Solomon Islands: An Emerging Economy

Before calling a judgment on whether Indonesia bribed Solomon Islands, first we need to understand the need of an emerging economy, such as Solomon Islands. The Solomon Islands’ economy grew by three and a half times between 2003 and 2016. Not so long ago, Jay Bartlett, Chair of the Chamber of Commerce and Industry (SICCI), released a statement to the press about the challenges and opportunities facing this key Pacific economy.

Bartlett said that agribusiness, mining and tourism are three sectors with potential. He argued that, with agribusiness, there is a lot of scope and a lot of opportunity, since a bigger part of the population is rural and a lot of the population is already engaged in the informal sector in agriculture.

The Indonesia-Solomon Islands trade relations has shown nothing of abnormality. The steady yearly growth of 17% shows that imported goods from Indonesia is gaining acceptance in Solomon Islands. Being a neighboring partner of economy for long, Indonesia, especially in Papua and West Papua province, is significantly more experienced in handling agriculture, mining, and tourism.

Cooperating in Palm Oil Industry

Situated in the Pacific region, Solomon Islands shares the same soil characteristics with countries like Indonesia, or Papua New Guinea. The idea of starting a new sector as palm oil supplier is currently a major talking point in Solomon Islands. The country seeks to follow the steps of Indonesia for the matter, as Indonesian president Joko Widodo discussed with Solomon delegations during Asia Pacific Economic Cooperation summit this year.

Indonesia is way ahead of the region, in the palm oil industry. Palm oil itself has been very contributive towards the life of many Papuans. By December 2017, there were 79 registered palm oil companies in Papua, with 114 plantation licenses. giving employment for a hundred thousands of Papuans. This makes Indonesia the biggest palm oil producer in the world, contributing US$18 billion of gross income, matching the amount of Indonesian national oil and gas revenue.

To the east of Indonesia, Papua New Guinea opened their multi-million dollar Guadalcanal Plains Palm Oil Ltd (GPPOL) back in 2005. The company and its plantations are developed by the Papua New Guinea-based New Britain Palm Oil Ltd (NBPOL), which always look forward for expanding the business.

Sustainable Fishing

Since the British investment in 1960, Solomon Islands has been a supplier of exotic, premium maritime products. One of the biggest company in the country is SolTuna, a company specializing in exporting highest quality canned tuna and oils.
The last time Solomon’s fishing industry took a step forward was in mid-2017, when a US$10M loan was given to National Fisheries Development, for purchasing new vessels. A cooperation with Indonesian fishing industry will not only result in productive loans and investments given, but also technology transfer and the sharing of human resources. The cooperation will not only expand the market and boost production capacity for Solomon Islands, but also makes the fisheries more sustainable as well as environmentally friendly.

The Prospect of Ecotourism

In the sector of ecotourism, Papua, and Indonesia in general, is a good model for Solomon Islands. Not only has Indonesia charmed the world with national parks like Komodo and Bunaken; Raja Ampat of Papua is currently one of the hottest items in the bucket list of both backpackers and jetsetters.

In 2015, West Papua declared itself the world’s first “conservation province,” with a mandate to prioritize conservation in all decisions of economic development. In October 2018 West Papua and Papua provincial leaders signed the Manokwari Declaration. The agreement changes the two regions’ development framework from “conservation” to “sustainable development”. This has opened better possibilities for the government to market the untouched lands of Papua as an object for exclusive ecotourism.

Ecotourism is strategic for Papua, and also Solomon Islands, because it demands smaller amount of investments, outside of the conservation program itself. The Arfak Mountain in Papua is one of the first dedicated ecotourism site designed by the Indonesian government, and the stakeholders are optimistic that the site is going to turn immediate profit, and contribute for the local economy. Tourists who come to ecotourism sites are aware that they will most likely stay in local residents’ homestay rooms, therefore ensuring their interactions with the local market. They are coming despite the current limits of infrastructure; many of the villages are isolated, lacking easy access and electricity.

Importance of Maritime Affairs

As Australia and the US is considering to project their influence forward, they announced the plan to redevelop a joint naval base in Manus island, Papua New Guinea. At the same time, The Chinese government aggressively promotes their infrastructure investment package, the Belt and Road Initiative. A strategic maritime cooperation with Indonesia will minimize potential conflicts, ranging from fishing borders and economic dispute, to imminent military threats.

A Gateway to ASEAN

Possibly a more important point, Indonesia is also seen as a gateway for Pacific island countries like Solomon Islands to start bigger businesses with the ASEAN countries. As the biggest market in ASEAN (also strong in military power), newly emerging economies in the Pacific will see Indonesia not only as a market, but as a partner who gives the invitation to ASEAN meetings. With so many regional communities like ASEAN+3, ASEAN-China Free Trade Area, a good relationship with Indonesia is seen as lucrative. Solomon Islands has opened their embassy in Jakarta since August 2014, while Indonesian embassy in Port Moresby is also accredited to Solomon Islands. Indonesia is a gateway for Pacific countries to enter the ASEAN and Asian region, while Indonesia wish to increase its influence in Pacific region. Both countries are also members of Melanesian Spearhead Group (MSG).

Solomon Islands, as one of the least developed countries in the world is seen by experts as soon to be graduating into developing country. Least Developed Countries (LDC) is a category issued by the United Nations in 1971, to increase the awareness of the rest of the world. There have been only five countries graduated from LDC status since 1971. With Indonesia supplying around 3% of Solomon Islands’ imported goods value, the trade between two countries has a lot of room for improvement. West Papua is, apparently, the eastern part of the gate that connects Pacific island countries with the rest of Asia.

The Indonesian Soft Power
In conclusion, Indonesia’s presence in the Pacific region is a form of soft power: a non-coercive force which simply attracts other nations to cooperate. In the form of economic and possibly cultural attraction, Solomon Islands, along with other Pacific countries, will be better off cooperating with Indonesia, more often than not.

Source :

https://www.businessadvantagepng .com/solomon-islands-growth-potential/