Marshall Islands: Country and Foreign Investment Regime

On this Page:

- MARSHALL ISLANDS GEOGRAPHY
- MARSHALL ISLANDS HISTORY, POPULATION, LANGUAGE AND CULTURE
- MARSHALL ISLANDS GOVERNMENT
- MARSHALL ISLANDS ECONOMY AND CURRENCY
- MARSHALL ISLANDS ENTRY AND RESIDENCE
- MARSHALL ISLANDS BUSINESS ENVIRONMENT
- MARSHALL ISLANDS FOREIGN INVESTMENT REGIME

Marshall Islands History, Population, Language and Culture

The population was estimated to be just under 67,200 in July 2011.

The Republic of the Marshall Islands was first settled in about 1,000 BC by people of Mayo/Polynesian stock. It was visited by Spanish navigators in the 16th century seeking a westerly route to the Spice Islands.

British naval explorer John Marshall gave his name to the islands in 1788. The Marshall Islands were under control of Spain from 1500 to the late 1800s, Germany from 1885 to World War I, and Japan from 1917 to 1944. After the second World War, the Marshall Islands became a United Nations Trust Territory of the Pacific Islands, under United States administration.

The Republic of the Marshall Islands came into existence in 1979 and gained its independence in 1986, after signing a Compact of Free Association with the United States. The Republic became a full member of the United Nations in 1991 and has established diplomatic relations with the world's major maritime and industrial nations.

Marshallese and English are official languages and both are taught in schools.

Religious affiliation is as follows: Protestant 54.8%, Assembly of God 25.8%, Roman Catholic 8.4%, Bukot nan Jesus 2.8%, Mormon 2.1%, other Christian 3.6%, other 1%, none 1.5% (1999 census).

Majuro atoll, capital of the Marshall Islands, is the most developed atoll with a thriving commercial and political centre and a population of nearly 30,000. It offers visitors, diving and fishing, a cultural museum, a variety of cuisine and entertaining nightlife.

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Marshall Islands Government

Republic of the Marshall Islands has a government modeled after that of New Zealand, although the chief minister and head of state bears the title of President.

There is a unicameral Parliament (Nitijela) with 33 seats. Members are elected by popular vote to serve four-year terms. Elections were last held in January 2008.

There is also a 12-member Council of Chiefs (Iroij) which advises on matters affecting customary law and practice.

The chief of state and head of government is President Jurelang Zedkaia who succeeded Litokwa Tomeing following a no-confidence vote on 21 October 2009.

The Judicial Branch of the Marshall Islands includes the Supreme Court, High Court, district and community courts, and traditional rights court. Trial is by jury or judge.

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Marshall Islands Economy and Currency

The Marshall Islands has a stable business environment; the currency is the US dollar.

Air transportation is facilitated by two international airports, plus airstrips scattered throughout the larger islands. There are twelve deep water docks for large ocean-going ships.

Commercial activities include: fishing, aquaculture farms, copra, and a rapidly expanding tourist trade. Giant clams and sea cucumbers, prized for their meat and shell, are farmed on many islands. Major tourist attractions include the world-class snorkel and scuba diving of submerged World War II wrecks, colorful reefs and exotic fish in clear warm water with visibility over 100 feet.

GDP at purchasing power parity was estimated at USD133.5m in 2008, with annual growth estimated at -0.3% in the same year. Unemployment exceeded 30% in 2006. Inflation in 2008 was estimated at 12.9%.

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Marshall Islands Entry and Residence

Visas are not required for United States, Federated States of Micronesia, and Palau citizens. All other visitors must pay $25 for a 3-month tourist visa and $50 for a business visa (at the time of writing). The visas are issued upon arrival. All visitors must hold a valid passport valid for one year from the date of arrival.

US passport holders may stay up to 30 days without visa, however permit must be obtained prior to entry (not necessary for cruise passengers).

For stays up to 30 days (extendible for up to 90 days from date of entry), all visitors must possess sufficient funds for stay and possess an onward air or sea ticket or sufficient funds for such ticket. A departure fee of $15 US (those over age 60 exempt) is required.

Yellow fever certificates and cholera vaccinations are required by all travelers arriving from infected areas. Vaccination against Hepatitis A and B, typhoid, tetanus and diphtheria may be advised. For those intending to stay for more than 30 days, an AIDS certificate is required.

Temporary residence permits are issued by the Attorney General.

Work permits are required for non-resident workers regardless of the term of their employment contract. The Government requires employers to follow a three-stage process in obtaining work permits for non-resident workers:

• First, they must notify the Chief of Labor in the Ministry of Foreign Affairs by letter of their desire to employ a non-resident worker for a particular position.
• Second, they must make an effort to hire a citizen for the position, including advertising the position in a local newspaper and on the radio.
• Third, if their efforts to hire a citizen worker are unsuccessful, they can apply, using a prescribed form, to the Chief of Labor requesting a specific non-resident worker to fill the position. Submission of the application must wait at least 30 days following the initial advertisement for the position. In their application, the investor must show evidence of their efforts to hire a citizen worker. They also must demonstrate that the proposed non-resident worker has the skills and experience to effectively fill the position, does not possess any communicable diseases and does not have a police record. Every effort is made to provide the applicant with a decision regarding their application within 14 days of its submission.

A work permit is issued for a specific non-resident worker for a period of one year. The permit must be renewed at the end of the calendar year and can be renewed for a total of two years. It may be extended for a third year at the discretion of Cabinet. The Government requires all employers with non-resident workers to agree in writing to cover the cost of repatriating non-resident workers to the place from which they were hired.

Non-citizen investors issued with a foreign investment business license are exempted from having to obtain a work permit for themselves. Similarly, citizens of the United States, Federated States of Micronesia and Palau do not require work permits to be employed in the Marshall Islands. Non-citizen investors and nationals of the above-mentioned countries, however, are required to register with the Labor Office.

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Marshall Islands Business Enviroment

Financial services include the Bank of Guam and the Bank of Hawaii, in addition to local banks. The major islands have their own power plants and water systems.

Telecommunications services include telex, cellular, internet, international calling, caller ID, and leased data circuits. Majuro Atoll and Ebeye and Kwajalein islands have regular, seven-digit, direct-dial telephones; other islands interconnected by shortwave radiotelephone (used mostly for government purposes). The international country code is 692.

In 2009, main telephone lines in use were estimated at 4,400, and cell phones at 1,000.

2009 figures suggested that there were around 2,200 internet users in the jurisdiction.

Local governments issue business licenses for businesses operating in their areas of jurisdiction. Each local government determines its own rates and administration procedures.

There are no foreign exchange controls in the Marshall Islands. However, the Government requires all banks in the Republic of the Marshall Islands to report transfers of funds from the country over a 24-hour period that are in excess of US$10,000. This requirement is a result of the Government's international money laundering commitments. The Banking Commission monitors this information and has the authority to investigate the financial records of individuals or businesses, as it considers necessary.

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Marshall Islands Foreign Investment

The Government of the Republic of the Marshall Islands is particularly interested in encouraging private investment in its fisheries, tourism, manufacturing and agriculture sectors, and is actively seeking direct foreign investment to assist the country meet its goals.

The Government has established the Trade and Investment Services Division under the Ministry of Resources and Development to be responsible for investment promotion and the provision of investor facilitation services.

The Division provides information on investment conditions and data on the cost of doing business in the country and investment related authorization procedures. It assists in arranging meetings with government officials, and identifying local private consulting, accounting and legal services to assist investors comply with the various approvals required in order to establish and operate their business activities.

The Government requires all non-citizen investments to obtain a Foreign Investment Business License (FIBL). A non-citizen investment is defined as having any level of its equity held by a non-citizen (i.e. foreign citizen, corporation, joint venture, partnership or other legal entity). The FIBL can be obtained by making application to the Registrar of Foreign Investment in the Office of the Attorney General using a prescribed form.

The Government requires non-citizen investments to either incorporate as a domestic limited company in the Republic of the Marshall Islands, or register as a foreign entity, which can be a limited company, partnership or sole proprietorship.

In general, non-citizen investment from all countries is equally welcome and unrestricted in the Republic of the Marshall Islands. Certain sectors, however, have been reserved for citizen investment. These sectors are specified in a Reserved List:

• Small scale agriculture for local markets;
• Small scale mariculture for local markets;
• Bakeries and pastry shops;
• Motor garages and fuel filling stations;
• Land Taxi Operations, not including airport taxis used by hotels;
• Rental of all types of motor vehicles;
• Small retail shops with a quarterly turnover of less than US$ 1,000.00 (including mobile retail shops and/or open-air vendors/take-outs);
• Laundromat and dry cleaning, other than service provided by hotels/motels;
• Tailor / sewing shop;
• Video rental;
• Handicraft shop;
• Delicatessen, Deli Shop or Food take-out.

The Government is committed to maintaining its marine resources, primarily to ensure food security. Tuna is the only resource for which industrial-scale fisheries is promoted. Priority is given to increasing the returns accruing from this fishery by encouraging domestic-based production, processing and exports of tuna products. Domestic-based fishing investments, both non-citizen and citizen owned, intending to fish for tuna in the Republic of the Marshall Islands exclusive economic zone must negotiate a fishing license agreement with the Marshall Islands Marine Resources Authority (MIMRA).

The Government similarly requires any investor interested in exploiting or culturing marine resources in its coastal waters to obtain a license from MIMRA.

To help meet its private sector objectives, the Government offers investments in selected sectors exemptions from paying taxes and duties. The exemptions are equally available to both non-citizen and citizen investors, and can be applied for by submitting a letter to the Minister of Finance. Investors intending to establish in the following export-oriented sectors can be exempted from paying gross revenue tax for a five-year period:

• Off-shore or deep sea fishing;
• Manufacturing for export, or for both export and local use;
• Agriculture;
• Hotel and resort facilities.

In order to qualify for an exemption, the investor must make an investment of at least US$1.0m, or provide employment and wages in excess of US$150,000 per annum to citizen workers.

The government also offers investments in seabed hard mineral mining in the country's exclusive economic zone an exemption from paying all taxes, duties and other charges except taxes on wages and salaries, individual income tax and social security contributions. In order to qualify for the exemption, investors must pay the Government a royalty, production charge or combination of production charge and a share of net proceeds accruing from the mining activity. All investors are required to notify the Environmental Protection Agency (EPA) prior to commencing any development to determine if an EIA is necessary.

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