The Solomon Islands Chamber of Commerce and Industry (SICCI), as the peak body representing the private sector, and the Economics Association of Solomon Islands (EASI) has highlighted to the Solomon Islands Government (SIG) a number of fundamental reforms priorities that would create a better business environment.
This was during a SICCI-SIG Consultation on Wednesday 10 February focusing on the Government’s Policy Redirection which is aimed at cushioning the negative economic impact of COVID-19, a statement issued by SICCI Media Unit said.
“As a Chamber, we would want to see some tangible actions in regards to Government’s reform priorities.
“If resources are limited within Government to undertake some of these legislative reforms then we should focus on the few things that we really can achieve,” a SICCI statement said.
From a private sector perspective, a comprehensive tax reform – to create and deliver a fair, simple, and broad-based tax system is one that is long overdue and requires tangible action.
This could have a big impact on the economy, the private sector, and economic recovery.
“Reforming the tax system will be an important driver to improving the business environment settings and stimulating private sector growth and we are encouraged to hear that the Government redirection policy aims to refocus and address key priorities within the current policy mandate.
“The current tax structure in Solomon Islands constrains economic growth and limits the pace of development. It imposes a very high tax burden when compared to other Pacific countries and the structure of the tax system is outdated, inefficient, complex, expensive to administer, and anti-competitive.
“The tax system imposes high compliance costs on taxpayers and encourages unproductive tax avoidance and evasion activities. Moreover, it does not actively support growth – for example, it does not systematically support exports and instead relies upon distortionary exemptions for exporting industries,” the SICCI statement said.
SICCI further highlights that access to finance is also a key constraint to businesses particularly Small Medium Enterprises (SMEs).
According to a World Bank report on SME Finance, it is the second most cited obstacle facing SMEs to grow their businesses in emerging markets and developing countries.
“There is a strong link between access to finance and business growth, and, in turn, growth in employment and incomes. DBSI provides an opportunity for more innovative financing options that are more suited to the Pacific to drive economic diversity and sectors with future growth potential,” the SICCI statement added.
SICCI also reiterated that the cost of electricity is also a key cost faced by businesses.
“Solomon Islands faces some of the highest electricity costs in the Pacific and there needs to be a review of the Solomon Power tariff.
“While a thorough review of the tariff model should occur, continued reductions in the tariff will continue to alleviate the costs faced by business and consumers.”
These fundamental reform areas highlighted here including other key areas on (1) The basics right to create certainty for businesses; (2) Providing Immediate support to alleviate pressure on business and (3) Actions to stimulate economic activity and improve productivity via infrastructure and sector support are been documented in what will be SICCI’s “Private Sector Pathway to Covid-19 Recovery Strategy”.