Solomon Islands
Carlaine Gidman
SOC 300-051

Solomon Islands
Throughout the western world technological advances have pushed society into a progressive era of the newest, sleekest, most efficient way of living. The everyday lives of western society revolve around computers, fast food, fashion, and what some would call immoral judgments. What tends to be forgotten or overlooked, is what these same technological advances have done to the lesser developed countries of this world. With the technological advances of the world having increased efficiencies and reduced prices, the economies of lesser developed countries, such as the Solomon Islands have almost vanished.
The Solomon Islands are a grouping of over 1,000 islands located in the south pacific off the Australian coast east of Papua New Guinea. The islands together are estimated to span over 28,896 sq. km with over 27,986 sq. km of tropical landscape. The capital, Honiara, is located on the island of Guadalcanal. The Islands are part of the Commonwealth of Nations, and are a sovereign state of Oceania. The current political state revolves around a constitutional monarchy. With a population between 450,000 to 500,000 people divided between 5 major ethnic groups, in which the Melanesian people account for about 93% of the population. (CIA, 2012; Fugui, 2012).
The history of the Melanesian people show early diversity within their ethnic relations. With over 70 languages spoken within the islands, there are more than seventy cultural groups as well. In early history, these groups diversified within their own ethnic group. Meaning that a person from Guadalcanal would readily identify with others from Guadalcanal and not with a person not from Guadalcanal, however, there were no judgments placed. It was not until the late twentieth century, when the Europeans gained an interest in settling in the islands, when ethnic relations became politicized, resulting in violence (Fugui, 2012; DFA, 2004, pg.3).
For approximately 178 years the European settlers ruled over the islands, influencing political and economic pressures that had been unknown to the people prior to colonization. In 1978 the Solomon Islands gained their independence, inheriting a functional public service system including, a respected judiciary and disciplined police force and prison services, known as an ‘honest authority’ (DFA, 2004, pp.32-33).
While the islands import and export markets were well sourced, and the economic climate was well financed, the governance of the islands remained honest and loyal. However, as the rest of the world began to find less expensive imports, the Solomon island exports began to diminish. The main export was from the Solomon Islands Plantation Limited (SIPL), the only palm oil producer which accounted for 30,000 tons of palm oil annually to the world. Mainly due to the East Asian financial crisis in 1998 SIPL was forced to close, as well as, fish production fell from 49,000 tons to less than 21,000 tons in 2000, and the logging market became almost nonexistent. By 2002, the value of merchandise exports fell by an average of 19% (Chand, 2001, pg. 155; DFA, 2004, pp.32-33).
The island governance was not equipped nor experienced in governing a system in trouble. Over time mismanagement and corruption began to undermine the public service systems. The decline in governance accelerated resulting in outbreaks of violence, failed services, excessive public spending, high population growth rates, and constrained private sector development and growth by the end of the 1990s. In 2002 alone, the stock of the formal government fell by over 40% as the government lost control of finances. Resulting in most essential services, including health clinics and schools, unable to function without the help of private donors, of which were far and in between (DFA, 2004, pp. 32-33).
By 2003, the Solomon Islands were arguably a failed state. The government could not enforce law and order, corruption and extortion had drained the government resources and services, domestic production was collapsing and the economies debt was becoming unmanageable. (DFA, 2004, pg.xii).
In July 2003, the Prime Minister of the Solomon Islands, Sir Allan Kemakeza, acknowledged that outside assistance would be required if there was any hope of stopping the decline of the Solomon Islands. Kemakeza formally approached Australia for assistance, and with the support of the Solomon Islands Parliament, the Australian-led Regional Assistance Mission to Solomon Islands (RAMSI) was formed and dispatched (DFA, 2004, pg. 25).
With a police-led operation to introduce law and order back in the region, a Budget Stabilization Team to regain budgetary discipline and fiscal control, and a number of other measures that were implemented to regain fiscal control and stop the most excessive instances of government extortion, the Solomon Islands were re-established within one year (DFA, 2004, pg.25).
With law and order now re-established RAMSI turned to more specific applications of economic progression. Including, formal vocational service training on governance, providing access to basic services at the village level, budgetary pressures, and public sector consolidations, along with protecting and strengthening accountability institutions. By the end of 2003 the economy started to turn around. The value of exports for 2003 was 43% higher than in 2002 resulting in a trade surplus of SBD 31.6 million, however still below 1999 levels (DFA, 2004, pp.26-27).
With the help of RAMSI the Solomon Islands governance have begun “The Solomon Islands Government’s economic reform program” for the economic future of the islands. Due to the history of corruption in the government of the islands, the program calls for growth of the private sector through three main categories, rejuvenation of infrastructure, creating the right environment for success, and business opportunities. This reform program gives hope that the new born governmental and economic stabilization will continue to embrace their region.
The first main reform category is rejuvenation of infrastructure. The current infrastructure provisions in the islands are inadequate. The services that provide electricity, water, and sanitation are erratic when provided and generally only provided in certain regions. The reform program calls for private sector involvement in water, electricity, and domestic airline service through the auction of long-term concessions to use government-owned assets for improving service delivery, as well as, greater competition in telecommunications and transport markets. The reform program provides an opportunity to secure new investment, strengthen management, and provide better service delivery through international, and private sector markets (DFA, 2004, pp. 47-70).
Creating the right environment for success is the second category in the reform program. Continuing to promote the strengthening of the private sector the reform program includes a credible budget strategy in which allows the Solomon Islands Government to pay its bills, as well as, a debt management strategy that will aid the private sector. This strategy includes the improving of access to finances to encourage new businesses, and well as the implementation of several credit unions instead of a national bank. Several other policies are to be implemented regarding, more open trade and investment policies, regulations to protect the limitations on essential public goods like the environment and national security, as well as more flexible dismissal criteria and procedures and further training facilities that assist businesses, lastly, the streamlining and reform of work permits and business licenses that will ease the regulatory burden on businesses (DFA, 2004, pp.73-105). The third and final aspect to the reform program is the creation of more business opportunities. There are several key industries that can be found throughout the islands including, palm oil, cocoa and fish. The major businesses that once controlled these industries were either forced to close, or struggled to survive as the markets dried up. The Solomon Islands Plantation Ltd., Russell Islands Plantation Ltd, Gold Ridge mine, and Solomon Taiyo Ltd. were among them. The reform program encouraged private investors to consider nucleus estate programs for agricultural plantations that could assist in palm oil, copra and cocoa production, as well as, the strengthening of the Department of Agriculture and Livestock. Consultation with landowners regarding mining opportunities could lead to mineral extraction, which could result in a valuable source of revenue, sustainable growth and development of other opportunities. However, the main reform program for the creation of businesses is in foreign investors. It is recommended through the reform program that a major effort be made to attract foreign investors who have capital, technology, and a global marketing network (DFA, 2004, pp. 107-131).
Though the Solomon island people have a history of being forgotten by the outside world, the ancestry of the Melanesian people have shown growth and determination. RAMSI has successfully met the short-term priorities of re-establishing law and order and bringing some control over government finances. However, the mid to long-term problems are still yet to be tackled. The major obstacle that the region will face is that of land-tenure and the building of the private sector. The size of the Solomon Islands’ market and the inherent difficulties and costs due to geographic and relative isolation do not mean that the islands cannot be prosperous. The facilitation of an open and flexible business environment will help the Solomon Islands’ economy grow and its businesses to compete in international markets.

References
Bureau of East Asian and Pacific Affairs. (June 12, 2012). U.S. Relations with the Solomon Islands: Fact Sheet. Retrieved from http://www.state.gov/r/pa/ei/bgn/2799.htm.
Chand, Satish. (2002, May 1). Conflict to crisis in Solomon Islands. Retrieved from http://www.vanuatu.usp.ac.fj/sol_adobe_documents/usp%20only/pacific%20general/chand.pdf.
CIA. (2012). The World Factbook: Solomon Islands. Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/bp.html.
Dauvergne, Peter. (1998, October). Corporate Power in the Forests of the Solomon Islands. Retrieved from http://www.politics.ubc.ca/fileadmin/user_upload/poli_sci/Faculty/dauvergne/PacificAffairs1999.pdf.
DFA - Department of Foreign Affairs – Economic Analytical Unit. (2004). Solomon Islands: Rebuilding an Island Economy. Retrieved from http://www.dfat.gov.au/publications/rebuilding_solomon/index.html.
Fugui, John Moffat. (2012). Solomon Islands. Retrieved from http://www.everyculture.com/Sa-Th/Solomon-Islands.html#b.