Navigating the Business and Regulatory Environment in Solomon Islands: A Brief Summary.

By William Kadi

The Solomon Islands have been at the center of geopolitical discussions in the past five years after switching diplomatic relations from the Republic of China (ROC) to the People’s Republic of China (PRC) in 2019. Apart from that, the business environment in the Solomon Islands and what economic opportunities and challenges the country is facing is less known or basically not discussed.

A lot of international companies and investors find it difficult to navigate the business environment in the Solomon Islands. The challenges you might face include not knowing where to look, who to ask, and, most importantly, how to find exactly what you need. If you’ve encountered these issues, then this article will be able to provide some insight into why they occur and what the main focuses are for improving them. 

As much as it is geographically challenging, its positioning between Australia and the South-East Asia chain made the Solomon Islands a significant security point, and a valuable strategic location for trade and logistics with the broader Pacific.

Doing business in Solomon Islands is quite complex if you do not have any experience on the ground or if you do not get the right lead. The digital business environment is yet to be maximized, and most of the business has to be done in person. With 3-levels of governance, dealing with the national, provincial authorities, and the customary domain require some understanding of what powers and functions were devolved, what decisions and authorities remains in the customary domain, which taxes, licenses, fees, and permits apply to specific type of investments and developments.

The ratings for ease of doing business in the Solomon Islands from the 2018 World Bank annual ratings placed Solomon Islands 136th over 190 economies – but fear not, we understand how to navigate the complex regulatory environment. In the 2020 Doing Business Report, it clearly indicated that Solomon Islands have improved a lot in aspects including starting a business, getting credit, taxation, and trading across borders. There is still need for some more improvement in areas such as minority investors protection and insolvency resolutions. For areas like contract enforcements, registration of properties, and dealing with construction permits, there is slight improvement as outlined in the 2020 report.

Solomon Islands today offer huge opportunities for investments in the space of renewable energy, and this would contribute a lot to the fair ranking of getting electricity based on the score ratings. Investments in infrastructure, logistics and transshipments, fisheries, tourism, and mining are priorities of the current government and clearly outlined in the 100 days plan that sets the direction to start warming up the machineries for the next four years. What we hope to see in the public authorities’ space is an improved service delivery partnership that is reliable and trusted as partners in ensuring efficient business is prioritized and regulatory gaps are addressed.

For political stability, Solomon Islands is managing its adjustments to ensure a fair deal with its key bilateral partners – compared to the heated geopolitical arena in the past five years. It is also important to say that the people and the general public are now getting a clear picture of the roles that geopolitics play and how important government and political stability is for the sake of development and a stable economy, which is key to a peaceful and safe country.

Generally, some of its markets such as the manufacturing and downstream markets are still in their infancy compared to mature markets. This provides great opportunities to tap into as political stability become clearer, and policy directions aim to encourage more investment opportunities in a number of sectors. To support the energy capacity of Honiara, the Tinahydro project is expected to be completed in 2026 due to COVID-19 and supply chain push back dates from its original expected timeline to kick in operation around 2022. This project will provide the much needed capacity to reduce costings of electricity for  the manufacturing and downstream market sectors.

In the logistics and transportation industry, Solomon Islands have already set some ambitious goals and partnerships with Japan’s motor vehicle industry entities, to be a car transshipment hub based on its strategic location in the Pacific. Further to that, the Bina Harbor project is still very much pursued as the government continues to fish for potential investors in the global tuna industry. These projects anticipate a high traffic and trade environment in the Solomon Islands for the next 10 years and going forward into the future.

With global security and digital technology as a key collaboration towards a more connected future, we see ongoing discussions between key bilateral and security partners. This includes the setting up of a Patrol boat base operation in Shortlands, where Solomon Islands share its northern border with Papua New Guinea, while also having ongoing security arrangements with Vanuatu regarding the maritime border at the South-Eastern Solomons.

Pacific Legal Network and its key affiliate on ground, Primo Afeau Legal Services continue to assist in the business and advisory environment in Solomon Islands, including providing support to technology and communication companies like Starlink to properly establish and operate. These technologies will provide complements to the digital and communication environment in Solomon Islands, offering competitive supplementary services to existing national communication providers including Telekom SI Ltd.

To navigate the business and legal environment in the Solomon Islands, investors and interested international corporations require quality business and legal advisories that would be able to deliver industry standard advices for informed decision making in board room level discussions.

Solomon Islands is growing considerably and into the future of connecting with the broader regional and global economy. With its strategic location, it is worth exploring the opportunities that have not yet been fully explored. If you are looking for opportunities to expand your portfolio or are looking for opportunities in these parts of the world, Pacific Legal Network has a wealth of knowledge and expertise on the grounds and regionally to support your business and investment concepts. If you would like to get in touch with us, you can contact us here.