Tunisia cultural report

This report is designed to support and complement existing cultural information available through the Italian posts in Tunisia with particular reference to entrepreneurship in Tunisia and relationship with Italy. It adds value in that it provides evidence and information from discussion and interviews with regard to Tunisian business culture. Its primary purpose is to help better prepare Italy businesses for approaching the Tunisian market for the first time and vice versa. It is designed primarily to help Italian business visiting Tunisia for the first time and to supplement the official generic cultural information found in the web. The report gives an indication of what business life is like on the ground, in other words it is a report written by business for business and we request that the reader respect the confidentiality with which this information is given. The report focuses on Tunisian language and business culture and has been written in informal style to reflect the comments made by those we met

The project focused on 4 questions which were identified as central to developing a ptactical know-how by all the people we contacted.

1. How much do I know the Tunisian society? 2. How much Arabic do I need to learn to deal efficiently with the Tunisian market, and how much English and Italian are generally spoken by the business community in Tunisia? 3. To what extent does the economic situation in Tunisia offer opportunities for Italian business? 4. What are the top tips you would give to a Italian business coming from Tunisia for the first time?

So on to the questions

1. How much do I know the Tunisian society?

An overview on Tunisian Society: The population of Tunisia numbers approximately 10.216.000 inhabitants. The demographic growth rate is 1.08 % (2007 figures). million

Arab, Berber, African, and European influences have helped shape the unique Tunisian cultural identity. The overwhelming majority of the population is Muslim, and the official religion is Sunni Islam. Christian and Jewish communities practice their faith freely and contribute to Tunisia's rich cultural diversity. Tunisia's population is over 65% urban. The greater area, Tunis with a population more than 2.3 million, is one of the principal cosmopolitan urban centers of the Mediterranean. Other cities in Tunisia include Carthage, Jerba, Hammamet, Sfax, Nabeul, Kairouan, Sousse, Bizerte, Jendouba, Medenine, Monastir, Gabes, Gafsa, Tabarka, Zarzis, Beja, Kasserine and Le Kef. The official language is Arabic; French is widely used. English is spoken among a growing number of Tunisians. Many also speak Italian.

Family: The family remains the basic unit of Tunisian society . With the assistance of public and private institutions, it continues to function as a vital support mechanism for the individual at all stages of life. Enjoying total equality of rights with men, women have gained a good measure of autonomy and are able to pursue their own careers on an equal footing with men.

Middle class: The structure of Tunisian society is characterized by the predominance of the middle class (around 75 to 80% of the population). There has been a continuous rise in the standard of living of Tunisia's citizens thanks to sound development policies and to the implementation, since 1987, of a series of measures and actions which have promoted business initiative and economic opportunity, and ensured the access of all citizens to basic amenities. DEMOGRAPHICS: Demographic Figures: Population (2007): 10.216.000 (8,785,364 in 1994) Urban population (2007) : 65% (33% in 1956) Age group Ratios:

*15 to 59 years old: 64% of the population (2004); (56.9% in 1994) * 4 years and under: 8.1% of the population (2004); 11% (1994). Life expectancy (1984): 67.4 years Demographic Growth rate (2004): 1.21% and 1,08% in 2005; 1.7% (1994) Average family size (2004): 4.01; (5.16 in 1994) Population Growth Projection: 2009: 10.388 million 2019: 11.210 million 2029: 11.763 million A special attention is accorded in Tunisia to labor and professional relations, given the close correlation between social and economic development, and given the importance of work as a civilizational value and as a means to achieve progress and prosperity. Since the Change, action has been taken to consolidate the social gains of workers, to adapt the national labor legislation to the requirements of socioeconomic development, to keep up with the international labor legislation, to promote social dialogue, and to improve the purchasing power of workers, particularly low-income ones Labor and professional relations: Concerning the promotion of labor legislation and social dialogue, major reforms were introduced into the Labor Code, covering most of the provisions that organize professional relations. Following Tunisia's ratification of the International Labor Convention No. 135 concerning worker's representatives, a law was enacted in 2007, amending certain provisions of the Labor Code related to the representation of workers, in such a way as to adapt them to the requirements of the international convention. Tunisia has so far ratified 58 International Labor Conventions, including the 8 conventions related to the fundamental rights of workers. The contract-based policy has been further consolidated. Fifty-one sectorbased collective agreements are already in force, nine of which were signed after the Change. Since 1990, negotiations for revising the collective sector-based agreements have regularly been held every 3 years. These negotiations have yielded positive results, having contributed to promoting social peace and improving working conditions.

Three-year pay increase programs have been established over 18 years, improving the social climate and the purchasing power of wage-earners. Moreover, to protect the purchasing power of low-income wage-earners, the minimum guaranteed wage in the agricultural and non-agricultural fields has been increased 27 times since the Change. Action has also been taken to guarantee the rights of women in labor legislation. Concerning child labor, Tunisia ratified the International Minimum Age Convention (No. 138) and the Worst Forms of Child Labor Convention (No. 182). A law was enacted to promote and protect disabled people, to increase their employability, and to offer them equal opportunities.

2. How much Arabic do I need to learn to deal efficiently with the Tunisian market, and how much English and Italian are generally spoken by the business community in Tunisia?

Arabic is the official language in Tunisia. The language has a formal, written form derived from the Arabic religious texts, and a spoken form. The two differ almost as much medieval English and modern English. French is widely spoken in Tunisia, especially in the north and eastern costal towns. The spread of education and in particular the access to satellite television mean that the language is widely understood at a basic level, even if it is not spoken. Older people know very little French. Many Tunisian understand some Italian, English and German are widely understood as well. Do not expect to much however, and be prepared to communicate in a mixture of broken English and French. It is therefore not difficult to find business people capable of speaking fluent English, especially in metropolitan contexts.

Economic relations of Tunisia are mainly with the European Union both for imports and exports in the case. Precedence relations with France, about 25%, those with Italy, about 19%, and lower percentage than those with Englishspeaking countries. It follows that the language requirements necessary to the implementation of trade and cultural relations between Italy and Tunisia are mainly related to Arabic, Italian and in French that, as explained above, is the language most used in economic relations. This does not mean automatic exclusion of English, anything, English is the language required in relations with other European Union countries and in relations with the Americas, as well as being universally

considered to be the official language in relations economic and cultural entire planet and essential for an optimal process of internationalization of the economy of all countries

3. To what extent does the economic situation in Tunisia offer opportunities for Italian business?

Economy The Tunisian economy, subject to a long drive to state control, since 1986 has been transformed into a free market economy through a structural adjustment program initiated in accordance with the International Monetary Fund, concerning the liberalization of prices, interest rates and investment, reform of state owned industries and private sector promotion. While maintaining some restrictions on certain strategic areas, the Tunisian government has a policy of liberalization of imports and uses of regulatory initiatives aimed at encouraging investment and regional development activity. The economic measures implemented in conjunction with the IMF in order to achieve the liberalization of the Tunisian economy has been a substantial growth in both imports and exports.

2008 was marked by intensification, starting in September, of the financial crisis that began in 2007 under the impact of the subprime crisis in the United States and its spreading to most advanced and emerging countries. This led to drying up of bank liquidity and loans, sharp downturns on stock markets, and bankruptcy at major financial institutions. As a result, the world economy suffered from overall slowdown and the beginning of recession in the main industrialized countries. In Tunisia, although the financial sphere was spared from the repercussions of this crisis, the economic activity - wide open to the outside world - could not help but be affected by the record increase in world commodity prices (especially for energy and cereals) over the first half of 2008 and the drop, starting in October, in foreign demand for the goods turned out by Tunisias main exporting sectors, notably textiles/clothing and mechanical/electrical industries. Despite these adverse circumstances, the Tunisian economy managed to post a 2008 growth rate of 4.6% in real terms, compared to 6.3% a year earlier. This was made possible by robust foreign trade and strong domestic demand, notably household consumption and private investment, mainly with major

foreign direct investment (FDI) flows boosted by reforms and an enhanced business environment. Exclusive of agriculture and fishing, which experienced a slower pace in added value in real terms (0.1% vs. 3.3% in 2007), the economy grew by 5.2%, down from 6.7% the year before. This was due in particular to the strong performance of market services, which posted 7.6% growth vs. 8.2% a year earlier, contributing 3.3 percentage points to real GDP growth, just slightly less than the 2007 figure of 3.5 percentage points. There was higher growth for transport (5.5% vs. 5.3% in 2007) and tourism (4% vs. 3.5%). There was also strong although slower growth in the communications sector: 17.7% vs. 20%. Industrial growth came in at a slower 2.7% rate, following 2007s remarkable increase of 7.7%. Slower growth was posted by manufacturing industries (4.2% vs. 6.8%), notably mechanical/electrical industries (8.4% vs. 15.1%) and textiles/clothing-leather/footwear (2% vs. 5.7%), influenced by lower demand from abroad over the closing months of 2008. On the other hand, agro food industries as well as building material, ceramics and glass industries posted sustained growth. Growth was down in non manufacturing industries, from 9.2% in 2007 to 0.3% in 2008, affected by negative growth in mining (-4% vs. 1% in 2007) and hydrocarbons (-6.5% vs. 22.5%), due in particular to lower production of lime phosphates and crude oil. Overall, the contribution of the industrial sector to economic growth fell in 2008, posting 0.7 percentage point (15.9%) compared to 2.1 percentage points or 32.9% a year earlier.

The main commercial and economic agreements signed between Italy and Tunisia are: "Convention for the avoidance of double taxation on income" in force since 1981 "Agreement for the promotion and protection of investments" in force since 1989 "Agreement on international road transport of goods by road" of 1990 "Air agreement" reconfirmed in 1993

The economic and trade relations are strong: Italy is the second largest trading partner of Tunisia and the Maghreb countries remained among the very first export markets for Italian exports in the Mediterranean, second only to the turkish market. The total exchange in 2007 reached the figure of 5.381 billion euros, with a positive balance of trade balance for Italy amounted to 463 million euros. Main items of our exports are refined petroleum products (13.4% of total), textiles (10.6%) and machinery of various types (5.5%). Imports from Tunisia concern, however, mainly the textile clothing (16.7% of total) of vegetable and animal oils and fats (11.2%) and hydrocarbons (6.9%). The Italian business is in Tunisia with about 700 Italian companies fully or semi, which employ about 50,000 people, for a total investment is around 103 million euros. Italian investments are in sectors: chemical and rubber, electrical and electronics, construction, transport, tourism, mechanical, metallurgical, food and agriculture, leather and footwear. Many Italian companies are also awarded a major tender issued by the Tunisian authorities in the field of infrastructure works. Other interesting opportunities are emerging for Italian companies following approval by the Government of Tunisia 's eleventh five-year Development Plan (2007-2011), which includes substantial investment in public works. Despite the already strong economic partnership, there is still a strong interest from Italian side to further strengthen the presence of industry and participation in infrastructure projects planned by Tunisia in the coming years in different sectors such as maritime transport and port services, energy and tourism. The energy sector is one of the most important areas of economic cooperation between Italy and Tunisia. In the perspective of integration between the Maghreb and the European electricity system, it is studying a joint ItalianTunisian project involves the construction of a combined cycle power plant in El Houari and electricity interconnection with Italy via an undersea cable. The Italian company Terna is responsible for drawing together the Tunisian STEG project for the construction and operation of the power plant. Further initiatives of potential cooperation in the energy field could include the establishment of other plants to produce electricity (Gannouche, Korba, Bir Mcherga, Ajloula). In the hydrocarbons sector, especially relevant is the presence of ENI, which operates through subsidiary TTPC, the Transmed pipeline linking Algeria to Sicily through Tunisia and is currently being upgraded by SNAM. The scope of

the pipeline should be extended to reach by the end of 2008, the annual amount of about 34 billion cubic meters. Interesting prospects for our business resulting from the planned integration of agro-food in the Euro-Mediterranean Partnership, with the ability to make Italy an access privileged Tunisian product quality for the European market. Play for Italy because geographical proximity and the high quality of the industries of our country in the fields of food processing and packaging. Are also good opportunities for cooperation in the development of organic farming, for which Tunisia is the only country in the Middle East and North Africa have adopted a specific strategy for development and regulation hoc. Important are the prospects for development in the tourism sector, which already sees a strong Italian presence in Tunisia. In January 2006, was signed a bilateral cooperation agreement, aiming to create a legal and regulatory environment to allow the deepening of cooperation between public and private entities of both countries and, ultimately, increased the already significant tourism flows between Italy and Tunisia.

4. What are the top tips you would give to a Italian business coming from Tunisia for the first time?

A key recommendation for the Italian business entering the Tunisian market would be to use a local representative who would have an understanding of the cultural code that is the recognition of time living and working entirely different, and especially in times of prayer, especially during the period of Ramadan. Care should be taken to respect Islamic conventions

Although Tunisian businesses place much emphasis on social relationships, it is still advisable to have written agreements. It is also advisable to visit a contact or potential clients premises to assess their resource and capability, in preference to meeting in hotels, and to avoid Mr X who promise more than they can deliver. It is advisable to back up any partnership with a legal framework to provide added protection. Bear in mind that it may take up to 3 months to build a confident relationship with a Tunisian partner.

Where interpreting services are required, it is advisable to provide any relevant documentation and brief interpreters in advance of meetings or presentations. It is also recommended to clarify any technical vocabulary which may be used.

Personal relationships are very important, and the visitor may be invited to late meals and may experience close physical contact, usual practice in Tunisia. Trust in the family often takes precedence over trust in other business contacts. You will need to allow extra time in-country for follow-up meetings. Allow time for long meals and family introductions, and remember that Tunisians prefer doing business with you as a person less than as a company representative. Try not to change the company representative visiting the market, but allow for consistency of contact. Make sure that your potential client is aware of associated import costs.

Thus, the top tips that we would give a Tunisian business person are the following: 1. Try to establish from the beginning a personal relationship with the economic partners, gain their trust and friendship. 2. And if the partner is a group, try to understand who, in the group, has the real decision making power and who is the mediator of likely conflicts. Then try to become friend with these two. 3. Try to understand the kind of network linking the different key players in the areas which interest you, in order to have a clear and solid awareness of the best buyers and sellers in the area. 4. Therefore, invest some time in visiting the country before designing a market strategy, in order to get to know the reality and the features of the location. 5. Do some in-depth research on the economy, social context, culture and policy of the actual region where you wish to export. 6. If at all possible, acquire some details on specific points of interest in the region (just to show your interest during conversation). 7. The Tunisian market can be very creative and quick on new ideas, although managers and entrepreneurs are always pressed for time, money, resources, etc.. so make sure you listen as well as speak (this is where a good and well briefed interpreter is invaluable). 8. Finally, a good tip is to make sure that you have with you a variety of different, brief proposals, in order to submit the one that best matches the outcome of your negotiations.