Policies Toward 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 foreseeable future.

Foreign investment is governed through the Foreign Investment Business License (Amendment Act (2000)), which established the Registrar of Foreign Investment and details restrictions on foreign investments, mostly in certain small-scale retail and service businesses. However, this law is reportedly not consistently enforced, and foreign investors may enter partnership agreements with local Marshallese businesses. The Ministry of Resources and Development, Trade and Investment Division, administers the law in coordination with the Office of the Attorney General.

The RMI Cabinet can approve tailor-made investment incentives including tax and duty exemptions. 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 and import duties for a five-year period in certain sectors including offshore or deep-sea fishing. This focus on Cabinet decision-making together with a lack of transparency and consistency across all sectors contravenes international best practices.

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

The newly formed Office of Commerce Investment and Tourism (OCIT) drafted an investment policy review in 2018 for the purpose of stimulating private sector economic activity that will increase employment, sustainable FDI, and boost the RMI economy. According to the OCIT 2018-2020 Business Plan, the office’s priorities include revising and updating the RMI Investment Policy, addressing and removing constraints to business in the RMI, and implementing 3-year targeted development strategies for projected private sector growth sectors (tourism, fisheries, and MSMEs), and marketing the RMI for commerce, tourism, and investment.

Business Facilitation

The government of the Marshall Islands created the Office of Commerce and Investment and Tourism (OCIT) to assist foreign investors. OCIT’s website has helpful information regarding investment and doing business in the Marshall Islands: http://www.investrmi.org. OCIT developed a one-stop-shop business registration process, but it is still largely a paper-based system. They hope to launch an online business registration website next year. There currently is no online website for registering a business in the Marshall Islands. This must be done in person. After a foreign investor receives an FIBL, detailed in the Laws and Regulations on DFI, 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.

*Local GDP statistics from the Economic Policy, Planning and Statistics Office (EPPSO) which serves as an economic advisor to the Government of the Republic of the Marshall Islands. It is responsible for Policy & Strategy Development, Statistics & Analysis, and Performance Monitoring, Evaluation & Aid Co-ordination. EPPSO is directly responsible to the Office of the President.

Table 3: Sources and Destination of FDI

No detailed information is available on the IMF’s Coordinated Portfolio Investment Survey (CPIS) website and no information is available on outward direct investment from Burundi.

Table 4: Sources of Portfolio Investment

Data not available.