Out of the rubble of last year’s 7.3 magnitude earthquake that hit Vanuatu’s capital Port Vila on December 17 and the snap election due next week on January 16, a new leadership is required to reset the country’s developmental trajectory.

Persistent political turmoil has hampered the Pacific nation’s ability to deal with a compounding set of social and economic shocks over recent years, caused by climate-related and other natural disasters.

The earthquake is estimated to have conservatively caused US$244 million (VUV29 billion) in damage, and the Vanuatu government’s ability to pay for disaster response, the election, and resume public service delivery will require strong, committed and stable leadership.

Prior to the devastating quake and dramatic dissolution of Parliament on November 18, economist Peter Judge from Vanuatu-based Pacific Consulting warned of an evolving economic emergency.

Vanuatu’s US$1 billion economy faced a concerning decline in government revenue from value-added tax, down 25 percent on the previous year.

This was a ripple effect from the decline in economic activity after the collapse of national airline Air Vanuatu last May, as well as the falling revenues from the troubled Citizenship by Investment Programme.

Both were plagued by lack of oversight by parliamentarians.

Struggling economy
In 2024, Vanuatu is expected to record about 1 percent economic growth, as it struggles to climb out of the red and back to pre-pandemic levels.

Conversely, Vanuatu has a much more positive, although somewhat contradictory democratic profile.

According to the Global State of Democracy Initiative, Vanuatu is one of the more democratic states in the Pacific islands region, and currently ranks as 45th in the world.

But this performance comes with a significant price. Leadership turnover is frequent, with 28 prime ministerial terms in just 44 years of statehood, 20 of those in the last 25 years — the highest frequency of change in the Melanesian region.

The impacts of disrupted leadership and political instability are highly visible. Government decision-making and service delivery is grindingly slow.

In Vanuatu’s Parliament, the legislative process is frequently deferred due to regular motions of no confidence, with several critical bills still awaiting MPs’ attention.

Last October, for example, the Vanuatu government proposed a 2025 budget 10 percent smaller than 2024’s, due to reduced economic activity and declining government revenue.

Sudden dissolution
Parliament was unable to approve this year’s budget due to its sudden dissolution on November 18, only two-and-a-half years into a four-year political term.

This is the second consecutive presidential dissolution of Parliament, the previous one in 2022 also occurring barely two-and-a-half years into its term.

The Bill for the appropriation of the 2025 budget now awaits the formation of the next legislature for approval. In the meantime, earthquake recovery and election management costs accumulate under a caretaker government.

With deepening economic hardship and industries facing slow economic growth across multiple sectors, voters are looking for leadership that can stabilise the compounding cost of living pressures.

The new government will need to urgently tackle overdue, unresolved issues pertaining to reliable inter-island transport and air connectivity, outstanding teacher salaries and greater opportunities for the nation’s restive youth.

The youth unemployment rate is at 10.7 percent and rising.

Democracy with political stability is the holy grail for Vanuatu. But attaining this legendary and supposedly miraculous prize comes with costs attached.

Rules come into force
In response to civic and youth activism in late 2023 calling for political stability and transparency, the last Parliament approved a national referendum to make political affiliation more accountable and end party hopping.The rules come into force in the next parliamentary term for the first time.

The referendum passed successfully on May 29, 2024, but cost US$2.9 million. The 2022 snap election required US$1.4 million and the 2025 poll is expected to require another US$1.6 million.

While revenue from candidature fees of US$250,000 does cover part of these costs, each legislature transition also weighs on the public purse.

The current crop of outgoing 52 parliamentarians were paid out US$1.62 million in gratuities and benefits — around US$31,000 per MP — even though most did not see out their full terms.

Vanuatu’s average annual household income in 2020 was US$9000.

Whatever the outcome of the 2025 snap election, the incoming government will need to refocus attention on stabilising the trajectory of Vanuatu’s economy and development.

The next legislature — the 14th — will need to commit to stability in the interests of Vanuatu’s people and the nation’s development.

Budget, earthquake recovery priorities
The most immediate priorities for a new government should be the passage of the 2025 national budget and the implementation of an earthquake recovery and reconstruction plan.

In the 45 years since throwing off the British and French colonial yoke, citizens have enthusiastically done their duty at elections in the expectation of a national leadership that will take Vanuatu forward.

Now their faith appears to be waning, after the 2022 poll saw voter turnout — a key indicator of the health of a democracy — dropped below 50 percent for the first time since independence.

This election therefore needs to see a return on the considerable investment made in Vanuatu’s democratic processes, both in terms of financial cost to successive governments and donors, and more to the point, a political dividend for voters.

Anna Naupa is a ni-Vanuatu scholar and currently a PhD student at the Australian National University. Republished from BenarNews with permission.

Article by AsiaPacificReport.nz

The government of Vanuatu has convened three major tourism and travel stakeholders this week to announce a major shakeup in the sector.

Dubbed Shared Vision 2030, the plan commits Air Vanuatu, the Vanuatu Tourism Office, and Airports Vanuatu Ltd to an ambitious expansion strategy.

The Vanuatu Daily Post reported yesterday that Air Vanuatu intends to build an actual international fleet of up to eight jet aircraft. Airports Vanuatu Ltd has almost completed the essential Bauerfield runway upgrade. It is also lining up support for an ambitious new facility plan that can accommodate and service Air Vanuatu’s fleet.

READ MORE: Vanuatu and New Caledonia hold historic talks on tourism

For its part, the Tourism Office is being asked to transform itself into a more dynamic organisation, in touch with modern travellers and modern tech.

The government is being asked to stump up no less than VT500 million (NZ$6.6 million) in new money every year for the next five years to back this play.

The plan unveiled on Monday raises countless questions.

Where will Air Vanuatu find the pilots? How will it finance the planes? A new Airbus A320 lists for US$101 million, and a Boeing 737-800 costs about a million dollars more.

Leasing isn’t cheap
Leasing even one isn’t cheap. How will Air Vanuatu afford 6 of them?

A new terminal isn’t just a building. It’s the air traffic control centre, hangars, fuel depot, service bays, fire-fighting and emergency response facilities, food preparation, administration… the list is long and exacting.

All things considered, a price tag of more than  VT10 billion (NZ$130 million) won’t be hard to reach.

The argument in support of the plan is simple. We can either grow now, or run the risk of our economy withering away.

Vanuatu’s economy suffered badly in 2018. Few businesses thrived, and many struggled. VAT revenues are one of the most reliable measures of overall commercial activity. They don’t look good.

Although monthly revenues have surged a few times over the same period in 2017, 2018 revenues overall were only about 10.2 percent higher than last year.

That’s a problem, because revenues should have risen at least 15 percent overall, given the 20 percent rise in the tax rate (2.5 is 20 percent of 12.5, so the rate rise is 2.5 percent, but revenues should increase by 20 percent). The trendline is pointing downward, when it should be sharply upward.

Tourism slump
Much of the commercial slowdown comes from slumping tourism revenues among traditional players. Larger resorts and hotels are struggling, to put it politely. The lucky ones are seeing 50 percent occupancy rates. The unlucky ones are far worse off.

Reduced tourism activity has effects throughout the economy, dragging industry, services and agriculture down with it.

Tourism officials are quick to crow about ‘record’ air arrival numbers. The numbers are real, but they hide a number of problems. First, these numbers have only just managed to rebound from 2014 levels, before the twin catastrophes of cyclone Pam and the Bauerfield runway debacle decimated air arrival numbers.

Second, everyone’s strategic plan expected continuous growth through that period. But we’re barely ahead of where we were in 2014. That puts us almost five years behind schedule.

Lastly, travellers are planning differently. They’re not following the beaten path as much. The advent of social media changed the way people decide where to go, how they book their reservations, and what they do when they’re away.

Referrals matter more than ever. More people ask for input about possible destinations on social media than ever before, and a large number of people decide where to go based on what they hear.

AirBnB is affecting traditional booking patterns enough to make it hurt, especially for larger resorts. Unless arrival numbers rise significantly, it will be impossible to convince new investors to come, and some existing investors could well begin planning an exit.

No middle ground
The plan’s proponents argue that Vanuatu can either rise in popularity, or expect to be ignored by the next generation of travellers.

And based on which path we choose our economy will either grow, or shrink. There’s no middle ground, they say.

But we have to walk before we run. Tourism and travel industry experts tell the Daily Post that the first priority is getting maximum value from existing markets. Expect to see service to Melbourne announced soon, and increased flights to all existing destinations.

One insider told the Daily Post that there is a shortage of aircraft worldwide. Forbes reports that in the USA, for example, “More than three-quarters of the fleet for sale is more than a decade old, [with a] decreasing quantity and quality of less-than-decade-old aircraft.”

Vanuatu will have to acquire ‘new iron’ for its own routes, rather than trying to seduce outside airlines to come here.

One major challenge that has yet to be addressed is the 140 new pilots who will be needed to fly the fleet.

The greatest shortage in the aviation industry right now is pilots. This means more competitive salaries and better working conditions will be needed to convince commercial plots to come, and our own pilots to stay.

Air Vanuatu is holding a press conference today to discuss these and other issues. The Daily Post will be following the story as it develops.

Dan McGarry is media director of the Vanuatu Daily Post group.

Article by AsiaPacificReport.nz