The United Nations Conference on Trade and Development (UNCTAD) has released its 2025 World Investment Report, highlighting an 11% global decline in foreign direct investment (FDI) and calling for immediate reforms in developing economies. For Vanuatu, a small island developing state, this presents both a challenge and an opportunity.

From a press release it states that according to the report, many developing nations are being left behind in global investment flows—not due to a lack of potential, but because capital is still moving toward markets that are easier to navigate rather than where it’s most needed. This trend is particularly relevant for Vanuatu, which continues to face several barriers despite its investment potential.

In response to the report, the Vanuatu Foreign Investment Promotion Agency (VFIPA) has reaffirmed its commitment to driving strategic reforms that align with UNCTAD’s recommendations. VFIPA is preparing to launch its Investment Promotion Strategy, which prioritises key sectors such as tourism, agriculture, renewable energy, and digital services.

The agency is also advancing reforms through its involvement in global trade platforms like the Joint Information System (JIS), International Commercial Arbitration efforts, and the national Review of the Reserve and Restricted List of business activities. These reforms are being implemented with strong support from development partners, who continue to provide technical assistance and capacity-building programs.

However, the report also recognises that Vanuatu must address longstanding investment hurdles. These include unreliable airline connectivity, high operating costs, skilled labor shortages, approval delays, land access issues, and a lack of infrastructure to support digital business and logistics. VFIPA estimates that nearly 27% of active investments in Vanuatu have either stalled or are underperforming due to such challenges.

Lorenzo Raplili, Manager of Aftercare and Advocacy at VFIPA, emphasized the broader value of investment, stating, “Investment is not just about capital flows; it’s about unlocking human potential and building a sustainable future for Vanuatu.”

VFIPA is calling on the Government, private sector, and development partners to work together to implement the reforms needed to position Vanuatu as a competitive and resilient investment destination in the Pacific.