Solomon Islands Business Guide s pecial feature This feature first published in the July/Aug 2017 edition of Paradise magazine.

© Copyright 2018 Air Niugini and contributors www.airniuginiparadise.com SPECIAL REPORT BUSINESS GUIDE

Sunny skies, calm seas and A POSITIVE ECONOMIC OUTLOOK he Solomon Islands, 1400 by 11.4 years, mean years of The Asian Development Bank’s Commerce and Industry, says kilometres east of Papua schooling increased by 0.7 years Asian Development Outlook 2018 progress on broadening the New Guinea, is a country and expected years of schooling notes that cash crops, fishing country’s agricultural base has Tthat is making big economic increased by 3.6 years. revenue and construction remained been relatively slow in the short advances. Although it faces Over the same period, Solomon strong in 2017, but economic term. “There is a little bit of small many of the familiar challenges Islands’ gross national income growth slowed because of a niche products getting exported confronting developing Pacific per head (GNI per capita) decline in logging exports. at the moment but nothing very economies, such as a narrow increased by 14.8 per cent. “Inflation decelerated on lower substantial.” industry base, the country has The bulk of the population food prices, and the current In the medium term, however, been making some positive gains. depends on agriculture, fishing account deficit almost halved. there are plans for expansion of the According to the United and forestry for at least part of Slower growth is expected in 2018 palm oil industry. Nations’ Human Development its livelihood. Most manufactured and 2019 as new construction only A subsidiary of New Britain Index, between 2000 and 2015 goods and petroleum products partly offset a likely further decline Palm Oil, GPPOL, is, says Bartlett, the Solomon Islands’ rating must be imported. The islands in logging output. Progress is being looking at an expansion program increased from 0.442 to 0.515 – an are rich in undeveloped mineral made in implementing a much- in the , in the east improvement of 16.5 per cent. resources such as lead, needed national transport plan, but of the country. The UN estimates that between zinc, nickel and gold. Some challenges remain.” “GPPOL is looking at more 1990 and 2015, Solomon Islands’ calculations put the country’s Jay Bartlett, chairman of the plantations; that is in the pipeline.

PICTURES: DAVID KIRKLAND life expectancy at birth increased GDP at $US1.317 billion in 2017. Solomon Islands Chamber of There just needs to be some key

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David James reports that economic advances are being made in the Solomon Islands, providing plenty to smile about. Located 1 hour from on infrastructure built: two bridges to “A task force has been the waterfront of the historic open up access.” established. The Chamber of Tulagi harbour. Bartlett says there are some Commerce is working with the •Reef & Wreck Diving cassava exports but it is still on a Government and the Ministry of •Accommodation “quite small scale”. Virgin coconut Agriculture. The private sector is •Bar & Dining oil production has been growing taking the lead to find a solution. slowly, but could potentially be It needs to be a biological solution •Snorkeling affected by spread of the coconut … a virus that will kill it.” •Hiking & more... rhino beetle. Bartlett says the government is “That is a huge threat to the embarking on a three-year review livelihoods of our rural population into tax reform “to ensure that that depends on the coconut its administration is efficient and industry. It is also having a negative simpler”. He describes it is a very impact on the palm oil industry, positive step. as well. It is spreading around “We in the private sector, the the Solomons at the moment Chamber of Commerce, we are WWW.RAiDERSHoTEl.Com and being found in a number of part of the committee so we different provinces. are trying to ensure that the Email: [email protected] • Ph: +677 7494185/7938017 government understands Check out our reviews on TripAdvisor & Facebook

July – August 2018 109 SOLOMON ISLANDS BUSINESS GUIDE SPECIAL REPORT A positive economic outlook the business point of view and which is very high. We have also how we would like to see the got a very young population. reform happen. I think people that invest and run We are talking seven out of 10 “It will broaden the base, make business in Papua New Guinea and under 30 – so similar demographics tax easier to pay and broaden as PNG. the net. There is a large informal Melanesia probably see the Solomons as “With a lack of economic sector that at the moment isn’t a good opportunity as well. opportunity for young people and a contributing to government lot of unemployment, in the future revenue so hopefully we can look security could be a concern. So we at getting more businesses into are just looking at ways we can the formal sector with a simplified “I think people that invest and Monetary Fund (IMF) the address this holistically. Not just tax system. That is something we run business in Papua New Australia-led Regional focus on how we can stop it, but can promote.” Guinea and Melanesia Assistance Mission to also why these issues are there.” Bartlett says the members of probably see the Solomon Islands (RAMSI) Land ownership is another issue, the chamber are businesses that Solomons as a good withdrew this year says Bartlett. “contribute and comply”. He says opportunity as well,” after 14 years, “having “Accessibility to land is always it is hard to say what the level of says Bartlett. succeeded, together challenging. Similar to Papua compliance is across the whole A trade delegation with the authorities, in New Guinea, most of the land economy. “We believe there is a lot from the Solomons to restoring law and order is customary owned.” Bartlett of room for improvement.” PNG is being planned. and re-establishing public estimates 85 per cent of the land Two positive developments for “It will be a partnership institutions”. is customary land and only 15 per the Solomon Islands are the Tina between the private sector RAMSI was established cent is registered land. River Hydropower Development and government just to gauge in 2003 to deal with ethnic “With the majority of our land Project and the Solomons what sort of interest we can violence, the closure of we need to get some ownership Undersea Cable Project (which will get in PNG and also for us key businesses, and structures in place so we can be mainly funded by the Australian to go on a bit of a learning government fiscal move on development and get Government). The ADB estimates mission as well. stresses. infrastructure in place. There are Jay Bartlett … that these will start contributing to “There is a lot of chairman of the Bartlett says the different models in the Pacific. economic growth in 2019. innovation that is Solomon Islands relationships remain. “It “Some of them are quite Bartlett says the laying of happening in Papua New Chamber of has just changed from successful, like in Fiji – they have Commerce and domestic cables is expected to Guinea with agriculture. Industry. the mission to a bilateral the Native Land Trust Board that begin in May 2019. The main So maybe there are some relationship so we still have manages this. But it is a long-term international cable will go into process. Land reform is about Honiara and there will be three people, not land. We have to go additional domestic connections. through some sort of identification He says it will “definitely” lead to The bulk of the population depends on process to really understand who more efficiency in business, lower is there and what people own. It costs and increased speeds. agriculture, fishing and forestry for at least is not something that is going to Bartlett says after that immediate part of its livelihood. happen quickly. It will take some impact, experience suggests that time and it needs a lot of political consumption will double every will to drive it.” year for the first five years. “It Bartlett adds that the Solomons creates other avenues where we lessons we can learn and bring a lot of support from the Australian chamber represents “a quite can use technology a lot more to back. We are still in dialogue government. One of the things we diverse group of businesses”. deliver services and infrastructure; with the Port Moresby Chamber, are doing as a chamber is working He says the big-ticket items are connectivity is always a challenge the Trade Commissioner and the with law enforcement and police infrastructure, the cost of business, and logistics costs are always very High Commissioner in PNG but to build trust and confidence in utilities, roads and general business expensive. I think innovation is a big we would like to do it this year, business, and to encourage more efficiency. area that can grow from this.” working towards September.” investment. He says the cost of internet is The Solomon Islands is mostly The Solomon Islands is recovering “The Solomons is a safe country. also prohibitive, but he expects Melanesian, and has strong cultural from some serious civil conflict. But we do have a lot of (negative) that to fall with the laying of the connections with PNG. According to the International elements like unemployment, overseas cable.

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ccording to the Asian tighter budget will reduce capital Development Bank (ADB), expenditure and impede long-term economic growth in the Output in copra rose by 35 per cent and growth and productivity. Solomon Islands slowed The rise in taxes would also A fish by 15 per cent. Mining and tourism to 3.2 per cent in 2017, down from increase the burden on businesses 3.4 per cent in 2016. also expanded significantly. and there is less likely to be sup- Log output decreased by almost port for key growth businesses. 2 per cent in 2017 to 2.65 million According to Andrew Harris, a cubic metres from a high of 2.69 partner at Deloitte PNG, changes million cubic metres in 2016. But Merchandise exports grew by an that in the 2018 Budget, revenues to withholding taxes and petro- output in copra rose by 35 per cent estimated 12.0 per cent in 2017, up were 12.8 per cent higher than in leum tariffs have been “effective”. and fish by 15 per cent. Mining and from a 0.6 rise in 2016. the draft budget, and domestic About a third of the government tourism have also expanded signifi- The Solomon Islands in 2017 re- revenues were up 12.3 per cent revenue comes from goods tax cantly, albeit from low bases. corded a budget deficit estimated “due to new measures by the IRD and a quarter from personal The current account deficit to be equal to 4 per cent of GDP. (internal revenue department).” income tax. He says the Solomon almost halved in 2017 from the This is likely to improve in 2018. Expenditures were revised up 4 per Islands has the highest level of equivalent of 4.9 per cent of GDP According to Donald Kiriau, cent from the draft budget. tax collection amongst Pacific in 2016 to 2.5 per cent, reflecting treasurer of the Economics The positive of this fiscal con- countries. It is 33 per cent of GDP, “low international food prices, Association of Solomon Islands, solidation, according to Kiriau, is which is about double the level in strong exports, and continued the government is moving from that it instigates a “cycle towards Papua New Guinea. inflows of grants from develop- adopting expansionary budgets fiscal consolidation and a balanced – DAVID JAMES ment partners”. towards balanced budgets. He said budget.” The downsides are that a

112 Paradise – Air Niugini’s in-flight magazine SOLOMON ISLANDS BUSINESS GUIDE SPECIAL REPORT A positive economic outlook Q&A DEREK AIHARI The director of InvestSolomons says the country is open for business and looking to develop its already close links to PNG. Q: What are the main Soon, we'll be looking at investors A: PNG is ranked third in terms We also have a sectors you are promoting to come and develop that place. of foreign direct investment for number of PNG to the international business Q: What is the regulatory the Solomon Islands. One of the investments in community? framework like? How easy investments is Guadalcanal Plains retail. A: The growth is in the services is it for foreign companies to Palm Oil, which is originally from sector. One of the ideas is to set up? Papua New Guinea (New Britain promote the tourism sector, as A: We have undergone some Palm Oil). In the services sector, well as the mining and minerals reforms. In November 2016 we have Bank South Pacific (BSP) sectors. We have a number of we improved the system of with us – they took over the role of reforms going on. The government registration. We now have an Westpac. Also Credit Corporation, has a plan to develop a special online registry system. It will make another financial institution. economic zone, where we can it easier for foreigners to register, In the tourism sector, we offer incentives. We have a tuna as well as locals, and incorporate a have one of the biggest cannery and we are currently company or list a business name. hotels in Honiara: the looking at one more in Malaita Q: What are the main PNG Heritage Park. Province, the biggest province in companies doing business the Solomons. Work is underway. in the Solomons?

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July – August 2018 113 SOLOMON ISLANDS BUSINESS GUIDE SPECIAL REPORT A positive economic outlook

Travellers’ tips VISAS CAR HIRE HEALTH Taj Mahal (Sri Lankan and Indian), Free visas valid for 90 days Avis and Economy Car Rentals It is advisable to take anti-malarial just across the road from the are issued on arrival for have a good variety of vehicles in tablets, even if just visiting Heritage Park Hotel, has a very most nationalities, including Honiara. See avis.com.sb and Honiara. Consult your doctor good reputation. If you are after Commonwealth, US and European economycarrentals.com.sb. before departure about malaria great coffee and comfort food, the visitors. To ensure the visa is Car hire and drivers can also be but also tetanus and vaccination Breakwater Cafe and Lime Lounge issued, visitors should have return booked via travel agencies such for hepatitis A and B. A typhoid are popular expat hang-outs in the or onward tickets. as Guadalcanal Travel Services. booster is also recommended. centre of town. The Bamboo Cafe, See solomontravel.info. run by and directly next door to INTERNATIONAL/ HONIARA the King Solomon Hotel, is another DOMESTIC BUSINESS ACCOMMODATION good option. FLIGHTS ETIQUETTE The Heritage Park Hotel is popular CLIMATE Meetings can seem informal – with business travellers and has International flights land at Warm and humid, with coastal day jackets and ties aren’t necessary, a swimming pool and conference Honiara’s Henderson Airport. Air temperatures averaging 28°C. May though a degree of flexibility rooms. See heritageparkhotel. Niugini flies from Port Moresby to November tends to be drier. to Honiara five times weekly. is. ‘Island time’ can mean com.sb. The five-star Coral Sea See airniugini.com.pg. Solomon some people don’t show for Resort & Casino opened last year. TIME ZONE Airlines flies throughout the appointments or, conversely, See coral-sea-resort.com. 11 hours ahead of GMT. country. The domestic terminal is meetings can be arranged at The Solomon Kitano Mendana two kilometres from Henderson. A short notice. Hotel, next door to the Solomon shuttle bus connects the airports Island Visitor Bureau office, has a ELECTRICITY and costs $SBD35 each way. BUSINESS HOURS business centre and conference 240V AC 50Hz, using Australian- style plugs. See sightseesolomons.com. Banking hours are 8.30am or rooms. See kitanomendana.com. 9am to 3pm, Monday to Friday. CURRENCY Commercial hours tend to be from HONIARA ENTERTAINMENT One Solomon Islands dollar (SBD) 7.30am to midday and 1pm to RESTAURANTS Away from the larger hotels, many is worth around 0.42 kina and 4pm, Monday to Friday, and also The Heritage Park Hotel and the call into the Point Cruz Yacht Club 0.13 USD. There are ATMs in Saturday mornings. Government Coral Sea Resort have upmarket for a beer after work. Visitors can the international airport and in offices open from 8am to midday restaurants. At the Heritage, sign in. The Honiara Golf Club, just Honiara’s small CBD. and from 1pm to 4.30pm, Monday guests dine in part of the governor out of town, is also popular. to Friday. general’s former residence. GETTING AROUND Haydn’s Steakhouse, at the MEDIA SAFETY Coral Sea Resort, has modern The Solomon Islands Broadcasting HONIARA Commission has a daily online Central Honiara is 12 kilometres Throughout the Solomon Islands it Australian and European cuisine. newsfeed. See sibconline. from the international airport. A is safe to walk around during the There is also a restaurant, The com.sb. The Solomon Star taxi from the airport to the CBD day; however, as for anywhere Boardwalk, featuring South-East (solomonstarnews.com) and costs around $SBD200. Major in the world, caution should be Asian street food at Coral Sea. The Island Sun are the local daily hotels can organise transfers. The a priority at night. There are several options away newspapers. The Solomon Times country’s official tourism site is a from the hotels. Sea King is Online (solomontimes.com) is the good place for travel information. the best known of the crop of other local main news source. See visitsolomons.com.sb. Chinese restaurants.

114 Paradise – Air Niugini’s in-flight magazine SOLOMON ISLANDS BUSINESS GUIDE SPECIAL REPORT A positive economic outlook

SOLOMONS SNAPSHOT AREA: 28,900 sq km GDP: $US1.317 billion MAJOR EXPORT HEAD OF STATE: Governor in 2017 (CIA) MARKETS: China 62.4%, General Frank Kabui POPULATION: 550,000 Italy 7%, UK 4.4% (CIA Fact (2011 est.) INFLATION: 0.5 per cent Book, 2016) HEAD OF 2016 (Statista.com) GOVERNMENT: Prime CAPITAL CITY: Honiara: MAJOR IMPORT Minister Rick Houenipwela (c. 50,000) EXCHANGE RATE: MARKETS: China 25.3%, Solomon Islands dollar, equals Australia 15.5%, Singapore DISTANCE BY AIR: Port OFFICIAL LANGUAGES: 0.42 PGK, 0.17 Australian Moresby to Honiara, 2 hours Pijin, English 9.6%, Malaysia 9.5%, Japan dollars, and 0.12 5.2%, South Korea 5%, NZ 5%, and 20 minutes US dollars. PEOPLE: Melanesian 95%; Papua New Guinea 4.4% (CIA WORLD BANK EASE Polynesian, Micronesian, Fact Book, 2016) OF DOING BUSINESS European and Chinese 5% RANKING: 116 (2018)

USEFUL BUSINESS CONTACTS Solomon Islands Chamber of Commerce Invest Solomons (Solomon Islands Central Bank of the Solomon Islands and Industry investment promotion agency) See cbsi.com.sb. See solomonchamber.com.sb. See commerce.gov.sb. Office of the Prime Minister Solomon Islands Business Registry See pmc.com.sb. See solomonbusinessregistry.gov.sb.

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