At a workshop held yesterday, members of the Business Trade and Investment Board (BTIB) informed government agencies and ministries of regulations on foreign investment.
BTIB chief executive officer Terry Rangi said some foreign investors have been slipping through the cracks.
“We’ve got an act that says, if you carry on business here and you’re not a Cook Islander, you have to be registered and approved. If there are people coming over, they’ve got to be registered, and pay their local tax, and declare what they’re going to spend here,” he said.
“A lot of people just don’t know you have to register. People can come here on a holiday and sell a few things, and they don’t know they have to register, and neither do local businesses. So up until now they’ve been getting away with it.”
To register, foreign investors need to fill out a one-page form – including information such as their name, details of the project or service, local services that will be used, the project value and who is funding it, and a list of local and expatriate workers. They also pay a fee, which ranges from $250 for small projects, up to a maximum of $750.
Foreign investment and compliance manager Teariki Vakalalabure said registration is a mandatory part of foreign investors coming to the Cook Islands.
“We follow a set procedure. We don’t want to put unnecessary burden (on investors), but it’s a requirement in our processes.”
He said there are a number of ‘tests’ applied to foreign investors, including whether a third or more of voting shares or voting power in the project or company is held by non-Cook Islanders, whether a third or more shares are for the benefit of non-Cook Islanders, and whether central management is controlled by non-Cook Islanders.
“We look at who benefits from the company coming in to do the work. With some companies, you go back five or six levels to see who actually benefits.”
He said there have been cases where foreign investors with less than a third of shares in local companies have not registered with the board, even though in some cases they are the sole decision maker or funder of the business.
“Some people think it’s okay because they have less than one third of the shares. Please be aware it’s not that simple.”
Vakalalabure said the BTIB can help if there is any uncertainty over whether a foreign investor needs to be registered.
“Where a person is not clear, please just consult with us. We’re always there to be able to sort this out.”
He said a priority of BTIB is that Cook Islanders have the chance to participate, including when tenders are offered to overseas companies for local projects.
“For us, the test is that Cook Islanders had the opportunity. If they had the opportunity to tender, and their tender is so unreasonable (that it cannot be accepted), then it is acceptable (to hire foreign companies). If their tender is close (to that of foreign companies), you must consider their tender seriously before you rule them out. And if you rule them out, rule them out for good reasons.”
Rangi said foreign investment projects have tended to be of low value in recent years.
“We’ve seen projects around the $200,000 to $250,000 mark. We don’t necessarily want more of it, but we’re looking for quality (investment).”
He said the BTIB are interested in projects that will add value to the Cook Islands, such as by creating jobs for locals.
“We’re looking to increase the range of services – not just tourism. We’d like to see investment in infrastructure, and initiatives in local production to replace imports. We’d like to see renewable energy projects. We’d like to see industries be created. That creates local jobs.”