Cook Islands: E-Commerce

Cook Islands Introduction

By the end of the year 2000, Nassau Islanders were able to make their first telephone calls to the outside world. The board of Telecom Cook Islands (TCI) had informed the then Prime Minister Dr Terepai Maoate in August 2000 that they had agreed to fund the establishment of a satellite earth station on Nassau (in the northern group).

The directors of TCI also informed the government that it would build a satellite earth station on Palmerston Island (northernmost in the southern group) the following financial year to coincide with planned passage and airport developments on the island.

In May 2007, Argent Networks, a leading technology and telecommunications billing solutions company announced that it would provide its ArgentEclipse real time convergent billing and CRM software for Telecom Cook Islands.

Telecom Cook Islands, which has been operating since 1991, is majority owned by Telecom New Zealand, with 40% held by the locally elected government of the Cook Islands.

Larry Barker, CEO of Argent Networks, announced that the deal with Telecom Cook Islands would supply Telecom Cook Islands and its users with the full ArgentEclipse suite of products.

“ArgentEclipse is a complete converged billing solution that will provide Telecom Cook Islands with both prepaid and postpaid billing with a single rating and CRM solution. The suite of Eclipse products will give Telecom Cook Islands a flexible infrastructure to expand its range of product, provide subscribers with more compelling services, and help to manage their network more cost-effectively,” said Barker.

Also that month, the Internet Corporation for Assigned Names and Numbers (ICANN) and the Pacific Islands Telecommunications Association (PITA) announced that they had signed a Memorandum of Understanding, with the aim of building partnerships to better share information about the internet.

“This MoU is a step forward in accountability and ensuring the stability of the Internet. By sharing information, ICANN can learn about the challenges facing small island nations, and PITA will have access to expertise and ideas from other areas facing similar challenges, ” explained Dr Paul Twomey, ICANN’s President and CEO.

The objective of the MoU is to build a non-exclusive partnership to see information on internet issues flow in both directions, promote regional telecommunications and information technology standards, and aid in transferring skills, knowledge, and capacity to the Pacific Islands region.

The parties agreed to:

• Exchange information on issues relating to the internet emerging from the respective organization’s work;
• Foster a network of stakeholders and decision makers who can contribute to discussions of Internet security, stability, and interoperability; and
• Provide information about respective policies under development and enable improved participation.

In October 2007, it was announced that the Cook Islands authorities had signed a Memorandum of Understanding (MOU) with API, the New Caledonia based company representing the South Pacific Information Network (SPIN), to conduct a country specific assessment of the proposed optical fiber undersea cable.

The proposed project has two components, the first an east-bound route, known as SPIN-East, going from New Caledonia to French Polynesia via Wallis & Futuna, which could provide links to Fiji, Samoa, American Samoa, Tonga Niue and the Cook Islands. The other is the west-bound route (SPIN-West) from New Caledonia linking Vanuatu, Solomon Islands and Papua New Guinea, and would connect to the existing Port Moresby - Cairns cable and the soon to be implemented Noumea - Sydney and Tahiti - Honolulu cables for international access.

The objectives of SPIN-East are not only to connect the Pacific Islands but also to contribute to ICT development in the region, secure New Caledonia and French Polynesia traffic, build a new trans-Pacific route, and offer back-up capacities to US and Australian operators, it was announced.

The Cook Islands government expressed the hope that involvement in a network such as SPIN would enhance economic growth by providing employment opportunities with regard to remote working, on-line catalogues, e-commerce and the establishment of new multimedia and audiovisual industries, while also developing prospects for e-learning, e-administration, etc.

Secretary General of the Secretariat of the Pacific Community (SPC), Dr. Jimmie Rogers, told the Cook Islands cabinet at the time that this project provided a chance for the Cook Islands and the rest of the Pacific to tap into the development opportunities that can be gained thorough ICT. He also concurred with the view of Greg Urwin, the Secretary General of the Pacific Islands Forum Secretariat (PIFS), that "the lack of telecommunications infrastructure in the region is a serious impediment to development and improvement and quality of life of Pacific Islanders".

The SPIN project is aligned to the Pacific Digital Strategy and the Pacific Plan endorsed by Pacific Leaders.

According to Liz Koteka of the Policy and Planning Division of the Office of the Prime Minister, the signing did not commit the Cook Islands to the project, but allowed API to come in for further assessment, dialogue and negotiations with Government and other agencies.

She added that: “Government will only commit to the project when all the required information and the possible options have been analyzed and assessed to ensure that the decision that Government will make would be to the benefit of the Cook Islands."

In March, 2009, Digicel initiated a takeover bid of TCI which was accepted. However, Digicel withdrew the offer as they felt the offered price was too high. TCI declined the lower offer.

Also in 2009, Mervin Communications sought approval to establish a competitor (Kukicell) for mobile networks on the island. In response, the government planned to amendment the Telecommunications Act during 2010 in order to open up the market for competitors. KukiCell began setting up test stations for its mobile phone network at the end of March, 2011, but was instructed by the Telecommunications Minister, Mark Brown, to end testing after just one week. His argument against issuing a licence to KukiCell for the necessary radio testing equipment was that the issuance would infringe the joint venture agreement between TCI and the Cook Islands Government.

By late 2011, no amendments to the Telecommunications Act had been drafted.

Cook Islands Offshore Activities

The natural bonding of the Internet and Offshore stems from the fact that both, of their nature, manage to avoid tax. Businesses which can operate on the Internet without, so to speak, touching ground in a high-tax jurisdiction will naturally migrate to offshore jurisdictions; while business that already have offshore existence will find it highly convenient to be able to use the Internet to trade with their high-tax customers without having to make a landing in their countries.

By locating websites in the Cook Islands to carry out functions previously based in high-tax jurisdictions such as sales and marketing, treasury management, supply of financial services, and most of all, the supply of digital goods such as music, video, training, software etc, businesses can take advantage of low rates of taxation for increasingly substantial parts of their operation.

In many countries, the distribution of goods from a warehousing facility does not constitute the carrying on of a trade or business in that jurisdiction, so that even for physical goods, in many case it will be possible to avoid a permanent establishment (taxable presence) altogether in many high-tax jurisdictions where trading activities currently take place.

For information about the impact of e-commerce on a number of the main offshore activities which take place in the Cook Islands, click on a link below to go to our specialist E-commerce site Offshore-e-com.com

Sales and Distribution of Physical Products
Sales and Distribution of Digital Products
Banking and Financial Services (including Investment Funds)
Corporate Support Functions

To see an analysis of the current state of legal and tax issues surrounding offshore e-commerce, click here.

BACK TO TOP

Cook Islands Case Studies

This section will contain case studies of e-commerce solutions applied to offshore business activities carried out from the Cook Islands. The case studies will be developed in association with partners. Contact us to learn more.

BACK TO TOP