HERALD WEEKLY ISSUE 587: 2 November 2011

Giving locals a chance
The draft Investment Code proposes a better future for locals in the face of foreign investors

If the changes proposed for the Cook Islands Investment Code are adopted, it may still be up to five years before we see more locals getting into businesses which in the past may have been snapped up by better resourced foreigners.
That’s the view of Business Trade Investment Board (BTIB) officials ‘Space” Teanini Raumea and Teariki Vakalalabure who spoke with the Herald on Tuesday morning. They have been compiling comments on the draft Code which has been out for comment by key stakeholders, the Aronga Mana, businesses and the public. Consultations have also taken place in Aitutaki and Atiu. A comment raised in Aitutaki is that the people of Aitutaki should decide who sets up in business there.
The period for comment closes on 4 November and the comments received to date have been largely positive and constructive.
According to Space, under the current Code the areas reserved for Cook Islanders have been a concern. That’s because the exceptions actually provide a “back door” to the reserved areas. In fact there are no reserved areas. This emerged from the feedback during the consultations.
In the draft Code certain elements have changed. Part C referring to Policy, Part E referring to exceptions where there have been some changes, and a new part-Part H has been added regarding the payment by investors of a refundable security deposit (originally a Bond).
The Bond is payable in the Tourism sector.
The refundable deposit is part of the operating capital and is refunded if the business proves satisfactory after a specified period.
Under the draft, the main limitations are that businesses valued at below $200,000 will be restricted to locals. Where the investment is valued between $200,000 and $750,000 foreigners must enter into a joint venture with a resident Cook Islander who must hold not less than 40 per cent interest in the venture. Where the value of the investment, capital outlay, acquisition is more than $750,000 a joint venture partner is not required but is encouraged.
Still to be dealt with is the question as to what to do about businesses valued below $200,000 which locals do not take up. The question raised is whether this limit be lowered.
There are exceptions to the reserved areas and these relate to investments over $1 million in the case of Rarotonga and over $500,000 in the case of Aitutaki. However, submissions from Aitutaki and other outer islands have raised whether this ceiling should be the same as for Rarotonga. There are also other exceptions relating to niche markets and special skills and technology enterprises.
At the heart of the Code is the desired outcome of protecting the Cook Islands, getting Cook Islanders into businesses and providing them with the skills. The current Code is not achieving this and if we continue as we are then foreigners will dominate says Teariki. Bogus investors and speculators need to be eliminated. Basically, it’s about learning from the mistakes of the past.
Teariki stressed the importance of having a policy which was a working, practical one so it meets the Code’s objectives. Also important he felt was the need for the Board to have clear processes for arriving at a final decision. Their deliberations he felt, can be supported by background research by special committees set up for that purpose. -Charles Pitt

Herald Issue 554 09 March
- Norm exposes Trio of Doom
- Briefs from PM’s media conference Tuesday
- Tourism Industry ponders $5 million draft strategy
- Norman George resigns from Cook Islands Party
- Letter of Resignation from CIP
- Norman selfish says Prime Minister

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