Vanuatu has opened its economy to global investment in several key sectors including tourism, agriculture, livestock, fisheries, forestry and construction.
Foreign investments are channelled through the offices of the Vanuatu Investment Promotion Authority (VIPA), which aims to be a one-stop shop for processing investment proposals and assisting entrepreneurs from the approvals through to the implementation stages.
“Tourism and agriculture are the most promising areas,” says Lionel Kaluat, VIPA’s acting chief executive.
Tourism is a high priority area since it is the fastest growing industry and has the greatest potential. But agriculture holds no less promise in the present global context, says Kaluat.
Vanuatu offers a pure tropical environment in which to cultivate organically grown fruit and vegetables that have a galloping demand the world over. Several entrepreneurs have taken up that cue and have already set up farms and food processing outfits in the country. VIPA is actively promoting investment in the fisheries and forestry sectors where there is equally high potential, says Kaluat.
There has been a sudden spurt in the number of approved investment proposals last year. As against 128 projects approved in 2006-07, the number is expected to rise to 257 in 2008-09. The government approved projects totalling nearly 2 billion vatu from New Zealand investors last year, as against close to double that figure from Australia.
Australia continues to be the biggest investor with over 100 projects approved last year followed by New Zealand at 25.
The Vanuatu government has protected a number of areas from foreign investors to encourage indigenous ownership. Ranging from tourism and farming to fisheries and a number of local services, the protected sectors usually have low investment thresholds. In terms of incentives for overseas investors, the government exempts import duty on raw materials and extends the exemption to three years if the investment exceed one billion vatu.
Investors and businesspeople ISLANDS BUSINESS spoke to say that the cost of doing business in Vanuatu was high even if some of those costs were set off by the country’s tax free status and the absence of rules for repatriating profits. By far, the biggest costs were those of utilities like power and communication—the latter having dropped after the introduction of a second mobile phone operator this year, they say.
But exporters were happy with the progress the country had made with increasing air accessibility and frequency with larger aircraft and code share arrangements.
Shipping remains a concern with irregular schedules and poor access to key commodity markets outside the region.