1

AVIATION SECTORSECTOR PRESENTATION

2Tunisia benefits from

a key geographic proximity to

European countries and has signed free

trade agreements with the markets of

Sub-Saharan Africa, the Middle East and the European Union

A CENTRAL POSITION IN THE EUROMED AREA

n Countries with which Tunisia has signed a free trade agreement and / or a trade agreement

Source: World bank, Eurostat, CBT exchange rate on 24/ 07/19 1 Tunisian Dinar = 0,3119 €, INS, Deloitte analytics, World Investment Report 2019

GAFTA

Main free trade / trade agreements ratified by Tunisia

Population (2018)

11,55 millions

Capital Tunis (1,07 m inhabitants)

Surface Area

163 610 km2

Economic openness rate

87,7% (en 2017)

Time zone

GMT + 1hour

Free trade agreements

UE, COMESA, UMA, GAFTA

Stock of inward FDI in GDP % - 2018

Tuni

sia

Liby

a

Mar

occo

Nor

th A

fric

a

Afr

ica

67,1

%

42,4

%

54,3

%

42,7

%

38,6

%

3Tunisia’s growth rate rose from 1.5% in 2015 to 2.5% in 2018 - According to Government estimates, this trend is likely to continue,

reaching 2.7% in 2020

KEY FIGURES

Source: African Development Bank, INS, World Bank, IMF: World Economic Outlook (WEO) Database, April 2019, World Investment Report 2019 / 2018e: GDP 2018 according to the CBT estimates

GDP growth rate(2018)

2,5%

FDI inward stock (2018)

26 792 m $

GDP / capita (PPA $, 2018)

12 483 $

# of FDI projects announced (destination Tunisia 2018)

554

# of FDI projects announced (source Tunisia 2018)

93

GDP ($, 2018)

39,86 m $

Flow of foreign direct investment (2018)

1 036 m $

CPI inflation (2018)

7,3%

Evolution of GPD in billion TND (2008-2018)

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

e

55,

3

58,

7

63,

1

64,

5

70,

4

75,

1

80,

8

84,

7

89,

8

96,

3

105

,4

CAGR +6,7 %

4,2%

3,0% 3,5%

-1,9

%

4,0%

2,9%

3,0%

1,2%

1,1% 2

,0%

2,5%

1,4% 2

,7%

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020 s

4Tunisia has a

favorable position compared to

competing destinations on the

basis of the most relevant international

rankings

TUNISIA IN THE INTERNATIONAL RANKINGS

Source: Data World bank 2018

Source: Global innovation index 2018

Source: Doing Business 2020

Source: Data World bank 2018

Source : Global Information Technology Report | Facilité d’adoption des technologies émergentes et de la

transformation digitale = 7 étant le meilleur

Source: Global competitiveness report 2019

High-technology exports in pourcentage of manufactured exports

« Global innovation 2018 » Score

Doing Business Score

Number of researchers in R&D per million inhabitant

Networked readiness index

Global competitiveness index

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aria

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sia

Alge

ria

Egyp

t

25,9

0

19,6

0

16,9

0

10,6

0

10,6

0

10,1

0

10,1

0

7,40

7,20

5,30

3,80

2,30

0,90

0,60

54,2

49,4

47,9

44,6

44,5

42 41,3

40,3

36,9

36,8

32,8

31,6

27,5

24

77,9

76,8

76,8

76,5

76,4

76,3

75,6

73,4

73,4

73,3

72 68,7

60,1

48,6

4441

4291

3690

2924

2873

2795

2528

2131

1965

1386

1069

890

821

669

5,3

4,3

4,8

4,7

4,5

4,4

4,4

4,4

4,1

4,1

3,9

3,9

3,7

3,2

78,8

75,3

70,9

70,4

68,9

66,8

65,1

64,9

64,4

62,1

60 56,4

56,3

54,5

5In 2018, the aviation

sector has contributed to around 3.8% of the GDP - since 2004, the number of companies

operating in the sector has been growing

steadily, around 8% per year, to reach 80

companies with a vast majority of which are

foreign companies

Progression of the number of companiesin M TND

2004

2008

2011

2015

2018

11

38

51

69

80

• The aviation sector in Tunisia contributes nearly 3.8% of the national GDP and has recorded continuous growth since 2004. The sector has 80 national and international companies operating throughout the value chain, distributed as follows:

Bizerte3 compagnies Nabeul

6 compagniesGrand Tunis area

Sahel Region

Beja2 compagnies

Zaghouan5 compagnies

Origin of the companies France 65,0%Germany 2,5%Italy 2,5%Netherlands 1,3%Qatar 1,3%Suitzerland 1,3%China 1,3%UK 1,3%Others 23,8%

57% Metal works

19% Electrical and Electronic works

13% Engineering, consulting and training services

7% Composite Systems

4% Aviation Maintenance

6Since 2006, the

main players in the sector have been grouped together

within GITAS in order to strengthen and

promote exchange, collaboration and

synergies between them

THE GROUP OF TUNISIAN AVIATION AND SPACE INDUSTRIES GITAS

• CCreated in 2006, GITAS is a Group of 50 Tunisian and foreign companies operating in the Aviation and Space sectors concentrated around 4 big poles: the Greater Tunis area, the Sahel region, Soliman and Zaghouan

• GITAS’s mission is to:

- Support exchange, collaboration and synergies between companies working in the aeronautics and space sector located in Tunisia

- Promote the development of an environment favorable to the aviation and space industry in Tunisia and abroad

- Support the emergence of local suppliers with the necessary approvals- Actively and directly participate in the implementation of training modules adapted to

the current and future needs of the aerospace industry

7THE GROUP OF TUNISIAN AVIATION AND SPACE INDUSTRIES GITAS COVERING THE WHOLE CHAIN OF VALUE OF THE SECTOR

ENGINEERING AND DESIGN |MANUFACTURING | MAINTENANCE

8Several «success

stories» and regional champions have

emerged in recent years, and have

contributed to making Tunisia one of the main

hubs of the African continent in this sector

...

EXAMPLES OF SUCCESS STORIES AND REGIONAL CHAMPIONS

• Established in Tunisia in 2003 (formerly ZODIAC AEROSPACE) in Soliman in the governorate of Nabeul - the company has experienced significant growth leading to its diversification on several axes and the creation of 4 sites: Zodiac automotive, Zodiac equipment, Zodiac seats and Zodiac composites sites monuments

• The company employs more than 3500 people• Zodiac Tunisie has set up one of the group’s most important research and development

centers on a regional scale

• STELIA Aerospace Tunisie is located in the city of M’Ghira (south of Tunis) on a site with a surface area of around 15,000 m2

• The company, specialized in the assembly of subsets, has expanded, with a 20 hectares park and 6 partners, thus creating a one of its kind aviation park in Africa

• The company, considered as the main world producer of the front part of the Airbus A320, has a steadily growing activity, in particular thanks to the increasing production of the A320, NEO and CEO aircraft families.

9

• The company MECAHERS AEROSPACE was created in 2010 in Soliman in the governorate of Nabeul then relocated to El Mghira on a site of 10,400 m² including 5,400 m² covered area.

• The company, which specializes in the production of subsets, sets and sheet metal parts intended for the aviation sector, currently employs more than 300 employees.

• With Stelia as its main customer, the company produces parts for the AIRBUS A320, A330 and A350 programs

• The company recorded an average growth of 30% between 2012 and 2015

• Established since 2012, the company is located in El M’Ghira in the Stelia park and had more than 620 employees in 2018

• The company has a production capacity of more than 20,000 hours per month and specializes in the manufacture and assembly of structural parts and subset parts intended for aeronautics as well as surface treatment and painting.

10The aviation sector

employed more than 17 000 people

in 2018, with an average annual

growth of 8,3% over the 2011 – 2018

period

BREAKDOWN OF JOBS BY COMPANIES NATIONALITY

France 71%

UK0,5%

Germany1%

Switzerland4,7%

Tunisia15,7%

United States 1,6%

42% metalworking

8% Composite Systems

31% Electrical and electronic works

8% Aviation Maintenance

10% Engineering and consulting services

Progress of the number of employees of the sector

Distribution of jobs by sector

2011

2013

2015

2017

2018

9 69

3

10 0

66

10 8

39

12 6

74

18 0

00

CAGR +8,3%

*Number of employees in 2018 based on GITAS estimates - 18.000 in the aeronautic sector excluding transport

11On average, more

than 7500 engineer graduate each year -

according to the «Global Competitiveness

Report“. Tunisia ranks first in North Africa

in terms of quality of vocational training,

graduates skills as well as with regards to the

ease of access to skilled employees

A POOL OF TALENTS COVERING THE AUTOMOTIVE SECTOR’S NEEDS

• Over 7,500 engineers graduates annually

• 47 Schools and establishments (public and private), offering engineering training

• 25 Higher institutes of technological studies ensuring the training of qualified middle managers and technicians and meeting the needs of companies

• + 60 public vocational training centers, covering the entire Tunisian territory

Quality of vocational training (score)

Graduates ‘ skills (score)

Ranking of countries by ease of finding skilled employees

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33,1

39

43,3

43,4

44,9

45,6

48,4

61,3

31,8

37,8

40,8

41

43,4

44,9

45

57,6Rank « 1 » means the best

138 133 131 125 109 99 94 66

RANK*

12Several

engineering schools and the Higher Institute of Technological

Studies cover the various

needs of the aviation sector, by ensuring the

training of a talent pool made

up of qualified engineers and technicians...

DISTRIBUTION OF ENGINEERING SCHOOLS AND ISET

DISTRIBUTION OF STATE CENTERS OF PROFESSIONAL VOCATIONAL TRAINING

Bizerte1 engineering

schools • 1 ISETGrand Tunis area

Bizerte

Nord Ouest

Kasserine

Gafsa

Nabeul

Zaghouan

Sahel Region

Sfax

Gabès

Médenine

Grand Tunis area19 engineering

schools • 3 ISET

Sahel Region8 engineering

schools • 2 ISET

Sfax4 engineering

schools • 1 ISET

Gabès2 engineering

schools

3

5

2

2

2

6

3

1

2

10

21

+60 state Centers of vocational training distributed over the whole tunisian territory

• Automobile inspection training • Maintenance training

• Technology training • Electromecanical training

13… As well as training structures dedicated to the aviation sector

offering training courses oriented towards the

needs of the sector and integrating the new

challenges facing the sector

TT TRAINING CENTER : 1ST AFRICAN CENTER DESTINED TO THE AERONAUTIC MAINTENANCE SECTOR

AN EXCELLENCE CENTER DEDICATE TO THE PROFESSIONS OF AERONAUTIC INDUSTRY (CEMIA)

• 1st african center dedicated to the aeronautic maintenance

• A partnership with Airbus for the training of 30 trainees per month from the Arab world and the African continent on Airbus and Boeing aircraft

• An accredited training in conformity with the European requirements offers a set of training courses administered by the major players in MROs

• Aircraft PART 145 certification and educational infrastructure identical to that used by Airbus

• … Set up on a 6,500 m² plot in the El Mghira region, the center includes 10 workshops, 1 computer laboratory, 1 control laboratory, 1 electrical and electronic works laboratory and 6 teaching rooms ...

•… and delivers a 2 year certification course, leading to a Brevet de Technicien Professionnel (BTP) (Professional Technician Certificate)- Technicians specialized in Mechanical manufacturing technicians on numerically controlled

machines- aviation cable assemblers- Aircraft structure fitters- aviation boilmakers- Surface treatment and aviation painting technicians- Specialists in stratification of composite materials

14The cost of labor is

a major competitive asset of the Tunisia

destination. The average annual cost of Tunisian

engineers is largely competitive compared to the main competing

destinations ...

…the same applies to operators and technicians (1/2)

… the same applies to operators and technicians (2/2)

COST OF THE LABOREngineer - Manager

Opérations - Manager

Operations – Operator - Professional

Engineer – Senior Professional

Opérations – Supervisor

Technician – Senior professional

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Tuni

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372%

309%

304%

269%

268%

258%

210%

206%

201%

175%

169%

100%

340%

299%

288%

270%

253%

246%

197%

193%

151%

147%

124%

100%

892%

661%

604%

604%

482%

439%

427%

413%

384%

256%

141%

100%

249%

210%

200%

184%

175%

163%

159%

140%

139%

110%

101%

100%

475%

419%

406%

350%

309%

301%

279%

251%

240%

195%

139%

100%

429%

426%

402%

357%

349%

310%

307%

272%

245%

238%

132%

100%

15The country has also a multitude

of integrated and developed facilities aiming to promote

R&D, production and training activities ...

Cyber parc

Technopoles

COMPETITIVENESS CENTERS, TECHNOPOLES AND CYBER PARKS • 10 Competitiveness centers and Technopoles

spread over the whole Tunisian territory focusing on the promising sectors of the Tunisian economy

• 18 regional cyber parks support new business creators during the incubation phase of business projects

• One of the biggest technology parks in Africa

• A surface area of 155 hectares

• More than 100 national and foreign ICT companies

• A surface area of 10,5 hectares

• A R&D center • An integrated facility

to host: - Academic and

research training activities

- Innovation and transfer of techno-logy activities

- Production and development acti-cities

• A surface area of 60 hectares

• More than 65 companies

• The technopole has 3 laboratories: - Microelectronic

systems- Advanced Material

Systems and nano-physical systems

- Microsystems of physical chemical and biological weapons

Innovation Center Tunisia

16... and has set up a

development program for industrial parks, in

line with its national regional development

strategy

A LAND DEVELOPMENT PLAN THAT MEETS THE INDUSTRIAL SECTOR’S NEEDS

• Tunisia has more than 150 industrial parks covering more than 10 thousand hectares. The average price per square meter in the areas cur-rently up for sale is about 40 TD / m² equivalent to around 12 € / m²

• Tunisia has set up a 2016-2020 program for the development of indus-trial parks aiming to develop more than 65 industrial parks for a total surface area of more than 2,000 ha at an estimated cost of more than 650 million Dinars, distributed as follows :- 51 regional development zones over a surface area of 1,508 Ha- 18 industrial parks over a surface area of 746 Ha in the rest of the

country • …as well as a program to renovate 60 industrial parks for a total sur-

face area of over 1,576 ha at an estimated cost of more than 150 million Dinars, distributed as follows :- 20 regional development areas over a surface area of 400 Ha- 40 industrial parks over a surface area of 1,176 Ha in the rest of the

country

2

1 11

2

5

3

1

6

2

1

1

2

3

7

2

5

n ZDR 1st groupn ZDR 2nd group

New industrial parks and industrial parks currently up for sale- 2017

17The penetration rates

of fixed and mobile internet have been

growing strongly over the 2013 – 2019 period driven by the

democratization of 4G and Data Boxes

PENETRATION RATE FOR

FIXED TELEPHONY DATA

PENETRATION RATE FOR

MOBILE TELEPHONY DATA

DISTRIBUTION OF SUBSCRIBERS

IN FIXED TELEPHONY DATA BY CONNECTION

2013

2014

2015

2016

2017

2018

2019

22,5

%

21,5

%

21,2

%

23,0

%

27,9

%

33,9

%

36,5

%

2013

2014

2015

2016

2017

2018

2019

30,7

%

47,2

%

61,9

%

62,8

%

65,1

%

75,8

%

75,2

%

4Mb/s 8Mb/s 12Mb/s Other

2017 67,5% t 24,7% s 3,6% s 4,2%

2018 54,2% t 34,1% s 8,0% s 3,7%

April 2019 47,2% t 38,0% s 11,3% s 3,5%

• The fall in internet access costs was accompanied by a significant impro-vement in ADSL access with speeds of 8.MB / s and 12MB / s

• The growth in the number of internet connections is driven by the demo-cratization of mobile data

• The mobile data penetration rate was 75.2% at the end of April 2019

• Tunisia has started preparations for the launch of 5G networks - a study on the advisability and the technical and economic conditions for the in-troduction of 5G is scheduled for the end of 2021

18The aeronautical

sector is one of the priority sectors

mentioned in the new investment law which

aims to promote investment, regional

development and innovations (1/2)

Type of incentive Rate of incentive / Tax Incentives Incentive limit

Regional Development(except negative list)

Zone 1 : 15%/ investment cost Zone 2 : 30%/ investment cost

Zone 1: 1,5 MDTZone 2: 3 MDT

Zone 1: Total deduction at 100% from the tax base for 5 years and payment of 10% after

Taking in charge of the employer’s contribution= 5 years

Zone 2: Total deduction at 100% from the tax base for 10 years and payment of 10% after

Taking in charge of the employer’s contribution = 10 years

Deduction from the corporate tax base, revenues or profits reinvested in the subscription to the initial capital or in its increase

Priority sectors15% /investment cost 1 MDT

Taking in charge of the employer’s contribution= 3 ans

Economic branches 15% /investment cost 1 MDT

Infrastructure subsidy (DR)

Zone 1: 65%

Zone 2: 85%

10% /project cost

Maximum limit 1MD

19The aeronautical sector

is one of the priority sectors mentioned in

the new investment law which aims to promote

investment, regional development and innovations (2/2)

Mapping of bonuses and incentives of

projects of national interest (PNI)

Incentive Type Incentive rate / Tax Incentives Incentive limit

Material investment : New technologies and productivity enhancement

50% component cost 500 KD

Intangible investment 50% component cost 300 KD

Research and development expenses

50% component cost 500 KD

Certified trainings expenses 70% component cost 20 KD/company

Employability incentive Taking in charge of the of salaries according to management rate

Sutaibnable development incentives

50% component cost 300 KD

PROJECTS OF NATIONAL INTEREST PIN

Eligibility criteria Process for obtaining bonuses and incentives Bonuses and incentives

Investment cost is higher than 50 MTD or crea-tion of minimum of 500 jobs over 3 years

Study of projects at the level of the l’Instance Tunisienne de l’Inves-tissement (Tunisian Investment Authority)

Investment incentives within the limit of 1/3 of the investment cost with a maximum 30 MTD

Tax exemption over a period up to 10 years

Infrastucture works taken in charge by the State

Support for the employer’s contribution to the social security scheme up to 10 years

Granting of non-agricultural state land: long-term rental or in symbolic dinar

Meets one of the 4 objectives of the investment law

Submission to the Investment Council for approval of advantages

20

Rue du Lac Huron, Les berges du Lac 1,1053 Tunis

Tél.: +216 70 248 148Fax: +216 70 248 100

@2019 Tunisia Investment Authority

www.tia.gov.tn