Solomon Islands WT/TPR/S/215 
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IV. TRADE POLICIES BY SECTOR 
(1) OVERVIEW  
1. Agriculture is one of the largest economic sector s in Solomon Islands;  it consists of small-
scale production of subsistence and cash crops, and some large-scale plantations.  Assistance is 
limited, and the State has gradually reduced its pa rticipation in this sector.  Solomon Islands has 
significant fish resources;  the bulk of the commercial fishing fleet is composed of foreign flag vessels 
licensed under bilateral and plurilateral fisheries ag reements.  Forestry has been a major driver of 
economic growth:  exports of timbe r account for a large share of total merchandise exports, and taxes 
on timber are a major source of fiscal revenue.  Pr actically all mining production ceased in mid-2000 
amid civil strife.  However, mining is expected to  regain its former importance with the projected 
reopening of a major gold mine in 2010.  Electricity is expensive, low-quality,  and largely unavailable 
beyond the capital city, but Solomon Islands is taking steps to improve the financial situation of the 
state-owned electricity monopolist.  Manufactur ing is limited to a handful of activities. 
2. Solomon Islands undertook sector-specific co mmitments under the GATS in only a handful 
of sectors.  There is significant foreign participa tion in the financial system, and efforts are being 
made to strengthen the prudential framework and expand access to cred it.  Solomon Islands intends to 
introduce competition into the telecommunications market, currently supplied by a single firm.  
Maritime transport is key for Solomon Islands intern ational and domestic trade.  Foreign flag vessels 
may not provide cargo or passenger cabotage.  The legislative framework governing civil aviation was 
revamped in late 2008 to foster competition and help attain international standards.  The sole national 
airline is wholly state owned and in a weak fi nancial position.  The State owns and manages all 
international port and airport infrastructure.  Few professional services are regulated;  there have been 
significant efforts to reduce the time to process wo rk permits for highly skilled foreign workers. 
(2) AGRICULTURE  
3. Agriculture is one of the largest economic sector s and a source of livelihood for most of the 
population.  The sector consists of small-scale production of subsistence and cash crops, and some 
large-scale plantations.  Available information sugge sts that assistance to the sector is limited, with 
current policy seeking to enhance extension and resear ch activities.  The State has gradually reduced 
its participation in plantation agriculture.  A lthough a statutory body has ample powers regarding 
export marketing of certain commodities, sinc e 2002 its activities have been limited to the 
enforcement of quality standards for copra and cocoa exports. 
4. Agriculture accounts for 20% of GDP and is am ong the largest sectors of the economy.  Four-
fifths of the population lives in rural areas and derives its livelihood primarily from small-scale 
production of subsistence and cash crops.  Subsistence crops include sweet potato and other root 
crops, leafy greens, and fruits.1  The annual output of sweet potato, which represents 65% of the total 
volume of locally grown staple foods, and other important staple foods (cassava, banana, taro, 
coconut, and yam) is estimated at 430,000  tonnes, with a value of SI$411 million.2  The main cash 
crops include cocoa and copra.  There are also la rge-scale oil palm and coconut plantations producing 
mainly for export.  Oil palm, coconut, and co coa account for approximately 17% of exports 
                                                      
1 For a detailed analysis of subsistence agriculture in Solomon Islands, see Australian Government and 
AusAID (2006). 
2 Australian Government and AusAID (2006). WT/TPR/S/215 Trade Policy Review 
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(Table IV.1).  Lack of adequate domestic trans port infrastructure and credit, and the high transaction 
costs of securing leases on communal land severely constrain agricultural output.3 
Table IV.1  
Cash crop exports, 2000-07 
 2000 2001 2002 2003 2004 2005 2006 2007 
C o c o a          
 Volume (t) 2,316 2,038 2,907 4,587 4,181 4,928 3,829 4,470 
 Value (US$'000) 1,823 859 4,109 7,086 5,400 8,543 4,132 9,257 
 As % of total exports 2.8 1.8 7.1 9.5 5.6 8.3 3.4 5.5 
Copra         
 Volume (t) 19,004 1,701 1,731 14,849 21,831 26,182 21,214 27,905 
 Value (US$'000) 6,827 82 329 1,042 3,413 2,180 1,848 4,805 
 As % of total exports 10.5 0.2 0.6 1.4 3.5 2.1 1.5 2.9 
Palm oil         
 Volume (t) .. .. 0 0 0 0 5,427 17,152 
 Value (US$'000) 1,290 45 0 0 0 0 4,037 13,759 
 As % of total exports 2.0 0.1 0 0 0 0 3.3 8.2 
 
.. Not available. 
 
Source:  WTO estimates, based on IMF, Tax Summary and Statistical Appendix  (various issues). 
5. The Central Government has traditionally been ac tive in plantation agricu lture.  At the time of 
the previous Review of Solomon Islands, it owned 30% of Solomon Islands Plantation Ltd (SIPL), an 
oil palm plantation and processing company that w as forced to cease operations in 2000 amid civil 
strife.  The Central Government has divested its  equity in SIPL, and a majority foreign-owned 
company (Guadalcanal Plains Palm Oil Ltd or G PPOL) has reactivated SIPL's former site.  GPPOL 
began operations in 2006.  It ha s received numerous incentives, including a ten-year income tax 
holiday, and duty-free import of capital goods for a specified period.4 
6. Responsibility for agriculture lies primarily with the Ministry of Agriculture and Livestock.  
The Ministry's objective is "to provide extension,  education, regulatory, research and associated 
activities to improve the... sector's contribution towards increased food production, food security and 
standards, and economic r ecovery and development".5 
7. The average MFN applied tariff for agriculture, defined in accordance with the International 
Standard Industrial Classification (ISIC), was 9.3%, virtually the same as for the economy as a whole (see also Chapter III(2)(iv)). 
8. The Commodities Export Marketing Authority (CEMA) is a statutory body established to 
promote commodity exports.
6  Under the Commodities Export Marketing Authority Act, only the 
CEMA, or a person licensed by it, can export coconu t and coconut products, copra, cocoa pods, cocoa 
beans and products, palm oil, palm kernel , palm-based products, coffee, and spices.7  At the time of 
the last Review of Solomon Islands, CEMA was the sole exporter of copra.  In 2002, the Government 
changed its policy to allow additi onal exporters of copra.  There are  currently six licensed copra 
exporters, thirteen for cocoa, one for palm oil, and one for spices. 
                                                      
3 IMF (2004). 
4 International Finance Corporation and The World Bank Group (2005). 
5 Coalition for National Unity and Rural Advancement Government (2008b). 
6 Section 6(1), Commodities Export Marketing Authority Act, Chapter 36 of the Laws of 
Solomon Islands, 1 July 1985. 
7 Section 11. Solomon Islands WT/TPR/S/215 
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9. The CEMA can fix commodity prices, and "engage in buying or selling of commodities at 
such prices".8  At the time of the last Review of Solomon Islands, the CEMA administered a copra 
price stabilization scheme, whose purpose was to re duce variations in producer income resulting from 
price fluctuations.  The authorities indicate that the CEMA does not maintain any price stabilization 
schemes. 
10. The CEMA enforces quality standards for expor ts of cocoa and copra, and charges an 
inspection fee of SI$40 per tonne for cocoa expor ts (around US$5.20), and of SI$30 per tonne for 
copra exports. 
11. The 2008 budget allocated SI$28.4 million (aro und US$3.7 million) to the Ministry of 
Agriculture and Livestock for "development".9  This amount, equivalent to nearly 8% of total 
development expenditure by the Central Government , will be devoted primarily to cattle industry and 
plantation rehabilitation programmes, and the development of oil palm  and rice projects.  The 2009 
development budget allocated to the Ministry of  Agriculture and Livestock totals SI$40 million.10  
Around 60% of the total will fund rural rice and cattle development projects. 
12. Several donor-funded agricultural programmes are ongoing.  The largest is RAMSI's 
Transitional Support to Agriculture Programme, which seeks to promote domestic production and 
marketing by facilitating access to root crop and tr ee crop materials, and fostering partnerships 
between small-scale producers and the private sector .  Various other donor-funded programmes target 
agriculture indirectly through support of rural development. 
13. The Medium Term Development Strategy 2008-10 lists three agricultural programmes, with a 
combined indicative cost of SI$155 million.11  The programmes seek to:  promote small-scale 
livestock activities;  establish partnerships between the State, small-scale producers, and the private sector for extension support, nurseries, and small-scale processing of agricultural commodities;  and to support food processing, packaging, and distribu tion, including through physical infrastructure. 
14. Under the Income Tax Act, new agricultural firm s may qualify for income tax exemptions in 
five out of ten years following the start of opera tions.  These firms may also qualify for additional 
import duty and income tax exemptions ( see Chapter III(2)(iv), (3)(iii), and (4)(iii)). 
15. There are no official credit schemes targeti ng agriculture.  Small businesses "involved with 
rural business ventures" receive priority under the Central Bank's small business finance scheme 
(Chapter III(4)(iii)).  The state-owned Development Bank of Solomon Islands (DBSI), which used to 
provide lending to the agriculture sector, has ceased  operations after experiencing severe liquidity and 
solvency difficulties.  Following a 2004 Court decisi on, management of the DBSI was transferred to 
the Central Bank.  According to the authorities,  all of the DBSI's assets have been sold. 
16. The capacity of the Ministry of Agriculture and Livestock to offer extension services is 
limited, and initiatives in this area ar e driven mainly by donor funding.
12  The main agricultural 
research facility was destroyed during civil unrest in 2000. 
                                                      
8 Section 6(2), Commodities Export Marketing Authority Act. 
9 2008 Appropriations Act 2008. 
10 Government of Solomon Islands (2009). 
11 Government of Solomon Islands (2008). 
12 See, for example, Ministry of Development Planning and Aid Coordination (2007), and Australian 
Government and AusAID (2006). WT/TPR/S/215 Trade Policy Review 
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17. Foreign investment is prohibited in plant crop cultivation and livestock farming for sale 
exclusively in the domestic market (Chapter II(4)). 
(3) FISHERIES  
18. Solomon Islands has significant fish resour ces.  However, weak sector governance and 
inadequate data collection on catches seem to pose risk s to sustainability.  In addition, the main fish 
processing operation, which is majority-owned by the State, faces serious financial difficulties.  
Foreign-flag vessels represent the bulk of the comme rcial fishing fleet;  they must be licensed under 
one of Solomon Islands' plurilateral or  bilateral fisheries agreements, or participate in joint venture or 
domestic processing activities.  Fish exports are subject to taxes at rates 5% to 30%. 
19. Solomon Islands has sizeable fish resources.  Close to 12% of total exports comprise fish 
(Table IV.2).  Poor infrastructure and transpor t facilities, including inadequate inter-island and 
international air cargo connections, appear to be among the main factors hindering the sector's 
development.13 
Table IV.2 
Fisheries selected indicators, 2000-07  
 2000 2001 2002 2003 2004 2005 2006 2007 
Contribution to real growtha (percentage 
points) -4.6 -0.8 0.6 1.7 0.7 -0.7 1.5 -1.1 
Fish catch (t) 21,163 17,720 18,520 28,955 27,249 23,853 29,597 21,196 
Exports (SI$'000) 41,174 37,336 70,752 92,869 132,052 86,921 145,855 151,392 
As % of total exports 12.4 15.0 18.1 16.7 18.2 11.3 15.0 11.8 
Employmenta 5,315 5,179 5,030 5,015 5,114 .. .. .. 
 
.. Not available. 
 a IMF data;  employment figures refer to formal employment. 
 
Source : Central Bank of Solomon Islands, Annual Report  (various issues), and IMF, Tax Summary and Statistical 
 Appendix  (various issues). 
20. Commercial fishing operations rely largely on tu na, most of which is exported frozen, smoked 
or canned.  In 2007, there were around 330 vessels licensed for commercial fishing in Solomon Islands waters;  the vast majo rity of these are foreign-flag vessels.
14  Exports of sea 
cucumbers and certain molluscs have traditionally been an important source of cash for coastal 
dwellers. 
21. The Central Government has 51% equity in one  of the main commercial fishing operations 
(Soltai Fishing and Processing Company Ltd).  Th e company has a cannery, which has been operating 
below capacity in recent years.  Soltai's financial si tuation is critical:  during the first semester of 
2008, the Government provided SI$18 million (appr oximately US$2.4 million) to maintain its 
operations.  A Government committee had previous ly issued recommendations to redress Soltai's 
financial difficulties, but these have not been implemented (late 2008). 
22. Provinces are responsible for managing all fish eries (except tuna and other pelagic fish) 
located within three nautical miles off the Solo mon Islands coast.  Resource management in the 
remainder of the 200-mile zone off the coast is the responsibility of the Ministry of Fisheries and 
                                                      
13 Australian Government (2004b). 
14 Western and Central Pacific Fisheries Commission (2008). Solomon Islands WT/TPR/S/215 
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Marine Resources.15  The policy is to ensure the sustainabl e utilization of resources for the benefit of 
the people of Solomon Islands.16  According to the Ministry of Development Planning and Aid 
Coordination, sector governance is weak due to inadequate resour ces, uncoordinated decision-making, 
limited transparency and account ability, and political interference.17  It seems that inadequate data 
collection on catches significantly undermines tuna fi sheries management.  Resource management in 
coastal areas is also very weak. 
23. Commercial fishing is subject to licensing by the Ministry of Fisheries and Marine 
Resources.18  Under the Fisheries Act 1998, the Director of Fisheries must issue licensing guidelines, 
which may specify methods to distribute licences , and eligibility requirements for applicants.19  
Licensing guidelines exist for tuna under the Nationa l Tuna Management and Development Plan.  
Revenue from fishing licences granted under intern ational arrangements totalled SI$32 million in 
2006 (approximately US$4.2 million), the latest y ear available, and was expected to reach 
SI$120 million in 2008.20 
24. Vessels wholly owned by the Government, Solomon Islands citizens, or by a company 
incorporated and with its principal place of busin ess in Solomon Islands qualify as "local vessels" and 
are eligible to apply for a licence.  Also eligible are "locally based  foreign fishing vessels", defined as 
foreign vessels that land their catch in Solom on Islands under a joint venture approved by the 
Government or an arrangement i nvolving "shore based development".21  Other vessels are considered 
"foreign" and must qualify for licensing under the Mu ltilateral Fisheries Treaty, the Federated States 
of Micronesia Arrangement, or bilateral "access agreements".22  Solomon Islands has entered into 
bilateral agreements with Chinese Taipei, the EC, Japan, Korea, and New Zealand.23  No information 
was available on the number of active licences for lo cal, foreign, and locally based foreign fishing 
vessels. 
25. Commercial fishing licences are valid for up to one year, and are not transferable without 
authorization from the Director of Fisheries.24  The refusal to issue or re new a licence can be appealed 
to the Minister of Fisheries and Marine Resources within 30 days.25 
26. Licensing conditions for tuna fishing are ba sed on the National Tuna Management and 
Development Plan.  Licensing fees are highe r for foreign vessels than for local ones.26  In addition, 
only local vessels are allowed to fish wi thin the 30-mile zone off the coast. 
27. Under the Income Tax Act, new fisheries firms may qualify for income tax exemptions in five 
out of ten years following the start of operations (see Chapter III(4)(iii)). 
                                                      
15 Section 7, Fisheries Act 1998. 
16 Coalition for National Unity and Rural Advancement Government (2008a). 
17 Ministry of Development Planning and Aid Coordination (2007). 
18 Sections 14 and 16, Fisheries Act 1998. 
19 Section 13(1). 
20 CBSI (2007). 
21 Section 16(8), Fisheries Act 1998. 
22 Section 16(7), Fisheries Act 1998. 
23 Western and Central Pacific Fisheries Commission (2006). 
24 Section 26, Fisheries Act 1998. 
25 Section 29, Fisheries Act 1998. 
26 Campling, Havice, and Ram-Bidesi (2007). WT/TPR/S/215 Trade Policy Review 
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28. Exports of fish and shells are taxed at rates of between 5% and 30% of a value calculated by 
the Comptroller of Customs after consultation with the Ministry of Fisheries and Marine Resources (see Chapter III(3)(ii)).  A permit is required to e xport fish.  Exports of sea cucumbers were banned 
for environmental reasons in 2005-06. 
(4) F
ORESTRY  
29. Forestry has been a key driver of recent economic  growth, with logging mostly carried out by 
foreign firms.  Timber exports are subject to tax es, which are a major source of Government revenue.  
However, substantial revenue leakage results from fraud and the Government's undervaluation of 
exports.  Moreover, logging exceeds the sustainable harves ting rate by at least a factor of three.  Thus, 
there is a pressing need to take measures to ensure the long-term viability of production, which might 
require enhanced international c ooperation to curb pressure groups and make sure that forestry 
policies and practices effectivel y reflect the national interest. 
30. Forestry accounts for 10% of GDP, 65% of exports, and close to 20% of tax revenue 
(Table IV.3).  The sharp increase in productio n since 2003 partly reflects the approval of new 
licences, favourable international prices,  and continued strong demand from abroad.27 
Table IV.3 
Forestry selected indicators, 2000-07 
 2000 2001 2002 2003 2004 2005 2006 2007 
Contribution to real growtha 
(percentage points) -0.6 01 0.0 2.1 2.9 0.9 0.6 2.4 
Production ('000 m3) 541 493 550 714 1,043 1,118 1,130 1,446 
Exports (SI$'000) 224,422 190,457 254,149 371,394 468,175 510,162 643,574 838,693 
As % of total 67.7 76.6 65.2 66.7 64.7 66.1 66.3 65.2 
Revenue from log export duty (SI$'000) .. 21,707 38,233 61,017 66,279 85,061 128,562 .. 
As % of total tax revenue .. 10.6 15.7 17.9 14.0 15.1 18.5 .. 
Employmenta 3,226 3,192 3,132 3,285 3,482 .. .. .. 
 
.. Not available. 
 
a IMF data.  
Source : Central Bank of Solomon Islands, Annual Report  (various issues), and IMF, Tax Summary and Statistical 
 Appendix  (various issues). 
31. The bulk of production consists of round logs for export.  Most commercial logging is 
conducted in natural forests by foreign firms, often under contract with landowners.  In addition, there 
are two industrial timber plantations;  the Govern ment owns 40% equity in one of them.  Recent 
logging rates are unsustainable, having exceeded th e sustainable harvesting rate by a factor of 
between three and five since 2004.28  Some forecasts estimate that the commercial stock of timber will 
be depleted by 2012.29 
32. There have been numerous unsuccessful effort s to modernize the legal framework, which 
consists mainly of the Forest R esources and Timber Utilization Act 1969.30  New legislation adopted 
by Parliament in 1999 did not enter into force, because it was not published in the Solomon Islands 
                                                      
27 IMF (2008a). 
28 Ministry of Development Planning and Aid Coordination (2007). 
29 Ministry of Development Planning and Aid Coordination (2007). 
30 Chapter 40 of the Laws of Solomon Islands, 1 October 1970. Solomon Islands WT/TPR/S/215 
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Gazette .  A draft forestry bill that was expected to  be adopted in 2004 is still being reviewed 
(early 2009). 
33. The Ministry of Forestry is responsible for sect or regulation and supervision.  A policy issued 
in May 2006 called for a moratorium on new licences and mandatory reforestation.  The moratorium 
was abandoned shortly after its enactment in Augus t 2006.  The policy objective of the Ministry of 
Forestry is to attain sustainable harvesting "with  fair returns to landowners and the government".31 
34. Logging and timber processing are subject to licensing by the Commissioner of Forest 
Resources.32  The conditions and procedures to obtain a logging licence are specified in the Forests 
Resources and Timber Utilization Act.  Loggi ng licences for communal land are granted upon the 
successful conclusion of an agreement between th e landowners and the licence applicants under the 
aegis of the relevant provincial government.33  Close to 90% of land in Solomon Islands is under 
customary tenure.  The authorities indicate that around 20 logging licences are active;  these represent 
between 10% and 15% of total logging licences issued  (October 2008).  It is estimated that licences 
cover nearly 90% of forest areas suitable for logging.34  Licensed operators must post a SI$250,000 
(around US$32,640) bond prior to starting operations.  Licences issued after 2005 are valid for up to 
five years, and subject to an annual fee specifi ed in the Forest Resources and Timber Utilization 
(Fees) (Amendment) Regulations 2005.  There are no statutory limitations on foreign ownership of 
licenses. 
35. During the period under review, Solomon Islands enacted a code of logging practice under the 
Forest Resources and Timber Utilization Act 1969.35  In addition, the Ministry of Forestry expects to 
review the licensing process and procedures, an d to suspend firms that breach sustainability 
requirements.36  It also aims to adopt regulations to re duce harvesting by 25% with respect to the 2007 
level. 
36. Timber exports may subject to duties, mostly at compound ( ad valorem  plus specific) rates 
(see also Chapter III(3)(ii)).37  Plantation timber is exempt.  Duti es are assessed by the Comptroller of 
Customs on the basis of a "determined value" published in the Gazette .  Cabinet approves determined 
values on the recommendation of the Commissioner of Forests.  There are no statutory instruments 
defining the frequency of review of  determined values;  nor is the formula to set determined values 
specified in legislation.  According to the authoriti es, timber prices in major Asian markets, and the 
declared value of Solomon Islands timber in im porting countries are among the factors considered in 
setting determined values.  Determined values for timber were last modified in May 2008. 
37. Timber exports may not clear customs unless they have "specific authority".  Specific 
authority is granted by the Central Bank on the r ecommendation of the Commissioner of Forests.  The 
Commissioner makes a negative recommendation if th e determined value exceeds the price in the 
sales contract by more than 5%.  The purpose of th e specific authority is to "ensure that Solomon 
                                                      
31 Coalition for National Unity and Rural Advancement Government (2008b). 
32 Sections 5 and 17, Forest Reso urces and timber Utilization Act. 
33 Part III, Forest Resources and timber Utilization Act. 
34 Ministry of Development Planning and Aid Coordination (2007). 
35 Chapter 40 of the Laws of Solomon Islands, 1 October 1970. 
36 Coalition for National Unity and Rural Advancement Government (2008b). 
37 Section 19, Forest Resources an d Timber Utilization Act, and section 7, Customs and Excise Act. WT/TPR/S/215 Trade Policy Review 
Page 54 
 
 
Islands log exporters obtain open market prices fo r their log exports and remit the full proceeds to 
Solomon Islands".38 
38. The average determined value was in creased to US$78 from US$71 in May 2008.39  The IMF 
estimates that determined values remain about 70%  below average international prices, resulting in 
lost tax revenues of between 3% and 4% of GDP in  2006 and in 2007;  for 2008, lost revenue could 
amount to 10% of GDP.  In the context of this Review, the authorities indicate that they have no plans to introduce an automatic price adjustment mechanism to bring de termined values into line with 
international prices.  In addition, it seems that reve nue leakage also results from widespread export tax 
evasion, including through under-reporting of quan tities and false declaration of wood species 
exported. 
39. Licence holders, including landowners that have entered into cont racts with logging firms, are 
liable for payment of export taxes, and may appl y for export tax remissions under the Customs and 
Excise Act.
40  The World Bank reports that licence  holders obtained a SI$32.2 million (around 
US$4.2 million) export tax remission in 2004.  Th e World Bank also indicates that export duty 
remissions are granted to support reforestation, but that Solomon Islands does not have the capacity to 
monitor reforestation activity;  thus, in practice e xport remissions are used to compensate landowners 
for poor contractual arrangements with logging firms.41  According to the authorities, no new export 
duty exemptions have been granted since 2003, and the last export duty exemption expired in 2006. 
40. Under the Income Tax Act, new forestry firms ma y qualify for income tax exemptions in five 
out of ten years following the start of operations (see Chapter III(4)(iii)). 
41. Foreign investment is prohibited in milling operations pr oducing up to 2,500m3 of sawn 
timber per year (Chapter II(4)). 
(5) MINING  
42. Practically all mining production ceased in mid- 2000 amid civil strife and land ownership 
disputes.  However, mining is likely to regain its  former importance, with production expected to 
restart in a few years and prospecting ongoing.  There are no statutory restrictions on foreign 
ownership of mining rights, except for alluvial mining permits, which are granted only to Solomon 
Islands citizens.  Mining companies are e ligible for certain income tax exemptions. 
43. Although the contribution of mining to GDP  is minimal, there are several ongoing 
prospecting activities, mostly for gold, nickel, bauxi te, and copper.  Apart from prospecting, there is 
quarrying for gravel and sand, and alluvial pannin g for gold.  Gold production, which peaked at 
150,000 ounces in 1999, ceased with the closure of the mine at Gold Ridge in Guadalcanal in 
June 2000.  Gold exports from this mine constitu ted a quarter of all export earnings in 1999.  
Commercial production at Gold Ridge is expected to  resume in 2010, following the completion of the 
site's refurbishment by a foreign-owned company that acquired it in 2005.42 
                                                      
38 Central Bank of Solomon Islands online information, "Solomon Islands Round Log Export System".  
Viewed at:  http://www.cbsi.com.sb/index.php?id=41. 
39 IMF (2008a). 
40 Section 8(7). 
41 International Finance Corporation and The World Bank Group (2005). 
42 Australian Solomons Gold Ltd. online information, "Overview" and "Presentation to Solomon 
Islands Government".  Viewed at:  http://www.solomonsgold.com.au. Solomon Islands WT/TPR/S/215 
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44. The Ministry of Mines, Energy and Rural Elect rification is responsible for sector regulation 
and supervision.  Under Policy Stat ements issued in 2008, the Ministry's objective is to ensure the 
"sustainable, innovative, environm entally conservative and socially acceptable" use of minerals.43  
According to one study, the Ministry lacks "the  financial, manpower, and equipment resources to 
effectively promote and monitor the industry".44 
45. The Mines and Minerals Act vests the owners hip of minerals in "the people and the 
Government of Solomon Islands".45  Prospecting and mining require a permit from the Minister of 
Mines, Energy and Rural Electrification.  Permits ar e granted in the form of reconnaissance permits, 
prospecting licences, or mining leases, upon the non-bi nding recommendation of the Minerals Board, 
which is composed of representatives of the central and relevant provincial government, and 
landowners.46  The Act specifies the requirements that permit applicants must fulfil.47  It also regulates 
the scope and duration of permits, a nd the obligations of permit holders.  Permits are issued subject to 
the negotiation of "surface access rights" with landowners. 
46. There are no statutory limitations on foreign ow nership of permits, exce pt that holders of 
alluvial mining permits must be Solomon Island citizens.48  Applicants who hold three or more 
prospecting licences, and have not applied for a mi ning lease, are not eligible for new prospecting 
licences.49  Mining lease holders must incorporate under the Companies Act, and must control or 
share control of the incorporated company.  The authorities indicate that they issued around 
70 prospecting licences between 2005 and 2008. 
47. As part of the conditions attached to mini ng leases, the Mining Board can require lease 
holders to enter into a production, revenue, prof it, or equity sharing arrangement with the 
Government.50  Royalty payments are determined by th e Minister of Mines, Energy and Rural 
Electrification in consultation with the Minister of  Finance and Treasury, and based on "the principle 
of fair market value".51  The Minister of Mines, Energy and Rural Electrification can defer or remit 
royalty payments on the advice of the Mining Board.52 
48. Gold sales and purchases are restricted to licensed Solomon Islands citizens and banks.53  
Gold exports require a permit, unless the e xporter holds a licence to buy and sell gold.54  The Director 
of Mines of the Ministry of Mines, Energy and Rural Electrification is responsible for issuing the permits. 
49. Exports of gold and other metals are subject to taxes (Chapter III(3)(ii)). 
50. Under the Income Tax Act, mining companies can deduct for income tax purposes 
expenditure in infrastructure projects approved by the Government.
55 
                                                      
43 Coalition for National Unity and Rural Advancement Government (2008b). 
44 Australian Government (2004). 
45 Section 2, Mines and Minerals Act, Chapter 42 of the Laws of Solomon Islands, 1 March 1996. 
46 Section 6, Mines and Minerals Act. 
47 Section 31, Mines and Minerals Act. 
48 Section 50(1), Mines and Minerals Act. 
49 Section 4, Mines and Minerals (Amendment) Act 2008. 
50 Section 36, Mines and Minerals Act. 
51 Section 45(3), Mines and Minerals Act. 
52 Section 47, Mines and Minerals Act. 
53 Section 55(1), Mines and Minerals Act. 
54 Section 60(4), Mines and Minerals Act. 
55 Section 15(1), Income Tax Act. WT/TPR/S/215 Trade Policy Review 
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(6) ELECTRICITY56 
51. The electricity market is a de facto  state monopoly.  The system is unreliable and has limited 
coverage beyond the capital city.  The authorities ha ve taken steps to ease the critical financial 
situation of the state electricity company, a nd to improve its operati ons.  Although the legal 
framework does not limit private participation in the el ectricity market, it lacks clarity with respect to 
the applicable terms and conditions. 
52. Installed generation capacity in Solomon Isla nds is around 22MW.  Peak demand in Honiara 
is 12.5MW.  Generation totalled ar ound 77GWh in 2007, and is predom inantly diesel based.  Honiara 
and surrounding areas account for approximately 80% of electricity consumption.  Some 70% of 
Honiara residents have access to electricity, compar ed with 10% for the rest of the population.  The 
electric power system is unreliable.  Generating capac ity declined gradually during the period of civil 
strife, but has increased since then. 
53. The Solomon Islands Electricity Authority (SIEA), a statutory body, runs the whole electric 
power system (generation and distribution).  Its fi nancial situation is critical, with operating losses of 
SI$45 million (around US$5.9 million) in 2007, loan liabilities of SI$196 million, and tax arrears of 
SI$8.5 million.  This is exacerbated by relatively low bill collection efficiency and large system 
losses.  The Government agreed to forgive the SIEA's debt in April 2008.  The SIEA has also sought 
to improve revenue collection, for example by disconn ecting customers in arrears.  Solomon Islands is 
receiving assistance from the World Bank to improve the SIEA's operations and financial sustainability.
57 
54. The electricity tariff in Honiara is US$0.52 per kWh.  The high cost is largely driven by world 
petroleum prices and the cost of su pplying petroleum to Solomon Islands.58  The Ministry of Mines, 
Energy and Rural Electrification is considering the development of a 22MW hydropower plant at 
Ngalimbiu in Guadalcanal.59 
55. The Ministry of Mines, Energy and Rural Electrification is responsible for the electricity 
sector.  The World Bank considers that the Ministry's  staff and resources are inadequate to fulfil its 
functions.60  The SIEA is a statutory body created in 1969 to "secure the supply of electricity at 
reasonable prices" and "to promote and encourage th e generation of electricity with a view to the 
economic development of Solomon Islands".61  The SIEA is accountable to the Minister who appoints 
its directors. 
56. The supply of electricity, and the operation of insta llations to that end, are subject to licensing 
by the SIEA.62  Most private generators with a capac ity of 50kW or less are exempt from this 
requirement.63  The Electricity Act does not specify the requirements for licence applicants.  Licences 
may be transferred, and may not exceed 21 years, unless the Minister of Mines, Energy and Rural 
                                                      
56 Unless otherwise indicated, the data contained in this section are from World Bank (2008). 
57 World Bank (2008). 
58 World Bank (2008). 
59 Coalition for National Unity and Rural Advancement Government (2008b). 
60 World Bank (2008). 
61 Section 13(1), Electricity Act, Chapter 128 of the Laws of Solomon Islands, 1 January 1969. 
62 Section 30(1), Electricity Act. 
63 Section 2, The Electricity (Exemptions) Order, 4 December 1992. Solomon Islands WT/TPR/S/215 
 Page 57 
 
 
Electrification approves a longer period.  The SIEA  may impose additional licensing conditions.  The 
SIEA managers indicate that they are read y to issue licences to potential generators.64 
57. Tariffs are fixed by the Minister of Min es, Energy and Rural Electrification on the 
recommendation of the SIEA.65  A two-part tariff is used.  The base tariff is adjusted annually for 90% 
of the CPI change during the previous year, and the fu el tariff is adjusted every quarter for 95% of the 
change in fuel prices during the previous quarter. 
(7) MANUFACTURING  
58. Manufacturing is limited to a handful of activities.  Although sector assistance appears limited 
in absolute terms, some activities potentially r eceive significant effective protection due to the 
availability of import duty exemptions for qualifying inputs.  Under the Protected Industries Act, the 
State can prevent market entry into particular i ndustries on public interest grounds.  However, no 
information is available on the industries affected by this measure. 
59. The share of manufacturing in GDP declined  steadily between 2000 and 2007, from nearly 
5% to around 3%.  The principal manufacturing sect ors are food, which accounts for around 43% of 
manufacturing value added, followed by beverages a nd tobacco (24%), and w ood products (8%) (see 
also sections (2) and (3)).  Manufacturing exports , as defined under the Standard International Trade 
Classification (SITC), represent less than 1% of total exports.66 
60. Unreliable electricity services and lack of skilled labour are among the chief impediments to 
manufacturing investment.67  Also, the IMF notes that the small size and geographic dispersion of the 
domestic market does not encourage large-scale manufacturing.68 
61. The average applied MFN tariff rate for the manufacturing sector, defined in accordance with 
the International Standard Industrial Classification (ISIC), was 9.1%, the same as for the economy as 
a whole (see also Chapter III(2)(iv ))  Under the Customs and Excise Act, manufacturing inputs that 
undergo a substantial transformation or change in th e their essential character are exempt from import 
tariffs.  Manufacturing firms may qualify for a dditional import duty and income tax exemptions 
(Chapter III(3)(iii), and (4)(iii)). 
62. Under the Protected Industries Act, the Minister of Commerce, Industries and Employment 
may issue an order limiting entry by new firms into  industries whose development is in the "public 
interest".69  Orders must be reviewed every two years to ensure continued compliance with the public 
interest provision of the Act.  Business entry into  industries protected under the Act is subject to 
licensing;  the Minister of Commerce, Labour and Immigration has "complete discretion" in issuing 
licences.70  The Minister may apply limits on the prices charged by licensed firms. 
63. The WTO Secretariat has no information on whether any industries are subject to the 
Protected Industries Act.  During the 1980s, the Mini ster declared several industries to be protected, 
                                                      
64 Asian Development Bank (2005a). 
65 Section 21, Electricity Act. 
66 WTO Secretariat estimate, on the basis of Comtrade data for Solomon Islands' trading partners. 
67 IMF (2004). 
68 IMF (2004). 
69 Section 3, Protected Industries Act, Chapter 177 of the Laws of Solomon Islands, 
29 November 1954. 
70 Section 7, Protected Industries Act. WT/TPR/S/215 Trade Policy Review 
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including paints and varnishes, sandals, pref abricated wooden buildings , baked goods, and film 
processing. 
(8) SERVICES  
(i) Introduction 
64. Services represent around 40% of Solomon Isla nds GDP, down eight percentage points from 
2000.  The decline reflects partly  the reduction of the value of "other services", which includes 
government services.  In 2007, exports of service s totalled US$73.3 million, while imports were 
US$52.9 million.  During the period under review, de ficits were generally pos ted in transportation, 
travel, and, since 2004, in financial services. 
65. Solomon Islands scheduled commitments in only 29 of the 160 subsectors in the GATS 
(Table IV.4).  It did not undertake commitments  in the post-Uruguay Round negotiations on basic 
telecommunications or financial services.  By assuming a greater number of GATS commitments, Solomon Islands would enhance the predictability  of the legal framework governing its service 
activities, thus helping to address the concerns a bout political instability that have undermined its 
economic performance (see Chapters I and II). 
66. Solomon Islands listed approval and registration requirements, restrictions on land purchases, 
and debt ceilings applied on foreign investors as  horizontal limitations on market access through 
commercial presence;  provisions on entry conditi ons for managers and specialists, and certain 
training requirements for foreigners were listed as horizontal limitations on the presence of natural 
persons. 
Table IV.4 
Summary of specific commitments under the GATS 
   Market access National treatment 
 Modes of supply:          
  Cross-border supply 1    1    
  Consumption abroad  2    2   
  Commercial presence   3    3  
  Presence of natural persons    4    4 
Commitments (■ no limitations (none);  ◨ partial limitations;  □ no commitments (unbound);  – not appearing in Schedule) 
Horizontal limitations − − Yes Yes − − − Yes 
Sector-specific commitments         
1.  Business services         
 A.  Professional services         
  Legal (home country law a nd public international law) ■ ■ ◨ ◨ ■ ■ ◨ ◨ 
  Accounting, auditing, architecture and engineering ■ ■ ■ ◨ ■ ■ ■ ◨ 
 B-F.  Other business services − − − − − − − − 
2.  Communications services         
 A.  Postal services  − − − − − − − − 
 B.  Courier services  − − − − − − − − 
 C. and D.  Telecommunication and audiovisual services  − − − − − − − − 
Table IV.4 (cont'd) Solomon Islands WT/TPR/S/215 
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   Market access National treatment 
 Modes of supply:          
  Cross-border supply 1    1    
  Consumption abroad  2    2   
  Commercial presence   3    3  
  Presence of natural persons    4    4 
Commitments (■ no limitations (none);  ◨ partial limitations;  □ no commitments (unbound);  – not appearing in Schedule) 
3.  Construction and related engineering services          
 A.  General construction work for buildings □ ■ ■ ◨ □ ■ ■ ◨ 
 B.  General construction work for civil engineering ◨ ■ ■ ◨ ◨ ■ ■ ◨ 
 C.-E.  Other − − − − − − − − 
4.  Distribution services  − − − − − − − − 
5.  Education services − − − − − − − − 
6.  Environmental services − − − − − − − − 
7.  Financial services         
 A.  Insurance and related services ■ ■ ■ ◨ ■ ■ ■ ◨ 
 B.  Banking and othe r financial services ■ ■ ■ ◨ ■ ■ ■ ◨ 
 C.  Other − − − − − − − − 
8.  Health and social services  − − − − − − − − 
9.  Tourism and travel services          
 A.  Hotels and restaurants ■ ■ ■ ◨ ■ ■ ■ ◨ 
 B.-D.  Other − − − − − − − − 
10.  Recreational, cultural, and sports services − − − − − − − − 
11.  Transport services − − − − − − − − 
12.  Other services − − − − − − − − 
 
Source:  WTO document GATS/SC/117, 1 April 1996. 
67. In its Final List of Article II (MFN) Exemp tions, Solomon Islands included future waivers 
granted to members of the Me lanesian Spearhead Group (MSG) on approval and registration 
requirements for foreign investors, and measures re lating to the temporary entry of natural persons.71 
68. Solomon Islands had not tabled a services offer in  the context of the Doha negotiations (see 
Chapter II(5)(i)). 
69. None of the preferential trade agreements in force in Solomon Islands contains disciplines on 
services.  Negotiations on a protocol on trade in services are ongoing under the Pacific Island Countries Trade Agreement (late 2008), and services di sciplines are being considered as part of a 
revised MSG Trade Agreement (see Chapter II(5)(ii)). 
(ii) Financial services 
70. There is significant foreign participation in th e financial system of Solomon Islands.  Bank 
prudential indicators appear sound, and efforts have been made to strengthen the prudential 
framework and expand access to credit.  Certain stat utory restrictions affecting consumption abroad 
and cross-border trade of banking and insurance se rvices appear to be in contrast with Solomon 
                                                     
 
71 WTO document GATS/EL/117, 1 April 1996. WT/TPR/S/215 Trade Policy Review 
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Islands' GATS commitments on financial services.  Realigning the legal framework to reflect those 
commitments would thus be important. 
(a) Market structure and performance 
71. Financial system assets totalled approximat ely SI$3,540 million in 20 07, around 120% of 
GDP.72  The assets of the three commercial banks  represent close to 51% of GDP, up almost 
20 percentage points from 2000;  all are branches of foreign corporations.  There are three foreign-
owned insurance companies with assets of 2.3% of GDP.  The National Provident Fund (NPF), which is fully owned by the State, is responsible for the social security scheme.  Its assets are equivalent to 
25% of GDP.  The financial sector also incl udes some ten credit unions and the state-owned 
Development Bank of Solomon Islands, which is  insolvent and has been under Central Bank 
administration following a 2004 court order. 
72. The spread between weighted average interest rates on commercial bank deposits and loans 
was 13.6 percentage points in 2007.
73  Banks' high operating costs and the perceived threat of 
economic, political, and social instability are among the factors influencing the spread.74  Private-
sector credit collapsed during the height of the ci vil conflict in 2001, but has expanded rapidly in 
recent years, reaching 37% of GDP in 2007.75  Around 80% of the population outside Honiara does 
not have access to financial services.76 
73. According to the IMF, the banking system of Solomon Islands is well capitalized and 
profitable.77  Non-performing loans remain low, at 3%, and risk-weighted capital asset ratios, at 20%, 
are well above the prudential standard of 15%.  Although the NPF's profitability has improved in 
recent years, the IMF indicates that a new legal instru ment is necessary to clarify the NPF's objectives 
and enhance its governance.78  According to the authorities, politi cal support for reform of the NPF is 
weak. 
74. Solomon Islands undertook financial services co mmitments under the GATS (Table IV.4).  It 
fully bound market access and national treatment with respect to banking, insurance, and other 
financial services delivered via cross-border supply and consumption abroad.  Commercial presence is 
constrained by a horizontal limitation providing for the possibility of an economic needs test. 
(b) Banking 
75. The Central Bank is responsible for banking sector  supervision and can make regulations with 
the approval of the Minister of Finance and Treasury.79  Supervision of the NPF and credit unions is 
also the responsibility of the Central Bank.  The Ce ntral Bank holds letters of  understanding from the 
head offices of two commercial banks promising to provide funds to cover all obligations and 
liabilities incurred by their subsidiaries in the Solomon Islands.80 
                                                      
72 This estimate comprises the assets of the Central Bank, commercial banks, Credit Corporation (SI) 
Ltd, National Provident Fund, insurance companies, and eight credit unions. 
73 IMF (2008b). 
74 CBSI (2007b). 
75 CBSI (2008c). 
76 Flaming and Stuart Mathison (2007). 
77 IMF (2008a). 
78 IMF (2007a). 
79 Section 4, Central Bank of Solomon Islands Act, Chapter 49 of the Laws of Solomon Islands and 
section 35, Financial Institutions Act 1998. 
80 IMF (2004). Solomon Islands WT/TPR/S/215 
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76. Since its last Review, Solomon Islands has a dopted the Financial Institutions Act 1998, which 
repealed the Banking Act of 1976.  In addition,  the Central Bank has introduced "Prudential 
Supervision Policies".  The IMF indicates that the policies, which cover asset quality, capital 
adequacy, liquidity, large exposures, corporate governan ce, and external audit, are in accordance with 
Basle Core Principles.81  Although the policies are still in draft form, the authorities indicate that they 
are being implemented fully, and that they will  be finalized "after receipt of comments from 
commercial banks".82  Under the Secured Transactions Act adopted in 2008, movable property can be 
used as loan collateral.  This is expected to improve access to credit, which has been severely 
hindered by practical limitations on the use of land as collateral. 
77. Solomon Island residents, and companies estab lished in Solomon Islands, including banks, 
must obtain Central Bank approval to borrow funds from a bank established outside Solomon Islands.
83  In assessing applications, the Central Bank seek s to ensure that the "overall cost" paid to 
the lender is not "excessive in relation to currently pr evailing interest rates", and that the debt equity 
ratio of the borrower does not exceed "prudent levels".84  Solomon Island residents are allowed to 
open a foreign currency account with a bank outsi de Solomon Islands in "exceptional cases" only.85  
Under its GATS commitments, Solomon Islands ma y not impose restrictions on banking services 
delivered via cross-border supply or consumption abroad. 
78. Foreign banks may supply services in Solomon Islands through a subsidiary, branch, or 
representative office.  There are no statutory limits on foreign ownership of banks established in 
Solomon Islands.  According to the authorities, th ere are no policy restrictions on the number of 
foreign banks that may operate in Solomon Islands, or the number of agencies that foreign banks may 
open.  The legal framework does not differentiate  between the types of services that foreign and 
domestic banks can provide. 
79. All banks operating in Solomon Islands must be licensed by the Central Bank.  The Financial 
Institutions Act 1998 specifies the criteria to be  used by the Central Bank when assessing licence 
applications.  These include "the ec onomic advantage of Solomon Islands".86  A horizontal limitation 
in Solomon Islands' GATS Schedule reads:  "N ormal government approva l and registration is 
required for all foreign investors by the Foreign Investment Board.  Such approval is based on an economic needs test, for which the following criteria are, in general, used:  (i) provision of new 
services;  (ii) improvement of productive structure of the economy;  (iii) viability of the new project especially with respect to foreign exchange earnings or savings;  (iv) implications for employment in 
the Solomon Islands". 
80. The 1998 Act specifies three licensing criteria applie d exclusively on foreign applicants:  their 
international reputation, ownershi p structure, and the statutory requirements in their country of 
incorporation.  Foreign applicants must submit wr itten confirmation that they will provide "support as 
necessary" to their Solomon Island operations.  In  addition, they must present a programme of 
training "to place Solomon Islands citizens in manage ment positions".  On the other hand, under mode 
4, Solomon Islands  has scheduled the following na tional treatment limitation:  "foreign employees 
are required to provide on-the-j ob-training to local employees". 
                                                     
 
81 CBSI online information, "Prudential Supervision Policies".  Viewed at:  http://www.cbsi.com.sb/ 
index.php?id=6. 
82 CBSI online information, "Prudential Supervision Policies".  Viewed at:  http://www.cbsi.com.sb/ 
index.php?id=6. 
83 Section 7, Exchange Control Act, Chapter 51 of the Laws of Solomon Islands, 1 March 1977. 
84 CBSI (undated). 
85 CBSI (undated). 
86 Section 5(5). WT/TPR/S/215 Trade Policy Review 
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81. Bank licence applicants must have at least SI$5 million in capital (some US$650,000).  The 
actual amount is determined by the Central Bank on th e basis of prudential considerations.  Under the 
Financial Institutions Act 1998, th e Central Bank must reach a decision on licence applications within 
four months.  According to the authorities, no licence  applications have been formally rejected since 
the last Review of Solomon Islands. 
82. Banks are not allowed to hold equity in other firms, except those that carry out "functions 
incidental to banking business".87  There is no institutional m echanism for the administrative 
allocation of financial resources.  Although there are no o fficial controls on bank interest rates or fees, 
credit unions are subject to an interest rate cap of 12% per year.88  Solomon Islands does not have a 
deposit insurance scheme. 
(c) Insurance 
83. The Ministry of Finance and Treasury is author ized to make regulations for the insurance 
sector.89  Insurance sector supervision was transfer red to the Central Bank from the Ministry of 
Finance and Treasury in 2004. 
84. Under the Insurance Act, foreign reinsurance firms can offer services without establishing in 
Solomon Islands.  However, consumption abroad a nd cross-border supply of insurance services is 
only permitted for services that have been explicitly "exempted" by  the Minister of Finance and 
Treasury.  Exemptions can be granted for services th at are not available in Solomon Islands or for 
"public interest" reasons.90  According to the authorities, exemp tions have been granted for insurance 
related to banking and public lia bility.  Under its GATS commitments, Solomon Islands may not 
impose restrictions to insurance and related services delivered via cross-border supply or consumption 
abroad. 
85. Foreign insurance firms may establish in Solomon Islands through a subsidiary or a branch.  
The legislation does not foresee the establishment of  representative offices.  There are no statutory 
restrictions on foreign ownership of insurance firms established in Solomon Islands.  According to the 
authorities, there are no policy restrictions on the nu mber of foreign insurance firms that may operate 
in Solomon Islands or the number of agencies that they may open. 
86. Life insurance companies are not allowed to offer any other insurance services unless the 
Central Bank is satisfied that their assets in So lomon Islands are adequate to meet their liabilities.91  
The legal framework does not differentiate between the types of services that foreign and domestic 
insurers can provide. 
87. Insurance firms established in Solomon Islands , including branches of firms incorporated 
outside Solomon Islands, must regi ster with the Central Bank.  In surance registrations must be 
renewed annually.  In assessing applications for regist ration, the Central Bank must take into account 
the criteria specified in the Insura nce Act, including whether the app licant's likely volume of business 
and earning prospects are adequate.92  The Minister of Finance and Treasury may direct the Central 
                                                      
87 Section 13(1), Financial Institutions Act 1998. 
88 Section 62, Credit Unions Act, Chapter 165 of the Laws of Solomon Islands, 5 September 1986, and 
section 4, The Credit Unions Regulations. 
89 Section 74, Insurance Act, Chapter 82 of the Laws of Solomon Islands, 1 March 1986. 
90 Part III, Insurance Act. 
91 Section 30, Insurance Act. 
92 Section 14. Solomon Islands WT/TPR/S/215 
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Bank not to register an applicant if th is is against the "national interest".93  According to the 
authorities, there have been no applications for registration of new firms since 2000. 
88. The Insurance Regulations specify the paid-up cap ital that insurance companies must have to 
qualify for registration.  However, the authorities in dicate that such capital requirements are not being 
applied, and are under review. 
89. Insurance firms' management expenses are s ubject to statutory limits ranging from 35% to 
40% of net premium income depending on the type of insurance offered.94  In addition, "head office 
or overseas expenses" cannot exceed the lesser of SI$85,000 or 7.5% of the gross premium and 
investment income.  In the context of this Review , the authorities indicated that insurance premiums 
are not subject to official controls. 
(iii) Telecommunications 
90. Telecommunication services are supplied by a monopolist, resulting in unnecessarily high 
prices and low coverage.  Moreover, the statutory framework and institutional capacity to supervise 
the sector are inadequate.  To address those problem s, the Governemnt intends to renegotiate the 
incumbent's exclusive licensing agreement, and to  introduce a new legislative framework developed 
with external assistance. 
91. The number of fixed telephone lines increased at  an annual average rate of 3.6% between 
2002 and 2007.  However, the penetration rate of 1.6 fixed lines per 100 inhabitants remains one of 
the lowest in the world.95  The same holds for the mobile pe netration rate (2.2 subscribers per 
100 inhabitants), despite an eleven-fold increase in  the number of mobile cellular subscribers during 
the same period.  Nearly half of all telephone s ubscribers in Solomon Islands are mobile cellular 
subscribers.  There are 1.6 internet users per 100 inhabitants.  Prices for international and mobile 
telephony and internet access are among the highest in the Pacific region.96 
92. Solomon Telekom Company Ltd. is the sole provider of telecommunication services, 
including internet access.  Its exclusive licence to provide telecommunication services was renewed 
for a 15-year period in November 2003.  The licensi ng arrangement is subject to review every five 
years.  Through the Investment Corporation of Solo mon Islands, the Government owns 2.7% equity in 
Solomon Telekom Company Ltd;  a foreign invest or (Cable and Wireless) owns 32.6%, and the 
National Provident Fund 64.7%.97  The board of the National Provident Fund is appointed by the 
Government, which has absolute discre tion in terminating board appointments.98  At the time of the 
previous Review of Solomon Islands, the Gove rnment owned 58% equity in Solomon Telekom 
Company Ltd. 
93. Under the Solomon Islands Postal Corpora tion Act 1996, the Solomon Islands Postal 
Corporation can carry out any activity that is "incidental" to postal services.99  At the time of the last 
Review of Solomon Islands, the Corporation was examining whether to provide certain 
                                                      
93 Section 14, Insurance Act. 
94 Section 11, The Insurance Regulations. 
95 ITU online information, "ICT Statistics".  Vi ewed at:  http://www.itu .int/ITU-D/ict/index.html. 
96 World Bank (2006). 
97 Our Telecom online information, "About Us".  Viewed at:  http://www.solomon.com.sb/library/ 
about_telekom.php. 
98 Section 3, Solomon Islands National Provident Fund Act, 1 January 1976. 
99 Section 7. WT/TPR/S/215 Trade Policy Review 
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telecommunications services, including electronic mail.  The Secretariat was unable to confirm 
whether the Postal Corporation provides any telecommunications services. 
94. The Ministry of Communication and Aviati on is responsible for the regulation and 
supervision of the sector.  The policy for the sect or is a competitive telecommunications market 
allowing for "choices of technology, system and prices".100  Solomon Islands requested external 
assistance to develop draft telecommunications legisl ation, and to enhance its oversight capacity.  
According to the authorities, the current stat utory framework, and the institutional capacity to 
supervise the sector, are inadequate to support a competitive market.  The authorities intend to renegotiate the terms of the licence granted to Solomon Telekom Company Ltd. during the 
November 2008 review of the licensing arrangement. 
95. There have been no changes to the legislativ e framework governing telecommunications since 
the last Review of Solomon Islands.  The Telecommunications Act does not limit private or foreign ownership of telecommunication service providers, nor their number.  A licence issued by the 
Ministry of Communications and Aviation is required to provide telecommunication services.
101  
Under the Telecommunications Regulations, the Mi nistry may grant licences to operate different 
types of radio communication stations, and private landline telephone systems.102  Licensing fees are 
specified in the Regulations.  There are no detailed statutory provisions on licensing criteria and procedures. 
96. There are no statutory provisions on interconn ection of telecommunications networks or 
infrastructure sharing of telecommunications facilities.  Nor are there any statutory provisions on 
tariffs.  Although the exclusive licensing arra ngement with Solomon Telekom Company Ltd. 
establishes requirements on tariffs, the authorities in dicate that these cannot be enforced because of 
their lack of precision. 
(iv) Maritime transport and ports 
97. Maritime transport is key for Solomon Islands ' international and domestic trade.  Solomon 
Islands is open to international maritime service pr oviders but it does not allow foreign flag vessels to 
conduct cabotage of cargo or passengers.  Solom on Islands subsidizes certain domestic routes, 
considering that they cannot be operated on a commercial basis but are essential for social and economic reasons.  A statutory body manages and pr ovides all port services in the two international 
ports.  Certain rates for port services are higher for foreign flag vessels than for domestic ones. 
98. Solomon Islands is an archipelago consisting of six main islands and hundreds of smaller 
ones.  Its trade is therefore highly dependent on bo th international and domestic maritime transport.  
There are no data on the volume and value of cargo transported by sea.  The domestic merchant fleet consists of some 200 vessels, not all of which are in service.  There are no domestic flag vessels offering international services.  Domestic services ar e provided by the private sector and, to a lesser 
extent, provincial governments.
103 
99. The main port for international trade is the por t of Honiara, which is also a focal point for 
domestic maritime transport.  There is another inte rnational port (Noro, in Western Province), used 
primarily for fish and commodity exports, and nu merous wharves and jetties for domestic maritime 
transport. 
                                                      
100 Coalition for National Unity and Rural Advancement Government (2008b). 
101 Section 5, Telecommunications Act, Chapter 115 of the Laws of Solomon Islands, 1 January 1972. 
102 Section 5. 
103 Meyrick (2008). Solomon Islands WT/TPR/S/215 
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100. International maritime freight rates are roughly comparable to other Pacific islands, although 
significantly higher than for Australia or New Zealand.104  The cost of maritime freight from 
Solomon Islands to Europe is around three times higher than from Australia and New Zealand to 
Europe.  Port charges at Honiara are the lowest among a group of selected ports in six Pacific island 
countries.105 
101. The Ministry of Infrastructure Development is the lead entity responsible for the regulation 
and supervision of the ma ritime transport sector.  The Solomon Islands Port Authority (SIPA) is a 
statutory body that owns and operates the ports of Honiara and Noro, under the direction of the 
Ministry of Infrastructure Development.106  According to the National Transport Plan, "regular, 
reliable and cost-effective shipping services throug hout the country will be the backbone of the 
national transport network".  The Plan also seeks to  ensure that transport infrastructure, including 
ports and wharves, is well maintained, and that th is receives sufficient funding.  Solomon Islands has 
ratified seven conventions adopted under the ausp ices of the International Maritime Organization.107 
102. Although private participation in port operati on is permitted under legislation, the SIPA 
provides all port, stevedoring, and international cargo handling services at the ports of Honiara and 
Noro108;  it operates on a commercial basis.109 
103. The SIPA is responsible for setting charges at the ports of Honiara and Noro.110  T h e  
applicable rates are specified in The Levy of Ra tes and Dues (Ports of Honiara and Noro) Rules.  
Rates on overseas ships are generally higher than on lo cal ships.  Vessels qualify as local if they are 
licensed in Solomon Islands and are "employe d in voyages involving calling at ports in 
Solomon Islands".  For example, port dues are SI$3.40 per metre for overseas ships (around 
US$0.44), and SI$0.36 per metre for local ships.  In addition, the rates applied on overseas ships are subject to a "currency adjustment factor".  Tonna ge dues are set at SI$3.05 per tonne of incoming 
cargo and SI$1.60 per tonne of outgoing cargo. 
104. There are no statutory limitations on the number of scheduled or non-scheduled international 
maritime transport service providers.  According to  the authorities, foreign companies providing 
international maritime transport services in Solomon Islands are not required to establish there.  There 
are no institutional arrangement for cargo allocation. 
105. Passenger cabotage is reserved for domestic flag vessels.
111  Under the Shipping Act 1998, 
domestic flag vessels must be wholly owned by Solo mon Islands citizens or corporations with their 
principal place of business in Solomon Islands  (irrespective of the origin of capital).112  According to 
the authorities, although there are no statutory restrictions on the provision of cargo cabotage by 
foreign flag vessels, in practice only domestic flag v essels are allowed to provide this service.  Prior to 
2006, foreign investment was prohibited in vessels of less than 10 metres in length performing 
                                                      
104 Australian Government (2008). 
105 World Bank (2006). 
106 Sections 9(1) and 11, Ports Act, Chapter 161 of the Laws of Solomon Islands, 4 June 1956. 
107 IMO Convention 48, SOLAS Convention 74, COLREG Convention 72, STCW Convention 78, 
MARPOL 73/78 (Annex IV), London Convention 72, and CLC Protocol 92.  IMO online information, "Status 
of Conventions by Country".  Viewed at:  http://www.imo.org/Conventions/mainframe.asp?topic_id=248. 
108 Section 10(1), Ports Act. 
109 Australian Government (2004a). 
110 Part XI, Ports Act. 
111 Section 10(2), Shipping Act 1998. 
112 Section 9(1). WT/TPR/S/215 Trade Policy Review 
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passenger and cargo cabotage.113  The Foreign Investment Act 2005 eliminated this restriction 
(Chapter II(4)). 
106. The crew on domestic flag vessels must not include foreign citizens.114  Under the Shipping 
Act 1998, the Minister of Infrastructure Development can waive this prohibition for up to six months 
if duly certified Solomon Island citizens are unavailable. 
107. Solomon Islands does not regulate tariffs for intern ational or domestic maritime transport.  It 
subsidizes certain domestic maritime transport servi ces, recognizing that many routes are essential for 
social and economic reasons, but cannot be operated on a commercial basis.  The Ministry of 
Infrastructure Development determines the operators and routes targeted by the subsidy.  The amount 
of the subsidy is the cost of service less the re venue received from passenger and cargo fees.  It is 
estimated that subsidies are up to SI$600,000 per year (some US$78,330).115  Solomon Islands is 
receiving external assistance to reform its maritime  transport subsidy scheme, which is costly to 
administer and has encouraged operators to underreport revenue.116  In this context, the Asian 
Development Bank has proposed a franchising scheme in  which private operators are contracted to 
provide services to areas that are not viable commercially.117 
(v) Air transport and airports 
108. Solomon Islands adopted new civil aviation legi slation in November 2008 as part of its policy 
to foster a competitive and open market for air transpor t.  It has six bilateral air services instruments, 
and has signed, but not yet ratified, an agreement to establish a single aviation market in the Pacific.  
The State owns the only national airline, which is  in a weak financial position partly because it 
continues to service non-viable domestic routes.   The country's only international airport 
(Honiara International) is owned and managed by the State. 
109. In 2007, the number of air transport passengers totalled 38,468.  In the same year, incoming 
air freight totalled 962.4 tonnes;  data for outgoing air freight are not available.  Honiara International 
Airport is the main hub for domestic air transport.  Th ere are plans to build a ne w domestic terminal at 
the Honiara International Airport, and an international airport in Western Province.118  The State owns 
and manages Honiara International Airport through the Civil Aviation Division of the Ministry of 
Communication and Aviation.  There are two providers  of ground-handling services at this airport.  
There are another 28 airports, none of which have a paved runway. 
110. There are three licensed carriers for internationa l passenger services, and two for international 
freight.  The State owns the only national airline, Solomon Airlines Ltd., the only carrier licensed to 
provide domestic services.  Solomon Airlines Lt d. services its international routes through 
arrangements with Air Vanuatu and Our Airline (Nau ru).  Although these arrangements appear to be 
profitable, the overall financial s ituation of Solomon Airlines Ltd. is weak, with losses of around 
SI$55 million (about US$7.2 million) during the first eight months of 2007119;  only a small fraction 
of its domestic routes are viable.120  The authorities have received external assistance to formulate 
                                                      
113 Chapter II(8)(i), WTO (1999). 
114 Section 50, Shipping Act 1998. 
115 Meyrick (2008). 
116 Meyrick (2008). 
117 Meyrick (2008). 
118 Coalition for National Unity and Rural Advancement Government (2008b). 
119 Australian Government (2008). 
120 Australian Government (2004b). Solomon Islands WT/TPR/S/215 
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plans for private participation in Solomon Airlines Lt d., but have not taken any policy decision in this 
respect.121 
111. One of the policy objectives for the sector is a "competitive and open market for international 
and domestic air travel".122  As part of this policy, new civ il aviation legislation was adopted in 
November 2008.  According to the Medium Term De velopment Strategy 2008-10, the new legislation 
will also help Solomon Islands to achieve and ma intain International Civil Aviation Organization 
standards and procedures.123  The Ministry of Communication and Aviation is responsible for sector 
regulation.  The Civil Aviation Act 2008 foresees the establishment of a Civil Aviation Authority 
responsible for promoting civil aviation safety and security. 
112. Solomon Islands has bilateral air services instruments with Australia, Fiji, Nauru, 
New Zealand, Papua New Guinea, and Vanuatu (Table IV.5). 
Table IV.5 
Bilateral and plurilateral ai r services instruments, 2008 
Traffic rights Tariff regulation Passenger 
capacity Designation 
Australia (initialled on 01.04.1998)    
.. .. .. .. 
Fiji (10.07.1990)    
3rd and 4th freedoms Free pricing;  however, if an 
aeronautical authority files a "notice 
of dissatisfaction" with respect to a 
proposed tariff, the authorities must 
set the tariff through consultations or arbitration Pre-determined Single 
Nauru (10.09.2006) 
5th freedom for Nauru (to Australia); 
"future" 5th freedom for Solomon 
Islands;  3rd and 4th freedoms for 
Pacific Air Express 
 .. Pre-determined SI:  Solomon Airlines and Pacific 
Air Express 
Nauru:  Nauru Air Corporation 
New Zealand (30.05.1990)    
5th and 7thfreedoms Free pricing;  however, if an 
aeronautical authority files a "notice 
of dissatisfaction" with respect to a 
proposed tariff, the authorities must set the tariff through consultations 
or arbitration 
 .. Multilple;  designation may be 
refused if substantial ownership 
and effective control of the 
designated airline are not vested in the party designating the 
airline 
Papua New Guinea (PNG) (08.05.1990) 
5th freedom for PNG, subject to a 
"satisfactory commercial agreement" 
between designated airlines 
 Dual approval Pre-determined SI:  Solomon Airlines 
PNG:  Air Niugini 
Vanuatu (23.05.1990) 
3rd and 4th freedoms Dual approval Pre-determin ed SI:  Solomon Airlines Ltd. 
Vanuatu:  Air Vanuatu 
(Operations) Ltd. 
 .. Not available. 
 
Source: WTO Secretariat. 
                                                      
121 See Asian Development Bank (2006). 
122 Coalition for National Unity and Rural Advancement Government (2008a). 
123 Government of Solomon Islands (2008). WT/TPR/S/215 Trade Policy Review 
Page 68 
 
 
113. Solomon Islands has signed, but not yet ratified,  the Pacific Islands Air Services Agreement 
(PIASA), which has been ratified by Cook Islands , Nauru, Niue, Samoa, Tonga, and Vanuatu, and 
entered into effect in October 2007.  From Apr il 2008, airlines designated by each PIASA member 
can operate direct services between their home count ry and other member countries (third and fourth 
freedom rights), and services through their home country between two other member countries 
(sixth freedom rights).  From October 2008, design ated airlines can operate  services between their 
home country and another member country through a third member country (fifth freedom rights).  From April 2010, designated airlines can opera te services between their home country and a 
non-member country through a third member country , to the extent that this is permitted under a 
bilateral agreement with the non-member country.  The PIASA does not contain provisions on 
seventh freedom rights, and explicitly excludes eighth freedom rights. 
114. International air services to and from Solomon Islands are subject to licensing.
124  Licences 
are granted by the Minister of Communication and Aviation, and must conform to the relevant air 
services arrangement. 
(vi) Professional services 
115. Solomon Islands undertook GATS commitments with respect to legal, accounting, 
architectural, and engineering services (Table IV.4). 
116. Few professional services are regulated in So lomon Islands.  Foreign professionals may 
provide legal, accounting, and arch itectural and engineering services;  they must obtain a work permit 
and a "permit to enter and reside" in Solomon Islands.125  The Commissioner of Labour is responsible 
for granting work permits.  In evaluating work perm it applications, the Commissioner of Labour must 
ensure that Solomon Island citizens are not availabl e to perform the work in question, and that the 
applicant is properly qualified.126  If the work permit pertains to a company employee, the 
Commissioner of Labour must assess the company's training programme to ensure that Solomon 
Island citizens are receiving "appropriate training".127  According to the authorities, the delay for 
processing work permits for highly skilled workers has been reduced from several months to five 
days.128 
117. Residency permits are granted by the Director of Immigration of the Ministry of Commerce, 
Industries, Labour, and Immigration, and are vali d for renewable periods of two years.  The 
application requirements for a residency permit are available online.129 
118. There is no general law governing professi onal services in Solomon Islands;  the few 
professions that are regulated are governed by sector-s pecific legislation.  Nor is there legislation 
establishing procedures for recognizing the equiva lency of foreign-based qualifications.  No 
information is available on whether an y professions are reserved for nationals. 
                                                      
124 Part XI, The Civil Aviation Act 2008. 
125 See Section 37 of the Labour Act, Chapter 73 of the Laws of Solomon Islands, 1 June 1960, and 
Section 8 of the Immigration Act, Chapter 60 of the Laws of Solomon Islands, 29 September 1978. 
126 Government of Solomon Islands online information, "Work Permit Application & Fees".  Viewed 
at:  http://www.investsolomons.com/docs/Work-Permit.pdf. 
127 Government of Solomon Islands online information, "Work Permit Application & Fees".  Viewed 
at:  http://www.investsolomons.com/docs/Work-Permit.pdf. 
128 Government of Solomon Islands (2008). 
129 Ministry of Commerce, Industries, Labour, an d Immigration online information, "Residing in 
Solomon Islands".  Viewed at:  http://www.commer ce.gov.sb/Divisions/Immigration/Residing_in_SI.htm. Solomon Islands WT/TPR/S/215 
 Page 69 
 
 
119. The supply of accounting, architectural, and engi neering services is not regulated in Solomon 
Islands. 
120. To practice before a court, lawyers must obtain a "certificate of qualification" issued by the 
Chief Justice.130  The requirements for obtaining the certificate are specified in the Legal Practitioners 
Act.131  The Legal Practitioners Act does not estab lish any nationality requirements for legal 
practitioners.  Notaries public must be appointed by the Chief Justice.132  The Notaries Public Act 
does not establish any nationality requirements fo r notaries public.  The Solomon Islands Bar 
Association represents lawyers as a profession. 
                                                      
130 Section 3, Legal Practitioners Act, Chapter 16 of the Laws of Solomon Islands, 11 September 1987. 
131 Section 5. 
132 Section 2, Notaries Public Act, Chapter 22 of  the Laws of Solomon Islands, 15 June 1965. Solomon Islands WT/TPR/S/215 
 Page 71 
 
 
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