Foreign Direct Investment — A brief guide

Key steps for starting a business in Vanuatu

What a potential investor is required to do

Starting a business or investment requires significant research, the results of which can determine the success of your business. Vanuatu Investment Promotion Authority (VIPA), as the marketing arm of foreign direct investment (FDI) into the country, encourages you to study the ground carefully before leaping in. Foreign residents with investment prospects for Vanuatu are encouraged to consult with other government agencies for relevant information that may directly or indirectly affect their business venture. VIPA exists to facilitate and promote FDI into Vanuatu with the aim of creating an investorfriendly environment for foreign investors, and offers facilitation services from your initial enquiry to the final processes of establishing your business.

What is illegal for foreign investors

Underlying legislation for foreign investment as entailed in the Vanuatu Investment Promotion Act CAP 248 disallows a foreign investor to engage in business within the country without first obtaining a Foreign Investment Approval Certificate (FIAC). Other important laws that you should be well versed with include the Employment Act, the Business License Act Cap 249, Immigration Act, VNPF Act and other relevant legislations that will directly impact the operations of your business.

The benefits of having a FIAC

A FIAC provides you the opportunity to enjoy certain privileges including zero corporate and personal income tax, freely able to repatriate funds without condition, guarantees a minimum of two residency permits and access to two work permits for key positions requiring technical or managerial expertise. It also allows you to take responsibilities by obeying all Vanuatu laws, whenever possible hire and train NiVanuatu workers and ensure that they are registered with the Vanuatu National Provident Fund (VNPF).

Types of VIPA applications

There are three types of foreign investment applications: New Investment, Renewal and a Variation application. A new investment application should be obtained before the initial start-up of your business. A renewal, under current VIPA legislation, must be obtained annually before the anniversary date of the FIAC. A variation application should be obtained when you are thinking of making changes to any aspects of your existing FIAC including business name, ownership, business activity or location. Each type of application requires you to provide supporting documents. These requirements are identified in a checklist on page two of each application forms.

A FIAC is the prerequisite document needed to complete the rest of the steps that will be taken to obtain full rights and the ability to start up your business. From VIPA you can simultaneously work towards establishing your business with your granted FIAC by applying for residency permits, work permits, should there be the need to, obtaining a business license and registering with VNPF.

Start up requirements

The processes on business requirements for a new investment as follows:

  • 1. Apply to the VIPA for a FIAC of a new investment activity
  • 2. Register your company with the Vanuatu Financial Services Commission
  • 3. Apply for Residency permit from Department of Immigration
  • 4. Apply for Work Permit if you are hiring foreign workers, from Labour Department
  • 5. Apply for Business License from Department of Customs and Inland Revenue
  • 6. Register for VAT
  • 7. Register your company and employees with VNPF

What sectors to invest in?

Investment in Vanuatu in most categories is open to foreign investors, however a list of Reserved Activities exists that restricts foreign investor participation in a small number of selected pursuits. The Reserved List of Activities highlights “small scale” activities that is only allowed to Ni-Vanuatu citizens. It is best to consult with VIPA to know more about what activities are reserved and to consult on what activities that you can engage in. A list of prohibited activities is also provided to you which outline certain activities that are completely banned from the country such as production of nuclear and chemical weapons.

How long it will take?

Your application is assessed against four criteria that determines whether or not you may invest in the country. The first criteria being that your application form must be completed and stamped by a commissioner of oath authenticating the information you have provided. Your proposed business activity is not a prohibited activity nor a reserved activity and that you are a fit and proper person to invest. If for some reason your application is rejected by the VIPA Board of Directors you may launch an appeal within 14 days of receiving your decision.

How does Vanuatu rank?

Your journey into investing in Vanuatu should not be as difficult and time consuming if your project proposal is well planned, research on local market is sufficient and sound business advice is followed through. VIPA is your facilitation agency and it is our duty to ensure that your right choice in investing in Vanuatu satisfies your business projections and Vanuatu’s economic welfare.

Comparative Ranking for 2016 and 2015 “in Starting a business”

Source: World Bank Ease of Doing Business Report 2016

Vanuatu ranks 4th in Starting up a Business followed by Fiji in 5th place. Samoa has secured the leading position followed by the Solomon Islands and PNG. A number of factors affect the changes in ranking including natural disasters such as the TC Pam. However VIPA is undergoing various reforms that will allow for more improvement in its ranking especially in reducing its processing time-frame to fast track your business proposals and improve its overall facilitation and aftercare services to better cater for your investment needs.

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