RESTRICTED  
  
WT/TPR/S/378  
28 August  2018 
(18-5366) Page: 1/84 
Trade Policy Review Body   
 
TRADE POLICY REVIEW  
REPORT BY THE SECRET ARIAT  
VANUATU  
This report, prepared for the first Trade Policy Review of Vanuatu, has been drawn up by the WTO 
Secretariat on its own responsibility. The Secretariat has, as required by the Agreement 
establishing the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement 
Establishing the World Trade Organization), sought clarification from Vanuatu on its trade policies 
and pra ctices.  
 
Any technical questions arising from this report may be addressed to Mr Masahiro Hayafuji 
(tel.: 022 739 5873); Mr Arne Klau (tel.: 022 739 5706); a nd Ms Zheng Wang 
(tel.: 022 739 5288).  
 
Document WT/TPR/G/378 contains the policy statement submitt ed by Vanuatu.  
 
 
 
 
Note: This report is subject to restricted circulation and press emb argo until the end of the 
first session of the meeting of the Trade Policy Review Body on Vanuatu. This report was drafted in 
English.   WT/TPR/S/378 • Vanuatu  
 
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  CONTENTS  
SUMMARY  ................................ ................................ ................................ ........................  7 
1   ECONOMIC ENVIRONMENT  ................................ ................................ ........................  11 
1.1   Main Features of the Economy  ................................ ................................ ..................... 11 
1.2   Recent Economic Developments  ................................ ................................ ................... 12 
1.3   Developments in Trade and Investment  ................................ ................................ ........ 15 
1.3.1    Trends and patterns in merchandise and services trade  ................................ ................ 15 
1.3.2    Trends and patterns in FDI  ................................ ................................ ....................... 17 
2   TRADE AND INVESTMENT  REGIMES ................................ ................................ ...........  19 
2.1   General Framework  ................................ ................................ ................................ ....19 
2.2   Trade Policy Formulation and Objectives  ................................ ................................ ........ 20 
2.3   Trade Agreements and Arrangements  ................................ ................................ ........... 21 
2.3.1    WTO ................................ ................................ ................................ ...................... 21 
2.3.2    Regional and preferential agreements  ................................ ................................ ........ 22 
2.3.2.1    Regional trade agreements (reciprocal)  ................................ ................................ ...22 
2.3.2.1.1    MSG Trade Agreement  ................................ ................................ ........................ 23 
2.3.2.1.2    PICTA  ................................ ................................ ................................ ............... 23 
2.3.2.1.3    PACER and PACER Plus  ................................ ................................ ....................... 24 
2.3.3    Other agreements and arrangements  ................................ ................................ ......... 24 
2.4   Investment Regime  ................................ ................................ ................................ ....25 
2.4.1   Business licence  ................................ ................................ ................................ ......25 
2.4.2    Foreign direct investment (FDI)  ................................ ................................ ................. 26 
3   TRADE POLICIES AND P RACTICES BY MEASURE  ................................ ........................  31 
3.1   Measures Directly Affecting Imports  ................................ ................................ .............. 31 
3.1.1    Customs procedures, valuation, and requirements  ................................ ....................... 31 
3.1.2    Rules of origin  ................................ ................................ ................................ ......... 32 
3.1.3    Tariffs  ................................ ................................ ................................ .................... 32 
3.1.3.1    Applied MFN tariffs  ................................ ................................ ................................ 32 
3.1.3.2    Tariff bindings  ................................ ................................ ................................ ......35 
3.1.3.3    Preferential tariffs  ................................ ................................ ................................ .35 
3.1.3.4    Tariff exemptions and concessions  ................................ ................................ .......... 35 
3.1.4    Other charges affecting imports  ................................ ................................ ................. 35 
3.1.5    Import prohibitions, restrictions, and licensing  ................................ ............................ 36 
3.1.6    Anti-dumping, countervailing, and safeguard measures  ................................ ................ 37 
3.2   Measures Directly Affecting Exports  ................................ ................................ .............. 38 
3.2.1    Customs procedures and requirements  ................................ ................................ .......38 
3.2.2    Taxes, charges, and levies  ................................ ................................ ........................ 38 
3.2.3    Export prohibitions, restrictions, and licensing  ................................ ............................. 38 
3.2.4    Export support and promotion  ................................ ................................ ................... 39 
3.2.5    Export finance, insurance, and guarantees  ................................ ................................ ..39 WT/TPR/S/378 • Vanuatu  
 
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  3.3   Measures Affecting Production and Trade  ................................ ................................ .......39 
3.3.1    Incentives  ................................ ................................ ................................ ............... 39 
3.3.2    Standards and other technical requirements  ................................ ............................... 39 
3.3.3    Sanitary and phytosanitary requirements  ................................ ................................ ....40 
3.3.4    Competition policy and price controls  ................................ ................................ ......... 42 
3.3.4.1    Competition policy  ................................ ................................ ................................ 42 
3.3.4.2    Consumer protection legislation  ................................ ................................ .............. 43 
3.3.4.3    Price controls ................................ ................................ ................................ ........ 44 
3.3.5    State trading, state -owned enterprises, and privatization  ................................ ............. 44 
3.3.5.1    State trading arrangements  ................................ ................................ ................... 44 
3.3.5.2    State -owned enterprises (SOEs) and privatization  ................................ ..................... 44 
3.3.6    Government procurement  ................................ ................................ ......................... 46 
3.3.7    Intellectual property rights  ................................ ................................ ........................ 47 
3.3.7.1    Legislative and institutional framework  ................................ ................................ ....47 
3.3.7.2    Industrial property rights  ................................ ................................ ....................... 48 
3.3.7.3    Copyrights and related rights  ................................ ................................ ................. 48 
4   TRADE POLICIES BY SE CTOR  ................................ ................................ .....................  50 
4.1   Agriculture, Forestry, and Fisheries  ................................ ................................ ............... 50 
4.1.1    Agriculture  ................................ ................................ ................................ .............. 50 
4.1.1.1    Features  ................................ ................................ ................................ .............. 50 
4.1.1.2    Agriculture trade  ................................ ................................ ................................ ...51 
4.1.1.3    Domestic policies  ................................ ................................ ................................ ..51 
4.1.1.4    Support levels  ................................ ................................ ................................ ......52 
4.1.1.5    Border measures  ................................ ................................ ................................ ..53 
4.1.1.6    Selected subsectors  ................................ ................................ .............................. 54 
4.1.1.6.1    Coconut  ................................ ................................ ................................ ............ 54 
4.1.1.6.2    Cocoa  ................................ ................................ ................................ ............... 54 
4.1.1.6.3    Kava ................................ ................................ ................................ ................. 54 
4.1.1.6.4    Cattle  ................................ ................................ ................................ ............... 55 
4.1.2    Fisheries  ................................ ................................ ................................ ................. 55 
4.1.2.1    Features  ................................ ................................ ................................ .............. 55 
4.1.2.2    Fisheries trade  ................................ ................................ ................................ ......56 
4.1.2.3    Domestic policies  ................................ ................................ ................................ ..56 
4.1.2.3.1    Institutional and legislative framework  ................................ ................................ ..56 
4.1.2.3.2    Mana gement plans  ................................ ................................ ............................. 58 
4.1.2.3.2.1    The National Deep -Bottom Fish Fishery Management Plan  ................................ ....58 
4.1.2.3.2.2    Revised tuna fishery management plan  ................................ .............................. 60 
4.1.2.4    Border measures  ................................ ................................ ................................ ..60 
4.1.2.5   Support  ................................ ................................ ................................ ............... 60 
4.2   Mining and Energy  ................................ ................................ ................................ ......61 WT/TPR/S/378 • Vanuatu  
 
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  4.2.1    Electricity  ................................ ................................ ................................ ............... 61 
4.3   Manufacturing  ................................ ................................ ................................ ............ 63 
4.4   Services  ................................ ................................ ................................ .................... 63 
4.4.1    Main f eatures and GATS commitments  ................................ ................................ .......63 
4.4.2    Financial services  ................................ ................................ ................................ .....65 
4.4.2.1    Banking  ................................ ................................ ................................ ............... 66 
4.4.2.2    Insurance  ................................ ................................ ................................ ............ 67 
4.4.3    Telecommunications  ................................ ................................ ................................ .69 
4.4.3.1    Main features  ................................ ................................ ................................ .......69 
4.4.3.2   Information and communication technologies (ICT) and the UAP ................................ .71 
4.4.4    Transport  ................................ ................................ ................................ ................ 73 
4.4.4.1    Civil aviation  ................................ ................................ ................................ ........ 73 
4.4.4.2    Maritime transport  ................................ ................................ ................................ 74 
4.4.5    Tourism  ................................ ................................ ................................ .................. 76 
4.4.5.1    Main features  ................................ ................................ ................................ .......76 
4.4.5.2    Institutional and regulatory framework  ................................ ................................ ....77 
5   APPENDIX TABLES  ................................ ................................ ................................ .... 81 
 
CHARTS  
 
Chart 1.1 Production composition of merchandise trade, 2016  ................................ ................. 16 
Chart 1.2 Direction of merchandise trade, 2016  ................................ ................................ .....16 
Chart 2.1 Registration process  ................................ ................................ ............................. 28 
Chart 3.1 Distribution of MFN tariff rates, 2012 and 2018  ................................ ....................... 34 
Chart 4.1 Growth rates, 2010 -17 ................................ ................................ ......................... 50 
Chart 4.2 Exports of main agricultural products, 2012 -16 ................................ ....................... 51 
Chart 4.3 Domestic support to agriculture, 2015  ................................ ................................ ....52 
Chart 4.4 Average tariff rates of WTO agricultur al groups, and fish and fishery products  ............. 53 
Chart 4.5 Slaughtered cattle  ................................ ................................ ................................ 55 
Chart 4.6 Electricity demand and customer numbers, 2006 -16 ................................ ................ 62 
Chart 4.7 Telecommunication indicators per 100 inhabitants, 2016 and 2017  ............................ 70 
Chart 4.8 Number of pa ssengers using the three international airports, 2011 -15 ....................... 73 
Chart 4.9 Visitor arrivals by air, 2013 -17 ................................ ................................ .............. 77 
Chart 4.10 Visitor arrivals by air, 2017  ................................ ................................ ................. 77 
 
TABLES  
 
Table 1.1 GDP by economic activity, 2010 -16 ................................ ................................ ........ 11 
Table 1.2 Selected economic and financial indicators, 2013 -18 ................................ ................ 13 
Table 1.3 Central Government budgetary operations, 2013 -17 ................................ ................ 14 
Table 1.4 Balance of payments, 2013 -18 ................................ ................................ .............. 14 WT/TPR/S/378 • Vanuatu  
 
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  Table 1.5 Trade in services, 2010 -15 ................................ ................................ .................... 17 
Table 1.6 Foreign direct investment, 2010 -16 ................................ ................................ ........ 18 
Table 2.1 Major trade and investment related legislation  ................................ ......................... 20 
Table 2.2 Notifications to the WTO, 24 August 2012 – 27 June 2018  ................................ ........ 21 
Table 2.3 Overview of Vanuatu regional trade agreements, 2018  ................................ ............. 22 
Table 2.4 Selected categories of business licences ................................ ................................ ..25 
Table 2.5 Business activities reserved only for Ni -Vanuatu citizens  ................................ ........... 26 
Table 2.6 Reserved activities open t o foreign investment above a minimum threshold  ................ 27 
Table 2.7 FDI investment procedure  ................................ ................................ ..................... 29 
Table 3.1 Summary analysis of Vanuatu's MFN tariff, 2018  ................................ ..................... 32 
Table 3.2 Structure of Vanuatu's tariff  ................................ ................................ .................. 34 
Table 3.3 Products for which applied rates exceed bound ra tes, 2018  ................................ .......35 
Table 3.4 Excise duties, 2018  ................................ ................................ .............................. 36 
Table 3.5 Import restrictions  ................................ ................................ ............................... 37 
Table 3.6 Export restrictions  ................................ ................................ ................................ 38 
Table 3.7 Sectoral legislation with competition related provisions  ................................ ............. 42 
Table 3.8 Legislation with consumer protection related pro visions  ................................ ............ 43 
Table 3.9 CGBE performance indicators, FY2014  ................................ ................................ ....44 
Table 3.10 Main IP laws, and treaty membership  ................................ ................................ ...47 
Table 3.11 Duration of protection for industrial property rights  ................................ ................ 48 
Table 3.12 Duration of copyright protection  ................................ ................................ ........... 49 
Table 4.1 Imports and exports of fish and fisheries products, 2012 -16 ................................ .....56 
Table 4.2 Fisheries laws  ................................ ................................ ................................ ......57 
Table 4.3 Fishing licence fees  ................................ ................................ .............................. 57 
Table 4.4 Main measures  ................................ ................................ ................................ ....58 
Table 4.5 Area restriction for local fishing vessels  ................................ ................................ ..59 
Table 4.6 Electricity tariff structure for Port Vila, Malekula and Tanna  ................................ .......63 
Table 4.7 Vanuatu's services indicators, 2012 -16 ................................ ................................ ...64 
Table 4.8 Gross assets of Vanuatu's financial system, 2012 -17 ................................ ................ 65 
Table 4.9 Legislation  ................................ ................................ ................................ .......... 66 
Table 4.10 Banks' financial soundness indicators, 2012-17 ................................ ...................... 67 
Table 4.11 Insurance service providers  ................................ ................................ ................. 68 
Table 4.12 Premiums for insurance companies ................................ ................................ .......69 
Table 4.13 Telecommunication ind icators, 2014 -17 ................................ ................................ 69 
Table 4.14 Current telecom licensees  ................................ ................................ ................... 70 
Table 4.15 Major origins of imports, and export destinations for cargo transported by air  ........... 74 
Table 4.16 Vanuatu: Absolute and relative contribution of the tourism sector, 2017  ................... 76 
Table 4.17 Key tourism indicators 2013 -17 ................................ ................................ ........... 77 
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  BOXES  
 
Box 1.1 Cyclone Pam and the role of trade in natural disasters  ................................ ................ 12 
 
APPENDIX TABLES  
 
Table A1.1 Merc handise exports by products, 2012 -16 ................................ ........................... 81 
Table A1.2 Merchandise exports by country, 2012 -16 ................................ ............................. 82 
Table A1.3 Merchandise imports by products, 2012 -16 ................................ ........................... 83 
Table A1.4 Merchandise imports by country, 2012 -16 ................................ ............................. 84 
 
  WT/TPR/S/378 • Vanuatu  
 
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  SUMMA RY 
1. Since Vanuatu's accession to the WTO in 2012, its  economy has grown at an average annual 
rate of around 2 .3%. Vanuatu's GDP per capita is now some  US$2,900.  Most of the population live 
in rural areas where subsistence farming, fishing and the production  of cash crops such as kava, 
coconut and cocoa are the main sources of livelihood . However, strong population growth and a 
rapid urbanization rate are exercising increasing  pressure on land and other natural resources . The 
authorities expect that Vanuatu w ill graduate from LDC status in a few years.  
2. Vanuatu has a high risk of  natural disasters, especially  from cyclones, earthquakes, volcano 
eruptions, and tsunamis. In 2015, large parts of the country were  devastated by Category 5 
Cyclone Pam. Infrastructure  and transport links among  islands also remain a challenge.  
3. Inflation averaged some 2% annually over the review period.  Public debt has increased 
greatly over recent years, mainly due to rising expenditure and lower income levels arising from 
Cyclone Pam, from around 26% of GDP at end -2015 to 51% in 2017. Vanuatu's current account 
deficit  amounts to around 10% of GDP.  
4. Trade is very important for Vanuatu' s economy; the combined val ue of exports and imports 
equalled  around 106%  of GDP  in 2016, up from 93% in  2011. Tourism, cattle and logs are the 
main exports; Vanuatu's main trading partners include Australia, Fiji and New Zealand . Foreign 
direct investment is significant, with the main subsectors being tourism, telecommunications, food, 
and wood processing. Vanuatu 's vulnerability to natural disasters  and the weakness of its 
infrastructure are some of the challenges  it faces in attracting more investment.  
5. The Ministry of Foreign Affairs, International Cooperation and External Trade is responsible 
for formulat ing and coordinating Vanuatu's international trade policy; the Ministry is also 
responsible for bilateral, regional and multilateral trade and investment negotiations. Vanuatu's 
Trade Policy Framework, which was prepared in 2012 and is currently being updated, has the  
objectives of, inter alia , mainstream ing trade into Vanuatu's national development strategy, and 
enhanc ing development through increased exports of goods and services. Vision 2030, its policy 
document, aims to achieve stability, sust ainability and prosperity for the country by 2030  through, 
inter alia , increasing trade and investment opportunities and reducing barriers, increasing access 
to markets for exports, requiring all new trade agreements to demonstrate tangible benefits in the  
national interest, and stimulating economic diversification.  
6. Vanuatu acceded to the WTO on 24 August 2012; it is in the process of establishing a 
Permanent Mission in Geneva to foster its participation in the WTO. At the time of accession to the 
WTO, Vanu atu committed to submit notifications. It has submitted few notifications to the WTO ; as 
at 31 December 2017, notifications were outstanding in the areas of: agriculture (export 
subsidies); IPR  (Article 69 in conjunction with the TRIPS Council Decision of 1995); the TRIMs 
Agreement; import licensing procedures; quantitative restrictions; customs valuation; rules of 
origin; the Integrated Database for imports  for 2016; subsidies and countervailing measures; state 
trading enterprises; and GATS. While Vanuatu has not yet ratified the Trade Facilitation 
Agreement , it has notified its Category A, B , and C commitments to the WTO. It has not been 
involved in any dispute settlement cases.  
7. Vanuatu grants at least MFN treatment to all of its trading partners. It is pa rty to several 
overlapping regional agreements. Under the Melanesian Spearhead Group (MSG) Trade 
Agreement, the Pacific Island Countries Trade Agreement (PICTA), and the Pacific Agreement on 
Closer Economic Relations, it has preferential trade agreements w ith other countries and territories 
in the South Pacific. Vanuatu also benefits from some non -reciprocal preferential trade 
arrangements , including the Generalized System of Preferences offered by some WTO Members. 
Australia and New Zealand provide duty -free and quota -free market access to Vanuatu exports 
under the South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA), while 
the European Union provides duty -free and quota -free access to Vanuatu exports under the 
Everything but Arms init iative.  
8. Under the Business Licence Act, foreign investors must obtain, inter alia,  a certificate from 
the Vanuatu Investment Promotion Authority before applying for a business licence. Most business 
activities are open to foreign investment . For activities  such as tourism, retail shops, coastal WT/TPR/S/378 • Vanuatu  
 
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  shipping, and certain professional or business services, foreign investment is allowed  as long as 
the operation meets minimum thresholds specified in the relevant legislation. Some activities are 
reserved for Vanuatu  citizens. These include businesses engaged in the export of sandalwood and 
kava; manufacturers of handcraft s and artefacts; service providers of kava bars, road transport, 
residential building and construction, and commercial cultural feasts; commercial f ishing in 
Vanuatu's inshore waters; and the small scale production of sawn timber.  
9. In 2013, Vanuatu adopted legislation to give effect to the WTO Agreement on Customs 
Valuation. The average time for customs clearance in Port Vila was three days and seven hours in 
2017; according to the authorities, this was greatly reduced with the inauguration of a new berth 
in 2018.  
10. Vanuatu's  simple average applied MFN tariff is 9.3%  in 2018 , up from 9.2% in 2012 ; the 
small increase is due mainly to changes in the HS nomenclature. All but two tariff lines are 
ad valorem . The highest rates, of 75%, 55%, and 40%, apply to 56 tariff lines, comprising tobacco  
products and alcoholic and non -alcoholic beverages. 26% of tariff lines are duty -free. Vanuatu 
does not u se tariff rate quotas or seasonal tariffs. It has bound all of its tariff lines. For three tariff 
lines, applied rates exceed bound rates.  
11. A value -added tax of 15% applies to all goods and services, except those that are exempted 
or zero -rated. Excise dut ies apply to tobacco products and alcoholic beverages. A law on trade 
contingency measures was enacted in 2013; no measures have yet been taken. Import 
prohibitions apply to, inter alia , certain agricultural products. Certain goods, including alcohol, 
certain drugs, certain foods, right -hand drive motor vehicles, and certain whiskies, are subject to 
import licensing.  
12. Exporters are required to register in ASYCUDA World.  An export duty of 5% plus VT 3,000 
per cubic metre is applied to wood in the rough or ro ughly squared. Licences are required for 
exporting cattle, cocoa beans, cocoa, copra, lavender oil, and tea -tree oil. Vanuatu does not 
provide any export subsidies. It does not have any public finance, insurance, or guarantee 
schemes for exporters. Export prohibitions apply, inter alia , to certain marine animals.  
13. Vanuatu does not have any major incentive schemes , as it does not levy income tax on 
individuals or companies. Import tariffs are exempted on materials used for tourism, 
manufacturing or processin g, and mineral exploration. The Bureau of Standards, established in 
August 2017, oversees the development and adoption of standards. Several pieces of legislation 
make up the SPS regime, which is overseen by Biosecurity Vanuatu. No TBT or SPS notifications  
have been submitted to the WTO. Standard setting is in the early stage of development. No 
specific trade concerns have been raised against Vanuatu's TBT or SPS measures. The authorities 
indicate that a Competition and Consumer Protection Act, with provisi ons on price controls, is 
being drafted . 
14. Various state -owned enterprises dominate sectors such as broadcasting, postal services, and 
transport. Their activities accounted for around 2% of GDP in recent years. The ir performance has 
been declining, resulting  in significant cost s to the Government. According to legislation, 
discrimination against foreign participation is not allowed; about 60% of government procurement 
is provided by foreign suppliers. Vanuatu is not party to the Agreement on Government 
Procur ement. More than half of the public procurement processed by the Central Tender Board was 
through open tendering. Vanuatu's IPR legislation covers the main areas of the TRIPS Agreement. 
The Vanuatu Intellectual Property Office, the institution responsible for protecting IP rights, was 
established in 2012. It is in the process of setting up a Patent Division and a Design Division, and 
its Trademark Division was set up a few years ago. IPR enforcement at the border is the 
responsibility of Customs, which requ ires importers to prove the genuineness of their goods . 
Vanuatu's IPR regime is in the early stage of development. The authorities consider that more 
technical training is needed to improve IPR protection.  
15. Agriculture plays a key role in Vanuatu's economy , with around 80% of the population 
depending on subsistence farming. The agriculture sector (including fisheries and forestry) 
accounts for more than 20% of GDP and virtually all of merchandise exports. The simple average 
applied MFN tariff rate on agricu ltural tariff lines (WTO definition) is 16.9%, higher than the 
average rate on non -agricultural tariff lines (8%). Imports of beef originating in Europe, and copra WT/TPR/S/378 • Vanuatu  
 
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  are prohibited. The m ain agricultural export items are copra, kava, coconut oil, cocoa, and beef, 
while the main agricultural import items are rice, pastry, chicken meat, wheat flour, beverages and 
cigarettes. Agricultur al development has been constrained by, inter alia , a lack of access to 
finance, and land disputes. The Agriculture Sector Policy , covering the period between 2015 and 
2030, suggest s using tax incentives to reduce business costs. According to Vanuatu's notification 
to the WTO, all its support measures have been under the "Green Box", and the majority were  for 
crop extension, pest and disease control, and training.  
16. Licenc es are required for commercial fishing, and licensing fees, an important source of 
government revenue, are higher for foreign vessels than for lo cal ones. Difficulties facing the 
fisheries sector include a lack of data, difficult ies for fishermen in obtaining bank loans and 
insurance coverage, and a lack of  infrastructure and transport links among islands. Vanuatu 
currently has no fish processing f actories ; the export of fish is minor . Imports of fish originate 
mainly from Australia and New Zealand. The fishing and trad ing of s ea cucumber and green snail 
are banned, and the exportation of coconut crab and rock lobster is prohibited. Duty -free fuel was 
provided  to fishing vessels until 2017.  
17. A significant constraint for business in Vanuatu is the availability, cost and reliability of 
electricity and other utilities: 83% of rural households lack access to electricity, compared to 20% 
of urban household s. The main energy source is diesel combustion, contributing to about 80% of 
the total electricity generated, while windmills, and hydro and solar power produce  the rest. The 
Utilities Regulatory Authority (URA) regulates the provision of electricity in Va nuatu. Electricity 
tariffs are either reviewed  or set by the URA. Small customers are charged significantly less than 
the regional average due to cross -subsid ization  from large and business customers, who pay 
significantly more than the regional ave rage.  
18. The services sector, accounting for about two  thirds of Vanuatu's GDP, is a net foreign 
exchange earner. Services exports accounted for 87% of Vanuatu's total exports (of goods and 
services) in 2017. Vanuatu made specific GATS commitments in 10 services se ctors, and 
scheduled horizontal commitments on commercial presence and the presence of natural persons 
for all 10 sectors.  
19. The financial services sector is overseen by the Reserve Bank of Vanuatu (RBV), which is the 
Central Bank. Under t he Financial Instit utions Act , there is no difference between capital 
requirements applied to locally -owned banks and those applied to foreign owned  ones. Three of 
the four commercial banks operating in Vanuatu are foreign owned. Their performance has been 
improving  after Cyclone Pam , due mainly to the RBV's accommodative stance in the aftermath of 
the cyclone, when it  lower ed the statutory reserve deposit requirement and the liquid asset 
requirement. During the review period, i nterest rates remained high and large interest rate 
spreads persisted, reflecting the high cost and high risk of credit, arising from small scale , 
vulnerability to shocks, and the geographic dispersion of the islands. The insurance sector remains 
small.  
20. The telecommunication services sector has been developing fast , with significant increases 
in subscribers and market revenue; the mobile penetration rate increased from 12% in 2007 to 
85% in 2017 while , during the same period, the fixed line penetration rat e fell from 4.6% to 1.6%. 
Any person, local or foreign, may apply for a telecommunications licence issued by the 
Telecommunications and Radiocommunications Regulator ( TRR) – the sectoral regulator. 
Two companies provide fixed line, mobile and Internet serv ices; both are foreign invested.  
21. To facilitate Vanuatu's ICT development, which faces geographical and topographical 
challenges as the population is spread  across numerous islands, the Government launched a 
Universal Access Policy , with the aim  of making ICT available to 98% of the population by 2018. 
The authorities state that the target has already been reached , as ICT is availa ble to 98.8% of the 
population.  
22. Transport services remain a major constraint to economic development. Airports Vanuatu 
Limited ( AVL), a government -owned company, operates three international airports in Vanuatu. 
The other 26 domestic airfields are regulated by the Civil Aviation Authority Vanuatu, the sectoral 
regulator. Air Vanuatu, a government -owned enterprise, provides air serv ices linking Vanuatu's 
islands. Reflecting the cost s incurred when providing universal transport services, the Government WT/TPR/S/378 • Vanuatu  
 
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  provides loans and guarantees to Air Vanuatu to help cover its loss es. Foreign participation in 
cabotage is allowed, if provided for u nder the Air Services Agreement (ASA) between Vanuatu and 
the country from which th is foreign carrier originates.  
23. Maritime transport is of vital importance to Vanuatu , as the country  is composed of 
83 scattered islands. Under the Maritime Sector Regulator y Act No.  26 of 2016, which entered into 
force in 2017, the Office of the Maritime Regulator (OMR) was set up to administer domestic ship 
registration. Vanuatu Maritime Services Limited (VMSL), a domestic private company, is contracted 
by the Government as  the international shipping registry administrator. Foreign investment is 
allowed in coastal shipping (excluding vessels that exclusively provide transport to foreign tourists) 
only when the carrying capacity of the vessel is above 80 tonnes. Van uatu has n o legislation on 
cabot age; in practice, foreign vessels are not allowed to provide cabot age services in Vanuatu , 
except during particular periods such as natural disasters.  
24. Tourism is the mainstay of the economy and a major foreign exchange earner. The num ber 
of tourist arrivals, mainly from Australia, New Caledonia and New Zealand, recovered in recent 
years from a significant drop in 2015 caused by Cyclone Pam. Some types of tourism services 
(such as tour agents, tour operators, commercial cultural feasts,  guest houses, bungalows, and 
hotels and motels)  are reserved for Vanuatu citizens ; foreign investment is allowed if the annual 
turnover is above a certain threshold. The sector is dominated by foreign investment, while local 
investors remain in smaller, less capital intensive businesses. Accessing capital is one significant 
constraint for establishing or expanding business es owned by Vanuatu citizens . The Government 
developed the Vanuatu Strategic Tourism Action Plan 2014 -2018 as a guideline for the 
devel opment of tourism services.   
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  1  ECONOMIC ENVIRONMENT  
1.1  Main Features of the Economy  
1.1.  The Republic of Vanuatu is an island nation located in the South Pacific Ocean, east of 
northern Australia, east of Papua New Guinea, southeast of Solomon Islands, and west of Fiji. Port 
Vila, on the island of Efate, is the capital. The archipelago is composed of about 82 islands of which 
65 are inhabited and 14 have surface areas of more than 100 square kilometres. Most of the 
islands are mountainou s and of volcanic origin, and have a tropical or sub -tropical climate. Total 
land surface is about 4,700 square kilometres.  
1.2.  Vanuatu's population is about 270,000. With more than 100  languages spoken, Vanuatu's 
linguistic density is among the highest in th e world. Most of the population lives in rural areas 
where subsistence farming, fishing and production of cash crops such as kava, coconut and cocoa 
are the main sources of livelihood. However, strong population growth, of some 2.3% annually, 
and a rapid u rbanization rate are exercising increasing pressure on land and other natural 
resources.  
1.3.  As in the case of some other small island developing States, Vanuatu is faced with various 
specific challenges including: high cost of public service provision reflec ting its geographical setting 
of dispersed islands; a narrow economic base; and a vulnerability to external economic shocks. 
Located on the Ring of Fire, the country is highly susceptible to both hydro -meteorological (tropical 
cyclones, floods) and geophys ical disasters (volcano eruptions, earthquakes, and resulting 
tsunamis and landslides).  
1.4.  Vanuatu's economy is based mainly on agriculture, fishing, tourism and offshore financial 
services, while the role of manufacturing is limited (Table 1.1). Tourism is the main generator of 
foreign exchange, benefiting mostly from visitors from Australia and New Zealand. In 2016, 
estimated GDP per capita was about US$2,900. Vanuatu is a least developed country; the 
authorities expect it to graduate from LDC status in 202 0. 
Table 1.1 GDP by economic activity, 2010 -16 
 2010  2011  2012  2013  2014  2015  2016  
GDP by economic activity at current basic prices (%)  
Agriculture, forestry and fishing  21.9 24.2 26.7 26.7 26.8 23.1 22.2 
 Crop production  17.4 19.4 20.9 21.1 20.9 19.9 19.1 
Mining and quarrying  0.0 0.0 0.0 0.0 0.0 0.0 0.0 
Manufacturing  5.1 4.5 3.8 3.4 3.5 3.5 3.4 
Electricity, gas and water supply  2.0 2.1 2.1 2.0 2.0 2.0 2.0 
Construction  5.9 3.7 2.1 2.9 3.1 5.9 5.7 
Services  65.0 65.5 65.3 64.9 64.5 65.4 66.6 
 Wholesale and retail trade; repair of motor 
 vehicles  16.4 16.5 18.4 18.1 18.8 19.1 20.3 
 Transportation and storage  5.7 5.9 5.6 5.2 4.9 3.9 4.2 
 Accommodation and food services  5.1 4.9 5.3 5.4 5.2 4.5 4.6 
 Information and communication  5.2 5.5 4.0 4.4 4.5 4.6 4.6 
 Finance and insurance  6.7 7.5 7.1 7.7 7.4 8.7 8.7 
 Real estate  6.7 6.6 7.3 7.2 7.4 8.0 7.8 
 Professional, scientific, technical and 
 administrative services  3.3 3.3 2.7 2.7 2.6 2.6 3.4 
 Government services  14.0 13.2 12.9 12.4 11.7 12.1 11.3 
 Education, health, recreation, and other 
 services  1.7 2.0 2.0 1.9 2.0 1.9 1.8 
GDP by economic activity at constant 2006 prices (annual % change)  
Agriculture, forestry and fishing  4.8 6.1 2.2 4.8 4.2 -15.8 5.1 
 Crop production  3.8 6.0 -0.2 3.5 2.6 -9.3 5.9 
Mining and quarrying  -27.3 -18.8 46.2 -15.8 -12.5 -21.4 72.7 
Manufacturing  86.5 -8.6 -13.8 -6.2 0.7 -4.5 2.9 
Electricity, gas and water supply  7.3 2.5 -2.4 1.9 -1.6 -2.5 11.9 WT/TPR/S/378 • Vanuatu  
 
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   2010  2011  2012  2013  2014  2015  2016  
Construction  -11.2 -36.3 -44.3 45.3 9.7 101.6  2.0 
Services  3.0 3.2 4.4 0.1 2.4 2.0 2.9 
 Wholesale and retail trade; repair of motor 
 vehicles  8.3 4.8 6.6 -0.8 5.1 3.5 2.4 
 Transportation and storage  0.1 3.1 28.9 -22.6 -5.9 -4.0 1.3 
 Accommodation and food services  1.8 -1.0 4.4 3.7 1.3 -9.7 3.7 
 Information and communication  0.0 7.3 -8.4 8.3 7.9 7.0 6.0 
 Finance and insurance  -1.9 9.1 -0.1 8.1 -0.3 6.8 0.2 
 Real estate  5.9 3.1 9.1 1.8 2.7 1.8 3.6 
 Professional, scientific, technical and 
 administrative services  -5.0 4.7 -20.0 -0.9 -1.2 9.7 18.3 
 Government services  5.3 -4.1 2.0 6.4 1.8 1.6 1.8 
 Education, health, recreation, and other 
 services  -10.6 14.4 1.4 -5.6 8.8 -4.1 -7.4 
Source:  Vanuatu National Statistics Office online information.  
1.5.  In 2010, the latest  year for which figures are available, 10.7% of the population lived below 
the national poverty line; life expectancy was some 72 years, and the adult literacy rate was some 
85%. In UNDP's 2016 Human Development Index, Vanuatu ranked 134th of 188 countries  and 
territories. The labour market is characterized by a high degree of informality.  
1.6.  The Reserve Bank of Vanuatu (RBV), Vanuatu's central bank, is responsible for the 
formulation and implementation of monetary policy. The main objectives of monetary polic y are 
(1) a low and stable inflation rate (defined as an annual change in the Consumer Price Index 
within the 0 to 4 percent range), and (2) maintaining a sufficient level of foreign exchange 
reserves (defined as a minimum threshold of 4  months of import c over). A Statutory Reserve 
Deposit and open market operations are the main monetary policy instruments. Vanuatu's 
currency (the vatu) is pegged to an undisclosed basket of currencies.  
1.2  Recent Economic Developments  
1.7.  In March 2015, category 5 cyclone Pam cause d extensive damage on all islands (Box 1.1). 
The cyclone led to a slowdown in GDP growth to about 0.2% in 2015. As at mid -2018, most 
reconstruction works had been  completed or were near completion.  
Box 1.1 Cyclo ne Pam and the role of trade in natural disasters  
According to the UN World Risk Index, Vanuatu is the world's most at -risk country for natural disasters, facing 
the specific risks of cyclones, volcano eruptions, earthquakes, and tsunamis. In March 2015, c ategory 5 
Cyclone Pam struck the whole country, with estimated wind speeds of 250  km/h and wind gusts that peaked at 
around 320 km/h, causing widespread devastation and extensive damage. An estimated 65,000 people – 
about a quarter of Vanuatu's total popul ation – were displaced from their homes. Approximately 17,000 
buildings were damaged or destroyed, including houses, schools, clinics, and other medical facilities. 
Communication across the country was crippled, with only one cellular tower in Port Vila re maining operational, 
and the power grid was devastated. Four days after the storm, nearly 60 inhabited islands remained cut -off 
from the outside world. The total economic damage caused by Pam was estimated at approximately 
VT 48.6 billion, equivalent to ab out 64% of GDP. The most affected sectors were agriculture and tourism, 
which contracted by 15.8% and 9.7% respectively. Merchandise exports and income from tourism declined 
substantially, while imports surged due to reconstruction needs.  
 
The Government's  responses to the disaster included: support for household reconstruction by temporarily 
suspending VAT and import duties on construction materials; steps taken by the Reserve Bank of Vanuatu to 
alleviate liquidity constraints by reducing the Statutory Res erve Deposit requirement; and the implementation 
of a business continuity plan for banks to ensure that most households and businesses had enough physical 
currency. Also, one week after the cyclone hit, the Government allowed contributors to the Vanuatu Na tional 
Pension Fund to withdraw up to 20% from their retirement accounts for emergency expenditure. These ex-post 
responses were generally considered successful. However, experience from Cyclone Pam also highlights the 
importance of ex-ante measures for co untries that are prone to natural disasters, such as resilient 
infrastructure, the availability of internal and external emergency funds or fiscal buffers, risk assessment and 
planning, and diversification of economic activity.  WT/TPR/S/378 • Vanuatu  
 
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  Beyond the specific experi ence of Vanuatu, natural disasters may pose important challenges to any country's 
trade regime. Entry issues for humanitarian goods and services fall within the ambit of measures regularly 
discussed at the WTO.a Onerous inspection and documentation require ments may delay the entry of relief 
items. High import tariffs on relief items may push up costs for responders if they are not exempted. Where 
tariff exemptions may be available, difficulties in applying them can add further delays. Specialized personnel 
can face regulatory barriers due to issues related to the recognition of their qualifications and licensing or 
permit requirements. In small countries with infrastructure challenges, customs authorities and the transport 
sector may also face serious capaci ty constraints.  
a Roberts, Michael  and Mohammed, Nazia , "Trade Issues Affecting Disaster Response ", WTO Staff 
Working Paper 2017 -07. 
1.8.  The exchange rate of the vatu against the US dollar has been relatively stable since 2015. 
Accommodative monetary policy played a crucial role in supporting economic recovery and 
financial stability after cyclone Pam. Since 2017, however, excess liquidity in the banking system 
has been associated with  the building up of inflation ary pressure. Inflation fluctuat ed around 1% i n 
most years up until 2016 , before  increas ing to over 3% in the second quarter of 2017 (Table 1.2).  
Table 1.2 Selected economic and financial indicators, 2013 -18 
 2013  2014  2015  2016  2017a 2018b 
Output and prices (annual percentage change)  
Real GDP  2.0 2.3 0.2 3.5 4.2 3.8 
Consumer prices (period average)  1.5 0.8 2.5 0.8 3.1 4.8 
Consumer prices (end period)  1.5 1.1 1.5 2.1 3.8 4.6 
Government finance (% of GDP)  
Total revenue  21.4 23.5 31.9 30.8 31.5  31.6 
Taxes  17.2 17.4 16.3 16.3 17.4  17.8 
Other revenue  2.0 2.0 5.5 5.3 5.2 5.2 
Grants  2.2 4.1 11.8 8.3 8.3 8.2 
Expenditure  21.7 28.5 41.5 36.9 38.9  39.5 
Expense  20.7 21.8 23.1 24.8 27.0  28.6 
Net acquisition of non -financial assets  1.0 6.6 18.3 12.1 11.9  11.0 
Net lending (+)/borrowing ( -) -0.2 -5.0 -9.6 -6.1 -7.5  -8.0 
Public and publicly  guaranteed debt 
(end of period)  23.1 28.7 42.4 48.8 51.0  53.7 
Domestic  7.8 7.8 7.5 8.5 8.0  7.6 
External  12.6 16.3 30.5 37.6 40.4  43.7 
Publicly guaranteed debt 2.8 4.6 4.4 2.8 2.6  2.4 
Money and credit (annual percentage change)  
Broad money (M2)  -6.4 8.5 23.1 10.6 2.4 11.3 
Net foreign assets  -14.8 -14.5 71.6 46.5 -6.6 12.7 
Domestic credit  2.7 9.3 -7.4 -10.2 10.9 10.1 
Of which: Credit to private sector  2.0 9.0 1.4 1.3 4.3 4.1 
Interest rates (%, end of period)  
Deposit rate  (vatu  deposits)  1.9  2.6 2.3 1.6 .. .. 
Lending rate  (vatu  loans)  10.5  10.3 10.0 9.9 .. .. 
Exchange rates        
Vatu per US$ (period average)  94.5 97.1 107.0  109.3  107.8  .. 
Vatu per US$ (end of period)  97.3 102.7  109.6  113.1  106.5  .. 
Real effective exchange rate 
(average)  98.9 98.1 100.3  102.3  102.2  .. 
Memorandum items        
Nominal GDP (in billions of vatu)  75.8 79.1 82.8 87.3 93.7 101.9  
Nominal GDP (in millions of US$)  802 815 774 798 870 957 
.. Not available.  
a Estimate  
b Projection  
Source:  IMF (2016), Vanuatu: 2018 Article IV Consultations . 
1.9.  Government revenues remain at relatively low levels. In the aftermath of cyclone Pam, 
grants have been playing an important role in financing reconstruction works (Table 1.3). In order 
to increase fiscal income, the Government raised the VAT rate in January 2018, from 12.5% to WT/TPR/S/378 • Vanuatu  
 
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  15% (Section 3.3.1), and also uses economic citizenship programmes .1 The Government aims to 
introduce corporat e and personal income taxes in 2019.  
1.10.   Government expenditure rose significantly in 2015 to finance reconstruction, and has 
remained at these high levels since then. In August 2015, the Government launched the Vanuatu 
Infrastructure Strategic Investment Pla n 2015 -2024, aimed at developing urban and rural areas, 
improving living standards, and delivering community services. The plan outlined the 
Government's priorities for both economic and social infrastructure, and laid out how to fund and 
implement these i nvestments.  
Table 1.3 Central Government budgetary operations, 2013 -17 
 2013  2014  2015  2016  2017  
Total revenue  16,247  18,585  26,424  26,872  29,514  
Taxes  13,069  13,747  13,467  14,231  16,276  
Other revenue  1,514  1,561  3,209  5,403  5,417  
Grants  1,664  3,277  9,748  7,238  7,821  
Expenditure  18,339  22,518  34,344  32,207  36,509  
Expense  15,694  17,268  19,152  21,629  25,317  
Compensation of employees  8,438  8,582  8,893  9,107  9,967  
Use of goods and services  4,144  5,185  5,843  5,995  8,131  
Interest payment  555 573 700 908 949 
Grants  1,600  2,035  2,530  3,217  2,408  
Social benefits  346 241 476 1,542  2,664  
Other expense  612 652 710 860 1,198  
Net acquisition of nonfinancial assets  2,644  5,250  15,191  10,578  11,192  
Gross operating  balance  553 1,317  7,272  5,243  4,197  
Net lending (+)/borrowing ( -) -2,092  -3,933  -7,919  -5,335  -6,995  
Net acquisition of financial assets  -343 460 5,682  3,050  1,470  
Net incurrence of liabilities  1,428  3,607  12,425  9,002  7,173  
Domestic  306 263 32 1,453  105 
Foreign  1,121  3,344  12,393  7,549  7,068  
Source:  IMF (2018), Vanuatu: 2018 Article IV Consultations . 
1.11.   Vanuatu's public debt stood at around 51% in 2017, up from 26% at end -2015. Public and 
publicly  guaranteed debt increased sharply from 2014 mainly due to disbursements for 
reconstruction and infrastructure projects, though most of the new external borrowing was highly 
concessional. Against the background of strongly increasing foreign debts, Vanuatu prepared its 
first debt management str ategy in August 2015. With eight to nine months of imports, Vanuatu 
has adequate reserves.  
1.12.   Vanuatu's current account has traditionally featured a deficit, which was particularly marked 
in 2015 and 2017, when it was equivalent to 10.6% and 9.0% of GDP, resp ectively (Table  1.4). 
The deficit was financed by official transfers, foreign investment inflows, and remittances.  
Table 1.4 Balance of payments, 2013 -18 
(US$ million, unless otherwise indicated)  
 2013  2014  2015  2016  2017a 2018b 
Current account balance  -26 -2 -82 -32 -78 -88 
Trade balance  -223 -197 -269 -264 -320 -264 
Exports of goods (f.o.b.)  45 63 39 50 52 60 
Imports of goods (f.o.b.)  -268 -260 -308 -314 -373 -324 
Services balance  190 166 104 179 215 151 
Receipts  331 307 283 330 347 337 
 of which: travel  288 257 183 204 222 250 
Payments  -142 -141 -179 -152 -132 -186 
Primary income  -11 4 7 7 2 2 
Receipts  33 36 36 36 39 43 
Payments  -45 -33 -29 -30 -37 -41 
                                                
1 Under these programmes, the Government offers honorary citizenship to foreign investors against a 
one-time contribution, ranging from US$200,000 for a single person application to US$280,000 for a family 
with elderly parents. " Honorary citizenship" offers most Vanuatu  citizens  rights , with the exception of  voting 
and political involvement. The application process requires a background check , including of financial resources 
and criminal record, and takes between one and two months, making it one of the most fast -track citizenship 
programmes in the world. However, citizens of North Korea, Yemen, Syria, Iraq, and Iran are not allowed to 
apply.  WT/TPR/S/378 • Vanuatu  
 
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   2013  2014  2015  2016  2017a 2018b 
Secondary income  18 26 76 46 25 24 
Official  17 22 39 38 23 22 
Private  1 3 37 8 2 2 
Capital and financial account  58 43 118 95 124 81 
Capital account  21 32 84 48 82 36 
 of which : Official capital transfers (net)  .. .. .. 47 35 34 
Financial account  .. .. .. 47 42 45 
Foreign direct investment  .. .. .. 55 33 38 
Portfolio investment  .. .. .. -11 -11 -11 
Other investment  .. .. .. 3 20 19 
Net errors and omissions  -36 -34 51 -61 55 0 
Overall balance  -5 6 87 1 100 -6 
Financing:  5 -6 -64 -1 -100 3 
Change in international reserves ( - = increase)  5 -6 -87 -1 -100 6 
Memorandum items:        
Gross international reserves  179 184 269 267 368 361 
In months of prospective imports  5.4 4.5 6.9 6.4 8.6 8.2 
Current account balance (% of GDP)  -3.3 -0.3 -10.6 -4.1 -9.0 -9.2 
Exchange rate (vatu per US$, period average)  94.5 97.1 107.0  109.3  107.8  .. 
Exchange rate (vatu per US$, end of period)  97.3 102.7  109.6  113.1  106.5  .. 
Public external debt (% of GDP)  12.6 16.3 30.5 37.6 40.4 43.7 
.. Not available.  
a Estimates.  
b Projections.  
Source:  IMF (2018), Vanuatu: 2018 Article IV Consultations . 
1.13.   According to the IMF, the outlook for Vanuatu's economy is that it will  fully recover from the 
effects of Cyclone Pam in the near future, with an estimated real GDP growth rate of 4% in both 
2017 and 2018.2 Inflation is expected to rise to 4.8% in 2018, mainly due  to the increase in 
value -added tax from 12.5% to 15% in January 2018, before reverting to lower levels in the 
medium term. The current account deficit is expected to widen to around 9% of GDP in 20 17 and 
2018, due to the high import content of the projects to scale up infrastructure. The fiscal deficit is 
expected to remain high, at around 7 -8% of GDP, also reflecting reconstruction and infrastructure 
expenditure. The possibility of further natural disasters remains an important downside risk to all 
projections.  
1.3  Developments in Trade and Investment  
1.3.1   Trends and patterns in merchandise and services trade  
1.14.   Trade is significant for Vanuatu's economy; the combined value of exports and imports 
equalled over 106% of GDP in 2016, up from 93% in 2011. This increase is mostly due to the 
strong growth of imports, while exports stagnated during the period under review. Cyclone Pam 
led to a contraction of exports in 2015, while imports increased strongly.  
1.15.   Vanuatu ha s not submitted any data to the UN Comtrade database since 2012. The 
authorities indicate that they intend to resume data submission in the near future.  
1.16.   Merchandise exports are heavily concentrated in a few items. Based on data from the 
National Statistics  Office, Vanuatu's goods exports are dominated by agricultural products, 
particularly coconut products, kava, beef, cocoa, timber, and coffee (Table A1.1 and Chart 1.1).  
1.17.   Australia, New Caledonia, and other members of the Melanesian Spearhead Group 
(Papua  New Guinea, Fiji, and Solomon Islands) are the main destinations for Vanuatu's 
merchandise exports (Table A1.2 and Chart 1.2).  
1.18.   Imports are dominated by manufactured goods, food products and live animals (Table A1.3 
and Chart 1.1). The y mainly come from  Australia, Fiji, New Zealand, and Singapore (Table A1.4 
and Chart 1.2).  
                                                
2 IMF, Vanuatu 2018 Article IV Consultation Press Release and IMF Country Report No. 18/109.  WT/TPR/S/378 • Vanuatu  
 
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  Chart 1.1 Production composition of merchandise trade, 2016  
 
Source:  WTO calculations, based on online data from the National Statisti cs Office of Vanuatu.  
Chart 1.2 Direction of merchandise trade, 2016  
 
a Including Solomon Islands, Fiji, and Papua New Guinea.  
Source:  WTO calculations, based on online data from the National Statistics Offic e of Vanuatu.  
1.19.   Vanuatu's service exports grew strongly between 2010 and 2013, but contracted in 2014 
and 2015. In 2015, they were dominated by tourism, which accounted for some 80% of service 
exports (Table  1.5). Imports of services grew constantly during t he review period; they mainly 
comprised transport services, travel and other business services.  
Beef & veal
5.8%
Cocoa
7.5%Copra
31.9%
Sawn timber
2.3%Chart 1.1  Production composition of merchandise trade, 2016
Exports
Total:  US$50.2 million Total:  US$368.5 millionBeverages &
tobacco 3.2%Food & live animals
21.1%
Basic manufactured
products 18.4%Imports
Other
19.8%Other
16.4%
Mineral fuels
8.5%
Chemicals
6.5%
Coconut oil
10.6%Kava
22.1%
Source:   WTO calculations, based on data taken online from the National Statistics Office of Vanuatu.Machines &
transport equip.
25.9%
EU-28
4.0%MSG membersa
8.8%New Zealand
3.0%Australia
17.4%Chart 1.2  Direction of merchandise trade, 2016
Exports
Source:   WTO calculations, based on data taken online from the National Statistics Office of Vanuatu.Total:  US$50.2 million Total:  US$368.5 millionNew Zealand
11.5%Australia
22.9%
Japan
5.6%Imports
Other
55.8%Other
16.4%
New Caledonia
1.3%
Fiji
11.8%Japan
1.9%New Caledonia
9.0%
a   Including Solomon Islands, Fiji, and Papua New Guinea.Hong Kong,
China 2.8%
Singapore
8.3%
France
5.2%WT/TPR/S/378 • Vanuatu  
 
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  Table 1.5 Trade in services, 2010 -15 
(US$ million)  
 2010  2011  2012  2013  2014  2015  
Total credit (US$ million)  276.7  283.2  301.8  352.4  333.7  282.9  
% of total credit  
Maintenance and repair  0.0  0.0  0.0  0.0  0.0  0.0  
Construction  0.1  0.1  0.1  0.1  0.1  0.1  
Transport  11.4  11.7  10.7  9.6  13.5  12.1  
 Passenger  9.1  9.2  8.8  7.7  8.2  9.1  
 Freight  1.0  1.0  0.9  0.8  0.7  0.6  
 Other (including postal and courier)  1.3  1.4  1.1  1.1  4.6  2.4  
Travel  78.5  78.8  80.0  81.4  77.1  80.5  
 Business  7.6  8.0  8.5  6.4  5.0  5.5  
 Personal  70.9  70.7  71.5  75.0  72.1  74.9  
Insurance and pension services  0.1  2.4  2.5  1.8  1.0  0.0  
Financial services  3.7  2.0  2.3  1.3  1.3  1.6  
Charges for the use of intellectual property  0.1  0.1  0.1  0.0  0.1  0.1  
Telecommunications, computer, and information 
services  2.2  1.1  0.5  0.5  1.6  2.6  
Other business services  1.9  2.3  1.5  1.3  1.2  1.1  
Personal, cultural and recreational services  0.0  0.1  0.1  0.0  0.1  0.1  
Government services  2.0  1.6  2.2  3.9  4.1  1.9  
Other  10.2  12.7  12.2  9.9  9.1  14.3  
Total debit (US$ million)  124.6  145.0  145.9  149.1  144.9  179.0  
% of total debit  
Maintenance and repair  0.0  0.0  0.0  0.0  2.3  0.9  
Construction  0.1  0.1  0.1  0.1  0.1  0.1  
Transport  53.5  50.8  49.3  49.0  51.3  59.7  
 Passenger  3.2  3.0  3.8  3.5  2.8  2.3  
 Freight  38.1  36.7  35.0  35.4  34.9  39.1  
 Other (including postal and courier)  12.1  11.1  10.5  10.1  13.6  18.3  
Travel  23.9  24.3  25.4  27.7  25.4  16.8  
 Business  7.2  7.2  6.7  7.0  7.1  5.3  
 Personal  16.7  17.1  18.7  20.7  18.3  11.5  
Insurance and pension services  3.6  6.8  6.9  5.9  3.9  2.4  
Financial services  2.9  2.1  3.5  4.3  1.6  0.8  
Charges for the use of intellectual property  0.1  0.2  0.1  0.1  0.1  0.1  
Telecommunications, computer, and information 
services  10.7  10.1  9.7  7.7  5.7  4.3  
Oher business services  4.2  4.6  4.3  4.2  8.2  13.8  
Other  1.0  1.0  0.6  1.0  1.4  1.0  
Source:  IMF online information.  
1.3.2   Trends and patterns in FDI  
1.20.   The most recent peak in foreign direct investment into Vanuatu was in 2012, amounting to 
US$78  million (Table 1.6). The FDI inward stock was US$545 million in 2016; the main subsectors 
for FDI in Vanuatu were tourism, telecommunications, food, and wood processing. According to t he 
authorities, the main investing countries are Australia, Japan, China and New Zealand. Vanuatu's 
vulnerability to natural disasters, the weakness of its infrastructure, its geographical isolation, and 
poorly protected property rights are some of the pot ential hindrances to investment.  
1.21.   Outward FDI is negligible and has not exceeded US$2 million in any year since 2011; the 
stock of outward investment in 2016 was US$24 million.  WT/TPR/S/378 • Vanuatu  
 
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  Table 1.6 Foreign direct investment, 2010 -16 
(US$ million)  
Year 2010  2011  2012  2013  2014  2015  2016b 
FDI inflows   70a 78a -19a -18a 29a 32 
FDI outflows   1a 1a 0.5a 1a 2a 1 
FDI inward stock  454a .. .. .. .. .. 545 
FDI outward stock  23a .. .. .. .. .. 24 
.. Not available.  
a Asset/liability basis.  
b Estimates.  
Source:  UNCTAD, FDI/MNE database. 
Viewed  at: http://www.unctad.org/en/Pages/DIAE/FDI%20Statistics/FDI -Statistics.aspx . 
 
 
 WT/TPR/S/378 • Vanuatu  
 
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  2  TRADE AND INVESTMENT  REGIMES  
2.1  General Framework  
2.1.  The Republic of Vanuatu is a parliamentary democracy. Under the current Constitution, which 
was adopted in 1980 when the country became independent, the national political structure 
consists of a legislative, an executive, and a judiciary branch.1 
2.2.  The head of the country is the President, who is elected for a term of five years by a 
two-thirds majority of an electoral college.2 The power of the President is primarily ceremonial ; the 
President  appoints the Chief Justice of the Supreme Court, and th ree other justices. The current 
President has served since July 2017.  
2.3.  The legislative branch is a unicameral Parliament consisting of 52 members, all of whom are 
elected every four years. The Parliament makes laws by passing bills introduced by one or mor e 
members, or by the Prime Minister or a minister. When a bill is passed by the Parliament, it must 
be presented to the President, who assents to it within two weeks. If the President considers the 
bill to be inconsistent with a provision of the Constituti on, the Supreme Court needs to be referred 
to for its opinion. The bill must not be promulgated if the Supreme Court considers it inconsistent 
with the Constitution.  
2.4.  The head of the executive branch is the Prime Minister, who is the head of Government and  
is elected by a majority vote of a three -quarters quorum of the Parliament. The Prime Minister and 
the Council of Ministers form the central government. The national Council of Chiefs (Malvatu 
Mauri), elected by district councils of chiefs, advises the Go vernment on matters relating to 
Vanuatu  citizens' culture and language.  
2.5.  The head of the judicial branch is the Chief Justice of the Supreme Court, which consists of 
the Chief Justice and other judges. Two or more members of the Court may constitute a Cour t of 
Appeal. Magistrate courts handle routine legal matters. Vanuatu's legal system is based on both 
British common law and French civil law. Village or island courts, presided over by local chiefs, 
deal with questions of customary law.  
2.6.  International trea ties and agreements must be ratified before they can be invoked before 
courts in Vanuatu. Ratification procedures involve the preparation of a bill with the treaty attached 
to it in French and in English. A bill is debated in Parliament prior to its passag e. A bill passed by 
the Parliament is forwarded to the President for assent and publication in the Official Gazette, 
before its entry into force.  
2.7.  If the laws of Vanuatu are found to contradict international treaties or agreements, the 
provisions of the in ternational treaty or agreement prevail. Provisions of the WTO Agreement, 
including Vanuatu's accession protocol, must be applied uniformly throughout its customs territory. 
In cases where WTO provisions are not applied, or are applied in a non -uniform man ner, central 
authorities would act to enforce WTO provisions; affected parties would not need to petition 
throughout the courts.3  
2.8.  According to the World Bank's Doing Business Report, in 2018  in Vanuatu,  resolving a 
standard contract enforcement legal dispute takes 430 days and costs 56% of the value of the 
claim (the East Asia and Pacific average was 566 days and 47% of the claim).4 According to the 
report, in 2018, Vanuatu stood at 135th out of 190 economies on the ease of enforcing contracts.  
                                                
1 WTO document WT/ACC/VUT/17, 11 May 2011. The Constitution of Vanuatu is accessible at: 
http://www.wipo.int/wipolex/en/text.jsp?f ile_id=195747#LinkTarget_720 . 
2 The electoral college consists of 52 members of Parliament and 6 presidents of local government.  
3 WTO document WT/ACC/VUT/17, 11 May 2011.  
4 World Bank (2017), Doing Business 201 8 – Reforming to create jobs . Viewed at: 
http://www.doingbusiness.org/~/media/WBG/DoingBusiness/Documents/Annual -Reports/English/DB2018 -Full-
Report.pdf .  WT/TPR/S/378 • Vanuatu  
 
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  2.9.  Acts passe d by the Parliament are available online on the Government's website.5 Vanuatu's 
main trade and investment related legislation is listed in Table 2.1.  
Table 2.1 Major trade and investment related legislation  
Subject  Legislation  
Investment  Vanuatu Foreign Investment Promotion (Amendment) Act No. 23 of 2008;  
Business Licence (Amendment) Act No. 34 of 2010;  
Excise (Amendment) Act No. 30 of 2010;  
Value Added Tax (Amendment) Act No. 3 of 2007  
Trade  Customs (Amendment) Act No. 20 of 2007;  
Import Duties (Amendment) Act No. 29 of 2010;  
Import of Goods Control (Amendment) Act No. 37 of 2010;  
Export Duties (Amendment) Act No. 25 of 2007  
Source:  Information provided by the authorities of Vanuatu.  
2.2  Trade Policy For mulation and Objectives  
2.10.   The formulation and coordination of Vanuatu's trade policy is mainly under the authority of 
the Ministry of Foreign Affairs, International Cooperation and External Trade, which is also 
responsible for bilateral, regional and multila teral trade and investment negotiations. Under the 
direction of the Ministry of Tourism, Trade, Commerce, Industry and Ni -Vanuatu Business, 
Vanuatu's Trade Policy Framework was prepared in 2012, and is in the process of being updated. 
The objectives of the  Framework are to, inter alia , mainstream trade into Vanuatu's national 
development strategy, enhance development through increased exports of goods and services, 
and facilitate increased flows of Aid for Trade.  
2.11.   The National Trade Development Committee (N TDC), established in 2012 and comprising 
both public and private sector representatives, oversees trade development in Vanuatu. Other 
ministries, departments and agencies involved in trade -related activities include: the Ministry of 
Finance and Economic Ma nagement; the Ministry of Agriculture, Livestock, Forestry, Fisheries and 
Biosecurity; the Ministry of Infrastructure and Public Utilities; the Ministry of Lands and Natural 
Resources; the Ministry of Climate Change and Natural Disaster; and the Reserve Ba nk of 
Vanuatu.  
2.12.   Vanuatu's policy document, Vision 2030, set s the target of achieving a stable, sustainable 
and prosperous country within 15 years (from 2016 to 2030), through, inter alia , encouraging 
trade, promoting investment, and providing economic oppor tunities for all members of society.6 It 
aims to, inter alia , increase trade and investment opportunities and reduce barriers, including 
through the use of Aid for Trade; increase access to markets for Vanuatu exports; require all new 
trade agreements to d emonstrate tangible benefits in the national interest; and stimulate 
economic diversification to spread the benefits of growth and increase economic stability.  
2.13.   The authorities indicate that the National Industry Policy (NIP) issued in 2011 provides 
guideli nes for the development of local manufacturing industries, including promoting and 
protecting infant industries in Vanuatu. Sectoral trade policy objectives were set out in various 
sectoral policies such as the Agriculture Sector Policy (2015 -2030), the Li vestock Policy 
(2015 -2030), the Fruits and Vegetables Strategy (2017 -2027), the National Coconut Strategy 
(2016 -2025), the Forest Policy (2013 -2023), the National Kava Strategy (2016 -2025), the 
National Cooperatives Policy (2017 -2022), and the Strategic To urism Action Plan (2013 -2018).  
2.14.   Vanuatu ratified the United Nations Convention against Corruption (UNCAC) in 2010. In 
2011, the Government established the Office of the Government Chief Information Officer (OGCIO) 
to facilitate the development of informati on and communication technology used by government 
agencies, so as to enhance efficiency and improve transparency (Section 4.3.3.2).7 The 
Government also completed a Right to Information Policy in 2013, and a Right to Information Act 
was passed by the Parl iament in 2017, with the aim of improving transparency.  
                                                
5 Viewed at: http://www.paclii.org/vu/legis/num_act/ .  
6 Vanuatu 2030 – The People's Plan. Viewed at: 
https://www.gov.vu/attachments/article/26/Vanuatu2030 -EN-FINAL -sf.pdf . 
7 Transparency International (2014), National Integrity System Assessment 2014 – Vanuatu . Viewed at: 
https://www.transparency.org/whatwedo/publication/vanuatu_national_integrity_system_assessment_2014 . WT/TPR/S/378 • Vanuatu  
 
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  2.15.   The authorities are making efforts regarding anti -money laundering (AML) and combating 
the financing of terrorism (CFT) to prevent the laundering of proceeds of corruption. According to 
an IMF report , Vanuatu was included in the Financial Action Task Force's (FATF) gray list in 
February 2016 after the authorities agreed to an action plan addressing significant AML/CFT  
deficiencies. Measures adopted include the amendments to the legal framework on AML/ CFT.8 
2.3  Trade Agreements and Arrangements  
2.3.1   WTO  
2.16.   On 24 August 2012, Vanuatu became the 157th Member of the WTO.9 Vanuatu committed 
that it would fully apply all WTO provisions from the date of its accession, and did not require 
recourse to any transitional period except on intellectual property and on the publication of trade 
information. Vanuatu bound all of its tariff lines, and the average final bound rate is 40.2% 
(Table  3.2). It grants at least MFN treatment to all its trading partners. Vanuatu made specific 
GATS commitments on 10 services sectors (Section 4.3). In  January 2018, Vanuatu notified to the 
WTO its  commitments in Categories A, B, and C with indicative dates for implementation (for 
Categories B and C); it has not yet ratified the Trade Facilitation Agreement.10  
2.17.   In WTO negotiations, Vanuatu is a member of the following groups: ACP (African, Caribbean 
and Pacific countries with preferences in the European Union); G -90 (African group + ACP + least 
developed countries (LDCs)); and LDCs.  
2.18.   Since its accession, Vanuatu has not been involved in any WTO dispute settlement cases 
either as a complainant, a respo ndent, or a third party.11 
2.19.   Vanuatu has submitted a number of notifications to the WTO (Table 2.2).  However, as at 
31 December 2017,  notifications were outstanding in the areas of: agriculture (export subsidies); 
IPR (Article 69 in conjunction with the TRIPS  Council Decision of 1995); the TRIMs Agreement; 
import licensing procedures; quantitative restrictions; customs valuation; rules of origin; 
Integrated Database for 2016 imports; subsidies and countervailing measures; state trading 
enterprises; and GATS. At the time of accession to the WTO, Vanuatu committed to submit all 
initial notifications required by any Agreement constituting part of the WTO Agreement.12 
Table 2.2 Notifications to the WTO, 24 August 2012 – 27 June 2018  
Legal provision  Description of requirements  WTO document and date  
Agreement on Agriculture  
Article 18.2 – DS:1 Domestic support  G/AG/N/VUT/1, 20 July 2016  
Agreement on the Implementation of Article VI of the GATT 1994 (Anti -Dumping Agreement)  
Articles 16.4 & 16.5  Has not established any competent authority 
to initiate and conduct an anti -dumping 
investigation, and has not taken any 
anti-dumping action  G/ADP/N/193/VUT, 27 July 2016  
Article 18.5  No relevant laws and/or regulations  G/ADP/N/VUT/1, G/SCM/N/1/VUT/1, 
G/SG/N/1/VUT/1, 25 July 2016  
Agreement on Subsidies and Countervailing Measures  
Article 32.6  No relevant laws and/or regulations  G/ADP/N/VUT/1, G/SCM/N/1/VUT/1, 
G/SG/N/1/VUT/1, 25 July 2016  
Article 25.11, 25.12  No relevant authority, no action taken  G/SCM/N/202/VUT, 22 July 2016  
Agreement on Trade Facilitation  
WT/L/931  Notification of Categories A, B and C 
commitments  G/TFA/N/VUT/1, 10 January 2018  
Agreement on Safeguards  
Article 12.6  No relevant laws and/or regulations  G/ADP/N/VUT/1, G/SCM/N/1/VUT/1, 
G/SG/N/1/VUT/1, 25 July 2016  
                                                
8 IMF (2016), Vanuatu 2016 Article IV Consultation, IMF Country Report No. 16/336, October.  
9 WTO online information. Viewe d at: https://www.wto.org/english/news_e/pres12_e/pr671_e.htm . 
10 WTO document G/TFA/N/VUT/1, 10 January 2018.  
11 WTO online information. Viewed at: 
https://www.wto.org/english/thewto_e/countries_e/vanuatu_e.htm . 
12 WTO document WT/ACC/VUT/17, 11 May 2011.  WT/TPR/S/378 • Vanuatu  
 
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  Legal provision  Description of requirements  WTO document and date  
Agreement on Trade -related Intellectual Property Rights (TRIPs)  
Article  63.2  Laws and regulations  IP/N/1/VUT/1, 10/10/2 014 
 Copyright & Related Rights Act No.  42 of 
2000 IP/N/1/ VUT/C/1, 22/10/2014  
 Berne Convention for the Protection of 
Literary and Artistic Works (Ratification) Act 
No. 16 of 2012  IP/N/1/VUT/C/2, 22/10/2014  
 Designs Act No. 3 of 2003  IP/N/1/VUT/D/1, 22/10/2014  
 Geographical  Indications (Wine) Act No. 53 
of 2000 IP/N/1 /VUT/G/1, 22/10/2014  
 Circuit Layouts Act No.  51 of 2000  IP/N/1/VUT/L/1, 22/10/2014  
 Convention Establishing the World 
Intellectual Property Organization 
(Ratification) Act No.  13 of 2012  IP/N/1/VUT/O/1, 18/11/2014  
 Patent Act No.  2 of 2003  IP/N/1/VUT /P/1, 22/10/2014  
 Trademarks Act No.  1 of 2003  IP/N/1/VUT/T/1, 22/10/2014  
 Trademarks Act No.  1 of 2003 – Declaration 
of Convention Countries Order No.  40 of 
2012 IP/N/1/VUT/T/2, 22/10/2014  
 Trademarks for Goods and Services (Fees) 
Regulation (Amendment) Order No.  116 IP/N/1/VUT/T/3, 22/10/2014  
 Trade Secrets Act No.  52 of 2000  IP/N/1/VUT/U/1, 22/10/2014  
Source:  Vanuatu's  notifications to the WTO.  
2.3.2   Regional and preferential agreements  
2.20.   Vanuatu is party to some reciprocal regional trade agreements (RTAs), and it also benefits 
from some non -reciprocal preferential trade arrangements (PTAs) including the Generalized 
System of Preferences (GSP) offered by some WTO Members. Australia and New Zealand provide 
duty-free and quota -free market acc ess to Vanuatu exports under the South Pacific Regional Trade 
and Economic Cooperation Agreement (SPARTECA), while the European Union provides duty -free 
and quota -free access to Vanuatu exports under the Everything -But-Arms (EBA) initiative and the 
GSP. 
2.3.2.1   Regional trade agreements (reciprocal)  
2.21.   Vanuatu has engaged in RTAs, including: the Melanesian Spearhead Group (MSG) Trade 
Agreement, the Pacific Island Countries Trade Agreement (PICTA), and the Pacific Agreement on 
Closer Economic Relations Plus (PACER Plu s). PACER Plus has not yet entered into force 
(Table  2.3). 
Table 2.3 Overview of Vanuatu regional trade agreements, 2018  
RTAs  Details  
MSG Trade Agreement  
Parties  Fiji, Papua New Guinea, the Solomon Islands  and Vanuatu  
Date of signature/entry into force  22 July 1993/1 January 1994  
Date of WTO notification and legal coverage  3 August 1999  
Enabling Clause  
Year of tariff elimination by Vanuatu  2012 
Services covered  No. The MSGTA3 was extended to cover trade  in services, 
labour mobility, and cross -border investment.  
WTO consideration status  Summary Fact Sheet (goods) distributed  
Related WTO documents  WT/COMTD/N/9 (7 Oct ober 1999), WT/COMTD/21 
(7 October 1999)  
PICTA  
Parties  Cook Islands, Fiji, Kiribati, Federated States of Micronesia, 
Nauru, Niue, Papua New Guinea, Samoa, Solomon Islands, 
Tonga, Tuvalu and Vanuatu,  
Date of signature/entry into force  18 August 2001/13 April 2003  
Date of WTO notification and legal coverage  28 August 2008  
Enabling Clause  
End of implementation period  2021 
Services covered  No. It is expected that the coverage will expand to include 
trade in services, movement of capital and labour  WT/TPR/S/378 • Vanuatu  
 
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  RTAs  Details  
WTO consideration status  Factual presentation not distributed  
Related WTO documents  WT/COMTD/N/29 (17 September 2008)  
PACER Plus  
Parties  Australia, New Zealand, and Pacific Island countries 
including Vanuatu  
Date of signature/entry into force  Vanuatu signed in September 2017  
Date of WTO notification and legal coverage  Not in force  
Transition for full implementation  25 years after 2017 for non -LDCs, and from 2028 for LDCs  
Services covered  Yes. Covering goods, services, investment, labour, SPS, and 
aid.  
WTO consideration status  N.A.  
Related WTO documents  N.A. 
Source:  WTO Secretariat.  
2.3.2.1.1   MSG Trade Agreement  
2.22.   The members of the MSG Trade Agreement include Fiji, P apua New Guinea , the Solomon 
Islands  and Vanuatu . In 2016, the Agreement was revised with the intention of extending the 
coverage of goods to those cov ering trade in services, labour mobility, and cross -border 
investment. Vanuatu has not signed the revised Agreement.  
2.23.   Under the current MSG Trade Agreement that Vanuatu has signed , tariffs are eliminated on 
all products originating and exported from other parties, with the exception of wines, spirits, and 
tobacco. Parties committed that no quantitative import restrictions are applied (except for 
BOP reasons) and no new export prohibitions or restrictions are imposed. Vanuatu authorities 
confirm that no such  measures have been applied to date. The authorities state that, within the 
MSG countries, Fiji is the main destination for Vanuatu's exports, followed by Papua New Guinea 
and the Solomon Islands.  
2.3.2.1.2   PICTA  
2.24.   PICTA is a trade agreement among the Forum Island cou ntries (FICs), and is intended to 
gradually establish a free trade area among the 14 FICs. PICTA entered into force in 2003 after six 
FICs ratified it; Vanuatu signed the Agreement in 2001, ratified it in 2005, and it entered into force 
on 21 July 2005. Am endments to PICTA have been agreed but have not entered into force through 
formal acceptance by all parties.13 PICTA  covers trade in goods, with the exception of alcohol and 
tobacco products, government procurement rules, dangerous goods such as explosives, and other 
restrictions to protect human or animal health.  
2.25.   Under PICTA, its members are to eliminate tariffs on in tra-regional trade by 2021. Tariffs on 
"non-excepted" goods were to be removed by 2017 (2021 for LDCs including Vanuatu); and tariffs 
on "excepted products" (i.e. goods on a negative list) by 2021. For Vanuatu, the excepted 
products concern 18 tariff lines  (HS eight -digit level): meat and edible offal; birds eggs; canned 
beef; fruit juices; ice cream; paints and varnishes; pigments used to manufacture paint, and dyes; 
some fibreglass tanks; toilet paper; fibreglass boats; wooden furniture; plastic furniture ; and 
prefabricated buildings. Among them, 14 lines are subject to ad valorem  tariff rates, ranging from 
25% to 50%; and 4 lines are subject to non -ad valorem  tariff rates (VT 350/litre).14 The 
authorities state that, apart from the list of "excepted goods" , tariffs on other goods originating in 
PICTA countries enter Vanuatu duty free.  
2.26.   FICs are encouraged to convert specific tariffs to ad valorem  rates by the start of the 
scheduled reductions. Any remaining non -ad valorem  duties were to be phased out by 2017 . Trade 
barriers other than tariffs, such as quotas, must be eliminated immediately on trade between the 
FICs.15 The authorities state that Vanuatu has converted all specific duties to ad valorem  duties, 
and it does not impose any import quotas.  
2.27.   Under the P ICTA framework, negotiations on trade in services were completed in 2012 when 
12 of the 14 FICs signed a Services Protocol, which has not yet entered into force. The Protocol 
                                                
13 WTO notification WT/COMTD/N/29 , 17 September 2008.  
14 WTO document WT/ACC/VUT/17, Annex 1, 11 May 2011, p.48. 
15 Pacific Islands Forum Secretariat online information. Viewed at: https://www.forumsec.org/ . WT/TPR/S/378 • Vanuatu  
 
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  stipulates that parties will provide each other with preferential treatment in tr ade in services, in 
the areas of professional, telecommunications, construction, financial, tourism and transportation 
services. Vanuatu participated in the negotiation, but has not ratified the amendments on the 
Protocol.  
2.28.   All MSG Trade Agreement members are signatories to PICTA. Under PICTA, the signatories 
are allowed to continue to reduce barriers among themselves at a faster pace than is provided 
under PICTA.  
2.3.2.1.3   PACER and PACER Plus  
2.29.   In August 2001, the Pacific Agreement on Closer Economic Relations (PACER) was signed, 
and it entered into force in August 2002. PACER is open to any Pacific Island country or territory, 
and it is an umbrella agreement  between members of the Pacific Island  Forum (PIF) and Australia 
and New Zealand. PACER provides a framework for the development of trade cooperation and 
gradual integration, to facilitate the PIF economies to gradually become part of a single regional 
market.  
2.30.   In September 2017, Vanuatu signe d PACER Plus, an FTA involving Australia, New Zealand 
and Pacific Island countries. PACER Plus , which has not entered into force, is a reciprocal RTA and 
is to replace SPARTECA , a non-reciprocal  agreement . PACER Plus covers trade in goods, trade in 
service s, investment, labour, SPS measures, aid and other issues. The non -LDC signatories were 
to start reducing tariff rates from 2017 and must lower their tariff rates to zero by 25 years after 
2017. LDCs in the region, i.e. Kiribati, Solomon Islands, Tuvalu, a nd Vanuatu, have a delayed 
timetable for tariff reductions: they commence lowering their tariffs from 2028, unless the country 
graduates from LDC status.  
2.3.3   Other agreements and arrangements  
2.31.   Vanuatu is also a beneficiary of a number of non-reciprocal prefere ntial trade arrangements . 
It benefits from GSPs from Australia, Canada, the European Union, Iceland, Japan, Kazakhstan, 
New Zealand, the Russian Federation, Switzerland, Turkey, and the United States. As an LDC, it 
also benefits from duty -free treatment fr om Chile; China; India; Korea, Republic of; 
Kyrgyz  Republic; Chinese Taipei; Tajikistan; and Thailand.16 The EBA Agreement had resulted in 
some exports from Vanuatu to the EU market, notably of coconut oil.17  
2.32.   In addition, under SPARTECA, a non -reciprocal tr ade agreement entered into force in 1981 ; 
Australia and New Zealand provide duty -free and quota -free access to all products  originating in 
the 14 FICs, except sugar in the case of Australia. SPARTECA also includes provisions for economic 
and technical coop eration, and safeguard provisions relating to dumping and subsidies and 
suspension of obligations. Rules of origin generally require at least 50% of the product's total 
factory cost to be from SPARTECA parties.  
2.33.   However, unilateral tariff reductions in Aust ralia and New Zealand may lead to erosion of 
tariff preferences, and hence the declined relevance and importance of SPARTECA on exports from 
Vanuatu. The authorities indicate that Vanuatu has not actively utilized the SPARTECA preferences.  
2.34.   Vanuatu joined the PIF in 1982. This is an inter -governmental organization that aims to 
increase sustainable regional trade (goods and services) and investment to promote pro -poor 
economic growth by lowering trade barriers, including both physical barriers (e.g. borders)  and 
technical barriers (e.g. quarantine, import taxes and passport requirements).  
2.35.   Vanuatu has signed technical cooperation agreements with Fiji and Papua New Guinea, a 
technical aid cooperation agreement with New Caledonia, and an Agreement on Economic an d 
Technical Cooperation with China. The Australia -Vanuatu Partnership Development Agreement was 
signed in 2009.18  
                                                
16 WTO online information. Viewed at: http://ptadb.wto.o rg/Country.aspx?code=548 . 
17 WTO document WT/ACC/VUT/17, Annex 1, 11 May 2011, p.29.  
18 WTO document WT/ACC/VUT/17, Annex 1, 11 May 2011, p.29.  WT/TPR/S/378 • Vanuatu  
 
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  2.4  Investment Regime  
2.4.1   Business licence  
2.36.   Legislation regulating the business environment includes the Business Licence Act, the 
Vanuatu Foreign Inve stment Promotion Act, the Industrial Development Act, and the Labour 
(Work  Permit) Act.19  
2.37.   The Business Licence Act defined 11 classes of business licences , and a number of 
sub-categories within these classes (Table 2.4). Vanuatu has no special category of business 
licence for franchising, although its legislation does not prohibit local or foreign participation in 
franchising. Licensing authorities include the Director of Customs and Inland Revenue, provincial 
governme nts, and the Minister of Finance.20 Exporters of goods do not require business licences.  
Those who import goods, re -assemble and repackage them for export require a business licence.  
Table 2.4 Selected categories of business licences  
Category  Description  Fee  
Category D1  Importers licence:  
Required for direct importation for resale (without 
transformation), wholesale or retail , including acting as 
agent in buying or selling of any merchandise to other 
businesses.  Annual fee VT 10,000 
(US$100)  
Category D2  Retailer or wholesaler licence:  
Required for wholesalers or retailers, excluding open -air 
vendors and mobile shops  Annual fee ranges from 
VT 20,000 (US$200) to 
VT 1 million (US$10,000), 
depending on the gross 
turnover of the business.  
An additional VT 100,000 
(US$1,000) was levied on 
every non -citizen principal or 
partner engaged in category 
D2 business.  
Non-citizens and non -resident 
foreign investors pay an 
additional annual fee of 
VT 100,000 (US$1,000) for 
the processing of the 
investment application.  
Category D5  Licence required for open -air vendors and mobile shops   
Category B  Licences required for manufacturing industries and trade:  
Required for the importation of materials and supplies 
used for manufacturing without a D1 licence.  
These enterprises are also allowed to sell their output, 
wholesale or retail, without a D2 licence, but only through 
one outlet – at the business headquarter s or adjacent 
premises.   
Source:  WTO document WT/ACC/VUT/17, 11 May 2011.  
2.38.   The Business Li cence Act was amended in 2010 and became the Business Licence 
(Amendment) Act. In accordance with the amended Act, a new category of business licence was 
issued to allow holders to engage in the import and export of goods without engaging in 
manufacturing or wholesale/retail (distribution).  
2.39.   Business licence fees are charged according to the type of business activity and the turnover 
of the business. Fees are exempted for: artists and sculptors; planters, farmers, dairy farmers, 
market and other gardeners, s tock-breeders, and vegetable and fruit hawkers; and fishermen, if 
the business gross turnover is less than VT 10 million. The following businesses are also exempted 
from the fee: export; credit unions registered under the Credit Union Act; religious missio ns; 
                                                
19 Other relevant legislation includes the Immigration Act, the Vanuatu National Provident Fund Act, and 
the Compan ies Act.  
20 Customs online information. Viewed at: https://customsinlandrevenue.gov.vu/index.php/en/inland -
revenue/rates -taxes/business -license . WT/TPR/S/378 • Vanuatu  
 
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  teachers and professors in schools and institutions not conducted for profits; non -profit clubs; and 
charitable organizations.  
2.40.   The licence is valid for one year, renewable before 31 January of the following year. 
Renewal of approval from the Vanuatu I nvestment Promotion Authority (VIPA) is required for 
non-citizens. Any foreign investor wishing to invest in Vanuatu must obtain a certificate from VIPA, 
and a certificate of business name or a certificate of incorporation from the Vanuatu Financial 
Servic e Commission (VFSC), before applying for a business licence issued by the Department of 
Customs and Inland Revenue ( Section 2.4.2 ). 
2.41.   According to the Industrial Development Act No. 19 of 2014, industrial undertakings and 
internationally traded services in V anuatu may be exempted from import tariffs , once they have a 
valid Industrial Permit. To apply, businesses must: obtain a certificate issued by VIPA and a 
Manufacturing Business Licence (Category B) from the relevant authorities; register with the 
VFSC; an d pay a fee of VT 2,000. Once all the requirements are met, the Department of Industry 
may issue a permit which is valid for five years.  
2.42.   The issuance of work permits is regulated under the Labour (Work Permit) Act,  which 
contains a list of professions reserved for Ni -Vanuatus, such as able seaman/ordinary seaman; 
bricklayer; bus driver; clerical supervisor; dock worker; driver; hotel receptionist; housemaid; 
lorry or van driver; mason; painter; portable saw -miller; receptionist; street vendor; typist and 
waitress/waiter.  
2.4.2   Foreign direct investment (FDI)  
2.43.   Fostering an open, transparent and conducive national policy environment for investment 
and promoting coherence in national and international investment policy is Van uatu's key policy 
objective regarding FDI.21 
2.44.   Legislation currently in force concerning FDI in Vanuatu is the Foreign Investment 
Promotion Act, which entered into force in 2010. VIPA, established in 1998, became a statutory 
body in 2008 under the Ministry of  Tourism, Trade, Commerce, Industry and Ni -Vanuatu Business. 
VIPA aims to facilitate, promote and foster foreign investment in Vanuatu. It was established as an 
institution aimed at developing guidelines to promote FDI with a view to improving private sect or 
growth and employment.22 It both promotes and regulates FDI inflow in Vanuatu through the 
registration of new and existing foreign investment. It is a liaising body between the Government 
and the private sector and other relevant agencies.  
2.45.   In addition to the Foreign Investment Promotion Act, investors in some services sectors  are 
also subject to legislation regulating these individual sectors (Section 4.3).  
2.46.   Foreign investment is open for most activities other than those on the Reserved and t he 
Prohibited lists (Tables 2.5 and 2.6). For activities open to foreign investment, there are no foreign 
investment equity restrictions . 
Table 2.5 Business activities reserved only for Ni -Vanuatu citizens  
Reserved sectors  
Trade  
Export of sandalwood in stick and chip form, harvested from natural forest s 
Local trading of sandalwood, harvested from natural forest s 
Export of seeds and other minor forest products, harvested from natural forest s 
Second hand clothing shops  
Export of kava in root, chip and stick form  
Manufacturing  
Manufacture of handcraft s and artefacts  
Services  
Kava bars  
                                                
21 VIPA online information. Viewed at: http://www.investvanuatu.org/wp/investing/government -
support/ . 
22 VIPA online information. Viewed at: http://www.investvanuatu.org/wp/aboutvipa/our -history -
achievements/ . WT/TPR/S/378 • Vanuatu  
 
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  Reserved sectors  
Open -air vendors, door -to-door sales, and mobile shops  
Road transport operators – the provision of any taxi or bus service, including airport road transfers and any 
other road transport service involving the guest of a hotel or other accommodation business  
Private security services including security guards  
Electricians and electro -technicians  
Residential building and construction  
Commercial cultural feasts  
Fishing  
Commercial fishing in Vanuatu's inshore waters as defined by the Maritime Zones Act (i.e. archipelagic waters 
including the first six nautical miles from land)  
Other  
Small scale  production of sawn timber from natural forest s using a portable sawmill (i.e. can be physically 
moved from one location to another in the forest)  
Source:  Information provided by the authorities.  
2.47.   Some business activities are open to foreign investors only  as long as the operation is 
sufficiently large. Foreign investment in these sectors are allowed if the investor is able to 
demonstrate over time that they exceed the specified minimum threshold.  
Table 2.6 Reserved activities open to foreign investment above a minimum threshold  
Activity  Minimum threshold  
Tourism   
Tour agent (business that sells tourism services)  Annual turnover of VT 20 million  
Tour operator (business that packages two or more 
travel services into a single product for the 
consumer, i.e. transport, accommodation, meals, 
entertainment, sightseeing)  Investment of VT 20 million  
Guest house (business that provides simple 
accommodation using private or semi -private rooms 
and offers limited guest services)  50 beds or 10 rooms or annual sale turnover of 
VT 20 million  
Bungalows (business that provides island -style 
accommodation in detached or semi -detached 
dwellings)  Annual turnover of VT 30 million  
Hotels and motels (business that provides 
accommodation using private rooms and offers 
amenities such as food, alcohol and other guest 
services)  Investment of VT 10 million, or annual turnover of 
VT 20 million  
Other services   
Retail shops including general merchandise trading 
shops (excluding speciality shops)  Annual  turnover of VT 30 million  
Coastal shipping (excluding vessels that exclusively 
provide transport to foreign tourists)  Vessel size with carrying capacity of 80 tonnes  
Other professional or business service   
Real estate agent s; property managers; land and 
property developers; legal practitioners; accounting 
practitioners; engineering practitioners and services; 
architectural practitioners and services; surveyors 
and draftsmen; core drilling, assaying geological and 
prospecting support services; business and financial 
services and consultants; book keeping services; 
management services and consultants; advertising 
and marketing services and consultants; 
photocopying and duplicating services; typing and 
secretarial services; langu age translation and 
interpreting services; business security and 
protective services; debt collection and credit rating 
services; and other business and administrative 
services and agencies  Annual turnover of VT 5 million  
Source:  Information provided by t he authorities.  
2.48.   The authorities are in the process of developing a National Investment Policy  with a view to  
ensur ing coherence in existing and future sector al policies . VIPA has conducted reforms to improve 
FDI inflows into Vanuatu. For example, in 2016, it removed the VT 5 million bank confirmation 
requirement for investors. In the same year, it also implemented a five -year Foreign Investor 
Approval Certificate  (FIAC) that complements the five -year residency ap proval for an investor by WT/TPR/S/378 • Vanuatu  
 
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  the Department of Immigration. The VIPA application fee was increased from VT 25,000 to 
VT 120,000.  
2.49.   All land belongs to the indigenous population of Vanuatu. The Constitution stipulated that no 
land in Vanuatu can be owned by a fo reigner. Foreigners have the right to lease land for a period 
of 75 years, in accordance with the Land Lease Act [CAP. 163]. A "subsidiary land rent payment" 
of 2-4% of gross annual turnover, paid to the custom landowners, applies to tourism leases.  
2.50.   The F oreign Investment Promotion Act sets out procedures for foreign investors to conduct 
businesses in Vanuatu (Chart 2.1).  
Chart 2.1 Registration process  
 
Source:  Information provided by VIPA.  
2.51.   Applicants must submit their application in writing to VIPA, with the following information:  
a. details of the investor(s);  
b. proposed investment and its location;  
c. type of business licence required;  
d. amount and source of capital expenditure to be incurred;  
e. projected return on the investment during the first three years; and  
f. expected employment to be generated during the first three years of operation.  
2.52.   The time and fees required are different for each step in the process (Table  2.7). 
Source:  Information provided by the VIPA.Chart 2.[registration process]
VFSC
Apply for a VIPA FIACVIPA
Department of Customs Department of LabourDepartment of
Immigration
Register for a 
business/company nameApply for a 
residency permit
Vanuatu National 
Provident FundDepartment of Customs
Register the
company and employeesRegister for 
VATObtain a
business licenceApply for a work
permit for foreign workersWT/TPR/S/378 • Vanuatu  
 
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  Table 2.7 FDI investment procedure  
Procedure  Time to 
complete  Associated cost  
FIAC 15 days  VT 120,000  
Company incorporation  3-5 days  Based on authorized share capital:  
- Greater or equal to VT  30,000 if the 
authorized share capital  is VT 35 million or 
less; 
- less than or equal to VT 250,000 if the 
authorized share capital is VT 300 million  
Residency permit  5 days  VT 57,600 per year  
Work permit  5 days  VT 210,000 per year  
Business licence  1-2 days  Greater or equal to VT 20,000 per business 
category if  the earnings are less than 
VT 10 million per year  
VAT registration  2–3 days  No fee  
Registration with the National Provident 
Fund 3-4 days  No fee  
Source:  Information provided by the authorities.  
2.53.   VIPA is governed by a Board of Directors, which makes the overall decisions to approve 
investment application proposals. The Board evaluates the application, and may require the 
investor to submit an environment impact assessment. If a foreign investment proje ct requires 
leasing land, a certificate to negotiate issued by the Minister of Lands will be needed, with which 
applicants may negotiate for a lease on a plot of custom land.  
2.54.   The length of stay allowed for foreigners with a residency permit is linked to i nvestment in 
Vanuatu:  
a. An investment of VT 5 million (US$50,000) entitle s the foreign investor to a one -year 
residenc y permit;  
b. A higher initial investment, and an undertaking to maintain the investment at this level, 
ensure s the foreign investor a longer r esidenc y permit;  
c. A maximum -length (15 years) residenc y permit is issued to foreigners having invested 
more than VT 100 million (US$1 million), subject to annual renewal.  
2.55.   Vanuatu does not have complex investment incentive schemes. The business environment 
has the following features:23  
a. No income or company tax for residents , including foreigners;  
b. No capital gains tax;  
c. No inheritance tax;  
d. No foreign exchange controls or reporting requirements regarding  the movement of 
funds;  
e. Exemptions of import tariffs on tourism, manufacturing and processing, and mineral 
exploration; and  
f. VAT levied at a rate of 15%.  
2.56.   In September 2017, an Investment Service Centre, which functions as a one -stop shop, was 
established by VIPA on a pilot basis so that investment information may be gathered in one 
location. Main government units involved in the one -stop shop service include the departments of 
                                                
23 VIPA online information. Viewed at: http://www.investvanuatu.org/wp/investing/t ax/. WT/TPR/S/378 • Vanuatu  
 
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  Immigration and Labour, and the Vanuatu Tourism Office.24 The authorities indicate that much 
work and effo rt are needed for this service centre to be fully functional.  
2.57.   Vanuatu ranks 90th out of 190 economies on the World Bank's Ease of Doing Business Index 
in 2018.25 It ranks high in getting credit (29th) and paying taxes (57th), but low in dealing with 
constru ction permits (151st), trading across borders (143rd), enforcing contracts (135th), and 
starting a business (128th). It takes around 18 days to set up a limited liability company, involving 
seven steps and costing 44% of per capita income.  
2.58.   Vanuatu does not  have any bilateral or regional investment promotion or protection 
agreements.26 Vanuatu has not signed any double taxation avoidance treaties (DTAs) as the 
country applies no income tax. Disputes may be resolved through either the mediation procedure 
or the legal court procedure.  
 
 
 
                                                
24 VIPA online information. Viewed at: http://www.investvanuatu.org/wp/vipa -one-stop-shop-service -
commences/ . 
25 World Bank (2017), Doing Business 2018  Vanuatu . Viewed  at: 
http://documents.worldbank.org/curated/en/953481510223151566/pdf/121108 -WP-PUBLIC -DB18 -VUT.pdf . 
26 It negotiated bilateral investment treatie s (BITs) with China (2006) and the United Kingdom (2003), 
but has not signed them.  WT/TPR /S/378 • Vanuatu  
 
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  3  TRADE  POLICIES AND PRACTIC ES BY MEASURE  
3.1  Measures Directly Affecting Imports  
3.1.1   Customs procedures, valuation, and requirements  
3.1.  All imported goods are subject to customs control. I mporters are required to register in 
ASYCUDA World, where they are assigned a customs  identification number (CIN) . Foreign 
companies or individuals can apply for a CIN. Imported goods must be accompanied by: an import 
declaration, the commercial invoice, a packing list, shipping documents (airway bills or bills of 
lading), and an import pe rmit or licence if applicable. An import declaration is required for all 
imports above VT  10,000. The declaration can be submitted electronically; the fee is VT 1,000 per 
declaration.  Vanuatu does not require pre -shipment inspection.  
3.2.  Most imports arrive by  sea. Customs duties and internal taxes are collected by Customs and 
Inland Revenue  (CIR), which has  offices in Port Vila , Luganville a nd all provincial centre s. The CIR 
has a total  of 90 staff. The use of a licensed customs broker is not mandatory. Howeve r, according 
to the authorities, in practice, only customs brokers and licenced personnel have access to the 
electronic system.  There are 15  customs brokers in Vanuatu, most of whom are located in Port 
Vila.  
3.3.  The CIR maintains an electronic risk management  system to identify high -risk shipments. 
Under these procedures, imports are assigned to one of three risk levels: red, yellow , or green. 
The level of risk is determined by the type of product, the country of origin, and past records of 
the importer.  Updat es to the system are made on a quarterly basis.  
3.4.  Shipments classified as high risk (red) are subject to physical examination and documentary 
review. Medium -risk shipments (yellow) are subject to documentary review. Low -risk shipments 
(green) are not subject  to physical examination or documentary review, unless randomly selected. 
About 26% of consignments are directed to the red channel, and another 26% to the yellow 
channel , while 48% are allocated to the green channel. The authorities indicate that an incre ase in 
the share of the green channel is a policy objective.  
3.5.  All importers, customs brokers and manufacturers may apply to the CIR  for an advance  
ruling on the classification of goods, the applicability of an exemption or concession, the country of 
origin of particular goods, or the valuation rule to apply to particular goods.  A fee of VT  5,000 is 
payable for each application.  A ruling is issued by the CIR within 40 days of the date of receipt of 
the request . For perishable goods, quick -release provisions can also apply.  
3.6.  According to the authorities, the average time for customs clearance is three days and seven 
hours, as shown by a time release study carried out in 2017. The authorities indicate that a 
number of steps have been taken since then to reduce r elease times, including the inauguration of 
a new wharf and the introduction of ASYCUDA World, and that a new time release study is planned 
for 2018.  
3.7.  Vanuatu adopted the Import Duties (Consolidation) (Amendment) Act of 2013 No. 29 to give 
effect to the WT O's Customs Valuation Agreement. The Act has not yet been notified to the WTO. 
In principle, the primary method of valuation is the transaction value of the imported goods; when 
necessary, recourse to alternative methods follows the hierarchy set out in th e WTO Customs 
Valuation Agreement. The dutiable value of all imports is the sum of the purchase cost and all 
expenses incurred for transport, insurance and freight up to the point of entry into Vanuatu. The 
authorities indicate that stand -alone legislation  on customs valuation is planned.  
3.8.  In May 2014, Vanuatu benefitted from a WTO seminar to assess its needs with regards to 
trade facilitation and to help determine its category A commitments. Vanuatu notified its category 
A, B and C commitments in January 2 018.1 Of its commitments under the Trade Facilitation 
Agreement (TFA), 12  are in category A, 12 in category B, and 12 in category C. As at March 2018, 
Vanuatu had not ratified the TFA.  Pursuant to Article 195 of the Customs Act, decisions by customs 
may be  appealed to a Customs Appeal tribunal within 30 days of receiving the administrative 
                                                
1 WTO document G/TFA/N/VUT/1, 10 January 2018.  WT/TPR/S/378 • Vanuatu  
 
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  decision. The authorities indicate that, as at mid -2018, no formal appeal procedures were in place, 
but that the drafting thereof is underway.  
3.1.2   Rules of origin  
3.9.  Vanuatu doe s not maintain non -preferential rules of origin. As a party to the MSG Trade 
Agreement, the PICTA , and PACER Plus , Vanuatu applies preferential rules of origin.  
3.10.   Goods containing inputs from non -MSG countries qualify for MSG preferences if they have 
been " sufficiently worked or processed". This criterion is met when the goods are classified under a 
different four -digit tariff heading from their non -MSG inputs.  
3.11.   Under PICTA, goods containing non -PICTA  inputs must have been "substantially 
transformed" to qualify for preferential treatment. Substantial transformation occurs when the final 
manufacturing process occurs in the exporting PICTA country, with at least 40% of material, 
labour, and overhead cost s incurred in that country.  
3.12.   Under PACER Plus, the good must undergo  a change of  tariff classification , or at least 40 % 
of value -adding must take  place within the PACER Plus membership, with the last process of 
production taking place in a PACER Plus  membe r.  
3.13.   To qualify for preferential treatment, importers must submit to Customs a certificate of 
origin issued by the competent authority of the exporting country.  
3.1.3   Tariffs  
3.1.3.1   Applied MFN tariffs  
3.14.   Vanuatu grants at least MFN tariff treatment to all its trading par tners.  
3.15.   The 2018 tariff schedule comprises 5,502 tariff lines at the eight -digit level (Table 3.1). The 
tariff nomenclature is based on the Harmonized Commodity Description and Coding System 
(2017). The only non -ad valorem  tariff rates concern two tariff li nes at the eight -digit level (light 
oils and preparations) and involve specific duties; ad valorem  equivalents (AVEs) were provided by 
the authorities. The simple average applied MFN rate increased slightly during the review period, 
from 9.2% in 2012 to 9. 3% in 2018, mainly due to the transposition to HS 2017. Vanuatu does 
not apply seasonal or variable tariffs, or tariff quotas. Tariffs apply on the c.i.f. value of goods.  
Table 3.1 Summary analysis of Vanuatu' s MFN tariff, 2018  
 Number 
of lines  Average 
(%) Range 
(%) Coefficient 
of 
variation  Duty 
free 
(%) 
Total  5,502  9.3 0-75 1.0 26.0 
HS 01 -24 996 17.2 0-75 0.7 8.2 
HS 25 -97 4,536  7.6 0-55 1.0 29.8 
By WTO category       
WTO agricultural products  768 16.9 0-75 0.8 10.9 
 Animals and products thereof  117 19.5 0-30 0.5 4.3 
 Dairy products  22 14.5 5-15 0.1 0.0 
 Fruit, vegetables, and plants  212 22.6 0-30 0.4 7.1 
 Coffee and tea  24 23.3 15-30 0.3 0.0 
 Cereals and preparations  91 7.5 0-30 1.0 31.9 
 Oils seeds, fats, oil and their products  83 6.6 0-10 0.5 14.5 
 Sugars and confectionary  17 10.0 10-10 0.0 0.0 
 Beverages, spirits and tobacco  58 37.0 0-75 0.5 3.4 
 Cotton  5 10.0 10-10 0.0 0.0 
 Other agricultural products, n.e.s.  139 10.5 0-30 0.9 15.1 
WTO non -agricultural products  4,734  8.0 0-55 0.9 28.5 
 Fish and fishery products  265 15.4 0-30 0.3 3.4 WT/TPR /S/378 • Vanuatu  
 
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   Number 
of lines  Average 
(%) Range 
(%) Coefficient 
of 
variation  Duty 
free 
(%) 
 Minerals and metals  907 7.4 0-25 0.8 29.2 
 Chemicals and photographic supplies  939 5.3 0-30 1.2 35.3 
 Wood, pulp, paper and furniture  286 12.1 0-30 0.7 21.0 
 Textiles  590 7.5 0-20 0.5 1.9 
 Clothing  224 15.4 15-30 0.2 0.0 
 Leather, rubber, footwear and travel goods  155 7.8 0-30 0.9 27.7 
 Non-electric machinery  539 3.3 0-25 1.6 63.8 
 Electric machinery  262 9.8 0-15 0.6 17.9 
 Transport equipment  171 9.7 0-40 1.0 37.4 
 Non-agricultural products, n.e.s.  380 9.5 0-55 1.3 45.5 
 Petroleum  16 8.1 0-38 1.2 6.3 
By ISIC sector       
 ISIC 1 - Agriculture, hunting and fishing  401 15.0 0-55 0.8 14.5 
 ISIC 2 - Mining  96 3.3 0-15 0.9 38.5 
 ISIC 3 - Manufacturing  5,004  8.9 0-75 1.0 26.7 
 Manufacturing excluding food processing  4,394  7.7 0-55 1.0 29.6 
 ISIC 4 - Electricity  1 0.0 0-0 0.0 100.0  
By stage of processing       
 First stage of processing  770 11.4 0-55 0.9 22.1 
 Semi-processed products  1,808  6.4 0-30 0.8 21.8 
 Fully processed products  2,924  10.5 0-75 0.9 29.7 
By HS section       
 01 Live animals and products  379 15.6 0-30 0.5 5.3 
 02 Vegetable products  310 17.9 0-30 0.7 12.3 
 03 Fats and oils  48 6.5 0-10 0.7 29.2 
 04 Prepared food, beverages and tobacco  229 21.1 0-75 0.6 3.1 
 05 Mineral products  158 3.1 0-38 1.4 47.5 
 06 Chemicals and products thereof  869 5.1 0-30 1.1 30.7 
 07 Plastics, rubber, and articles thereof  215 8.1 0-30 1.0 33.5 
 08 Raw hides and skins, leather, and its products  69 4.1 0-15 1.6 72.5 
 09 Wood and articles of wood  122 14.7 0-30 0.3 5.7 
 10 Pulp of wood, paper and paperboard  143 8.0 0-30 0.8 35.0 
 11 Textiles and textile articles  809 9.5 0-30 0.5 0.1 
 12 Footwear, headgear, etc.  47 14.7 0-15 0.1 2.1 
 13 Articles of stone, plaster, cement  143 11.8 0-25 0.4 11.2 
 14 Precious stones and metals, pearls  53 4.9 0-20 1.8 75.5 
 15 Base metals and articles thereof  565 7.7 0-20 0.7 25.7 
 16 Machinery, electrical equipment, etc.  802 5.5 0-25 1.2 48.5 
 17 Transport equipment  182 9.7 0-40 1.0 37.9 
 18 Precision equipment  210 4.5 0-15 1.5 67.1 
 19 Arms and ammunition  18 52.8 15-55 0.2 0.0 
 20 Miscellaneous manufactured articles  124 13.7 0-30 0.7 18.5 
 21 Works of art, etc.  7 0.0 0-0 0.0 100.0  
Note:  Including AVEs for two specific rates under petroleum oils.  
Source : WTO Secretariat calculations, based on data received from the authorities.  
3.16.   The coefficient of variation is 1.0, reflecting a relatively low degree of uniformity among 
rates (Table 3.2). The average applied tariff for agriculture (WTO definition) is 16.9%, higher than 
the average for non -agriculture (8.0%). Average tariffs are low est on non -electric machinery 
(3.3%), and highest on beverages, spirits and tobacco (37%).  
3.17.   26% of all tariff lines are duty free. Around 24% of all tariff lines carry an MFN rate of 5%, 
some 16% have a rate of 10%, and around 23% have a rate of 15% (Chart  3.1). The highest 
ad valorem  rates, of 75%, 55%, and 40%, apply on 56 tariff lines comprising tobacco products WT/TPR/S/378 • Vanuatu  
 
- 34 - 
 
  and alcoholic and non -alcoholic beverages. Tariff escalation exists between semi -processed and 
fully processed goods.  
3.18.   Income derived from import s is an important part of government revenue; in 2017, the 
combined share of tariffs and VAT on imports was equivalent to 47% of total fiscal revenue.  
Table 3.2 Structure of Vanuatu's tariff  
 2012  2018  Final bounda 
Total number of tariff lines  5,087  5,502  5,502  
Simple average rate (%)  9.2 9.3 40.2 
 HS 01 -24 18.3 17.2 48.5 
 HS 25 -97 7.6 7.6 38.4 
 WTO agricultural products  17.7 16.9 43.6 
 WTO non -agricultural products  7.9 8.0 39.6 
Duty free tariff lines (% of all tariff lines)  25.9 26.0 3.3 
Simple average of dutiable lines only  12.4 12.5 41.5 
Tariff quotas (% of all tariff lines)  0.0 0.0 0.0 
Non-ad valorem tariffs (% of all tariff lines)  0.02b 0.04b 0.0 
Domestic tariff peaks (% of all tariff lines)c 6.0 5.7 0.02d 
International tariff peaks (% of all tariff lines)e 11.1 11.2 96.4 
Nuisance applied rates (% of all tariff lines)f 0.0 0.0 0.0 
Coefficient of variation  1.0 1.0 0.3 
Note:  2012 and 2018 tariff schedules are based on HS07 and HS17 nomenclature, respectively.  
a Final bound rates are based on the 2017 tariff schedule. All tariff lines are bound.  
b In 2012 and 2017, one and two tariff lines under Chapter 27 are specific, respectively. AVEs were 
provided by the authorities and are inclu ded in the calculations.  
c Domestic tariff peaks are defined as those exceeding three times the overall simple average applied 
rate. 
d One tariff line (certain grape must) is bound at 210%.  
e International tariff peaks are defined as those exceeding 15%.  
f Nuisance rates are those greater than zero, but less than or equal to 2%.  
Source:  WTO calculations, based on data provided by the authorities.  
Chart 3.1 Distribution of MFN tariff rates, 2012 and 2018  
(Number  of tariff lines)  
 
Note:  Excluding one and two specific rates, respectively, for 2012 and 2018. The 2012 tariff is based on  
the HS07 nomenclature; the 2018  tariff is based on HS17. Figures in brackets refer to the 
percentage of total lines.  
Source:  WTO Secretariat calculations, based on data provided by the authorities.  
(25.9%)
(24.5%)
(17.6%)(21.0%)
(4.6%) 
(0.5%)(5.0%)
(0.5%) (0.5%)(0.1%)(26.0%) 
(23.8%)
(16.1%)(22.9%)
(4.8%)
(0.6%)(4.7%)
(0.5%) (0.4%) (0.1%)
02004006008001,0001,2001,4001,600
Duty free 5% 10% 15% 20% 25% 30% 40% 55% 75%Number of tariff linesChart 3.2  Distribution of MFN tariff rates, 2012 and 2018
MFN 2012
Total number of lines:  5,087MFN 2018
Total number of lines: 5,502
Note:  Excluding oneand two specific rates, respectively for 2012 and 2018 .    2012 tariff is based on HS07 nomenclature; 2017 tariff 
is based on HS17.  Figures in brackets refer to the percentage of total lines.
Source:  WTO Secretariat calculations, based on data provided by the authorities.WT/TPR /S/378 • Vanuatu  
 
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  3.1.3.2   Tariff bindings  
3.19.   Vanuatu has bound all of its tariff lines, mostly at rates of 35% (20% of all tariff lines), 40% 
(63% of tariff lines) or 60% (10% of tariff lines). The average final  bound rate is 40.2%. 3.3% of 
tariff lines are bound at 0%. The average final bound tariff for agriculture (WTO definition) is 
43.6%, higher than the average for non -agriculture (39.6%).  
3.20.   In general, applied tariff rates are within their bound rates. For th ree tariff lines, however, 
the applied rates exceed their bindings (Table 3.3).  
Table 3.3 Products for which applied rates exceed bound rates, 2018  
HS code  Product description  MFN rate  Bound rate  
02071410  Chicken wings, cuts and offal, fresh or chilled  30% 20% 
29397100  Alkaloids, natural or reproduced by synthesis, and their salts, 
ethers, esters and other derivatives – cocaine, ecgonine, 
levometamfetamine, metamfetamine (INN), metamfetamine 
racemate , salts, esters and other derivatives thereof  5% 0% 
29397900  Alkaloids, natural or reproduced by synthesis, and their salts, 
ethers, esters and other derivatives – other  5% 0% 
Source:  Data provided by the authorities.  
3.21.   Vanuatu has bound other duties and charges at zero.  
3.1.3.3   Preferential tariffs  
3.22.   Vanuatu applies preferential tariffs to other members of the MSG, where almost all goods 
originating fro m the other MSG Members (Fiji, Papua New Guinea  and Solomon Islands) are duty 
free. Exception s to this include: al l products under HS22 (beverages, spirits and vinegar) except 
items classified under HS2201, 2202, and 2209; all products under HS24 (tobacco and 
manufactured tobacco substitute s); all products under HS27 (mineral fuels, mineral oils and 
products of their distillation, and bituminous mineral waxes), and cane sugar (HS1701  1300 and 
1701 1400 ).  
3.1.3.4   Tariff exemptions and concessions  
3.23.   Part 2(A) of the Annex to the Import Duties (Consolidation)  (Amendment) Act No. 33 of 
2014 lists the goods that are eligible for imp ort tariff and VAT concessions. Tariff concessions are 
available for goods imported for disabled persons, and medical supplies. Pursuant to Part 2(B) of 
the Annex, tariff and VAT concessions are also available for commercial samples. Furthermore, raw 
mater ials for the manufacture of approved goods, and equipment used to establish a new 
manufacturing enterprise, can be imported tariff -free. Various institutions listed in Part 3 of the 
Annex are also exempt from paying tariffs and VAT on imports, including th e Red Cross, registered 
churches, and youth organizations such as the scouts.  
3.24.   In the case of natural disasters, t he Director of Customs, upon the suggestion of the 
National Disaster Management Office , may grant  duty exemption s to certain  tariff lines, prov ided 
that the goods are for disaster relief, are  funded by foreign states or international organizations , 
and are intended for free distribution for use in declared disaster areas . According to the 
authorities, this was the case, for example, after Cyclone  Pam struck in March 2015.  
3.25.   Revenue forgone (including VAT and excise tax) due to exemptions and concessions 
amounted to VT 1 billion in 2013, VT 1.5 billion in 2014, VT 4 billion in 2015 (when Cyclone Pam 
struck), and VT 3.8 billion in 2016.  
3.1.4   Other charges affecting imports  
3.26.   VAT of 15% applies on all goods and services, unless they are exempt or zero -rated. Until 
December 2017, the VAT rate had been 12.5%. The tax applies to imported and domestically 
produced goods alike. On imports, VAT applies on the c.i.f.  value of goods plus customs duties. 
VAT on imported goods is payable at the same time as customs duties. Imports are not charged WT/TPR/S/378 • Vanuatu  
 
- 36 - 
 
  VAT if they are valued at VT 10,000 or less. The income threshold for companies or individuals 
paying VAT is VT 4 million.  
3.27.   The following goods and service are exempt from VAT : financial services, donated goods 
and services sold by non -profit organi zations, residential rental accommodation, and property that 
has been used for residential rental accommodation for at least five years. 
3.28.   The VAT zero rate applies to the international transportation of passengers and goods, and 
goods or services supplied for approved aid projects.  
3.29.   Excise duties apply to alcoholic and certain non -alcoholic beverages, tobacco products, and 
certain firearm s (Table 3.4). In addition, all vehicles are subject to a  Vehicle Registration Fee , 
which  is 7% of the r etail price excluding VAT, import duty, and road tax . 
Table 3.4 Excise duties, 2018  
Product  HS Code  Excise duty rate  
Waters containing added sugar or 
sweetening matter, or flavoured  2202.10.00  VT 50/litre  
Non-alcoholic beer  2202.91.00  VT 50/litre  
Beer made from malt, less than 
10% by volume of alcohol  2203.00.10  VT 140/litre  
Beer made from malt, 10% by 
volume of alcohol or more  2203.00.20  VT 300/litre  
Wine of fresh grapes  22.04  VT 300/litre  
Vermouth and other fermented 
beverages  22.05 and 22.06  VT 300/litre  
Ethyl alcohol  22.07  VT 200/litre  
Spirits, liqueurs, and other 
spirituous beverages  22.08  VT 200/litre if less than 10% by 
volume of alcohol;  
VT 420/litre if between 10% and 
37% by volume of alcohol;  
VT 1,200/litre if more than 37% by 
volume of alcohol  
Cigars, cheroots and cigarillos,  
containing tobacco  2402.10.00  VT 18,000 per kg  
Cigarettes  containing tobacco and 
other  2402.20.00 and 
2402.20.90  VT 16 per piece  
Other manufactured tobacco and  
manufactured tobacco substitutes;  
"homogenised" or "reconstituted"  
tobacco; tobacco extracts and  
essences  24.03  VT 4,000 per kg  
Revolvers and pistols  9302.00.00  VT / 10,000 per piece  
Source:  Information provided by the authorities.  
3.1.5   Import prohibitions, restrictions, and licensing  
3.30.   Pursuant to the Customs (Prohibited Import) Regulations Order No.  115 of 2014 , the 
following items are subject to an import prohibition: (1) absinthe; (2) beef in any form originating 
from Europe, as set out under the Food (Control) Act [CAP 228] (Prohibition of Beef from Europe 
Order No. 53 of 2001); (3) copra; (4) any obscene material as described in the Obscenity Act [CAP 
73]; (5) any offensive weapon as defined in the Restriction of Offensive Weapons Act [CAP 54] of 
1969; (6) any ozone -depleting substances and synthetic greenhouse gases, as set out in the 
Ozone Layer Protection Act No. 27 of 2010; (7) wine with a false descr iption and presentation, as 
provided for in the Geographical Indications (Wine) Act [CAP 269]; and (8) various chemicals2. In 
addition, the Customs Act No . 7 of 2013 prohibits the importation of goods infringing intellectual 
property rights.  
3.31.   Certain goods are subject to import licensing (Table 3.5). The licences specify the conditions 
under which a product may be imported. Vanuatu has not notified its import licensing procedures 
                                                
2 Hydrochlorofluorocarbons , methyl bromide , bromochloromethane , hydrofluorocarbons , and 
perfluorocarbons.  WT/TPR /S/378 • Vanuatu  
 
- 37 - 
 
  to the WTO, nor has it answered the questionnaire on import licensing. No infor mation was made 
available on the cost of each permit or licence.  
Table 3.5 Import restrictions  
 Goods restricted from importation  Authority responsible for issuing 
import permit or license  
(a) Alcohol – Alcohol Importation Act [CAP 8]  Minister of Finance and Economic 
Management  
(b) Ammunition – Firearms Act [CAP 198]  Firearm Licensing Officer, Vanuatu 
Police Force  
(c) Animals and biological products - Animal Importation and 
Quarantine Act [CAP 201]  Principle Veterinary Officer  
(d) Currency or negotiable bearer instruments not less than the 
equivalent of VT  1,000,000 - Proceeds of Crime Act [CAP 284]  Financial Intelligence Unit  
(e) Dangerous Drugs Act [CAP 12]  Minister of Health  
(f) Devices and nets designed for trapping birds - Wild Bird 
(Protection) Act [CAP 30]  Director of the Department of 
Agriculture  
(g) Explosives - Explosives Act [CAP 6]  Minister of Internal Affairs  
(h) Fauna and flora - International Trade (Fauna and Flora) Act [CAP 
210] Minister of Lands  
(i) Firearms - Firearms Act [CAP 198]  Firearms Licensing Officer, Vanuatu 
Police Force  
(j) Food which is considered:   
i. injurious to health;  
ii. unfit for human consumption;  
iii. unclean, putrid, decayed or diseased  Chief Food Authority  
(k) Right-hand drive motor vehicles - Import of Motor Vehicles 
(Control) Act [CAP 221]  Minister of Internal Affairs  
(l) Pesticides - Pesticides (Control) Act [CAP 226]  Pesticides Committee  
(m) Plants and plant products - Plant Protection Act [CAP 239]  Minister of Agriculture  
(n) Whiskey or product purporting to be whiskey that has been 
stored in wood for more than three years - Immature Whiskey 
(Prohibition) Act [CAP 7]  Director of Customs  
Source:  Information provided by the authorities .  
3.1.6   Anti-dumping, countervailing, and safeguard measures  
3.32.   The Import Duties (Consolidation) (Amendment) Act of 2013 No. 29 is the legal basis for 
anti-dumping , countervailing , or safeguard  measures. The legislation has not been notified to 
WTO.  
3.33.   The designated authority responsible for the investigation is the Director of the department 
responsible for trade. The Act does not establish how dumping margins are calculated. If the 
authority has reasonable cause to suspect that there is dumping, subsidization or inc reased 
imports of the goods, it may, by a notice published in the Gazette, declare that an investigation be 
carried out. Such a notice may direct the customs authority to impose provisional payments for an 
amount and a period specified in that notice. The authority may repeal or amend the notice at any 
time, with or without retrospective effect.  
3.34.   Decisions on definite measures are taken by the Council of Ministers; they must also be 
published in the Gazette. The duration of the measure is decided by the Mini ster of Trade. For 
countervailing measures, it may not exceed five years. For anti -dumping measures, it may exceed 
five years only if a review is initiated before the expiry of the initial period that determines that 
dumping of the goods is continuing. The  initial duration of safeguard measures may not exceed 
four years; extensions up to a total duration of 10 years are possible.  
3.35.   As at May 2018, Vanuatu has never imposed any anti -dumping, countervailing or safeguard 
duties.  WT/TPR/S/378 • Vanuatu  
 
- 38 - 
 
  3.2  Measures Directly Affecting Expo rts 
3.2.1   Customs procedures and requirements  
3.36.   Registration and documentation requirements are similar to imports (Section 3.1.1). 
Exporters are required to register in ASYCUDA World, where they are assigned a CIN . Foreign 
companies or individuals can also apply for a CIN.  
3.37.   For all exports, the bill of lading, commercial invoice, packing list, and customs declaration 
must be lodged with the CIR. Additional information is required for exports of goods subject to 
licensing requirements (Section 3.2.3).  
3.38.   According to t he authorities, customs clearance for exports usually takes less than 
one hour.  
3.2.2   Taxes, charges, and levies  
3.39.   The legal basis for export taxes is the Export Duties (Amendment) Act No. 1 of 2006, Export 
Duties [CAP 31], and the Export Duties (Amendment) Act No . 25 of 2007.  
3.40.   An export duty of 5% plus VT 3,000 per cubic metre applies on wood in the rough or 
roughly squared. Fiscal income derived from export duties amounted to VT 21.5 million in 2017.  
3.2.3   Export prohibitions, restrictions, and licensing  
3.41.   Pursuant to the Customs (Prohibited Export) Regulations Order No.  114 of 2014 , an export 
prohibition applies to acetic anhydride and any other explosive or its components.  
3.42.   Various products are subject to licences or permits upon export ( Table 3. 6). No info rmation 
was made available  on the cost of each permit or license.  
Table 3.6 Export restrictions  
Items  Goods  Authority responsible for issuing 
permit or licence  
(a) Cattle ( cattle Export Act  [CAP 97])  Minister  of Agriculture  
(b) Cocoa beans (Cocoa Act [CAP 13])  Minister of Trade  
(c) Commodities (Vanuatu Commodities Marketing Board Act 
[CAP 133])  
a) Cocoa  
b) Copra  
c) Lavender oil  
d) Tea -tree oil Vanuatu Commodities Marketing Board  
(d) Cultural items (Preservation of Sites and Artifacts Act 
[CAP 39])  Minister of Environment  
(e) Currency or negotiable bearer instruments not less than 
the equivalent of VT 1  million   
(Proceeds of Crime Act [CAP 284])  Financial Intelligence Unit  
(f) Fauna and flora (International Trade (Fauna and Flora) 
Act [CAP 210])  Minister of Environment  
(g) Kavaa (Kava Export Fee Order No. 17 of 1999 – Plant 
Protection Act [CAP 239])  Vanuatu Quarantine and Inspection 
Services  
(i) Logs and flitches (Forestry Act [CAP 276])  Minister of Forestry  
(m) Meat and meat products (Cattle (Export) Act [CAP 97])  Minister of Agriculture  
(o) Sandalwood (Forestry [CAP 276])  Minister of Forestry  
(p) Turtles embalmed with preservative substance 
(Prevention of Cruelty to Animals [CAP 78])  Minister of Environment  
(q) Aquarium fish, coconut crabs, rock lobsters, sea 
cucumbers  Minister of Agriculture  
a Kava means natural extracts, dried roots, stumps, or basal stems from selected varieties of the plant 
species Piper methysticum ; logs and flitches means any timber that has not been processed into 
plywood, veneer, planks or any other finished products except timber from coccos nucifera  or 
santalum austro -caledonicum . 
Source:  Information provided by the authorities . WT/TPR /S/378 • Vanuatu  
 
- 39 - 
 
  3.2.4   Export support and promotion  
3.43.   Vanuatu does not provide any export subsidies. Exported goods and services are VAT 
zero-rated.  
3.44.   Public export support and promotion activities are limited. The Vanuatu Chamber of 
Commerce and Industry (VCCI) offers export -related s ervices , such as training for businesses on 
marketing and quality assurance; it also  provides  general marketing advice.   
3.45.   Vanuatu does not have any export processing zones. The authorities indicate that studies 
are being undertaken to explore the possibility of establi shing such a zone in Espiritu Santo.  
3.2.5   Export finance, insurance, and guarantees  
3.46.   Vanuatu does not have any public finance, insurance, or guarantee schemes exclusively for 
exporters, nor does it have public finance schemes for domestic production.  
3.3  Measures Affecting Production and Trade  
3.3.1   Incentives  
3.47.   In 2017, Vanuatu's tax revenue was equivalent to 17.4% of GDP, up slightly from 17.2% in 
2013 (Table 1.2). The biggest source of tax revenues was generated from VAT, while the 
combined share of tariffs and VAT on i mports was equivalent to 47% of total fiscal revenue in 
2017 (Section  3.1.3).  
3.48.   Vanuatu has no personal or corporate income tax. Taxes and fees levied include: VAT; 
import tariffs; excise taxes; vehicle r egistration fees; contributions to the National Provid ent Fund; 
business licence fees; port dues, aviation charges, a departure tax on international airline 
passengers (included in the price of air tickets); and taxes on rent, land, the extraction of 
minerals, logging, and commercial fishing.  
3.49.   The Government is considering introducing income tax. Following the launch  in August 
2016, by the Council of Ministers, of a Revenue Modernization and Reform Programme, which 
aimed to "build an effective tax system", the Government announced that it was considering 
introducing personal and corporate income taxes; the top personal income tax rate was to be 
aligned with the company income tax rate, which was suggested to be below the rate of Vanuatu's 
neighbours.3 The authorities indicate that the implementation of the inco me tax has been deferred 
to 2020.  
3.50.   Vanuatu does not have complex incentive schemes (Section 2.4.2). Some sectoral 
incentives were provided, to, inter alia,  agricultural producers (Section 4.1.1.3). These incentives 
may take the form of exemptions from busi ness licensing requirements, provisions of special 
loans, and exemptions from import tariffs and other taxes.  
3.3.2   Standards and other technical requirements  
3.51.   In August 2017, the Bureau of Standards was established under the Ministry of Tourism, 
Trade, Commerce , Industry and Ni -Vanuatu Business (MTTCINVB) in accordance with the Bureau 
of Standards Act No. 14 of 2016, which entered into force on 17 April 2017. Functions of the 
Bureau include overseeing the development and adoption of standards, the conformity ass essment 
of traded goods and processing and manufacturing facilities, and the accuracy of weights and 
measures.  
3.52.   At the time of its accession to the WTO, Vanuatu's  only technical regulations were the 
National Building Code on constructions in main towns,  administered by the city councils of Port 
Vila and Luganville, to protect  life from cyclones and earthquakes; and some basic health 
                                                
3 IMF (2016), Vanuat u Article IV Consultation 2016, IMF Country Report No.  16/336, October.  According 
to the IMF Report, among comparator countries, Fiji has the lowest rate, at 20% for resident companies and 
17% for multinational headquarters.  WT/TPR/S/378 • Vanuatu  
 
- 40 - 
 
  standards administered by the Ministry of Health.4 Since its accession, Vanuatu has not made any 
TBT notifications to the WTO.   
3.53.   The authorities indicate that a procedure to develop standards is being developed; 
whenever possible, Vanuatu standards are to be aligned with, or based on, international 
standards. For example, its technical regulations on food, meat, and cocoa were bas ed on Codex, 
OIE, and International Cocoa Organization standards, respectively. The Kava Act, a technical 
regulation specific to Vanuatu, was developed in 2002. The authorities are making efforts to bring 
the kava standard to the Codex to develop it into a n international standard.  
3.54.   Vanuatu was not represented directly or regionally (through the South Pacific Forum) at any 
international standardization bodies. The authorities state that Vanuatu has applied to become an 
ISO member. Vanuatu  committed to applyi ng the Agreement on Technical Barriers to Trade (TBT) 
from its WTO accession date without any transitional period. It established a TBT enquiry point 
within the Department of Trade, Industry and Investment, under the MTTCINVB.5 The Office of the 
Director o f Trade is responsible for fulfilling its TBT notifications and enquiry point obligations. By 
the end of June 2018, no specific trade concerns had been raised against Vanuatu's TBT measures 
in the TBT  Committee.6 
3.3.3   Sanitary and phytosanitary requirements  
3.55.   The authorities  state that, given Vanuatu's isolated location in the South Pacific, the 
Government considers that its SPS measures must reflect the need to use and preserve the 
favourable pest status.7 Its SPS related legislation includes:  
a. The Animal Importa tion and Quarantine Act of 1988, and regulations in Order No. 14 of 
1994;  
b. The Plant Protection (Amendment) Act of 2013, the Penalty Notice Regulation Order of 
2014, and the Imports Specification (Plants) Manual;  
c. The Food Control Act No. 21 of 1993, revised  in 2009;  
d. The Meat Industry Act [CAP 239], the Meat Industry (Approved Establishments) 
Regulations Order 12 of 1994 and Order 48 of 2002, and the Meat Industry Regulations 
Order 9 of 1992 and Order 12 of 2005;  
e. The Pesticides (Control) Act [CAP 226] (to be gazetted);  
f. The Animal Disease Control Act [CAP 220]; and  
g. The Kava Amendment Act of 2015.  
3.56.   The Biosecurity Department (Biosecurity) under the Ministry of Agriculture, Livestock, 
Forestry, Fisheries and Biosecurity (MALFFB) was formerly known as the Vanuatu Quarantine and 
Inspection Services until 2013. Its two main offices are located in Port Vila and Luganville, with 
outposts located at "certified ports of entry".8 These ports were certified and approved by the 
Council of Ministers. Foreign vessels are allo wed to enter and exit through these ports.  
3.57.   Biosecurity is responsible for implementing SPS provisions on animals and plants, and the 
Department of Health is responsible for food safety and hygiene management. The SPS enquiry 
point was established and entr usted to the Director of the Biosecurity Department.  
                                                
4 WTO document WT/ACC/VUT/17, 11 May 2011.  
5 WTO document WT/ACC/VUT/17, 11 May 2011.  
6 TBT IMS Database. Viewed at: http://tbtims.wto.org/en/SpecificTradeConcerns/Search . 
7 WTO document WT/ACC/VUT/17, 11 May 2011, p .20.  
8 These include: Sola Port on Vanua Lava Island, Torba Province; Luganville Port on Santo Island, 
Sanma Province; Litzlitz Port on Malekula Island, Malampa Province; Lapitasi Port on Efate Island, Shefa 
Province; Lenakel Port on Tanna Island, Tafea P rovince; and Anelcauhat Port on Aneytium Island, Tafea 
Province.  WT/TPR /S/378 • Vanuatu  
 
- 41 - 
 
  3.58.   Importers must apply for a permit to import " approved animal products  from approved 
countries " for q uantities greater than 5 kg. Approved animal products are those commercially 
processed and packaged, w ith a certificate issued from the exporting country certifying that they 
are fit for human consumption. Approved countries are those free from foot -and-mouth disease 
without vaccination, and are recognized by the World Organization for Animal Health (OIE).  
Countries may be approved for some commodities, but not for others. Commercial importation of 
live animals is restricted, and is limited to certain species only, and an import permit issued by 
Biosecurity is required.9  
3.59.   Importation of new products of anim al origin, and products from a new import origin, must 
undergo an import risk analysis, which typically takes at least 18 months. Import risk analyses are 
conducted by Biosecurity in accordance with the standards of the OIE, Codex Alimentarius, and the 
International Plant Protection Convention (IPPC). The authorities indicate that, due to limited 
human resources and a lack of access to up -to-date references, Biosecurity often uses risk 
analyses completed by regional partners (e.g. New Zealandor Australia), and/or seeks technical 
assistance from regional intergovernmental agencies such as the Secretariat of the Pacific 
Community. In 2016, the Government launched its National Biosecurity Policy 2016 -2030, to build 
Biosecurity into an adequately resourced and m anaged agency to deliver its services effectively.10 
3.60.   According to a time release study conducted by the Asian Development Bank (ADB) in 
July 2017, quarantine takes, on average, 3 days and 2 hours for imports arriving by air, and 
11 days and 7 hours for impo rts arriving by sea. The study found that the procedure for obtaining 
a quarantine -based import permit was causing significant delays in the release of cargo, both at 
ports and at airports.11 At ports, once the cargo is cleared by Customs, due to a lack of space, 
containers need to be moved to owners' (importers') premises for SPS examination. According to 
the study, these cargos were often released by Customs without proper notification or examination 
by quarantine, i.e. Biosecurity.   
3.61.   Not all plants and pla nt products are allow ed to enter Vanuatu. Biosecurity developed a 
plant import ation manual  (Import Specification Manual). Importers are required to consult this 
Manual before importing plants and plant products into Vanuatu. The Plant Health Section under 
Biosecurity conducts import risk analyses for plants and plant products. For new plants th at are 
not included in the Manual, an import risk assessment (IRA) is conducted in accordance with the 
International Standard for Phytosanitory Measures, and may take several months to complete.  
3.62.   The Food (Control) Act restricts businesses and persons from  displaying, storing or selling 
food unfit for human consumption. The Act is enforced by the Department of Health under the 
Ministry of Health, and by the municipalities and provincial authorities under the Ministry of 
Internal Affairs. Import permits for food and food products may be issued within 48 hours.  
3.63.   Vanuatu has been a member of the OIE since 1983, and sends monthly reports to the OIE 
on its disease status. It has been a member of the Codex Alimentarius Commission since 1995. It 
has also been a con tracting party to the IPPC since 2007.  
3.64.   Vanuatu has not submitted any notifications to the WTO on its SPS measures. No specific 
trade concerns  were raised regarding Vanuatu's SPS measures in the SPS Committee.12 
3.65.   The Fisheries Act No. 10 of 2014 prohibits the  imports of genetically modified aquatic 
organisms (Article 20). Vanuatu does not prohibit all living modified organisms (LMOs)/genetically 
modified organisms (GMOs),  although their importation must go through a risk assessment 
process. The Vanuatu Nationa l Biosafety Framework outlines the pre -import risk assessment, as 
required under the Cartagena Protocol, for biological products. Biological products include GMOs 
(living or processed) for use as human food, animal feed, pharmaceuticals or other purposes. They 
refer to any products derived or extracted from a biological organism including the whole organism 
or a part thereof, whether alone or in combination with other products of diverse origin.  
                                                
9 Biosecurity online information. Viewed at:  https://biosecurity.gov.vu/import -animal -and-animal -
product/ . 
10 Biose curity, National Biosecurity Policy 2016 -2030. Viewed at: 
http://pafpnet.spc.int/attachments/article/820/VUBiosecurity%20Policy%202016%20 -%202030.pd f. 
11 ADB (2017), Time Release Study – Vanuatu .  
12 SPS IMS database. Viewed at: http://spsims.wto.org/en/SpecificTradeConcerns/Search . WT/TPR/S/378 • Vanuatu  
 
- 42 - 
 
  3.3.4   Competition policy and price controls  
3.3.4.1   Competition policy  
3.66.   At present, Vanuatu does not have a general competition law; it has some sector -specific 
legislation related to competition, and some consumer protection legislation. The Vanuatu Trade 
Policy Framework 2012 recommended the drafting of a competition law and  policy, and the 
establishment of a competition authority. The authorities indicate that they are in the process of 
preparing a Competition and Consumer Protection Act, with provisions on price controls.  
3.67.   The following sector -specific legislation contains competition related provisions, and sectoral 
regulators were set up under these legislation (Table 3.7):  
a. The Telecommunications and Radiocommunications Regulation Act 2009, under which 
the Telecommunications and Radiocommunications Regulator (TRR) regulate s the 
telecommunication market;  
b. The Utilities Regulatory Authority Act 2007, under which the Utilities Regulatory 
Authority (URA) regulates public utilities such as water and electricity; and  
c. The Civil Aviation Act [CAP 258], under which the Civil Aviation  Authority of Vanuatu 
(CAAV) regulates civil aviation services.  
Table 3.7 Sectoral legislation with competition related provisions  
Subject  Telecommunications and 
Radiocommunications 
Regulation Act  Utilities R egulatory 
Authority Act  Civil Aviation Act  
Anti-competitive 
merger  The TRR's prior approval is required 
for the transfer of control of a 
telecom service provider if:  
- the person acquiring or 
transferring control is a dominant 
service provider; and  
- as a result of the transfer, a 
person would control service 
providers with 40% or more of 
gross revenue in the Vanuatu 
telecom market, or a person would 
be in a position of economic 
strength affording it the power to 
behave to some extent 
independently of com petitors, 
consumers or end users.  n.a. n.a. 
Cartel  Telecom service providers must not 
engage in price fixing, market 
allocation or preventing or 
restricting the supply of any goods 
or services to or by another service 
provider.  Prohibits price fixing  The Director of the 
CAAV authorizes 
agreements relating 
to international 
carriage by air in 
relation to tariffs and 
capacity.  
Anti-competitive 
agreements or anti -
competitive conduct  A telecom service provider must 
not engage in conduct which has 
the purpose,  effect, or likely effect 
of substantially lessening 
competition in the telecom market.  n.a. n.a. 
Exclusive dealing  Prohibited  Prohibited  n.a. WT/TPR /S/378 • Vanuatu  
 
- 43 - 
 
  Subject  Telecommunications and 
Radiocommunications 
Regulation Act  Utilities R egulatory 
Authority Act  Civil Aviation Act  
Abuse of dominant 
market power  The TRR may declare a service 
provider "dominant" ; said provider  
must not abuse dominancy by 
restricting the entry of any person 
into a telecom market, provid ing 
unjustifiable bundling of services, 
or engaging in unreasonable price 
discrimination.  n.a. n.a. 
General access to 
essential facilities or 
key infrastructure  A dominant service provider is 
deemed to abuse its dominance if it 
denies access to essential facilities 
or key infrastructure to another 
service provider.  n.a. n.a. 
n.a. Not applicable.  
Source:  Information provided by the authorities.  
3.3.4.2   Consumer protection legislation  
3.68.   Vanuatu does  not have a general consumer protection law. A number of pieces of legislation 
contain consumer protection related provisions (Table 3.8):  
a. The Telecommunications and Radiocommunications Regulation Act 2009;  
b. The Utilities Regulatory Authority Act 2007;  
c. The Food (Control) Act 1993; and  
d. The Weights Act [CAP 43].  
Table 3.8 Legislation with consumer protection related provisions  
Legislation  Consumer protection related provisions  
Telecommunications and 
Radiocommunications 
Regulation Act 2009  Prohibits:  
- unfair dealing, including sending unrequested or inaccurate invoices, and 
engaging in providing a telecom service that is "misleading or deceptive, 
or is likely to mislead or dec eive";  
- unauthorized collection or disclosure of personal information; and  
- unjustified discrimination by dominant service providers regarding terms 
and quality of services.  
 Requires : 
- service providers to have end -user complain t and dispute resolution 
procedures;   
- customers are given reasonable advance notice of any change in a 
telecom service provided to end -users that alters the quality or 
functionality of the service;  
- accurate and current information about a service is provided to cons umers 
at the point of sale;  
- a service provider must allow a customer to inspect its records relating to 
a telecom service provided to that customer, and to promptly correct or 
remove consumer information in those records that is shown to be 
incorrect; an d  
- an advertisement for a telecom service must not state or imply that the 
service is free of charge, unless the service is entirely and unconditionally 
free. 
Utilities Regulatory 
Authority Act 2007  - it is an offence for a utility to engage in any conduct that is misleading or 
deceptive, or is likely to mislead or deceive a consumer; and  
- the URA may, upon request, assist a person to resolve any dispute in 
respect to a regulated services . 
Food (Control) Act 1993  Regulates the quality and safety of food, and prohibits manufacturing, importing, 
selling, or distributing of any food unfit for human consumption, or adulterated or 
non-compliant with the Act or relevant regulations.  
No person may label, package, treat, p rocess, sell or advertise any food in a 
manner that is false, misleading, deceptive or likely to create an erroneous 
impression regarding its character, value, quality, composition, merit, or safety . WT/TPR/S/378 • Vanuatu  
 
- 44 - 
 
  Legislation  Consumer protection related provisions  
Weights Act [CAP 43]  Prohibits the giving of the short weight of goods, and having any false weight or 
false weighing instruments . 
Source:  Information provided by the authorities.  
3.3.4.3   Price controls  
3.69.   Vanuatu's Price Control Act [CAP 86] enables prices to be controlled in relation to any goods 
or services. However, the authorities state that this Act has never been implemented due to a lack 
of budget allocation. In February 2018, the Minister of Finance and Economic Management 
appointed an Interim Price Controller, with the intention of setting up a Price Co ntrol Bureau and 
of implementing the Act. The authorities indicate that the Bureau is soon to be operational.  
3.70.   The Vanuatu Commodities Marketing Board (VCMB) used to regulate the "beach" 
(farm -gate) price of copra on an ad hoc  basis (Section 4.1.1.4); when the world price of copra fell, 
the VCMB could use EU funds to stabilize copra prices. This was stopped a few years ago, and the 
VCMB was in the process of being liquidated (Section 3.3.5). Regarding public utilities, the URA 
checks price adjustments for el ectricity (Section 4.2).  
3.3.5   State tradin g, state -owned enterprises , and privatization  
3.3.5.1   State trading arrangements  
3.71.   At the time of Vanuatu's WTO accession, only the VCMB had exclusive rights relating to the 
import or export  of certain goods.13 The VCMB  was established in 1981 to buy, sell and stabilize 
prices of copra, cocoa, and kava. It had sole purchasing rights on copra and cocoa for export. 
From 2011, the VCMB was in the process of being liquidated, although it seems that no progress 
has been made since then.  Vanuatu has not notified any state trading arrangements to the WTO 
since its accession.  At the time of accession  to the WTO , Vanuatu committed to notify any 
enterprise falling within the scope of Article XVII.14  
3.3.5.2   State -owned enterprises ( SOEs ) and privatization  
3.72.   There are currently seven active SOEs, which are locally referred to as commercial 
government business enterprises (CGBEs) (Table 3.9). According to the IMF, CGBEs play an 
important role in the economy; they account for about 7% to 8% of t he total stock of fixed capital, 
and dominate several sectors including banking, broadcasting, postal services, and transport.15 In 
FY2014 , the CGBEs contributed 2% to GDP.16 Among the seven CGBEs, the three largest ones 
(National Bank of Vanuatu, Air Vanuat u (Operations) Ltd., and Airports Vanuatu Ltd.) comprised 
96% of total CGBE assets.17  
Table 3.9 CGBE performance indicators, FY2014  
Name of 
company  Ownership 
(%) Return 
on 
equity 
(%) Return 
on 
assets 
(%) Total  
assets  
(VT 
million)  Total 
revenue  
(VT 
million)  Total 
liabilities  
(VT million)  Average 
return on 
assets  
FY2008/ 14 
(%) 
Airports 
Vanuatu Ltd . 100 1 1 4,436  737 1,143  1 
Air Vanuatu 
(Operations) 
Ltd. 100 NE (18) 4,755  5,139  5,392  (13) 
National Bank 
of Vanuatu  100 5 1 10,158  992 9,040  1 
                                                
13 WTO document WT/ACC/VUT/17, 11 May 2011.  
14 WTO doc ument WT/ACC/VUT/17, 11 May 2011.  
15 IMF (2016), Vanuatu Article IV Consultation 2016, IMF Country Report No.  16/336, October . 
16 ADB (2016), Finding Balance 2016 – Benchmarking the performance of State -owned enterprises in 
Island countries . Viewed at: https://www.adb.org/sites/default/files/publication/192946/finding -balance -2016-
soe.pdf . 
17 IMF (2016), Vanuatu Article IV Consultation 2016, IMF Country R eport No.  16/336, October . WT/TPR /S/378 • Vanuatu  
 
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  Name of 
company  Ownership 
(%) Return 
on 
equity 
(%) Return 
on 
assets 
(%) Total  
assets  
(VT 
million)  Total 
revenue  
(VT 
million)  Total 
liabilities  
(VT million)  Average 
return on 
assets  
FY2008/ 14 
(%) 
Vanuatu 
Agriculture 
Development 
Bank 100 1 1 449 138 52 (5) 
Vanuatu 
Broadcasting 
and Television 
Corporation  100 (3) (2) 371 134 83 1 
Vanuatu Post  100 n.a. n.a. n.a. n.a. n.a. 11 
National 
Housing 
Corporation  100 n.a. n.a. n.a. n.a. 
n.a. (1.3) 
Portfolio   (16.8)  (3.7)  20,171  7,140  15,711  (1.3)  
NE Negative equity.  
n.a. Not available.  
( ) = negative.  
Source:  Information provided by the authorities of Vanuatu.  
3.73.   The CGBEs' financial performance has been declining in recent years. They added 0.24% to 
Vanuatu's GDP for every 1% share of the total fixed capital stock they held, indicating a significant 
productivity cost for the economy.18 Only three CGBEs generated a positive return (Table  3.9): the 
largest – the National Bank o f Vanuatu – was the most profitable. There are also three inactive 
CGBEs: Metenesal Estates Ltd., Vanuatu Livestock Development L td., and the VCMB. The 
authorities state that, legally, the three still exist, but are not in operation.  
3.74.   According to the IMF, the poor financial performance of the CGBEs resulted in them being a 
significant and ongoing cost for the Government, with government transfers to CGBEs averaging 
2.3% of general government expenditure during FY2010/14.19 The Government further provided a 
loan of VT 478,045 to Air Vanuatu in 2015/16, and another loan of VT 99,497 to Vanuatu 
Broadcasting in 2017. Among the major reasons for CGBE losses are the community service 
obligations (CSOs), which involve activities operating on non -commercial or subsid ized terms, and 
which are a significant burden. From 2008 to 2014, Air Vanuatu accounted for 94% of the total 
CGBE losses; its CSOs amounted to VT 176 million in 2013 alone, and resulted in a VT 1.4 billion 
loan and a VT  2.2 billion guarantee from the Gove rnment. The financial performance of the 
National Bank of Vanuatu has also been declining in recent years, partly reflecting its rural 
outreach expenditures (costing VT  1.7 million in 2014).  
3.75.   The Government has been making efforts to improve the performanc e of the CGBEs. For 
example, it adopted a Government Business Enterprises Policy in 2013, which required CGBEs to 
operate as commercial entities. The Policy also stipulated the setting up of a range of monitoring 
and governance mechanisms, such as appointi ng a CGBE Minister, and establishing a framework 
for financing CSOs. However, implementation of this Policy has been weak.20 For example, the 
CGBE Monitoring Unit established under this reform Policy remains under -resourced. No CGBE 
Minister has been appoin ted, and the performance of CGBEs continues to be supervised by their 
line ministries. In 2011, a bill was passed by Parliament to liquidate the VCMB; however, no action 
has been taken to date. The authorities state that no liquidation process has started because the 
repealed VCMB Act has not been gazetted.  
3.76.   The authorities state that a bill on CGBEs, based on the CGBE Policy, is scheduled to be 
submitted to Parliament in 2018. The bill requires CGBEs to achieve a return on equity that is 
sufficient to cover  their costs, and defines the role of the Monitoring Unit to ensure that the Unit 
has a direct reporting line to the CGBE Minister.  
                                                
18 IMF (2016), Vanuatu Article IV Consultation 2016, IMF Country Report No.  16/336, October . 
19 IMF (2016), Vanuatu Article IV Consultation 2016, IMF Country Report No.  16/336, October . 
20 IMF (2016), Vanuatu Article IV Consultation  2016, IMF Country Report No.  16/336, October . WT/TPR/S/378 • Vanuatu  
 
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  3.77.   The authorities indicate that no major privatization plan is in place, except the restructuring 
of some CGBEs such as the Va nuatu Agriculture Development Bank (VADB), and the National 
Housing Corporation.  
3.3.6   Government procurement  
3.78.   Vanuatu has an open public procurement regime, where discrimination against foreign 
participation is not allowed. At the time of its accession to the WTO, Vanuatu committed not to 
impose any discrimination against foreign participation in its government procurement.21 About 
60% of government procurement is provided by foreign suppliers.  The authorities state that most 
government procurement projects are for consultancy services, and are funded by donors. They 
state that, in 2016, a total of VT 1.4 billion of public procurement was processed by the Central 
Tender Board (CTB), more than half of which (54%) was through open tendering.  
3.79.   The CTB, a parastatal organization operating under the Ministry of Finance and Economic 
Management (MFEM), awards tenders for ministries and agencies at the central government level. 
Procurement by CGBEs is not covered by public procurement.  The CTB is also in charge of the 
registration and grading of contractors, although this is not a compulsory requirement for 
contractors to participate in government procurement.  The CTB reports to, and is responsible for, 
the Council of Ministers, who can accept or reject a CTB approval. The  Chairman of the CTB is 
appointed from the public sector. The CTB is currently reviewing the  public procurement 
guideline s, which is a purchasing manual first issued in 2002, with a view to expanding coverage 
to the procurement of works.  
3.80.   The CTB considers that government procurement needs to follow the principles of seeking 
the best value for money, and seeking to promote open and effective competition.22 Government 
procurement is grouped into two types: low -value (where the value is below VT 5 million), and  
high-value procurement (where the value is equal to or greater than VT 5 million). The Public 
Finance Management Act and its regulations (the Financial Regulations) outline the purchasing, 
approval, and payment procedures for goods and services with a val ue below VT 5 million. The 
Government Contracts and Tenders Act [CAP 245] No. 40 of 2013 and the Tenders Regulation 
Order No. 40 of 1999 outline the procedures for the payment of goods and services with a value 
greater than VT  5 million.  
3.81.   All contracts wit h a value greater than VT 5 million must be considered by the CTB, and be 
subject to open and competitive bidding, unless the CTB decides otherwise. For example:  
a. for large and complex tenders, selective tendering may be used where pre -qualification 
is requ ired, to ensure that invitations to bid are issued to those suppliers/contractors 
with adequate capabilities and resources;  
b. where it is not feasible to fully define the technical or contractual details to elicit 
competitive tenders, a two -stage tender may be applied, so that only those that 
submitted acceptable technical proposals in the first stage may submit tenders in the 
second stage; and  
c. under exceptional circumstances, limited tender may be applied subject to the approval 
of the CTB.23 
3.82.   For contracts wi th a value below VT 5 million but greater than VT 100,000, procurement 
entities must issue at least three requests for quotations, with brief contract terms and conditions. 
The purchase must be approved by the Director General of the line ministry or his/h er 
representative. For contracts with a value below VT 100,000, procurement entities must issue a 
local purchase order, which may be approved by an official  with the appropriate delegated financial 
authority working for the procurement entity . 
                                                
21 WTO document WT/ACC/VUT/17, 11 May 2011.  
22 CTB online information. Viewed at: https://doft.gov.vu/index.php /procurement -tender -government -
guidelines/tender -board . 
23 CTB online information. Viewed at: https://doft.gov.vu/index.php/procurement -tender -government -
guidelines/tender -board . WT/TPR /S/378 • Vanuatu  
 
- 47 - 
 
  3.83.   There is a complaint review mechanism provision in the Government Contract and Tenders 
Act. Since 2012, there have been no major procurement disputes that led to court.  
3.84.   Apparently,  Vanuatu does not intend to apply for accession to the WTO  GPA.24 
3.3.7   Intellectu al property rights  
3.3.7.1   Legislative and institutional framework  
3.85.   The first intellectual property (IP) legislation was introduced in 2000. Prior to that, Vanuatu 
was using UK legislation to protect IP rights  (IPRs) . IP related legislation was promulgated or 
revised during Vanuatu's WTO accession process. In 2014, the country  notified its laws and 
regulations on  IPRs to the WTO (Table 3.10 ).  
Table 3.10 Main IP laws, and treaty membership  
Laws and regulations  
Patent s  Patent s Act No.  2 of 2003  
Patents Act No.2 of 2003 – Declaration of Convention Countries Order No. 42 of 2013  
Patent s (Amendment) Act No.  14 of 2011  
Trademarks  Trademarks Act No.  1 of 2003  
Trademarks Act No.  1 of 2003 – Declaration of Convention Countries Order No.  40 of 2012  
Trademarks for Goods and Services (Fees) Regulation (Amendment) Order No.  116 of 2012  
Trademarks for Goods and Services (Fees) Regulation Order No.  15 of 2012  
Trademarks Act No.  1 of 2003 – Establishment of Intellectual  Property Office Order No. 24 of 
2012 
GIs Geographical  Indications (Wine) Act No. 53 of  2000 
Designs  Designs Act No. 3 of 2003  
Designs Act No.3 of 2003 – Declaration of Convention Countries Order No.41 of 2012  
Circuit 
layout s Circuit Layouts Act No.  51 of 2000  
Trade 
secrets  Trade Secrets Act No.  52 of 2000  
Copyright  Copyright and Related Rights Act No.  42 of 2000  
Treaty membership  
 Berne Convention for the Protection of Literary and Artistic Works (Ratification) Act No.  16 of 
2012 
Convention Establishing the World Intellectual Property Organization (Ratification) Act No.  13 of 
2012 
Source: WTO document IP/N/1/VUT/1,  10 October 2014. WIPO online information. Viewed at: 
http://www.wipo.int/wipolex/en/profile.jsp?code=VU . 
3.86.   The Vanuatu Intellectual Property Office (V anIPO) is the institution responsible for 
protecting IP Rs. VanIPO was established in March 2012, and is operating as a unit within the 
corporate service of the M TTCINVB. In August 2017, VanIPO  signed a technical agreement with 
WIPO to establish an Intellectual Property Automation System for registering trademarks, patents 
and designs.25 The authorities state that, c urrently , there are 8,694 trademarks, 129 patents,  and 
2 designs registered.  
3.87.   VanIPO is in the process of setting up a Patent Division and a Design Division ; the 
Trademark Division is already  functioning  and has witnessing an increase in trademark 
registrations .  
3.88.   IPR protection at the border is managed by  Customs,  which requires importers to prove the 
genuineness of their goods . IPR infringing goods are destroyed. The authorities consider that more 
technical training is needed to boost the capacity of their staffs to improve IPR protection.  
                                                
24 WTO document WT/ACC/VUT/17, 11 May 2011.  
25 Vanuatu Daily Post online news, 14 August 2017. Viewed at: http://dailypost.vu/news/a -trademark -
registering -system -for-vanuatu/article_c529e66e -7204-59fe-a840-4b7603b4345e.html . WT/TPR/S/378 • Vanuatu  
 
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  3.3.7.2   Industrial prop erty rights  
3.89.   Under the Patents Act No. 2 of 2003, all patents registered in the United Kingdom are 
protected in Vanuatu.  
3.90.   The Trade marks Act 2003 allows for independent applications to be made to the Register. 
Previously, only marks registered in the United Kingdom were allowed to be register ed in Vanuatu. 
The Act:  
a. introduced independent registrations and examination systems;  
b. allowed f or the registration of service marks;  
c. may prescribe signs that cannot be used as a trademark or part of a trademark;  
d. set up an opposition procedure to the registration of a trademark ( within 28 days of 
publication in the Gazette);  
e. allowed for the remov al of a trademark from the Register for no n-use of the mark;  
f. allowed for the registration of collective trademarks;  
g. incorporated provisions governing the registration of trademarks involving indigenous 
culture;  
h. allowed for marks registered in Madrid Convention countries to be recognized in 
Vanuatu; and   
i. allowed for a ll trademarks registered under the previous Registration of United Kingdom 
Trademarks Act (Cap 81) to remain registered in Vanuatu, provided that they are 
renewed once the duration of the 10-year protection lapses.  
3.91.   Patents are protected for 20 years, while trademarks, GIs, and designs are protected for 
10 years, renewable indefinitely for 10 -year periods (Table 3.11).   
Table 3.11 Duration of p rotection for industrial property rights  
Industrial 
property  
rights  Duration of protection  
Patent  20 years from the date of filing  
Trademarks  10 years upon registration, renewable indefinitely for 10-year periods  
GI 10 years of protection from the date of filing, renewable indefinitely for 10-year periods  
Designs  10 years of protection from the date of filing , renewable indefinitely for 10 -year periods  
Trade secrets  The owner of a trade secret has the right to tha t secret remaining undisclosed  
Source:  Industrial property rights  legislation, and information from the authorities.  
3.3.7.3   Copyrights and related rights  
3.92.   While copyright cannot currently be registered in Vanuatu, the authorities are preparing to 
establish a Collective Society for copyright owners to register and commerciali ze their works.26 The 
Vanuatu Copyright Management Society Act was passed by Parliament in 2017. For most 
copyright, protection is for the lifetime of the last surviving author plus 50 years  (Table 3.12).  
                                                
26 WTO document IP/N/1/VUT/1, 10 October 2014.  WT/TPR /S/378 • Vanuatu  
 
- 49 - 
 
  Table 3.12 Duration of copyright protection  
Copyright and related rights  Duration of protection  
Works of joint authorship  The life time of the last surviving author and for 50 years after his/her 
death  
Collective work s (other than a work of 
applied art) and audiovisual work s For 50 years after the date on which the work:  
 - was made;  
 - was first made available to the public; or 
 - was first published ,  
whichever is the latest  
Works published anonymously or 
under a pseudonym  For 50 years after the date on which the work:  
 - was made;  
 - was first made available to the public; or  
 - was first published ,  
whichever is the latest  
Works of applied art  For 25 years after the making of the work  
Any other work s The lifetime of the author and for 50 years after his/her death  
Source:  Copyright and Related Rights Act No. 42 of 2000.  
 
 WT/TPR/S/378 • Vanuatu  
 
- 50 - 
 
  4  TRADE POLICIES BY SE CTOR  
4.1  Agriculture , Forestry, and Fisheries  
4.1.1   Agriculture  
4.1.1.1   Features  
4.1.  Vanuatu is an agriculture -based economy, with 80% of the population depending on 
subsistence agriculture. Total land area is about 1.2 million hectares, of which 40% is arable 
agricultural land, making it about 10 hectares per household. More than 90% of t he land is 
customarily held, while the other 10% is government owned or leased.  One third of the cultivable 
customary land area is being farmed.1  
4.2.  The agriculture, forestry and fish eries sector account ed for around 22% of GDP in 2016, and 
for almost all  merchandise exports  (Table A1.1). The sector has been growing faster than the 
overall economy in most of the years between 2010 and 2016, except in 2015 (Chart 4.1).  In 
2016, value -added in agriculture, forestry and fish eries recovered from a decline in 2015  (caused 
by Cyclone Pam) by registering a positive growth of 5.1%: crop production grew by 5.9%, 
followed by animal production (2.6%), fishing (3.9%), and forestry (0.7%).2 Crop production 
accounted  for a dominant share (80%) of total agricultural output  in 2016 . 
Chart 4.1 Growth rates, 2010 -17 
 
Source:  Vanuatu National Statistics Office online information, World Bank database, and IMF online 
information.  
4.3.  Agriculture in Vanuatu is divided into three subsectors: a labour -intensive subsistence sector, 
a semi -commercial sector, and a commercial sector. The subsistence subsector is predominantly 
centred on root crops (taro, yam, cassava, and sweet potato ( Ipomoea batatas )) for consumption 
and cultural pur poses, and is characterized by a total reliance on rain irrigation and rudimentary 
tools. The semi -commercial agricultural activities are concentrated near urban centres, and are 
comprised of, inter alia,  green leafy vegetables, cabbages, tomatoes, capsicu m and eggplant, as 
well as spice and herb cultivation. The commercial subsector is based on a limited range of 
traditional cash crops including cocoa, kava, coffee, and coconut, and some new cash crops such 
as pepper and vanilla. Beef production is growing  in importance.  The development of the 
commercial subsector is closely related to, inter alia , fluctuations in world commodity prices and 
emerging markets for novel crops.  
4.4.  Most agricultural activities in Vanuatu make use of rudimentary hand tools, leading to low 
and irregular production. Production is also constrained by,  inter alia : lack of land, lack of 
improved farming skills, climate vulnerability, difficulties in accessing credit, and infrastructure and 
related transport costs, and hence difficulties i n accessing trade and marketing opportunities.   
                                                
1 MALFFB, Vanuatu Agriculture Sector Policy  2015-2030. Viewed at: 
https://malffb.gov.vu/doc/Vanuatu_Agriculture_Sector_Policy.pdf . 
2 Vanuatu Statistics Office (2017), Statistics Release: Gross Domestic Product 2016 . 
-20%-15%-10%-5%0%5%10%
2010 2011 2012 2013 2014 2015 2016 2017
Real GDP
Agriculture, forestry and fishing
Crop production
Services
Source:  Vanuatu National Statistics Office online information, World Bank database, and IMF online information.Chart 4.1[Growth rates, 2010 -17]WT/TPR/S/378 • Vanuatu  
 
- 51 - 
 
  4.1.1.2   Agriculture trade  
4.5.  During the period under review , main agricultural export items were: copra, kava, coconut  
oil, cocoa, and beef (Chart 4. 2). The fluctuation in export value reflects both changes in 
productio n, and variation in international prices. Vanuatu's m ain agricultural export markets 
include: Australia, the European Union , Japan,  other MSG member countries  (e.g. Fiji, P apua New 
Guinea  and Solomon  Islands), New Caledonia and  New Zealand.  
Chart 4.2 Exports of main agricultural products, 2012 -16 
(VT million)  
 
Source:  Vanuatu National Statistics Office, Quarterly Statistical Indicators July -September 2017.  
4.6.  In 2016 , Vanuatu's main agricultural import i tems were rice, pastry, chicken meat, wheat 
flour, beverages, and cigarettes, among others.3  
4.1.1.3   Domestic policies  
4.7.  The main legislation regulating the agriculture sector , according to the authorities,  is the 
National Agriculture Bill. Responsibility for Vanua tu's agricultural policy lies with the Ministry of 
Agriculture, Livestock, Forestry, Fisheries and Biosecurity (MALFFB). The Department of 
Agriculture and Rural Development (DARD) within the MALFFB aims to build a robust and 
competitive agriculture sector.   
4.8.  Access to credit for rural development is a major constraint for producers. The MALFFB is 
working with the  Vanuatu Agriculture Development Bank  to consider avenues where access to 
credit for rural producers could be enhanced.  Climate change and climate v ariability add to the 
difficulties in Vanuatu's agricultural development.4 For example, disaster risk management 
requires strong collaboration among various stakeholders, and changing climatic conditions and 
natural hazards have implications for the transp ortation of agricultural produce from rural areas to 
markets in the main urban centres. Poor road conditions and deteriorating wharfs, jetties and 
shipping routes have added significantly to transportation costs.  
4.9.  Against this background, the Government is sued its Agriculture Sector Policy 2015 -20305, 
which is a guideline with suggestions regarding, inter alia , institutional arrangements, extension 
and training, finance and investment, land use, R&D, production and market access, food security, 
climate variability and climate change. In particular, the following suggestions were made: the use 
of tax holidays and tax exemptions to reduce business costs in agriculture, such as an exemption 
from all taxes including import tariffs on agriculture inputs, e.g.  tools, machinery, seeds, fertilizers, 
pesticides, and fuel; and an exemption from all licensing requirements on agricultural businesses 
                                                
3 FAO online statistics.  
4 MALFFB, Vanuatu Agriculture Sector Policy  2015-2030. Viewed at: 
https://malffb.gov.vu/doc/Vanuatu_Agriculture_Sector_Policy.pdf . 
5 MALFFB, Vanuatu Agriculture Sector Policy  2015-2030. Viewed a t: 
https://malffb.gov.vu/doc/Vanuatu_Agriculture_Sector_Policy.pdf . 
02004006008001,0001,2001,4001,6001,8002,000
Copra Kava Coconut oil Cocoa Beef Coffee2012 2013 2014 2015 2016Chart 4.2 [Exports of main agricultural products, 2012 -16]
Source:   Vanuatu National Statistics Office, Quarterly Statistical Indicators July -Septermber 2017, Emailed on 5 Feb 2018.VTmillionWT/TPR/S/378 • Vanuatu  
 
- 52 - 
 
  for the first three years of operation. The authorities indicate that these policies still need to be 
implemented, and that, up to now, duty exemptions need to be officially requested and the 
process is very slow.  
4.10.   The authorities consider that, in order to facilitate market access for Vanuatu agricultural 
products, export and domestic markets need to be identified and stre ngthened, ensuring the 
products' compliance with food hygiene standards. From this perspective, they plan to establish a 
Vanuatu National Marketing and Consumer Cooperative Federation (VNMCCF) to facilitate market 
access and improve the livelihood of the p eople.6  
4.11.   The Agriculture Sector Policy also required the authorities to develop strategies for 
commodities in the agriculture sector. So far, a coconut strategy and a kava strategy have been 
issued (Section 4.1.1.6). The authorities state that they are pla nning to develop strategies for 
other commodities such as cocoa, coffee, and onions.  
4.12.   The Tanna Coffee Development Company (TCDC), previously state -owned, was privatized 
and all its exclusive rights and privileges revoked.  It is no longer a state trading co mpany, and any 
company can now produce coffee, and import or export coffee to or from Vanuatu.7 The authorities 
state that they are not aware of any other state trading arrangements.  
4.1.1.4   Support levels  
4.13.   Vanuatu notified to the WTO its domestic support to the a griculture sector in 2015; 
according to the authorities, all support measures were in the Green Box category. Among the 
VT 368.46  million of support, most was used for crop extension, pest and disease control, and 
training (Chart 4.3).8  
Chart 4.3 Domestic support to agriculture, 2015  
 
Source:  WTO document G/AG/N/VUT/1, 20 July 2016.  
4.14.   At the time of accession to the WTO, the authorities stated that Vanuatu provided virtually 
no monetary grants to agricultural p roducers. In 2012, agricultural producers were among the 
businesses eligible for incentives offered through the Business Licence Committee, and the 
Customs Department. These incentives included exemption from business licensing requirements, 
special loans at relatively low interest rates from commercial banks, and special exemptions 
accorded by the customs and tax authorities.9 It is not clear to the Secretariat if these incentives 
are still offered.   
                                                
6 MALFFB online information, MALFFB Corporate Plan 2014 -2018. Viewed at: 
https://malffb.gov.vu/index.php?id=6 . 
7 WTO document WT/ACC/VUT/17, 11 May 2011.  
8 WTO document G/AG/N/VUT/1, 20 July 2016.  
9 WTO document WT/ACC/VUT/17, p.23, 11 May 2011.  
Research
10.8%
Training
22.5%Pest and disease 
control
29.8%Crops extension
30.0%
Livestock extension
6.9%Chart 4.3 [Domestic support to agriculture, 2015]
Source:  WTO document G/AG/N/VUT/1, 20 July 2016.WT/TPR/S/378 • Vanuatu  
 
- 53 - 
 
  4.15.   At the same time, the authorities also state that Vanuat u had aid -financed domestic support  
programmes for agriculture.10 Small -holders of coffee were provided with free planting materials 
and a subsidy on the purchasing price. The Vanuatu Commodities Marketing Board (VCMB) 
regulated  the "beach" (farm -gate) price of copra on an ad hoc  basis by using surpluses generated 
from trading activities and transfers of Lomé Convention funds from the commodity price 
stabilization scheme (Stabex) of the European Union.  No information was made ava ilable to the 
Secretariat as to whether  these prices are still regulated.  
4.1.1.5   Border measures  
4.16.   The simple average applied MFN tariff rate on agricultural tariff lines (WTO definition) is 
16.9% (in 2018), higher than the average rate on non -agricultural tariff lines ( 8%) (Table  3.1). 
Tariff rates range from zero to 75% for agricultural products; the highest tariff rates are on 
beverages, spirits and tobacco (Chart 4.4). 10.9% of agricultural tariff lines are duty free,  less 
than the duty -free percentage for non -agricultural tariff lines (28.5%).  
Chart 4.4 Average tariff rates of WTO agricultural groups, and fish and fishery products  
 
Source:  WTO Secretariat calculations, based on data from the authorities.  
4.17.   Vanuatu does not apply any tariff quota on its agricultural products. It does not have any 
non-ad valorem  agricultural tariff line s.  
4.18.   Import prohibitions are maintained on the grounds of protecting public health, safety, 
morals and the environment. Absinthe, beef originating in Europe, copra, and wine with a false 
description and presentation as provided for in the Geographical Indicatio ns (Wine) Act are 
prohibited from importation (Section 3.1.5). Certain agricultural goods are subject to import 
licensing (Table 3.5).  
4.19.   Some agricultural products, such as cattle, cocoa and cocoa beans, copra, lavender oil, 
tea-tree oil, kava, meat and mea t products, and turtles embalmed with preservative substances, 
are subject to export licensing requirements (Table 3.6). Apparently a fee is collected, although no 
information is made available on the cost of each licence (Section 3.2.3). In 2012, exporter s of 
kava were required to obtain an authorization from the Biosecu rity Department at a cost of 
VT 30,000 (US$300), and were also required to pay a facility fee of VT 80,000 (US$800), payable 
in instalments, to the Biosecurity Department. Revenues from lic ensing fees collected from coffee 
exportation covered the cost of quality control.11 It is not clear to the Secretariat if these fees have 
been maintained or terminated.  
                                                
10 WTO document WT/ACC/VUT/17, p.23, 11 May 2011.  
11 WTO document W T/ACC/VUT/17, p.17 , 11 May 2011.  
0% 5% 10% 15% 20% 25% 30% 35% 40%
Total
WTO agricultural products
   Animals and products thereof
   Dairy products
   Fruit, vegetables, and plants
   Coffee and tea
   Cereals and preparations
   Oils seeds, fats, oil and their products
   Sugars and confectionary
   Beverages, spirits and tobacco
   Cotton
   Other agricultural products, n.e.s.
WTO non-agricultural products
   Fish and fishery products
Source:  WTO Secretariat calculations, based on data from the authorities.Chart 4.4 [Average tariff rates of WTO agricultural groups, and fish and fishery products]WT/TPR/S/378 • Vanuatu  
 
- 54 - 
 
  4.1.1.6   Selected subsectors  
4.1.1.6.1   Coconut  
4.20.   Coconuts account for most of the land area devoted to crop s in Vanuatu. A 2007 agriculture 
census recorded around 9.7 million coconut trees planted on about 119,384 hectares of land, 
representing 24% of good agricultural land.12 The authorities state that Vanuatu had a capacity to 
produce 760 million coconuts per year while in reality around 300 million coconuts were produced. 
This is the result of an ageing population of trees that were mostly planted during the colonial era, 
and other factors such as land disputes.13 In addition, coconuts are underutilized in Vanu atu. It is 
estimated that 58% of coconuts are never harvested, as they are left to germinate in the 
plantations.14  
4.21.   In 2016, about 40% of Vanuatu exports came from the coconut harvest : copra accounted 
for 32% of total merchandise exports, and coconut oil for 11%.  The bulk of copra was exported to 
India, Indonesia and the Philippines.15 Despite this dominancy, coconut rehabilitation programmes 
remained stagnant over the last 30  years in all major copra producing islands, with only a very 
small percentage of fa rmers engaging in coconut replanting programmes. The authorities state 
that they were making efforts to replant trees: in 2016, a total of 120,000 coconut seed nuts were 
planted and, in 2017, a total of 119,000 coconut seed nuts were distributed and plante d. Copra 
production recovered strongly in 2016, following a rise in the average price (from VT 35,000 to 
VT 51,000 per tonne).16  
4.22.   Vanuatu Copra & Cocoa Exporters Ltd (VCCE) exports 52% of the copra and 80% of the 
cocoa in Vanuatu. It provides finance to age nts to purchase copra from farmers from all the 
islands.17 The supply of raw materials is the most significant constraint on exports, followed by 
inadequate equipment, shortage of skills and shortage of working capital.18  
4.23.   A Vanuatu National Coconut Strategy  2016-2025 was issued in 2016 by the DARD  as a 
roadmap to revitalize the coconut sector. Its focus is to diversify the sector rather than relying on 
copra as the only coconut based product. In particular, considering the challenges associated with 
shipping  and transportation costs and the distance from major markets, the Strategy highlights 
the linking of the coconut sector to the tourism industry.19 
4.1.1.6.2   Cocoa  
4.24.   In Vanuatu, around 2,500 hectares of land is used for cocoa plantations. Farmers tend to 
have very smal l plots, and production has been limited due to low yield, as trees were old and 
unproductive.20 
4.25.   The DARD aims to facilitate the development of cocoa production and trade through, 
inter alia, distributing cocoa seeds for planting, improving cocoa quality, a nd encouraging small 
scale cocoa processing. Cocoa seedlings and planter bags were distributed to farmers: 500,000 
cocoa seedlings in 2016 (200,000 in 2017), and 300,000 planter bags in 2016 (100,000 in 2017).  
4.1.1.6.3   Kava  
4.26.   Kava is a plant of the Pacific whose roo ts are used to produce a drink with anaesthetic and 
spiritual properties. Domestic demand for kava was estimated to be about three times its export 
value. This is likely due to the high demand in the domestic market from a growing tourism sector. 
The share  of kava exports to total merchandise exports varies significantly, from 4.2% in 2015 to 
                                                
12 Vanuatu National Coconut Strategy 2016 -2025.  
13 MALFFB online information. Viewed at: https://malffb.gov.vu/index.php?id=1 . 
14 Vanuatu National Coconut Strategy 2016 -2025. 
15 Vanuatu National Coconut Strategy 2016 -2025.  
16 Vanuatu Statistics Office (2017), Statistics Release: Gross Domestic Product 2016 . 
17 Government of Vanuatu, Vanuatu Business Cost Competitiveness.  
18 Government of Vanuatu, Vanuatu Business Cost Competitiveness . 
19 Vanuatu National Coconut Strategy 2016 -2025.  
20 Vanuatu Statistics Office (2017), Statistics Release: Gross Domestic Product 2016 . WT/TPR/S/378 • Vanuatu  
 
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  22% in 2016. This jump may be attributed to the lift of a ban by the European Union on kava 
importation.21  
4.27.   Quality and quantity are considered by the authorities as tw o of the challenges facing the 
kava sector. Vanuatu has around 80 varieties of kava, and fast -growing varieties are often not 
recommended for the beverage market. Thus, the MALFFB issued a National Kava Strategy 
2016-2025, to improve quality.22 Measures sug gested in the Strategy include the development of a 
Kava Quality Management Plan, and the translation of the Kava Act into Bislama (the local 
language in Vanuatu). In 2015 and 2016, the DARD carried out a kava campaign, aimed at 
promoting the 10  best kava varieties. The Kava Act was developed in 2015 with at the aim of 
improving kava quality.   
4.28.   The Government  is also linking the development of kava production and trade with the 
tourism sector. Kava bars are reserved for Vanuatu's citizens (Section 2.4.2).  
4.1.1.6.4   Cattle  
4.29.   Cattle production has been growing in importance in recent years. The number of heads 
slaughtered recovered in 2016 after having been in decline since 2013 (Chart 4.5).  
Chart 4.5 Slaughtered cattle  
 
Source:  Vanuatu National Statistics Office. Statistics released on 18 January 2018.  
4.30.   Commercial livestock production has been the mainstay of meat protein provider s to 
Vanuatu and  export markets. Th e sector is constrained by the lack of farm land  and proper ly 
managed land leases , ambiguous incentives schemes set up by  the Government , as well as a lack 
of access to capital. With a view to facilitating the development of this subsector, the Government 
issued its National Livestock Policy 2015 -2030 in 2015.23 
4.1.2   Fisheries  
4.1.2.1   Features  
4.31.   Data from the Vanuatu National Statistics Office indicate that , in 2016, the fisheries sector 
contributed 3.9% to GDP, and , as of March 2017, live fish trade contributed 3% to total exports. 
About 70% of rural households were engaged in f ishing activities.24 In addition, access fees paid 
                                                
21 MALFFB online information: " With a ban imposed by the European Union lifted soon due to legal 
action, its  importance as a cash crop is gradually accelerating further" . Viewed at: 
https://malffb.gov.vu/index.php?id=1 . 
22 Vanuatu National Kava Strategy 2016 -2025.  
23 Vanuatu National Livestock Policy 2015 -2030: https://pafpnet.spc.int/pafpnet/images/articles/policy -
bank/vanuatu/National%20Livestock%20Policy_Dec2015%2027_01_16.pd f. 
24 FAO online information, Fishery and aquaculture country profiles – the Republic of Vanuatu . Viewed 
at: http://www.fao.org . 
02,0004,0006,0008,00010,00012,00014,00016,00018,00020,000
2012 2013 2014 2015 2016Number of heads
Weight in tonnes
Source:  Vanuatu National Statistics Office.  Statistics released on 18th January 2018.Chart 4.5 [Slaughtered cattle]WT/TPR/S/378 • Vanuatu  
 
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  by foreign fishing vessels have been making significant contributions to government revenue: in 
2017, the Vanuatu Fisheries Department collected VT  441 million in license fees from both foreign 
and Vanuatu -flagged vessels, most of which were foreign owned.  
4.32.   Commercial food fish catch (i.e. deep -water demersal fish, reef fish and coastal pelagic) is 
sold mainly in urban and suburban parts of Vanuatu. Vanuatu also exports live non -food fish for 
aquarium purpose s.  
4.33.   Offshore fisheries target species including certain species of tuna (albacore, skipjack, and 
yellow fin) and giant squid. Coastal fisheries target species including reef fish, coastal pelagic fish 
and invertebrates that include trochus, lobsters, cocon ut crabs and other crustaceans. Both fishing 
and trading activities of  sea cucumber (until a new management system is set up) and green 
snails (2017 -2020) were banned in 2017, because stocks were low.  
4.34.   A licence is required for commercial fishing. Deep bottom longline fishing and the use of 
scuba gear for fishing is banned. According to the authorities, difficulties facing the development of 
the fisheries sector include a lack of data (e.g. data on species caught, the size and/or length of 
the fish caugh t, the total number of fishermen and fishing vessels, and the frequency of fishing 
trips), and the difficulty for fishermen to get bank loans and insurance coverage.  
4.35.   Infrastructure and transport  links among islands also remain a challenge, adding to the co st 
for fishermen to access markets. The lack of sufficient infrastructure in terms of roads, wharfs and 
market facilities, and the lack of proper ice plants and storage facilities led to difficulties in quality 
control, as well as low income for fishermen.25 The authorities state that Vanuatu currently has no 
fish processing factories. In addition, the majority of Vanuatu's fishing vessels are open skiffs, 
ranging in length from 5 to 8 metres. While such vessels are affordable and economical to operate, 
they are not suitable for long fishing trips.  
4.1.2.2   Fisheries trade  
4.36.   Vanuatu generally has a trade surplus in fish and fish products , although their export value 
declined significantly in 2016 (Table 4.1).   
Table 4.1 Imports and exports of fish and fisheries products, 2012 -16 
 2012  2013  2014  2015  2016  
Exports (VT million)       
Live fish  136 88 142 116 53 
Shellfish 27 30 44 27 21 
Fish, other than live  185 139 10 0 14 
Share in total merchandise exports (%)       
Live fish 2.7  2.4  2.3  2.7  1.0  
Shellfish 0.5  0.8  0.7  0.6  0.4  
Fish, other than live  3.6  3.8  0.2  0.0  0.3  
Source:  FAO estimates, and the National Statistics Office of Vanuatu.  
4.37.   The authorities state that Vanuatu's main export markets are Japan for tuna fish and the 
United States for live non -food fish. Vanuatu imports fish mainly from New Zealand and Australia.  
4.1.2.3   Domestic policies  
4.1.2.3.1   Institutional and legislative framework  
4.38.   The Vanuatu Fisheries Department (VFD)  under the MALFFB aims to " ensure sustainabl e 
management, development and conservation of fish resources to achieve maximum social and 
economic benefits to Vanuatu for the  present and future generations". Its core activities include 
formulating policies, regulations and legislative framework, provid ing scientific and development 
advice to fisheries development, and where necessary assisting in supporting fisheries 
development programmes.  
                                                
25 MALFFB online information, Vanuatu National Deep -Bottom Fish Fishery Management Plan . Viewe d at: 
https://www.cbd.int/doc/meetings/mar/soiws -2016-05/other/soiws -2016-05-vanuatu -13-en.pdf . WT/TPR/S/378 • Vanuatu  
 
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  4.39.   The Fisheries Act No. 10 of 2014  is the primary legal instrument for the management, 
development and conservation  of fisheries resources. The Fisheries Regulation Order No. 28 of 
2009 provides the regulatory framework. In addition, there are a number of acts regulating the 
fisheries sector (Table 4.2 ). 
Table 4.2 Fisherie s laws  
Acts Descriptions  
Decentralization and Local Government 
Regions Act (1997)  Empowers provinces to pass by -laws regulating fishing activities 
within their six -mile provincial waters, and to issue fishing 
licences  
Environmental Protection and 
Conservation Act CAP 283  Contains a range of general provisions relating to the protection 
and conservation of the environment. It provides for the 
establishment of community conservation areas and of  
environmental impact assessments  
Maritime Zone Act No.  6 of 2010  Establishes a series of zones in Vanuatu waters from the 
archipelagic baseline. From this baseline the seaward limits of a 
State's territorial waters, contiguous zone and exclusive economic 
zone are measured  
Foreign Investment Promotion Act, 2010 Provides for activities and industries reserved exclusively for 
citizens of Vanuatu. For instance, fishing within the archipe lagic 
waters is reserved for Vanuatu's citizens  
Source:  MALFFB online information, Vanuatu National Deep -Bottom Fish Fishery Management Plan . Viewed 
at: https://www.cbd.int/doc/meetings/mar/soiws -2016-05/other/soiws -2016-05-vanuatu -13-en.pdf . 
4.40.   When the Fisheries Act was promulgated in  2014, Vanuatu was removed from the EU illegal, 
unreported and unregulated (IUU) fishing activities yellow card, which had been issued by the 
European Union in 2012. Also in 2014, a Fisheries Management Advisory Council was established 
to pro vide recommendations to the Director of the VFD on policy matters relating to fisheries 
conservation and management.  
4.41.   Vanuatu's Maritime Act established Vanuatu as an open registry nation for ships. Up till 
now, the Vanuatu International Shipping Registry ( VISR) has had 94 fishing vessels registered. 
According to the Fisheries Act 2014, there are two types of licences for vessels conducting 
commercial fishing or related activities in Vanuatu waters:  
a. a local fishing licence for vessels fully owned by a Vanua tu citizen; and  
b. a foreign fishing licence for vessels not fully owned by a Vanuatu citizen (Article 35).  
4.42.   These licences are valid for a maximum of one year. Depending on the type of licence, fees 
are levied ( Table 4.3).  Foreign fishing vessels (50% domest ic landing or 100% overseas landing), 
locally based foreign fishing vessels, and local fishing vessels pay different fees to the VFD.   
Table 4.3 Fishing licence fees  
Fees for foreign fishing licences  
Fishing category  Size of vessel in 
gross registered 
tons (GRT)  Fees payable 
(50% domestic 
landing)  
(US$)  Fees payable 
(100% 
overseas 
landing)  
(US$)  Locally based 
foreign fishing 
vessel (US$)  
Tuna longline  <100 GRT  20,000  45,000  12,000  
≥100 GRT and 
<400 GRT  30,000  60,000  15,000  
≥400 GRT  67,000  67,000  21,000  
Purse seine  - 50,000  50,000  20,000  
Pole and line  - 8,000  8,000  4,500  
Other methods  - 8,000  8,000  4,500  
Research fishing   5,000  5,000  5,000  
Exploratory and test 
fishing   8,000  8,000  5,000  
Seasonal sport fishing 
(3 months)   n.a. n.a. 500 WT/TPR/S/378 • Vanuatu  
 
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  Fees for foreign fishing licences  
Fees for local fishing vessel 
licences  Efate and Luganville, excluding 
offshore islands and rural 
Santo: licence fees (VT)  Other islands: licence fees (VT)  
≤ 8 metres  20,000  10,000  
> 8 metres  20,000 + 5,000 per metre over 
8 metres  10,000 + 2,500 per metre over 
8 metres  
Sport fishing  50,000  30,000  
n.a. Not applicable.  
Source:  The VFD and the Pacific Islands Forum Fisheries Agency (2014), Revised Tuna Fishery Management 
Plan. Fisheries Regulations Order No. 22 of  2009, schedules 3, 5, and 11.  
4.43.   According to the Fisheries Regulations Order No. 22 of 2009, after each fishing trip, 
operators of foreign fishing vessels must pay: up to 5% of the total value of the catch caught 
within Vanuatu waters, and landed domestical ly; or 5% of the total value of the catch caught 
within Vanuatu waters, and landed overseas. According to the authorities, however, these 
measures have not been applied in practice .  
4.44.   In 2017, the MALFFB issued the National Fisheries Sector Policy 2016 -2031.26 The focus is 
on sustainable stock management and biodiversity conservation, as well as:  
a. advancing small -scale sustainable domestic fisheries and aquaculture development using 
local operations; and  
b. acknowledging the need for larger commercial fishing ve ntures to promote employment 
and improve livelihoods, and ensure food security.  
4.45.   Under the Policy, measures regulating the fisheries sector include mainly: a licensing 
programme for all commercial fishing vessels; limitations on fishing operations; and a to tal 
allowable catch for foreign fishing, locally based foreign, local, and sport fishing vessels. Many of 
the measures were adopted in the management plans for different fisheries subsectors.  
4.1.2.3.2   Management plans  
4.46.   The Fisheries Act requires the Director of the VFD to prepare a plan for the management 
and development of all designated fisheries.  Several plans have been prepared as follows.  
4.1.2.3.2.1   The National Deep -Bottom Fish Fishery Management Plan  
4.47.   In 2016, the VFD launched its National Deep -Bottom Fish Fishery Manage ment Plan, which 
gives details of main management measures, such as: licensing; area restriction; data collection; 
and gear restriction (Table 4.4).27 
Table 4.4 Main measures  
Main measures  Description  
Licensing  Vessels ≥8 met res long must apply for a licence  
Area restriction  Certain fishing vessel sizes are restricted to certain areas  
Data collection  Data collection in fishery has been implemented through two means: licence applications; 
and duty-free fuel as an incentive for fisher men to submit dataa 
Gear restriction  A ministerial order (Conservation and Management Measure for Deep -Bottom Fish Fishery 
Order No. 87 of 2012) prohibits the use of deep -bottom longline gear and restricts the 
number of hooks on a vertical dropline to 10  
a The authorities indicated that duty -free fuel to fishing vessels was discontinued in 2017.  
Source:  MALFFB online information, Vanuatu National Deep -Bottom Fish Fishery Management Plan. Viewed 
at: https://www.cbd.int/doc/meetings/mar/soiws -2016-05/other/soiws -2016-05-vanuatu -13-en.pdf . 
                                                
26 MALFFB  (2017), Vanuatu National Fisheries Sector Policy 2016 -2031.  
27 MALFFB online information, Vanuatu National Deep -Bottom Fish Fishery Management Plan . Viewed at: 
https://www.cbd.int/doc/meetings/mar/soiws -2016-05/other/soiws -2016-05-vanuatu -13-en.pdf . WT/TPR/S/378 • Vanuatu  
 
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  4.48.   Under the VIPA Act, deep bottom snappers are reserved for citizens of Vanuatu. In 
accordance with the Deep -Bottom Fish Fishery Management Plan issued by the MALFFB, two types 
of licences are applied in this type of fishing:  
a. a local fishing licence, issued by the Director of the VFD and required for all fishing 
vessels involved in the ha rvesting of deep -bottom fish species , with a fee collected by 
the VFD; and  
b. a provincial access permit, issued by the relevant provincial government, for all fishing 
vessels wishing to conduct fishing and fishing related activities , with fees collected by 
the relevant provincial government.28  
4.49.   The number of licences is limited to the total number of vessels listed in the vessel register. 
The Director of the VFD monitors the deep -bottom fish fishery catch in all locations comprising 
more than 20% of issued li cences. The ruby snapper, the saddle -back snapper, and the comet 
grouper are indicator species; a minimum of 50% of the catch of these species must be measured 
for length and weight, and their otoliths must be extracted. No further licences may be issued i f 
the Director determines that:  
a. 25% of the ruby snapper catch has a fork length of less than 54 cm;  
b. 25% of the saddle -back snapper catch has a fork length of less than 33 cm; or  
c. 25% of the comet grouper catch has a fork length of less than 44 cm.  
4.50.   In these cases, licences are not issued until appropriate limit reference points for the 
deep-bottom fish fishery are set and accepted, or the trend in the proportion of juveniles in the 
catch decreases to below the above levels over a five -year period.  
4.51.   If the latest annual catch record of the deep -bottom fish fishery in the fishery waters clearly 
exceeds the average yearly catch record of the past five years, the Director will review the impact 
of this catch, and may reduce the total number of licences appr oved. The Director may apply 
additional limits to fishing with the approval of the Minister  of the MALFFB and after consultation 
with the provincial governments, the relevant fishers' associations, key stakeholders and the 
Fisheries Management Advisory Cou ncil (FMAC), if he/she is of the opinion that it is in the interests 
of the sustainability or economic viability of deep -bottom fish fishery in Vanuatu.  
4.52.   The Plan also outline s an area restriction, based on the size of the fishing vessel (Table  4.5). 
Table 4.5 Area restriction for local fishing vessels  
Fishing category  Fishing vessel  
 <10 metres  ≥10 metres  >15 metres  
Artisanal fishing vessels  No restriction  Outside 6 nautical miles Outside 12 nautical miles 
Commercial fishing 
vessels (e.g. Lady 
Christina, Ocean Fishing 
Ltd.) Comply with provincial 
by-laws, if applicable  Outside 6 nautical miles Outside 12 nautical miles 
Source:  MALFFB online information, Vanuatu National Deep -Bottom Fish Fishery Management Plan. Viewed 
at: https://www.cbd.int/doc/meetings/mar/soiws -2016-05/other/soiws -2016-05-vanuatu -13-en.pdf . 
4.53.   Regarding data collection , the VFD is to car ry out a survey in collaboration with relevant 
provincial governments, fishermen's associations, individual fishermen and communities to 
determine the total number of fishing vessels engaged in each type of fishing; and the VFD is to 
design, develop, updat e and maintain a register of fishing vessels involved in each type of 
fishing.29 The authorities indicate that the survey has not yet been conducted.  
                                                
28 MALFFB online information, Vanuatu National Deep -Bottom Fish Fishery Management Plan . Viewed at: 
https://www.cbd.int/doc/meetings/mar/soiws -2016-05/other/soiws -2016-05-vanuatu -13-en.pdf . 
29 MALFFB online information, Vanuatu National Deep -Bottom Fish Fishery Management Plan . Viewed at: 
https://www.cbd.int/doc/meetings/mar/soiws -2016-05/other/soiws -2016-05-vanuatu -13-en.pdf . WT/TPR/S/378 • Vanuatu  
 
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  4.1.2.3.2.2   Revised tuna fishery management plan  
4.54.   In 2014, the VFD, with the assistance of the Pacific Islands Forum Fis heries Agency (FFA), 
issued a revised tuna fishery management plan. The plan revised the management limits in 
Vanuatu's longline fishery exclusive economic zone (EEZ), taking into account bio -economic 
analyses. The plan stipulates various strategies for th e conservation and management of Vanuatu's 
fishery resources, through imposing a maximum number of licences and total allowable catch for 
some tuna species, as well as designating areas closed to or restricting fishing. It revised the 
licensing fees for fo reign fishing vessels, locally based foreign fishing vessels, and local fishing 
vessels (Table 4.3). According  to the plan, no  more than 70 fishing licences  are to be issued each 
year under Vanuatu's longline fishery EEZ.30 If the VFD  receives more applications for licences, 
priority is given to: first, local fishing vessels; second, locally -based foreign fishing vessels; and 
third, foreign fishing vessels.  The authorities state that the number of fishing licences fell from 
107 in 2012  to 69 in 2015, then rose to 90 in 2016 and 171 in 2017.  
4.1.2.4   Border measures  
4.55.   The simple average MFN tariff rate on fish and fishery products is 15.4% in 201 8, higher 
than that on non -agricultural tariff lines (simple average 8%), but lower than that on agricul tural 
tariff lines (simple average 16.9%) . Tariff rates range fr om zero  to 30%, with 3.4% of fishery tariff 
lines duty free.  More than 80% of all fishery tariff lines are at a rate of 15%. Six lines are at a 
tariff rate of 30%:  
a. HS 0306.15: frozen Norway lo bsters;  
b. HS 0306.16: frozen cold water shrimps and prawns;  
c. HS 0306.17: frozen other shrimps and prawns;  
d. HS 0306.34: live, fresh or chilled Norway lobsters;  
e. HS 0306.39: other, including flours, meals and pellets of crustaceans, fit for human 
consumption;  and 
f. HS 0306.92: lobsters.  
4.56.   Export of commercial species of fisheries products requires a licence, which is valid for 
one year. Currently sea cucumber and green snail s are banned from fishing and trade, and exports 
of coconut crab and rock lobster are prohibited.  
4.1.2.5   Support  
4.57.   During the review period, the following supports were provided  to Vanuatu's tuna fish 
sector:  
a. Duty-free concessions: to encourage participation in the development of the domestic 
tuna indust ry, all locally -based vessels with a valid commercial fishing licence are eligible 
for duty exemption on fuel and fishing gear , including bait, fishing equipment and spare 
parts, for their fishing operation s. 
b. Infrastructure development: the VFD gives prefe rence to infrastructure development 
plans when allocating its budget.  
c. Foreign investment: the VFD provides information and support to the Vanuatu Foreign 
Investment Board to attract foreign investment in the tuna industry. Joint ventures with 
a significant  involvement of Vanuatu companies and individuals are given preference.  
                                                
30 VFD and Pacific Islands FFA (2014), Revised Tuna Fishery Management Plan,  August.  WT/TPR/S/378 • Vanuatu  
 
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  d. Legislation to facilitate fish exports: the Tuna Management Advisory Committee (TMAC) 
actively supports the development and implementation of health and other legislation to 
ensure tha t food safety requirements of importing countries are met.  
e. Vanuatu 's citizens  crewing requirements: all Vanuatu -flagged fishing vessels and all 
locally -based foreign fishing vessels are obliged to employ Vanuatu 's citizens  as officers 
and fishing crew, and the employ ment of  Vanuatu 's citizens  on foreign fishing vessels 
operating in the EEZ is strongly encouraged. Local vessels must be crewed by 
Vanuatu 's citizens,  includ ing masters and engineers  wherever possible.31  
4.58.   According to FAO online information, fishery was a significant source of rural income on 
certain islands in the 1980s and 1990s. This was achieved because the Government used technical 
assistance funds to subsidize the fishery sector for over 15 years. How ever, when donor support 
expired, most of the rural fishing centres were closed. Fishery operations continued on the islands 
of Efate, Espiritu Santo and Malekula, where fish transportation and other operational costs make 
fishery commercially viable.32 
4.2  Mining and Energy  
4.2.1   Electricity  
4.59.   The Department of Energy , within the Ministry of Climate Change and Natural  Disaster , is 
responsible for the development of energy policies, legislation and regulations to guide the 
development of energy services in Vanuatu.33 In 2013, the Government developed a National 
Energy Road Map (NERM) with a view to energizing Vanuatu's growth and development through 
the provision of secure, affordable, widely accessible, high quality, and clean energy services. The 
NERM was updated in 201 6; according to it, 83% of rural households still lacked access to 
electricity, compared to 20% of urban households.34 A significant constraint for business in 
Vanuatu is the availability, cost and reliability of electricity and other utilities.35 
4.60.   The Utilit ies Regulatory Authority Act No. 11 of 2007 established the Utilities Regulatory 
Authority (URA). In accordance with the Act, the URA regulates certain utilities, in particular the 
provision of electricity and water services. Its core functions include: mo nitoring and enforcing 
existing concession contracts, which include checking price adjustments, monitoring service 
standards and technical performance; renegotiating tariffs with utility providers; and managing 
consumer complaints.36 Other relevant legislat ion includes: the Electricity Supply Act No. 21 of 
2000 (CAP 65), the Government Contracts and Tenders Act No. 10 of 1998, the Tenders 
Regulations Order No. 40 of 1999, and the Public Finance and Economic Management Act No. 6 of 
1998.37 
4.61.   Between 2006 and 201 6, the average annual growth rate of electricity demand was 3.4%, 
while that for annual customer number growth was 5.8% (Chart 4.6). The  authorities indicate 
that, over the 10 -year period, compared with an annual GDP growth rate of 3%, a 1% increase in 
GDP was associated with a 1.1% increase in electricity consumption. Electricity demand dropped 
significantly in 2015 due to Cyclone Pam. In 2016, the economy, and the electricity demand, 
gradually recovered.  
                                                
31 FAO online information, Fishery and aquaculture country profiles – the Republic of Vanuatu . Viewed 
at: http://www.fao.org . 
32 FAO online information. Viewed at: http://www.fao.org/fi/oldsite/FCP/en/VUT/profile.htm . 
33 DOE online information. Viewed at: https://doe.gov.vu/index.php?r=site/about . 
34 Department of Energy (2016), Updated Vanuatu Na tional Energy Road Map 2016 -2030, June.  
35 Government of Vanuatu, Vanuatu Business Cost Competitiveness. . 
36 URA (2017), Preliminary Decision and  Notice of Request for Comments – Case U -0006-15 in the 
matter of UNELCO's electricity tariff review, September. Viewed at:  
http://www.ura.gov.vu/attachments/article/100/U -0006-15%20 -
%20URA%20Preliminary%20Decision%20 UNELCO%20Electricity%20Tariff%20Review.pdf . 
37 URA online information. Viewed at: 
http://www.ura.gov.vu/index.php?option=com_content&view=article&id=52& Itemid=226&lang=en . WT/TPR/S/378 • Vanuatu  
 
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  Chart 4.6 Electricity demand and customer numbers, 2006 -16 
 
Source:  URA (2017), Preliminary Decision and Notice of Request for Comments – Case U -0006-15 in the 
matter of UNELCO's electricity tariff review, September. Viewed at: 
http://www.ura.gov.vu/attachments/article/100/U -0006-15%20 -
%20URA%20Preliminary%20Decision%20UNELCO%20Electricity%20Tariff%20Review.pdf . 
4.62.   The Government granted three electricity concessions for Port Villa, Malekula and Tanna to 
UNELCO (Concessionaire) in 1986 and 2000 under various concession contracts.38 These contracts 
specified rules regarding service coverage, quality of service, and t he maximum tariffs to be 
charged. In 2011, the Pernix Group  – a power company from the United States – was accepted to 
provide electricity services in Luganville, Santo Island, including the generation, transmission, 
distribution, and billing and collectio n of payments through its local subsidiary, Vanuatu Utilities 
and Infrastructure (VUI) Limited. In addition, a variety of small -scale arrangements exist for the 
supply of electricity.  
4.63.   By September 2017, the main energy source was diesel combustion, which contributed to 
about 80% of the total electricity generated. Windmills generated about 9% of electricity, while 
hydro and solar power contributed about 8% and 3%, respectively.39  
4.64.   The G overnment , with the support of the private sector and donor partners , has launched  
five renewable  projects , which are  now in the completion stage . Another two are about to be built . 
UNELCO has sought alternative sources to supplement its traditional means of power supply 
source, including using coconut oil. In Luganville, hydr opower generates up to 84% of power 
during the rainy season. The VUI provided micro -solar installations to over 155 off -grid 
households, and maintains these facilities at zero cost to the users.  
4.65.   According to UNELCO, electricity tariffs are based on the co nditions stipulated in the 
concession agreement with the Government, and are regularly reviewed (about every five years) 
by the URA. The last tariff review took place in 2010/11. UNELCO tariffs are adjusted monthly, 
mainly to reflect diesel price changes. The current tariff structure adopted by UNELCO contains 
separate customer categories. Each category has different fixed and variable cost charges, and the 
charges are referenced to price P (Table 4.6). The first block small domestic customers are 
supported  by cross subsidization: they pay 34% of the actual costs, while the third block small 
domestic customers pay three times the actual cost. High voltage, business licence holders, and 
other low voltage users also pay the fixed tariff per kilovolt ampere per  month.  
                                                
38 UNELCO  is a subsidiary of France's Suez. VIPA online information. Viewed at: 
http://www.investvanuatu.org/wp/investing/infrastructure/ . 
39 URA (2017), Vanuatu Mo nthly Energy Market Snapshot in September 2017. Viewed at: 
http://www.ura.gov.vu/attachments/article/106/ 2017%2009 -
%20Monthly%20Energy%20Market%20Report%20 -%20September%202017%20 -%20English.pdf . 
02,0004,0006,0008,00010,00012,00014,00016,00018,00020,000
010,00020,00030,00040,00050,00060,00070,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Demand (MWh)
Customer numbers
Source:  URA (2017), Preliminary Decision and Notice of Request for Comments –Case U -0006-15 in the matter of 
UNELCO's electricity tariff review, September. Viewed at:   http://www.ura.gov.vu/attachments/article/100/U -
0006-15%20 -%20URA%20Preliminary%20Decision%20UNELCO%20Electricity%20Tariff%20Review.pdf  
[26/02/2018]Chart 4.6   Electricty demand and customer nubmers, 2006 -16
(MWh) (Numbers)WT/TPR/S/378 • Vanuatu  
 
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  Table 4.6 Electricity tariff structure for Port Vila, Malekula and Tanna  
Type of customer  Type of variable tariff  Variable tariff level  
Per kWh/month  Fixed tariff per 
kVa/month  
Small domestic customers  1st block (0 –60 kWh)  0.34 × P  
0 2nd block (61 –120 kWh)  1.21 × P  
3rd block (121+ kWh)  3 × P  
Other low voltage users  Single block  1.21 × P  5 × P  
Business licence holders  Single block  0.87 × P  20 × P  
Sport s fields Single block  1 × P  0 
Public lighting  Single block  0.54 × P  0 
High voltage  Single block  0.70 × P  25 × P  
Source:  UNELCO Tariff Application V2 2016 -2021. The URA (2017), Preliminary Decision and Notice of 
Request for Comments – Case U -0006-15 in the matter of UNELCO's  electricity tariff review, 
September. Viewed at: http://www.ura.gov.vu/attachments/article/100/U -0006-15%20 -
%20URA%20Preliminary%20Decision%20UNELCO%20Electricity%20Tariff%20Review.pdf . 
4.66.   According to a UNELCO report, electricity bills paid by domestic customers contain: VAT at a 
rate of 15%, a fixed charg e of 3.9%, a fuel excise tax of approximately 8%, a subsidy for small 
domestic customers of approximately 3%, a subsidy for Tanna and Malekula concessions of about 
3%, funding for rural electrification of approximately 3%, and a new (from 2017) URA surchar ge 
of 2%. This surcharge, mandated on all utility invoices, applies to the other elements that 
constitute the utility invoices, and the proceeds are remitted to the URA.40 
4.67.   The VUI does not have a concession agreement with the Government. It is an operation and 
management arrangement. Tariffs in Luganville are set by the URA, not by the VUI. The 
authorities indicate that electricity tariffs in Luganville are much lower than in Port Vila, Malekula 
and Tanna, as electricity is mainly generated by hydropower in Luganville.  
4.68.   According to a report by the URA on the regional comparison of electricity bills, in June 
2017, small domestic customers in Vanuatu were charged significantly less than the regional 
average, due to cross -subsidization from large and business cu stomers. Other low voltage users, 
who were relatively high domestic users in Vanuatu, were charged significantly more than the 
regional average, and subsidize other users; some business customers paid below  the Pacific 
average rate, while some paid over it .41 
4.3  Manufacturing  
4.69.   In Vanuatu's economy, the role of manufacturing is limited. In 2016, manufacturing 
accounted for 3.4% of GDP (3.8% in 2012).  
4.4  Services  
4.4.1   Main features and GATS commitments  
4.70.   The services sector accounts for about two thirds of Vanuatu's GDP (Ta ble 4.7). In 2016, 
the main services subsectors were: wholesale and retail trade and repair of motor vehicles, 
government services, finance and insurance, and real estate. During the review period, growth 
rates of value added in many services subsectors we re rather volatile, particularly the transport 
and storage services; the professional, scientific, technical and administrative services; and the 
information and communication services. The services sector, notably travel (particularly personal 
travel), is  a net foreign exchange earner (Table 1.5). Services exports accounted for 87% of 
Vanuatu's total exports (of goods and services) in 2017 (Table 1.4).  
                                                
40 UNELCO online information. Viewed at: https://www.unelco.engie.com/en/electricity/elec tricity -rates. 
41 URA (201 7), Comparative Report Pacific Region Electricity Bills , June. Viewed at: 
http://www.ura.gov.vu/attachments/article/106/Electricity%20Price%20Comparison%20 -
%20Pacific%20Area%20June%202017%20(2).pdf . WT/TPR/S/378 • Vanuatu  
 
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  Table 4.7 Vanuatu's services indicators, 2012 -16 
 2012  2013  2014  2015  2016  
Services (% of current GDP)  65.3 64.9 64.5 65.4 66.6 
 Wholesale and retail tr ade;  
 repair of motor vehicles  18.4 18.1 18.8 19.1 20.3 
 Transportation and storage  5.6 5.2 4.9 3.9 4.2 
 Accommodation and food services  5.3 5.4 5.2 4.5 4.6 
 Information and communication  4.0 4.4 4.5 4.6 4.6 
 Finance and insurance  7.1 7.7 7.4 8.7 8.7 
 Real estate  7.3 7.2 7.4 8.0 7.8 
 Profess ional, scientific, technical  and 
 administrative services  2.7 2.7 2.6 2.6 3.4 
 Government services  12.9 12.4 11.7 12.1 11.3 
 Education, health, recreation, and 
 other services  2.0 1.9 2.0 1.9 1.8 
Services (% growth rate)  4.4 0.1 2.4 2.0 2.9 
 Wholesale and retail trade;  
 repair of motor vehicles  6.6 -0.8 5.1 3.5 2.4 
 Transportation and storage  28.9 -22.6 -5.9 -4.0 1.3 
 Accommodation and food services  4.4 3.7 1.3 -9.7 3.7 
 Information and communication  -8.4 8.3 7.9 7.0 6.0 
 Finance and insurance  -0.1 8.1 -0.3 6.8 0.2 
 Real estate  9.1 1.8 2.7 1.8 3.6 
 Professional, scientific, technical  and 
 administrative services  -20.0 -0.9 -1.2 9.7 18.3 
 Government services  2.0 6.4 1.8 1.6 1.8 
 Education, health, recreation, and 
 other services  1.4 -5.6 8.8 -4.1 -7.4 
Source:  Vanuatu National Statistics Office online information; and data provided by the authorities . 
4.71.   Under the GATS, Vanuatu scheduled horizontal commitments on commercial presence and 
the presence of natural persons for all sectors included in its schedule.42 Regarding commercial 
presence, government approval is required for all foreign investors under the Foreign Investment 
Act No. 15 of 1998 and its amendments, while the purchase of real estate is subject to limitations. 
The presence of natural persons is un bound, except for the entry and temporary stay of natural 
persons with managerial and technical skills, which are in short supply in Vanuatu or of those who 
fall within the categories of: business managers; intra -corporate transferees; or certain 
professio nals.  
4.72.   Vanuatu has made specific commitments under GATS in almost all services sectors:  
a. business services ( professional, computer and related, and other business services ); 
b. communication services (courier, telecommunication, and audiovisual services);  
c. construction and related engineering services (general construction work for buildings, 
and general construction work for civil engineering);  
d. distribution services (commission agents, wholesale trade, retailing, and franchising 
services);  
e. education service s (primary education, secondary education, higher education, adult 
education, and other education services);  
f. environmental services (sewage, refuse disposal, and sanitation and similar services);  
g. financial services ( all insurance and insurance related se rvices,  and banking and other 
financial services );  
h. health related and social services (hospital services, and social services);  
                                                
42 WTO document WT/ACC/VUT/17/Add.2, 11 May 2011.  WT/TPR/S/378 • Vanuatu  
 
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  i. tourism and travel -related services (hotels and restaurants including catering, and travel 
agencies and tour operators service s); and  
j. transport services (air transport services).  
4.73.   Vanuatu's list of Article II (MFN) exemptions are cross -sectoral MFN exemptions; citizens 
and permanent residents of MSG countries may be granted a waiver from the normal investment 
and right of temporary sojourn obligations of Vanuatu law.  
4.4.2   Financial services  
4.74.   Financial services (finance and insurance) accounted for 8.7% of GDP in 2016 . In 2017, 
total assets of the financial sector were about VT 130 billion, of which commercial banks accounted 
for around 87%, while the insurance sector remains small (Table 4.8).  
Table 4.8 Gross assets of Vanuatu's financial system, 2012 -17 
 2012  2013  2014  2015  2016  2017  
Total assetsa (VT billion)  95.6 100.6  104.3  120.2  121.8  130.3  
 Commercial banks  82.8 85.1 88.3 95.8 104.8  112.8  
 Credit institutions  0.5 0.6 0.8 0.7 0.8 .. 
 Insurance companies  1.6 1.9 1.6 7.9 3.0 2.7 
 Vanuatu National Providence Fund  10.2 12.3 13.0 15.2 13.2 .. 
Market share        
 Banks  86.5%  84.7%  84.7%  79.7%  86.0%  86.6%  
 Insurance companies  1.7%  1.9%  1.6%  6.6%  2.5%  2.1%  
a Includes other regulated financial institutions.  
.. Not available.  
Source:  Information provided by the authorities.  
4.75.   Vanuatu undertook various financial services commitments under the GATS. With respect to 
banking and other related services (CPC 811 -813), Vanuatu applies no market access limitations 
on services delivered via cross -border supply and consumption abroad43, while commercial 
presence requires banks to co mply with the provisions of the relevant banking legislation. Vanuatu 
applies no national treatment limitations on modes 1, 2 and 3 of banking and other related 
services.44 Vanuatu has bound market access and national treatment with respect to all insurance  
and related services (CPC 812) delivered via cross -border supply, consumption abroad, and 
commercial presence.45 
4.76.   Banks carrying out business in Vanuatu are supervised and regulated by the Reserve Bank 
of Vanuatu (RBV), which is the central bank. Offshore b anks, which deal with non -residents, are 
also supervised and regulated by the RBV.46  
4.77.   In addition, the RBV regulates and supervises the non -deposit -taking financial services 
industry,  including 12 insurance companies, the Vanuatu National Provident Fund (th e 
Government's pension scheme), Credit Corporation Vanuatu Limited, the Agriculture Development 
Bank, and a number of credit unions. According to the IMF, the non -bank financial sector remains 
small and not sufficiently regulated.47 
4.78.   The Vanuatu Financial Se rvices Commission (VFSC) was established in 1993  following the 
enact ment of  the Vanuatu Financial Services Commission Act No. 35 of 1993 . It administers 
certain legislation (Table 4.9). It is modernizing, with the support of the Asian Development Bank 
(ADB), the Companies Act, and the Companies (Insolvency and Receivership) Act. A bill for the 
regulation and supervision of trust and company service providers was passed by Parliament. The 
                                                
43 The authorities stated there are restrictions on dividends payments and transfer s for the purpose of 
the maintenance of adequate capital.  
44 The RBV deducts placements of funds offshore by subsidiaries and branches (with non -related 
entities) on capital for the purpose of capital adequacy ratio.  
45 WTO document WT/ACC/VUT/17/Add.2, 11 M ay 2011.  
46 Offshore banks were previously supervised by the Vanuatu Financial Services Commission (VFSC).  
47 IMF (2016), Vanuatu Article IV Consultation 2016, IMF Country Report No.  16/336, October.  WT/TPR/S/378 • Vanuatu  
 
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  VFSC is also proposing to introduce a new Trustee Act. Amendments to t he Business Names Act 
passed through Parliament and were gazetted in 2015.48  
Table 4.9 Legislation  
Laws and regulations administered by the VFSC  
Business Names (Amendment) Act No.  10 of 2015  
Companies (Insolvency and Receivership) Act No.  3 of 2013  
Companies Act No.  25 of 2012  
Company and Trust Services Providers Act No.  8 of 2010  
Charitable Associations (Incorporation) Act [CAP 140] and Amendments  
Credit Unions Act [CAP 256] and Amendmentsa 
Dealers in Securities (Licensing) Act [CAP 70] and Amendments  
Electronic Transactions Act No.  24 of 2000 and Amendments  
E-Business Act No.  25 of 2000 and Amendments  
Foundation Act No.  38 of 2009  
Incorporated Cell Companies Act of 2009  
International Companies Act [CAP 222] and Amendments  
Insolvency (Cross -border) Act No.  4 of 2013  
Mutual Funds Act No.  38 of 2005  
Offshore Limited Partnerships Act No.  39 of 2009  
Partnership Act [CAP 92]  
Personal Property Securities Act No.  17 of 2008  
Protected Cells Companies Act No.  37 of 2005 and Amendments  
Trade Unions Act [CAP 161]  
United Trusts Act No.  36 of 2005  
a The Credit Unions Act is being reviewed to improve prudential supervision and AML and CFT , and to 
transfer registration of credit unions to the RBV. Currently, credit unions are registered by the VFSC 
and supervised by the RBV.  
Source:  VFSC online information. Viewed at: http://www.vfsc.vu/l aws-regulations/ . 
4.4.2.1   Banking  
4.79.   Five banks  are licensed by the RBV: the National Bank of Vanuatu (NBV), the Australia and 
New Zealand Banking Group (ANZ), the BRED Vanuatu Limited (BVL), the Bank of South Pacific 
(BSP), and the European Bank Limited (EBL). Currently, four of these serve the domestic market, 
while the EBL (now Wanfuteng Bank) is being restructured.  
4.80.   Three commercial banks – ANZ, BVL, and BSP – are foreign -owned. The NBV  was a fully 
government -owned statutory organization, with a mandate to cater to Vanuatu  citizens  clients. It 
underwent ownership restructuring, and is now 70% owned by the Government, 15% owned by 
the National Provident Fund, and 15% owned by the Internat ional Finance Corporation. The NBV 
provides micro -finance, loans to SMEs, and commercial loans.  
4.81.   According to a Diagnostic Trade Integration Study (DTIS) Report, micro -finance products 
involved loans of up to VT 50,000 (US$500) for agricultural and retail purposes for individuals from 
remote islands, with an annual interest rate of 27%; the level of arrears for these loans was low 
and the recovery rate was good. On the other hand, loan recovery from SMEs had proven 
problematic; SMEs with a turnover of more than VT 30 million made up 80% of NBV's SME 
clients.49 
4.82.   Banks' performance was affected significantly by Cyclone Pam in 2015; capital adequacy 
ratios (CARs) declined between 2012 and 2015, while asset quality deteriorated as the 
non-performing loans ratio ro se (Table 4.10). However, according to an IMF Article IV report, the 
financial soundness of the banks has been improving since the last quarter of 2015.50 The 
improvement was attributed to the RBV's accommodative stance in the aftermath of the cyclone, 
lowering the statutory reserve deposit (SRD) requirement and the liquid asset requirement (LAR) 
to alleviate potential liquidity pressure on banks.51  
                                                
48 VFSC online information. Viewed at: http://www.vfsc.vu/about -us/new -developments -2/. 
49 Department of Trade, Industry and Investment (2008), Vanuatu DTIS Report 2008, Port Vila.  
50 IMF (2016), Vanuatu Article IV Consultation 2016, I MF Country Report No.  16/336, October.  
51 IMF (2016), Vanuatu Article IV Consultation 2016, IMF Country Report No.  16/336, October.  WT/TPR/S/378 • Vanuatu  
 
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  Table 4.10 Banks' financial soundness indicators, 2012 -17 
(%) 
 2012  2013  2014  2015  2016  2017  
Capital adequacy        
 Regulatory capital to risk -weighted assets  20.5 18.1 17.6 16.4 19.4 17.9 
 Regulatory Tier 1 capital to risk -weighted 
 assets  18.3 15.9 16.7 16.2 16.4 15.6 
Asset quality        
 Non-performing loans net of provisions to 
capital  12 37.4 49.4 69.3 41.8 57.4 
 Non-performing loans to total gross loans  8.1 13.5 11.1 12.6 10.8 15.1 
Earnings and profitability        
 Return on assets  0.6 0.4 0.4 0.6 1.5 0.1 
 Return on equity  4.3 3.1 3.0 4.6 11.3 3.8 
 Interest margin to gross income  46.5 50.1 54.3 49.7 64.6 63.6 
 Non-interest expenses to gross income  52.4 46.9 55.2 51.4 64.8 63.2 
Liquidity        
 Liquidity assets to total assets (liquidity asset 
 ratio)  18.8 26.1 23.8 26.2 32.9 35.5 
Source:  RBV. 
4.83.   Interest rates remained high on lending for business activities, and substantial interest rate 
spreads persisted, reflecting, inter alia , the high cost and high risk of credit potentially arising from 
small scale, vulnerability to shocks, and geographic di spersion of the islands.52  
4.84.   In accordance with the Financial Institutions Act of 1999, banks need to obtain a licence 
from the RBV to operate in Vanuatu once they meet prudential requirements. The RBV expanded 
the Basel II prudential requirements (on CARs, liquid asset ratios, exposures to capital 
requirements) into prudential guidelines, and issued 11 prudential guidelines for domestic banks, 
and 12 for international banks.  
4.85.   The Financial Institutions Act of 1999 eliminated difference s in capital requiremen ts for 
locally -owned and foreign -owned banks, and stipulated that paid up capital and unimpaired 
reserves of  VT 200 million were necessary for all banks and branches of banks.53 Offshore banks 
require a minimum paid up capital of US$500,000. The RBV imposes  a minimum CAR of 12% for 
both domestic and international banks.  
4.86.   The authorities are considering ways to improve access to credit. Efforts include the 
establishment of a National Financial Inclusion Task Force in 2013, a separate Financial Inclusion 
Unit a t the RBV in 2016, and financial literacy programmes operated by banks. Recently, the 
Vanuatu National Financial Inclusion Strategy (2018 -2022) was also launched. Amendments to 
legislation relating to AML and CFT were completed in 2017. The RBV is drafting  a new Credit 
Union Act to improve supervision.54  
4.87.   Offshore banking comprises seven banks (one is in the process of revocation, and another is 
yet to be operational). They registered a decrease in asset size at the end of 2017. Total assets 
declined by 26.1% to US$78.8 million, compared to US$106.7 million  in 2016, reflecting mainly 
decreases in loans and advances (by 29% to US$29.3 million), marketable securities (by 46.4% to 
US$9.2 million), and investment (by 28.6% to US$16 million). Total liabilities (excluding capital) 
also decreased by 32.3% to US$59. 5 million in the same year. The annual loss was 
US$1.3  million, compared to an annual loss of US$1.5 million in 2016. The total capital base grew 
by 2.4% to US$19.3 million. The RBV considered that the offshore banking industry was well 
capitalized, with a  further CAR increase from 88% in 2016 to 98% in 2017.  
4.4.2.2   Insurance  
4.88.   The insurance services sector is regulated under the Insurance Act No. 54 of 2005 and the 
Insurance Regulation Order No. 16 of 2006. The RBV is the insurance sector regulator.  
                                                
52 IMF (2016), Vanuatu Article IV Consultation 2016, IMF Country Report No.  16/336, October.  
53 WTO document WT/ACC/VUT/17/Add. 2, 11 May 2011.  
54 IMF (2016), Vanuatu Article IV Consultation 2016, IMF Country Report No.  16/336, October . WT/TPR/S/378 • Vanuatu  
 
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  4.89.   The insurance  sector is composed of insurance managers, insurance agents, an insurance 
loss adjuster, insurance brokers, captive insurers, external insur ers, international insur ers, and 
local insurance companies, as well as one reinsurance company and one protected cel l company 
(Table  4.11). All are foreign -owned.  
Table 4.11 Insurance service providers  
 Descriptions  Companies  
Insurance 
managers  A person/entity licensed to act as an 
insurance manager to, or provide 
manager services for, external and 
captive insurers  International Finance Trust Company Limited 
(IFTC)  
Risk Management International Consulting 
Limited  
Ron Pattenden  
Willis New Zealand  
Thelma Tapasei  
Insurance 
agents  A person/entity who, with the authority 
of an insurer but not being the employee 
of that insurer, acts on behalf of the 
insurer in e stablishing an insurance policy  ANZ Bank (Vanuatu) Limited  
John Lum & Associates Limited  
Sportscover Vanuatu Limited  
Surata Tamaro Travel Limited  
NBV 
EDNA Ratonel  
Credit Corporation Vanuatu Ltd . 
LT Equity Consultant Insurance Ltd . 
Insurance 
loss adjusters  Assesses the amount of compensation 
that should be paid after a person has 
claimed on their insurance policy  McLarens Young (Vanuatu) Limited  
Insurance 
brokers  Acts on behalf of a prospective customer 
and, with the prospective customer's 
authority , arranges insurance business 
with insurers, including making proposals 
and paying premiums  AON (Vanuatu) Limited  
Marsh Insurance Brokers Pty. Limited  
Willis New Zealand Limited  
Chartered Pacific Insurance Brokers Limited  
Aerosure Ltd . 
Arthur J Gallagher & Co . (Aust) Ltd . 
Poe-Ma Vanuatu Insurance Brokers Ltd . 
Captive 
insurance  A licensed insurance company that 
carries out insurance business for the 
purpose of predominantly insuring 
interests:  
- in the parent company;  
- in companies that it is affiliated or 
associated with; or  
- in companies organized within a group 
or agency relationship  Biltmore Life Insurance Company Limited  
Boston Marks Insurance Limited  
Caledonian Insurance Co., Limited  
Oceania Insurance Limited  
Pacific Casualty & General Insurance Limited  
Orbit International Insurance PCC Ltd . 
Centron  Insurance ICC Ltd . 
Platinum Insurance Ltd . 
External 
insurance  An insurance company incorporated 
outside Vanuatu that is licensed to carry 
out insurance business in Vanuatu  Dominion Insurance Limited  
Society of Ll oyd Underwriters Corp . 
International 
insurance  An insurance company incorporated in 
Vanuatu that does not provide domestic 
insurance products in Vanuatu  Sportscover Insurance Ltd.  
Crown Insurance Services Limited  
Exsular Insurance Corporation Ltd . 
Local 
insurance 
companies  A company incorporated in Vanuatu that 
carries out insurance business inside or 
outside Vanuatu  QBE Insurance (Vanuatu) Limited  
Vancare Insurance Ltd . 
Tower Insurance  
Reinsurance  Reinsurer  EverBest Re Corporation Ltd.  
Protected Cell 
Companies 
(PCC ) A form of company structure. A single 
legal entity comprise d of a core and 
several cells that are not legally separate 
from the core company  Orbit International Insurance PCC Limited  
Source:  Information provided by the authorities. And RBV online information. Viewed at: 
http://www.rbv.gov.vu/index.php?option=com_content&view=article&id=138&Itemid=117&lang=en  
4.90.   An insurance company may provide either life or general insurance, but cannot operate as a 
composite insurer. The authorities state that there is currently no life insurance operating in 
Vanuatu. An insurance company may not provide both insurance and bank ing services. 
Compulsory insurance products are: comprehensive third -party insurance for vehicles, as required 
by the Traffic Act; and workers' compensation insurance, as required by the Labour Act.  
4.91.   Insurance premiums are set by the insurance companies. In 2016, the total gross premium 
in the domestic insurance market went up by 5% to VT  1.5 billion (Table 4.12). Total premiums WT/TPR/S/378 • Vanuatu  
 
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  transacted through insurance brokers for the domestic market fell from VT  1 billion in 2016 to 
VT 959 million in 2017. Total broke rage paid to brokers as at end -December  2017 was 
VT 188 million, an increase of 30% from 2016. Reinsurance, as provided by the EverBest Re 
Corporation Ltd., reached a peak in both its premiums and expenses in 2014. O ffshore  insurance 
experienced a dramatic  decline in 2014,  when its assets fell by 39% to US$10.2 million.  
Table 4.12 Premiums for insurance companies  
 2012  2013  2014  2015  2016  2017  
Gross premiums for domestic market 
(VT billion)  1.3 1.41 1.4 1.43 1.5 .. 
Reinsurance       
 Gross premium (US$ million)  n.a.a 1.3 10.2 7.4 6.9 .. 
 Expenses (US$ million)  n.a.a 1.2 10.1 7.1 6.4 .. 
Insurance brokers        
 Gross premium (VT million)  802.8  884.2  931.7  1,000  1,000  959 
 Brokerage (VT million)  206.8  123.1  179.5  147.3  144.3  188.3  
International and captive 
aggregate        
 Asset s (US$ million)  13.5 16.8 10.2 11 11.9 10.3 
 Liabilit ies (US$ million)  6.6 6.2 1.7 1.7 6.2 7.4 
 Net asset s (US$ million)  6.9 10.6 7.3 9.3 5.7 2.9 
 Gross premium (US$ million)  7.4 6.1 12.2 9.2 4.1 4.3 
a The reinsurance company obtained its licence in 2012.  
.. Not available.  
Source:  Information provided by the authorities.  
4.92.   The authorities state that two insurers were heavily affected by Cyclone Pam in 2015. 
Among the 777 claims, most (98%) were closed or settled. The authorities indicate that  
VT 5.5 billion (52%) of the original estimated total loss of VT 10.5 billion was paid by insurers.  
4.4.3   Telecommunications  
4.4.3.1   Main features  
4.93.   Since the introduction of competition in 2008,  the promulgation of sectoral legislation and 
the establishment of the sectoral regulator in 2009, and the construction and launch of the ICN1 
submarine cable linking Vanuatu and Fiji in 2014, the telecommunication services sector has been 
growing fast, wi th significant increases in subscribers and market revenue (Table  4.13).  
Table 4.13 Telecommunication indicators, 2014 -17 
 2014  2015  2016  2017  
Mobile subscriptions  159,148  180,424  218,603  232,564  
Mobile data subscriptions (estimation)  5,000  35,000  60,000  78,000  
Fixed Internet subscriptions  4,228  4,248  4,486  4,802  
Fixed -line telephone subscriptions  5,382  4,632  4,555  4,424  
Total mobile data downloads (MB)  16,251,427  85,435,487  272,693,622  663,137,541  
Market gross revenues (VT billion)  3.89 3.95 4.48 5.12 
Households with a computer  .. .. 22.6% .. 
Households with Internet access at home  .. .. 29.4% .. 
Individuals using Internet  .. .. 24% .. 
.. Not available.  
Source:  Telecommunications and Radio -communication Regulator  (TRR) (2017), Telecommunications Sector 
Report 2017 . ITU ICT -Eye (http://www.itu.int/icteye ). And information provided by the authorities.  
4.94.   The growth was mostly driven by the large increase  in the use of mobile technologies, and 
mobile penetration went up from 12% in 2007 to 85% in 2017 (Chart 4.7).55 The increase in the 
number of mobile subscribers may be attributed to, inter alia : increased competition between 
mobile providers; the release of 4G licences; and increasing mobile network coverage under the 
Government's Universal Access Policy (UAP), which gave more areas and people access to mobile 
                                                
55 TRR (2017), Telecommunications Sector Report 2017.  WT/TPR/S/378 • Vanuatu  
 
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  services (Section 4.3.3.2).56 However, the number of fixed telephony subscribers reached its peak 
in 2008, with a penetration rate of 4.6%. Since then, the number of fixed telephone line 
subscribers has continued to decline, as consumers found it easier and more affordable to use 
mobile services. In 2017, the fixed line penetration rate fell to 1.6%.  
Chart 4.7 Telecommunication indicators per 100 inhabitants, 2016 and 2017  
 
Source:  ITU online information and data provided by the authorities.  
4.95.   Vanuatu's telecommunication services sector is open. Under its G ATS commitment, Vanuatu 
bound market access and national treatment with respect to the telecommunication services 
delivered via cross -border supply, consumption abroad, and commercial presence (from 2012).57 
The telecommunications market, including that for  mobile and fixed -line telephone services, is 
open to domestic and foreign service providers, subject to the relevant legislation and to Vanuatu's 
GATS commitments.  
4.96.   The sector is regulated by the Telecommunications and Radiocommunications Regulation 
Act No . 30 of 2009 . In accordance with the Act, a Telecommunications and Radio -communication 
Regulator (TRR) was established in 2009 to be the sectoral regulator issuing licences to 
telecommunication and radio -communication service providers. In 2015, the  Telecommunications 
and Radiocommunications (Consumer Protection) Regulation Order No. 157 of 2015 was gazetted.  
4.97.   Any person, local or foreign, may apply for a telecommunications licence. It is valid for 
15 years and is renewable, subject to approval by the TRR. The TRR charges a licence fee: 2.25% 
of the licensee's quarterly gross revenue. The fee  is payable by all registered licensee s (domestic 
and foreign ) on a quarterly basis.  All licences are unified – licensees choose the types of services 
they wish to provide. Currently, both Telecom Vanuatu Ltd. and DigiCel provide mobile, Internet, 
and fixed telephony services, while another six companies chose to provide Internet services only 
(Table  4.14).   
Table 4.14 Current telecom licensees  
Company  Date issued  Services provided  Current 
status  If 
amended  Date 
amended  
Telecom Vanuatu Ltd.  11/03/2008  Mobile/Internet/Fixed  Operating    
DigiCel (Vanuatu) Ltd.  14/03/2008  Mobile/Internet/Fixed  Operating  Yes  22/09/2009  
Telsat Broadband Ltd.  22/09/2009  Internet  Operating    
Wantok Network Ltd.  22/09/2009  Internet  Operating  Yes  31/04/2014, & 
16/12/2016  
Interchange Ltd.  22/09/2009  Internet  Operating  Yes  02/02/2010  
Incite  30/09/2010  Internet  Operating    
Spim Ltd.  01/04/2011  Internet  Operating    
Global Telecom Pacific 
Ltd. 06/03/2015  Internet  Operating    
Source:  TRR online information. Viewed at: https://www.trr.vu/en/telecom -
industry/licenses/telecommunications -licence . 
                                                
56 TRR (2017), Telecommunications Sector Report 2017 . 
57 WTO document WT/ACC/VUT /17/Add.2, 11 May 2011.  
2016 20170102030405060708090
Fixed-telephone subscriptions
Mobile-cellular subscriptions
Fixed (wired)-broadband subscriptions
Mobile-broadband subscriptionsChart 4.[]   Telecommunication indicators per 100 inhabitants, 2016 and 2017
Source:  ITU online information and data provided by the authorities.WT/TPR/S/378 • Vanuatu  
 
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  4.98.   Telecom Vanuatu Limited  (TVL) had, for many years, been the sole supplier of 
telecommunication services. In 2008, competition was introduced, and DigiCel entered the market. 
TVL is  predominantly a fixed -line telephone service provider, while DigiCel supplies a small 
proportion of the fixed telephony service. They both provide mobile communication services. Both 
are foreign invested companies.  
4.99.   In 2014, the construction and launch of  the ICN1 submarine cable stimulated a substantial 
increase in access to, and usage of, the Internet, with increased availability of higher -speed 
Internet services on both fixed and mobile networks, and larger data download plans. In 2016, 
international ba ndwidth had grown by 650% since January 2014. The increased availability of 
mobile data, due to significant reductions in data and handset costs, and the increased network 
coverage, have encouraged consumers to use over -the-top (OTT) services58, and there h as 
consequently been a decline in SMS messaging and in international call volumes. In addition, the 
first Internet Exchange Point was launched in 2012, which also greatly strengthened the national 
infrastructure in telecommunication services.59  
4.100.   Interchange  Limited, a public -private company, completed its ICN1 submarine cable, 
linking Port Vila to Suva, in Fiji, in January 2014. Between 2014 and October 2017, telecom 
companies could lease the cable through a wholesaler – Fidelity Communication Corporation. 
Following an anti -competitive investigation on the price of bandwidth capacity at the wholesale 
level, TRR required that all proposed price and non -price terms and conditions of supply be 
reviewed and approved by the TRR, with a view to ensuring that prices  are cost based and not 
discriminatory. As part of the outcome of the investigation, Interchange Limited began offering 
capacity leases in October 2017, the price of which was approved by the TRR at US$285 per Mbps 
per month. Both TVL and DigiCel chose thi s capacity lease.  
4.101.   Interconnection, i.e. the physical linking of a telecommunication carrier's networks to 
another carrier's networks, allows the exchange of services, in particular voice, data and SMS 
traffic, to flow from one network to another . Intercon nection charges are not set by the TRR; they 
are formulated through commercial negotiations between the interconnecting parties. The TRR 
may mediate if the parties are not able to agree on interconnection terms or pricing. The TRR 
requests information from  all licensees on a six -monthly basis, to enable monitoring of any 
cross-subsidization.  
4.102.   The TRR is also responsible for the ma nagement of the national spectrum in accordance 
with the Telecommunications and Radiocommunications Regulation Act, the Radio App aratus 
Licence and Spectrum Licence (Fees) Regulation, and other relevant legislation. The Act contains 
provisions related to competition and consumer protection (Section 3.3).  
4.4.3.2   Information and communication technologies (ICT) and the UAP  
4.103.   Policies related t o telecommunication services and ICTs are developed by the National ICT 
Development Committee, the Office of the Government Chief Information Officer (OGCIO), and the 
TRR. In 2013 and 2014, the Government launched a national ICT policy, a cyber -security po licy, 
and a UAP.  
4.104.   The National ICT Policy provides a roadmap for the development of the ICT sector around 
eight core priorities, i.e.:  
a. access to ICT in education;  
b. access to ICT infrastructure and devices;  
c. e-government;  
d. integration of ICT into sectoral policies (e.g. agriculture, trade, finance, forestry, health);  
                                                
58 Examples of OTT services are Facebook, Messenger, and WhatsApp.  
59 National Information and Communication Technology Policy, December 2013. Viewed at: 
https://ogcio.gov.vu/images/Vanuatu -National -ICT-Policy -EN.pdf . WT/TPR/S/378 • Vanuatu  
 
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  e. building trust, and mitigating risks related to ICT development;  
f. developing locally relevant content;  
g. building capacity, including literacy; and  
h. establishing a platform for multi -sector coordin ation and collaboration.  
4.105.   Currently, the ICT -related legal framework contains:  
a. the Telecommunication and Radiocommunications Regulation Act No. 30 of 2009;  
b. the Telecommunications Act [CAP 206];  
c. the Wireless Telegraph (Ships) Act [CAP 5];  
d. the Electronic Tra nsactions Act No. 24 of 2000 (as amended by the Statute Law 
(Miscellaneous) Provisions Act No. 2 of 2010), which regulates electronic transactions 
and related matters, including e -records, e -contracts, and e -signatures;  
e. the E -Business Act No. 25 of 2000 (a s amended by the E -Business (Amendment) Act 
No. 17 of 2007); and  
f. the Broadcasting and Television Act [CAP 214].  
4.106.   As part of the ICT policy, both the private and the public sectors have been implementing 
projects to further enhance the ICT sector. These incl ude the Government Broadband Network 
(which connects all provinces), the Integrated Government (iGov) initiative, the provision of 
4G services, and the E -Government Strategic Roadmap.  The Government Broadband Network, 
badly damaged by C yclone  Pam, was rebu ilt in November 2017. The private sector is expanding 
the use of ICT in tourism and travel services, providing Internet banking, and launching online 
shopping tools.60 
4.107.   ICT development in Vanuatu faces a number of challenges, particularly geographical and 
topographical challenges, as the population is spread across numerous islands. The Government 
launched its UAP, with a target of making ICT available to 98% of the population by 2018.61 
According to the  TRR, the target has already been reached, as ICT is avai lable to 98.8% of the 
population.  
4.108.   The UAP aims to expand telecommunications services to underserved and unserved areas, 
and the TRR was designated by the Government to implement this policy. In accordance with the 
UAP, telecommunication services covered by  this Policy are provided to end users at 
geographically uniform prices.  
4.109.   The TRR followed a "play" or "pay" approach. Under the "play" approach, the TRR signed 
contracts with three UAP providers: TVL, DigiCel, and Telsat Broadband Ltd.62 These service 
providers committed to building and expanding telecommunication infrastructures and/or 
upgrading services to underserved and unserved areas, at their own cost. The "pay" approach is 
where other service providers pay a levy imposed by the TRR: 4% of their annua l net revenue. 
This levy is channelled to the UAP Fund, to facilitate the implementation of the UAP.  
                                                
60 National Information and Communication Technology Policy, December 2013. Viewed at: 
https://ogcio.gov.vu/images /Vanuatu -National -ICT-Policy -EN.pdf . 
61 TRR online information. Viewed at: 
https://www.trr.vu/attachments/category/215/universal_access_policy.pdf . 
62 TRR online informat ion. Viewed at: https://www.trr.vu/index.php/en/telecom -industry/universal -
access/universal -access -policy . WT/TPR/S/378 • Vanuatu  
 
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  4.4.4   Transport  
4.110.   Transport and storage accounted for 4.2% of GDP in 2016, down from 5.6% in 2012 
(Table  4.7). The growth rate in this sector varies considerably;  from a positive and significant 
growth at a rate of 28.9% in 2012, to a contraction at a rate of 22.6% in 2013. This was followed 
by further declines in 2014 ( -5.9%) and 2015 ( -4%), until it recovered in 2016 (1.3%). Transport 
services are a major constra int to economic development.  
4.4.4.1   Civil aviation  
4.111.   Under Vanuatu's GATS commitment, it fully bound market access and national treatment 
with respect to the maintenance and repair of aircraft, and selling and marketing of air transport 
services delivered via cros s-border supply, consumption abroad, and commercial presence.63  
4.112.   The Civil Aviation Authority Vanuatu (CAAV), under the Ministry of Infrastructure and 
Public Utilities, is the regulator on all civil aviation matters. In accordance with the Civil Aviation 
Rules, the CAAV ensures that civil aviation meets the requirements of the Government and of the 
International Civil Aviation Organization (ICAO).64  
4.113.   There are 29 airports in Vanuatu.  Airport s Vanuatu Limited (AVL),  a corporate set up and 
fully owned by the Go vernment, with CAAV oversight, operates the three  international  airports at 
Port Vila (Bauerfield), Luganville (Pekoa), and Tanna (Whitegrass). Vanuatu Terminal Services 
Limited  (VTSL), a subsidiary company under and fully owned by the AVL, provides,  inter alia, 
international terminal cargo and freight forwarding services, and aircraft ground handling 
services.65  
4.114.   The other 26 domestic airfields are regulated by the CAAV, and operated and maintained 
by the Public Works Department (PWD)  under the Ministry of Infrastructure and Public Utilities . 
Maintenance is carried out by village -based contractors, and the CAAV assists by providing training 
for the contractors. Ground handling services at these locations are the responsibility of the 
aircraft operators.  
4.115.   In 2015, a total of 491,427 domestic and international passengers were transported by air 
carriers operating into and within Vanuatu (Chart 4.8). About 72% of passengers used the 
Bauerfield Airport, Vanuatu's principal gateway. This was followed by Pekoa Airp ort (20%), and 
Whitegrass Airport (8%). Airports levy a fee of VT 3,400 per departing international passenger, to 
cover its service and security charges.  
Chart 4.8 Number of passengers using the three internat ional airports, 2011 -15 
 
Source:  Information provided by the authorities.  
                                                
63 WTO document WT/ACC/VUT/17/Add.2, 11 May 2011.  
64 Section 36 of the Civil Aviation Act refers to the New Zealand Civil Aviation Rules as the standard 
operating rules in Vanuatu.  
65 VTSL online information. Viewed at: http://www.vts.vu/ . 
2011 2012 2013 2014 20150100,000200,000300,000400,000500,000600,000
Bauerfield
Pekoa
WhitegrassChart 4.[]   Number of passengers by three international airports in Vanuatu, 2011 -15
Source:  Information provided by the authoritiesWT/TPR/S/378 • Vanuatu  
 
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  4.116.   Information provided by the VTSL indicates that cargo transported by air reached its peak 
in 2016. In 2017, New Zealand was the largest export market for cargo transported by air from 
Vanuatu, and Australia was the second largest. Other main export markets included 
New Caledonia, the Uni ted States, the Solomon Islands, and Fiji (Table 4.15). In terms of imports, 
Australia was by far the biggest origin of imports, followed by New Zealand, New Caledonia, Fiji, 
and Papua  New Guinea.  
Table 4.15 Major origins of imports, and export destinations for cargo transported by air  
(Kg) 
 2015   2016   2017  
Exports  86,420  Exports  213,792  Exports  177,879  
New Zealand  34,681  New Zealand  79,946  New Zealand  58,070  
Australia  33,327  Australia  72,739  Australia  55,917  
Solomon Islands  5,720  New Caledonia  29,578  New Caledonia  32,521  
New Caledonia  4,767  United States  14,813  United States  13,319  
United States  3,528  Fiji 6,344  Solomon Islands  8,480  
Fiji  1,614  Germany  1,174  Fiji  8,363  
Imports  279,065  Imports  849,144  Imports  764,131  
Australia  170,376  Australia  524,666  Australia  489,130  
New Zealand  63,586  New Zealand  215,966  New Zealand  179,553  
Fiji 22,782  New Caledonia  44,890  New Caledonia  40,927  
New Caledonia  15,941  Fiji 44,146  Fiji  29,582  
Hong Kong, China  2,677  Papua New 
Guinea  7,846  Papua New Guinea  19,690  
Papua New Guinea  1,237  Solomon Islands  3,858  Hong Kong, China  1,650  
Solomon Islands  1,220  Japan  2,963  Solomon Islands  1,541  
  Hong Kong, China  1,834    
Source:  Information provided by the authorities (VTSL).  
4.117.   In addition to Air Vanuatu, other international airlines operating in Vanuatu include : Air 
Caledonie, Fiji Airways and its subsidiary Fijilink, Air Niugini, Solomon Airlines, Virgin Australia,  and 
Air New Zealand. The requirements for f oreign airlines to operate international services to Vanuatu 
are outlined in the Civil Aviation Act and the Civil Aviation Rule . Four airlines provid e charter 
services (Unity Airlines, Vanuatu Helicopter, Air Taxi, and Air Melanisie ).  
4.118.   Air Vanuatu is fully  owned by the Government.  It provides universal transport services in 
Vanuatu, i.e. it provides air services among a number of Vanuatu's islands. Reflecting the cost 
incurred when Air Vanuatu is fulfilling this community service obligation, the Government provides 
loans and guarantees to the company to help cover its loss (Section 3.3 ).  
4.119.   According to the authorities, foreign participation in cabotage is allowed, i.e. foreign 
airlines are allowed to provide services linking different islands within Vanuatu,  if provided for 
under the Air Services Agreement (ASA) between Vanuatu and the country from which this foreign 
carrier originates.  
4.120.   Vanuatu signed bilateral ASAs with Australia, Fiji, Kiribati,  New Caledonia, New Zealand, 
Papua New Guinea , Singapore , Solom on Islands, and Chinese Taipei. Of these, there ha ve been no 
direct flights between Vanuatu and Chinese Taipei, or between Vanuatu and Kiribati.  Vanuatu has 
adopted the Open Skies Policy, which has been captured in the Civil Aviation Act. 
4.121.   Vanuatu signed the plurilateral Pacific Islands Air Services Agreement (PIASA) on 
16 August  2003. However, the PIASA never really took off, as Fiji, the hub in the Pacific region, 
has not yet signed it.  
4.4.4.2   Maritime transport  
4.122.   Maritime transport is  of vital im portance to Vanuatu, as the country is composed of about 
83 scattered islands. It is regulated in accordance with the Maritime Act, the Shipping Act, and the 
Ports Act. In 2016, the Maritime Sector Regulatory Act No. 26 of 2016 was passed by Parliament. 
It went into effect in 2017. Under it, the Office of the Maritime Regulator (OMR) was set up in 
July 2017. The OMR administers domestic ship registration, shipping safety inspection and 
certification, while the Department of Ports and Marine under the Minist ry of Infrastructure and WT/TPR/S/378 • Vanuatu  
 
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  Public Utilities administers port operations. The authorities state that they are currently reviewing 
maritime related legislation to streamline the legislative and institutional arrangements for 
maritime transport.  
4.123.   Vanuatu Mariti me Services Limited  (VMSL) is a domestic private  company contract ed by 
the Government as Vanuatu's international shipping registry administrator. It handles vessels' and 
seafarers' documentation, in accordance to International Maritime Organization (IMO) C onventions 
and Treaties. Vanuatu's Recognized Classification Societies (International) assist with the 
registered ships' safety inspections and surveys for required standard certifications. The Vanuatu 
international ship ping registry  is open to ship owners  of any nationality  if the owner wishes to 
register their ship under the Vanuatu flag . The authorities indicate that the international shipping 
registry has a total of 599  vessels registered.66 
4.124.   The ports of Port Vila and Luganville are two international hub s for the entry and exit of 
imports and exports and of passengers visiting by ships. The two ports have undergone significant 
improvements and expansion to cater for 20 -foot containers. Currently, seven overseas shipping 
lines provide both container and ge neral cargo international services to and from Vanuatu, via 
these two ports.67  
4.125.   Wharf infrastructure in the port of Port Vila, the major port in Vanuatu, was improved 
significantly, particularly regarding its cargo handling capacity, with the completion of the Lapetasi 
International Wharf in 2017: vessel turnaround time is between 12 and 24 hours. The Port Vila 
Main Wharf is used for cruise ships and tankers, while Lapetasi International Wharf is used for 
international cargo vessels. Both wharfs are owned by  the Government, and all port dues are 
collected by the Department of Ports and Marine.  
4.126.   The Luganville  port is owned by the Government. After its renovation, which was 
completed in August 2017, two container ships, or one large cruise ship, are able to berth there. A 
large cruise ship terminal and two large warehouses for copra were also built.  
4.127.   In both po rts, pilotage is compulsory for all international vessels, and is provided by the 
Harbour Master of the Department of Ports and Marine.  
4.128.   Vanuatu's Maritime Act and the Maritime Regulations stipulate the annual tonnage tax for 
international registry, as wel l as fees for vessels.68 According to VMSL online information, a 
registration fee of US$0.35 per net ton, and an annual tonnage tax of US$0.25 per net ton, are 
collected.69  
4.129.   The authorities indicate that about 70 domestic shipping vessels provide transportat ion 
services for passengers and cargo. The OMR collects fees for the registration, documentation, 
vessel surveys and crew licensing for domestic shipping vessels.  
4.130.   According to information provided by the VIPA, foreign investment is allowed in coastal 
shipping (excluding vessels that exclusively provide transport to foreign tourists) only when the 
vessel 's carrying capacity is ab ove 80 tonnes (Table 2.6). Vanuatu has no legislation concerning 
cabotage rules.  In practice, foreign vessels are not allowed to provide cabotage services in 
Vanuatu , although exemptions may be given for particular periods such as natural disasters.  
                                                
66 According to UNCTAD, in  2017, Vanuatu was one of the top 25 "leading flags of registration countries 
by value" (UNCTAD (2017), Review of Maritime Transport 2017. Viewed at: 
http://unctad.org/en/PublicationsL ibrary/rmt2017_en.pdf . 
67 VIPA online information. Viewed at: http://www.investvanuatu.org/wp/investing/infrastructure/ . 
68 Maritime Act (CAP 131). Viewed at: http://www.vanuatumaritimeships.com/Documents/Mari -Act.pdf . 
Maritime Regulations. Viewed at: http://www.vanuatumaritimeships.com/Do cuments/mari -reg.pdf . 
69 VMSL online information. Viewed at: http://www.vanuatumaritimeships.com/ . WT/TPR/S/378 • Vanuatu  
 
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  4.4.5   Tourism  
4.4.5.1   Main features  
4.131.   The tourism sector is the mainstay of the Vanuatu economy. According to the World Tr avel 
and Tourism Council, the travel and tourism industry directly contributed 1 8% to GDP in 201 7.70 
Travel and tourism directly supported 11,000 jobs, 14.4% of total employment, while its total 
contribution to employment, including jobs indirectly supporte d by the industry, was 39% of total 
employment (30,000 jobs). Moreover, the industry is a major foreign exchange earner, captures a 
significant share of capital investment, and accounts for more than 60% of total merchandise and 
services exports in 2017 (T able 4.16).  
Table 4.16 Vanuatu: Absolute and relative contribution of the tourism sector, 2017  
 Absolute 
contribution  Relative contribution  
(% of total)  
Direct contribution to GDP (US$ million)  144.6  18.2 
Total contribution to GDP (US$ million)  365.7  46.1 
Direct contribution to employment ('000 jobs)  11 14.4 
Total contribution to employment ('000 jobs)  30 39.3 
Capital investment (US$ million)  28.9 15.5 
Visitor ex portsa (US$ million) 254.2  61.6 
a Visitor exports: Spending within the country by international tourists for both business and leisure 
trips, including spending on transport, but excluding international spending on education.  
Source:  World Travel and Tourism Council, Travel & Tourism Econo mic Impact 2018 Vanuatu.  Viewed at: 
https://www.wttc.org/ -/media/files/reports/economic -impact -research/countries -
2018/vanuatu2018.pdf . 
4.132.   Tourism in Vanuatu suffered severely from Cyclone Pam in 2015 (Section 1), but has 
recovered in 2016 and 2017 (Chart 4.9). In 2017, visitors coming for vacations accounted for 76% 
of all visitor arrivals by air, followed by those coming to visit friends and rel atives (8%), and 
arriving for business (7.6%). Tourists coming for education and sports accounted for about 6.9% 
of the total.  
4.133.   In 2017, Australia was the largest inbound market, accounting for more than half (53%) of 
all tourist arrivals, followed by New Caledonia (15%), New Zealand (11%), other Pacific countries 
(7%), and Europe (6%) (Chart 4.10).  
4.134.   The number of tourist arrivals by cruise ships is far greater than those arriving by air; i n 
2017,  there were 109,108 international air arrivals, about one thir d of the number of cruise ship 
passengers (333,767) (Table 4.17). However, as cruise ship passengers spent on average one day 
in Vanuatu, their total direct expenditure is less than the expenditure from overnight tourists 
arriving by air. International vis itors by air spent an average of 11 days in Vanuatu.  
4.135.   There are both land -based tour operators, providing activities such as cultural products, 
village tours, and some traditional handicrafts; and marine -based tour operators organizing 
activities such as ka yaking, paddle -boarding, kite -surfing, ocean swimming, sports fishing, and 
yachting. Accommodations range from larger scale (more than 100 rooms) family focused resorts 
to boutique resorts, as well as holiday homes, residential homes, and apartments for re nt. The 
occupancy rate for large scale resorts is approximately 60%, while the average hotel occupancy 
rate is around 35%.  
 
                                                
70 WTTC (2018), Travel & Tourism Economic Impact 2018 Vanuatu . Viewed at: https://www.wttc.org/ -
/media/files/reports/economic -impact -research/countries -2018/vanuatu2018.pdf . WT/TPR/S/378 • Vanuatu  
 
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  Chart 4.9 Visitor arrivals by air, 2013 -17 
 
Source:  Vanuatu National Statistics Office online information.  
Chart 4.10 Visitor arrivals by air, 2017  
 
Source:  Vanuatu National Statistics Office online information.  
Table 4.17 Key tourism indicators 2013 -17 
 2013  2014  2015  2016  2017  
Visitor arrivals by air  110,109  108,808  89,952  95,117  109,108  
Average length of stay (days)  11.2 10.5 11.1 10.9 11.4 
Cruise visitor arrivals  247,296  267,488  245,773  344,907  333,767  
Number of port calls  254 244 226 296 268 
Hotel occupancy rate (%)  35 35 35 35 35 
Source:  Vanuatu National Statistics Office online information, Statistics Update: International Ar rival 
Statistics, February 2018.  Viewed at: 
https://vnso.gov.vu/index.php/component/advlisting/?view=download&fileId=4652 . And information 
provided by the authorities.  
4.4.5.2   Institutional and regulatory framework  
4.136.   The responsibility for the tourism sector lies primarily with the Ministry of Tourism, Trade, 
Commerce, Industry and Ni -Vanuatu Business (MTTCINVB). The Department of Tourism (DOT), 
under the MTTCINVB, is responsible for policy setting regarding tourism de velopment. The 
Vanuatu Tourism Office (VTO) is a statutory body within the MTTCINVB in charge of tourism 
marketing.  
4.137.   There are a number of private sector associations in the tourism sector, such as the 
Vanuatu Hotels and Resorts Association (VHRA), the Van uatu Tour Operators Association (VTOA), 
and the Vanuatu Island Bungalows and Tourism Association (VIBTA). The authorities state that 
representatives from each association are current members of the steering committees that look 
into setting the policy dire ction for the tourism industry.  
2013 2014 2015 2016 2017020,00040,00060,00080,000100,000120,000
Vacation
Visiting friends and relatives
Business
Stop over
Other, incl. education, sportChart 4.[]   Visitor arrivals by air, 2013 -17
Source:  Vanuatu National Statistics online information.
Chart 4.[]   Visitor arrivals by air, 2017
North America 2.8%
Source:  Vanuatu National Statistics online information.China 3.3%Australia
52.6%
Japan 1.0%New Zealand
10.6%NewCaledonia
14.5%
Other
2.5%Europe
6.2%Other Pacific countries
6.6%
Total arrivals by air:
109,108WT/TPR/S/378 • Vanuatu  
 
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  4.138.   Legislation governing tourism includes the Environment and Conservation Management 
Act, the Foreshore Development Act, the Labour Act, the Companies Act, and the VIPA Act.71 
Under the Tourism Council Act No. 23 of 2012, a nat ional tourism council and six provincial 
tourism councils were established, with a view to enhancing the competitiveness of Vanuatu as a 
destination for tourists and investors. This Act also contains provisions on compulsory tourism 
accreditation.72 
4.139.   Accordi ng to the Government's Business Cost Competitiveness Report, Vanuatu is seen as 
a relatively high cost destination.73 In addition, it is difficult for visitors to access the outlying 
islands' attractions: currently, most visitors (97%) stay in Port Vila.74 In 2013, the Government 
developed the Vanuatu Strategic Tourism Action Plan 2014 -2018 (VSTAP) as a guideline for the 
development of tourism services.75 Projects in the VSTAP were mainly (60%) funded by a 
New Zealand aid programme. The VSTAP identified five k ey priorities:  
a. delivering tourism benefits to the outer islands;  
b. focusing on core markets such as Australia, New Caledonia, and New Zealand;  
c. investing in the planning and building of infrastructure;  
d. developing the Vanuatu Tourism Accreditation Committee; and 
e. setting up a team to implement the VSTAP.  
4.140.   According to information provided by the authorities, by the end of February 2018, among 
the 23 projects listed in the VSTAP, 14 had been started (of which, 3 were completed) and 9 were 
pending.  
4.141.   Investment in Vanuatu's tourism sector has been mainly conducted by fo reign investment, 
while Vanuatu  citizens investors are virtually all in smaller, less capital intensive businesses, such 
as taxis, buses, bungalows, tours and cultural shows. Foreigners are not allowe d to own land, 
although they may lease it to build  hotels or other facilities.  Accessing capital is a significant 
constraint to es tablishing or expanding Vanuatu  citizens' business;76 other constraints include 
lacking development plans, and the land tenure system. The authorities state that 80% of land is 
customary land, making it hard for local people to use it as collater al if they wish to borrow 
start-up capital from banks.  
4.142.   Under its GATS commitment, Vanuatu applies no market access limitations on hotel and 
restaurant services (CPC 641) delivered via cross -border supply and consumption abroad, while 
commercial presence faces some constraints, and kava bar ownership is reserved for Vanuatu's 
citizens. Vanuatu applies no national treatment limitations on cr oss-border supply, consumption 
abroad, or commercial presence regarding hotel and restaurant services. With respect to travel 
agencies (excluding tour operating services), Vanuatu fully bound both market access and national 
treatment regarding these servic es delivered via modes 1, 2 and 3.77 
                                                
71 DOT online information. Viewed at: https://tourism.gov.vu/investment.php . Other relevant legislation 
includes the Public Health Act, the Physical Planning Act, the Land Leases Act, the Import Duties Exemption 
Act, the Minimum Wage Act, and the  Vanuatu National Provident Fund Act.  
72 MTTCINVB (2014), Vanuatu Strategi c Tourism Action Plan 2014 -2018.  Viewed at: 
https://tourism.gov.vu/assets/docs/VSTAP_FINAL_Feb_2014.pdf . 
73 Government of Vanuatu, Vanuatu Business Cost Competitiveness .  
74 Vanuatu Daily Post, 17 March 2017. Viewed at: http://dailypost.vu/news/ifc -led-survey -
demonstrates -value -of-vanuatu -s-tourism -sector/article_b43b9a68 -9d66-5a27-b26b-bd0c4ef5321b.html . 
75 Ministry of Tourism, Industry, Commerce & Ni -Vanuatu Business (2014), Vanuatu Strategic Tourism 
Action Plan 2014-2018. Viewed at: https://tourism.gov.vu/assets/docs/VSTAP_FINAL_Feb_2014.pdf . 
76 MTTCINVB (2014), Vanuatu Strategic Tourism Action Plan 2014 -2018. Viewed at: 
https://tourism.gov.vu/assets/docs/VSTAP_FINAL_Feb_2014.pdf . 
77 WTO document WT/ACC/VUT/17/Add.2, 11 May 2011.  WT/TPR/S/378 • Vanuatu  
 
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  4.143.   The Fo reign Investment Promotion Act reserves certain types of tourism services for 
Vanuatu's citizens:  
a. Local tour agents, if the annual turnover is less than VT 20 million;  
b. Local tour operators, if the investment is les s than VT 50 million;  
c. Commercial cultural feasts (Melanesian, Polynesian, etc.);  
d. Guest houses with less than 50 beds or less than 10 rooms , or if the annual turnover is 
less than VT 20 million;  
e. Bungalows if the annual turnover is less than VT 30 million; and 
f. Hotels and motels if the total value of the investment is less than VT 10 million or if the 
annual turnover is less than VT 20 million ( Table 2.6 ). 
4.144.   Depending on the activities engaged in, and following a Tourism Product Classification 
System, tourism o perators may need to apply for a Tourist Permit from the DOT.78 For activities 
where such a Permit is required, the DOT checks the Vanuatu Tourist Operators Minimum 
Standards before making a decision on the issuance of the Permit.79 Under this System, touris t 
business activities are classified as:  
a. Category D3, requiring a Tourist Permit: all tourist accommodation;  
b. Category D3, not requiring a Tourist Permit: restaurants, catering services, cafes, bars, 
and takeaway outlets;  
c. Category E3, requiring a Tourist Pe rmit: travel agents; tour agents; tour operators; 
other tourism support services (e.g, air tourism activities, water tourism activities, 
tourism yacht or boat charters, land transport services to tourists – bus or taxi, rental or 
hire services to tourists,  and tours and transfer services);  
d. Category E4, requiring a Tourist Permit: vehicle rental services; equipment rental 
services; boat rental services; other rental services;  
e. Category G2, not requiring a Tourist Permit: personal, social and recreational and repair 
services; recreational and pleasure grounds and facilities; spas, beauty salons and 
centres; barber and hairdressing services.  
4.145.   Foreign investors, having obtained a Tourist Permit from the DOT, must present it to the 
VIPA to apply for an updated VIPA  certificate before applying for their business licence.80 Tourist 
Permits are renewed every two years with no equity or capital requirements.  
4.146.   The Investment Facilitation Section in the DOT is responsible for facilitating investment in 
the tourism and hospi tality sector, by identifying potential investment opportunities and locations, 
and searching for appropriate legal, financial and other professional services required to assist 
tourism projects.81 According to DOT online information, under the Customs Duty  Exemption Act, 
the Director of DOT may approve duty exemption for goods imported exclusively for: the 
                                                
78 DOT onl ine information , Business License Application Process – Guidelines for Tourism Operators . 
Viewed  at: 
https://tourism.gov.vu/assets/docs/accreditation/2.%20Business%20Licence%20Application% 20Process_V2_2
2Jan.pdf . 
79 DOT online information,  Vanuatu Tourism Accreditation – Information Pack . Viewed a t: 
https://tourism.g ov.vu/assets/docs/accreditation/1.%20Vanuatu%20Tourism%20Accreditation%20Info%20Pa
ck_email.pdf . 
80 DOT onl ine information , Business License Application Process – Guidelines for Tourism Operators . 
Viewed at: 
https://tourism.gov.vu/assets/docs/accreditation/2.%20Business%20Licence%20Application%20Process_V2_2
2Jan.pdf . 
81 DOT online information. Viewed at: https://tourism.gov.vu/investment.php . WT/TPR/S/378 • Vanuatu  
 
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  construction of new hotels or resorts; the renovation and expansion of existing resorts; the 
addition of a minimum of 10  rooms; or new facilities to incl ude a casino, gym or conference 
facilities.82 The authorities state that duty exemptions only apply to projects with an investment of 
over VT  4 million.  
4.147.   In 2013, when the VSTAP was launched, the Government also launched a National Cruise 
Tourism Action Plan . Under the Plan, a National Cruise Tourism Committee was established to 
promote the uniqueness of Vanuatu among cruise companies as a preferred destination for cruise 
tourism.83 Key strategies identified in the Plan include: strengthening partnership relat ions 
between the Government and cruise companies; improving infrastructure such as wharfs; looking 
for niche market for Vanuatu exports, such as Tanna coffee and Vanuatu water; setting up a 
dedicated webpage to advertise Vanuatu as a cruise destination; an d providing training to Vanuatu 
citizens  crews.  
4.148.   In the same year, a Vanuatu Tourism Infrastructure Project (VTIP) was approved by the 
Vanuatu Council of Ministers, with the aim of increasing tourism's contribution to GDP through the 
promotion of sustainab le international tourism, and contributing to a buoyant and resilient tourism 
sector that provides greater economic returns to Vanuatu's citizens. Various projects, such as the 
relocation of port gates, the construction of a new tourism building and parks,  and the 
refurbishment of seawalls, are being undertaken under the VTIP.84  
4.149.   The Vanuatu Trade Policy Framework (TPF) (2012), the Government's policy document, 
outlines the importance of tourism for Vanuatu, and the importance of creating a stronger link wit h 
the local economy, especially with agriculture. A study conducted by the IFC in 2015 found that 
imported food items were a significant cost driver for the tourism sector.85 More than half of fresh 
food items (including vegetables, fruits, meat and dairy, and herbs) used by hotels and 
restaurants were imported, while the other was produced locally.  The Government has been 
making efforts to increase the provision of local products, including food items for tourists. In 
December  2016, the Vanuatu Agritourism Plan of Action was issued, and an Agritourism Steering 
Committee was set up. In November 2016, an Agritourism Festival was held, where local 
producers exhibited their products to the tourism sector.86 Other activities included tours to local 
farms and to fi sh farms, measures to improve agriculture related infrastructure, including the 
irrigation system, and measures to improve inter -island transportation.  
                                                
82 DOT online information. Viewed at: https://tourism.gov.vu/investment.php . 
83 MTTCINVB (2012), Vanuatu's Nation al Cruise Tourism Action Plan . Viewed at: 
https://tourism.gov.vu/assets/docs/NationalCruiseActionPlan20012012.pdf . 
84 Vanuatu Project Management Unit online information.  Viewed at: 
https://vpmu.gov.vu/index.php/projects/vtip . 
85 IFC (2015), Vanuatu Agri -Tourism Linkages: A Baseline Study of Agri Demand from Port Vila's 
Hospitality Sector. Viewed at: 
https://tourism.gov.vu/assets/docs/reports/VanuatuBaselineStudyOfAgriDemandinTourismFinal.pdf . 
86 VIPA,  Annual FDI report 2016 . Viewed at: http://www.investvanuatu.org/wp/wp -
content/uploads/2017/07/FDI -Annual -Report -2016-fin.pdf . WT/TPR/S/378 • Vanuatu  
 
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  5  APPENDIX TABLES  
Table A1. 1 Merchandise exports by products, 2012 -16 
 2012  2013  2014  2015  2016  
Total (US$ million)  54.8  38.6  62.8  39.0  50.2  
 (% of total)  
Copra  21.4  10.0  24.3  17.6  31.9  
Kava 13.0  22.8  13.2  4.2  22.1  
Coconut oil  22.9  12.6  17.7  19.4  10.6  
Cocoa  5.1  8.0  7.4  7.8  7.5  
Beef veal  10.2  8.9  7.2  8.1  5.8  
Sawn timber  0.8  4.5  7.0  8.9  2.3  
Coconut meal  1.8  6.2  1.9  7.8  1.7  
Live fish  2.7  2.4  2.3  2.7  1.0  
Root crops  0.0  0.0  0.0  0.0  0.5  
shellfish  0.5  0.8  0.7  0.6  0.4  
Fish, other than live  3.6  3.8  0.2  0.0  0.3  
Coffee  0.1  0.2  0.5  0.3  0.2  
Cowhides  0.5  0.8  0.4  0.4  0.1  
Alcoholic beverages  3.2  3.2  0.0  0.0  0.0  
Vanilla  0.2  0.2  0.1  0.0  0.0  
Other products  13.8  15.5  16.9  22.1  15.6  
Source:  National Statistics Office of Vanuatu online information.  WT/TPR/S/378 • Vanuatu  
 
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  Table A1. 2 Merchandise exports by country, 2012 -16 
 2012  2013  2014  2015  2016  
 (% of total)  
Australia  21.7  23.5  28.6  26.9  17.4  
New Caledonia  5.2  8.5  7.4  2.5  9.0  
MSG membersa 14.0  17.8  8.8  9.3  8.8  
EU-28 1.4  1.5  1.6  1.0  4.0  
New Zealand  3.4  4.1  3.2  6.6  3.0  
Japan  6.0  6.2  3.8  4.9  1.9  
Korea, Republic of 0.4  0.2  0.4  0.1  0.0  
Other  47.8  38.2  46.2  48.6  55.8  
a Fiji, Papua New Guinea and Solomon Islands.  
Source:  National Statistics Office of Vanuatu online information.  WT/TPR/S/378 • Vanuatu  
 
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  Table A1.3 Merchandise imports by products, 2012 -16 
 2012  2013  2014  2015  2016  
Total (US$ million)  290.5  311.5  311.1  365.2  368.5  
 (% of total)  
Food and live animals  19.7  20.6  19.6  21.0  21.1  
Beverages and tobacco  4.3  3.9  3.9  2.8  3.2  
Crude materials excluding fuels  1.6  1.7  1.6  1.9  1.9  
Mineral fuels  17.2  15.6  17.5  10.6  8.5  
Oils, fats and waxes  0.5  0.4  0.4  0.4  0.4  
Chemical products  10.4  9.1  7.5  6.0  6.5  
Basic manufactured products  13.3  13.4  12.0  24.6  18.4  
Machines and transport equipment  22.2  23.4  26.4  23.6  25.9  
Misc. manufactured goods  9.6  10.7  10.3  9.0  13.0  
Other  1.2  1.1  0.9  0.1  1.1  
Source:  National Statistics Office of Vanuatu online information.  WT/TPR/S/378 • Vanuatu  
 
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  Table A1. 4 Merchandise imports by country, 2012 -16  
 2012  2013  2014  2015  2016  
 (% of total)  
Australia  30.8  27.3  29.6  22.7  22.9  
Fiji 7.8  9.4  9.3  9.4  11.8  
New Zealand  12.7  12.5  11.9  12.3  11.5  
Singapore  16.9  15.5  17.4  11.0  8.3  
Japan  2.4  3.8  2.5  4.2  5.6  
France  2.8  4.1  3.8  2.3  5.2  
Hong Kong, China  1.8  1.9  2.2  2.4  2.8  
New Caledonia  1.8  1.1  1.5  1.6  1.3  
Other  23.0  24.3  21.8  34.2  30.6  
Source:  National Statistics Office of Vanuatu online information.  
 
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