Sao Tome and Principe A. Definitions and sources of data The Investment Code of Sao Tome and Principe (Lei n.o 13/92) of 1995 does not provide a specific definition of foreign direct investment (FDI). The Government of Sao Tome and Principe does not provide data on FDI. Data on the annual inflows of FDI were gathered from the tapes provided by the International Monetary Fund (IMF) and from the Organization for Economic Co-operation and Development.

The prospect of oil resources being developed has greatly increased western strategic interest in Sao Tome and Principe, particularly from the United States. The United States highlighted the importance of Sao Tome and Principe in the Gulf of Guinea as an alternative to the Middle East.

After independence Sao Tome and Principe developed close links with several socialist countries, particularly Cuba, Germany, China and Angola. The former colonial power, Portugal has an influence, while France and Brazil have also become important partners. The decision to recognize Taiwan in 1997 has resulted in significant aid inflows. Sao Tome and Principe joined the African Union, New Partnership for Africa's Development, signed the Cotonou Agreement for the renegotiation of the African, Caribbean and Pacific Agreement with the European Union and was a founding member of the Communaute economique des Etats de l'Afrique centrale, in 1983. It is also a member the community of Francophone countries, Organization de la Francophonie. Given the size of the country, international representation on the islands is limited. Portugal, France, Nigeria, Angola, Cape Verde and Gabon maintain Diplomatic representation in Sao Tome and Principe. Of the United Nations' agencies, only the United Nation Development Programme and World Health Organization have full representation. The main offices for other United Nations' agencies, IMF and World Bank responsible for Sao Tome are in Gabon or Angola.

Posted November 2006

B. Statistics on FDI and the operations of TNCs

Table 1. Summary of FDI(Millions of dollars)

Variable Inward Outward1. FDI flows, 2002-2005 (annual average) 2.3 ..2. FDI flows as a percentage of GFCF, 2002-2005 (annual average) 12.7 ..3. FDI stock, 2005 24.3 ..4. FDI stock as a percentage of GDP, 2005 34.7 ..Source: Based on tables 3a, 4 and UNCTAD, FDI/TNC database.

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Table 3a. FDI flows, by type of investment, 1980-2005(Millions of dollars)

Inward investment Outward investment

Year

1980 .. .. .. .. .. .. .. ..1981 .. .. .. .. .. .. .. ..1982 .. .. .. .. .. .. .. ..1983 .. .. .. .. .. .. .. ..1984 .. .. .. .. .. .. .. ..1985 .. .. .. .. .. .. .. ..1986 .. .. .. .. .. .. .. ..1987 .. .. .. 0.2 .. .. .. ..1988 .. .. .. 0.2 .. .. .. ..1989 .. .. .. -0.1 .. .. .. ..1990 .. .. .. .. .. .. .. ..1991 .. .. .. .. .. .. .. ..1992 .. .. .. .. .. .. .. ..1993 .. .. .. -0.5 .. .. .. ..1994 .. .. .. .. .. .. .. ..1995 .. .. .. 0.03 .. .. .. ..1996 .. .. .. 0.3 .. .. .. ..1997 .. .. .. 0.1 .. .. .. ..1998 4.2 .. .. 4.2 .. .. .. ..1999 3.0 .. .. 3.0 .. .. .. ..2000 3.8 .. .. 3.8 .. .. .. ..2001 3.5 .. .. 3.5 .. .. .. ..2002 3.0 .. .. 3.0 .. .. .. ..2003 .. .. .. 0.9 .. .. .. ..2004 .. .. .. -1.6 .. .. .. ..2005 .. .. .. 7.0 .. .. .. ..

Note : FDI inflows: OECD for 1987, 1989, 1993, 1995-1997 and 2003-2004, IMF on the basis of net direct investment for1988, IMF for 1998-2002, and estimate for 2005. FDI outflows: Not available.

Source : UNCTAD, FDI/TNC database.

Equity Reinvested earnings

Intra-company

loansTotalEquity Reinvested

earnings

Intra-company

loansTotal

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Table 4. FDI stock, by type of investment, 1980-2005

(Millions of dollars)

Inward Investment Outward Investment

Year

1980 .. .. .. .. .. .. .. ..1981 .. .. .. .. .. .. .. ..1982 .. .. .. .. .. .. .. ..1983 .. .. .. .. .. .. .. ..1984 .. .. .. .. .. .. .. ..1985 .. .. .. .. .. .. .. ..1986 .. .. .. .. .. .. .. ..1987 .. .. .. 0.2 .. .. .. ..1988 .. .. .. 0.4 .. .. .. ..1989 .. .. .. 0.4 .. .. .. ..1990 .. .. .. 0.4 .. .. .. ..1991 .. .. .. 0.4 .. .. .. ..1992 .. .. .. 0.4 .. .. .. ..1993 .. .. .. -0.1 .. .. .. ..1994 .. .. .. -0.1 .. .. .. ..1995 .. .. .. -0.1 .. .. .. ..1996 .. .. .. 0.3 .. .. .. ..1997 .. .. .. 0.4 .. .. .. ..1998 .. .. .. 4.6 .. .. .. ..1999 .. .. .. 7.6 .. .. .. ..2000 .. .. .. 11.4 .. .. .. ..2001 .. .. .. 14.9 .. .. .. ..2002 .. .. .. 18.0 .. .. .. ..2003 .. .. .. 18.8 .. .. .. ..2004 .. .. .. 17.3 .. .. .. ..2005 .. .. .. 24.3 .. .. .. ..

Source : UNCTAD, FDI/TNC database. Note : FDI inward stock: Estimated by accumulating inflows since 1987. FDI outward stock: Notavailable.

Equity Reinvested earnings

Intra-company

loansTotal Equity Reinvested

earnings

Intra-company

loansTotal

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Economy 1996 1997 1998 1999 2000 2001 2002 2003 2004Germany 1.3 .. 1.1 .. .. .. .. .. ..Portugal -1.1 0.6 0.6 0.1 0.7 0.9 0.3 -2.3 1.6Source: UNCTAD, FDI/TNC database.Note: Data are based on information reported by the economies listed above.

Economy 1996 1997 1998 1999 2000 2001 2002 2003 2004Portugal 0.01 .. .. .. 0.02 0.51 -0.56 .. 0.02Source: UNCTAD, FDI/TNC database.Note: Data are based on information reported by the economies listed above.

Economy 1996 1997 1998 1999 2000 2001 2002 2003Portugal 2.0 1.4 3.8 3.0 2.7 2.6 6.0 15.6Source : UNCTAD, FDI/TNC database.Note: Data are based on information reported by the economies listed above.

Economy 1996 1997 1998 1999 2000 2001Czech Republic .. .. 10.5 .. .. ..Portugal 0.2 .. .. .. .. 0.5Source : UNCTAD, FDI/TNC database.Note: Data are based on information reported by the economies listed above.

Table 6. FDI flows in the host economy, by geographical origin, 1996-2004

(Millions of dollars)

Table 9. FDI flows abroad, by geographical destination, 1996-2004

(Millions of dollars)

Table 12. FDI stock in the host economy, by geographical origin, 1996-2003

(Millions of dollars)

Table 15. FDI stock abroad, by geographical destination, 1996-2001

(Millions of dollars)

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Table 88. Largest affiliates of foreign TNCs in the host economy, 2004

(Millions of dollars and number)

Company Home economy Industry Sales Employees

A. Industrial

.. .. .. .. ..

B. Tertiary

Companhia Sao Tomense de Telecomunicacoes Portugal Telecommunication 11 89 a

C. Finance and Insurance Assets Employees

.. .. .. .. ..

a Estimate.

Sources: The Banker's Almanac , 2003 (London, Reed Information Services Ltd, 2003); Thomson Analytics(http://analytics.thomsonib.com/); Who Owns Whom database (https://solutions.dnb.com/wow).

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C. Legal frameworks for transnational corporations In Sao Tome and Principe, the following legal instruments exist to regulate the activities of transnational corporations and foreign direct investors. The main instruments applicable in the country include: I. National framework II. International Framework A. Sao Tome and Principe is a party to the following multilateral and regional instruments: Paris Convention for the Protection of Industrial Property of 1883 (Revised at Brussels in 1900, Washington in 1911, The Hague in 1925, London in 1934, Lisbon in 1958 and Stockholm in 1967, and as amended in 1979). Signed in 1994. Convention on the Settlement of Investment Disputes between States and Nationals of other States of 1965. Entered into force on 14 October 1966 Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958, which entered into force on 7th June 1959. Convention Establishing the Multilateral Investment Guarantee Agency of 1985, entered into force on 12 April 1988. Marrakesh Agreement Establishing the World Trade Organisation of 15 April 1994. Entered into force on 1 January 1995. Agreement on Trade-Related Investment Measures. General Agreement on Trade in Services. Agreement on Trade Related Aspects of Intellectual Property Rights. Treaty Establishing the Market for Eastern and Southern Africa (COMESA), 1993. Fourth ACP - EEC Convention (Lome IV) of 1989, entered into force on 1st March 1990. Charter on a Regime of Multinational Industrial Enterprises (MIEs) in the Preferential Trade Area for Eastern and Southern African States. Southern Africa Development Community (SADC): Countries include Angola, Botswana, Democratic Republic of Congo (DRC), Lesotho, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe, creating a potential market of about 200mn people. Treaty for the Establishment of the East African Community, 30 November 1999. Partnership Agreement between the Members of The African, Caribbean and Pacific Group of States, of the one part and the European Community and its member states, of the other part signed in Cotonou, Benin on 23 June 2000.

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B. Bilateral treaties 1. Bilateral investment treaties for the protection and promotion of investments: Italy 1996. 2. Bilateral treaties for the avoidance of double taxation: ..

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D. Sources of information Official ...

Secondary

African Energy Week (2004). "The definitive gathering for Africa's energy decision makers" (Abuja: Africa Energy).

Economist Intelligence Unit (EIU) (2002a). Country Profile: Sao Tome and Principe (London: EIU Ltd.).

___________________(2002b). Country Report: Sao Tome and Principe (London: EIU Ltd.), September.

___________________(2005a). Country Profile: Sao Tome and Principe (London: EIU Ltd.).

___________________(2005b). Country Report: Sao Tome and Principe (London: EIU Ltd.), September.

Foreign Investment Advisory Service (FIAS) (2000). "Providing advice on FDI in small island economies: the need for a differentiated approach?", FIAS/PREM seminars, 17 October 2000.

International Monetary Fund (IMF) (2006). IMF's Sub-Saharan Africa Regional Economic Outlook, March 10, 2006. (Washington D.C.: IMF).

The Government of Sao Tome and Principe (2001). "Country presentation: Sao Tome and Principe", presented at the Third United Nations Conference on the Least Developed Countries (Paris: UNCTAD).

United Nations Conference on Trade and Development (UNCTAD) (2002). FDI in Least Developed

Countries at a Glance (Geneva: UNCTAD) (www.unctad.org/en/subsites/dite/LDCs/ pdfs/Countries/capeverde.pdf).

___________________(2005a). Investor-Disputes Arising from Investment Treaties: A Review. UNCTAD

Series of International Investment Policies for Development (UNCTAD/ITE/IIT/2005/4). ___________________(2005b). A Survey of Support by Investment Promotion Agencies to Linkages.

Advisory Studies No. 18 (UNCTAD/ITE/IPC/2005/12). ___________________(2005c). FDI in least developed countries at a glance: 2005/2006

(UNCTAD/ITE/IIA/2005/17). United States Trade Representative (2006). 2006 Comprehensive Report on U.S. Trade and Investment Policy

Toward Sub-Saharan Africa and Implementation of the Africa Growth and Opportunity Act: The Sixth of Eight Annual Reports, May 2006. (Washington D.C.: US Government).

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