THE CLOSURE this week of shops owned and operated by foreigners in the Lungga area has exposed a much bigger problem for owners of large buildings, it was revealed Friday.
At the same time, foreign shop owners and operators in the area must each pay the maximum penalty of $125, 000 or half of it before they are allowed to reopen, according to the Foreign Investment Division (FID) of the Ministry of Commerce, Industries, Immigration, and Labour.
As a result of the anomaly, owners of large buildings where foreign-owned businesses operate will be required to reconfigure the space they are renting out. This is to comply with the requirement of the Foreign Investment Act, which stipulates that a foreign investor is not allowed to operate his business in a space less than 200sq metres.
Areas measuring less than 200km2 are reserved for Solomon Islanders.
Shop owners and operators are believed to have incurred millions of dollars in lost sales over the two-week shutdown.
The closure of the shops – largely owned by Chinese and Bangladeshis – was ordered by the FID last week. Some have since reopened after they had paid part of their outstanding bills, FID told Solomon Star Friday.
A Chinese businessman whose shop was affected said the shutdown was due to errors in the address given by authorities in their FID certificates.
He denied there was any prior warning, oral or written, for the shutdown.
“There is no written or oral notice given for this inspection in the beginning, thus when most of us foreign investors realized there is an error in the address in our FID certificate, we voluntarily approached the FID office on 7th January – the first day when the inspection started – to rectify the situation.
“But since then, there has been no feedback from the FID office. Most foreign investors visited the FID office to express their concerns but got no positive advice or feedback,” the man said.
He said most shops that were forced to shut down had acquired a valid Guadalcanal Province Business License.
“When Guadalcanal Province issued our business license, we the foreign investors assumed our applications to the Guadalcanal Province are satisfactory. We never realized there were address errors in the FID certificates that we received,” the Chinese businessman said.
“Guadalcanal Province should have been written in our Certificate because we are doing business on Guadalcanal. Instead, Honiara was written in our Certificate of registration. It was not our fault,” he said.
The businessman said the FID has ordered these businesses to pay SB$125,000 each in fines before they could be allowed to re-open their shops,
“The amount is far too huge for us to afford given the impact the Covid-19 global pandemic has had on the global economy. Shutting down of the shops has only worsened our situation with many of us incurring big losses.
“Given the situation, we’re appealing to the FID to reconsider the amount imposed on us,” he said.
The man also called on the FID to explain to them the shop space requirement of 200 square meters.
He said the shutdown of the shops has affected consumers in the Lungga area. It has also dealt a heavy blow to young people who worked in these shops.
“The action of the FID has caused most of us to lose confidence in Solomon Islands Foreign investment Division. FID must never forget that foreign investors have brought in investments that created employment and contribute significantly to the national government coffers by paying taxes in the name of providing a service to local residents.
An FID spokesperson confirmed that $125, 000 is the maximum penalty applicable for the offence.
“Yes, that is the maximum penalty given to them and they must pay half before they are allowed to reopen their business operations,” the spokesperson said.
The spokesperson has also acknowledged that the errors in the Certificate of Approval might have been done by other authorities other than the FID.
By FOLLET JOHN and ALFRED SASAKO