In the country of Vanuatu – Tourism directly contributed about 40% of Vanuatu’s GDP in 2019, indicating its dominance in the economy. Related opportunities exist across accommodation, tours, restaurants, retail businesses and transport services. Almost all islands have existing or planned tourism developments which is signaling the industry’s growth potential.
In addition to tourism—construction is another fast-growing sector. It has been driven by tourism projects, increasing urbanization as people move to cities and the government’s elevated infrastructure spending in recent national budgets. The influx of aid funding for cyclone reconstruction has also stimulated building activity.
However—the geographic isolation, small domestic market (population 300,000), vulnerability to natural disasters and limited infrastructure pose challenges for investors. There is potential for private healthcare, education services, food processing and ICT businesses to expand by serving rising local demand.
There are also growth opportunities in private healthcare and education services given Vanuatu’s young and growing population. Other sectors with potential include- processed foods and beverages to add value to Vanuatu’s agricultural produce, light manufacturing of products for export and information technology.
In terms of the business environment, Vanuatu ranks 84th out of 190 countries in the World Bank’s Ease of Doing Business Index. This indicates it is relatively easy to start and operate a local company. In particular, Vanuatu scores well on ease of starting a business, accessing credit, paying taxes and trading across borders. However— the small domestic market, geographic isolation, vulnerability to natural disasters, and infrastructure constraints pose challenges.
Vanuatu ranks 84th out of 190 countries in the World Bank’s Ease of Doing Business Index. There are few barriers to starting a company, accessing credit or paying taxes. The government offers some incentives such as tax holidays and import duty exemptions to attract foreign investment in priority sectors like tourism and infrastructure.
