The Solomon Islands Chamber of Commerce and Industry (SICCI) hosted a roundtable meeting on Wednesday 3 June 2020 to discuss ways in which the Solomon Islands Government (SIG) can maximize its opportunities for revenue collection from businesses.
By doing this, SICCI aims to promote an environment where business confidence can increase because of a level playing field.
Present at the meeting were Governor of the Central Bank of Solomon Islands (CBSI), Dr Luke Forau, officials from the Ministry of Commerce, Industry, Labour and Immigration and the Prime Minister’s Office and Director of the Economic Reform Unit (ERU), Mr Rictor Luaboe, who delivered a presentation of behalf of Government.
Representing SICCI was Chief Executive Officer (CEO), Atenasi Ata and Executive Board members and from the SICCI membership with special interest in the subject, were General Managers of Solomon Islands Tobacco Company (SITCO), Mr. Kazi Mushfiqur Rahman and South Pacific Oil (SPO) Limited, Mr Carson Korowa, Managing Director of Solomon Breweries, Mr Peralt van der Merwe, Country Manager for Solrice Limited, Mr James Bradford and Chief Executive Officer of Sullivans & Nambawan Meat, Mr Wayne Lorrimer.
The Chamber convened this meeting as it was noted that in the last five (5) years, taxes paid to the government by these companies have dropped significantly. SICCI as a partner of Government and advocator for private sector growth is concerned that when the country is losing such substantial amount of revenue, there will be adverse social impacts such as reductions to budgets for critical sectors like health, education, and infrastructure.
SICCI relayed that notwithstanding structural and institutional challenges faced by business and industry in the country, overwhelmingly businesses are prepared to invest in the productive capacity of the country and create and sustain local jobs. Being responsible corporate entities, they comply with paying all taxes to Government, relevant licensing fees and permits required to operate; continue to implement/maintain a high Health and Safety standards.
SICCI recommended that these same requirements or obligations apply to all that do business in the country. This ensures that consumers are guaranteed safe quality products, employees are guaranteed a safe and healthy working environment while government see a boost in their revenue from a broader collection base.
Hence, another important aspect of the roundtable discussions was how the Government can be the best enabler for private sector growth.
‘A level playing field’ continues to be a SICCI concern, as it is important that businesses coexist in a spirit of competition all the while complying with Government legal framework. Some examples where compliance is expected is in fulfilling company obligations as regulated by Government, adhering to tax regulations and complying with Occupational health and safety standards.
SICCI in its presentation noted that combined, these large companies are substantial tax payers that contribute at least 30% in taxes to government revenue annually.
Together they also employ a large number of Solomon Islanders as well as support families’ livelihoods through their supply chains throughout the country. On top of that they invest millions of dollars into the local economy.
Benefits from taxes collected by Government trickles down to the local individual Solomon Islander who can access basic Government services such as health care, education, sanitation and hygiene, employment and so forth.
In addition, the meeting noted the requirement by Government for large investors called the Company Social Obligation (CSO) which provides assistance for local communities through projects such as building of local schools, clinics, community church houses, improvement of feeder roads and so forth.
During the roundtable meeting, SICCI CEO, Ms Ata in her presentation summarized the potential gaps and suggested some ways to address them.
“The Solomon Islands business environment lacks a ‘level playing field’. This is causing companies complying with Government regulations to lose significant Market shares.”
“In competing with cheaper products on the market, compliant companies lose their market share as the consumers will choose the cheaper product over the quality-stringent, and tested product. Thus, the Government loses millions of dollars of revenue from the compliant companies.”
“We conducted a desk-top exercise to project the amount that could be collected by Government when ensuring compliance to its laws and regulations and it was estimated between $200m-$400m.”
“For the economy, in a worst case scenario, a surge in unemployment could lead to rising social problems. This can happen when businesses have to cut costs through reducing labour.
“Looking at it another way, for the average Solomon Islander, unsafe low quality and cheap products sold by noncompliant businesses can be risky and hazardous as well,” Ms Ata added.
In response, Director of the Economic Reform Unit (ERU) under the Ministry of Finance and Treasury, Mr Rictor Luaboe, highlighted the gaps in Government revenue and what the Solomon Islands Government is doing to finance the National Budget.
The meeting agreed that going forward, SICCI would work with Government to ensure that level playing field for business and industry is implemented. To achieve this, it was agreed that a taskforce would be formed to ensure that compliance is monitored with regular review and reporting. The mechanism for this reporting will be through the quarterly SIG-Private Sector Advisory Group meetings mandated under the signed MOU between the Government and SICCI in 2017.