Supportive Policies for Private Sector Development In Vanuatu – An opinion piece from General Manager Mr. Howard Aru
Time for some serious reflections on ourselves and on where we are leading this country, economically. Look at our policies – first and foremost, and more so, the intents and the motivations behind those policies.
If there is any benchmark in the Pacific region for Vanuatu to measure itself against when it comes to creating a conducive, friendly and enabling climate for private sector development and for foreign and domestic investment in the country, Vanuatu needs not look too far away but consider the booming economy of our immediate neighboring country, the Fiji Islands.
After an estimated rebound of 15.6% in 2022, Fiji’s economy is set to grow by an average of 7% in 2023-24 as tourism recovers and domestic consumption remains strong. The government has introduced a hard budget in an attempt to boost revenue without stunting growth.
Following the swearing in of the new Fiji Government in late December 2022, it kicked off its work in early 2023 with a National Economic Summit to address key issues concerning the economy. In his keynote address the new Hon. Prime Minister “called for strategies to ease the cost of living and build confidence for the private sector.”
Among its key resolutions includes the sheer importance of ensuring ‘Sustainable Private sector Participation’ in the country’s economic development efforts and aspirations. It acknowledged the importance of the private sector to Fiji’s economic transformation and the crucial role of investors, and supported Government’s vision for a sustainable and resilient private sector to deliver economic transformation, together with the need to ‘foster a culture that allows the private sector to flourish.’
At the recent Forum Economic Ministers’ Meeting (FEMM) in Suva held from 7-10 August 2023, Fiji’s Finance Minister reiterated Fiji’s drive and commitment to implement the outcomes of the Economic Summit of April 2023.
Key message here is, if Fiji, with its broader private sector base and resources sees the need to pay very close and special attention to supporting the private sector and investors in the country, then that should send some very serious signals to our very own Vanuatu Government and institutions across the board.
Mindset Change – Policy Level
Vanuatu needs good policies that support private sector development and that are favorable to and attract foreign investment. Such policies need to be driven by a mindset change that realizes our need for ‘new money’, technology, skills and resources that can help to grow our ailing economy.
Labour mobility numbers are set to plateau and then reduce significantly from 2030 onwards (recent World Bank study). Our reliance as a nation on passport sales and donor support is not a sustainable solution. We need new and innovative ways to build the Government’s revenue and to develop our nation in access to quality healthcare and education services.
Foreign investment can have significant positive impacts on the economy of our country, including technology transfer and innovation, increased employment and income, improved infrastructure and market access to global markets and value chains – stimulating efficiency, quality, and market share.
In this context, we need to appreciate and understand why countries such as Fiji, Papua New Guinea and others around the region and the world proactively promote foreign direct investment (FDI) in their respective jurisdictions. Bottomline is, we need “new money” and you get that from foreign exchange (Forex) – which is in turn driven by exports, FDI and other external sources of funding, besides aid.
How does it work?
Imagine for a moment, a conducive environment to attracting investors and investment into the country – flowing primarily into the property and productive sectors for example. Investors, attracted by the option of obtaining residency subject to a minimum investment, giving investors an opportunity to bring up their families in our developing nation with quality education and social standards, cash flowing physically throughout the community and to the Government via regulated VAT and levies.
Moving Forward
Recently I was chatting with several long term investors to the country, who lamented recent changes to the business landscape. One had just returned from a trip to Fiji, where they had witnessed a vibrant, professional and extremely busy seafront precinct in Denarau, teeming with tourist spending their money and receiving great experiences. On return into Port Vila they witnessed a Saturday night full of closed shops, empty restaurants and only noisy nightclubs for weekend entertainment on offer. We need to change the way we do things to invite tourists and revenue back in to our urban areas.
Our request
We ask that this next chapter for Government, in their role as policy makers, work hand in hand with the private sector to rekindle the regular consultations had in the past years. If the Fiji Government can do it, the private sector is very confident we can do the same here in Vanuatu.
