‘Islands nations need to further leverage their inherent strengths as tourism destinations and turn them into valuable dollars. By not levying even the most modest of visa charges, the islands lose millions—perhaps billions—of dollars every year’


The ‘instability’ in the Pacific Islands region’s ‘arc of instability’ is often attributed to bad politics and poor governance by a corrupt political class and an inefficient bureaucracy.

While that may indeed be a significant contributor to a perception of instability in some of the countries, what is not often given the importance it deserves is the role that sound economic policies can play in contributing to stability.

Indeed, it is the interpenetrating relationship between politics and economics that determines the well-being of the nations.

This year’s Forum Economic Ministers Meeting (FEMM) in Honiara in July heard many of the interdependent issues debated. As in previous years, problems were acknowledged and discussed, academic papers presented, solutions suggested and progress assayed. But as always, there never are easy answers.

Recent indicators across the region portray a rather grim picture of most islands economies—with the notable exception of Papua New Guinea. Growth is slowing, both investment and exports declining, trade imbalances ballooning, deficits rising and foreign exchange reserves plunging—in some cases to perilously low levels ranging from a few weeks to a couple of months worth.

The response has naturally been reactive with some like Fiji resorting to expensive external borrowings, while others like Samoa are putting curbs on spending, tightening credit, increasing interest rates as well as goods and services taxes.

These indeed are more like fire-fighting measures and are certainly warranted given the situation.

But could the islands countries evolve pro-active strategies that will induce a climate of increased investment and spur growth in their economies?

No doubt the issue is a complex one and there can never be a one-size-fits-all approach to solutions. But can the islands look at some of the common factors that link them all—especially common factors that have in recent times been strong contributors to their growth?

Let us take only one of these for the purposes of our discussion here: tourism. Over the decades, tourism has come to be the islands’ investment trump card and many of the economies—particularly Fiji and Samoa—have played their cards well, registering consistent, impressive growth. Can they maximise gains from this sector?

A recent tourism investment seminar presented by the investment bureaus of the Solomon Islands, Vanuatu, Samoa, Tonga and New Caledonia were faced by a single common question by an audience of eager potential investors. It was not about political stability. Neither was it so much about law and order. It was about land tenure.

Land is the scarcest commodity in the islands and the traditional attitude of Pacific peoples to land is understandable in this and their cultural contexts. But if investment in tourism as well as infrastructure and even manufacturing sector is to increase, this all-important issue must be addressed effectively.

None of the presenters—barring New Caledonia where communal land holdings are relatively low—was able to convincingly assure potential investors about how the countries planned to address the issue. That cannot inspire investor confidence to say the least. And recent developments like Fiji’s Qoliqoli Bill only serve to exacerbate the doubts in the minds of potential investors.  

Islands nations need to further leverage their inherent strengths as tourism destinations and turn them into valuable dollars. By not levying even the most modest of visa charges, the islands lose millions—perhaps billions—of dollars every year.

They are perfectly justified in charging visa fees since their metropolitan neighbours do the same—exorbitantly, by islands standards.

A modest charge will not affect tourists but will considerably augment valuable revenue for the islands. There is no reason why this should not be considered.

The tourism industry has consistently proved to be a winning horse for most islands nations.

It is imperative that they concentrate on the industry leveraging it to derive the maximum possible benefit to build solid bedrock for their economies. Increased internal accruals realised from the tourism sector by adopting some of these policies will go a long way in bringing islands economies on an even keel and dispelling the growing notion of instability.