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U.S. Department of State
Algeria Country Commercial Guide
Office of the Coordinator for Business Affairs



                          Country Commercial Guide

                                 Algeria

                             Fiscal Year 1996


This Country Commercial Guide (CCG) presents a comprehensive look at 
Algeria's commercial environment through economic, political and market 
analyses.  

The CCGs were established by recommendation of the Trade Promotion 
Coordinating Committee (TPCC), a multi-agency task force, to consolidate 
various reporting documents prepared for the U.S. business community.  
Country Commercial Guides are prepared annualy at U.S. Embassies through 
the combined efforts of several U.S. governement agencies.  


     Table of Contents

I.  Executive Summary

II.  Economic Trends and Outlook
Principal Growth Sectors
Government Role in the Economy
Balance of Payments Situation
Infrastructure Situation

III.  Political Environment
Security Climate
Relations with the United States

IV.  Marketing U.S. Products and Services
Distribution and Sales Channels
Use of Agents and Distributors
Franchising, Joint-Ventures/Licensing
Establishing an Office
Advertising and Trade Promotion
Sales Service/Customer Support

V.  Leading Sectors for U.S. Exports

VI.  Trade Regulations and Standards
Export Controls, Free Trade Zones
Membership in Free Trade Arrangements

VII.  Investment Climate
Openness to Foreign Investment
Conversion and Transfer Policies
Expropriation and Compensation
Dispute Settlement
Political Violence
Performance Requirements/Incentives
Right to Private Ownership
Protection of Property Rights
Regulatory System
Bilateral Investment Arrangements
OPIC
Labor

VIII.  Trade and Project Financing
Banking System
Foreign Exchange Controls
General Financing Availability, Project Financing
List of Banks with Correspondent Arrangements

IX.  Business Travel
Currency Regulations
List of Local Holidays in 1995-96

X.  Appendices



I.  EXECUTIVE SUMMARY

Algeria is a large market for American exports, but one difficult to 
develop because of the ongoing political crisis and widespread 
terrorism.  U.S. exports to Algeria reached $1.2 billion in 1994, up 
over thirty percent from 1993 levels.  Grains and petroleum-sector 
equipment and services comprise the bulk of U.S. sales.  This export 
surge came as the Algerian economy is undergoing an immense transition.  
The Algerian government over the past 15 months has implemented a broad 
array of economic liberalization measures, backed with strong support 
from the IMF.  It has substantially deregulated foreign trade.  In 
addition, IMF financing and generous foreign debt rescheduling have made 
foreign exchange readily available to Algerian importers.  The Algerian 
government also has substantially deregulated its investment and product 
distribution controls.  After several years of disappointing economic 
performance, the government projects the economy will grow about four 
percent in 1995; the petroleum, agriculture and construction sectors 
appear poised for substantial expansion.  U.S. exporters targeting these 
and other market niches will find substantial opportunities.

The murderous violence plaguing Algeria will challenge U.S. companies 
seeking to capitalize on these opportunities, however.  The economy 
likely will not expand if the political crisis continues.  Armed gangs 
regularly attack infrastructure and economic facilities.  Moreover, 
terrorists target both foreigners and Algerians alike.  The U.S. 
Department of State, therefore, strongly urges American citizens not to 
travel to or work in Algeria without substantial armed protection.  Any 
firm thinking of establishing a new operation or an office in Algeria 
will have to make security considerations a priority.  Companies new to 
the market may find it best to use local distributors or agents able to 
undertake all the necessary legwork on the ground.

Country Commercial Guides are available on the National Trade Data Bank 
on CD-ROM or through the Internet.  Please contact STAT-USA at 1-800-
STAT-USA for more information.  To locate Country Commercial Guides via 
the Internet, please use the following world wide web address:  
WWW.STAT-USA.GOV.  CCGs can also be ordered in hard copy or on diskette 
from the National Technical Information Service (NTIS) at 1-800-553-
NTIS.



II.  ECONOMIC TRENDS AND OUTLOOK

The Algerian economy is now undergoing a wrenching transition from a 
state-controlled system to a market economy.  The past eighteen months 
have witnessed more market-oriented reform measures than any previous 
period in Algeria's history.  Overshadowing this tremendous progress in 
reorienting the economy, however, is the ongoing political violence 
wracking the country.  Despite substantial help from the International 
Monetary Fund and the World Bank, and a generous foreign debt 
rescheduling, GDP registered growth of -1.1% in 1994; this followed 
negative growth of 2.2% in 1993.  This disappointing performance stemmed 
from reduced gas export earnings, low agriculture-sector output due to 
bad weather conditions and continued public-sector production 
inefficiencies.  In addition, new investment shied away from Algeria 
because of investor worries about the political/security situation.  The 
government hopes that new investments in the hydrocarbons and 
construction sectors, as well as better rainfall, will hike economic 
output in 1995 by about four percent.  Economic growth is essential to 
reverse the trend of rising unemployment.  About a quarter of the 
workforce is unemployed, a problem with major political implications.

Principal Growth Sectors

Hydrocarbons:  The vital petroleum sector so far has remained largely 
immune from major security problems, and it is likely to substantially 
expand during the next several years.  The state-owned hydrocarbons 
giant, Sonatrach, plans to invest about $14 billion over the next four 
years to raise its export earnings from $8.6 billion in 1994 to $12.2 
billion by 1999.  The key element in the plan is the doubling of natural 
gas exports to 60 billion cubic meters annually.  Sonatrach just 
completed the expansion of its Trans-Med gas pipeline to Italy.  In 
addition, the Trans-Maghreb pipeline linking the desert gas field at 
Hassi R'Mel with Spain and Portugal via Morocco is under construction 
now (with Bechtel participation, among others) and is to be operational 
by mid-1996.  In the longer term, Sonatrach plans to build another 
pipeline from Alrar to Hassi R'Mel (the GR 2 project).  Sonatrach also 
has a multibillion dollar deal pending with British Petroleum for 
development of the Ain Salah gas field.  Beyond gas projects, Sonatrach 
encourages foreign oil companies to explore the Algerian desert.  
Sonatrach then operates production-sharing agreements with foreign firms 
to develop producing wells.  Several firms, including Anadarko and 
Louisiana Land, hope to begin production in Algeria soon.  In addition, 
the American company ARCO is negotiating to introduce advanced injection 
technology to raise output at an older field near Hassi Messaoud.

Agriculture:  The agriculture sector is also expected to grow 
significantly over the next several years.  In 1994 agriculture 
accounted for only about 12% of GDP even though it employed nearly a 
quarter of the labor force.  Production suffered during 1993 and 1994 
due to drought conditions.  In addition, farmers are delaying 
investments until the planned state-owned lands are transferred to 
private ownership.  Key crops include cereals, dairy products and fruits 
and vegetables.  The better rains in 1994-1995 should help increase 
output.  In addition, the Government has increased producer prices for a 
variety of cereals to encourage domestic production.  The Government is 
seeking to channel more state financing into the sector through the 
state-owned Fund for Agricultural Cooperatives.  The Government also 
wants to develop Algeria's potential for dryland farming.  Connected to 
the agriculture sector, local food processing is one of the few sectors 
in which private Algerians are making substantial investments despite 
the security situation.

Construction:  One of the worst problems faced by young Algerians is the 
shortage of housing; the Government estimates Algeria needs over one 
million units immediately, as well as an additional 140,000 annually.  
Production in 1994 totaled only 80,000 units, however.  Large, state-
owned construction enterprises dominate the housing sector.  They have 
suffered from constant financial difficulties, as well as shortages of 
key materials such as cement and steel bars.  As part of its economic 
reform program, the Government plans to inject 30 billion dinars ($600 
million) to improve the firms' balance sheets and improve their access 
to bank credits and imported inputs.  The Government hopes up to 160,000 
units will be built during 1995.

Major Local and Third Country Competitors

Algeria's domestic producers are not in a position to compete with their 
American counterparts.  While Algeria has a relatively well-developed 
industrial base which covers most manufacturing sectors, local 
production is largely below international standards in terms of quality 
and range.  It also is not sufficient to meet local demands.  This is 
particularly true of consumer products, since basic industrial goods 
make up most of what is locally produced.  The success in recent years 
of the local "trabendo" (contraband) trade in consumer goods 
demonstrated that Algerians are prepared to pay world prices for high 
quality imported goods.

The U.S. has become Algeria's second largest trading partner following 
France.  Italy, Germany, Spain, and to a lesser extent Japan, are the 
other main U.S. competitors.  The four European countries' combined 
exports account for an annual average of 40-60% of total Algerian 
imports in such sectors as telecommunications, computer equipment, 
mining equipment, building products, and water resource equipment.  
Suppliers from these countries also have staked out near-monopolistic 
positions in some sectors.  Examples include France which supplies 70% 
of Algeria's pharmaceutical imports; Italy whose market share for food 
processing equipment and agricultural machinery has averaged 70% and 40% 
respectively in recent years; and Germany, which accounts for 40% of 
mining equipment imports.  Other competitors have established specific 
market niches, such as Finland and Sweden in telecommunications, and 
Japan in telecommunications and water resource equipment.

Government Role in the Economy

Trade Liberalization:  Although the economy was stagnant in 1994, the 
Government laid useful groundwork for the future.  It broadly 
liberalized the foreign trade sector, abolishing in the summer of 1994 a 
list of 80 goods, mostly machinery and foodstuffs produced already by 
Algeria's public sector, whose importation previously was illegal.  In 
January 1995 the Government abolished a second list of goods, mostly 
basic food commodities, for which special import permits were required.  
In addition, the Government has sought to make foreign exchange more 
readily available to importers in both the private and public sectors, 
by allowing commercial banks to buy foreign exchange from the Bank of 
Algeria (Central Bank).  Thes banks' demand for foreign exchange assets 
is to determine the foreign exchange rate of the Algerian dinar.  Since 
this system went into operation in September 1994, the dinar has 
depreciated 20%.  The Government plans to allow commercial banks to 
trading in foreign exchange by the end of 1995.  In addition, in June 
1995 the Bank of Algeria began allowing Algerians to buy foreign 
exchange to pay for medical and educational expenses overseas.  By 1996, 
the dinar may become fully convertible.

Budget Austerity and Price Liberalization:  Beyond the trade 
liberalization measures noted above, the Government sought to reduce 
inflation, estimated at 30% for 1994, and also bring domestic prices 
into line with world prices.  The Government has followed a strict 
policy of budget austerity in which spending in many categories, such as 
infrastructure investment and wages for public-sector workers, fell 
after inflation adjustment.  As a result, the Government has reduced the 
budget deficit to under 3% of GDP, down from about 9% in 1993.  In 
tandem with the budget restraint, the government has implemented very 
tight monetary policy.  Interest rates average about 24%.  Despite these 
tough measures, price inflation remained stubbornly in the thirty 
percent range in early 1995.  Interest rates are, therefore, unlikely to 
fall soon.  To restrain consumption and boost domestic production, the 
Government also has cut subsidies and lifted controls on prices on 
nearly all items and eliminated the previous controls on profit margins 
for politically sensitive items such as foodstuffs.

State Enterprise Reform:  The reform policies above have had an adverse 
impact on the output of Algeria's industrial sector, which produces 
about 14% of GDP.  Algeria's industry is marked by large, inefficient 
state-owned enterprises dependent on imported inputs and easy bank 
credits; many operate at only 35-40% of capacity.  The dinar devaluation 
raised their costs substantially, while the tight monetary policy 
largely closed their access to financing.  Industrial output during the 
first quarter of 1995 slumped nearly 8% from that of the same period of 
1994.  To remedy this the Government is restructuring companies which 
could be made solvent and providing them new financing.  It will close 
firms which are chronically unprofitable.  It also plans to privatize 
some firms.

Privatization:  The Government recognizes that privatization is a means 
of increasing efficiency in state-owned firms.  Along with restructuring 
of public sector enterprises, privatization will be one of the key 
elements of the Government's economic reform program in 1996.   However, 
in the current security environment, few investors will come forward.  
The Government, therefore, will initially privatize smaller scale 
companies.  In 1995, five state-owned hotels were offered for sale as a 
pilot project, but they generated only limited interest.  Algeria's 
Government-appointed parliament (Conseil National de la Transition) is 
reviewing a privatization draft law.  The bill provides for an employee 
stock ownership plan (ESOP) whereby up to 30% of the capital of a 
company being privatized will be offered to the workforce.  The bill 
targets for sale firms in the agri-business, textiles, public works, 
tourism, distribution, and road transport sectors.

Balance of Payments Situation

Algeria's balance of payments has been the key economic challenge 
spurring recent government economic policy.  As Algeria's industrial 
base is uncompetitive, hydrocarbons still represent over 95% of 
Algeria's exports.  This makes export revenues highly vulnerable to 
shifts in world oil and gas prices.  Algeria's challenge is to find 
enough foreign exchange to import sufficient amounts of food to feed a 
fast-growing population, pay necessary installments on the $30 billion 
foreign debt and still finance key imports of production inputs and 
investment goods.

In 1994 Algeria and its economic partners recognized that the challenge 
would be impossible without exceptional assistance over the next several 
years.  Algeria concluded an IMF agreement, and a subsequent Paris Club 
debt rescheduling of $5.3 billion allowed the Bank of Algeria to rebuild 
depleted holdings of hard currency.  In May 1995 the Bank of Algeria 
concluded a $3.2 billion rescheduling of its commercially held foreign 
debt.  In May 1995 the IMF agreed to back with credits totalling $1.8 
billion a broader Algerian reform program projected to last three years.  
Algeria planned to reschedule over $5 billion in new debt payments again 
with a second Paris Club accord scheduled for July 1995.  With this IMF 
and Paris Club support, as well as that from other donors, the Algerian 
Government projects the economy will have enough foreign exchange to 
import needed investment and consumption goods.  Imports are expected to 
reach almost $12 billion by 1997, up from $9.2 billion in 1994.  
Meanwhile, an ongoing program of investments in the hydrocarbons sector 
should spur an increase in export earnings from $9.6 billion in 1994 to 
$12.6 billion by 1997.

Infrastructure Situation

Algeria, whose territory is one third the size of the U.S., has devoted 
significant resources to expanding and modernizing the transport and 
telecommunications sectors since the 1970s.  Today, Algeria has a 
relatively well-developed infrastructure as a result.  Unfortunately, 
armed groups fighting the Government have often targeted the power and 
telecommunications networks as well as rail and road transport lines.

Road Transport:  The government launched an ambitious program twenty 
years ago to build an extensive main highway and secondary road system.  
Algeria now boasts a road network of 90,000 kilometers, of which 26,000 
are trunk roads and highways, and 20,000 are wilaya or provincial roads.

Railways:  The Algerian railway network covers mainly the North.  It 
includes 4,500 kilometers of tracks, of which 3,000 kilometers are of 
standard gauge, and 1,200 kilometers of narrow gauge.

Air Transport:  Algeria has 11 international and 20 domestic airports.  
Only a few international airlines still serve Algeria due to security 
concerns.  The State Department specifically warned against traveling 
through airports in Algeria after the hijacking of an Air France plane 
revealed serious security lapses at the Algiers airport.  The national 
carrier, Air Algerie, serves 37 destinations in Europe, Africa and the 
Middle East.  It carries 30 million tons of cargo, and three million 
passengers per year.  There are no direct flights between Algeria and 
the U.S.

Shipping:  Algeria has 12 main ports:  eight are general purpose ports, 
and four are specialized hydrocarbon terminals.  Algerian ports in 1994 
handled a total of 82.2 million tons in goods traffic, 63.6 million tons 
for exports, and 18.6 million tons for imports.  Passenger traffic was 
408,400 passengers.  Some of the largest ports (Algiers, Oran, Annaba) 
are being equipped with container handling installations.  By 1995, a 
number of businessmen were complaining of difficulty finding shipping 
lines still willing to call on Algerian ports; like air carriers, fewer 
shipping firms are maintaining their service to Algeria.

Telecommunications:  The Algerian Post and Telecommunications Ministry 
operates telephone, telex, telegraph, and facsimile networks, a mobile 
telephone system, a public data communications network, and a maritime 
radio service.  All new installations since 1986 use digital technology.  
The international telephone network links Algeria to most countries, and 
is more reliable than the domestic network; the domestic network also 
has suffered from acts of sabotage.  Algeria relies heavily on satellite 
communications, particularly in the Sahara.  DHL was operating services 
in Algeria until the PTT without warning or explanation suspended its 
operations in April 1995. 



III.  POLITICAL ENVIRONMENT

Dangerous Security Climate:  After the cancellation of parliamentary 
elections in January 1992, which the Islamist opposition party, the 
Islamic Salvation Front (in French, FIS) was poised to win, the 
confrontation between the military-backed government and Islamist 
insurgents quickly expanded.  Terrorists targeted schools, public 
buildings, security service members and a variety of noncombatants, 
including journalists, intellectuals, government officials, women and 
even children.  In addition, some 80 foreigners have been murdered since 
December 1993; five were killed in the South in May 1995 and another two 
in Algiers in June.  Government talks with the now-banned FIS and other 
opposition parties have so far failed to conclude any agreement on how 
to settle the conflict.  Although many Algerians perceived the violence 
was receding somewhat by the summer of 1995, fighting and terrorist 
incidents erupted regularly; no military solution to the conflict seemed 
possible.

The President announced in November 1994 that the Government would hold 
a presidential election before the end of 1995 to restore Government 
legitimacy.  Algeria's opposition parties, which include both secular 
opponents of the government and regional (Berber) and Islamist 
movements, generally have avoided commiting to participation in this 
election.  In January 1995 the major opposition parties, including the 
FIS, concluded an accord denouncing violence against innocents and 
calling for talks with the Government.

Relations with the United States:  The United States government has 
encouraged Algerians to find a political solution to the crisis gripping 
their country.  It also has supported Algeria's economic reforms within 
the IMF, the World Bank and the Paris Club.  Algeria in 1994 was the 
fourth largest export market for U.S. products in the Arab World, and 
U.S. exports to Algeria climbed nearly thirty percent that year.  
However, like other economic observers, Washington has warned Algiers 
that the success of those economic reform efforts depends largely on 
ending the violence which is precluding adequate levels of investment in 
the economy.  Due to the widespread terrorism, the Department of State 
has advised Americans not to visit Algeria; those who do so are urged to 
have substantial armed protection while there. 



IV.  MARKETING U.S. PRODUCTS AND SERVICES

Distribution and Sales Channels

Algeria has a well-developed distribution system through an extensive 
network of wholesale and retail outlets throughout the country, most of 
which are run by the private sector.  The state-owned wholesale business 
handles mainly imported goods, such as foodstuffs, pharmaceuticals and 
industrial products.  Private wholesalers, however, are increasingly 
active in these sectors.  The retail trade is almost exclusively 
controlled by the private sector.  Exceptions are the state-run stores 
for hardware (Aswak) and foodstuffs (Souk El Fellah).  The Government 
plans to privatize the state-owned distribution outlets in 1996.

Use of Agents/Distributors

In the unsafe security climate, using agents, distributors or finding 
joint-venture partners is a must for U.S. firms planning to enter the 
market.  Many Algerian businessmen are used to meeting foreign business 
partners in Europe for safety reasons.  Foreign suppliers may use local 
agents and distributors, or set up their own distribution companies.  
Under the Law on Money and Credit, which allowed the use of agents and 
distributors, distributors had to invest in manufacturing, or establish 
a service organization in Algeria.  From 1991 to 1993, when the new 
Investment Code was promulgated, the government approved 87 investment 
projects and 97 agent/distributor applications.  Most investments 
originated from France (22 projects), Italy (19 projects), and Spain (12 
projects).  Another six investment projects came from the U.S.  The 
sectors that attracted the most interest were chemical and petrochemical 
(17 projects); steel, mechanical, and automotive (14 projects); 
agriculture and fisheries (12 projects); construction (6 projects); and 
hydrocarbon services (6 projects).

As the new Investment Code now governs investments, foreign suppliers no 
longer need to invest in Algeria to set up a distributorship.

Franchising

Franchising is not yet widespread in Algeria, but there is increasing 
interest, particularly from private firms.  Coca-Cola started a 
successful bottling operation with a private food processing company in 
September 1993.

Joint-Ventures/Licensing

As Algeria's economic situation worsened in recent years, it became 
clear to Algerians that since they lacked the resources to modernize the 
local manufacturing capability, they needed to attract foreign investors 
to help them do so.

Algerian companies are looking for foreign partners in order to acquire 
technical expertise, and to gird themselves for the competition they 
will face from international companies now that trade is fully 
liberalized.  Working with local firms will give U.S. firms a better 
understanding of the market, and access to well established wholesale 
and retail distribution channels.

Establishing an office in Algeria

U.S. firms will need to consider carefully security arrangements as part 
of any plan to set up an office in Algeria.  Using experienced Algerians 
instead of expatriates also is advised.  While setting up an office or a 
company requires some paperwork, the process has been much simplified.  
U.S. businesses here support this view.  The speed and facility with 
which U.S. oil companies set up operations in Algeria was an example.

Advertising and Trade Promotion

Direct advertising for most equipment and machinery has a limited impact 
on local end-users.  Since imports are made through international 
tender, advertising has no influence on the importing companies as to 
brands to be purchased.  Advertising will be most effective for consumer 
products, now that the Algerian import market is totally open.

Here follows a list of advertising agencies and major Algerian 
newspapers.  Algerian radio and television also carry advertising.


Advertising agencies

ANEP
1 Avenue Pasteur
Algiers, Algeria
Phone:  (213-2) 633083
Fax:    213 2 648994

HIWAR-COM
Maison de la Presse
Place du 1er Mai
Algiers, Algeria
Phone:  213 2 667204
Fax:    213 2 654501

Major newspapers

El Watan (Independent French-language daily)

1 Rue Bachir Attar
Algiers, Algeria
Phone:  213 2 662641
Fax:    213 2 650227

La Tribune (Independent French-language daily)
101 Bd Krim Belkacem
Algiers, Algeria
Phone:  213 2 741529
Fax:    213 2 740991

Liberte (Independent French-language daily)
37 Rue Larbi Ben M'Hidi
Algiers, Algeria
Phone:  213 2 736477
Fax:    213 2 730487

El Khabar (Independent Arabic-language daily)
1 Rue Bachir Attar
Place du 1er Mai
Algiers, Algeria
Phone:  213 2 661931
Fax:    213 2 661927

El Moudjahid (Government-controlled French-language daily)
20 Rue de la Liberte
Algiers, Algeria
Phone:  213 2 737030
Fax:    213 2 642483

Until recently, trade promotion events centered around the Algiers 
International Fair, the major annual trade event in Algeria.  Normally 
held in June, the 1995 Fair has been postponed until October for 
security reasons.  The Algerian Fair Authority, SAFEX, and a private 
exhibition company, Group ABH, have tried to develop trade fairs 
focussed on industry sectors.  The current economic reforms will 
increase interest in such events.  The U.S. Embassy in Algeria keeps 
informed of such shows and will identify those of potential interest to 
U.S. firms if security conditions improve such that U.S. participants 
could visit Algeria safely.

Sales Service/Customer Support

Suppliers of capital goods to the Algerian market are required to 
provide their customers sales service and customer support, which is 
referred to in Algeria as technical assistance.  Free sales service is 
usually required for a period of one year.  Thereafter, suppliers may 
enter into an agreement with their customers to provide them with 
remunerated  technical assistance.

Customer support is also provided by liaison offices established in 
Algeria by foreign suppliers.  The liaison offices, however, are not 
allowed to engage in commercial activities, and thus cannot import and 
distribute equipment and spare parts.  These must be imported by the 
Algerian end-user either directly or through distributors.

Sales service for consumer goods is only beginning to develop in 
Algeria.  Recent legislation makes it compulsory for distributors of 
foreign products to provide a warranty of six to 18 months, depending on 
the type of goods, to stock parts in Algeria and to provide their 
customers after-sales service.



V.  LEADING SECTORS FOR U.S. EXPORTS (AND INVESTMENT)

The Government has now totally liberalized Algeria's import regime.  
Given the security situation, best prospects are those markets which 
offer U.S. exporters immediate sales opportunities that can be exploited 
with minimum efforts to increase their share of the Algerian market.

U.S. Eximbank no longer offers financing assistance for U.S. exporters 
beyond short-term financing (under 180 days) for Algerian public-sector 
importers.  However, supplier financing is no longer required to import 
capital equipment if the Algerian purchaser can meet the dinar value of 
the imported equipment.  The rescheduling of Algeria's foreign debt is 
providing foreign exchange to finance Algeria's imports.  Algerian 
importers now have free access to hard currency to pay for their 
purchases, provided they have enough dinars to cover the hard currency 
cost of all types of imports.

Best Prospects for Non-Agricultural Goods

1 - Oil and Gas Field Machinery (OGM)

Algeria's foreign exchange is earned almost entirely by its hydrocarbon 
sector, which depends heavily on U.S. technology.  Current plans stress:  
increased exploration, increasing liquefaction capacity to enhance LNG 
exports, building additional pipelines, and negotiating contracts with 
foreign companies for enhanced oil recovery (EOR) in existing oil 
fields.  These trends will continue and will provide exceptionally high 
market growth rate.  Expansion of this sector, which has no domestic 
production, will largely benefit U.S. exporters.  The latter already 
dominate the market, but could still increase their market share in 
areas where their French, Italian and German competitors are most 
active.  Most promising sub-sectors (estimated 1996 market size - US $ 
millions):
--  Wellhead and down-hole:       200
      ( equipment and supplies)
--  Drilling machinery:           200   


                                  1994   1995   1996
                                  (U.S. $ millions) 
               
A. Total market size               280    340    450
B. Total local production            0      0      0
C. Total exports                     0      0      0
D. Total imports                   280    340    450 
E. Total imports from the U.S.      80    100    180


Notes:  1.  Exchange rates (US$1=AD)
            --  1994:  36  

            --  1995:  48 (est.)
            --  1996:  60 (est.)
        2.  The above statistics are unofficial estimates

2 - Telecommunications Equipment (TEL)

The Algerian PTT has a long-term plan to modernize and expand its 
network and to introduce new services.  Implementation will depend 
almost entirely upon imports.  U.S. manufacturers dominate
the radio communications and satellite equipment market, while French, 
Japanese and German suppliers dominate most other markets in which U.S. 
presence is very limited.  Sales efforts should be directed to 
transmission, particularly fiber optics, switching and radio 
communications equipment, areas which offer opportunities for U.S. 
companies to increase market share.  Most promising sub-sectors 
(estimated 1996 market size - US $ millions):

--  Transmission equipment:          115 
--  Switching equipment:             115 
--  Radio communications equipment:   50


                                  1994   1995   1996
                                  (U.S. $ millions) 

A. Total market size               180    230    290
B. Total local production           80    100    120
C. Total exports                     0      0      0
D. Total imports                   100    130    170
E. Total imports from the U.S.      15     22     30


Notes:  1.  Exchange rates (US$1=AD)
            --  1994:  36
            --  1995:  48 (est.)
            --  1996:  60 (est.)
        2.  The above statistics are unofficial estimates

3 - Water Resources Equipment (WRE)

Improving water resource supply and increasing agricultural production 
are major priorities.  The government's irrigation program offers 
substantial opportunities for direct sales and licensing arrangements.  
Several companies are seeking to develop local manufacturing of 
irrigation and waste water treatment equipment.  All have indicated 
their interest in working with U.S. firms.  American suppliers, whose 
technology enjoys a high reputation here, sell mostly drilling 
equipment, a market which they dominate.  They could, however, displace 
their French, Japanese and German competitors in most other areas.  Most 
promising sub-sectors (estimated 1996 market size - US $ millions):

--  Drilling equipment:               118
--  Irrigation equipment:              94
--  Waste water treatment equipment:   47


                                  1994   1995   1996
                                  (U.S. $ millions) 

A. Total market size               211    235    295
B. Total local production           16     20     25
C. Total exports                     5      6      8
D. Total imports                   200    220    280
E. Total imports from the U.S.      50     60     80


Notes:  1.  Exchange rates (US$1=AD)
            --  1994:  36
            --  1995:  48 (est.)
            --  1996:  60 (est.)
        2.  The above statistics are unofficial estimates

4 - Computers and Peripherals (CPT)

The Algerian market for computers and peripherals is very large.
Demand is estimated at some $200 million, about three times the amount 
of estimated average annual imports, and only lack of Algerian Dinars to 
cover the hard currency cost of purchases hampers import growth.  
Although U.S. manufacturers dominate this market, they could still 
increase their market share through greater availability of financing.  
Their main competitors, French and German suppliers, benefit from 
government export credits to finance their sales than that for American 
suppliers.  This is their only competitive advantage over their U.S. 
counterparts.  Most promising sub-sectors (estimated 1996 market size - 
US $ millions):

--  Microcomputers:     32
--  Monitors/printers:  20
--  Minicomputers:      16


                                  1994   1995   1996
                                  (U.S. $ millions) 

A. Total market size                57     67     82
B. Total local production            2      2      2
C. Total exports                     0      0      0
D. Total imports                    55     65     80
E. Total imports from the U.S.      20     30     40


Notes:  1.  Exchange rates (US$1=AD)
            --  1994:  36
            --  1995:  48 (est.)
            --  1996:  60 (est.)
        2.  The above statistics are unofficial estimates

5 - Drugs and Pharmaceuticals (DRG)

Pharmaceuticals are one of Algeria's largest import categories and will 
continue to be.  European suppliers, particularly France, have a virtual 
monopoly on this market.  However, importers are seeking to diversify 
suppliers, and the government encourages them to do so.  This sector, 
thus, presents a significant opportunity for American companies.  
Manufacturers are now allowed to sell their products through 
distributors.  U.S. pharmaceuticals are sold in Algeria through European 
subsidiaries, and are treated as European products, but American 
suppliers have ample opportunities to penetrate this lucrative market 
for both direct sales, licensing arrangements and production joint-
ventures for local manufacture.  Algeria imports the entire range of 
pharmaceuticals. 


                                  1994   1995   1996
                                  (U.S. $ millions) 

A. Total market size               310    360    420
B. Total local production           60     60     60
C. Total exports                     0      0      0
D. Total imports                   250    300    360
E. Total imports from the U.S.       .6     .7    10


Notes:  1.  Exchange rates (US$1=AD)
            --  1994:  36
            --  1995:  48 (est.)
            --  1996:  60 (est.)
        2.  The above statistics are unofficial estimates

6 - Food Processing and Packaging Equipment (FPP)

As the Algerian food processing industry is underdeveloped, demand for 
equipment and machinery is large and has hitherto remained  unfulfilled 
for two main reasons:  insufficient agricultural production and lack of 
foreign exchange for equipment imports.  However, the Government's 
efforts to develop the agricultural sector and increase food production, 
and the ongoing improvement of Algeria's financial situation, should 
make this market attractive to U.S. suppliers.  Although the market is 
dominated by Italy and Germany who account for some 80% of imports, U.S. 
companies will have ample opportunities to increase their share of the 
import market.  The Government's commitment to the long term development 
of this industry emphasizes the private sector's role, which is already 
very active in this industry.  Most promising sub-sectors (estimated 
1996 market size - US $ millions):
--  Fruit/vegetable canning equipment:  65
--  Grain mill machinery:               65
--  Controls:                           43


                                  1994   1995   1996
                                  (U.S. $ millions) 

A. Total market size               162    185    218
B. Total local production            2      5      8
C. Total exports                     0      0      0
D. Total imports                   160    180    210
E. Total imports from the U.S.      10     15     20


Notes:  1.  Exchange rates (US$1=AD)
            --  1994:  36
            --  1995:  48 (est.)
            --  1996:  60 (est.)
        2.  The above statistics are unofficial estimates

7 - Mining Industry Equipment (MIN)

The Government is now promoting this industry, which has been neglected 
despite rich mineral deposits.  There has been a notable increase in 
foreign firms' interest in this sector in 1995.  Algeria in 1991 
promulgated a mining law which, for the first time, allows direct 
foreign participation in this sector.  The Government will soon amend 
the law to further liberalize foreign investment.  Large future 
purchases of equipment and machinery, as well as foreign expertise to 
exploit and, in some instances, process the country's minerals are 
envisioned.  Since Algeria's independence, this industry had been 
influenced, helped, and equipped by Eastern European communist nations.  
With the geopolitical changes that have occured, opportunities are now 
open for others, especially for American firms.  Their current 
competitors are mainly German and French suppliers.  Most promising sub-
sectors (estimated 1996 market size - US $ millions):
--  Sorting, screening equipment:  33
--  Crushing, mixing equipment:    33 
--  Drilling equipment:            33 


                                  1994   1995   1996
                                  (U.S. $ millions) 

A. Total market size                80     90    110   
B. Total local production            0      0      0
C. Total exports                     0      0      0
D. Total imports                    80     90    110
E. Total imports from the U.S.       6      7      8


Notes:  1.  Exchange rates (US$1=AD)
            --  1994:  36
            --  1995:  48 (est.)
            --  1996:  60 (est.)
        2.  The above statistics are unofficial estimates

8 - Building Products (BLD)

This market offers good sales opportunities for U.S. exporters who are 
active in only a few of its many segments.  The Government is promoting 
the construction sector, particularly road building, partly to create 
jobs, because employment is a major problem, and housing to redress dire 
shortages.  This will call for large imports, particularly for lumber, 
wood products, specialty steel products and portland cement, all of 
which are currently purchased from various European countries.  Also, 
companies interested in joint-venture and licensing arrangements will 
find markets for building systems and local production of equipment to 
manufacture building products.  Most promising sub-sectors (estimated 
1996 market size - US $ millions):
--  Lumber:                     109
--  Specialty steel products:   109
--  Wood products:               62


                                  1994   1995   1996
                                  (U.S. $ millions) 

A. Total market size               225    255    312
B. Total local production           30     30     40
C. Total exports                     5      5      8
D. Total imports                   200    230    280
E. Total imports from the U.S.       6      8     10


Notes:  1.  Exchange rates (US$1=AD)
            --  1994:  36
            --  1995:  48 (est.)
            --  1996:  60 (est.)
        2.  The above statistics are unofficial estimates

BEST PROSPECTS FOR AGRICULTURAL PRODUCTS

Grain and Feed (wheat, barley, oats and corn)

Algeria continues to be one of the world's largest grain consumers with 
7.7 million metric tons consumed in 1994.  Grain imports account for 70 
to 90% of total needs, depending on local grain production.  The major 
suppliers are the U.S., Canada and France for wheat; the U.S. and France 
for barley and corn; Italy and Spain for semolina; France, Italy and 
Spain for flour.  However, the key factors for exporters to the Algerian 
market remain credit financing and prices.  The decline in GSM programs 
from the U.S. have decreased its grain market share from 50% in 1992 to 
43% in 1993, and less than 40% in 1994.


                                       1994     1995     1996
                                        (1,000 metric ton)  

A. Total market size                    7,700   8,100    8,400
B. Total local production               1,000   2,000    2,200
C. Total exports                            0       0        0
D. Total imports                        6,700   6,100    6,200
E. Total imports from the US            2,600   2,700    2,800


Notes:  1.  Exchange rates (US$1=AD)
            --  1994:  36
            --  1995:  48 (est.)
            --  1996:  60 (est.)
        2.  The above statistics are unofficial estimates

Vegetable Oils and Meals (soybean oil, soybean oil, sunflowerseed oil, 
rapeseed oil, palm oil)

Algeria remains heavily dependent on oilseeds product imports, i.e. 
oilmeals and vegetable oils.  The country imports annually 280,000 
metric tons of soybean meal which accounts for nearly 100 percent  of 
all protein meal imports; almost all soybean meal comes from the US with 
GSM credit financing.  Algeria also imports 350,000 metric tons of crude 
vegetable oils divided as follows:  50% for soybean oil, 30% for 
sunflowerseed oil, 20% for palm oil (and nearly no rapeseed oil).  Major 
suppliers of vegoils are the U.S., Argentina and Spain for sunflowerseed 
and soybean oils; Malaysia for palm oil.  In 1993, the U.S. provided 90% 
of Algerian sunflower and soybean oil imports, using GSM programs and 
SOAP and EEP subsidies; however, the suspension of the GSM program in 
1994 enabled  competitors such as Argentina and Spain to penetrate the 
Algerian vegoil market. 

                                   1994   1995     1996
                                    (1,000 metric ton)   

A. Total market size               412      660      675
B. Total local production           20       30       35
C. Total exports                     0        0        0
D. Total imports                   392      630      640
E. Total imports from the US       272      500      510


Notes:  1.  Exchange rates (US$1=AD)
            --  1994:  36
            --  1995:  48 (est.)
            --  1996:  60 (est.)
        2.  The above statistics are unofficial estimates

Dairy Products (non fat dry milk, whole milk powder, butteroil, butter, 
cheddar cheese)

Algeria continues to be one of the world's largest dairy product 
importers due to low productivity, insufficient forage, rising input 
prices and a generally unstable agricultural sector.  Although milk 
production is expected to increase, especially in Eastern Algeria, 
demand for milk will continue to rise because of population growth (70% 
of Algerian people are less than 25).  Consequently, dairy product 
imports are expected to develop significantly.  Major suppliers are the 
U.S., France, New Zealand and Canada for non fat dry milk and whole milk 
powder; the U.S. and New Zealand for butter and butteroil; New Zealand 
and France for cheddar and other cheese.  The high market share earned 
by the U.S. since 1990 is due to GSM financing availability and DEIP 
subsidy program. The decrease in GSM credit financing since 1993 ($600 
million in 1993, $300 million in 1995) could put U.S. dairy products at 
a disadvantage before other competitors like France with its COFACE 
financing.


                                   1994     1995     1996
                                     (1,000 metric ton)   

A. Total market size               420      460      500
B. Total local production          160      180      200
C. Total exports                     0        0        0
D. Total imports                   260      280      300
E. Total imports from the US        72       80       90

Algeria does not produce powdered milk.  Local production is expressed 
in milk powder equivalent.


Notes:  1.  Exchange rates (US$1=AD)
            --  1994:  36
            --  1995:  48 (est.)
            --  1996:  60 (est.)
        2.  The above statistics are unofficial estimates



VI.  TRADE REGULATIONS AND STANDARDS

After several years of tight import controls, Algeria has totally 
liberalized its trade regime.  Import categories still subject to 
restrictions are firearms, explosives, narcotics, and pork products, 
which are prohibited for security or religious reasons.

Export Controls:  The Government hopes to encourage the development of 
non-hydrocarbon exports.  Consistent with this goal, almost all export 
restrictions have been removed.  Restrictions remain only on palm 
seedlings, sheep and artifacts of historical and archaeological 
significance.

Free Trade Zones:  The Government has stated its intention to establish 
one or more free trade zones in Algeria, but has yet to announce where 
these will be located.  Several sites are being considered, and it is 
likely that one will be established on the international fairgrounds of 
Algiers, perhaps in the next year.  Foreign investments in any free 
trade zone will be exempt from all taxes and customs duties.

Membership in Free Trade Arrangements:  Algeria, Tunisia, Morocco, 
Mauretania and Libya agreed to form in 1989 the Arab Maghreb Union 
(known by its French acronym UMA).  The five nations also agreed to form 
a Maghreb free trade zone, but did not establish a particular timetable 
for doing so.  Algeria hopes to establish a free trade zone with the 
European Union similar to those that Morocco and Tunisia already enjoy, 
but this is not likely to occur before 1996 at the earliest.  Algeria is 
not yet a member of the World Trade Organization (WTO), but plans to 
become a member by 1996. 



VII.  INVESTMENT CLIMATE STATEMENT

Openness to Foreign Investment

As part of its effort to diversify and modernize the Algerian economy, 
the Government is placing increasing emphasis on promoting foreign 
investment.  In October 1993, the Government promulgated a new 
Investment Code which, for the first time, does not distinguish between 
investments made by foreigners and Algerians.  Conscious that Algerian 
investment promotion efforts had lagged behind those of Tunisia, 
Morocco, Turkey and others, the Government studied the investment 
regimes of these countries, consulted the private sector, and then 
developed a composite regime that equals or exceeds many of the 
incentives offered by neighboring countries.  The code grants new 
investors:

--  a three-year exemption from the value added tax on goods and 
services acquired locally or imported;

--  an exemption on property taxes;

--  a two to five year exemption from corporate income taxes;

--  the right to pay just 3% in customs duties for 30 different products 
(for which duties are between 40-60%); and

--  the right to pay a ceiling of 7% on social security payments for 
Algerian employees (the normal rate is 24%).

Finally, the incentives are even more attractive for those companies 
which establish export-oriented projects.  A sliding scale has been 
established whereby those firms exporting 100% of their production 
receive a 100% exemption on all taxes, and pay only the 7% employer 
contribution to social security.  Those exporting 50% of their 
production receive a 50% exemption on all taxes and pay the same 7% 
social security contribution.

The Government also established in May 1995 a new investment promotion 
agency (Agence de Promotion, de Soutien et de Suivi des Investissements, 
APSI), attached to the office of the Prime Minister, to register all 
investment applications, accord the advantages listed by the Code, and 
streamline the investment process.  Government officials point out that 
all investments are pre-approved; APSI's only role is to determine what 
advantages a particular investment should receive under the law. 

As part of its investment promotion efforts, the Government issued a 
decree in October 1993 which reduced the income tax paid by foreign 
technical and supervisory personnel.  Whereas most foreign workers 
previously paid taxes of up to 70% on their salaries, personnel employed 
by foreign companies working in most industrial sectors whose monthly 
salaries are in excess of 80,000 Dinars (approximately $1,600) will now 
pay a flat rate of 20%.

Investment Registration Procedure:  To register a proposed investment 
and apply for the advantages listed in the Code, investors must file a 
"Declaration d'Investissement" and a "Demande d'Avantages" with APSI.  
The U.S. Embassy can provide prospective investors with a list of 
Algerian lawyers who can assist in this task.  By law, these two 
documents must be processed by APSI within 60 days of their submission.  
In practice, it normally takes about one month.

In determining what level of advantages to accord a given investment, 
APSI considers the following five criteria:

--  whether an investor has a foreign partner;

--  the extent of self-financing (a firm self-financing more than 30% of 
the total value of the proposed investment receives the maximum 
advantages);

--  the dependence on foreign inputs (investments that use more than 50% 
local inputs or import substitution receive the maximum advantages);

--  the extent of technology transfer, and employment creation.

Results Thus Far:  Government officials report that during 1994, they 
approved 650 investments, representing 33 billion Dinars (about $915 
million).  50 of these were foreign investments which represented 6.6 
billion Dinars (about $183 million), or 20% of the total.  Two, Pfizer 
and DHL, were American.  Most of the rest were French (16 projects), 
Italian (11 projects), Spanish (8 projects), or German (4 projects).  
APSI currently receives an average of 30 investment projects per month.

Hydrocarbon Investments:  Investments in the hydrocarbon sector are 
governed by the 1986 Law Governing Activities of Exploration, 
Exploitation, and Pipeline Transportation of Hydrocarbons, and 
subsequent amendments.  The 1986 law allowed foreign companies to enter 
joint-venture partnerships with the state hydrocarbon company Sonatrach, 
and remain in a minority position.  The 1986 law was amended in December 
1991 to allow foreign companies to take up to a 49% share in production 
of existing oil fields.  It also allows foreign participation in natural 
gas exploration, and provides extra tax incentives to stimulate 
hydrocarbon exploration.  As a result of these incentives, eight 
American companies signed exploration and production contracts with 
Sonatrach valued at approximately $350 million.

Conversion and Transfer Policies

For investments made in hard currency, the new Investment Code 
authorizes the investor to repatriate, within 60 days of a request for 
capital repatriation, all capital, revenues, as well as the net proceeds 
of the transfer, even if the latter are higher than the original amount 
invested.

Expropriation and Compensation

The Embassy is not aware of any recent expropriation cases involving 
U.S. firms or any other foreign firm.

Dispute Settlement
Algeria is a signatory to the Convention of the Paris-based 
International Center for Settlement of Investment Disputes.  Algeria 
also ratified its accession to the New York Convention, and adhered to 
the Multilateral Investment Guarantee Agency (MIGA).  The Algerian Code 
of Civil Procedure allows both private and public sector companies in 
Algeria to seek international arbitration.  Algeria also allows local 
contracts to contain international arbitration clauses.  Although 
foreign investors have full recourse to international arbitration under 
Algerian law, the Embassy is not aware of any recent case in which a 
U.S. or other foreign company has had to seek such arbitration. DHL was 
in mid 1995 trying to reestablish its operations in Algeria after the 
PTT closed them suddenly without explanation. 

Political Violence

Political violence is a major problem in Algeria; terrorists target both 
Algerians and foreigners.  Since 1993 over 80 foreigners have been 
murdered in Algeria.  The State Department strongly urges Americans not 
visit or work in Algeria without substantial armed protection.

Performance Requirements and Incentives

As part of Algeria's efforts to develop an attractive investment 
promotion regime, foreign investors in Algeria are not subject to any 
performance requirements or incentives.

Right to Private Ownership

Foreign and domestic private entities may establish and own businesses 
and engage in all forms of business activity.

Protection of Property Rights

Patents:  Patents are protected by the law of December 7, 1993 and 
administered by the Institut Algerien de Normalisation et de Propriete 
Industrielle (INAPI).  The December 7 law reaffirms Algeria's 
ratification in 1975 of the Paris Convention and its subsequent 
revisions.  Patents are granted for 20 years from the date the patent 
request is filed and are available for all areas of technology.  For 
further information, please contact Mr. Mohamed Younsi, Directeur de la 
Protection Industrielle, 42 Rue Larbi Ben M'Hidi, Algiers (phone:  213-
2-735581).

Trademark Protection:  Trademark protection is afforded by the Laws of 
March 19, 1966 and of July 16, 1976.  In 1986, authority for granting 
and enforcement of trademark protection was transferred from INAPI to 
the Centre National du Registre du Commerce (CNRC).  INAPI sources 
indicate that a new law is under consideration which would transfer 
trademark authority back to INAPI.  For further information, please 
contact Ms. Farida Bouzid, Directeur des Marques, CNRC, R.N. 24, BP 18, 
Bordj El Kiffan, Algiers (phone:  702303).

Copyright Protection:  Algeria ratified in 1973 the 1952 Convention on 
Copyrights.  The Government also passed on April 3, 1973 a law to 
provide copyright protection for books, plays, musical compositions, 
films, paintings, sculpture and photographs.  The law also considers on 
the author the right to control the commercial exploitation or marketing 
of the above products.  A new law is being drafted to update the 1973 
law to include protection for (among other things) videos and radio 
programs.  Copyright protection is managed by the Office National du 
Droit d'Auteur (ONDA).  For further information, please contact Mr. Amar 
Lakhal, Directeur de la Repartition et de la Documentation, 6 Bd du 11 
Decembre 1960 (phone:  921308).

Regulatory System:  Laws and Procedures

The Government is in the process of putting in place the framework to 
transform the Algerian economy from a centrally-planned economy in which 
the public sector generates 60% of GDP to one based on free market 
principles.  Among the principal goals of the Government's economic 
reform program will be reduced controls over the economy, application of 
market principles to the management of state-owned firms, and 
development of a dynamic private sector.

Efficient Capital Markets and Portfolio Investment

Outside the banking system, Algeria lacks any sophisticated capital 
market.  In late 1994 the government began selling bonds to finance part 
of its deficit, but there is not yet a secondary market for these 
instruments.

Bilateral Investment Agreements

Algeria has bilateral investment agreements with France, Italy, Belgium, 
and Spain.  Agreements with Turkey, Indonesia, and Romania have been 
signed but not ratified.  It is also negotiating agreements with Canada, 
Russia, Portugal, and India.  Most of these bilateral agreements contain 
double taxation provisions. 
 
OPIC Programs

OPIC since 1990 has offered its services to U.S. companies considering 
investment in Algeria.  Only one U.S. project has concluded an agreement 
with OPIC so far, however.  OPIC provides insurance for U.S.  equity 
investments and loans against the risks of political violence, 
expropriation,and currency inconvertibility.  OPIC also operates special 
insurance programs to encourage petroleum exploration, development and 
production in developing countries.  Finally, OPIC also insures U.S. 
contractors and exporters against:  1) wrongful calling of bid, 
performance, or advance payment guarantees; 2) loss of physical assets 
and bank accounts due to confiscation or political violence; or 3) 
losses due to unresolved contractual disputes with foreign buyers.  
Investors are required to register projects with OPIC before the 
investment has been made or irrevocably committed.  Registration is free 
of charge and treated as privileged business information.  To register, 
please submit a Request for Registration for Political Risk Investment 
Insurance (OPIC form 50), available by calling the OPIC Facts Line (202-
336-8700).

OPIC also provides up to $200 million in medium to long term financing 
for investment projects involving significant equity or management 
participation by U.S. businesses through loan guarantees and/or direct 
loans.  OPIC will participate in up to 50% of the total project cost for 
a new venture, while a somewhat higher participation may be considered 
in the case of an expansion of a successful existing business.  Further 
information on OPIC financing programs may be obtained by calling the 
OPIC Info Line (202-336-8700).

For further information on OPIC programs in Algeria, please contact 
James Williams, OPIC Insurance Office at 202-336-8575.

Labor

By 1995 Algeria's workforce had grown to about 6.4 million out of a 
total population of 28 million because of the predominance of youth in 
the age structure of the population, and it was increasing about four 
percent annually.  28% of the population is unemployed, according to the 
latest Government data.  Unemployment is especially serious among 
younger, unskilled workers.  Wages average only 9000 dinars ($190) per 
month reflecting the low average productivity of most Algerian workers.  
Technical and basic education have lagged in recent years.  About four 
percent of the labor force has at least 12 years of regular schooling.  
Despite these factors, U.S. companies operating in Algeria have been 
able to hire adequately trained technical staff and qualified Algerian 
workers, but they are often not familiar with the latest technologies 
used in the West.  While most speak French, few speak English.  Due to 
declining purchasing power, Algerian labor unions staged a series of 
localized, nonviolent strikes at particular Algerian-owned firms in 1994 
and 1995.  In general, U.S. firms indicate that they have no problems 
with the Algerian labor unions, as the work conditions and salaries at 
their companies exceed those of Algerian firms.  There are no 
restrictions on the number of expatriate supervisory personnel.

Employers must pay a social security tax, which includes both retirement 
and unemployment compensation; in 1994 this tax was 24 percent of the 
gross salary.  As a result of limits on wage increases and dinar 
devaluation, Algerian wages have become increasingly competitive.  The 
following table shows average monthly wages found in the large, state-
owned enterprises, small, local government-owned firms and private 
sector:

                Upper     Supervisors    Workers     Average
                Mgt.
___________________________________________________________
National Ent.  16,071     11,524         9,774      11,268
Local Ent.     12,495      9,222         6,772       7,536
Private Ent.   16,614     10,516         8,079       8,282
___________________________________________________________
Averages       15,685     11,158         8,582       9,945

Salaries are in Algerian dinars:  $1 equals 48 dinars (DA)

In addition, some foreign companies operating in Algeria pay a small 
fraction of the monthly wage in hard currency as a bonus.

Free Trade Zones

As indicated earlier, foreign investments in any free trade zone will be 
exempt from all taxes and customs duties.

VIII.  TRADE AND PROJECT FINANCING

Banking System:  The Algerian banking system consists of the Central 
Bank (Banque d'Algerie), five state banks, one development bank, one 
national savings bank, and one private bank that is owned jointly by one 
of the state banks and the Saudi Al-Baraka Group.  Algeria's first 
private bank, Union Bank (UB), set up by a leading local businessman, is 
expected to start operating in coming months.   UB will also be the 
country's first merchant bank.  Until 1994, public enterprises long 
enjoyed privileged access to credit from Algeria's state banks.  As a 
result, the banking system in Algeria has been severely handicapped by 
the prevalence of non-performing public sector enterprise debt.  A key 
priority of the IMF-backed reform program is recapitalization and 
liberalization of the banking system.  The goal is to foster greater 
competition and more private sector participation, and develop a 
financial market, including a stock exchange.

Foreign Exchange Controls Affecting Trading:  The Government has no 
foreign exchange controls affecting trading.  As mentioned above, 
foreign exchange is readily available to Algerian importers, provided 
they have the dinar value of the hard currency cost of their purchases.

General Financing Availability:  The Government has lifted controls over 
access to hard currency, and local importers have free access to foreign 
exchange through the five state commercial banks.  Following Algeria's 
1994 debt rescheduling agreements with the IMF, the Paris Club and the 
London Club, and its forthcoming second agreements with the IMF and the 
Paris Club, significant additional financing will be available in coming 
years for both merchandise and investment imports.  Foreign exchange 
reserves of the Central Bank now stand at $2.6 billion. 

Export-Import Bank Financing:  The Board of Directors of the U.S. 
Export-Import Bank decided in 1994 to go off cover on medium and long 
term loans and guarantees fo Algeria, as well medium term insurance.  
ExIm remains open on short term (e.g. repayment terms of 180 days, and 
for some commodities, 360 days) transactions involving the five Algerian 
state banks and Sonatrach.  ExIm is also proceeding with disbursement 
under its guarantee program of some $700 million worth of transactions.  
With more than $2.2 billion in exposure, ExIm continues to be one of 
Algeria's leading creditors.  For further information regarding ExIm 
programs in Algeria, please contact Hala El Mohandes at ExIm (phone:  
202-566-8945).

Other External Financing:  France has indicated it will in 1995 provide 
five billion French Francs (about $1 billion) for import financing; 
Spain has pledged $650 million, and Italy and the European Union also 
will provide new credits.

Project Financing Available:  The World Bank and the African Development 
Bank are quite active in Algeria.  Both cover mostly infrastructure and 
social projects.  The World Bank also finances the government's economic 
restructuring program. 

List of banks with Correspondent U.S. Arrangements:

     Following is a listing of the correspondent banking relationships 
that the five Algerian banks have with U.S. banks.

Banque Exterieure d'Algerie     Banque Nationale d'Algerie  
Bank of New York                American Express Bank
BankAmerica International       Bank of America   
Bankers Trust                   Bank of New York
Chase Manhattan Bank            Bankers Trust
Chemical Bank                   Chase Manhattan Bank
Citibank                        Citibank
First Chicago                   CoBank Denver
                                First Interstate Bank 
Credit Populaire d'Algerie        of California
Citibank                        Mellon Bank
Arab American Bank              Pittsburgh national Bank
Chemical Bank                   United Bank for Africa
Mellon Bank
Banque de l'Agriculture         Banque de Developpement Local
et du Developpement Rural       Citibank
Bank of America NY              Credit Lyonnais NY
CoBank Denver                   Rabo Bank
Citibank                        United Bank for Africa
Bankers Trust
First Chicago
Rabo bank



IX.  BUSINESS TRAVEL

Passports and visas are required for U.S. citizens traveling to Algeria.  
Visas with validities of up to one year are available from the Algerian 
Embassy in Washington, 2118 Kalorama Road N.W., Washington D.C. 20008 
(202-265-2800).

Currency Regulations:  Travelers cheques and credit cards are accepted 
in only a few establishments in urban areas.  Currently, the Government 
requires all foreigners entering the country to exchange $200 into local 
currency.  Documentary proof of legal exchange of currency is required 
when departing Algeria.

List of 1995-96 Algerian Holidays

July 5 - Independence Day         April 30 - Aid El Adha
Aug. 9 - El Mawlid Ennabaoui      May 31   - Awal Mouharem
Nov. 1 - Revolution Day           June 7   - Achoura
Jan. 1 - New Year's Day           June 19 - Revolutionary
February 23 - Aid El-Fitr                   Recovery Day
May 1 -  Labor Day



X.  APPENDICES



Appendix A:  COUNTRY DATA 

                                        1994    1995     1996
                                                (est)    (proj)
                                        ____    _____    ______    
Population (millions)                   27.2     27.8      28.4
Population Growth Rate (%)               2.4      2.4       2.4
Religion:  99% Sunni Islam
Government System:  Republic
Languages:  Arabic (official), Berber, French
Work Week:  Saturday to Wednesday
            Banks and insurance companies work Sunday to
            Thursday.


Appendix B:  DOMESTIC ECONOMY


Gross Domestic Product (GDP)     47.9      48.4     49.75
  (U.S. $ billions)
GDP Growth Rate                  -1.1       3.8      5.0
GDP Per Capita (U.S. dollars)    1760      1741     1751
Inflation (%)                    38.5        20       10
Unemployment (%)                 24.3      25.7      N/A
Foreign Exchange Reserves         2.6       2.3      2.9
  (U.S. $ billions) 
Average Exchange Rate for U.S. $1.00
                                   36        48       60
Foreign Debt (U.S. $ billions)   29.9      30.3     33.6
Debt Service Ratio (%)             49      39.3     48.9
U.S. Economic/Military Assistance  75       N/A      N/A
  (U.S. $ thousands)
  

Appendix C:  TRADE

Total Country Exports (U.S. $ billions)   9.7       9.51    10.8
Total Country Imports                     9.2       9.4     10
U.S. Exports (U.S. millions)             1191      1000     1050
U.S. Imports (U.S. millions)             1664      1800     1800
U.S. Share of Country Imports (%)        12.5      10.6     10.5

U.S. Share of Agricultural Imports (%)   22        22       24

Principal U.S. Agricultural Exports 
  (U.S. $ millions)
Maize                                   135       140      150
Wheat                                   132       130      140
Soybean oilcake                          50        55       60
Soybean oil                              92        95      100
Durum wheat                             110       100      120
Dairy products                           62        70       75

Principal U.S. Imports 
  (U.S. $ millions)

Natural gas condensate                  934.7     N/A      N/A
No. 6 type fuel oil                     198       N/A      N/A
Liquified natural gas                   108.2     N/A      N/A
No. 4 type fuel oil                     155.9     N/A      N/A


Appendix D.  U.S. and Country Contacts


Algerian Ministries

Ministry of Finance
Palais du Gouvernement
Algiers, Algeria
Phone:  (213-2) 732340
Fax:    735472

Ministry of Commerce
Palais du Gouvernement
Algiers, Algeria
Phone:  732340
Fax:    733091
 
Ministry of Industry and Energy
Immeuble Le Colisee
Algiers, Algeria
Phone:  592440
Fax:    604584

Ministry of Small and Medium Size Industry
Immeuble Le Colisee
Algiers, Algeria
Phone:  592232
Fax:    592658

Ministry of Equipment
Ex-Grand Seminaire
Kouba
Algiers, Algeria
Phone:  689503

Ministry of Post and Telecommunications
4 Bd Krim Belkacem
Algiers, Algeria
Phone:  711220
Fax:    711771
 
Ministry of Transport
119 Rue Didouche Mourad
Algiers, Algeria
Phone:  747506
Fax:    656637

Ministry of Agriculture
4 Rue des Quatre Canons
Algiers, Algeria
Phone:  711712
Fax:    612542

Largest Public Sector Enterprises

Sonatrach (hydrocarbons)
10 Rue du Sahara
Hydra
Algiers, Algeria
Phone:  607000
Fax:    601949

Sonelgaz (power and gas utility)
2 Bd Krim Belkacem
Algiers, Algeria
Phone:  644555
Fax:    611314

ENIP (petrochemicals)
Zone Industrielle
BP 215, Skikda
Skikda, Algeria
Phone:  (8) 958862
Fax:    (8) 756146

SIDER (steel)
Chaiba, Commune Sidi Amar
BP 342, Annaba
Annaba, Algeria
Phone:  (8) 851011
Fax:    (8) 838957

SNVI (industrial vehicles)
BP 153, Rouiba
Boumerdes, Algeria
Phone:  851970
Fax:    857345

Chamber of Commerce

CNC
(Chambre Nationale de Commerce)
Palais Consulaire
Place des Martyrs
Algiers, Algeria
Phone:  574444
Fax:    629991

Private Sector Employers Associations

ACE
(Association des Chefs d'Entreprise)
Villa le Minaret
4 Rue Isidore Pouget
Les Tagarins
Algiers, Algeria
Phone:  638929
Fax:    639188

CAP
(Confederation Algerienne du Patronat)
Hotel Aurassi
Niveau C, Bureau 7
Algiers, Algeria
Phone:  647020
Fax:    641041

CGOEA
(Confederation Generale des Operateurs
Economiques Algeriens)
27 Rue Ferhat AEK
Staoueli
Tipaza, Algeria
Phone:  582851
Fax:    814353

CNPA
(Confederation Nationale du Patronat Algerien)
39 Rue Rahmoune Dekkar
El Biar
Algiers, Algeria
Phone:  793795
Fax:    788498

U.S. Embassy Trade Personnel

U.S. Embassy-Algiers
Robert Ford
Acting Commercial Officer
Mahmoud Lardjane
Commercial Specialist
BP 549, Alger-Gare
Algiers, Algeria
Phone:  693973
Fax:    693979

Washington-based Country Contacts

U.S. Department of Commerce
Claude Clement
Algeria Desk Officer
Washington, D.C. 20230
Phone:  (202) 482-1860
Fax:    (202) 482-0878

U.S. Department of State
Jeffrey Vrooman
Algeria Desk Officer
Washington, D.C. 20520
Phone:  (202) 647-4680
Fax:    (202) 736-4458

U.S.-based Multipliers

Export-Import Bank (ExIm)
Hala El Mohandes
Project Officer
811 Vermont Ave, NW
Washington, D.C. 20571
Phone:  (202) 566-8945
Fax:    (202) 566-7524

U.S. Trade and Development Agency (TDA)
John Richter
Regional Director for Africa and the Middle East
Nathan Younge
Country Manager, Africa and Middle East
SA-16, Room 309
Washington, D.C. 20523-1602
Phone:  (703) 875-4357
Fax:    (703) 875-4009

Overseas Private Investment Corporation (OPIC)
James Williams
Insurance Officer
1100 New York Ave, NW
Washington, D.C. 20527
Phone:  (202) 336-8575
Fax:    (202) 408-5142

Multilateral Development Bank Operations
Brenda Ebeling
Director
14th and Constitution, NW
Washington, D.C. 20007
Phone:  (202) 482-3399
Fax:    (202) 482-5179

The Trade Promotion Coordinating Committee
TPCC Trade Information Center
Phone:  1-800-USA-TRADE

U.S. Department of Agriculture
Foreign Agricultural Service
Trade Assistance and Promotion Office
Phone:  (202) 720-7420


Appendix E.  Market Research


1.  Available (IMI's)

--  Algeria's first private bank (09/25/94)
--  Reorganization of the hydrocarbon sector (12/20/94)
--  Petrochemical projects (12/26/94)
--  The agricultural sector is demonopolized (03/01/95)
--  Sonatrach's 1994 results (03/23/95)
--  Algeria's 1994 import statistics (03/28/95)
--  Further liberalization of Algeria's foreign trade (05/22/95)
--  The investment promotion agency is operational (05/22/95)

2.  Upcoming (IMI's).  Post will submit IMI's to reflect the continuing 
economic and political changes taking place in Algeria, as these changes 
occur.  We will also submit reports covering business conditions and 
practices, business leads, commercial opportunities, etc. as they 
develop.

Appendix F.  Trade Event Schedule


--  Algiers International Trade Fair, Algiers, Algeria, October 11-21, 
1995.

Because of the unsettled situation in Algeria, trade promotion 
activities will necessarily be limited.  Our participation in the 
Algiers International Fair, the single largest local trade event, will 
depend upon security conditions prevailing at the time the event is 
held.
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