1. Supporting Tourism Investment in the Pacific Islands: IFC’s Sector-based Approach to Overcoming Investment Climate Barriers Trinnex Meeting 30 August 2010 Vanuatu

2. IFC is the private sector arm of the World Bank Group. Though not a donor, we have a development imperative. We deliver investment and advisory services to support development of the private sector in order to generate jobs and economic growth. Clients can be gov’t (for investment climate work) or private. International Finance Corporation (IFC) INVESTMENT IFC seeks hotel opportunities in line with typical criteria: o >USD 5 million; o debt financing; o expansion/renovation project; o experienced sponsor; o where local financial market cannot meet need. Indirect financing via Kula II. Future role being scoped. ADVISORY SERVICES (AS) IFC AS has - with the help of donors (Australia, NZ, Japan) - supported many Pacific tourism initiatives over the years. More recently Pacific Tourism AS has focused on ‘impediments diagnostics’ (for 5 gov’t clients) leading to: o tourism-specific investment climate ‘solutions-based’ projects; o opportunity to advocate dev’pt partner coordination in the sector. The relevance of this to the tourism sector in the Pacific?

3. Destination Investors Market Tourism prioritization & leadership Destination management capacity Sustainable tourism planning & management Tourism-specific controls & regulations Tourism offering Supporting infra- structure supply Local social, political & environ- mental conditions that impact tourism Transport infra- structure supply Destination image and appeal Marketing effectiveness Ease of market access to the destination & its visitor experience Political & economic conditions Regulatory and legal framework Policy framework and institutional support for investors Access to finance & financial services Availability of tourism project- dependent resources Tourism HR capacity Background: Diagnosing Impediments What is impeding conditions required by stakeholder drivers?

4. Political & economic conditions Regulatory and legal framework Policy framework & institutional support for investors Access to finance & financial services Availability of tourism project- dependent resources Factors Enabling / Impeding Investors

5. Political & economic conditions Regulatory and legal framework Policy framework & institutional support for investors Access to finance & financial services Availability of tourism project- dependent resources Overcoming Investment Constraints Subject to external influences, or shaped by Gov’t / society Subject to Gov’t policy. IFC assistance available for Gov’t ‘Investment Climate’ reforms Subject to Financial Markets. IFC assistance available to financial institutions. Intrinsic in nature or subject to Gov’t, private sector or social influences. Subject to Gov’t policy. IFC assistance available for Gov’t ‘Invest- ment Climate’ reforms

6. Assessing the Regulatory & Legal Framework Requirements for establishing a company Conditions for tourism investment approvals Requirements of regulatory process governing tourism operations Nature of taxes and charges Access to labor: regulatory context Access to land: regulatory context Conditions surrounding importing equipment, materials & supplies Conditions surrounding enforcing contracts, debt recovery and dispute resolution Conditions surrounding insolvency / bankruptcy Conditions surrounding the protection of tourism investor assets Freedom in the selection and operation of investments Nature of competitive environment Sustainability compliance requirements

7. Government assistance for potential investors Nature of investment incentives Government response to tourism investors Professional assistance for potential tourism investors Availability of detailed data for tourism investment decisions Assessing the Policy Framework & Institutional Support

8. 1. Supporting an Enabling Framework Design a joint Tourism & Investment agency function. Support a sector-specific mechanism for whole of Gov’t & Public private dialogue. Responding to Investment Climate Barriers 2. Administrative, Regulatory & Legislative Reform Simplify / formalise tourism investment processes (eg. licensing, approvals); Revise tourism/investment enabling legislation (eg. Foreign Investment Act, Reserved Activities list, strata titling law).

9. Responding to Investment Climate Barriers 3. Investment Planning and Promotion. Build IPA/NTO knowledge of investor market and relationship management systems & skills; Determine supply gaps / market opportunities; ‘Profile’ investment-ready projects (1-2 pilots); Establish tourism investment data management systems; Develop a targeted tourism investment strategy; Clarify ownership/partnership options for the sector; Enhance tourism investment marketing materials (esp. online); Develop ‘Tourism Investor Guidelines’ for foreign & local investors; Conduct business development activity/investor outreach.