UN calls on Vanuatu to improve investment climate amid global downturn

July 24, 2025 9:50 pm | Posted in Business News | Share now TwitterFacebook

Compiled by Doddy Morris.

The Vanuatu Foreign Investment Promotion Agency (VFIPA) has welcomed a new global report urging countries like Vanuatu to take bold action to attract and retain Foreign Direct Investment (FDI), amid a sharp decline in global investment flows.

The 2025 World Investment Report, released this week by the United Nations Conference on Trade and Development (UNCTAD), warns that many developing economies — including small island states such as Vanuatu — risk being left behind. While global FDI fell by 11 percent last year, the report notes that capital continues to flow into countries with the least barriers, rather than where investment is most urgently needed.

UNCTAD’s report highlights that in order to compete, countries like Vanuatu must take strategic steps, including investing in digital transformation, upgrading infrastructure to attract institutional investors, cutting red tape, and defining a clear role for foreign investment in national development planning.

VFIPA said its soon-to-be-launched Investment Promotion Strategy is aligned with these recommendations, focusing on high-potential sectors such as tourism, agriculture, renewable energy, and digital services.

“Investment is not just about capital flows; it’s about unlocking human potential and building a sustainable future for Vanuatu,” said Lorenzo Raplili, Manager of Aftercare and Advocacy at VFIPA.

The agency also pointed to its active involvement in Joint Statement Initiatives (JSIs), international commercial arbitration efforts, and the ongoing review of the Reserve and Restricted List of business activities as part of broader reforms aimed at creating a more investor-friendly environment.

However, VFIPA acknowledged that several persistent barriers continue to hinder investor confidence and the successful rollout of projects in Vanuatu. These include unreliable airline services, high operational costs, labor and skills shortages, slow government approval processes, land disputes, and inadequate digital infrastructure for e-commerce and logistics.

VFIPA revealed that nearly 27 percent of registered investments are either stalled or underperforming — a signal that structural issues must be urgently addressed.

The agency is calling on the government, private sector, and development partners to work together to implement the needed reforms.

“Vanuatu must act now to ensure it remains a competitive and resilient destination for foreign investment,” Raplili said.