South Pacific Business

bananasForeign investment in tourism, retailing, banking, construction, transportation, and mining is heavy in the South Pacific. Foreign logging operations and local slash-and-burn agriculture threaten the rainforests of the high islands, and many governments lack the political will to enforce conservation. In the Solomon Islands, Malaysian logging companies are cutting the forests at far beyond the sustainable rate while paying landowners a royalty of less than one percent of the value of the timber. An Australian study has shown how Vanuatu and Solomon Islands have lost hundreds of millions of dollars due to overcutting and underpaying by Asian hit and run loggers. Payoffs to local officials allow this practice to continue. Despite these depredations, three-quarters of the old growth forest in these two countries is still intact and capable of being saved.

A drag on business is the government indebtedness and official corruption rampant in the islands. Like their counterparts in Jakarta, Athens, Rome, and Washington, many island political leaders have become hooked on the joys of borrowing, burdening their countries with unrepayable debts.