Information about the Government of Vanuatu

An independent, democratic republic.

Vanuatu is an independent, democratic republic with a 52 member Parliament elected by the people every 4 years. The executive consists of a Council of Ministers headed by the Prime Minister who is elected by Parliament from among its members. The President is elected by Parliament and the National Council of Chiefs for a period of five years.

The Prime Minister and the 12 co-members of the council of ministers oversee the administration of Vanuatu's 13 government ministries.

Independence was attained in 1980 after some 74 years of joint rule by Britain and France. The islands were then known as the New Hebredies.

The Constitution provides for executive and legislative arms of government, and the judiciary. The President is Vanuatu's Head of State. The judiciary consists of the Supreme Court with a Chief Justice and a Magistrates Court.

Vanuatu is a full member of the British Commonwealth, the French League of Nations, the United Nations, Agence de Co-operation Culturelle et Technique, the South Pacific Bureau for Economic Co-operation (SPEC), the South Pacific Commission, the World Bank and the Asian Development Bank (which has its regional headquarters in Port Vila).

Legal System

The International Companies Act (1993), the Companies Act (1986), the Banking Regulation and other Regulations are based on English law. The Supreme Court of Vanuatu has jurisdiction to determine all matters. Commercial law is based on English law.

Economic Situation

The country has a dualistic economy, with a large smallholder subsistence agricultural sector and a small monetised sector. The monetised sector is based on established plantations, ranches and associated trading, manufacturing, banking and shipping services, as well as the country's tourist industry. In Vanuatu, copra is the most important cash economic activity in the rural sector. At present, about 69,000 hectares of land are under coconut plantation, producing 50,000 tons of copra a year. Nearly all domestic exports are primary goods, the principal ones being coconut products, beef, cocoa, coffee and timber.

The introduction of commercial laws in the early 1970s added a new dimension to the economy; it led to the development of an off-shore finance and banking centre, and a rapid expansion in the number of support organizations and professionals in Port Vila. The Finance Centre contributes considerably to Government revenue through the payment of business licence fees, insurance, banking and trust company licences, annual registration fees for all companies, stamp duties and other smaller fees. It is also a significant earner of foreign exchange through capital transfers, professional fees, interest etc.

The Government places a high priority on tourism development within the country and several new resorts and hotels are due for completion by 2000.

The Government earns substantial revenue from turnover taxes on hotels, licensed premises, and casinos. Vanuatu has also enacted legislation to allow all forms of betting (under strict controls).

Currency

The local currency is the Vatu (VT) which is tied to a regional basket of currencies. As there are no exchange control regulations in Vanuatu, bank accounts can be held in Vatu or any of the major international currencies, and funds in any currency can be readily transferred anywhere in the world without the need for approvals.

Banking and Finance

The banking structure consists of a Reserve Bank, the National Bank of Vanuatu, numerous internationally recognized commercial banks, merchant banks, and the State-owned Development Bank. In addition, a substantial off-shore banking centre exists. Many international commercial banks have licences to conduct business locally as well as with non-residents. These banks provide international services through a worldwide network of branches and correspondents.

Exchange Control

Vanuatu has no exchange control regulations or authorities. Funds accrued in or remitted to Port Vila in any currency can be held in any currency and readily transferred anywhere in the world. This applies to all types of transactions whether capital, loans, dividends, interest, royalties, service fees or profits. Any major world currency can be invested, earn interest and be repatriated in that currency or freely converted into other currencies. Companies may be incorporated with capital in any recognised world currency.

Government Incentives

The Government has created conditions in Vanuatu that have widespread appeal to investors. The general policy toward all forms of foreign investment is to welcome it, provided that the proposed investment contributes to the economy. There is no percentage limit on foreign ownership of a Vanuatu business; indeed, most businesses are foreign owned.

Tax Incentives

In Vanuatu, there are no:

income taxes
corporate taxes
estate duties
succession duties
gift duties
capital gains tax
double taxation agreements, or
withholding taxes.

Customs Duties

Import:

The Government has defined areas for development in agriculture, industry and tourism. Within these priorities the following types of projects receive favourable consideration:

foreign exchange earning projects

projects planned for rural development

projects that generate employment

projects that will increase tourist accommodation.

These projects are eligible for full exemption from customs duties both on capital goods and construction materials imported during start-up and on raw materials or manufactured goods not locally available that will be re-exported after production.

Export:

Generally speaking there are no restrictions on export trade in Vanuatu. Export duties levied are not very heavy. There are no quota restrictions and there is no system of preferential tariffs or duties on goods coming from any particular source.

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