing;  to 
develop natural resources and protect natural producti on factors;  and to develop markets and organize 
key branches.  The latter have been identified for each of the 22 regions.  In the case of agriculture, 
the most important branches are rice, maize and sorghum, and for fishing, shrimps, tuna, spiny 
lobsters and traditional fishing are priorities. 
                                                      
6 The exploitation of Madagascar's fisheries and fore st resources is the subject of special subsectoral 
policies defined by regulatory frameworks (section (iii) below). 
7 IMF (2007a). WT/TPR/S/197/Rev.1 Trade Policy Review
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14. Since the end of 2005, the State has been pursuing its Programme national foncier (national 
land ownership programme) in order to make land tenure more secure.8  The lack of an operational 
property market represents a handicap to securitiza tion of financing for agricultural activities and, 
consequently, private investment in this activity.  According to the authorities, only 10 per cent of 
national territory was the subject of land ownershi p deeds in 2005.  The State's property services, 
under MAEP's responsibility, were unable to meet the demands from families seeking to obtain 
recognition of their land rights or requests to buy State-owned land so the Government rapidly 
decided to expand the network of property offices.   A property office is a neighbourhood community 
service responsible for administering land that is not  the subject of title deeds and for the community's 
land.  It issues a property certificate, which has full legal effect and allows all property transactions to 
be conducted.  The State also intends to reform land ownership legislation and update its application 
by computerizing topographical data and property deeds and certificates.  It should be noted that 
State-owned land or land registered in the name of the Malagasy State may not be bought by foreigners but may be the subject of a long lease for a maximum period of 99 years. 
15. There are three types of interv ention in the agricultural sector in Madagascar through the 
following:  the traditional activities of the MAEP (whi ch has around 3,588 officials);  projects;  and 
parastatal structures.  Research (into seeds and new growing techniques) is carried out by the Centre 
national pour la recherche app liquée au développement rural  – FOFIFA (National Centre for Applied 
Research for Rural Development), set up in 1974, whose activities are financed by the State.  The 
FOFIFA produces breeder seed, pre-foundation seed and foundation seed.  The latter are then 
multiplied at Centres multiplicateurs de semences  – CMS (seed multiplying centres), which have the 
status of a State-owned industr ial or commercial enterprise, by Groupements de producteurs de 
semences  – GPS (seed producers' groups) or by private operators.  The cost of the seed produced by 
the FOFIFA is determined according to its quality and the market price.  The MAEP also finances 
projects in support of modern agriculture by prov iding inputs and agricultural equipment (with a 
subsidy of 40 per cent).  Overall, the MAEP's budget (for operations and investment) amounted to 
MGA 195 billion in 2007, almost twice that in 2006. 
16. There are many projects in the field (creation of reservoirs, support for purchasing 
agricultural equipment, eradication of animal diseas e) financed by external funds;  for example, the 
World Bank is financing a development support proj ect (2001-2008), and the European Union and its 
member countries are also closely involved.  Pa yment for services and goods supplied depends on the 
donors and complies with the provisions laid down in the financing agreements signed between 
Madagascar and the donors.  The FIFAMANOR, a pa rastatal structure, produces foundation seed for 
potatoes, sweet potatoes and wheat, which is then sold  to farmers at a fixed subsidized price.  In 
addition, many NGOs are working in the field. 
17. The State is planning to set up an agricultural development fund in the near future, partly 
financed from external sources.  In order to promot e activities oriented towards internal and external 
markets, the State intends to increase the number of structures (farmers' organizations, markets, price monitoring centres such as that for ri ce) able to relay market trends to producers.  Value added is low 
because the majority of agricultural products are ex ported without processing.  The State plans to set 
up agri-business centres to train and support farmers in  relation to production, marketing and export.  
It is also a question of producing goods that meet  consumers' expectations as far as sanitary and 
quality standards are concerned.  Madagascar's Chamber of Agriculture was set up in 2002 to 
facilitate the exchange of information among producer s and allow them better to defend their interests 
vis-à-vis  the central authorities. 
                                                     
 
8 For further details, see the State's releva nt web site:  http://www.foncier.gov.mg. Madagascar WT/TPR/S/197/Rev.1 
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18. At present, the principal tax-related support measures for farmers, livestock breeders or 
fishermen are:  exemption from the company profits tax (IBS) and the minimum tax on new 
companies engaged in agriculture for the first two financial years with a 50 per cent reduction for the 
third financial year9;  the summary tax (applicable to indi viduals or companies whose turnover or 
annual gross income does not exceed MGA 6 million) at a reduced rate of 6 per cent10;  as well as 
various tax benefits under the free zone regime for export-oriented companies (Chapter II(4)).  The 
authorities point out that only those who are form ally registered as farmers or authorized as 
collectors11 pay tax.  Since 2002, the import of agricultura l inputs such as seed, fertilizer and herbicide 
has been subject to a zero tariff;  VAT must be paid. 
19. Madagascar's tariff policy gives relatively higher  nominal protection to agricultural products 
than to non-agricultural products.  The simple aver age of tariffs applied on agricultural products in 
2008, according to the ISIC definition (including livest ock, fishing and forestry), is 14.4 per cent 
(Table AIV.1), higher than the overall average of  13 per cent.  Agricultural products, including 
foodstuffs, may be subject to sanitary and phytosanitary measures (Chapter III(2)(vi)). 
20. Subsectoral policies apply, inter alia , to rice, cotton, tobacco, litchis, and to fishing and 
aquaculture and forestry.  The State is also pur suing its policy of withdrawing from agro-industrial 
units (section (i) above). 
(iii) Policy by subsector 
(a) Rice12 
21. According to the MAEP formula, "for Madagascar , rice is simultaneously an economic, social 
and political product"13, which explains its importance.  Rice is grown on 2,144,739 of the total 
2,994,501 farms.14  The area sown with rice is estimat ed to be 1,330,000 hectares (around 
three quarters of the area under crops).  Village -level rice farms have low yields (around 
2 tonnes/hectare annually).  The production is mainly for private consumption and only 26 per cent of the national crop is marketed.
15  Annual rice consumption per cap ita is around 120-140 kg.;  although 
production continues to increase (by 21 per cent sin ce 2001), it does not cover national requirements.  
Imports are needed and mostly come from Asia.  Despite population growth of 2.8 million between 
2001 and 2005, rice imports have remained stable (Table IV.2). 
22. In order to reach the PRSP objectives and becau se of the sustained growth of Madagascar's 
population and the key role played by rice in the rural economy, development of the rice market is one of the authorities' main concerns.  According to the plan adopted, the first stage in development is to 
increase rice production and then to improve its mana gement and remove the constraints (particularly 
road transport) on its marketing in Madagascar  from the farm to the table.  Since 2005, the 
consultation and guidance forum for the rice subsect or has organized regular consultations among the 
various actors in the subsector and the State. 
                                                     
 
9 Article 01.01.16, General Taxation Code (2006 edition). 
10 Article 01.06.02, General Taxation Code (2006 edition). 
11 Decree No. 65-046 of 10 February 1965 provides that agricultural products or livestock or fisheries 
products may only be collected by authorized collectors.   The purpose of this requirement is to encourage 
efficient collection and transfer to wholesalers. 
12 Directorate-General of the Economy, Ministry of the Economy, Finance and Budget (2004); 
Embassy of France in Madagascar, Economic Mission (2006b). 
13 Directorate-General of the Economy, Ministry of the Economy, Finance and Budget (2004). 
14 Embassy of France in Madagascar, Economic Mission (2006b). 
15 Directorate-General of the Economy, Ministry of the Economy, Finance and Budget (2004). WT/TPR/S/197/Rev.1 Trade Policy Review
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23. In order to increase the yield per hectare, the authorities plan to make the seed improved by 
the FOFIFA available.  Training is proposed in  order to develop producers' professional skills and 
make it easier for them to adopt new rice-growing techniques.  The State invests in improving the operation of irrigation channe ls.  It also assists storage by establishing village-level community stores.  
In order to lessen the isolation of the regions pr oducing rice, as well as to reduce the time taken to 
bring rice to local markets and lower transport costs,  the State is also investing in rehabilitating rural 
roads. 
24. The authorities are seeking to facilitate the ope ration of local markets in order to prevent 
shortages of rice that upset price trends, as happene d during the rice crisis of 2004-2005.  Collectors 
are the only persons authorized to collect agricultu ral products such as rice from farmers and sell them 
to wholesalers;  their role is intended to avoid large numbers of intermediaries and to place such 
activities on a formal basis.  Since 2005, prices on local markets have been monitored by the rice 
monitoring centre, whose findings are available onlin e and in other media in order to inform the 
various actors in the subsector (Chapter III(4)(ii)). 
25. Rice imports help to make good the deficit in  national production and avoid shortages when 
there is a seasonal shortfall (bet ween September and March).  Al though only small quantities of rice 
are imported in comparison with domestic production, they in fact supply one third of the market on 
average and only 26 per cent of domestic production is sold.  Tariff policy on rice varies according to the needs of the domestic market;  since 2005, the import of any type of rice (seed, paddy, husked, etc.) has been subject to a zero tariff.  Ot her taxes are usually levied.  In the medium term, 
Madagascar hopes to become a net exporter of rice. 
(b) Vanilla 
26. Since May 1995, the vanilla subsector has been liberalized and the Vanilla Fund abolished.  
The vanilla-producing zones are concentrated in th e east of Madagascar and are estimated to cover 
29,500 hectares.  Since 2001, when the producer price rose sharply, there has been a marked 
expansion in the growing of va nilla although prices have tended to drop since 2004.  Madagascar 
nevertheless remains the leading exporter of vanilla (a round 67 per cent of the world total).  Vanilla is 
all exported in a raw state and vanillin is extracted  in the importing countries;  artificial vanillin 
competes with the natural form.  Vanilla exports are subject to a quality standard (Chapter III(3)(iv)), 
which is controlled by the Ministry of Trade's analytical laboratory. 
27. In order to place them on a more professional basis, since 2001 the activities of vanilla 
planters and preparers have been regulated.
16  The SAVA Enterprises Group (GES) is responsible for 
the professional licences given to planters and prepar ers and also plays a key role in organizing 
markets and the subsector (dates of the harvest and opening of the season, monitoring the market for 
green vanilla, reinforcing control systems).  The Groupement national des exportateurs de la vanille  – 
GNEP (National Group of Vanilla Exporters) is co mposed of some 240 small groups comprising over 
15,000 planters.  Since 2007 there h as been a forum for consultation in  the vanilla subsector in order 
to encourage regular consultations among the va rious actors in the subsector and the State. 
28. In Madagascar, vanillin is highly protected.  It  may not be imported into Madagascar without 
prior authorization (Chapter III(2)(v)).  The maximum tariff of 20 per cent applies, together with VAT of 20 per cent and excise duty of 180 per cent.  Neve rtheless, vanillin is still not produced on an 
industrial scale in Madagascar. 
                                                     
 
16 Decree No. 2001/234 of 24 March 2001. Madagascar WT/TPR/S/197/Rev.1 
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(c) Cotton17 
29. Despite the privatization of the former State-owned company HASYMA in 200418, the cotton 
subsector has not been radically reorganized.  HASYMA has a monopoly of the production of cotton lint in Madagascar and is still the only buyer of  the seed cotton produced.  It directly employs 
500 workers and supports growers, some of whom are organized into groups.  The objective of HASYMA is to achieve production of 50,000 tonnes of  seed cotton in the medium term, i.e., twice the 
2006 level.  The State does not intervene directly  in HASYMA's support policy, but is represented on 
the company's governing board. 
30. The company determines a set price for buying seed cotton from growers;  in 2005, this price 
(in lint equivalent) was effectively two thirds of the global price.  HASYMA provides seed, fertilizer and phytosanitary products (the latter mostly impor ted) on credit, as well as equipment.  It issues an 
international tender for the supply of fertilizer and phytosanitary products to cotton growers at cost 
price without any margin.  Since 2003, however, it would appear that the increased price of inputs 
greatly exceeds the price of seed cotton, which makes cotton growing less profitable.  Cotton growers also finance their purchase of equipment through micro-finance, but this source appears to be 
inadequate. 
31. The seed cotton produced is stored and then collected by HASYMA.  Its transporters are 
private persons selected through a bidding procedure, w ith the cotton being delivered to the factory on 
trucks leased by HASYMA.  After being ginned (the average rate is 40 per cent), HASYMA exports the cotton lint or delivers it to the only spinni ng company, COTONA, a free enterprise.  HASYMA 
sells cotton seed separately.  The cotton spun in  Madagascar has become of increasing economic 
importance since the country started to participat e in the textile initiative under the United States 
AGOA (Chapter II(3)(ii)(f));  Madagascar has been gi ven a special waiver for the incorporation of 
fabrics from third countries, renewed until 30 Se ptember 2012.  In addition, it supports several 
initiatives in favour of African cotton. 
32. Cotton yarn and fabrics are given the maximum tariff protection of 20 per cent (Table AIII.1).  
VAT of 20 per cent applies both to imported cotton lint and to that domestically produced. 
(d) Litchis 
33. Litchis, a tropical fruit, are one of Madagascar's major exports.  The domestic crop is 
estimated to be some 100,000 tonnes, a quarter of which is exported.  Litchis are a highly seasonal 
fruit and are harvested after a short growing period.   The harvest is then sold on export markets 
between November and January.  The fresh fruit is exported as Madagascar does not have any 
processing capacity, with export mostly being transpor ted by sea, although some go by air.  The main 
export market for Malagasy litchis is France
19, where it competes with litchis produced by neighbours 
(South Africa and Mauritius).  Litchis are subject to an optional export standard (Chapter III(2)(vi)).  
                                                      
17 Ministry of Agriculture, Livestock and Fisheries (2005). 
18 HASYMA is 90 per cent owned by Dagris, while the State still has 10 per cent of the shares.  
According to the terms and conditions of sale, Dagris must  sell some of its shares to cotton growers in order to 
incorporate them into the new compan y; this stage has not yet been comp leted.  The Malagasy company, a 
subsidiary founded in 1973 by the Compagnie française pour le d éveloppement des fibres textiles , the former 
name of Dagris, was nationalized in 1978 when the capital was increased.  " Dagris s'offre HASYMA pour 
1.6 millions de dollars " (Dagris takes over HASYMA for US$1.6 million), 20 September 2004.  Consulted at:  
http://www.sobika.com/fich_news/v2 /news_436.htm [29 October 2007]. 
19 COLEACP EXPRESS, No. 25, June  2006.  Consulted at:  http://w ww.coleacp.org/fo_internet/doc/ 
Fîle/Coleacp_Express/FR_COLEACP_EXPRE SS_025.pdf [29 October 2007]. WT/TPR/S/197/Rev.1 Trade Policy Review
Page 60 
  
The total export earnings are around €14 million.  A consultation forum for the litchi subsector was 
set up in 2006 in order to encourage regular cons ultations among the various actors in the subsector 
(producers, collectors, transporters and exporters) and the State. 
34. Litchi imports are subject to the maximum tariff of 20 per cent and VAT of 20 per cent also 
applies. 
(e) Tobacco 
35. Tobacco is the subject of a special regime in Madagascar because its  cultivation plays an 
important role in the rural economy.  Some 29,000 tobacco planters are listed.  The Office malgache 
des tabacs  – OFMATA (Malagasy Tobacco Board) has had a monopoly of tobacco production in 
Madagascar since 1969.  It gives producers support,  determines a floor price for purchases of tobacco 
and supplies inputs on credit.  The OFMATA supplies tobacco in stable and fermented leaves to the two factories manufacturing cigarettes and chewing tobacco.  Domestic production was estimated to 
be around 3,000 tonnes in 2006.  The OFMATA also has a monopoly of tobacco imports, and may import those varieties that are not produced locally in  order to make cigarettes.  In addition, imported 
cigarettes are subject to the maximum tariff protec tion of 20 per cent and VAT of 20 per cent is also 
levied, together with excise duty of 230 per cent (the  local product is subject to 20 per cent VAT, but 
the excise duty is lowered to 135 per cent). 
(iv) Fisheries and aquaculture 
36. The fisheries and aquaculture subsector (together with the mining and tourism subsectors) is 
one of the three major activities on which the au thorities are relying to boost the medium-term 
economic development of Madagascar.  The master plan for fisheries and aquaculture for 2004-2007 
aims to increase freshwater fish production in orde r to help to meet the population's food needs and 
increase foreign currency earnings by exporting  fisheries products.  Madagascar has around 
42,500 fishermen. 
37. The regulatory framework for fisheries dates from 1993
20, and the separate regulatory 
framework for aquaculture from 2001.21  Fishermen must obtain a fishing licence and pay a royalty 
which varies according to the type of ship and the catch (tuna, shrimps, crustaceans, fish or other).22  
The Agence malgache de la pêche et de l'aquaculture  – AMPA (Malagasy Fisheries and Aquaculture 
Agency) issues fishing licences.  The authorities do not have any policy on quotas for catches by 
species but aim to manage fisheries resources by managing the fleets.  Nevertheless, it may be decided to stop fishing for certain periods in order to protect stocks. 
38. The Groupement des armateurs de pêche crevettière de Madagascar  – GAPCM (association 
of owners of shrimp fishing vessels of Madagascar),  set up in 1994, is in volved in managing the 
shrimp fishing subsector.
23  With backing from Madagascar's development partners, support structures 
have been set up, such as the r esearch programme, the fisheries m onitoring centre and the economic 
observatory.  Since 2000, the system for granting licences and monitoring the environmental aspects 
has been totally revised.  The GAPCM is involved in  identifying the periods for closure and reviewing 
production methods in order to optimize the catc hes, lower fuel consumption and reduce the 
incidental capture of other fish and turtles.  Since 2004, fishing gear on shrimp fishing vessels has been equipped with turtle exclusion devices (Chapt er III(3)(iv)).  The GAPCM considers that shrimp 
                                                     
 
20 Ordinance No. 93-022 of 4 May 1993. 
21 Law No. 2001 of 12 December 2001. 
22 Interministerial Order No. 5558/97 of 18 June 1997. 
23 Rojat, D. and Andriantosa, M. (2004). Madagascar WT/TPR/S/197/Rev.1 
 Page 61 
 
 
fishing meets the criteria for responsible fishing with in the meaning of the FAO Code of Conduct.  In 
2004, it signed an agreement with the WWF in order to obtain eco-certification for exports by shrimp 
farms.  
39. Shrimp farming (part of marine aquaculture) on average accounted for 36 per cent of the total 
annual production of shrimps during the period 2000-200524;  part of this production is exported.  
Shrimp farming experienced a crisis in 2004, but si nce then has continued to grow and accounted for 
40 per cent in 2005.  In 2007, some 7,000 tonnes were exported.  As relativel y large investment is 
needed for this activity because the ponds have to be  installed, shrimp farms are often to be found 
under the free zone regime (Chapter II(4)), which e xplains why shrimp farming is geared towards 
exports.  Malagasy exports consist of whole shri mps, shrimp tails and shelled shrimps and the 
principal export market is the European Union.  Ex ports of fisheries products to the EU are subject to 
Malagasy sanitary standards drawn up to meet the requi rements of this market and to strict regulations 
applicable to fisheries esta blishments (Chapter III(3)(iv)).  
40. The fisheries subsector enjoys relatively high ta riff protection of 18.8 per cent, way above the 
global average of 13 per cent (Table AIV.1).  This  tariff structure does not encourage the quest for 
competitiveness in the subsector and consequently production is oriented to wards exports in the 
absence of various benefits.  This explains why op erators in the subsector are mostly to be found 
under the free zone regime.  
41. Foreign vessels may fish in Madagascar's EEZ unde r bilateral agreements.  Deep-sea fishing 
for tuna takes place in the EEZ under bilateral agreem ents with the European Union (EU) and Japan.  
The EU and Madagascar have signed a new six-year  fisheries partnership agreement, which took 
effect on 1 January 2007.25  This allows 43 tuna freezer sein ers and 76 long-liners belonging to 
EU member countries to fish in Malagasy waters subject to a fishing licence to be issued by the 
Malagasy authorities, with compensation amounting to €1,197,000 for a total catch of 13,300 tonnes of tuna annually.  Japan and Madagascar signed a protocol of agreement on fishing on 24 October 2005 for a period of three years allowi ng access to 44 Japanese long-liners.  The financial 
counterpart is set at US$2,000 and US$5,000 per ship  per month, in addition to an entry fee for the 
EEZ amounting to US$1,000 per entry.  Japan finances investment in the fisheries sector (for 
example, building a market).  
(v) Forestry 
42. Madagascar's regulatory framework for forestry has not changed since the first review of its 
trade policy in 2001.
26  The objective of forestry policy is the sustainable management of forest 
resources and their beneficiation in order to cont ribute towards economic development.  This policy 
mainly concerns the management of State-owned fo rests, 24 per cent of whose total surface area is 
composed of zones (preservation forests, national parks and special reserves) to which the timber 
industry in principle has no access, while the remain der may be used for commercial forestry.  Since 
2003, the State has gradually put in place protected  areas (1 million hectares annually with a view to 
reaching 12 million hectares by 2015).  
                                                      
24 Embassy of France in Madagascar, Economic Mission (2005a). 
25 European Union press release IP/06/847, "EU an d Madagascar initial new fisheries partnership 
agreement", 26 June 2006.  Consulted at:  http://europ a.eu/rapid/pressReleasesActio n.do?reference=IP/06/847& 
format=HTML&aged=0&language=EN&guiLanguage=en [14 October 2007]. 
26 Law No. 97/017 of 8 August 1997 and Decree No. 98/781 of 16 September 1998 determining the 
general conditions for application of this Law. WT/TPR/S/197/Rev.1 Trade Policy Review
Page 62 
  
43. Commercial forestry policy is implemented by the Ministry of the Environment, Water 
Resources and Forests (MAEF)27, through forestry commissions on which forestry companies and 
NGOs involved in environmental protection are represen ted.  The main forestry authorization is an 
agreement on forest exploitation, which is acco mpanied by terms and conditions, setting out the 
company's rights and obligations together with those of the State.  The terms and conditions include a 
management plan based on a model drawn up to ensure the sustainable management of the forests concerned and operating permits are is sued annually in accordance with this plan.  Signatories to such 
agreements undertake to pay forest royalties,  including a levy on export of the products.
28  For wood 
forest products, since 1994 the tax has been 1.5 pe r cent of the f.o.b. price for processed wood and 
4 per cent of the f.o.b. price for logs and wood in the rough29;  in principle, however, Madagascar does 
not allow the export of unprocessed forest pr oducts, since 2006 for processed woods (rosewood and 
ebony)30, and since 2007 for all products coming from natural forest.31  Before it is allowed to leave 
the forest, any resource exploited must bear th e regulatory marks laid down in the terms and 
conditions.  
44. Because of these bans, it would appear that no wood in the rough of any species is any longer 
exported and only pinewood (grown on plantations) is exported in a processed state (Table IV.4).  In 
2006, earnings from the export of all forest produc ts amounted to MGA 24 billion (of which 1.5 per 
cent came from export levies).  The exports cons isted of various processed woods (55 per cent), 
handcrafted products and other finished products ( 12 per cent), essential oils and medicinal plants 
(32 per cent).  France is the main destination, bu t other markets are being developed, for example, 
Belgium, Switzerland, Germany, Italy and Singapore.  
45. Using the ISIC definition, the simple average of the tariff on imported products in the timber 
subsector is 6.8 per cent (Table AIV.1), below the ov erall average of 13 per cent.  Internal taxes are 
also levied on timber (Chapter III(2)(iv)(b)).  
Table IV.4 
Exports of forest products, 2006 
Type of product exported Volume Value 
(MGA) Taxes levied 
(MGA) 
Main products     
Anakaraka wood 340 m²;  25.683 m3 61,895,611 1,130,348 
Rosewood 457m;  3,565 m2,and 338.42m3 831,653,168  12,481,754  
Pinewood 202 m²;  43,563.697 m3 13,221,466,437 243,310,444 
Sohihy wood 445.24 m²;  4.7 m3 41,550,547 655,642 
Sohy wood 68 m² 2,144,405 32,166 
Teak wood 5.580 m3 8,667,972 130,020 
Eucalyptus wood 10.524 m3 12,055,296 180,829 
Ordinary wood 70 m²;  55.383 m3 113,550,164 2,172,301 
Katrafay 135.740 m² 8,275,164 124,127 
Varongy  6,002,100 90,032 
Table IV.4 (cont'd) 
                                                      
27 Decree No. 98/782 of 16 September 1998. 
28 The other levies are:  the operating permit tax (wood forest products);  the tax on collection (non-
wood forest products);  the logging permit tax;  the tax on entry into forest stations;  and the tax on transactions. 
29 Order No. 5139/94 of 15 November 1994. 
30 Interministerial Order No. 16030/2006 of 14 September 2006. 
31 Interministerial Order No. 10885/2007 of 3 May 2007. Madagascar WT/TPR/S/197/Rev.1 
 Page 63 
 
 
Type of product exported Volume Value 
(MGA) Taxes levied 
(MGA) 
By-products and other products     
Charcoal 33,000 kg. 5,605,120 84,078 
Copal 1,043 kg. 3,573,745 105,858 
Raffia 4,842 kg. 12,939,519 194,093 
Finished products     
Miniature model boats  187,985,787 2,819,788 
Furniture and/or furnishings  788,404,749 11,826,073 
Display units  98,296,447 1,474,446 
Handcrafted products  1,921,976,045 28,759,490 
Essential oils and medicinal plants     
Essential and plant oils  6,277,101,275 24,494,766 
Medicinal plants 412,254 1,577,881,441 31,828,910 
Medicinal seeds 72 3,858,305 39,796 
Total  24,904,883,399 361,934,968 
Source : Malagasy authorities. 
(3) MINING , ENERGY AND WATER  
(i) Mining products 
(a) Overview 
46. Madagascar has considerable mining potential.  Mining is one of the three major growth 
sectors (together with fisheries and aquaculture a nd tourism) on which the authorities are counting to 
form the basis for the country's medium-term economi c development, but currently, its contribution to 
Madagascar's GDP is marginal (Table I.1).  A lthough Madagascar produces chromite, graphite and 
gemstones, these are almost all exported in the ro ugh state without any value added; in 2006, the 
value of exports was MGA 86 billion, approximately  twice the value in 2000.  These exports could 
increase in the near future when  large new mines (ilmenite and nickel) start to operate under the 
Mining Code and in accordance with the environmental provisions (section (b)).  These projects may be eligible for the special regime on large-scal e mining investment (section (b)).  Mining is the 
activity that has attracted the largest amount of fore ign direct investment since the first review of 
Madagascar's trade policy in 2001.  
47. Currently, Madagascar produces chromite ore with  a content of 48 to 49 per cent in the mines 
at Ankazotaolana and Bemanevika, operated excl usively by the State-owned company Kraomita 
Malagasy (KRAOMA), which also has a monopoly of the marketing of Madagascar's chromium.
32  In 
2006, output was around 132,330 tonnes, of which 116, 290 were exported, the main destinations 
being China, Japan and Sweden, for a turnover of M GA 28 billion.  The ore is transported by rail to 
the port at Tamatave.  Chromite is used for chemical and metallurgical purposes and the KRAOMA has a project for vertical diversification of production by means of value added.  Its price is fixed quarterly on the international market and is risi ng (from US$51/tonne in 2001 to US$161/tonne in 
2007).  The Bemanevika mine has reserves amounting to 3 million tonnes, but resources at the mine at 
Ankazotaolana will soon be depleted.  Madagascar also produces graphite.  
                                                     
 
32 United States Geological Survey (2005). WT/TPR/S/197/Rev.1 Trade Policy Review
Page 64 
  
48. Madagascar produces and exports precious, semi -precious and ornamental gemstones.  
Production is almost entirely on a small scale and is virtually all exported in the rough state to markets 
in Asia for cutting and making jewellery.  The sub sector is dominated by illegal exports, which makes 
it difficult to evaluate its contribution to the economy  and, consequently, that of the mining sector as a 
whole to the GDP, to employment and to exports.  
(b) Mining policy 
49. Since Madagascar's first TPR, the Mining Code has changed33, notably with a view to 
improving the collection and the shares of the earnings from the 2 per cent mining royalties accruing to the autonomous provinces, regions and local auth orities (70 per cent in all) and the State (30 per 
cent).
34  With the support of development partners, the mining policy adopted in 2003 has enabled the 
geophysical information to be updated, thereb y making prospecting easier.  Since 2006, this 
information has been available to  interested persons through the Base de données sur la promotion et 
la gouvernance des ressources minérales – BPGRM  (database on the promotion and management of 
mineral resources);  there is a charge for access to the site (MGA 700 to 100,000).35  Madagascar 
intends to observe the requirements of the Extrac tive Industries Transparency Initiative, and all its 
large mining companies have belonged to the Initiative since 2007.36 
50. The Code governs prospecting, exploration,  operations, possession, holding, transport, 
processing and marketing of useful mineral substanc es found in the soil or subsoil (with the exception 
of liquid or gaseous hydrocarbons or underground wa ter, which are the subject of separate regulatory 
frameworks), which are owned by the State.  Mining prospection may be freely undertaken within 
Madagascar, except in protected zones, temporarily  reserved classified zones and areas covered by 
mining permits or by an "exclusive area reservation authorization (AERP)".37  The three types of 
mining permit are:  an R permit (for prospecting a nd exploration), valid for five years and renewable 
twice for three years;  an E permit (for exploitatio n), valid for 40 years and renewable for several 
further 20-year periods;  and a PRE permit, exclus ively for small-scale operators for prospecting, 
exploration and operations, valid for eight years, rene wable for one or more four-year periods.  Gold 
panning is a separate activity.  
51. Since 2001, Madagascar has had a special fra mework to encourage large-scale mining 
investment38;  since 2005, this framework has been amende d to lower the threshold for eligibility from 
MGA 200 to 50 billion39 because the results obtained were disappointing.  This special regime gives 
the right to a series of tax and customs incentives applicable throughout the term of the original 
mining permit, including:  a tax of 25 per cent on the company's profits and those of subcontractors 
(instead of the standard rate of 35 per cent), which falls to 10 per cent for processing companies and 
their subcontractors40;  and in the case of companies whose entire output is exported, the right to 
                                                      
33 Law No. 99-022 of 19 August 1999 and its Implementing Decree No. 2000-170 of 15 March 2000. 
34 Law No. 2005-021 of 27 July 2005. 
35 La Gazette, " Le centre unique de données ouvre ses portes " (The single data centre opens), 
30 September 2006.  Consulted at:  http://www2. gaf.de/bpgrm/pdf/Dossier-Press_BPGRM-300906.pdf 
[2 November 2007]. 
36 Madonline, " Secteur minier:  pour plus de transparence " (Mining sector: greater transparency), 
29 August 2007.  Consulted at:  h ttp://www.madonline.com/artic le.php?article_id=2340&lang=fr [2 November 2007]. 
37 An AERP is granted for a non-renewable period of three months and gives the exclusive right to 
prospect and then, where applicable, to request a mining permit with a view to exploration and/or operations 
within the area covered. 
38 Law No. 20-2001 of 8 October 2001 and its Implementing Decree No. 2003-784. 
39 Law No. 2005-022 of 27 July 2005. 
40 The IBS rises to 35 per cent in the case of an internal  rate of return (IRR) after tax of 20 per cent, and 
to 40 per cent when the IRR exceeds 25 per cent. Madagascar WT/TPR/S/197/Rev.1 
 Page 65 
 
 
import the machinery and equipment covered by the investment project free of VAT.  Investors may 
also freely convert into foreign currency and transfer  the sums needed for their day-to-day operations 
and, subject to authorization, may transfer capital.   They may opt for the regime giving taxation and 
customs stability while at the same  time being eligible for more fa vourable measures if the State so 
agrees.41 
52. Mining projects under E permits are subject to environmental impact requirements, under the 
responsibility of the Ministry of the Environment.42  For example, QIT Madagascar Minerals S.A. 
(QMM)43 exploits Madagascar's mineralized sands with a view to producing ilmenite;  the 
commencement of operations at the Tolognaro mi ne by QMM was the subject of studies on the 
environmental impact on the coastal area in order to  minimize the negative impact.  The first stage of 
this project, affecting Mandena, was given an environmental permit in 2001.44  The project includes 
the building of a new mineral ore port at Ehoala.  Th e other large mining site, at Ambatovy, exploiting 
nickel deposits, has not yet gone through all the stag es needed to obtain its environmental permit.  In 
order to protect Madagascar's natural assets, so me NGOs are highly active in the area of the 
environment.  
53. Possession and transport of mining products requires registration and a special pass;  the 
mining authorities ensure that exports conform to  the declaration made by the exporter.  The 
conformity certificate issued by the mining authorities is required for the export of precious stones 
and metals and also semi-precious stones.  It w ould appear, however, that trade in these products is 
also through informal channels.  The authorities hop e to orient production to the formal outlets that 
are gradually being introduced;  the KRAOMA has set up a pilot gold agency in Brieville, which buys 
gold from authorized collectors at a price that is some 60 to 70 per cent of the international price.  
54. The average tariff on mining products is 7.1 per cent.  The import of cut precious stones is 
subject to the maximum rate of 20 per cent and VAT of 20 per cent.  This tariff structure does not 
encourage investment in local jewellery-making activities.  
(ii) Petroleum products and natural gas 
55. Although Madagascar does not at the moment produce oil, following the boom in global 
prices since 2003, investment by oil companies in expl oring and exploiting oilwells has risen sharply.  
It is expected that Madagascar will produce its firs t crude oil in March 2008.  Since the first TPR of 
Madagascar, the regulatory framework fo r petroleum activities has not changed.45  By means of three 
types of mining title (explorati on, operations and transport)46, it governs prospecting, exploration and 
exploitation of liquid or gaseous hydrocarbons found in  the soil or subsoil, including those within the 
EEZ, which belong to the State;  as well as activities (and facilities) for storage, transport and 
processing of hydrocarbons within Madagascar.  
56. The Office des mines nationales et des industries stratégiques (OMNIS) (National Mines and 
Strategic Industries Board), a State-owned enterpri se, is in charge of the national hydrocarbons 
mining subsector.47  It centralizes geological information (which is available for purchase) describing 
                                                      
41 Article 159 of the Mining Code. 
42 Decree No. 99-954 of 15 December 1999 covers the environmental impact of all types of investment, 
including that in mining. 
43 The company is 80 per cent owned by Rio Tinto and the rest by the State. 
44 Consulted at:  http://www.pnae.mg/mecie /QMM/index.html [2 November 2007]. 
45 Law No. 96-018 of 4 September 1996. 
46 Decree No. 97-740 of 23 June 1997. 
47 Decree No. 96-113 of 7 November 1996. WT/TPR/S/197/Rev.1 Trade Policy Review
Page 66 
  
the potential onshore and offshore;  21 mining titles fo r exploration had been granted by the end of 
2007.  In addition, OMNIS may propose two types of  operating contract to oil companies:  joint 
ventures;  and production sharing.  In the former case, the mining titles may be held by the partners, 
while OMNIS holds the titles in the case of produc tion sharing contracts.  Oil companies holding 
mining titles for exploitation must pay a royalty per barrel produced, depending on the volume, and 
also a direct tax on hydrocarbons (IDH) amounting to  30 per cent, based on the profits (the IDH gives 
exemption from profits tax).48  A temporary admission regime is available for machinery and 
equipment used for prospecting, exploration and surv eying of hydrocarbons.  Investment is subject to 
environmental impact requirements49 under the responsibility of the Ministry of the Environment.  
57. Madagascar imports oil to meet its population's fuel needs.  In 1999, activities downstream of 
the petroleum subsector (import of hydrocarbons a nd gas, their processing, transport, storage and 
distribution) were liberalized.50  In 2000, the components of the formerly State-owned company 
SOLIMA, which had a monopoly of these activities, were privatized.  The Office malgache des 
hydrocarbures (OMH) (Malagasy Hydrocarbons Board) is the regulatory authority for the 
downstream sector and issues authorizations to opera tors for the import, processing, transport, storage 
and sale of hydrocarbons;  these activities are open to natural or legal persons (both Malagasy 
nationals and foreigners).  The exercise of such  activities, however, requires an operating licence and 
the payment of certain costs.51  Currently, licences to import hydrocarbons are held by JOVENNA, 
TOTAL, GALANA (and its refinery), Shell, JI RAMA, Madagascar Petroleum International Gas 
Station (MPIGS) and Madagascar Energy International Gas Station (MEIGS).  The only refinery at 
Toamasina, privatized in 2000 and taken over by  GALANA, is winding up its activities.  Several 
operators also hold licences for the storage and tr ansport of hydrocarbons and for the sale of fuel.  
58. The OMH ensures that the products imported or sold and the petroleum facilities comply with 
the standards in force.  It monitors fuel suppli es in Madagascar.  Until 2004, it was also responsible 
for drawing up price lists.  Since then, however, pr icing policy has changed from one of fixed ceilings 
to free pricing by operators.52  The OMH still monitors prices and margins in order to exert pressure 
on operators in the sector if their margins ar e excessive.  The OMH is awaiting the effective 
introduction of the new framework so that there can be proper competition.  Import of petroleum 
products is subject to special tariffs which vary  from MGA 12/kg. net to MGA 390/litre depending on 
the product and also to special taxes (the tax on pe troleum products (TPP)), VAT of 20 per cent, and a 
number of special levies (a tax on shipments to finance the OMH, another for the environment and 
one for road maintenance).  
(iii) Electricity and water 
59. Madagascar's national electricity scheme is co mposed of the Antananarivo and Fianarantsoa 
interconnected networks and independent centres.  A large proportion of the electricity generated 
(70 per cent) comes from hydroelectric power stations and the remainder from thermal stations.  The 
total installed capacity is currently 233 MW.  Furt hermore, the Antananarivo interconnected network, 
with a peak of 111 MW in 2000, has reached the limit of its capacity.  
                                                      
48 Law No. 96-010 of 12 August 1996. 
49 Decree No. 99-954 of 15 December 1999 covers the environmental impact of all types of investment, 
including that in mining. 
50 Law No. 99-010 of 17 April 1999. 
51 Decree No. 2004-669 of 29 June 2004 covers the types of licence.  The procedure generally takes 
about 120 days.  A licence to import hydrocarbons is issued against the equivalent of US$40,000 in MGA;  it is 
valid for seven years and its renewal or transfer costs th e equivalent of US$20,000 in MGA.  Overall, the OMH 
offers 18 types of licence. 
52 Law No. 2004-003 of 24 June 2004. Madagascar WT/TPR/S/197/Rev.1 
 Page 67 
 
 
60. In 1998, the State started to liberalize production, transport and distribution of electricity53, 
but these activities have attracted few investors.  The Office de régulation de l'électricité –  ORE 
(Electricity Regulation Board) is responsible for granting permits and concessions to suppliers (both 
from Madagascar and abroad), which should be gran ted following an invitation to tender although in 
practice they are granted as a result of a spontaneous  candidature.  Permit holders must pay a levy of 
1.2 per cent on their turnover and the sums  collected are used to fund the ORE.54  The State-owned 
company JIRAMA holds ten-year concessions for three activities, the generation, transport and 
distribution of electricity.  Following liberaliza tion, other producers have come on the scene and 
supply JIRAMA, which is still the only company engage d in transport and distribution.  Electricity 
producers are free to fix the selling price;  currently, the State sets ceiling prices for transport and distribution.  The latest price-list dates from N ovember 2007, with a price increase of 30 per cent in 
order to bridge the gap between the price and JIRAMA's operating costs.  
61. Production as a whole is unable to satisfy demand so the rate of electrification is low, 
particularly in rural areas where less than 2 per cent of the population has access to electricity.  The 
infrastructure is insufficient and a large number of the generation and distribution facilities are 
obsolescent.  Load shedding is common in the capital.   In the short term, reorganizing the JIRAMA is 
one of the State's priorities because of electricity supply problems.
55 
62. Forestry, mining, tourism or industrial co mpanies produce their own electricity, with 
authorization56, and are free to supply rural communities.  Ru ral electrification is financed through the 
Fonds national d'électricité – FNE (National Electricity Fund).57  In addition to grants from donors, 
the FNE is financed, inter alia , through a special contribution levied on each kilowatt-hour consumed 
in all exploitation centres (with the exception of electri city consumption billed at the social rate).  In 
2007, 21 villages were being connected to the el ectricity supply and US$110 million had been 
allocated for the electrification of 100 villages a year up to 2010.  
63. The JIRAMA also holds a ten-year concession for the production, transport and distribution 
of water.58  In 2004, 27 per cent of the population had access to drinking water and less than 20 per 
cent to a basic sanitation infrastructure, although in  rural areas the rate of access to water was 12 per 
cent.  In 2006, JIRAMA's total production amounted to 110 million m3, of which 60 per cent came 
from the city of Antananarivo and 40 per cent from th e six other large cities in Madagascar.  JIRAMA 
determines the price of water.  Following a consta nt increase in production, sales and consumption 
between 1996 and 2000, production is  now stagnating because use of the infrastructure is reaching 
saturation point while the number of subscribers con tinues to increase.  JIRAMA's disastrous financial 
situation and its low investment capacity hamper de velopment of the subsector in urban areas.  The 
company LAHMEYER was given a management contract to modernize the JIRAMA in 2005.  
64. With the support of donors, the Government ha s decided to open up the water subsector to 
private companies59 which will be able to carry out their activities alongside the JIRAMA.  The 
Autorité nationale de l'e au et de l'assainissement – ANDEA (National Water and Sanitation 
                                                      
53 Law No. 98-032 of 20 January 1999 and its Implementing Decree No. 2001-173 of 
28 February 2001. 
54 Interministerial Order No. 1055/2005 of 14 March 2005.  For information on the ORE, consulted at:  
http://www.ore.mg/ [29 December 2007]. 
55 IMF (2007b). 
56 Order No. 6678/2001 of 19 June 2001. 
57 Law No. 2002-001 of 7 October 2002. 
58 Embassy of France in Madagascar, Economic Mission (2005b). 
59 Implementing Decrees for Law No. 98-029 (Water Code) of 20 January 1999. WT/TPR/S/197/Rev.1 Trade Policy Review
Page 68 
  
Authority) was established60 and in 2003 regulatory texts for implementing the Water Code were 
adopted.  Nevertheless, the regulatory body has s till not been set up and the reorganization of 
JIRAMA remains a challenge with external financin g still to be mobilized.  Outside the area covered 
by the JIRAMA, water sources are managed collectively.  
(4) MANUFACTURING  
65. Manufacturing only plays a minor role in GDP fo rmation in Madagascar and there have been 
no important changes since 2001 (Table I.1).  In 2006, the manufacturing sector was essentially 
composed of companies set up under the free zone regime (43 per cent), a substantial increase 
compared with 2001 when these enterprises' share was only around 24 per cent (Table IV.5).  The 
companies concerned manufacture textile articles, process fisheries or timber products or are involved 
in shrimp farming.  In the manufacturing sector outside the free zone (Table IV.5), which is mainly oriented towards the domestic market, agro-industr y (beverages, foodstuffs and tobacco) plays the 
leading role (accounting for some 49 per cent of the sub-total), followed by the manufacture of 
building materials and metal articles (amounting together to 19 per cent).  The manufacturing sector also includes workshops making clothing or engage d in other small-scale activities, bakeries and 
some other small industries.  
66. Companies in the free zone are export-oriented and are generally more competitive than those 
outside this regime (Chapter III(3)(vi)).  The concerns of Malagasy firms, particularly manufacturers, include the high cost of access to financing, probl ems of electricity and water supplies, transport 
services and telecommunications, and macroec onomic instability, without forgetting poor 
governance.
61  In addition, the multilateral liberalizati on of textiles and clothing from 2005 onwards 
made Malagasy exports of these products more open to competition on foreign markets to which they 
had preferential access.62  Nonetheless, exports of these goods manufactured in the free zone 
amounted to US$195 million in 2006.  
Table IV.5 
Breakdown of activities in the manufacturing sector outside the free zone, 1999-2006 
 1999 2000 2001 2002 2003 2004 2005 2006 
Agro-industry  7  6  5  6  5  5  5  4 
Foodstuffs  21  20  20  21  22  21  21  22 
Beverages  28  27  26  25  24  24  22  21 
Tobacco  7  7  7  7  8  7  7  6 
Oils and fats   3  3  3  2  3  3  3  3 
Pharmaceuticals  8  7  7  7  7  7  8  7 
Textiles  2  2  2  1  1  1  1  1 
Leather  0  0  0  0  0  0  0  0 
Wood  3  3  3  3  3  3  3  2 
Building materials  5  5  6  5  5  5  6  7 
Metal industry  6  7  8  9  9  10  12  12 
Transport equipment  2  2  2  2  2  2  2  2 
Electrical appliances  7  8  9  8  8  8  9  9 
Table IV.5 (cont'd) 
                                                      
60 Decree No. 2003/192. 
61 World Bank Group, Africa Region, Private Sect or Unit, "Madagascar:  Investment Climate 
Statement", Note 3, September 2005.  Consulted a t:  http://siteresources.worldbank.org/EXTAFRSUMAFTPS/ 
Resources/note_3_screen.pdf [2 September 2007]. 
62 Ernst C., Ferrer, A.H. and Zult, D. (2005). Madagascar WT/TPR/S/197/Rev.1 
 Page 69 
 
 
 1999 2000 2001 2002 2003 2004 2005 2006 
Paper  1  2  1  1  2  2  1  1 
Other industries  0  0  0  0  0  0  0  0 
Total  100  100  100  100  100  100  100  100 
Source : WTO Secretariat calculations based on statistics provided by the Malagasy authorities . 
67. Sugar63 is produced by two State-owned companies (outside the free zone), namely, 
SIRAMA64 and SUCOMA.65  Protocol No. 8 on sugar (under the Cotonou Agreement) gives 
Malagasy sugar guaranteed access to  the European Union market for around 10,760 tonnes of sugar a 
year.  This volume is purchased at the guaranteed community price, which should fall by some 36 per 
cent between 2006 and 2009.66  Madagascar also has preferential quotas of 2,500 tonnes/year under 
the Special Preferential Sugar (SPS) scheme and 4,200 tonnes/year under the Everything But Arms (EBA) initiative.  In addition, Malagasy sugar is  given a preferential quota of 7,258 tonnes/year of 
raw sugar to the United States of America.  Th ese preferential quotas are not utilized.  Domestic 
production, however, cannot meet internal demand and large imports of s ugar are needed (over 
100,000 tonnes in 2005).  Imported sugar is in princi ple subject to customs duty of 20 per cent, plus 
VAT of 20 per cent and excise duty;  the latter' s rate is lower on domestically-produced sugar 
(Chapter III(2)(iv)(c)).  
68. Milk is collected from farmers and processed into dairy products by the private firms 
SOCOLAIT and TIKO;  domestic production is comp lemented by imports of powdered milk for the 
manufacture of dairy products.
67  Madagascar also produces beer under licence, rum, mineral water, 
sweetened beverages and local wine and alcohol.  These local products compete with similar imported 
products despite customs duty of 20 per cent.  In th e case of beer, wine and alcoholic beverages, the 
excise duty on local products is lower than that on imported products (Chapter III(2)(iv)(c));  the same 
applies to cigarettes.  In general, the manufactur e of beverages, foodstuffs  and cigarettes is given 
MFN tariff protection of 16.7 per cent (Table AIV.1) , with a large number of products subject to the 
maximum rate of 20 per cent and also to othe r import duties and taxes (Chapter III(2)(iv)(b)).  
69. The tariff structure does not encourage investme nt, particularly in agri-food industries, 
because of the relatively high cost of  agricultural raw materials, together with their relatively strong 
tariff protection so exporting firms tend to utilize the fr ee zone regime.  In addition, the high effective 
protection in the majority of industries, with a few exceptions (Chart III.2) does not encourage 
competitiveness and consequently expor t because of the lack of incentives.  
                                                      
63 Le Quotidien, "Dossier Sucre", No. 766, 14 April 2006.  Consulted at:  http://www.cite.mg/ 
malagasie/article.php?IdArticle=162 [9 September 2007]. 
64 The SIRAMA is composed of four sugar refineries (Ambilobe, Namakia, Nosy-Be and Brickaville) 
with nominal annual production capacity of 119,000 tonnes of sugar and 100,000 hl of pure alcohol, but it only produces some 20,000 tonnes/year.  The Ambilobe an d Namakia refineries are subcontracted out to the 
SUCOMA. 
65 The Chinese company SU COMA took over the  SIRANALA under a management leasing contract in 
1997.  This company has a sugar refinery in the Morondava plain; its annual production capacity is 
20,000 tonnes of sugar. 
66 WTO document WT/TPR/S/177/Rev.1 of 15 May 2007. 
67 Embassy of France in Madagascar, Economic Mission (2007a). WT/TPR/S/197/Rev.1 Trade Policy Review
Page 70 
  
(5) SERVICES  
(i) Transport 
(a) Water transport and port services 
70. Madagascar is served by large shipping lines (Maersk, Mediterranean Shipping Company) as 
part of their Indian Ocean routes.  The Société malagasy des transports maritimes  – SMTM 
(Malagasy Maritime Transport Company), a State- owned company, only operates one ship;  it is 
included in the privatization programme.  
71. Maritime transport is through the two main commercial ports:68  Toamasina, Madagascar's 
principal port on the east coast, 380 km. from the cap ital, and Mahajanga on the west coast, 570 km. 
from the capital.  Toliara and Diego are other tw o major ports in Madagascar.  The building of a 
mineral ore port started at Ehoala in 2007 as part of  the QMM project for extracting ilmenite and it is 
also planned to build a mineral ore port at Soalar a in connection with the exploitation of the cobalt 
and nickel mine at Ambatovy (section (3)(i)).  
72. The regulatory framework for maritime transport has not changed since Madagascar's first 
TPR in 2001.69  The State's policy has, however, been modified to hand management over to private 
operators.  The Agence portuaire, maritime et fluviale  – APMF (Port, Maritime and River Agency), 
set up in 200470, is responsible for controlling and monito ring independently managed ports and acts 
as the port authority in non-autonomous ports until 20 08.  It is responsible for maintaining maritime 
signalling and river and maritime navigation routes.  
73. The four independently managed ports, i.e., tho se in the hands of private companies in the 
context of public-private partnerships, are To amasina, Mahajanga, Toliary and Diego.  The Société du 
port autonome de Toamasina  – SPAT (Toamasina Autonomous Port  Company) has been modernizing 
the port facilities since 2005 in order, inter alia , to develop its role as a regional centre in 
Madagascar.71  The GasyNet (Chapter III(2)(ii)) is operating in the port.  Each year, 1.5 million tonnes 
of goods go through the port, of which almost 60 pe r cent are in containers.  In June 2005, the SPAT 
gave a 20-year concession for the new container te rminal to Madagascar International Container 
Terminal Services Limited (MICTSL).72  The International Ship and Port Facility Security (ISPS) 
Code applies in the independently managed ports.  
74. Madagascar's specific commitments under the GATS only relate to a small number of 
business services but not to any transport services.73 
(b) Land transport 
75. There have been changes in the regulatory framework governing land transport (by rail or 
road) since Madagascar's first TPR in 2001.74  The new policy for the sector aims to confine the 
                                                      
68 Consulted at:  http://portfocus.com/madagascar/index.html. 
69 Law No. 99-028 of 3 February 2000.  The framework is being revised to reflect the State's new 
approach to transport policy, both as regards maritime, river and land transport (section (b)) and air transport 
(section (c)). 
70 Decree No. 2003-659 of 4 June 2003. 
71 http://www.port-toamasina.com/. 
72 http://www.ictsi.com/operations.aspx?p_id=3 &category_id=72&operation_id=136&id=193. 
73 WTO document GATS/SC/51 of 15 April 1994. 
74 Law No. 2004-053 of 28 January 2005. Madagascar WT/TPR/S/197/Rev.1 
 Page 71 
 
 
State's activity to strategy and the design of infrastru cture, particularly for government investment in 
this area;  to define the public land transport service;  and to introduce a system for regulating 
operators and users in the subsector.  Respons ibility for regulation, granting concessions and 
management has been handed over to the Agence des transports terrestres  – ATT (Land Transport 
Agency).75  The Agency issues driving licences, car regi stration documents and permits for operating 
transport vehicles, as well as giving approval to road carriers;  the fees paid go towards the ATT's 
operating budget.  
76. The road network covers 50,000 km., of wh ich only 8,000 km. ar e in fair condition.76  The 
poor state of this infrastructure is an important  obstacle to Madagascar's economic development, 
particularly its agriculture, its mining sector and t ourism.  The rural transport policy, adopted in 2001, 
is aimed at expanding the network of sealed road s and rehabilitating rural roads and at resolving 
problems relating to their financing by decentr alizing responsibility for their maintenance.77  S i n c e  
2004, the land transport policy has been incorporated  into the Integrated Growth Poles (IGP) project 
in order to make the best use of the investment.  Large-scale road infrastructure rehabilitation projects 
are financed by development partners with a contribution from the Fonds d'entretien routier  – FER 
(Road Maintenance Fund), whose resources come from a special tax on the import of petroleum 
products (section (3)(ii)).  Some 16 per cent of budgetary expenditure in 2007 was allocated for 
government investment in the transport subsector.  
77. In large cities, authorized taxis and minibuses pr ovide the majority of urban public transport 
services.  Fares can be determined freely, but any increase must be communicated 15 days before it comes into effect for information purposes.  
78. Because of the poor state of the highway infr astructure, rehabilitation and extension of the 
railway network should be priorities.  There are two railways in Madagascar:  the northern route has 
been operating since 2004 under a concession give n to Madarail for 25 years;  while the Réseau 
national des chemins de fer – RNCFM  (Malagasy National Railway Network) for the south is 
included in the privatization programme.  The Mada rail (north) route is 750 km. long and is divided 
into three sections:  the TCE line (from the port of Toamasina to the capital Antananarivo), the 
TA line (from the capital to Antsirabe), and the ML A line (between Moramanga and Lake Alaotra).  
The company has promised substantial investment (€37.5 million over five years) to modernize the 
railway and meet demand for rail transport by mini ng companies.  The RNCFM is a major transporter 
of passengers and goods in the south of Madagascar.  The cost of rail transport may be determined 
freely.  For companies under Malagasy law,  an operating authorization may be required.  
(c) Air transport
78 
79. The regulatory framework governing civil aviation in  Madagascar is being revised in order to 
prepare the ground for liberalization of this activ ity.  According to the new Code adopted in 200479, 
regulation, granting operating licences and any other doc uments to air carriers (including suppliers of 
services at airports and airfields), and administ ering safety standards will be delegated to the Agence 
de l'aviation civile – AAC (Civil Aviation Agency).  For the time being, Aviation civile de 
Madagascar – ACM (Madagascar Civil Aviation) rema ins the authority responsible for the 
                                                      
75 Decree No. 2006-279 of 25 April 2006. 
76 http://www.worldbank.org/transpor t/rural_tr/gp_docs/madagascar.htm. 
77 Government of Madagascar, " Déclaration de politique et stratégies de transport en milieu rural " 
(Statement on rural transport policy and strategies),  May 2001.  Consulted at:  http://www.worldbank.org/ 
transport/rural_tr/gp_docs/mad_rt_pol&strat.pdf [3 November 2007]. 
78 Embassy of France in Madagascar, Economic Mission (2006c). 
79 Law No. 2004-027 of 9 September 2004. WT/TPR/S/197/Rev.1 Trade Policy Review
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subsector.80  The AAC negotiates Madagascar's bilateral agreements on air transport and  these have 
changed radically since Madagascar's first TPR in 2001.  For a long time Madagascar protected its air 
space because it was determined to guarantee the con tinuity of the national company Air Madagascar 
(still in the privatization programme), but is now in favour of increasing the number of routes and 
their frequency by all airlines and lowering prices in order to develop its tourism (section (ii)).  
80. In 2004, Madagascar signed an open skies agreemen t with the United States of America.  The 
Franco-Malagasy Bilateral Air Agreem ent of 1962 was renegotiated in 200581, and the agreement 
with Italy came into effect on a provisional basis in 2004.  In 2006, the 1992 agreement with Mauritius was renegotiated.  The new agreements signed with Egypt (2006) , Ethiopia (2007) and 
Senegal (2007) allow each of the parties to nominate an African multinational company as the 
national airline in conformity with the "Dec ision on the implementation of the Yamassoukro 
Declaration concerning the liberalization of air tr ansport and market access in Africa, signed on 
14 November 1999 and approved by the Heads of State of the African Union in July 2000".  
Madagascar is seeking to sign more reciprocal bilate ral agreements covering des tinations in Asia such 
as India and China in order to promote t ourism, both for business and leisure purposes.  
81. Air carriers are free to determine their fares, but these must be set at "reasonable" levels 
taking into account the relevant factors;  they ar e submitted to the other party 30 days before they 
come into effect.  A dispute settlement procedure is  provided if there is any disagreement.  Flight 
frequency is negotiated but may be increased on demand.  Commerci al activities are allowed, as is the 
transfer of the net earnings derived therefrom.  A ll the recent agreements provide for the first four 
freedoms, although the agreement with Italy also in cludes the fifth freedom.  None of the bilateral 
agreements authorizes domestic traffic.  
82. Madagascar's open policy has allowed it to be linked by international flights offered by 
airlines such as Air France, Corsair, Air Madagascar  and Air Austral (via the island of Réunion).  In 
addition, Air Madagascar has 20 weekly regional flights (Kenya, South Africa, Mauritius, Réunion, 
Comoros, Mayotte) and flights to Paris, Mila n, Kuala Lumpur, Bangkok (via Réunion) and 
Singapore.
82  Air Madagascar also serves 40 domestic d estinations;  under its agreement with the 
State, the company is obliged to service some unprofitable lines.  Since 2007, Air Madagascar has no 
longer been the only airline providing a domestic  service.  Some dozen small national private 
companies provide domestic passenger transport on demand.  
83. Madagascar has 12 airports and 43 airfields;  th e international airports are at Antananarivo, 
Nosy-Be and Fort-Dauphin.  The company ADEMA  (Aéroports de Madagascar), a State-owned 
company included in the privatization programme, has a monopoly for managing these airports.  It sets the rates for its services subject to approval by the Ministry in charge of transport.  Madagascar decided to leave the ASECNA which provides avia tion assistance in the form of meteorological 
services to all its member countries (except France ), because the budget allocated to the airports 
managed by the agency is deemed insufficient.
83 
                                                      
80 Decree No. 99-821 of 20 October 1999. 
81 Since 2007 the "Chirac tax" has applied to routes between France and Madagascar. 
82 Air Madagascar, flight schedule, 28 October 2007 to 29 March 2008.  Consulted at:  http://www. 
airmadagascar.com/jcms/index.php?op tion=com_content&task=view&id=36&Itemid=100 [3 November 2007]. 
83 L'Express , "Madagascar:  L'Asecna dans une mauvaise passe " (Asecna in bad straits), 
2 November 2007.  Consulted at:  http://fr.allafrica.com/stories/200711020586.html [3 November 2007]. Madagascar WT/TPR/S/197/Rev.1 
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(ii) Tourism84 
84. Madagascar is well known for its biodiversity and the large variety of its fauna and flora and 
since 2003 (with 2001 and 2002 being less fruitful year s) the number of tourists has continued to 
increase.  Between 2003 and 2004, this increase was around two thirds and then between 2004 and 
2005 the number of tourists (between January and September) rose to 202,485 (non-residents), a 21 per cent increase, with turnover of US$150 million.  This increase mainly consists of European 
tourists seeking discovery tourism, adventure s ports and eco-tourists, although business tourism (for 
the purposes of investment, humanitarian action or de velopment aid) has also been important in the 
capital.  
85. In general, tourism in Madagascar is less de veloped than in other destinations such as 
Mauritius.
85  Its tourism infrastructure, particularly transport, accommodation and related services, is 
confined to certain regions only, including Anta nanarivo, Nosy-Be and Fort-Dauphin.  Having 
identified them as having considerable developm ent potential, the World Bank's IGP project has 
identified three priority zones for development, including two devoted to tourism:  Nosy-Be and 
Fort-Dauphin.  In 2003, a master plan for t ourism in Madagascar, incorporating sustainable 
management, was adopted.  In order to encourag e the development of eco-tourism, tourism land 
reserves have been set up (Isalo is the first, eight  others are set up and more are being established).86  
In order to facilitate access to land by foreign i nvestors (Chapter II(4)), the land is bought by the 
Ministry in charge of tourism and becomes the subject of an international invitation to tender87;  
investment in this subsector is subject to the or dinary law regime, but foreign promoters may utilize 
the services of the GUIDE when setting up their busi nesses (Chapter II(4)).  Tourism facilities must 
respect the eco-tourism standards.  Tourism reserv es are poorly served by domestic transport and lack 
water, electricity and telecommunications.  Anot her obstacle to the development of tourism in 
Madagascar is the high cost of air transport, d espite the policy of opening up to competition pursued 
by Madagascar since 2004 (section (ii)(c)), as well as the limited availability of trained managers.  
86. There has been no change in the regulatory fra mework for tourism since Madagascar's first 
TPR in 2001.88  In principle, tourism facilities require authorization and must observe the prescribed 
standards.  In practice, only the facilities in Antana narivo appear to comply with these obligations and 
these were last surveyed in 2006.  The price of hotel services depends on their classification.  In 
Nosy-Be and Fort-Dauphin, the authorities are survey ing facilities (many of which lack authorization) 
and are encouraging them to meet the standards.  
87. Madagascar's specific commitments under the GATS relate to a small number of business 
services, including "maintenance and repair of equi pment (CPC 886);  preparation and control of 
basic equipment in the following sectors:  tourism an d hotels, with the exception of transport activities 
relating to tourism".89  Madagascar has expressed reservations  on the supply of these services through 
a commercial presence, although in practice such inv estment is eligible for the same ordinary law 
regime as that applicable to other sectors.  
                                                      
84 Embassy of France in Madagascar, Economic Mission (2006c). 
85 World Bank (2005). 
86 Ministry of the Economy, Trade and Industry, " Madagascar, une île paradisiaque, offre à tous les 
investisseurs qui veulent entrer dans le tourisme, une grande opportunité " (Madagascar, a paradise island, offers 
all investors in tourism a great opportunity) http://www.meci.gov.mg/ index.php?option=com_content&task= 
blogcategory&id=106&Itemid=282 [3 January 2008]. 
87 Consulted at:  http ://www.tourisme.gov.mg/. 
88 Law No. 95-017 containing the Tourism Code.  Decree No. 96-773 laying down standards applicable 
to companies, tourism companies, facilities and operators. 
89 WTO document GATS/SC/51 of 15 April 1994. WT/TPR/S/197/Rev.1 Trade Policy Review
Page 74 
  
88. Madagascar has been a member of the Wo rld Tourism Organization (UNWTO) since 1975.  
(iii) Telecommunications and postal services 
89. The Malagasy authorities attach great importance to the development of the 
telecommunications subsector, pursuant to their commitment in the MAP to make Madagascar a 
"linked nation".  Currently, the telecommunications subsector comprises TELMA90, which has the 
exclusive right to the commercial supply of basic fixed telecommunications services (telephone lines, 
national and international fixed calls) until June 2008 (i.e., four y ears after its privatization);  
GULFSAT Telephony, which has pr ovided telephone services since 2005 through the VSAT network 
to 11 isolated localities;  three mobile telephone companies, Orange, Madacom (a subsidiary of 
Celtel) and TELMA Mobile (a subs idiary of TELMA, launched in 2006)91;  as well as many Internet 
service providers (ISPs), a large number of di stributors of telephone car ds and mobile telephone 
booths.  Voice-over-the-Internet (VoIP) services are not allowed.  As a result of the growth in mobile 
telephony (Table IV.6), teledensity has progressed sharply in Madagascar si nce 2001 and in 2006 was 
6.4 lines per 100 inhabitants.  Access to the Inte rnet, however, which depends on fixed lines (only 
105,538 in 2006) or a satellite link, is still low.  
90. TELMA is currently investing in the installation of a backbone infrastructure so as to develop 
its high speed and telephony fixed services.  This scheme will eventually be linked to the outside 
because Madagascar is participating in two major regional projects for links using submarine fibre 
optics, which should in principle come about in 2008:  the Indian Ocean Islands network project, 
launched by the Indian Ocean Commission (COI) and COMESA;  and the EASSy project (Eastern 
Africa Submarine Cable System)92, to link Madagascar to the global submarine fibre optics network.  
At the end of 2007 only the latter project was under way with Alcatel as the supplier.  
Table IV.6 
Telecommunications service indicators, 2001-2006 
 2001 2002 2003 2004 2005 2006 
Subscribers, fixed lines 48,166 45,921 47,003 46,527 54,159 105,538 
Subscribers, mobile telephones 147,50 0 163,010 279,357 333,001 510,269 1,045,888 
Total subscribers 195,666 208,931 326,360 379,528 564,428 1,151,426 
Teledensity (lines per 100 inh.) 1.32 1.32 1.96 2.3 3.2 6.39 
Source : Malagasy authorities. 
91. The Office malagache d'études et de régulation des télécommunications  – OMERT 
(Malagasy Telecommunications Studies and Regula tion Board), set up in 1997, is the regulatory 
authority for the subsector.  The obligation to provi de universal basic services in principle lies with 
TELMA and their supply is financed through a sp ecial fund, the Telecoms Development Fund, 
administered by the OMERT, whose resources come from a fixed levy of 2 per cent on the annual turnover of all fixed or mobile telephony compani es.  Mobile telephony licences are awarded through 
a bidding procedure.  Tariffs for those areas open to  competition may be fixed freely, whereas the cost 
of services that are a TELMA monopoly are regulated;  the rates freely fixed by operators are 
                                                     
 
90 TELMA is 60 per cent owned by Distacom and the re mainder by the State.  Distacom's share is the 
result of the sale (in June 2004) by the State and Fran ce Cable & Radio of 34 per cent of TELMA (each) for a 
total amount of US$25.2 million. 
91 Embassy of France in Madagascar, Economic Mission (2007b). 
92 The member countries of this consortium are:  Botswana, Djibouti, Ethiopia, Kenya, Madagascar, 
Malawi, Mozambique, Rwanda, Somalia, South Africa, Sudan, Uganda and the United Republic of Tanzania.  
"EASSy (Eastern Africa Submarine Cable System)", April 2005.  Consulted at:  http://www.uneca.org/ 
disd/events/accra/ AccessAndinfrastructu re/EASSy.ppt [4 November 2007]. Madagascar WT/TPR/S/197/Rev.1 
 Page 75 
 
 
transmitted to the OMERT for information.  Inte rconnection rates are nego tiated among operators.  
Telephone equipment must comply with the international standards recommended by the ITU and be approved by the OMERT.  
92. Madagascar did not take part in the negotia tions on telecommunications services at the WTO 
after the Uruguay Round, which ended in 1997.  The regulatory framework was revised in 2005
93, 
following TELMA's privatization in 2004.  Sweep ing changes in the competition regime and in 
opportunities for investment in the subsector will,  however, not occur until TELMA's monopoly ends 
(after June 2008).  In principle, the OMERT should be replaced by the Autorité de régulation des 
télécommunications et des communications  – ARTC (Telecommunications and Communications 
Regulatory Authority).  The latter will be res ponsible for issuing licences to operators of 
telecommunications networks;  the declaration regime  will apply to ISPs;  and the free regime to call 
centres, inter alia .  Implementing decrees will be adopted to  regulate the opening up to competition.  
93. The government enterprise, La Poste, is responsib le for administering postal services.  It has a 
monopoly of reserved postal services (universal ma il service, postal financial services), and proposes 
a number of financial services through the postal savi ngs bank.  A number of private operators have 
been given licences to offer express mail services (f or example, DHL), in addition to those proposed 
by La Poste.  
(iv) Financial services 
(a) Banking and micro-finance services 
94. In Madagascar, commercial banking activities (excep t those provided by La Poste) are subject 
to the national banking regulations, which have  not changed since the first TPR in 200194;  the 
principal new feature is special regulations on micro-finance institutions (MFIs), in force since 
2005.95  Pursuant to the banking law, activities by any credit establishment require approval by the 
Commission de supervision bancaire et financière  – CSBF (Banking and Financial Supervisory 
Commission).96  The minimum capital required to set up any of these establishments is as follows:  
MGA 3 billion for Malagasy banks, non-Malagasy banks and specialized financial institutions;  
MGA 1 billion for financial establishments;  and MGA 15 to 700 million for MFIs in levels 2 and 3 of 
their classification97, if individual or collective approval (for a network) is required and if the MFI 
takes savings from the public.98  Conditions for engaging in banking are the same for all loan 
establishments whether owned by Malagasy nationa ls or foreigners.  The CSBF supervises the 
requirements for operating loan establishments, monito rs their financial situation and ensures respect 
for the profession's ethics, as well as exercising such control over MFIs in levels 2 and 3.  
95. Since 2001, the banking and micro-finance ser vices subsector has expanded from 12 to 
25 loan establishments.  Madagascar has eight co mmercial deposit banks, two of which are new;  
eight financial establishments, six of which were set up recently, notably for the purpose of proposing 
micro-credit services;  and nine MFIs (mutualist or not authorized to engage in micro-credit 
                                                      
93 Law No. 2005-023 of 17 October 2006. 
94 Law No. 95-030 of 22 February 1995. 
95 Law No. 2005-016 of 27 July 2005. 
96 Instruction No. 002/97/CSBF of 2 June 1997 (banks and financial establishments) and Instructions 
No. 002/2007, No. 003/2007, No. 004/2007, No. 005/2007 of 11 May 2007 (micro-finance institutions). 
97 Articles 14 to 17 of Law No. 2005-016 of 27 July 2005 define three levels of MFI (1 to 3).  All MFIs 
in level 3 may offer long-term loans, but only non-mutualist MFIs in this level may receive savings.  MFIs in 
levels 1 and 2 only offer short- and medium-term loans within the limits laid down in the regulations. 
98 Decree No. 2007-013 of 9 January 2007. WT/TPR/S/197/Rev.1 Trade Policy Review
Page 76 
  
operations), seven of which are new.  The privati zation that occurred in the subsector reduced the 
State's holding in several commercial banks in fa vour of French banking partners, even though the 
State's retains a sizeable share (Table III.5).  Among the commercial banks, the State Bank of 
Mauritius specializes in large accounts and banking  operations between Madagascar and Mauritius, 
and the BICM covers Malagasy imports of Chinese products.  Other banks ma inly offer finance to 
individuals and small- and me dium-sized enterprises (SMEs).  
96. The borrowing and lending rates proposed by the banks appear to be determined freely.  The 
lending rate does not seem to follow the trend la id down by the Central Bank of Madagascar (BCM) 
through its management of a reference rate.99  For example, the latter fell from 16 to 12 per cent 
during 2006, but the maximum borrowing rate remained fairly stable at around 14 per cent for fixed 
deposits for less than one year.  The lending rate applied ranges from 14 to 26 per cent for short-term 
loans, 12 to 17 per cent for medium-term loan s and 11 to 17 per cent for long-term loans.  
(b) Insurance services 
97. Since Madagascar's first TPR in 2001, the regul atory framework governing insurance services 
has not changed.100  Companies wishing to o ffer insurance services must be set up as public limited 
companies and comply with the law governing businesses.  They must obtain approval for each 
branch of activity – injury, life and capitalization – but may offer services in all branches.  The 
minimum capital required to set up an insura nce company offering personal insurance is 
MGA 100 million;  MGA 600 million for an insurance company offering insurance against injury;  
and MGA 1 billion for life insurance and capitaliza tion services.  The requirements for setting up a 
company are the same for foreign and Malagasy insu rers.  Approval for each branch is given by the 
Minister in charge of finance af ter the request has been reviewed.  
98. Madagascar's insurance market comp rises five approved suppliers:  the Compagnie 
d'assurances et de réassurances omnibranches  – ARO (Insurance and Reinsurance Company for All 
Branches);  the Compagnie malgache d'assu rances et de réassurances  – NY HAVANA (Malagasy 
Insurance and Reinsura nce Company);  the Mutuelle d'assurances Malagasy  – MAMA (Malagasy 
Mutual Insurance Fund);  and the Société d'assurances et de réassurances  – AGF-Madagascar 
(Insurance and Reinsurance Company);  the Société d'assurances et de reassurances  – 
COLINA-Madagascar (Insurance and Reinsurance Comp any).  The State has holdings in two of these 
companies, ARO and NY HAVANA.101 
99. A company established in Madagascar may not cover risks outside the country.  Likewise, 
risks in Madagascar may not be covered by non-reside nt companies;  residents may not take out direct 
insurance abroad in order to cove r a risk situated in Madagascar.  The only compulsory insurance is 
that for civil liability of owners of motor vehicles.   The policy on premiums is free but is monitored 
by the Ministry in charge of finance in order to en sure that the premiums are reasonable and take into 
account relevant factors, including the company's solvency and prudential standards. 
                                                      
99 Central Bank of Madagascar (2007). 
100 Law No. 99-013 of 2 August 1999. 
101 The State owns 73.35 per cent of ARO and 47.61 per cent of NY HAVANA. Madagascar WT/TPR/S/197/Rev.1 
 Page 77 
 
 
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