Streamlining Foreign Investment Processes in Vanuatu
Foreign direct investment is a significant driver of employment in Vanuatu. According to the Vanuatu National Provident Fund, foreign investors employ close to 40 percent of the workforce. But, according to the 2008 UNCTAD World Investment Report, the percentage of foreign direct investments to Vanuatu in the Pacific foreign direct investment pool has fallen from around 24 percent in the 1990s to around eight percent in 2008.
To revive foreign direct investments to the country, the government of the Pacific island nation of Vanuatu and IFC recently halved the approval time for foreign investments to just 15 days. This reform is crucial for creating jobs and income opportunities for the local economy by allowing investors set up their businesses quickly and more easily.
Working with the Vanuatu Investment Promotion Authority, IFC helped streamline procedures in the processing of Foreign Investment Approval Certificates, focusing on changes that could be made without amendments to the Foreign Investment Promotion Act. No legislative changes meant these new processes could be introduced quickly, while laying the groundwork for future amendments to the Act.
In the new process, the number of application forms required from each investor is reduced from four to three forms. Also, the monthly board approval meeting is replaced with email communications between board members within five working days. The Authority also produced an application guide to clarify the FDI process for new investors.
As a result, the processing time for a Certificate has been cut from 30 to 15 working days, with many applications being approved in less than 15 days.
"Since the reforms were implemented, most of my client applications have been processed in two weeks or less, leaving me with more time to service other clients," said Mark Stafford, an accountant who is often hired to help overseas investors apply for foreign investment certificates in Vanuatu. "The reforms have also made the process more cost effective for us."
IFC has also helped the Vanuatu Investment Promotion Authority to clarify its role as being solely responsible for promoting investment.
Smith Tebu, the CEO of the Vanuatu Investment Promotion Authority, said, "Vanuatu has been good at promoting its tourism sector but we need to be more aggressive in promoting investment opportunities in the country. This reforms will help the Authority to attract more investments in the future and ultimately deliver more benefits to the people of Vanuatu."