When the Foreign Investment Act (FIA) was first created back in 1998, to safeguard the business interests of indigenous ni-Vanuatu, a Reserved Investments List (RIL) was inserted in the Act.
In theory it should have worked, but in practice, quite the opposite. The key ‘culprit’ is the word ‘Citizen’ in the national Constitution. Indigenous and naturalized citizens both have ‘equal rights’ under the Constitution. The only person that is technically ‘banned’ from investing in the RIL is the foreigner (or non-citizen). This fact a lot of us still struggle to accept. So what do we do? Like many of you, I have blamed VFIPA before (past 12 months to be more specific), but generally-speaking, VFIPA is not the problem. Even the RIL is not the problem. However much we update the list, we’re still faced with the same old ‘culprit’ – the word ‘Citizen’ in the Constitution. We fear competition from our naturalized citizens, but that’s exactly what we’re going to keep facing, unless we do something about the RIL to make it ‘indigenous Ni-Vanuatu’ specific.
Twenty-Two Years Later
For 22 long years we’ve been fiddling around on the periphery with mere policy and with our conflicting ‘indigenous’ ni-Vanuatu interests or perceptions. It is easier to deal with foreigners who knowingly circumvent the law. But when it comes to naturalized citizens, these are not foreigners, they are ni-Vans.
Do we create two types or classes of ‘citizens’? On the other hand, do naturalized citizens understand that when they invest, for instance in kava bars, they’re encroaching into businesses meant for our indigenous ni-Vans who normally do not have sufficient capital to invest in bigger businesses (with the exception of course of a growing pool of very successful indigenous ni-Vanuatu-owned businesses)? In the Constitution, Chapter 3 describes a person who is ‘indigenous’ as ‘a person who has or had four grandparents who belong to a tribe or community indigenous to Vanuatu’. In a typical indigenous ni-Vanuatu’s mind, the RIL is reserved for ‘manples’ (stret man or woman Vanuatu). Today, 22 years later, we are worse off than back in 1998.
Defining a ‘Citizen’, under the Constitution
Under the Constitution, a citizen (Indigenous or by naturalization) is a citizen (be he black, brown, white or yellow). He or she has ‘equal rights’ by law to engage in any activity for economic gain as an ordinary citizen. To state this plainly and more simply, a naturalized citizen is also allowed to invest in any of the so-called ‘Reserved Investments’ listed in the VFIPA Act. Indigenous citizens may think otherwise, but the Constitution (our ‘mama law’) is clear in its provisions. If our leaders (a number of whom are legal experts) want to resolve the issue, they need to address it legally, rather than just via policy. I stand ready to be corrected here. Blaming VFIPA will not cut it. VFIPA is not responsible for managing what businesses ‘citizen’ investors are allowed or not allowed to invest in.
Exploiting Ni-Vanuatu as Fronts
There is also the countervailing practice of foreigners exploiting ni-Vans as “fronts” in reserved investments. Be these kava bars, small retail shops, taxis or buses. In those kinds of shops, for instance, the lady standing at the counter tapping away at the cash register is a poor ni-Vanuatu. But the actual owner is a Chinese, for instance. We are told this also happens with taxis, buses and other types of reserved investments. VFIPA cannot investigate the entire population of ni-Vanuatu businesses to try and catch law breakers. Firstly we don’t have the resources. Secondly, our role is the promotion of genuine FDI. Those ni-Vans who know of such illegal operations should come forward to report them to VFIPA’s Certification and Implementation Division (CID) and to the Departments of Labour and Immigration to assist with our global efforts of tidying up Vanuatu’s investment environment.
Illegal Passports and Reserved Investments
We saw in last weekend’s DP paper the Department of Immigration having cancelled two passports of a Vietnamese couple who were illegally granted citizenship by naturalization. Coupled with the definitional issue surrounding the word ‘citizen’ and how many more illegal passports floating around the place, imagine the number of ‘naturalized’ citizens now running around with those green Vanuatu passports, venturing into businesses meant to be “reserved” for ni-Vanuatu? The Government should launch a major investigation into this saga and clamp down on the practice comprehensively as part of our 40th Year of Independence undertakings. While borders remain closed under Covid-19, all Government agencies should in fact undertake some major internal reforms so that we can all have a cleaner slate to write the next 40 years on come 2021.The issue of illegal passports is a big one that must be addressed comprehensively.
The case of Kava
Back to our RIL and citizens argument. In the FIA, ‘Kava Bars and Export of Kava in Root, Chips and Stick Form’ are all reserved investments – reserved for ‘citizens’. There are two types of citizens (indigenous and naturalized). The Kava Act (KA) No.7 of 2002 does a better job on definitional matters. Under section 5 of the KA, a person must not export kava or kava products from Vanuatu unless the person is ‘an indigenous Ni-Vanuatu’. Even with these laws in place, we still have new citizens now happily running businesses (including kava bars!) that are meant to be reserved for ni-Vanuatu (indigenous) citizens. Classic example: the bamboo-walled kava bar next to USP. This kava bar is owned by a Chinese citizen and indigenous Ni-Vanuatu happily congregate there every evening to support their Chinese brother’s business.
As if we don’t have enough problems of our own, we’ve also gone down the route of adopting a number of foreigners and given them ‘kastom’ names. Nothing’s wrong with adoption, but it’s a serious issue when these newly adopted citizens venture into businesses that are only meant for indigenous Ni-Vans. Yes, we are Vanuatu. That’s us, at Yumi 40! It’s been 22 long years of this fantastic merry-go-round.
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.