Policies Towards Foreign Direct Investment

Due to COVID-19 health crisis, the government’s COVID Safe Economic Recovery Framework creates significant hurdles for foreign investors who intend to travel to Fiji.  One measure within the framework calls for an additional assessment by the government’s COVID-19 Risk Mitigation Taskforce of all new investment ventures.  The Fiji government continues to review its investment policies to improve efficiency of doing business in Fiji.  Investment Fiji is responsible for the promotion of foreign investment in the interest of national development (its previous powers as a regulator were removed in 2020).  In addition to registering and assisting with the implementation of foreign investment projects, Investment Fiji hosts information seminars for visiting foreign business delegations and participates at investment missions overseas.

Limits on Foreign Control and Right to Private Ownership and Establishment

The Foreign Investment Act (FIA) and the 2009 Foreign Investment Regulation regulate foreign investment in Fiji.  All businesses with a foreign investment component in their ownership are required to register and obtain a Foreign Investment Registration Certificate (FIRC) from Investment Fiji.

Some investment activities are reserved for Fiji nationals or are subject to restrictions.  There is no minimum investment requirement.  There are 17 reserved activities exclusively for Fiji citizens, mainly in the services sector, and eight restricted activities.  Full listings of reserved and restricted areas can be found at:  http://www.investmentfiji.org.fj/pages.cfm/for-investors/doing-business-in-fiji/foreign-investment-act-foreign-investment-regulations.html.  Restricted activities in forestry, tobacco production, tourism (cultural heritage), real estate development, construction, earthmoving, and inter-island shipping or passenger service require minimum investments ranging from USD 250,000 – 2.5 million (FJD 500,00 – 5 million).  Investment in the fisheries sector also requires a 30 percent local equity in the project.  Investment Fiji helps vet foreign investment proposals to ensure that the projects are in the interest of national development and to support implementation of projects.

Other Investment Policy Reviews

Fiji has not undergone any third-party investment policy reviews in the past three years.  In 2016, Fiji completed its second WTO trade policy review (https://www.wto.org/english/tratop_e/tpr_e/tp430_e.htm) and ratified the Trade Facilitation Agreement (TFA) in 2017.  In 2015, UNCTAD undertook a voluntary peer review of Fiji’s competition law and policy, available at http://unctad.org/en/PublicationsLibrary/ditcclp2015d5_en.pdf.

Business Facilitation

The Fiji government’s bizFiji website (www.business-fiji.com) is an information portal for new and existing businesses, as well as foreign investors.  The portal provides information on the business registration process, how to obtain construction permits, and included application forms and links to all the required agencies, including the Registrar of Companies, Fiji Revenue and Customs Services (FRCS), Fiji National Provident Fund, National Occupational Health and Safety Services, and the Fiji National University.  The government’s reforms to improve the ease and reduce the cost of doing business include eliminating the business license requirement for low-risk businesses, reducing processing times for business licenses to 48 hours, and removing several requirements for existing businesses.  Since the launch of bizFiji in 2019, the government has worked to develop a single online clearance system to improve registration processes, but inefficiencies remain.

For foreign investors, the bizFiji website is also linked to the Investment Fiji website.  The registration form and procedures, and regulations for foreign investment is available at the Investment Fiji issue of the Foreign Investment Registration Certificate (FIRC).  Applications for a FIRC and payment of the requisite application fee of USD 1,336 (FJD 2,725) needs to be submitted to Investment Fiji.  Investors need to meet the requirements listed under the Foreign Investment Act (FIA) and the 2009 Foreign Investment Regulation as well as ensure that the investment activity does not fall under the reserved and restricted activities lists.  The registration process for investment applications takes at least five working days and sometimes longer if the paperwork is incomplete.

Investors are also required to obtain the necessary permits and licenses from other relevant authorities and should be prepared for delays.  There are no special services or preferences to facilitate investment and business operations by micro, small and medium sized enterprises, or by women.

Contact: Ministry of Commerce, Trade, Tourism and Transport, Level 2 and 3, Civic Tower, Victoria Parade, Suva; Telephone: (679) 330 5411; Website:  www.mcttt.gov.fj

Outward Investment

The Reserve Bank of Fiji (RBF) tightened exchange controls and any outward investment by individuals, companies, and non-bank financial institutions, including the Fiji National Provident Fund, require clearance from the RBF.

Fiji does not have any Bilateral Investment Treaties in force but has signed Treaties with Investment Provisions (TIPs) with the European Union, and Australia.  In 2020, Fiji signed a Trade and Investment Framework Agreement (TIFA) with the United States and is in discussions on a wide range of issues to expand trade and investment.

Fiji has double taxation agreements with Australia, Japan, Malaysia, New Zealand, Papua New Guinea, the Republic of Korea, Singapore, United Arab Emirates, and the United Kingdom.  Fiji has not entered into a double taxation agreement with the United States.

Transparency of the Regulatory System

The lack of consultation with the private sector and other stakeholders on proposed laws and regulations remains an area of concern.  The business community has complained that the government enacts new regulations with little prior notice or publicity.  Foreign investors perceive a lack of transparency in government procurement and approval processes, and some considering investment in Fiji have encountered lengthy and costly bureaucratic delays, shuffling of permits among government ministries, inconsistent and changing procedures, lack of technical capacity, costly penalties due to the interpretation of tax regulations by the Fiji Revenue and Customs Service (FRCS), and slow decision-making.  The Biosecurity Authority of Fiji (BAF) regulates all food and animal products entering Fiji and has stringent and costly point-of-origin inspection and quarantine requirements for foreign goods.

Fiji’s constitution provides for public access to government information and for the correction or deletion of false or misleading information.  Although the constitution requires that a freedom of information law be enacted, there is no such law yet.  Proposed bills or regulations, including investment regulations, are made available and usually posted on the relevant ministry or regulatory authority’s website.  The parliamentary website (http://www.parliament.gov.fj/) is a centralized online location that publishes laws and regulations passed in parliament.  The government’s public finances and debt obligations are also made available annually in the budget documents.

International Regulatory Considerations

Fiji is a member of the Melanesian Spearhead Group (MSG) that allows for the duty-free trade of goods between Fiji, Papua New Guinea, Vanuatu and Solomon Islands.  Fiji has been a member of the WTO since January 1996.  According to Fiji’s trade profile on the WTO website, there are no records of disputes.  Fiji ratified the WTO’s Trade Facilitation Agreement in 2017.

Legal System and Judicial Independence

The legal system in Fiji developed from British law.  Fiji maintains a judiciary consisting of a Supreme Court, a Court of Appeal, a High Court, and magistrate courts.  The Supreme Court is the final court of appeal.

Both companies and individuals have recourse to legal treatment through the system of local and superior courts.  A foreign investor theoretically has the right of recourse to the courts and tribunals of Fiji with respect to the settlement of disputes, but government laws have been used to block foreign investors from legal recourse in investment takeovers, tax increases, or write-offs of interest to the government.

Laws and Regulations on Foreign Direct Investment

The Foreign Investment Act (FIA) and the 2009 Foreign Investment Regulation regulate foreign investment in Fiji.  All businesses with a foreign-investment component in their ownership are required to register and obtain a Foreign Investment Registration Certificate (FIRC).  Information on the registration procedures, regulations, and registration requirements for foreign investment is available at the Investment Fiji website:  http://www.investmentfiji.org.fj. Amendments to the FIA also require that foreign investors seek approval prior to any changes in the ownership structure of the business, with penalties incurred for non-compliance.

The Fiji government’s bizFiji website (www.business-fiji.com), an information portal for new and existing businesses, and foreign investors, includes links to the Investment Fiji website.  Since the launch of bizFiji in 2019, the government has worked to develop a single online clearance system to improve registration processes, but inefficiencies remain.

Competition and Antitrust Laws

The Fiji Competition and Commerce Commission (FCCC) regulates monopolies, promotes competition, and controls prices of selected hardware, basic food items, and utilities to ensure a fair, competitive, and equitable market.

Expropriation and Compensation

Expropriation has not historically been a common phenomenon in Fiji.  A foreign investor theoretically has the same right of recourse as a Fijian enterprise to the courts and other tribunals of Fiji to settle disputes.  In practice, the government has acted to assert its interests with laws affecting foreign investors.

In 2013, the government amended the Foreign Investment Decree with provisions to permit the forfeiture of foreign investments as well as significant fines for breaches of compliance with foreign investment registration conditions.

Dispute Settlement

ICSID Convention and New York Convention

Fiji acceded to the New York Convention in September 2010.  Fiji has been a member of the ICSID since September 1977.  However, there are no legislative or other measures adopted to make the convention effective.

Investor-State Dispute Settlement

The government has sometimes opted to penalize foreign investors by deportation in lieu of dispute settlement but there have been no new cases since 2016.

Past investment disputes have often focused on land issues, particularly in the mining, timber and tourism sectors.  Such disputes have been resolved through labor-management dialogue, government intervention, referral to compulsory arbitration, or through the courts.  In some instances, the investors have withdrawn from Fiji when a resolution could not be found.  Fiji is a party to the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States.

The World Bank Doing Business 2020 survey ranked Fiji 101 out of 190 on the efficiency of the judicial system to resolve a commercial dispute.  According to the survey, Fiji took 397 calendar days to complete procedures at a cost of 42.6 percent of the value of the claim.

International Commercial Arbitration and Foreign Courts

Fiji is a party to the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States.  Fiji acceded to the New York Convention in September 2010.  Fiji also enacted the International Arbitration Act to improve the framework governing international commercial arbitration, adopting a version of the United Nations Commission on International Trade Law (UNICTRAL) model law on arbitration.  The Fiji Mediation Center (FMC) is an alternative dispute resolution mechanism, with local and international mediators accredited by the Center in collaboration with Singapore.  The FMC services include family, commercial, and small case mediation, and as of March 2019, has mediated over 190 cases, with 67 percent of the mediated cases settled, and 84 percent of cases settled within one working day.

Bankruptcy Regulations

Fiji’s Companies Act 2015 has provisions relating to solvency and negative solvency.  According to the 2020 World Bank Doing Business survey, prior to COVID-19, in terms of resolving insolvency, it took an estimated 1.8 years at a cost of ten percent of the estate to complete the process, with an estimated recovery rate of 46.5 percent of value.

Investment Incentives

Fiji offers incentives to encourage investment in retirement village/aged care facilities, the health sector, tourism, and the information communication technology (ICT) sector.

In the health sector, the income of any business setting up private hospitals and ancillary medical services (such as pathology lab, MRI, or other diagnostics) is exempt from taxation between 7-20 years, dependent on the level of capital investments above USD 245,200 (FJD 500,000). Incentives for investment in the manufacture of pharmaceutical products include tax holidays ranging from 5-13 years, dependent on the level of investment and above the threshold of USD  122,600 (FJD 250,000).  For retirement village/aged care facilities, incentives include tax holidays between 5-13 years, dependent on the level of capital investment.  Incentives in the ICT sector that include investment in call centers, engineering and design, software development, animation and content creation, distance learning, market research, compliance and risk services, include tax exemptions for a period of 13 years and zero import duties on computer, computer parts, and specialized equipment.  There are various incentives to encourage investment in the agriculture, bio-fuel production, redevelopment of commercial buildings, tourism, and warehouse construction.

Government is increasingly participating in public private partnerships.  Although it does not practice issuing guarantees to foreign direct investments, it had previously offered a tax holiday for the entire period of the partnership agreement.

Foreign Trade Zones/Free Ports/Trade Facilitation

The northern and selected maritime regions of Fiji have been declared Tax Free Regions (TFR) to encourage development in these isolated outposts.  The specific areas include Vanua Levu, Rotuma, Kadavu, Levuka, Lomaiviti, Lau, and the Korovou-Tailevu area in the east of Viti Levu.  Businesses established in these regions that meet the prescribed requirements enjoy a corporate tax holiday for up to 13 years and import duty exemption on raw materials, machinery, and equipment.

Performance and Data Localization Requirements

Many jobs are reserved for Fijian citizens, and work permit applications for expatriate employees may face delays or denials.  Potential employers and employees should consult Fiji Immigration for further information prior to making any binding commitments as it can be difficult to secure employment visas for non-Fijians.  The COVID-19 safety requirements in place since 2020 are also complicating and causing lengthy processing for work permits for all foreigners.

To support the implementation of newly approved investments, Investment Fiji established a monitoring system to assist companies in obtaining necessary approvals to commence operations.  The investing firm must ensure that commercial production begins within 12 months for investments under USD 1.1 million (FJD 2.5 million) or within 18 months of the date of approval of the project for investments above USD 1.1 million (FJD 2.5 million).

The U.S. Embassy is unaware of any policies regulating data storage or requiring foreign IT providers to turn over source code or provide access to surveillance.

Real Property

Land tenure and usage in Fiji is a highly complex and sensitive issue.  Fiji’s Land Sales Act of 2014 restricts ownership of freehold land inside a city or town council boundaries areas to Fijian citizens.  There are exceptions to allow foreigners to purchase strata title land, which is defined as ownership in part of a property including multi-level apartments or subdivisions.  Foreigners are still allowed to purchase, sell, or lease freehold land for industrial or commercial purposes, residential purposes within an integrated tourism development, or for the operation of a hotel licensed under the Hotel and Guest Houses Act.  The Land Sales Act also requires foreign landowners who purchase approved land to build a dwelling valued at a minimum of USD   122,600 (FJD 250,000) on the land within two years or face an annual tax of 20 percent of the land value (applied as ten percent every six months).  Freehold land currently owned by a non-Fijian can pass to the owners’ heirs and will not be deemed a sale.

Foreign landowners criticized the government of Fiji for the speed at which the act was passed and the perceived lack of consultation with landowners and developers.  The application of the Land Sales Act continues to create uncertainty among foreign investors.  The Fiji government has yet to provide full clarification of the act, such as defining what constitutes an integrated tourism development.  The limited capacity of construction and architecture firms makes it difficult to comply with the two-year time frame for building a dwelling before tax penalties set in.

According to the pre-COVID-19 World Bank’s 2020 Doing Business Report, registering property took a total of 69 days and involved four main processes, including conducting title searches at the Titles Office, presenting transfer documents for stamping at the Stamp Duty office, obtaining tax clearance on capital gains tax, and settlement at the Registrar of Titles Office.

Ethnic Fijians communally hold approximately 87 percent of all land.  Crown land owned by the government accounts for four percent while the remainder is freehold land, which private individuals or companies hold.  All land owned by ethnic Fijians, commonly referred to as iTaukei land, is held in a statutory trust by the iTaukei Land Trust Board (TLTB) for the benefit of indigenous landholding units.

To improve access to land, the government established a land bank in the Ministry of Lands under the land use decree for the purpose of leasing land from indigenous landowning units (collections of households; under the indigenous communal landowning system, land is not owned by individuals) through the TLTB and subleasing the land to individual tenants for lease periods of up to 99 years.

The constitution includes other new provisions protecting land leases and land tenancies, but observers noted that the provisions had unintended consequences, including weakening the overall legal structure governing leases.

The availability of Crown land for leasing is usually advertised.  This does not, however, preclude consideration given to individual applications in cases where land is required for special purposes.  Government leases for industrial purposes can last up to 99 years with rents reassessed every ten years.  TLTB leases for land nearer to urban locations are normally for 50-75 years. Annual rent is reassessed every five years.  The maximum rent that can be levied in both cases is six percent of unimproved capital value.  Leases also usually carry development conditions that require lessees to effect improvements within a specified time.

Apart from the requirements of the TLTB and Lands Department, town planning, conservation, and other requirements specified by central and local government authorities affect the use of land.  Investors are urged to seek local legal advice in all transactions involving land.

Intellectual Property Rights

Fiji’s copyright laws are in conformity with World Trade Organization (WTO) Trade Related Aspects of Intellectual Property (TRIPS) provisions. Copyright laws adhere to international laws but are outdated.  In 2020, the government reviewed the trademark and patent laws; however, the enforcement of these laws remains weak.  There is no protection for designs or trade secrets.

Illegal materials and reproductions of films, sound recordings, and computer programs are widely available throughout Fiji.  The government is reviewing trademark and patent laws, but capacity is a challenge.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.

Capital Markets and Portfolio Investment

The capital market is regulated and supervised by the Reserve Bank of Fiji (RBF).  Twenty companies were listed on the Suva-based South Pacific Stock Exchange (SPSE).  At the end of September 2020, market capitalization was USD 1.7 billion (FJD 3.4 billion), an annual increase of 0.6 percent compared to September 2019.  To promote greater activity in the capital market, the government lowered corporate tax rates for listed companies to ten percent and exempted income earned from the trading of shares in the SPSE from income tax and capital gains tax.  The RBF issued the Companies (Wholesale Corporate Bonds) Regulations 2021 to develop the domestic corporate bond market by providing a simplified process for the issuance of corporate bonds to eligible wholesale investors only.

Foreign investors are permitted to obtain credit from authorized banks and other lending institutions without the approval of the RBF for loans up to USD 4.9 million (FJD 10 million), provided the debt-to-equity ratio of 3:1 is satisfied.

Money and Banking System

Fiji has a well-developed banking system supervised by the Reserve Bank of Fiji.  The RBF regulates the Fiji monetary and banking systems, manages the issuance of currency notes, administers exchange controls, and provides banking and other services to the government.  In addition, it provides lender-of-last-resort facilities and regulates trading bank liquidity.

There are six commercial banks with established operations in Fiji:  ANZ Bank, Bank of Baroda, Bank of South Pacific, Bred Bank, Home Finance Corporation (HFC), and Westpac Banking Corporation, with the HFC the only locally owned bank.  Non-banking financial institutions also provide financial assistance and borrowing facilities to the commercial community and to consumers.  These institutions include the Fiji Development Bank, Credit Corporation, Kontiki Finance, Merchant Finance, and insurance companies.  As of December 2020, total assets of commercial banks amounted to USD 5.2 billion (FJD 10.7 billion).  The RBF reported that liquidity reached USD 410.4 million (FJD 836.8 million) in December 2020 and that reserves were sufficient and did not pose a risk to bank solvency.  However, the RBF also noted that existing levels of non-performing loans could rise, with the ending of moratoriums offered by financial institutions to COVID-19 affected customers.  To open a bank account, foreign investors need to provide a copy of the Foreign Investment Registration Certificate (FIRC) issued by Investment Fiji.

Foreign Exchange and Remittances

Foreign Exchange

The Reserve Bank of Fiji (RBF) tightened foreign exchange controls to safeguard foreign reserves and prevent capital flight to mitigate the impact of COVID-19.  The Fiji dollar remains fully convertible.  The Fiji dollar is pegged to a basket of currencies of Fiji’s principal trading partners, chiefly Australia, New Zealand, the United States, the European Union, and Japan.

Although no limits were placed on non-residents borrowing locally for some specified investment activities, the RBF placed a credit ceiling on lending by commercial banks to non-resident controlled business entities.

Remittance Policies

The Reserve Bank of Fiji (RBF) tightened foreign exchange controls, requiring RBF approval for any investment profit remittances.  Prior clearance of withholding tax payments on profit and dividend remittances is required from the Fiji Revenue and Customs Service.  Tax compliance may restrict foreign investors’ repatriation of investment profits and capital.  A tax clearance certificate is required for remittances above USD9,808 (FJD 20,000) and audited accounts for amounts above USD 245,200 (FJD 500,000).  The processing time for remittance applications is approximately three working days, is contingent on all the required documentation submitted to the RBF.

Sovereign Wealth Funds

The Fiji government does not maintain a sovereign wealth fund or asset management bureau in Fiji.  The country’s pension fund scheme, the Fiji National Provident Fund, which manages and invests members’ retirement savings, accounts for a third of Fiji’s financial sector assets.  The fund invests in equities, bonds, commercial paper, mortgages, real estate and various offshore investments.

State-owned enterprises (SOEs) in Fiji are concentrated in utilities and key services and industries including aerospace (Fiji Airways, Airports Fiji Limited); agribusiness (Fiji Pine Ltd); energy (Energy Fiji Limited); food processing (Fiji Sugar Corporation, Pacific Fishing Company); information and communication (Amalgamated Telecom Holdings); and media (Fiji Broadcasting Corporation Ltd).  There are ten Government Commercial Companies which operate commercially and are fully owned by the government, five Commercial Statutory Authorities (CSA) which have regulatory functions and charge nominal fees for their services, seven Majority Owned Companies, and two Minority Owned Companies with some government equity.  The SOEs that provide essential utilities, such as energy and water, also have social responsibility and non-commercial obligations. A list of SOEs is published in government’s annual budget documentation.

Aside from the CSAs, SOEs do not exercise delegated governmental powers.  SOEs benefit from economies of scale and may be favored in certain sectors.  The Fiji Broadcasting Company Ltd (FBCL) is exempt from the Media Decree, which governs private media organizations and exposes private media to criminal libel lawsuits.  In some sectors, the government has pursued a policy of opening up or deregulating various sectors of the economy.

Privatization Program

The government is pursuing public private partnership (PPP) models in energy, aviation infrastructure, and public housing, often seeking technical assistance from development partners including the International Finance Corporation to implement these arrangements and to encourage more private sector participation. The government is in negotiations with a foreign investor to further divest ownership in energy company Energy Fiji Limited (EFL), following its divestment of 20 percent of its shares in EFL to Fiji’s pension fund, the Fiji National Provident Fund (FNPF) in 2019.  Foreign investors are already partnering in public-private partnership arrangements in the health and maritime port sectors.  In 2018, the government signed the first public private partnership agreement in the medical sector with Fiji’s pension fund and an Australian company to develop, upgrade, and operate the Ba and Lautoka hospitals, the country’s two major hospitals in the western region.  The PPP arrangements are on hold to July 2021 due to COVID-19 related disruptions to travel restrictions and supply chain management.  The Ministry of Economy publishes these opportunities as Tenders or Expressions of Interest (http://www.economy.gov.fj/).

Responsible Business Conduct (RBC) is increasingly promoted, and the government has included legal provisions to protect the environment, consumers, human rights, and labor rights, although its monitoring and enforcement of RBC is mixed.  The media, civil society organizations, and labor unions play active roles in promoting RBC. In 2019, a foreign-owned tourism development project was cancelled after the media highlighted extensive environmental degradation by the project developers.

Additional Resources

Department of State

• Country Reports on Human Rights Practices (https://www.state.gov/reports-bureau-of-democracy-human-rights-and-labor/country-reports-on-human-rights-practices/);
• Trafficking in Persons Report (https://www.state.gov/trafficking-in-persons-report/);
• Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities (https://www.state.gov/key-topics-bureau-of-democracy-human-rights-and-labor/due-diligence-guidance/) and;
• North Korea Sanctions & Enforcement Actions Advisory (https://home.treasury.gov/system/files/126/dprk_supplychain_advisory_07232018.pdf)

Department of Labor

• Findings on the Worst forms of Child Labor Report (https://www.dol.gov/agencies/ilab/resources/reports/child-labor/findings ) and;
• List of Goods Produced by Child Labor or Forced Labor (https://www.dol.gov/agencies/ilab/reports/child-labor/list-of-goods).
• Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World (https://www.dol.gov/general/apps/ilab) and;
• Comply Chain (https://www.dol.gov/ilab/complychain/).

The legal code provides criminal penalties for corruption by officials, but the government does not implement the law effectively.  The government established the Fiji Independent Commission Against Corruption (FICAC), which has broad powers of investigation.  FICAC’s public service announcements encouraging citizens to report corrupt government activities have had some effect on systemic corruption.  The government adequately funded FICAC, but some observers questioned its independence and viewed some of its high-profile prosecutions as politically motivated.  The media publishes articles on FICAC investigations into abuse of office, and anonymous blogs report on government corruption.  However, Fiji’s relatively small population and limited circles of power often lead to personal relationships playing a major role in business and government decisions.  Fiji acceded to the UN Convention Against Corruption (UNCAC) in 2008.

Resources to Report Corruption

Mr. Rashmi Aslam
Deputy Commissioner
Fiji Independent Commission Against Corruption (FICAC)
P.O. Box 2335, Government Buildings, Suva, FIJI
TELEPHONE: (679) 3310290
EMAIL ADDRESS: info@ficac.org.fj

As part of COVID-19 precautions, Fiji enforces a nationwide overnight curfew. The country held general elections in November 2018 and international observers deemed elections credible.   Although civil unrest is uncommon, the Public Order Act restricts freedoms of speech, assembly, and movement to preserve public order.  The Online Safety law may also restrict free speech in the digital space.  In 2020, there were reports that authorities used the POA’s wide provisions to restrict freedom of expression and of association, and defamation lawsuits filed against political opponents for posting comments critical of the government on social media.

Labor market conditions in 2020 deteriorated due to the impact of COVID-19 on international travel and border closures.  The decline in the tourism industry resulted in an estimated 115,000 Fijians unemployed.  As of November 2020, 177,000 Fijians had accessed unemployment support through the Fiji National Provident Fund.  In response to the health crisis the government passed into law the Employment Relations (Amendment) Act 2020 to bring the COVID-19 pandemic under the definition of ‘act of God’, targets at helping business to address difficulties in maintaining the employment of workers.

The International Labor Organization (ILO) estimates that Fiji’s labor force in 2020 was 362,135.  Education is compulsory until age 17, with male and female students in Fiji achieving largely the same level of education.  Fiji continues to face acute labor shortages in a broad range of fields, including the medical, management, engineering, and financial sectors, and increasingly, competent trade-skilled people in the construction, electrical and plumbing trades.   Fiji participates in the Australian Pacific Labor Scheme, with an estimated 564 Fijians employed in meat works, hospital, accommodation and aged care sectors since February 2021.

The Ministry of Employment, Productivity, and Industrial Relations has responsibility for the administration of labor laws and the encouragement of good labor relations.  The Employment Relations (Amendment) Act of 2016 restored the 2007 Employment Relations Promulgation (ERP) as the primary basis for the right of workers to join trade unions.  Trade unions are independent of the government.  The ERP prohibits forced labor, discrimination in employment based on ethnicity, gender, and other prohibited grounds, and stipulates equal remuneration for work of equal value.  There are workplace safety laws and regulations, and safety standards apply equally to both citizens and foreign workers.  The national minimum wage rate is USD 1.31 (FJD 2.68).

The U.S. International Development Finance Corporation (DFC) provides investment insurance in Fiji for qualified applicants, including political risk insurance and loans.  The risks of currency convertibility are safeguarded under Fiji’s foreign exchange regulations.  Fiji is a member of the Multilateral Investment Guarantee Agency.

* Source for Host Country Data: Fiji Bureau of Statistics data available at https://www.statsfiji.gov.fj/index.php/statistics/economic-statistics/balance-of-payments   

Table 3: Sources and Destination of FDI

The data from IMF’s Coordinated Direct Investment Survey (CDIS) is consistent with host country data by Fiji’s national statistics office, the Fiji Bureau of Statistics.  No data was available on outward direct investment in the United States.

Source: https://data.imf.org/?sk=40313609-F037-48C1-84B1-E1F1CE54D6D5&sId=1482331048410

Table 4: Sources of Portfolio Investment

Data from the IMF’s Coordinated Portfolio Investment Survey (CPIS) site is consistent with Fiji’s Bureau of Statistics.

U.S. Embassy Suva
158 Princes Road, Tamavua
P. O. Box 218
Suva, Fiji
(679) 3314466
commercialsuva@state.gov

Policies Towards Foreign Direct Investment

The government of the RMI publicly expresses interest in finding ways to increase foreign investment, but there are many structural impediments to foreign investment and economic progress, such as land rights, which are unlikely to be changed in the near future.

Foreign investment is governed through the Foreign Investment Business License (Amendment Act (2000)), which established the Registrar of Foreign Investment and which details restrictions on foreign investments. The Ministry of Natural Resources and Development, Trade and Investment Division administers the law in coordination with the Office of the Attorney General.

Land issues and disputes concerning leases are subject to customary law governing land tenure, and proceedings can take a protracted time to resolve.  Land cannot be purchased by investors; it can only be leased through customary practices.

Limits on Foreign Control and Right to Private Ownership and Establishment

Although the Marshall Islands generally encourages foreign investment, the Foreign Investment Business License (Amendment) Act established a National Reserved List, which restricts foreign investment in certain small-scale retail and service businesses. However, this law is not consistently enforced, and foreign investors may enter partnership agreements with local Marshallese businesses. Officially, foreign investment is prohibited in the following business ventures:

• Small scale agriculture and marine culture for local markets
• Bakeries and pastry shops
• Motor garages and fuel filling stations
• Land taxi operations, not including airport taxis used by hotels
• Rental of all types of motor vehicles
• Small retail shops with a quarterly turnover of less than USD 1,000 (including mobile retail shops and/or open-air vendors/take-outs)
• Laundromat and dry cleaning, other than service provided by hotels/motels
• Tailor/sewing shops
• Video rental
• Handicraft shops
• Delicatessens, Deli Shops, or Food take-out

Other Investment Policy Reviews

In the past three years the Government of the Marshall Islands has not conducted an investment policy review through any organization or institution.

Business Facilitation

The government of the Marshall Islands created the Office of Commerce and Investment and Tourism (OCIT) three years ago to assist foreign investors.  OCIT’s website at https://www.rmiocit.org/ has helpful information regarding investment and doing business in the Marshall Islands.  The OCIT is currently in the process of developing a one-stop-shop online business registration process, but  currently there is no online website for registering a business in the Marshall Islands.  This must be done in person.  After a foreign investor receives a FIBL, detailed in the Laws and Regulations on FDI, the business owner must complete the following steps:

• Check the uniqueness of the proposed company name with the Registrar of Corporations. This costs USD 100 and takes one day.
• Have the company charters notarized. Notarization can be done at the Office of the Attorney General.  It takes two days on average and costs USD 10.
• Register the company with the Registrar of Corporations. This takes five days and costs USD 250.  Limited Liability Companies need to file a Certificate of Formation and need to have LLC agreements detailing how the LLC will be operated, managed, and distributions divided.
• Obtain an Employer Identification Number from the Marshallese Social Security Administration. This number will also serve as the company’s tax identification number.  This process takes two days and costs USD 20.
• Apply for a business license. The business owner needs to submit a company charter along with the business license.  Business licenses are usually issued in seven days.  Licensing fees vary depending on the type of business.  Fees are as follows:
  • Retail Business: USD 150
  • Banks: USD 5,000
  • Professional: USD 3,000
  • Hotels: USD 500

The Ministry of Finance segments the business sector for tax purposes using annual gross revenue amounts, not number of employees.  There are no other segmentations recognized by the Marshall Islands.  There is a Small Business Development Center in Majuro.

Outward Investment

The RMI government does not actively promote, incentivize, or restrict outward investment.

The Marshall Islands does not have a bilateral investment treaty with any country.

Transparency of the Regulatory System

Regulatory and accounting systems are generally transparent and consistent with international norms. Bureaucratic procedures are generally transparent, although nepotism and customary hierarchal relationships can play a role in government actions. Proposed laws and regulations are available in draft form for public comment pursuant to the Administrative Procedures Act, Title 6 of the Marshall Islands Revised Code. Generally, tax, labor, environment, health and safety, and other laws and policies do not impede investment. There are no informal regulatory processes managed by nongovernmental organizations or private sector associations.

International Regulatory Considerations

The Marshall Islands currently remains a member of the Pacific Islands Forum (PIF), but has begun procedures to leave the organization. The PIF has a model regulatory and policy framework focused on competition, access and pricing, fair trading, and consumer protections.  The RMI has sought to implement PIF-agreed standards domestically; however, the capacity for enforcement remains weak.

Legal System and Judicial Independence

The Republic of the Marshall Islands has a responsive judiciary that consistently upholds the sanctity of contracts. The legal system in the Marshall Islands is patterned on common law proceedings as they exist in the United States. The country has a judicial branch composed of a Supreme Court, a High Court, a Traditional Rights Court, District Courts, and Community Courts. The Supreme Court is made up of one Chief Justice and two Associate Justices.  The High Court consists of the Chief Justice and one Associate Justice. The Chief Justices are both U.S. Citizens serving 10-year terms.  There are also three Traditional Rights Court judges, two District Court judges, and several Community Court judges serving the Marshall Islands. On certain occasions, as necessary, the Marshall Islands Judicial Service Commission recruits qualified judges on contract from the United States to serve with the Chief Justice on the Supreme Court and to temporarily fill vacancies on the High Court as there are few qualified and independent Marshallese who can fill these positions.  The Traditional Rights Court deals with customary law and land disputes.

The Marshall Islands Courts are generally considered fair, without undue influence or interference.  Marshall Islands Court rulings, legal codes, and public law can be found on their website: http://www.rmicourts.org/.

Laws and Regulations on Foreign Direct Investment

All non-citizens wishing to invest in the Marshall Islands must obtain a Foreign Investment Business License (FIBL). The FIBL is obtained from the Registrar of Foreign Investment in the office of the Attorney General. In coordination with the Investment Promotion Unit at the Ministry of Natural Resources and Commerce, the Ministry of Finance reviews the application and ensures that the business does not fall under the categories of the National Reserved List listed above. The application process usually takes 7-10 working days. The FIBL grants non-citizens the right to invest in the Marshall Islands, provided the investment remains within the scope of business activity for which the FIBL was granted.

The 2015 amendment to the Foreign Investment Business License Act requires all holders of FIBLs to maintain reliable and complete accounting records and records of ownership, and that all business records must be kept in such a way that they can be converted into written form at the request of an authorized inspector.  These records must be retained for a period of five years.

Competition and Anti-Trust Laws

The Marshall Islands does not currently have any anti-trust legislation or agency which reviews transactions for competition-related concerns.

Expropriation and Compensation

All land is privately owned by Marshallese citizens through complex family lineages. Although the Government of the Marshall Islands may legally expropriate property under the country’s constitution, the government has only exercised this right on one occasion and only for a temporary period of time. Given the importance of private land ownership in customary law and practice, it is very unlikely that the government will exercise this right in the near future.

If a business activity is subsequently added to the reserved List, the Registrar of Foreign Investment may not cancel or revoke an existing Foreign Investment Business License if the investment has already commenced.

Dispute Settlement

ICSID Convention and New York Convention

The Marshall Islands has been a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the 1958 New York Convention) since 2006, but is not a member of the International Center for Settlement of Investment Disputes (ICSID), nor does it have plans to become a member at this time.

Investor-State Dispute Settlement

There are no ongoing investment disputes involving the Government of the Republic of the Marshall Islands and foreign investors.   There is a very limited record of foreign investment disputes in the Marshall Islands due to the small size of foreign investment in the country. The most common type of business disputes is with landowners over land use, and land rights issues, and as there is currently no official dispute resolution procedure, these are frequently resolved informally or only after protracted court disputes. Domestic civil society has traditionally not been actively engaged in dispute resolution.  The Marshall Islands Courts are generally considered fair, without undue influence or interference.  There is no history of extrajudicial action against foreign investors.

International Commercial Arbitration and Foreign Courts

The Republic of the Marshall Islands does not have any alternative dispute resolution (ADR) mechanisms or domestic arbitration bodies available as a means for setting disputes between two private parties.  There is no known history of the RMI enforcing foreign commercial arbitral decisions.

Bankruptcy Regulations

There is no legal provision for bankruptcy in the Marshall Islands.  It ranks 153 out of 190 for resolving insolvency in World Bank’s 2020 Doing Business Report.

Investment Incentives

The Republic of the Marshall Islands offers a range of investment incentives, many of which can be found at https://www.rmiocit.org.

The Marshall Islands offers tax and duty exemptions for investments in certain private sector industries. These investment incentives apply uniformly to both domestic and foreign investors through submission of a letter to the Minister of Finance. Tax incentives are specified by law, but have been rarely awarded, given the relative lack of large-scale investment.

All imports are subject to import duties, and the only current duty exemptions are for renewable and alternative energy items. Import duties are generally low ad valorem rates on cost, insurance, and freight (CIF), and the number of tariff categories is small to facilitate administration. Goods in transit are exempt from the import tax, and the import tax on re-exported goods is refundable.  The Marshall Islands has no taxes on exports. Due to weak infrastructure and enforcement, tax and revenue continue to seep through the economy at a loss of about USD 60 million.

Under the terms of the Compact of Free Association, as amended, all items grown, made or produced in the Marshall Islands are exempt from U.S. duties with the following exceptions:

• Watches, clocks, and timing apparatus provided for in Chapter 91, excluding heading 9113, of the Harmonized Tariff Schedule of the United States;
• Buttons (whether finished or not finished) provided for in items 9606.21.40 and 9606.29.20 of such schedule;
• Textile and apparel articles which are subject to textile agreements; and
• Footwear, handbags, luggage, flat goods, work gloves, and leather wearing apparel which were not eligible for the generalized system of preferences in the Trade Act of 1974.

Tuna in airtight containers exported to the U.S. is duty-free, provided it does not exceed 10 percent of total U.S. tuna consumption during the previous calendar year. The Compact also stipulates that U.S. products imported to the Marshall Islands receive Most-Favorable Nation status, and the country must consult with the U.S. should they enter into a Free Trade Agreement with another country or customs territory.

Investors who invest a minimum of USD 1 million or provide employment and wages in excess of USD 150,000 annually to Marshallese citizens are exempt from paying gross revenue tax for a five-year period in the following sectors:

• Off-shore or deep-sea fishing
• Manufacturing for export, or for both export and local use
• Agriculture
• Hotel and resort facilities

Investors in seabed hard mineral mining are exempt from paying all taxes, duties, and other charges (except taxes on wages and salaries, individual income tax, and social security contributions). In return, investors are required to pay the Government of the Marshall Islands a share of net proceeds accruing from the investment in the form of royalties, production charge, or some combination thereof as agreed to between the government and investor.

Foreign Trade Zones/Free Ports/Trade Facilitation

There are no geographic foreign trade zones or free ports in the Marshall Islands.

Performance and Data Localization Requirements

The RMI government requires all investors employing non-resident workers to agree to:

• Cover the cost of repatriating non-resident workers to the place hired,
• Train one or more citizen workers to perform the work for which the non-resident worker is employed,
• Pay a levy of USD 0.25 per hour for every hour of work performed by non-resident worker, to be paid to the Resident Workers Training Account for the purposes of training citizen workers, and repatriating non-resident workers should the need arise.

This requirement is set and evaluated on a case by case basis and is usually included as part of a whole package that also includes investment incentives such as favorable taxation statuses.

U.S. Citizens do not require a visa to enter the Marshall Islands, and may be employed in the Marshall Islands without obtaining a work permit or a visa.  They must register as an alien with the Department of Immigration on an annual basis.  Though use of local products is encouraged, the government does not follow “forced localization.”

The RMI does not currently have laws or regulations on domestic storage or localization requirements.

Real Property

Land rights are a highly complex and frequently contentious issue in the Marshall Islands. Land ownership is through family lineage and according to social class. Paramount Chiefs (Iroij) have title to entire islands or portions of islands within an atoll, clan elders (alaps) have title to several parcels of land under their Paramount Chiefs, and workers (dri-jerbal) have title to the parcel of land associated with their Paramount Chief on which they live. Each parcel of land is thus owned by at least three separate individual landowners, one each from the classes described above. Non-Marshallese may not purchase land, and land purchases by Marshallese are also very rare. Paramount Chiefs may grant land rights to others, though they retain their share of ownership in all circumstances.

Available land for development is scarce, particularly in the two major urban areas of Majuro and Ebeye. Non-citizen investors must negotiate lease agreements directly with customary groups of landowners. Land may be leased in perpetuity with many leases having a term of 50 years, and options for renewal.  The Kwajalein land lease to the U.S. Government runs fifty years (to 2066) with an option to renew for another twenty years, for example. Mortgages against the title of land are not permitted, but commercial lease agreements and land lease payments may be used as collateral. There is limited written documentation of titles to land in the Marshall Islands, although local citizens generally know who controls each parcel of land on their particular atoll. In 2003, the Government of the Marshall Islands established a Land Registration Authority to create a voluntary register of customary land and establish a legal framework for recording documents related to ownership rights.

In the World Bank’s Doing Business 2020 report, the Marshall Islands rank 187th out of 190 countries for registering property.

Intellectual Property Rights

The Marshall Islands is not a member of the World Trade Organization, the World Intellectual Property Organization (WIPO), or any other international agreement on intellectual property rights. There is inadequate protection for intellectual property, patents, copyrights, and trademarks. The only intellectual property-related legislation relates to locally produced music recordings, and it has never been enforced.  The Marshall Islands are not listed on the USTR’s Special 301 Report, nor are they listed in the notorious market report. Pirated DVDs and CDs imported from off-island are readily available.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.

Capital Markets and Portfolio Investment

There are no stock exchanges or financial regulatory institutions in the country.

Money and Banking System

There are currently two banks with branches in the Marshall Islands. The Bank of Guam is a publicly owned U.S. company with its headquarters in Guam. It complies with all U.S. regulations and is FDIC-insured. The Bank of the Marshall Islands is a privately-owned Marshallese company with headquarters in Majuro.

Foreign Exchange and Remittances

Foreign Exchange

The government does not impose any restrictions on converting or transferring funds associated with an investment. The Marshall Islands uses the U.S. dollar as its official currency, and there is no central bank. There are no official remittance policies and no restrictions on foreign exchange transactions. There have been no reported difficulties in obtaining foreign exchange as the vast majority of funds are denominated in U.S. dollars.

Remittance Policies

While the government encourages reinvestment of profits locally, there are no laws restricting repatriation of profits, dividends, or other investment capital acquired in the Marshall Islands. To comply with international money laundering commitments, cash transactions and transfers exceeding USD 10,000 are reported by the banks to the Banking Commission, which monitors this information and has the authority to investigate financial records when necessary. To date, however, the country has not successfully prosecuted any money laundering cases.

Sovereign Wealth Funds

The Marshall Islands has no sovereign wealth fund (SWF) or asset management bureau (AMB), but the Compact of Free Association established a Trust Fund for the Marshall Islands that is independently overseen by a committee composed of the United States, Taiwan, and Marshall Islands representatives.

Nearly all major industries are controlled by state-owned enterprises (SOEs). The SOE sector, comprising 11 public enterprises, continues to underperform and to impose significant risks and burden on the fiscal system and economy.  In the Republic of the Marshall Islands Single Audit for FY2019, the government recognized the need for continued reforms at SOEs.  Air Marshall Islands, Marshall Islands Resort, and Tobolar  have negative cash flows and require subsidies each year.  The Marshall Islands Marine Resource Authority (MIMRA) is the only SOE to be a net revenue provider for the Marshall Islands, but the audit cautioned that the long-term future support from the fisheries sector cannot be taken for granted.  The Marshall Islands is not a member of the WTO.

In 2015 the Marshallese parliament passed the State-Owned Enterprises Act which set standards for the formation and operation of SOEs.  The Act changed the way the boards of directors of SOEs are structured, and set minimum reporting requirements for the 11 SOEs.  Boards must consist of at least three but no more than seven directors, only one of which can be a public official and that public official may not hold a term longer than three years.  A public official may not be selected as Chairman of the Board.

All SOEs are required to have their books independently audited as part of the government’s overall audit.

Privatization Program

There is no formal privatization program in the RMI.  Currently, foreign investors are allowed to purchase shares only in the National Telecommunications Agency, but foreign investors may not own a majority of shares. Bidding criteria are not readily available, and the process remains largely controlled by the national government.

The Marshall Islands has some basic worker protection laws, including a minimum wage and protections for foreign workers.  With the exception of a few retail businesses, the banking sector, and the ship registry, there is little general awareness of corporate social responsibility or responsible business conduct among producers or consumers. Firms that pursue these objectives are viewed neither favorably nor unfavorably.  The Marshall Islands does not have significant human or labor rights concerns and does not have a private security industry.

There are credible allegations and periodic prosecutions for misuse of government funds and abuse of public office for private gain. Government procurement and transfers appear most vulnerable to corruption, and personal relationships sometimes play a role in government decisions. Government officials at all levels are permitted to invest in and own private businesses without regard for conflict-of-interest considerations. Foreign aid has been abused and past audits report a number of financial irregularities connected to donor-funded activities. Bribery is a second-degree felony, whether to a domestic or foreign official.  The Marshall Islands acceded to the UN Convention against Corruption in September 2011.

Domestic and international firms as well as NGOs have repeatedly identified corruption as a problem in the business environment and a major detractor for international firms exploring investment or business activities in the local market.

Resources to Report Corruption

Richard Hickson
Attorney General
RMI Attorney General Office
PO Box 890
Majuro, Republic of the Marshall Islands 96960
RichardHicksonLawyer@gmail.com
Tel: +692 625 3244
Fax: +692 625 5218

No international, regional, or local watchdog organizations operate in the country.

There have been no reported incidents involving politically motivated damage to projects or installations.

The RMI workforce is estimated at 11,465 based on the 2019 economic summary, of which 45 percent work in the public sector. Results from the 2011 Marshall Islands census indicate the country has a 31 percent unemployment rate, and a significant portion of the population remains underemployed as well. Unemployment rates among youth and young adults could be as high as 50–60 percent.

Under the Compact of Free Association, Marshallese citizens are entitled to live, attend school, and work in the United States visa-free as “nonimmigrant residents.” Accordingly, many skilled and professional workers migrate to the U.S. for its higher wages and standards of living. Professional, medical, management, and other special labor skills are in high demand in the Marshall Islands.

Given the scarcity of resident qualified workers, the Marshall Islands allows investors to employ non-resident workers provided they agree to cover the cost of repatriation, that they hire and train at least one citizen to perform the same work, and pay a levy of USD 0.25 per hour for every hour of work performed by non-resident worker, to be paid to the Resident Workers Training Account for the purposes of training citizen workers, and repatriating non-resident workers should the need arise.  Non-citizen investors issued with a foreign investment business license are exempted from obtaining a work permit for themselves. Also, citizens of the United States, Federated States of Micronesia and Palau do not require work permits to work in the Marshall Islands. Investors and nationals of these countries, however, are required to register with the Labor Office. The RMI government may also issue investors work permit exemptions if investors can demonstrate that their investments will provide substantial economic benefits to the country. Such exemptions are limited to export-oriented investments. Applications for such exemptions should be submitted to the Chief of Labor.

Foreign workers are generally hired on a contract basis with opportunities for annual renewals.  The National Training Council provides training resources for Marshallese workers. While many consider the law discriminatory against foreign workers, employers are willing to pay the fee in order to hire skilled labor, which is not widely available in the country. Some companies, particularly in fisheries, seeking to expand business and hire additional workers are limited by other infrastructure constraints, such as the lack of available land, water, and power.

There are no laws that require employers to pay a severance package when an employee is released from service, either due to firing or lay-offs.  Arrangements for severance payments are generally made at the time of hire through terms in the hiring instrument.  There is no employment insurance or any other social safety net programs for unemployed individuals.

There is no legislation concerning collective bargaining or trade union organization. The country has a very limited history or culture of organized labor. The only union ever created in the country, the Teachers’ Union, was formed several years ago and is inactive. The Marshall Islands has been a member of the International Labor Organization (ILO) since 2007.

Table 3: Sources and Destination of FDI
Data not available.

Table 4: Sources of Portfolio Investment
Data not available.

Jeremiah Knight
Deputy Chief of Mission
U.S. Embassy Majuro; Republic of the Marshall Islands
Tel: +692-247-4011 Ext. 2320
KnightJK@state.gov
http://majuro.usembassy.gov/
http://www.facebook.com/usembassymajuro

Policies towards Foreign Direct Investment

The PNG Government remains focused on fostering an enabling environment for businesses to grow and attracting foreign direct investment. PNG aims to increase Foreign Direct Investment (FDI) in mining and the petroleum/gas sector from USD 40.0 million in 2016 to USD 100.0 million by 2022. FDI stock reached USD 4.2 billion in 2016. The mining, oil, and gas sectors attract most of the FDI. There is a target to increase stock to USD 10 billion by 2022. The government also aims to increase FDI in the renewable sector.

The goal of the 2017-2032 PNG National Trade Policy (NTP) ( http://www.pngeutra2.org.pg/wp-content/uploads/2017/08/PNG-National-Trade-Policy-2017-2032.pdf ) is to maximize trade and investment by increasing exports, reducing imports on substitute goods, and increasing FDI that generates wealth and contributes to growing the economy. The NTP envisions a future PNG with “an internationally competitive export-driven economy that is built on and aided by an expanding and efficient domestic market.”

The policy lays out numerous legal, regulatory, and administrative measures to be adopted by the Government of PNG in furtherance of these objectives. It also sets very ambitious economic targets, including the creation of over 100,000 new jobs, USD 10 billion in foreign investment, increased foreign exchange reserves, reduced government debt to GDP ratio, and a more diversified economy in the next five years.

Limits on Foreign Control and Right to Private Ownership and Establishment

PNG does not have any specific policy or law that promotes discrimination against foreign investors. However, the Foreign Investment Regulatory Authority Bill 2018 (FIRA Bill) prompted serious concern from businesses that the bill would impose restraints on foreign investment in the country, particularly by reserving investments below 10 million Kina for Papua New Guineans and by setting an extensive reserve activity list. In response to these concerns, the government maintains that the bill is more conducive to investments and growth of SMEs but suspended the bill for further review and wider consultation.

Soon after taking office in May 2019, the State Negotiation Team (SNT), made up of heads of various state-owned enterprises and government agencies secured additional concessions on the Papua Gas Agreement negotiated between the O’Neill Government and French multinational TotalEnergies. SNT ended negotiations, though, without an agreement with ExxonMobil PNG over investment returns for P’nyang, a major gas resource project. In April, acting at the behest of the Mining Advisory Council, the Government ended talks with Canadian firm Barrick Gold on renewing its lease on a major gold mine, pointing to environmental problems and the displacement of local residents. Barrick Gold expressed concern that the Government of Papua New Guinea’s position amounted to nationalization.

Given the important role that these resource sectors play, cabinet has set up strategic teams to lead dialogue and negotiations with relevant stakeholders. For gas resources, the State is represented by the SNT, while in mining, the Mining Advisory Committee, an independent committee established under the Mining Act, deliberates on the application process.

In addition, the government of PNG is an active partner in hosting regular resource sector forums that attract large numbers of international industry experts and investors. The government co-hosts the annual Petroleum and Energy Summit in Port Moresby and supports the bi-annual PNG Mining and Petroleum Conference.

Foreign investment in Papua New Guinea is facilitated, regulated, and monitored by the Investment Promotion Act. Section 37 of the Act guarantees that the property of a foreign investor shall not be nationalized or expropriated except in accordance with law, for a public purpose defined by law and in payment of compensation as defined by law. Foreigners are not allowed to own land in PNG. Most foreign businesses use long-term leases for land instead of direct purchases. There are no other specific requirements. PNG recently changed its citizenship laws to allow dual citizenship which had previously been a limiting factor for Papua New Guineans returning from overseas that naturalized elsewhere. Additionally, it allows long-term residents to naturalize as PNG citizens with full legal rights and responsibilities. PNG does not have any specific policy or law that promotes discrimination against foreign investors.

Although the PNG government does not have a minimum investment requirement, the Investment Promotion Authority (IPA) may, however, pursuant to Section 28(7) of the Investment Promotion Act, require a potential investor to deposit the prescribed amount prior to IPA approval. The purpose of the screening mechanism is to assess the net economic benefit and alignment with national interest. The possible outcomes of a review are prohibition, divestiture, and imposition of additional requirements. The IPA and other regulatory bodies in their particular sectors make the decision on the outcome. Appeal processes differ among the sectors. For IPA-related matters, a company must submit its appeal to the Ministry of Commerce and Industry. Appeals may be lodged in response to any decision made by the IPA, including rejection of an application or the cancellation of a registration.

The Bank of Papua New Guinea, PNG’s Central Bank, approves all foreign investment proposals. Such proposals include the issue of equity capital to a non-resident, the borrowing of funds from a non-resident investor or financial intermediary, and the supply of goods and services on extended terms by a non-resident. In its review, the Bank is mostly concerned that the terms of the investment funds are reasonable in the context of prevailing commercial conditions and that full subscription of loan funds are promptly brought to Papua New Guinea. A debt-to-equity ratio of five-to-one is generally imposed with respect to overseas borrowing and a ratio of three-to-one is generally imposed on local borrowing.

Other Investment Policy Reviews

In the past three years, the government has not undergone any third-party investment policy reviews (IPRs) through a multilateral organization such as the OECD, WTO, or UNCTAD.

Business Facilitation

The IPA, through the Companies Office, is responsible for the administration of Papua New Guinea’s key business laws such as the Companies Act, Business Names Act, Business Groups Incorporation Act, and the Associations Incorporation Act.

The services provided by the Authority include: Business, registration, regulation, and certification (under the Business Registration and Certification or Office of the Registrar of Companies), Investor Servicing and Export Promotion (under the Investor Services and Promotion Division), Protection of Intellectual Property Rights (under the Intellectual Property Office of PNG), and regulating capital Markets (under the Securities Commission of PNG).

Service information is available at http://www.ipa.gov.pg/business-registration-regulation-and-certification.

The IPA is the lead agency for PNG’s business facilitation efforts. It can be reached online at http://www.ipa.gov.pg/. The new “Do It Online” section allows both overseas and domestic business registration. Previously, the processing times were substantial, but the current processing time for IPA is seven days. A foreign company must first register under the Companies Act of 1997. Foreign companies have two options for registration in PNG: to incorporate a new company in PNG or to register an overseas company under the Companies Act of 1997. In practice, most foreign companies incorporate a new PNG subsidiary when entering the PNG market. Once incorporated and registered with the IPA, a newly incorporated PNG company or overseas company should also register with the Internal Revenue Commission for tax and employment purposes. Typically, this process takes nine days.

Outward Investment

Through the IPA, the government has a range of direct and indirect taxation-based incentives for large and small proposals. There are international treaties, agreements and pacts which give Papua New Guinea’s manufactured goods preferential access to various export markets, including duty free and reduced tariff entry to some of the largest markets in the world. These include access to the European Union (EU) under the Cotonou Agreement, and the United States Generalized System of Preferences Program (GSP). The GSP Program is a U.S. government arrangement that provides enhanced access to the U.S. markets, and designed to help countries grow their economies through trade. It provides duty-free treatment for almost 3,500 products from PNG and its neighbors.

The Multilateral Investment Guarantee Agency’s (MIGA) principal responsibility is promotion of investment for economic development in member countries through: * guarantees to foreign investors against losses caused by non-commercial risks; and

* guarantees to foreign investors against losses caused by non-commercial risks; and * advisory and consultative services to member countries to assist them in creating a responsive investment climate and information base to guide and encourage flow of capital.

* advisory and consultative services to member countries to assist them in creating a responsive investment climate and information base to guide and encourage flow of capital.

There are no explicit legal restrictions on outward investment. The most likely barrier for this type of investment would be securing sufficient access to foreign currency. There have been no recent large-scale outward investments originating from PNG.

Transparency of the Regulatory System

The Independent Consumer and Competition Commission (ICCC) is charged with fostering competition. While there are transparent policies in place, the competition regime is oriented towards regulating existing monopolies and does little to foster competition. Tax, labor, environment, health, and safety and other laws do not distort or impede investment. There are long bureaucratic delays in the processing of work permits and frequent complaints about corruption and bribery in government departments.

The IPA and the Government are moving, with the assistance of the International Finance Corporation, towards a more streamlined regulatory framework to encourage foreign investment. One example of this trend is the IPA’s move to an online registration process for businesses. There are informal regulatory processes managed by nongovernmental organizations and private sector associations. There are impediments to the licensing of skilled foreign labor that are imposed by local professional associations, such as the Papua New Guinea Institute of Engineers and the Law Society (both of which have their own regulatory processes), that foreigners must go through before they can work/practice in the country.

There are no private sector or government efforts to restrict foreign participation in industry standards-setting consortia or organizations. Proposed laws and regulations are made available for public comment, but comments are not always taken into consideration or acted on by lawmakers or regulators. Legal, regulatory, and accounting systems are transparent and consistent with international norms, but there are delays in the dispute resolution system due to a lack of human resources in the judiciary.

When possible, proposed laws are made available for public comment, but comments are not always taken into consideration or acted on by lawmakers. Frequently, important Parliamentary decisions, such as the annual budget, are taken with no hearings and little or no debate before voting.

Regulatory decisions can sometimes be capricious and opaque, but they do not specifically target foreign-owned businesses. Most regulatory decisions can be appealed to courts with jurisdiction. There are no regulatory reforms currently planned. Many PNG government functions and documents are available online, but not all, and they are not centralized.

The Marape government successfully processed the 2019 supplementary and 2020 national budget plans, aided in large part by an AUD 300 million infusion by the government of Australia. The new Treasurer, Ian Ling-Stuckey, proactively conducted a due diligence exercise on the state of the country’s economy, which was led by a joint committee comprising international financial institutions and key government economic agencies. The public was well-informed of the findings of a month-long review through press commentaries and debate on the floor of parliament during the tabling of the supplementary budget.

There is strong political will in PNG to restore public confidence and engagement in the government’s fiscal reporting systems. However, greater action by reporting agencies is critical to realize full and timely reporting practices in PNG’s public finance management systems.

Overall, the government needs greater coordination among reporting agencies to deliver their mandated functions and responsibilities effectively. This includes all government agencies consistently and fully reporting all required financial activities, with proper financial statements to the supreme audit institution. The lack of full and timely reporting practices continues to undermine public finance management systems, and publicly available budget information.

At the same time, most budget documents remain incomprehensible to many ordinary citizens due to low financial literacy levels and the lack of proper public and civic awareness programs.

International Regulatory Considerations

PNG is a party to the Melanesian Free Trade Agreement. The agreement came into effect in 2017 and does address the need for competent regulatory authorities in each country (PNG, Solomon Islands, Vanuatu, and Fiji). However, the regulatory chapter is small and is designed to be strengthened and improved going forward.

When international standards are used in PNG, they are most often Australian models due to PNG’s history under Australian colonial governance and their continuing close economic ties.

The government has notified the WTO Committee on Technical Barriers to Trade only once. That notification covered food safety issues and was issued in 2006.

Legal System and Judicial Independence

The legal system is based on English common law. Contract law in Papua New Guinea is very similar to and applies in much the same way as in other common law countries such as Great Britain, Australia, Canada, and New Zealand. There is, however, considerably less statutory regulation of the application and operation of contracts in Papua New Guinea than in those other countries.

The Supreme Court is the nation’s highest judicial authority and final court of appeal. Other courts are the National Court; district courts, which deal with summary and non-indictable offenses; and local courts, established to deal with minor offenses, including matters regulated by local customs.

While often painstakingly slow, the judiciary system is widely viewed as independent from government interference. The Supreme Court has original jurisdiction in matters of constitutional interpretation and enforcement and has appellate jurisdiction in appeals from the National Court, certain decisions of the Land Titles Commission, and those of other regulatory entities as prescribed in their own Acts. The National Court also has original jurisdiction for certain constitutional matters and has unlimited original jurisdiction for criminal and civil matters. The National Court has jurisdiction under the Land Act in proceedings involving land in Papua New Guinea other than customary land.

Laws and Regulations on Foreign Direct Investment

Foreign investors can either be incorporated in PNG as a subsidiary of an overseas company or incorporated under the laws of another country and therefore registered as an overseas company under the Companies Act 1997. The 1997 Companies Act and 1998 Companies Regulation oversee matters regarding private and public companies, both foreign and domestic. All foreign business entities must have IPA approval and must be certified and registered with the government before commencing operations in PNG. While government departments have their own procedures for approving foreign investment in their respective economic sectors, the IPA provides investors with the relevant information and contacts. In 2013, the government amended the Takeovers Code to include a test for foreign companies wishing to buy into the ownership of local companies. The new regulation states that the Securities Commission of Papua New Guinea (SCPNG) shall issue an order preventing a party from acquiring any shares, whether partial or otherwise, if the commission views that such acquisition or takeover is not in the national interest of PNG. This applies to any company, domestic or foreign, registered under the PNG Companies Act, publicly traded, with more than 5 million PGK (USD 1.53 million) in assets, with a minimum of 25 shareholders, and more than 100 employees.

In recent years, this law was not used to prevent ExxonMobil’s acquisition of InterOil or Chinese company Zijin Mining’s purchase of 50 percent of the Porgera Joint Venture gold mine. The IPA website ( https://www.ipa.gov.pg/ ) is the official online information platform to engage with the public on matters relating to the IPA’s mandated roles and function.

Competition and Antitrust Laws

The 2002 Independent Consumer and Competition Commission Act is the law that governs competition. It also established the Independent Consumer & Competition Commission (ICCC), the country’s premier economic regulatory body and consumer watchdog; introduced a new regime for the regulation of utilities, in particular in relation to prices and service standards; and allowed the ICCC to take over the price control tasks previously undertaken by the Prices Controller as well as the consumer protection tasks previously undertaken by the Consumer Affairs Council. The ICCC’s website is http://www.iccc.gov.pg .

There have been no significant actions taken by ICCC in the last 12 months that have affected international investors.

Expropriation and Compensation

The judicial system upholds the sanctity of contracts, and the Investment Promotion Act of 1992 expressly prohibits expropriation of foreign assets. The 2013 nationalization of the Ok Tedi copper-gold-silver mine was an Act of Parliament, considered and voted on in the regular order of business. There was no recourse or due process beyond the Parliament.

Dispute Settlement

ICSID Convention and New York Convention

PNG signed the instrument of Accession to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) on June 22, 2019. The Instrument of Accession was deposited with the UN Treaties Depository in New York on July 17, 2019, and PNG became the 160th country to accede to the New York Convention. As a signatory to the New York Convention, PNG’s National Executive Council endorsed reform to the country’s outdated Arbitration Act 1951 (Chapter 46 of the Revised Laws of PNG) through the adoption of new legislation based on international model laws to implement the New York Convention and to provide enhanced support for modern arbitration in PNG.

PNG has been a member of the International Centre for Settlement of Investment Disputes (ICSID Convention) since 1978. In agreements with foreign investors, GPNG traditionally adopts the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL model law). While no specific domestic legislation exists for enforcement of awards under the 1958 New York Convention or ICSID Convents, in early 2018, an Arbitration Technical Working Committee (ATWC) was formed to advance arbitration reform in PNG. Consisting of members of the PNG Judiciary and representatives of the First Legislative Counsel and other relevant inter-governmental departments and agencies, the ATWC produced a draft Arbitration Bill 2019 in consultation with the United Nations Commission on International Trade Law (UNCITRAL), Asian Development Bank and internationally recognized arbitration experts. The draft Arbitration Bill 2019 aims to conform with best modern international arbitration law practice. The draft bill is subject to further vetting before its enactment.

Investor-State Dispute Settlement

Investment disputes may be settled through diplomatic channels or through the use of local remedies before having such matters adjudicated at the International Centre for the Settlement of Investment Disputes or through another appropriate tribunal of which Papua New Guinea is a member. The Investment Promotion Act 1992, which is administered by the IPA, also protects against expropriation, cancellation of contracts, and discrimination through the granting of most favored nation treatment to investors. PNG does not have a Bilateral Investment Treaty (BIT) with the United States, and no claims have been made under such an agreement. There is not a recent history of international judgments against GoPNG nor is there a recent history of extrajudicial action against foreign investors. PNG does not have a Bilateral Investment Treaty (BIT) or Free Trade Agreement (FTA) with an investment chapter with the United States.

Over the last 10 years, there here have been no known disputes involving a U.S. person or other foreign investors, nor have the local courts heard cases to recognize or enforce foreign arbitral awards issued against the governments. There is no history of extrajudicial action against foreign investors.

International Commercial Arbitration and Foreign Courts

According to the Port Moresby Chamber of Commerce & Industry, local and foreign parties settle disputes in Papua New Guinea through the courts. Litigation in PNG is perceived to be an expensive and drawn-out process, sometimes taking years for a decision to be handed down.

There is no domestic arbitration body outside of the courts and contract enforcement. A 2015 international arbitration decision in favor of Interoil (which has since been acquired by ExxonMobil) and against Oil Search was reportedly respected in PNG. To date, there have been no cases in which SOEs were involved in investment disputes.

Bankruptcy Regulations

Papua New Guinea’s bankruptcy laws are included in chapter 253 of the Insolvency Act of 1951 and sections 254 through 362 of the Companies Act of 1997, which covers receivership and liquidation. Bankruptcy and litigation searches can only be conducted in person at the National Court in Port Moresby.

According to the World Bank’s Doing Business Report, resolving insolvency in Papua New Guinea takes an average of three years, and typically costs 23 percent of the debtor’s estate. The average recovery rate is 25.2 cents on the dollar. Globally, Papua New Guinea stands at 141 out of 189 economies for the Ease of Resolving Insolvency on the World Bank Ease of Doing Business Survey.

Investment Incentives

Performance requirements/incentives are applied uniformly to both domestic and foreign investors. The investment incentives currently available are designed primarily to encourage the development of industries that are considered desirable for the long-term economic development of Papua New Guinea or specific underdeveloped regions within the country.

A 10-year exemption from tax is available where certain new businesses are established in specified rural development areas. Businesses, resident, or non-resident, engaged in the following activities qualify for this exemption:

• Agricultural production of any kind;
• Manufacturing of any kind;
• Construction;
• Transport, storage, and communications;
• Real estate;
• Business services; and
• Provision of accommodation, motels, or hotels.

The following have been specified as rural development areas:

• Central province – Goilala;
• Enga province – Kandep, Lagalp, Wabag, Wapenamunda;
• Gulf province – Kaintiba, Kikori;
• Eastern Highlands province – Henganofi, Lufa, Okapa, Wonenave;
• Southern Highlands province – Jimi, Tambal;
• Madang province – Bogia, Rai Coast, Ramu;
• Milne Bay province – Losula, Rabaraba;
• Morobe province – Finschaffen, Kabwum, Kaiapit, Menyamya, Mumeng;
• East New Britain province – Pomio;
• West New Britain province – Kandrian;
• East Sepik province – Ambuti, Angoram, Lumi, Maprik;
• West Sepik province – Amanab, Nuku, Telefomin; and
• Simbu province – Gumine, Karimui.

The Investment Promotion Act contains guarantees that there will be no nationalization or expropriation of foreign investors’ property except in accordance with law, for public purposes defined by law, or in payment of compensation as defined by law.

Accelerated depreciation rates are available for new manufacturing and agricultural plants, generous deductions are available for capital expenditure on land used for primary production, and accelerated deductions are available for mining and petroleum companies. A 10-year exemption from tax is available where certain new businesses are established in specified rural development areas. The exemption does not apply to businesses in areas in which a special mining lease or a petroleum development license is granted.

Businesses that commence exporting qualifying goods manufactured by them in Papua New Guinea are exempt from income tax on the profits derived from those sales for the first three complete years. For the following four years, the profit derived from the excess of export sales over the average export sales of the three previous years is exempt from income tax. The list of qualifying goods includes, among other items: motor vehicles, matches, paint, refined petroleum, soaps, wooden furniture, dairy products, flour, chopsticks, artifacts, clothing and manufactured textiles, and jewelry.

A wage subsidy is payable to new businesses that manufacture new manufactured products. The business will receive a prescribed percentage of the value of the minimum wage paid by the business, multiplied by the number of Papua New Guineans permanently employed by the business.

Eligible products are, broadly, all products listed under division D of the International Standard Classification of All Economic Activities (Third Revision), provided the products are not subject to quota pricing without import pricing or to tariff protection.

Registered foreign companies must file an annual certification with the Registrar of Companies accompanied by audited financial statements. A foreign company must apply for Certification under the Investment Promotion Act 1992 within 14 days of registering. Any foreign company automatically falls under this category and therefore must complete the same process.

However, a company may apply to be exempted from certain requirements. A company which chooses to conduct business through a branch registered in Papua New Guinea can repatriate its profits without being subject to withholding tax. On the other hand, the dividends of a Papua New Guinea incorporated subsidiary may attract dividend withholding tax. A higher rate of income tax is imposed on non-resident companies. If a foreign company merely wishes to have a representative office in Papua New Guinea, it may be exempt from lodging tax returns if it derives no income in Papua New Guinea. The Companies Act adopts similar principles and standards of corporate regulation to those in place in New Zealand. Companies registered in Papua New Guinea must lodge an annual return every year with the Registrar of Companies within six months of the end of its financial year. Currently, the Papua New Guinea government is reviewing its structure.

There are no discriminatory or preferential export and import policies affecting foreign investors, and there are low levels of import taxes.

Foreign Trade Zones/Free Ports/Trade Facilitation

The creation of Special Economic Zones (SEZs) in PNG have been a policy initiative by the past two administrations but continue to lack appropriate legislative framework. The following geographical areas have been designated for SEZs:

1. Ihu SEZs in Gulf Province
2. Vanimo Free Trade Zone
3. Sepik Special Economic Zone
4. Manus Special Economic Zone
5. Bana (AROB) SEZ
6. Agriculture Province in EHP, WHP, Morobe, Sepik and others
7. Paga Hill Special Tourism Economic Zone, NCD
8. Nadzab Industrial SEZ
9. Western Province SEZ
10. Pacific Marine Industrial Zone (PMIZ)

For each SEZ, the government plans to operate Gold and Regional Value Chain Industries, maintain one-stop shop regimes, and grant fiscal and customs and operational incentives up to ten years. SEZs remain only a concept.

Performance and Data Localization Requirements

All non-citizens seeking employment in PNG must have a valid work permit before they can be hired. The work permit must be granted by the Secretary of the Department of Labor and Industrial Relations (DLIR) in accordance with the Employment of Non-Citizens Act of 2007. It can take weeks or even months to obtain both a work permit and visa for non-citizens to work in Papua New Guinea, and delays are common due to a lengthy bureaucratic clearance process. In the past, the government has used its immigration powers to block visas for personnel coming to Papua New Guinea to fill positions that it believes can be filled by Papua New Guineans.

There are no governmental authority-imposed conditions on permission to invest, nor forced localization imposed on foreign investors.

NICTA (National Information & Communication Technology Authority) Data Integrity Act called CCE (Controlled Customer Equipment) is strictly enforced. Only illegal transmission of state/military data will be charged against the state or military. These are the two Acts that enforce data integrity (Data Interference and System Interference) In any case the fine is an amount not exceeding PGK 100, 000.00 or 10 years in prison.

Real Property

Property rights exist and are enforced. Mortgages and liens do exist. For non-customary land, the system is reliable. PNG’s legal system does not allow direct foreign ownership of land. To get around this limitation, long-term government leases are used. The legal system protects and facilitates acquisition and disposition of all property rights, but there are substantial delays particularly within the Department of Lands.

Intellectual Property Rights

The IPA through the Intellectual Property Office of PNG (IPOPNG) administers the Trademarks Act, Chapter 385, Copyright and Neighbouring Rights Act (2000) and the Patents and Industrial Design Act (2000).

Protections for intellectual property rights relating to the reproduction and sale of counterfeit and pirated products, particularly music and movies, are insufficient. Such counterfeit products are openly sold on the streets and in shops. Sales persist despite sporadic law enforcement action. Other counterfeit products that infringe on copyrights, patents, and/or trademarks are often imported from Asian countries and sold in Papua New Guinea. Customs periodically seizes such shipments, but there are significant gaps in their enforcement regime. Adequate protection for trade secrets and semiconductor chip layout design exists in law, and minimal infringements appear to occur.

PNG primarily tracks seizures of counterfeit good through media reports, as no formal publication process exists. PNG does prosecute IPR violations. For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

Capital Markets and Portfolio Investment

Portfolio investments are unregulated and limited to the availability of stocks. PNG has one stock market in Port Moresby, PNGX Limited (Formerly POMSoX). Founded in 1999, it is closely aligned with the Australian Stock Exchange (ASX) and mimics its procedures.

Credit is allocated on market terms, and foreign investors are able to get credit on the local market, much more so than in previous years due to the liberalization of policies, provided that foreign investors have a good credit history. Credit instruments are limited to leasing and bank finance.

Money and Banking System

PNG’s commercial banking sector comprises four commercial banks. Two are Australian institutions, Westpac and Australian and New Zealand Group (ANZ) banks, with local banks Bank of South Pacific (BSP) and Kina Bank.

BSP is both the largest bank and non-mining taxpayer in PNG. BSP operates 79 branches, 52 sub-branches, 351 agents, 499 ATMs, 11,343 electronic funds transfer at point of sale (EFTPOS) units and 4261 employees.

Official government sources indicate that much remains to be done in terms of financial inclusion, with nearly three quarters of PNG’s population lacking access to formal financial services. Most of those excluded represent the low-income population in rural areas, urban settlements, especially women.

Based on the Oxford Business Group business update issue of 2018, assets in the commercial sector have recorded exponential growth since 2002, with the Bank of PNG reporting that total commercial banking assets rose from PGK3.9 billion (USD 1.2billion) in that year to reach PGK 20.3billion (USD 6.3bn) in 2011. Growth has been slower in recent years, however, with total assets rising from PGK 22.7 billion (USD 7.1billion) in 2012 to a high of PGK 29.8 billion.

The banking system in Papua New Guinea is sound. The Bank of Papua New Guinea acts as the central bank for Papua New Guinea. The Central Banking Act of 2000 outlines the powers, functions, and objectives of the Bank. Foreigners are required to show documentation either of their employment or their business along with proof of a valid visa in order to register for a bank account.

Foreign Exchange and Remittances

Foreign Exchange

While there are no legal restrictions on such activities, a lack of available foreign exchange makes such conversions, transfers, and repatriations time consuming. Bank of Papua New Guinea requires that all funds held in PNG be held in PNG kina. This rule was announced with little notice and caught many businesses off-guard in 2016. While there was an appeal process for businesses that wished to keep non-PGK accounts, none of the appeals were granted.

Remittance Policies

There have been no recent changes or plans to change remittance policies. Remittance is done only through direct bank transfers. All remittances overseas in excess of PGK 50,000 (USD 15,340) per year require a tax clearance certificate issued by the Internal Revenue Commission (IRC). In addition, approval of PNG’s Central Bank – the Bank of Papua New Guinea – is required for annual remittances overseas in excess of PGK 500,000 (USD 153,420).

While there are no legal time limitations on remittances, foreign companies have waited many months for large transfers or performed transfers in small increments over time due to a shortage of foreign exchange.

Sovereign Wealth Funds

A Sovereign Wealth Fund Bill was passed in Parliament on July 30, 2015. However, falling commodity prices have severely impacted government revenues. Plans for the SWF have been put on hold indefinitely.

SOEs in PNG continue to dominate critical public utilities ranging from electricity, water and sewerage, transport, and telecommunications. PNG’s total state assets stand at PGK 9.3 billion with staff strength of 7,000 employees. Papua New Guinea’s nine SOEs altogether comprise 4.8 percent of GDP with a total revenue of PGK 3 billion.

The SOEs operate and provide services in aviation, mobile services and telecommunications, water and sewerage, motor vehicle insurance, development banking and finance, petroleum sector, data service, port services, electricity, and postal and logistics services. Each SOE has an independent board that is appointed by the cabinet which then reports to the Minister of State-Owned Enterprises.

Recent reports highlighted the rapid growth in the assets of the nine largest SOEs. Asset use, however, has been inefficient and with their profitability steadily declining since 2005.

Structural reform in 2015 established Kumul Consolidated Holdings (KCH). The purpose of the reform was to give SOEs greater autonomy and accountability, but this is still lacking in day-to-day operations. Under the Kumul Consolidated Holdings Act 2015, the cabinet can appoint SOE directors, grant approvals for corporate plans, remuneration levels, tenders, engagement of consultants, and other powers, thereby reducing the autonomy of the SOE. It has also been reported that the Act allows the cabinet to direct governance control over the SOEs, a responsibility normally reserved for SOE boards. This increases the risk of political considerations overriding commercial targets. PNG’s SOEs generally lack transparency, accountability, autonomy, and a robust legal framework that requires the SOEs to operate as viable commercial entities. Most SOEs in PNG continue to fail to produce financial accounts in a timely manner to allow for more informed government and legislative decision-making. This includes KCH’s failure to publicly report its audited financial statements to date.

Privatization Program

There is no privatization program in place and thus no guidelines or structure on when and how foreign investors are allowed to participate in privatization programs. The government has funding available for privatization and is currently using the Public Private Partnership (PPP) structure as a model for privatization. The trend has been towards growing SOEs. The cumulative asset value of SOEs grew from USD1.58 billion in 2012 to USD6.32 billion by the end of 2015.

PNG does not have a national action plan for responsible business conduct (RBC). However, most multinational companies in PNG do operate with a set of standards. The concept of social responsibility activities is pervasive in the extractive industries and guides conducive interactions with all stakeholders. There are currently no NGOs specifically monitoring RBC in PNG.

While PNG does not have specific policies, most large, international companies use international best practices as standards.

PNG is a member of the Extractive Industries Transparency Initiative (EITI). PNG EITI’s efforts have thus far been hampered by a lack of cooperation from relevant government ministries and a severe lack of data.

Additional Resources

Department of State

• Country Reports on Human Rights Practices;
• Trafficking in Persons Report;
• Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities and;
• North Korea Sanctions & Enforcement Actions Advisory

Department of Labor

• Findings on the Worst Forms of Child Labor Report;
• List of Goods Produced by Child Labor or Forced Labor.
• Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World and;
• Comply Chain.

Corruption is widespread in Papua New Guinea, particularly the misappropriation of public funds, “skimming” of inflated contracts, and nepotism. In January 2020, Transparency International ranked PNG 142 out of 180 countries and rated it the most corrupt of the Pacific Island nations.

Although giving or accepting a bribe is a criminal act, penalties differ for Members of Parliament (MPs), public officials, and ordinary citizens. For MPs the penalty is imprisonment for no more than seven years; for public officials the penalty is imprisonment for no more than seven years and a fine at the discretion of the court; for ordinary citizens the penalty is a fine not exceeding PGK 400 (USD 123) or imprisonment of no more than one year. A bribe by a local company or individual to a foreign official is a criminal act. A local company cannot deduct a bribe to a foreign official from taxes. The government encourages companies to establish internal codes of conduct that, among other things, prohibit bribery of public officials. However, overall enforcement of existing laws is insufficient.

Most of the larger domestic companies and international firms from Europe, North America, Japan, Australia, and New Zealand have effective internal controls, ethics, and compliance programs to detect and prevent bribery. Many firms from elsewhere in East and Southeast Asia, particularly those in the resource extraction sectors, lack such programs.

Papua New Guinea has signed and ratified the UN Convention against Corruption. Papua New Guinea is not a party to the UN Convention against Transnational Organized Crime or the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

PNG’s Ombudsman Commission and the Police Fraud & Anti-Corruption Directorate are generally the main avenues to report and seek protection to matters pertinent to investigating corruption. The Ombudsman Commission is mandated to investigate and recommend to concerned authorities to take action, while the Police Fraud & Anti-Corruption Directorate has the powers to prosecute.

U.S. firms routinely identify corruption as a challenge to foreign direct investment. Some critical areas in which corruption is pervasive include budget management, forestry, fisheries, and public procurement. In addition, the findings from the recent business survey, “Results of the 2017 Survey of Businesses in Papua New Guinea,” highlighted that “corruption is becoming an increasing problem with most firms reporting that they make ‘irregular payments’ to government officials.” A considerable number of those surveyed indicated that problems lay in either Lands or Customs/Finance/Tax institutions.

Resources to Report Corruption

Twain PambuaiDirector of Corporate ServicesOmbudsman Commission+675 308 2618 Twain.pambuai@ombudsman.gov.pg 

Arianne Kassman, Executive DirectorTransparency International+675 320 2188 exectipng@gmail.com 

Lawrence Stephens, ChairmanTransparency International+675 320 2188 taubadasaku@gmail.com 

Tribal conflicts occur regularly, particularly in the Highlands and Sepik regions of the country, and election-related violence broke out following the 2017 national elections. While foreign investors/interests are not generally the target of these confrontations, project infrastructure can be inadvertently damaged, or their operations disrupt.

Most of the disruption and damage caused to projects is due to disputes between landowners and the central government, which are fueled by an often-true perception that the central government has failed to uphold its financial commitments to landowners. Landowners in these disputes have taken out their frustration with the central government by damaging the infrastructure or disrupting the operations of foreign projects in their regions.

The central bureaucracy is increasingly politicized, which has eroded the capacity of government departments and allowed nepotism and political cronyism to thrive in parts the public service. Civil disturbances have been triggered by the government’s failure to deliver financial and development commitments, particularly to landowners in the resource project areas. They have also occurred in major urban areas based on disputes between long-term residents and newly arrived migrants or between competing criminal networks.

Papua New Guinea does not have a primary information system to keep track of the country’s labor market, according to PNG’s Department of Labor & Industrial Relations. PNG’s Department of Labor & Industrial Relations is responsible for labor and industrial matters in the country. The absence of a proper information system hinders reliable and readily available labor data and statistics. In addition, the lack of specific legislative and policy guidelines has limited plans and exercises on collecting data on a regular and reliable basis over the years.

The Department confirmed the use of sectoral employment movements and trends to track PNG’s labor market.

The Central Bank of Papua New Guinea’s quarterly employment index is the widely used reference for labor market statistics in the country. The index covers 500 private companies, which represent 80 per cent of the formal private sector, employing about 10,000 workers. The Bank conducts periodic interviews with each company to verify their employment and revenue levels on a quarterly basis. The index generally represents employment levels by region and industry throughout the country.

With limited accountability in PNG’s labor market, most private businesses tend to have more bargaining power to determine the size and level of skilled workers for their operations. This has largely seen highly paid jobs dominated by mostly expatriate workers under contractual arrangements. It has also given rise to large numbers of skilled jobs occupied by expatriate workers. The lack of proper national labor market surveys continues to keep the actual availability of employment and workforce unchecked and open to displacement of national skilled workforce.

Youth unemployment is rampant throughout the country with fifty per cent of the population under the age of twenty-five years. The high unemployment figures reflect the small sector of formal business activities, as well as a downturn in the extractive resource sectors, which is heavily relied on to generate government revenue streams and create employment.

The country continues to see a shortage of highly skilled or specialized and experienced workforce in financial and industry management capacities. This is mainly due to high turnover in national staff in organizations and the slowness in localizing roles in a business.

Department of Labor & Industrial Relations 2009 Work Permit Guideline explains the Papua New Guinea Classification of Industrial Divisions and the country’s Classification of Occupations, which are an integral part of the Work Permit System. In practice, the Guideline is accommodative to industry labor demands. Permits are accessible by providing a simple justification suitable for hirer’s work requirements.

There are no seasonal adjustment restrictions in PNG. While companies do provide severance packages as a practice when conducting layoffs, there is no specific legal requirement to do so. There is no social insurance or other safety net programs for unemployed workers.

*Host Country Source: Bank of PNG

Table 3: Sources and Destination of FDI
Data not available.

Table 4: Sources of Portfolio Investment
Data not available.

Chad Morris
Public Affairs and Economic Officer
US Embassy Port Moresby +675 308-2174
MorrisCW@state.gov

Policies Towards Foreign Direct Investment

The Government of Samoa welcomes business and investors. Samoa’s fertile soil, English-speaking and educated workforce, and tropical climate offer advantages to focused investors, though the country’s distance from major markets affects the cost of imports and exports. The main productive sectors of the economy are agriculture and tourism, and the economy depends heavily on overseas remittances.

For investors, Samoa offers a trained, productive and industrially adaptable work force that communicates well in English; competitive wage rates; free repatriation of capital and profits; well-developed, reasonably priced transport infrastructure, telecommunications, water supply, and electricity; industry incentive packages for tourism and manufacturing sectors; a stable financial environment with single-digit inflation, a balanced budget and international reserves; relatively low corporate and income taxes; and a pleasant and safe lifestyle.

All businesses in the greater Apia area have access to broadband and Wi-Fi, which is reasonably reliable and fast, but relatively expensive. In rural Upolu and on Savaii Island there is limited availability of high-speed internet, but reliable Wi-Fi through personal mobile routers is universal. In 2018, Samoa completed the installation of a National Broadband Highway which provides fiber optic data services and 4G LTE cellular data speeds to the entire country. 4G LTE data speeds are operative and commercially available nationwide.

Foreign Investors are permitted 100 percent ownership in all different sectors of industry with the exception of restricted activities below.

The following businesses are reserved for Samoan Citizens only:

1. Bus transport services for the general public;
2. Taxi transport services for the general public;
3. Rental vehicles;
4. Retailing;
5. Saw milling; and
6. Traditional elei garment designing and printing.

Please see Samoa’s Foreign Investment Act 2000 for a more detailed Restricted List. http://www.paclii.org/ws/legis/consol_act/fia2000219/ 

The Investment Promotion division of the Ministry of Commerce Industry and Labor (MCIL) https://www.mcil.gov.ws/services/investment-promotion-and-industry-development/investment-promotion/ 

https://www.mcil.gov.ws/services/investment-promotion-and-industry-development/investment-promotion/ 

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign Investors are permitted 100% ownership in all different sectors of the industry with the exception of conditions for restricted activities below.

Automotive & Ground Transportation
Consumer Goods & Home Furnishings
Environmental Technologies
Textiles, Apparel & Sporting Goods

Please see Samoa’s Foreign Investment Act 2000 for a more detailed Restricted List. http://www.paclii.org/ws/legis/consol_act/fia2000219/ 

Other Investment Policy Reviews

The IMF completed a financial sector assessment with Samoan authorities in 2015. Readouts from this visit can be found here: http://www.imf.org/external/country/WSM/ 

The World Trade Organization conducted a Trade Policy review of Samoa in 2019: https://www.wto.org/english/tratop_e/tpr_e/tp486_e.htm 

Samoa’s national investment policy statement can be found here: https://www.mcil.gov.ws/services/investment-promotion-and-industry-development/investment-promotion/ 

The Strategy for the Development of Samoa can be found here: http://www.mof.gov.ws/Services/Economy/EconomicPlanning/tabid/5618/Default.aspx 

http://www.mof.gov.ws/Services/Economy/EconomicPlanning/tabid/5618/Default.aspx 

Samoa’s Trade, Commerce, and Manufacturing Sector Plan 2012-2016 Volumes 1&2 are available here: http://www.mof.gov.ws/Services/Economy/SectorPlans/tabid/5811/Default.aspx 

Business Facilitation

The Ministry of Commerce, Industry and Labor (MCIL) administers Samoa’s foreign investment policy and regulations ( https://www.mcil.gov.ws /). To open a branch of an existing corporation in Samoa, one must register the company for about USD 150. For a company to qualify as a “Samoan company,” the majority of shareholders must be Samoan. The fee to register an overseas company is about USD 150. All businesses with foreign shareholdings must obtain and hold valid foreign investment registration certificates. The application fee is about USD 50 and can be obtained by contacting MCIL. Certificates are valid until the business terminates activity. If a business does not commence activity within 2 years after a certificate is issued, the certificate becomes invalid. Upon approval of the FIC, the foreign investor is then required to apply for a business license before operating in Samoa. Fees range from USD 100-USD $250, depending on the type of business.

Land has a special status in Samoa, as it does in most Pacific Island countries. Under the country’s land classification system, about 80 percent of all land is customary land, owned by villages, with the remainder either freehold (private) or government owned. The standard method for obtaining customary land, which cannot be bought or sold, is through long-term leases that must be negotiated with the local communities. A typical lease for business use might be for 30 years, with the option of a further 30 years after that, but longer terms can be negotiated. It should be noted that customary land cannot be mortgaged, and thus cannot be used as collateral to raise capital or credit. Freehold land, mostly based in and around Apia can be bought, sold, and mortgaged. Only Samoan citizens may buy freehold land unless approval is obtained from Samoa’s Head of State.

The Foreign Investment Act 2000 is the preeminent legislation on foreign investment. http://www.paclii.org/ws/legis/consol_act/fia2000219/ 

Business Registration

• Step 1: Register your company and obtain a Foreign Investment Certificate at MCIL. https://www.mcil.gov.ws/services/business-registration/foreign-investment-registration/ 

• Step 2: Obtain a business license and register for VAGST and PAYE from the Ministry of Revenue.

• Step 3: Register with the National Provident Fund.

• Step 4: Register with the Accident Compensation Board.

This website explains all these steps in more detail. http://www.doingbusiness.org/data/exploreeconomies/samoa/starting-a-business/ 

Some parts of these registrations can be done online, but most, if not all, require payment in person.

MCIL has an Industry Development and Investment Promotion Division (IDIPD) with services available to all investors. http://www.mcil.gov.ws/index.php/en/division/industry-development-investment-promotion-idipd 

http://www.mcil.gov.ws/index.php/en/division/industry-development-investment-promotion-idipd 

Samoa’s Ministry of Revenue only distinguishes between small/medium enterprises (less than USD 400,000 in annual turnover) and large enterprises (over USD 400,000 in annual turnover). Priority service is given to large enterprises.

Outward Investment

There is minimal outward investment from Samoa beyond several stationery and apparel stores having branches in New Zealand and American Samoa. The government and economy are more focused on increasing exports of Samoan products. The government does not appear to restrict investment abroad.

Pacific Islands Trade and Invest ( https://pacifictradeinvest.com/about/ ) is a resource for companies looking to establish themselves overseas.

Transparency of the Regulatory System

The Government uses transparent policies and effective laws to establish “clear rules of the game.” Accounting, legal and regulatory procedures are all consistent with international norms. According to the Samoa Institute of Accountants, businesses adhere to International Financial Reporting Standards (IFRS) and International Standards on Auditing and Quality Assurance.

Draft bills are made available through the parliamentary website, http://www.palemene.ws/new/parliament-business/bills/ , but are not made available for formal public comment. Those who wish to make a comment on the bill are given the opportunity to do so before a Parliamentary Committee. Public notices are televised and printed on local newspaper for the awareness of the public that there is an avenue to voice their opinions on drafted Government policies.

The Office of the Regulator (OOTR) was established in 2006 under the Telecommunications Act 2005 to provide regulatory services for the telecommunications sector in Samoa. However, the Broadcasting and Postal Services Acts 2010 were recently approved by Parliament, which also provide regulatory framework for broadcasting and postal sectors in Samoa. These Acts require the Regulator to establish a fair, unbiased and ethical regime for implementing the objects of these Acts including licensing of telecommunications, broadcasting and postal services, promotion of new services and investment, consumer protection, prevention of anti-competitive activities by service providers, and management of the radio spectrum and national number plans. OOTR also approves the Electric Power Corporation’s Power Purchase Agreements with Independent Power Providers and reviews EPC’s Power Extension Plan.

Finances and expenditures of the government are published twice on an annual basis, and available through the parliament website. Debt obligations are published on a quarterly basis by the Samoa Bureau of Statistics through its quarterly reports.

International Regulatory Considerations

Samoa is a member of the Pacific Islands Forum, which is an 18-member inter-governmental organization that aims to enhance cooperation between the independent countries of the Pacific Ocean.

Samoa’s system of government is based on the Westminster Parliamentary system. Samoa’s Companies Act 2001 contains a modern regulatory regime based on New Zealand company law.

Legal System and Judicial Independence

The Samoan legal system has its foundations in English and Commonwealth statutory and common law. Various business structures utilized in common law are recognized: sole traders, partnerships, limited liability companies, joint ventures and trusts (including unit trusts). These structures are regulated by legislation including the Companies Act 2001, Partnership Act 1975, Trustee Act 1975 and Unit Trusts Act 2008. Samoa’s Companies Act 2001 contains a modern regulatory regime based on New Zealand company law. It allows the incorporation of a sole person company (i.e. one person being both shareholder and director) and directors need not be resident in Samoa.

A Samoa incorporated private company is a separate legal entity and a corporation under Samoan law. It must file an annual return with the Registrar of Companies specifying details of directors, shareholders, registered office etc. There is no requirement for private companies to file annual financial reports with the Companies Registry nor are there any minimum capital requirements.

The judicial system is largely independent from the executive branch. On December 15, 2020, the National Parliament passed into law three controversial bills that fundamentally changed country’s constitution and judicial system. The three bills, the Constitution Amendment Bill 2020, Lands and Titles Bill 2020, and Judicature Bill 2020, were introduced in March 2020 and passed by Parliament with a vote 41-4. The bills were opposed by the judiciary and the Samoa Law Society for lack of consultation and the impact on human rights and rule of law. The Australian and New Zealand Law Societies, and other international organizations issued statements in support of the judiciary and the law society.

The new laws have in effect divided the judicial system into parallel courts of equal standing. One to deal with criminal and civil matters, and the other with customary land and titles. The Lands and Titles Court (LTC) would have a new appellate court comprised of a retired Supreme Court Judge, a Supreme Court Judge and a retired Lands and Title Court Judge that would have authority to review the decisions of the Lands and Titles Court.

Prime Minister Tuilaepa Sailele Malielegaoi stated that the bills would implement the recommendations of the Special Inquiry Committee of Parliament into the LTC that was conducted in 2016. Following the passing of the bills, former Attorney-General, Ms. Taulapapa Brenda Heather-Latu, informed the Office of the Attorney-General that her clients intend to challenge the constitutionality of the new laws.

Laws and Regulations on Foreign Direct Investment

The Ministry of Commerce, Industry, and Labor administers Samoa’s foreign investment policy and regulations under the Foreign Investment Act 2000. All businesses with any foreign ownership require foreign investment approval by MCIL. ( https://www.mcil.gov.ws/ ).

Competition and Anti-Trust Laws

The Ministry of Commerce, Industry, and Labor’s Fair Trading and Codex Alimentarius Division (FTCD) handles competition related concerns. The main pieces of legislation regarding competition are Fair Trading Act 1998, Consumer Information Act 1989, and Measures Ordinance 1960.

Expropriation and Compensation

Expropriation cases in Samoa are not common; however, there was one significant case that occurred in 2009 over land designated for a new six-story government building. A business signed a 20-year lease with the government in 2005 but was then asked to move in 2008 to make way for the new building. The business moved but won a settlement in the Court of Appeals against the government for a much larger sum than the government initially offered the business for vacating the land.

Dispute Settlement

The Alternative Dispute Resolution Act of 2007 (amended 2013) outlines ADR procedures for both criminal and civil proceedings. Samoa has an Accredited Mediators of Samoa Association that was put in place to help resolve (largely commercial) disputes.

ICSID Convention and New York Convention

Samoa has been party to the ICSID since 1978. Samoa is not party to the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.

Investor-State Dispute Settlement

The provisions of the Labour and Employment Relations Act 2013 have full effect in relation to disputes that involve foreign investors in Samoa. Foreign investors are subject to this Act.

The Alternative Dispute Resolution Act 2007 also provides alternative dispute resolution procedures where civil or criminal cases may arise.

International Commercial Arbitration and Foreign Courts

The provisions of the Arbitration Act 1976 have full effect in relation to disputes that involve foreign investors in Samoa. Subject to this Act and to any other law in Samoa, the Convention Settlement of Investment Disputes signed in Washington on the 3rd of February 1978 and ratified by Samoa on the 25th of April 1978, shall have the force of law in Samoa. The Alternative Dispute Resolution Act 2007 also provides alternative dispute resolution procedures where civil or criminal cases may arise.

Bankruptcy Regulations

The Bankruptcy Act 1908 is in effect in Samoa. According to World Bank Doing Business 2019 survey, in terms of resolving insolvency, Samoa was ranked at 140 out of 190. The survey estimated that it took two years at a cost of 38 percent of the estate to complete the process, with an estimated recovery rate of 18.5 percent of value.

Investment Incentives

The government does not have a history of guaranteeing or financing projects. In certain circumstances, the government may provide land for certain business projects, or be instrumental in securing land of interest.

The Industry Development and Investment Promotion Division (IDIPD) under MCIL administers several schemes designed to provide assistance to businesses that produce for overseas and domestic markets, enhancing development of domestic businesses as well as property developers in the tourism industry, and also businesses in the private sector. Such schemes offer duty concessions on imported goods for the tourism and manufacturing industries and income tax exemptions for up to five years for hotel operators.

Research and Development

U.S. and foreign firms may participate in government financed or subsidized research and development programs as technical and in-country capacities are limited. However, as such programs are usually financed by foreign development partners and donors, any conditions and limitations may be dependent on the source of project financing.

Foreign Trade Zones/Free Ports/Trade Facilitation

Samoa does not have a Foreign Trade Zone.

Performance and Data Localization Requirements

In order to hire a non-Samoan citizen for a job, one must prove that the required skillset is not available through the local labor force. It is not an onerous task to hire non-residents.

There is no forced localization in terms of goods or technology.

There is no forced localization of data other than the industry exceptions outlined in the Intellectual Property section below.

Real Property

Leasing of Land:

In accordance with the Alienation of Customary Land Act 1965 and the Alienation of Freehold Land Act 1972, land may be leased for up to 30 years renewable once in the case of land leased or licensed for industrial purposes or a hotel and 20 years renewable once in the other cases.

Land holdings and ownership in Samoa fall into three (3) categories:

1. Customary Land
These lands are not for sale but can be leased out to foreigners as well as locals. All leased lands in this category are registered with the Ministry of Natural Resource and Environment. In case of dispute, ownership is decided by the Ministry of Justice and Courts Administration.

2. Public Land
The Ministry of Environment and Natural Resources administers the database of Government land available for lease. Applications for leasing of land should be submitted to the Chairman of the Samoa Land Board.

3. Freehold Land
Freehold land cannot be sold or leased to someone who is not a citizen of Samoa, unless except with the proper consent of the Head of State of Samoa.

According to World Bank Doing Business 2019 survey, in terms of registering property, Samoa was ranked at 68 out of 190.

Intellectual Property Rights

Samoa has legislation protecting patents, utility models, designs, and trademarks. Enforcement is moderate.

To protect and safeguard intellectual property in Samoa, the Government has passed the following laws: a) Copyrights Act 1998 – applies to work including books, pamphlets, articles, computer programs, speeches, lectures, musical works, audiovisual, works of architecture etc.

a) Copyrights Act 1998 – applies to work including books, pamphlets, articles, computer programs, speeches, lectures, musical works, audiovisual, works of architecture etc. b) Intellectual Property Act 2013 – for the registration and enforcement of rights of owners of Trademarks, Patents, Industrial designs, GI and Plant varieties.

b) Intellectual Property Act 2013 – for the registration and enforcement of rights of owners of Trademarks, Patents, Industrial designs, GI and Plant varieties.

Samoa is not on USTR’s Special 301 list or the Notorious Markets Report.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

Capital Markets and Portfolio Investment

The capital market is regulated by the Central Bank of Samoa (CBS). Since January 1998, the Central Bank has implemented monetary policy by issuing its own Securities using market-based techniques – commonly known as Open Market Operations (OMO). CBS Securities are the predominant monetary policy instrument, which is issued to influence the amount of liquidity in the financial system.

Capital Markets in Samoa are in their infancy with the Unit Trust of Samoa (UTOS) domestic market established in 2010, and no international stock exchange. More information on UTOS can be found in section 10.

Samoa has accepted the obligations of IMF Article VIII, Sections 2, 3, and 4, and maintains an exchange system that is free of restrictions on payments and transfers for current international transactions.

Money and Banking System

Samoa is well-served with banking and finance infrastructure. It has four commercial banks, complimented by a dynamic development bank. The sector is ably regulated by the Central Bank of Samoa. The largest banks are regional operators ANZ and BSP, which offer a wide range of services based upon electronic banking platforms. Although they service all markets, they tend to dominate the top-end, encompassing corporate, government and high net worth individuals. Samoa is still a cash-based society, however, and this has enabled two locally owned entrants, the National Bank of Samoa and Samoa Commercial Bank, to each garner double-digit market share, despite entering the market quite recently.

The banking sector appears healthy although recent reports have indicated the state-owned development bank is carrying a significant amount of bad debt, over 20% of its loan portfolio. The government also interfered with the bank’s attempts to foreclose on non-performing assets.

With its International Finance Centre (SIFA)—the first Pacific center to be white-listed by the OECD—and a well-structured financial services sector, Samoa is well placed to service the needs of both local and offshore businesses.

The Government, through the Central Bank, has been largely resistant of block chain technologies. Their skepticism is somewhat warranted with the discovery of several cryptocurrency schemes operating in the country widely believed to be scams.

Foreign Exchange and Remittances

Foreign Exchange

The Central Bank of Samoa (CBS) controls all foreign exchange transactions as well as matters relating to monetary stability and supply of money within the country. This includes international transactions, overseas transfer of funds and funding of imports, and registration of insurance companies. Repatriation of overseas capital and profits is normally permitted provided the original investment entered Samoa through the banking system or in an otherwise formally approved manner. Investors also have the freedom to repay principle and interest on foreign loans raised for the purpose of the investment and the freedom to pay fees to foreign parties for the use of intellectual property rights.

Remittance Policies

Repatriation of capital and profit remittances on foreign capital is permitted, although it must be approved by the CBS based on submission of necessary documents, such as the following: a) Application letter explaining the request;

a) Application letter explaining the request; b) Audited accounts relating to the profit remittance year(s) requested;

b) Audited accounts relating to the profit remittance year(s) requested; c) A copy of the Authorized Directors’ Resolution approving the specified dividend payment; and

c) A copy of the Authorized Directors’ Resolution approving the specified dividend payment; and d) A tax clearance certificate from the Ministry for Revenue.

d) A tax clearance certificate from the Ministry for Revenue.

Samoa’s Financial Intelligence Unit (FIU) within the Central Bank and the Ministry of Foreign Affairs and Trade do issue and provide to all financial institutions governed under the Money Laundering Prevention Act 2007.

Sovereign Wealth Funds

There is no sovereign wealth fund or asset management bureau in Samoa. The country has the Samoa National Provident Fund which manages and invests members’ savings for their retirement.

Private enterprises are allowed to compete with public enterprises under the same terms and conditions. Laws and rules do not offer preferential treatment to SOEs. State-owned enterprises are subject to budget constraints and these are enforced.SOEs are active in the Energy, Water, Tourism, Aviation, Banking, Agriculture supplies, and Ports/Airports sectors. Laws do not provide for a leading role for SOEs or limit private enterprise activity in sectors in which SOEs operate. SOEs have government-appointed boards and operate with varying degrees of autonomy with respect to their governing Ministry.

SOEs follow a normal corporate structure with a board of directors and executive management. All SOEs have boards of directors who are appointed by a cabinet minister. Some SOEs have board seats allocated specifically to the heads of certain government ministries.

By law SOEs are required to present financials to their board of directors, shareholding Ministry and the National Auditor. Timely compliance, however, varies between SOEs.

Privatization Program

Major recent privatizations in Samoa were in broadcasting (2008) and telecommunications (2011), both resulting in significant gains in efficiency and benefits to both producer and consumer. The 2011 telecommunications privatization was to a foreign company.

Procedures for establishing all businesses are provided under existing legislation, including the Companies Amendment Act 2006, the Foreign Investment Amendment Act 2011, the Business License Act 1998, the Labour and Employment Relations Act 2013, the Central Bank Act and Guidelines, and the Health Ordinance 1959 (Part 11, 111 clause 13 & 15).

There is a general awareness of responsible business conduct (RBC) among both producers and consumers, and foreign and local enterprises to follow generally-accepted RBC principles such as the OECD Guidelines for Multinational Enterprises. Firms that pursue RBC are viewed favorably but consumers generally prioritize value for money ahead of RBC claims.

The government fairly enforces domestic laws and protects human rights. The government encourages local enterprises to follow generally accepted RBC principals. A national contact point is not known.

There are no extractive industries in Samoa.

Additional Resources 

Department of State

• Country Reports on Human Rights Practices;
• Trafficking in Persons Report;
• Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilitiesand;
• North Korea Sanctions & Enforcement Actions Advisory

Department of Labor

• Findings on the Worst Forms of Child Labor Report;
• List of Goods Produced by Child Labor or Forced Labor.
• Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World and;
• Comply Chain.

Samoa ratified the UN Anticorruption Convention in 2018. It is not signatory to the OECD Convention on Combatting Bribery. Corruption has not been specifically identified as an obstacle to foreign investment. Both corruption and bribery are criminalized and prosecuted, and the laws appear to be impartially applied.

The Office of the Ombudsman is charged with investigating official corruption. There are no international, non-governmental “watchdog” organizations represented locally, and the country was ranked 50 out of 175 on Transparency International’s Corruption Perceptions Index (CPI) 2014. Samoa was not assessed by the Transparency International’s CPI report 2019/20 report.

Resources to Report Corruption

Contact at government agency or agencies are responsible for combating corruption:

Ms Luamanuvao Katalaina Sapolu
OmbudsmanSamoa Office of the Ombudsman
Central Bank Building, Level 5
P. O. BOX 303
Apia, Samoa
(685) 25394
info@ombudsman.gov.ws 

Contact at “watchdog” organization:

UN Office on Drugs and Crime (UNDOC)
Bangkok, Thailand +66 2 288 2100
+66 2 288 2100 fo.thailand@unodc.org  fo.thailand@unodc.org 

The parliamentary democracy functions without political violence. The risk of civil disorder is low. There is no civil strife or insurrection. There are no significant border disputes at risk of escalating into conflict. Law and order is well maintained by the Samoa Police Service with support from the village chiefs and other traditional/church authorities if required.

Samoa has recently suffered a measles epidemic, strict border closures due to the COVID-19 pandemic. Both instances severely affected local business with varying degrees of cessation of economic activity. The most affected is the tourism industry. Samoa has demonstrated that it will take extreme measures to prevent loss of life, even at the expense of massive economic losses.

The 2016 Census placed the total workforce at 57,585 people, with the unemployment rate at 3.7 percent, and 36 percent of the workforce engaged in subsistence living. Wages and salaries are comparatively low. Private sector minimum wage is roughly USD 1.22 an hour.

Local skilled labor is available in sufficient quantities to undertake most types of building work, except for some specialized skills and supervisory-level manpower, which is recruited locally and from abroad. To hire foreign workers, one must provide MCIL and Samoan immigration with justification that the position cannot be filled locally. This process is viewed as fair and straightforward.

Samoan First Union, the country’s only private sector union, was officially launched in 2015. It is an extension of the New Zealand-based First Union. One of their major pushes was for a WST 3 (USD 1.22 ) minimum wage, which was achieved in 2019.

Collective bargaining in the private sector is allowed, but not common in Samoa.

The Labor and Employment Relations Act 2013, the Occupational Safety and Health Regulations 2014, and the Labor and Employment Relations Regulations 2015 are the most current pieces of labor legislation, all of which meet core international standards.

More information can be found through Samoa’s Child Labor Report

* Source for Host Country Data: Samoa Bureau of Statistics – Dec 2019 quarter. Based on contemporaneous exchange rate of 1USD=$2.7WST

Table 3: Sources and Destination of FDI
Data not available.

Table 4: Sources of Portfolio Investment
Data not available.

Albert Mariner
Political Economic Specialist
U.S. Embassy, Apia, Samoa (+685)21631 X2231
(+685)21631 X2231 marinera@state.gov 
marinera@state.gov