Vanuatu: Investing

FDI in Figures

According to the World Investment Report 2023 published by UNCTAD, FDI flows to Vanuatu were negative at -USD 4 million in 2022, following a positive flow of USD 43 million one year earlier. At the end of the same period, the stock of FDI was estimated at USD 705 million, around 70.4% of the country’s GDP. Traditionally, the industries that attract most FDI are food and wood processing. Australia is the main source of foreign investment in Vanuatu's economy with a focus on tourism (two-thirds of long-stay tourists to Vanuatu and the vast majority of cruise ship passengers come from Australia), finance, and construction, followed by Japan and New Zealand. The main ongoing project is the Vanuatu Aviation Investment Project (VAIP), which is supported by the World Bank and is aimed at repairing and rehabilitating Vanuatu’s three main airports, especially the Bauerfield International Airport. New initiatives and essential reforms contributing to the overall regime of doing business in Vanuatu have been undertaken on a regular basis as part of the Government's commitment to improving the country’s business environment thereby enhancing its attractiveness for private investors and encouraging greater investment expansions to the rural areas of the country (VIPA).

The factors that encourage foreign investors include an attractive tax system (no direct taxes), lack of exchange controls, a stable political situation, and a particularly proactive FDI promotion agency (the Vanuatu Investment Promotion Authority - VIPA). The country's vulnerability to natural disasters, the weakness of its infrastructure, and its geographical isolation remain some of the potential hindrances to investment. Property rights are poorly protected, and investment is deterred by the country’s inadequate physical and legal infrastructure. Business activity is further limited by rigid labor regulations and widespread corruption. Foreign investors may lease but not own land, and investment in some sectors of the economy may be screened by the government. The country has been working on the creation of Economic Development Zones (EDZs) for years although they have not materialized yet. The enforcement of contracts, the protection of minority investors, and the resolution of problems related to insolvency are three points on which the country has a large margin of progress. In 2023, Vanuatu introduced the Sustainable Citizenship by Investment Program. This initiative offers international investors the opportunity to obtain citizenship in Vanuatu by investing in the nation's sustainable economy. Starting at USD 165,000 for up to four family members under one application, the "CIIP – CNO Future Fund" choice channels direct investment into a sector of Vanuatu's economy highlighted in the Government's Low Emission Development Policy as pivotal for achieving its goal of carbon neutrality in electricity generation by 2030. Vanuatu ranks 61st among the 180 economies on the 2023 Corruption Perception Index and 65th out of 184 countries on the latest Index of Economic Freedom.

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Latest Update: May 2024