Cook Islands has signed an agreement to allow Chinese banks to operate in the country.
The agreement was reached at the China-Pacific Islands Countries Programme of Action on Economic Development and Cooperation in Apia, Samoa this week.
Deputy Prime Minister Mark Brown attended the meeting along with leaders from nine other Pacific island countries where they held talks with China’s Vice Premier Hu Chunhua.
In one of the 30 agreements they reached with China, Brown and other Pacific leaders agreed on cooperation on finance.
The agreement stated subject to the law and regulations of each country, they support Chinese-owned banks in operating financial business and innovative financial products in the Pacific island countries, and vice versa.
Fletcher Melvin, the president of Cook Islands Chamber of Commerce, said Chinese banks that met industry regulations should be welcomed here.
However, Melvin noted any new bank would be subject to market forces in the country: The country already has four banks: Bank of the Cook Islands, Bank South Pacific, ANZ and Capital Security Bank.
“All the banks that wants to operate here, they have to be regulated by the Financial Supervisory Commission,” Melvin said.
“They have to follow stringent rules. The Chamber has no problem with competition in the industry as long as the regulators are doing due diligence with it.”
The introduction of new banks could be good for people, especially businesses, seeking financial assistance or investment.
However Melvin said they should be wary of “cheaper finances” that could come with higher risks.