Economic Governance

• Strengthening public finances
• Encouraging business and economic growth
• Support for provincial farmers
  

RAMSI is working with the Solomon Islands Government to strengthen financial management systems, to encourage broad-based economic growth and create a more prosperous Solomon Islands. RAMSI is helping to provide greater opportunities for both large and small businesses, including farmers in rural areas.

RAMSI has assisted the Solomon Islands Government deliver a program of targeted economic reform in areas such as taxation, transport (including aviation and shipping), industry revitalisation and simplifying regulatory requirements.

Strengthening public finances

RAMSI advisers work in close partnership with their Solomon Islands colleagues in the Ministry of Finance, National Reform and Planning. Together, the team has played a critical role in rebuilding investor confidence and the economy in Solomon Islands, strengthening financial management systems by:

• Restoring stability to government finances.
• Developing balanced national budgets.
• Helping the Solomon Islands Government better manage revenue and expenditure.
• Facilitating negotiations to restructure loans to reduce the government’s debt burden.
• Building the capacity of government departments, especially regarding financial transactions.

The Solomon Islands Government’s Treasury is now working more effectively. The Government is now:

• Beginning debt repayments to local people and businesses.
• Ensuring that public servant salaries and contributions to the National Provident Fund are up to date and paid on time.
• Improving revenue collection through better compliance which resulted in a 40 per cent increase in revenue from 2003-2004.
   

Encouraging business and economic growth

Within the Ministry of Finance, the Economic Reform Unit, which includes five RAMSI advisers, works in conjunction with other government departments to coordinate and drive economic reform and encourage investment through the removal of impediments. It does this by:

• Reducing the regulatory burden that makes doing business in Solomon Islands very expensive.
• Reducing high and cascading rates of taxation and ensuring that everyone pays their fair share.
• Improving service delivery and the financial viability of State Owned Enterprises, such as SIEA.
• Improving air and sea transportation.
• Increasing access to financial services, in particular in rural areas.

Economic Reform Unit staff, including RAMSI advisers, have been active in targeting areas that will encourage economic growth, including through local and foreign investment. Their work, in collaboration with their Solomon Islands colleagues, has resulted in many successes, including:

• The revised Foreign Investment Act was implemented in June 2006.
• Business regulation procedures were streamlined in 2006, particularly those related to foreign investment and work and residency permit rules.
• A process of Tax Reform has commenced, with the release of Tax Exemption Guidelines in June 2006. Also, the first round of public consultation on Tax Reform was finalised in June 2006. The consultations followed the release of a Tax Reform discussion paper in December 2005.
• The palm oil plantations on Guadalcanal have been reactivated and the Guadalcanal Plains Palm Oil Limited company began production in 2006. The refurbishment of the Gold Ridge Mine is currently underway, with landowners signing a new agreement in June 2006, to reactivate the mine.
• Conditional agreements have been signed with SOLTAI Fishing and Processing and Solomon Islands Electricity Authority in April 2006, to improve the performance of state-owned enterprises in return for debt restructuring.
• Import duties were removed on all inputs to shipping and boating, including ships, outboard motors and safety equipment.
• The new Pacific Islands Air Services Agreement (PIASA) and the Pacific Islands Civil Aviation Safety and Security Treaty (PICASST) have been signed.
• The economy has grown strongly in the last two years and this is expected to continue. The real economic growth rate is expected to exceed five per cent in 2006. There is evidence of a pick up in retailing, construction, hotel accommodation and property rentals, particularly in urban areas.

Support for provincial farmers
 

Eighty-four per cent of people in Solomon Islands live in rural areas. The vast majority of these people derive their livelihoods from subsistence agriculture and small-scale income-generating activities, particularly export cash cropping and fresh produce marketing.

Recognising the importance of a strategic approach to assist agriculture and rural development, RAMSI has jointly funded – together with the World Bank and the European Union – the formulation of an Agriculture and Rural Development Strategy (ARDS) to guide the development of policies and future investments in agriculture and rural livelihoods. RAMSI has funded a major study into agriculture in the Solomon Islands, the Solomon Islands Smallholder Agriculture Study, which identifies key areas for improving rural livelihoods, and has begun a program of assistance called the Transitional Support to Agriculture Program.

The Transitional Support to Agriculture Program (TSAP) is a short term program focused on implementing the recommendations made in the Solomon Islands Smallholder Agriculture Study. The program is focused on providing assistance to food production and marketing, and a number of nationwide projects have been implemented, including an agricultural market information system and a project disseminating improved root crop varieties. More projects are currently being developed for implementation.

Solomon Islands Infrastructure and Development Minister Stanley Sofu and RAMSI Special Coordinator James Batley inspect machinery to be used as part of road improvement works in Malaita.

Recognising the importance of road infrastructure, RAMSI has embarked on a program to rehabilitate key roads in the provinces. Better roads provide access to markets and services for rural people. Major work completed in 2005 on the East Road in Malaita resulted in increased market access and service delivery. RAMSI is contributing to the Solomon Islands Road Improvement Project (SIRIP), worth $SI128 million. The Solomon Islands Government has identified five provinces for road works – Choiseul, Guadalcanal, Isabel, Makira, and Western Province.

These efforts and ongoing security provided by the Solomon Islands Police Force and RAMSI have already had a significant impact on business confidence and the economy and have contributed to the economic recovery being witnessed in Honiara and throughout the provinces.

RAMSI hopes that by assisting the Government to strengthen its financial systems and stabilise the economy today, local and overseas businesses will have the confidence to invest in the Solomon Islands of tomorrow.

RAMSI aims to restore the wealth of the nation to the people of the nation.