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LAND AREA: 26 SQ. KM. BACKGROUND Tuvalu consists of nine dispersed islands of atoll or coral formation none of which is over 4.6 meters above sea level. They have a combined land area of only 26 square kilometers. Tuvalu has an extremely limited resource based and is relatively difficult to visit even by South Pacific standards. The economy is significantly aid dependent. INVESTMENT CLIMATE Government Policy The Government of Tuvalu has recently taken steps to develop guidelines for foreign direct investment making Tuvalu more attractive to private investors. Foreign investment proposals are dealt with on a case-by-case basis with the Government generally being accommodating regarding the terms and conditions under which overseas firms can operate. Investment Incentives No specific or fixed set of incentives currently exist for investment in general. In most instances incentives are granted on a case-by-case basis. Certain types of industries, including tourism, qualify for 'pioneer status' which gives them the opportunity of applying for tax exemptions. Under this category, the Minister of Finance can, at his discretion, grant exemption on tax for any concession period. Incentives are currently being reviewed to make them more attractive. Restrictions and Limitations on Foreign Investment Access to Land As a small island state, Tuvalu faces the problem of limited territory. The Government itself does not own any land, leasing land for its own purposes from traditional owners. The Government can acquire land for any 'public purpose' but is usually required to pay compensation to the traditional landowners. Presently, the Government pays a rate of around US$950 per acre per annum to traditional landowners for the government leased land. The Ministry of Natural Resources has the responsibility for lands. Non-natives can only access land on a leasehold basis, and then only with the approval of the Minister of Natural Resources. Access to Labor There is a plentiful supply of unskilled labor in Tuvalu, however shortages exist for semi-skilled, skilled and managerial workers. Permits are granted to investors involved in any project and for expatriate personnel where comparable local staff is not available. Transfers of Profits Approval to repatriate profits under the Foreign Currency Act is required from the Secretary of Finance. REGULATORY FRAMEWORK Review and Approval Mechanisms for Foreign Investment Proposals There is no specific Foreign Investment legislation. The Ministry of Finance, Economic Planning, Commerce and Industry will provide information on investment opportunities. Proposals or applications relating to potential investments and requests for information should be directed to the Ministry. Applications should contain sufficient relevant information on the size and nature of the project, its projected costs and benefits, land requirements, etc. The Ministry will appraise the proposal and make appropriate recommendations, including the granting of concessions. The Ministry may also seek advice from the Development Bank of Tuvalu as well as other ministries and government departments. Large investment projects may also be referred to the Cabinet for consideration and approval. Competition Policy Price controls are applied to essential commodities for example, basic food items and mineral fuels. There is no legislation in respect of monopolies and anti-trust, and acquisitions and mergers. Imports Most capital items, including plant, machinery and vehicles for newly established businesses, are exempted from duty upon application. All building materials are imported duty free. OPERATIONAL PROCEDURES Company/Business Structures Partnerships and companies are subject to specific legislation. Both public or private companies may be formed. Foreign companies may carry on a business within Tuvalu provided they register with the Registrar of Companies. Labor and Labor Regulations Formal employment in the cash sector is around 1,500, representing only 25 percent of the aged group 15-54 years. The remaining are mostly involved in rural based subsistence activities for their livelihood. Most wage rates in the private sector are based upon the government salary scale. Hourly wage rates for unskilled casual la our vary from 40 to 92 US cents with 47 US cents being fairly typical. The salary scale for clerical to managerial levels are as follows: Salary range (per annum)
Banking The National Bank of Tuvalu (NBT), the only bank in the country, is responsible for commercial banking service and functions connected with exchange control regulations. The Westpac Banking Corporation of Australia presently owns 40 percent of the NBT, although in August 1995, Westpac will sell its share to the Government of Tuvalu giving the Government 100 percent ownership. Westpac will, however, continue to provide international services for the bank. The NBT is responsible for providing development loans for investments, advisory services and, at times, acting as an import agency for the private sector. The country's Provident Fund is also becoming an important source of finance. Some loans may be obtained from the NBT for working capital requirements and joint venture partnerships may qualify assistance from the Business Development Advisory Bureau of Tuvalu. The major source of investment funds for developments by foreign investors has to be from abroad. Taxation Income Tax Personal income tax is levied at a flat rate of 30 percent with a tax free threshold of US$ 1.900. Company tax rates on all chargeable income are also set at 30 percent. Sales Tax A variety of sales taxes are applied to different goods and services. PROMOTION OF INVESTMENT OPPORTUNITIES There are no official promotion documents other than entries in the:
Contact for Further Information: Secretary
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