Reforms Bring Positive Changes To SI Economy

Minister Lilo Says Reforms Bring Positive Changes To SI Economy

Minister of Finance and Treasury Gordon Darcy Lilo says the government's current reform agenda has improved the country's economic situation after year's of stagnant growth.

Addressing a Business Seminar involving a visiting Taiwan Trade Mission today, Mr Lilo said the Government's reform agenda is driven by a desire to create the best possible environment for investment in the country - both from within Solomon Islands and from foreign investors.

"The series of reforms going on here in Solomon Islands are having a profound and positive impact on the lives of ordinary Solomon Islanders," Mr Lilo said.

Minister Lilo said the Government is overseeing a period of strong economic growth in Solomon Islands.

In 2006, real GDP grew by 6.1 per cent and is expected to remain around 6 per cent this year.

He said the country has also experienced a surge in employment which continues to grow strongly.

By comparison - government revenue was almost 50 per cent higher in June this year than it was in June last year.

Mr Lilo said despite this strong economic performance inflation has not been compromised and fell to 5.6 per cent through the year to June.

"Solomon Islands, therefore, has been experiencing a well-managed mini economic boom," he said.

He said this strong economic performance is no accident but a result of hard work to deliver the reforms that have set the foundation for this growth.

The first set of reforms have been the far reaching economic reforms that the Government is putting in place to reform the legal and regulatory structures to make doing business easier and introduce competition in key sectors and open up the Solomon Islands economy to the world.

He said one of major results of the reform is the implementation of the new Foreign Investment Act which reduces the processing time for approving new foreign investments from several months to just 5 days.

"As a result planned new foreign investment has soared four fold since the Act came into effect in June last year," he said.

The other achievement after the reform program is the reduction of tax holidays and other exemptions which reduces corruption and results in the overall tax burden being shared more fairly.

"High tariff rates have been brought down, with virtually all goods now being subject to only a 10 per cent duty," he said. "This will significantly reduce the cost of importing critical inputs to production such as marine transport and construction materials," Mr Lilo said.

Following the reform program there has also been a major reduction in the processing time for Work Permits for high skilled international labour - a critical resource for both domestic and foreign businesses.

The reduction in time from a number of months to just 5 days in most cases is something that many countries, including Australia and New Zealand, are still a long way off achieving.

Mr Lilo said the whole aim of the Government's extensive raft of economic reforms - past, current and future - is to create the economic environment necessary for a broad-based economy and for broad-based growth.

"Full implementation of all these reforms will be essential if the country is to address its challenges and bring the economic prosperity that its people deserve," he said.

The Taiwan Trade Mission visit to Solomon Islands is the first of its kind and will open up more opportunities for foreign investment in the country.

Mr Lilo encouraged the trade mission to facilitate more investors from Taiwan to invest in Solomon Islands.

ENDS

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