Investment's Role in Vanuatu's Economic Development: A Historical Perspective
Investment in Vanuatu has played a crucial role in its economic development throughout different historical periods. Starting from pre-1970 when both British and French governments supported foreign direct investment with few obstacles for entrepreneurs, to the challenges and opportunities faced in the 2000s, the journey showcases a mix of political stability, economic growth, and occasional instabilities that have shaped the country's development trajectory.
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PROGRAM DAY 1 Session 2: Investment and its Role in Economic Development Lindsay Barrett SFAI Barrett and Partners Vanuatu
Session 2: Investment and its Role in Economic Development Investment in Vanuatu a historical view point Pre-1970 Opt to be British or French Both Governments supportive of FDI Few obstacles for entrepreneurs Register a Company All people mixed Governments very approachable Land Titles Torrens Titles
Session 2: Investment and its Role in Economic Development Investment in Vanuatu a historical view point 1970-1980 Early talk of independence Some major investments halted British & French began to agree Small investments still okay, no big ones Recognition that independence inevitable Some unrest quelled (1980) Provisional Government formed 1978 Ministers very approachable
Session 2: Investment and its Role in Economic Development Investment in Vanuatu a historical view point 1980-1990 Independence Santo & Tanna troubles Land reverted to Custom Ownership New Government forced to raise revenue Foreign-owned businesses targeted After 1973, Lini Government stable FDI encouraged Private sector worked closely with Government Much new legislation drafted Country still cost competitive Air Vanuatu formed & successful (1987-1988)
Session 2: Investment and its Role in Economic Development Investment in Vanuatu a historical view point 1990-2000 Korman Government elected in 1991 No experience as leaders Corruption became noticeable Government less stable Finance sector less influential Ombudsman s office created [1996 report damning] More political parties created Government begins to be self-centered
Session 2: Investment and its Role in Economic Development Investment in Vanuatu a historical view point 2000 -2010 2002 VP s Natapei elected PM 2004 New election called & new PM 2008 Natapei elected PM 2009 Natapei stripped of PM s office Despite political instability, good economic growth 2010 No-confidence vote, Kilman elected Ethnic violence in 2007 Vanuatu rated as 57th (of 190) for ease of doing business
Session 2: Investment and its Role in Economic Development Investment in Vanuatu a historical view point 2010 -2023 Political musical chairs Natapei Kilman Carcasses Bribery & Corruption Pardoning Politicians Dissolution Salwai Red Tape increases Everywhere Galloping inflation Inadequate skills in key positions By 2019, Vanuatu moves to 107th in WB ease of doing business survey Since 2019, Much Worse! FDI is a competitive marketplace From LDC to DC, then COVID EU pressure/black lists
Session 2: Investment and its Role in Economic Development Investment in Vanuatu a historical view point cont. 2010 -2023 Uncontrolled Government spending Passport sales Horrendous energy costs Labour costs increase Can t open bank accounts easily Air Vanuatu issues Burgeoning corruption Working for the People forgotten Skills required too expensive Elephant in the room? Land!
Session 2: Investment and its Role in Economic Development Investment in Vanuatu a historical view point Possible Solutions? 1. Trust of Private Sector 2. One-Stop Shop for Investors 3. Air Vanuatu Fix it! 4. Open up restricted investments 5. Lower costs for needed skills 6. Exempt new investments from Resident Permit & Work Permit, Business License fees for, say 3 years (limit time) 7. Regular meetings with Ministers & fast law changes if needed
Session 2: Investment and its Role in Economic Development Investment in Vanuatu a historical view point cont. Possible Solutions? 8. Government should not be frightened to ask Private sector for help Why? We re all on the same side! 9. Banks restrict Forex Margins and ease difficulty of opening business accounts 10. Embrace technology as a product but cautiously 11. Speed up Government service
