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Pacific Islands Development Program, East-West Center

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Ministry Defends Vanuatu Permanent Residency Visas
Denies local jobs at risk, confirms ‘bait’ to lure foreign investors

By Jonas Cullwick

PORT VILA, Vanuatu (Vanuatu Daily Post, Feb. 19, 2013) – The Ministry of Internal Affairs has issued a statement defending the decision of Vanuatu’s Minister Toara Daniel to exempt foreign investors who are certified genuine participants of the Hong Kong Permanent Residency (PR) Visa Program from Vanuatu Labor Work Permits as "justified."

"Considering the level of revenue brought into the government treasury and non-problematic effect to the local community from the Hong Kong Permanent Residency visa holders, the exemption from the Vanuatu Labor Work Permit by the Minister for this category of people is justified," the statement says.

On February 6, the Daily Post carried a front page story revealing the Minister had signed two orders – one on January 10 and the other on January 14 legalizing the work permit exemption decision and making the order retrospective to September 13, 2011. The story also highlighted concerns about possible influx of Chinese investors taking over local employment as a result of the new order.

Last Friday, in the Daily Post front page story, the Commissioner of Labor, Lionel Kaluat, explained that the Vanuatu Labor Work Permit Exemption for Hong Kong Permanent Residency Program is a strategic government initiative aimed at attracting "mostly multi-millionaires to be able to come to and invest in Vanuatu."

Mr. Kaluat also highlighted the level of revenue the PR is bringing into the country saying that in 2011 the program generated Vt4.5-million [US$49,505] for the government revenue, 2012 Vt311.4-million [US$3.4 million] and Vt103.5-million [US$1.1 million] last months alone, giving government a projected total of VT1.2-billion [US$13.2 million] for 2013.

Now the Ministry of Internal Affairs has moved to allay fears the Minister’s action to provide Vanuatu Work Permits to HK PR holders would have a bearing on the local jobs. It also confirmed the statement by the Commissioner of Labor that the initiative was "bait" for multi-millionaires to come and invest in Vanuatu and the revenue levels from the HK PR Program highlighted by Mr. Kaluat.

"The Minister of Internal Affairs has made an exemption based on a judgment that this category would not cause any impact on the local employment conditions. They are wealthy and established businessmen and the chance is close to zero that they would take up any employment in Vanuatu. Under this condition, theoretically they are free to employ, and factually there is no employer that can afford to hire them," the Ministry said.

It has also confirmed that so far there is no one of the PR case who has set up residence in Vanuatu, adding that some of the holders of the Hong Kong Permanent Residency Visa under the Vanuatu program have visited Vanuatu to find out more about the country but they all have returned to their country of residence.

"Not a single one of them is staying in Vanuatu or taking any employment to compete with locals. In this context, and considering the revenue brought in and the non-problem effect to the local community, the Minister’s decision is justified."

The Ministry of Internal Affairs says the PR Program is a product of Vanuatu which responded to the interests of the clients of the Vanuatu Financial Services Commission (VFSC) who purchased an offshore company. These clients had requested the VFSC and the Vanuatu Government to provide them two Vanuatu products: 1) a Vanuatu offshore company and 2) a Vanuatu Residence Visa.

"VFSC, Immigration, respective Ministries deliberated and decided to accommodate the concept. Following that, legal requirements were developed and approved to legalize the process. Mechanism and operational systems have also been developed to facilitate the process of acquiring a visa and transfer of funds to the government treasury," the Ministry’s statement continued.

The PR program started operation in 2011 after being legalized and its main purpose is to target mainland Chinese who are going to apply for Hong Kong residence under the Hong Kong Capital Investment Entrant Scheme (HKCIES). The scheme requires the applicant to meet the following conditions: Must have a clean police report; Must be holding a permanent residence from a third country; Must have a net asset of HK$10 million [US$1.3 million] for the past two years prior to application; and Upon approval, invest in HK designated financial product of value not less than HK$10 million for seven years continuously.

"The Government has decided to provide residence visa to those applicants who will be able to meet the HKCIES criteria and conditions.

"Vanuatu is not the only country to offer this kind of program to facilitate the applicant to enter Hong Kong. African countries including Gambia, Guinea Bissau and others are very active for the past 10 years."

"Vanuatu has decided to engage in this initiative as a strategy for attracting investors which may bring benefit to the local economy," the Ministry of Internal Affairs says.

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