Doing business to become easier for locals in Vanuatu
New company laws tailored to the needs of a small island economy are expected to make it easier for locals to conduct business in Vanuatu.
New company laws tailored to meet the needs of a small island economy are expected to make it easier for locals to conduct business in Vanuatu.
The Asian Development Bank supported the drafting of the legislation.
Its Business Law Advisor Terry Reid told Bridget Tunnicliffe they are working with the Vanuatu government to make setting up and running local businesses smoother.
TERRY REID: Recently, the government passed a suite of laws - the Companies Act, the Companies (Insolvency and Receivership) Act and an Insolvency (Cross Border) Act, which effectively gives the country an entire new company law framework, which will make it more accessible for the vanuatu private sector.
BRIDGET TUNNICLIFFE: And what has the ABD's role been in the process?
TR: The ADB has provided technical assistance to the government in designing the bills and supporting them through their implementation. We did that first under our technical assistance and individual stand-alone technical assistance, and then through our Pacific private sector development initiative, which was at that time funded by the Australian government.
BT: So in what ways will it make doing business in Vanuatu easier? Can you give me some examples?
TR: The new laws introduce some newer types of companies, which will make it easier for, for example, smaller businesses to incorporate. It is possible now to form single shareholder companies. Also a new type of entity is a community company, which will allow communities to form a company and use their assets to operate businesses. And we now will embark, under our technical assistance, our Pacific private sector development initiative, which is co-financed by Australia and New Zealand. And we will implement these laws now which will involve putting in an electronic registry. So that will lower the transaction costs for people. It will mean that it will be very quick in terms of time to update their information and so on.
BT: I suppose for small countries like Vanuatu it's helpful to have company laws that are suitable for small island economies, typically where you would get a number of very small businesses.
TR: That's absolutely true, and Vanuatu was operating under a very old piece of legislation that certainly wasn't developed with their small island economy status in mind at the time. And these new laws are now tailored to the needs of Vanuatu, hence the introduction of the new entities. And the electronic aspect will make it much, much easier for people who are not necessarily located in Port Vila to incorporate companies and operate them.
BT: There have been complaints from local businesspeople or entrepreneurs that a lot of focus in the last few years has been on encouraging foreign investors that bring in a lot of money. Will this help shore things up a bit?
TR: Well, what this is does, this certainly creates a very favourable environment for local entrepreneurs and people that want to do business in Vanuatu to take advantage of the corporate form, and certainly lowers the cost of doing so. So I think this will have a very positive impact on the local private sector.
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