Parliament has passed four financial sector amendment Bills, as MPs debate the need to strengthen compliance while ensuring ni-Vanuatu can benefit from investment opportunities.
The Bills were tabled by Minister of Finance Johnny Koanapo and included amendments to the Unit Trusts Act, Protected Cell Companies Act, Incorporated Cell Companies Act and Offshore Limited Partnerships Act.
The proposed amendments aim to address compliance requirements and strengthen Vanuatu’s financial regulatory framework.
Financial literacy remains a challenge
Member for Ambrym, Hon. John Salong, says Vanuatu must do more than pass legislation, highlighting the need to improve financial literacy and create investment opportunities for local people.
Salong said unit trusts could provide an opportunity for ni-Vanuatu to invest smaller amounts of money through institutions that manage investments and risks.
“We make legislation to prepare for private sector participation,” Salong said, adding that financial literacy in Vanuatu remains low.
He said the challenge was to establish more local business entities that could take advantage of the legislation Parliament passes.
Salong also pointed to the limited availability of trustworthy institutions through which people could invest money earned from activities such as kava and sandalwood sales.
He said accessible investment opportunities could help local investors put their money into managed funds and potentially receive dividends.
Unit Trusts amendments target compliance
Koanapo said the amendments to the Unit Trusts Act were intended to address gaps in compliance and strengthen the legal framework governing unit trust schemes.
The amendments include expanding the definition of a beneficial owner to include beneficiaries of unit trusts, requiring supervision to reflect the risk profile of each fund, and strengthening measures to identify and address proliferation financing risks.
The changes are intended to improve the identification of people who ultimately benefit from unit trusts, strengthen risk-based supervision and improve safeguards against proliferation financing.
Leader of the Opposition, Hon. Ishmael Kalsakau, questioned whether the additional responsibilities placed on the Vanuatu Financial Services Commission (VFSC) would deliver sufficient benefits and resources to support its supervisory work.
Kalsakau said the Government needed to demonstrate that the reforms were achieving their intended results and helping Vanuatu meet international standards.
Member for Malo-Aore, Hon. Allan Liki, also raised concerns about the impact of international compliance requirements, questioning whether passing more legislation would lead to improvements in Vanuatu’s international standing.
In response, Koanapo said the Government had considered the costs and benefits of compliance, including the potential consequences of failing to meet international requirements.
He said VFSC revenue had continued to increase since 2021, reaching VT577 million this year, and highlighted the importance of maintaining the commission’s credibility with overseas authorities.
Koanapo argued that the potential costs of non-compliance, including risks to international financial transactions and correspondent banking relationships, could outweigh the costs of complying with the requirements.
Speaker of Parliament, Hon. Stephen Felix, also clarified during the debate that the legislation was for Vanuatu, rather than legislation simply being introduced from overseas.
Government plans stock market legislation
Koanapo also announced that the Council of Ministers had approved a policy direction for stock market legislation, which he expects to be brought before Parliament next year.
He said the proposed legislation would form part of wider financial sector reforms aimed at expanding investment opportunities for ni-Vanuatu.
The Minister said a stock market could give local investors more opportunities to invest in companies and help businesses raise capital.
Koanapo said the reforms were intended to create opportunities for people with available funds to participate in the financial sector and potentially benefit from business growth.
Four financial sector Bills passed
The Unit Trusts (Amendment) Bill was among four financial sector amendment Bills passed by Parliament yesterday.
The other three were the Protected Cell Companies (Amendment) Bill, the Incorporated Cell Companies (Amendment) Bill and the Offshore Limited Partnerships (Amendment) Bill.
