Solomon Islands Media Release

13 October 2009

The Hon Steve Abana, Minister for Planning, Solomon Islands (L) discusses Pacific Economic Survey 2009 with Australia's Parliamentary Secretary for International Development Assistance, Mr Bob McMullan (R) at the launch of the survey in Nuku'alofa, Tonga, October 2009

Photo; AusAID

Economic report encourages Solomon Islands to develop new niche markets

A new economic report recommends Solomon Islands consider developing niche markets such as organically certified high value agriculture products and tourism.

The report, Pacific Economic Survey 2009, engaging with the world, examines ways Pacific island countries and Timor-Leste can strengthen and diversify their economies to raise the living standard of families in Solomon Islands and help achieve the Millennium Development Goals.

The survey was prepared by the Australian Government's overseas aid agency, AusAID and specialists from the Pacific and Timor-Leste. It focuses on three drivers of growth in the region: trade, labour mobility, and food and energy security.

It says economic growth in Solomon Islands in 2009 is forecast to drop sharply, after reaching over 10 per cent in 2007 and about six per cent in 2008. Projected growth in 2009 is expected to be well under one per cent.

"Solomon Islands has been hurt badly by the global recession, but due to underlying structural weaknesses, the decline in commodity prices and falling demand for log exports, the impact has been exacerbated," said AusAID’s Chief Economist, Mark McGillivray at the launch of the survey in Tonga today.

"Combined with unsustainable logging rates, this highlights the need for Solomon Islands to develop other sectors of its economy to expand its base for economic growth," said Dr McGillivray.

The survey suggests Solomon Islands could benefit from creating high value organic products and increasing its appeal as a tourism destination.

"Organic certification can initially be costly but organic health foods and skincare products have the potential to fetch higher prices, especially in Europe, North America and Australia."

"For example, some poor communities in Solomon Islands whose only coconut crop until now has been the low value copra, are producing virgin coconut oil for an Australian company. This is making a substantial contribution to their incomes. Similar ventures should be encouraged," said Dr McGillivray.

While tourism is growing in Solomon Islands, it has not been quite as rapid as other Pacific island countries. The survey recommends more be done to reduce travel costs and improve infrastructure as other Pacific island countries have done, to encourage more tourists to visit the country.

"Vanuatu, Samoa and Tonga are reaping the benefits from reforms in these areas," said Dr McGillivray. "Even during the recession, their visitor numbers are growing, particularly among Australians and New Zealanders who are choosing to travel closer to home."

The survey also recommends Solomon Islands strengthen its economy by reforming parts of its energy sector to protect it against sudden rises in fuel prices. This includes exploring ways to bulk buy and store oil more cheaply and investing in renewable and alternate energy sources.