Leveraging FDI: An uphill battle between our best national intentions vs ‘Practice’

Vanuatu has shifted its economic gear from being a Least Developed Country (LDC) to Developing Country (DC).

Because we will lose our access to certain ‘international support measures’ (ISMs) due to graduation, the Right Hon Prime Minister Hon Bob Loughman and the Enhanced Integrated Framework’s (EIF) Executive Director Mr Ratnakar Adhikari have already mapped out an overal route to guide our way forward in a very pertinent and powerful article that must be read and understood by ALL government agencies and officials, particularly those who are involved in the process of foreign direct investment (FDI) facilitation across various Ministries.

This applies both to FDI and domestic investments.

Without FDI/investments, what does Vanuatu have to offer the rest of the world to create job opportunities for our burgeoning unemployment numbers, and with our unemployment rate currently being at an all time high?

Revenue and Employment – the Status Quo

The recent top two revenueearners (Citizenship/passport sales and Remittances via the SWP/RSE) are quite limited in scope. Firstly, citizenship

(passport) sales don’t create jobs (except for the few licensed agents that are involved). In addition, the Government’s position on this scheme is very clear – we need to move away from it and find other alternative income sources, but for now we have to maintain it in order to sustain revenues.

Secondly, Remittances from the RSE and SWP only benefit the workers

and their immediate families. How about the rest of the unemployed and

mashrooming population of this country which is now in transition mode after LDC graduation? Besides, how Vanuatu performs under the SWP and RSE (which have been key sources of employment for thosands of workers over the past 5-10 years) from 2021 onward also remains to be seen.

Professor Stephen Howes – the Australian National University’s well-respected and top policy adviser who has followed both schemes over the past decade – has already predicted doomsday for Vanuatu back in late October over the ‘sledgehammer’ we used against the current very successful system in favour of a ‘work-ready pool’ model that’s performed

rather poorly elsewhere in the region. Professor Howes’ words cannot be

taken lightly and brushed aside. He is the Asia-Pacific’s leading authority on matters relating to seasonal work.His analyses are empirical and

fully evidence-based.

Our Deepening Unemployment dilemma

So, to ask the earlier question again a bit more comprehensively, with FDI under threat from our internal decisions that are erroding investor confidence,

with the citizenship program not creating jobs for locals, with the SWP and RSE likely not being able to offer the same number of job opportunities again in future, what does Vanuatu have to offer the rest of the world in order to sustain job opportunities for our ever growing unemployment

numbers? If we’re truly sincere that LDC graduation also reflects our development ‘maturity’, we must answer these questions from an unbiased, mature and very objective standpoint. This isn’t about me or about you, but about Vanuatu as a nation and about our economy and

the people we’ve been called to serve.

We have a worrying future ahead of us in terms of unemployment. This

ought to make us extremely concerned.

Leveraging Foreign Direct Investment (FDI)

To ‘leverage’ something means to use it to maximum advantage. As such, when the Hon Prime Minister and EIF Executive Director advised of the need for Vanuatu to leverage FDI, they are actually telling us to maximise our economic gains through FDI, particularly now during these unprecedented times. We all need to understand this and to make this sink in our ‘heart of hearts’ (to use a phrase expressed by a private sector colleague this week). The PM and Mr Adhikari could have

presented an LDC graduation message that talks about stuff other than the economy, but they didn’t.

They focused on what matters most. They upheld the all-important value of FDI to the economy as we commence LDC graduation transition period. The two CEOs’ message revolved purely around the economy, trade, markets and investment (FDI). These are what generate growth and jobs. Businesses and FDI are the lifeblood of our economy. The whole world understands this. Why not some of us?

If we want jobs and employment, we take care of the goose, not kill the goose that lays the golden eggs. Our agencies and officials need to realise this. I make particular reference to FDI not because I serve at VFIPA but particularly because it is almost too obvious that businesses are being the subject of unnecessary severe scrutiny and target by some of us via policy decisions that simply amount to anti-investments and defeat even the words of our Prime Minister with whom the Private Sector is meeting this very morning during its 3rd High Level Breakfast consultations. We may claim otherwise, but our contradictory actions speak for themselves.

Either we are all speaking the same language in our efforts to attract FDI as already clearly expressed by the Hon Prime Minister and Director Ratnakar, or we are not. We have to allow common sense to prevail and

for once, fully cooperate to jointly unleash the potentials that this country has to grow economically. What we all must understand is the need to ensure a very condusive and “enabling environment” to make businesses grow and create the jobs we so direly and achingly need right now for our people. This economic development pillar policy objective is deeply embedded within the National Sustainable Development Plan (NSDP) 2030 under ECO 4. It’s all in there – read it.

Vanuatu is still a relatively poor country. Though we’ve graduated from LDC to DC, we are still a long way away in our development status. That gap can only be reduced when and only when we have come to our senses to understand, appreciate, value, protect, commit wholeheartedly to, ensure and provide the confidence that the private sector, FDI and local investors so desperately need in order to continue investing in our country.

Howard Aru is current CEO of the Vanuatu Foreign Investment Promotion

Agency (VFIPA) and former Director General of the Ministry of Agriculture,

Livestock, Forestry, Fisheries and Biosecurity, and the Ministry of Health

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