Former Central Bank governor Rick Hou has cautioned that the global recession and its effect on the country might be worse than the government had initially anticipated.
His warning followed a two-day meeting early this month with Deputy Prime Minister, Hon. Fred Fono and the Ministers of Finance and Planning as well as their senior officials.He said that the government had long been concerned about the decline in logging and the gap in the country's export receipts due to unsustainable harvest.
Mr Hou said that in the current economic climate, the decline in forestry might not be the only cause for worry since demand for other products would also decline.
He said the prospects for growth do not look good adding that growth may not necessarily decline, but growth will be distinctly low.
Mr Hou said the country must work with donors to develop new industries.
He said the country must do this if it is to stave off the economic recession and beat annual growth forecasts that are no higher than 1.5% should the forestry sector declines.
Mr Hou said during the meeting they identified several potential sources of growth: plantation agriculture; vanilla, cocoa and copra plantation, palm oil plantation, re-forestation, fishing and tourism.
He said with those potential sources of growth there are a number of required government support that may entice investors to enter the Solomons.
Mr Hou said firstly, for example, plantation agriculture is not a big industry, or at least not yet big enough.
He said plantations are located in areas that lack necessary infrastructure, such as port facilities and basic roads.
Mr Hou said Solomon Islands must establish the gaps and impediments to growth of these industries, and ask who can do what.
He said this does not just include the Solomon Islands government but also other donor partners.
Mr Hou now works in Washington as a Pacific representative and senior advisor to an executive director of the World Bank.
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