Eighty foreign investment enterprises face deregistration
More than seventy Foreign Investment Enterprises (F.I.E.) face being deregistered under the Foreign Investment Certificate registry after ceasing their operations.
The figure is revealed in a Monitoring and Evaluation report by the Ministry of Commerce, Industry and Labour (M.C.I.L.) for the period ending 31 March 2020.
The report reveals findings of inspections conducted by the Industry Development and Investment Promotion Division (I.D.I.P.) under M.C.I.L. for the month of February 2020.
The findings are a result of the division’s ongoing monitoring and evaluation of registered F.I.E.s in Upolu during the first quarter of the Financial Year 2019-20.
The main objectives of the inspection were to ensure that all registered foreign enterprises operating during the 2016-17 Financial Year were in compliance with the Act and its 2011 Regulations particularly with regard to:
• Confirmation of the operating statuses of registered foreign enterprises within the reporting period Financial Year 2016-17 (including businesses that remained active; have ceased operations; obtained citizenship and were therefore no longer classed as foreign; and businesses that had not yet commenced operations).
• The compliance of all foreign enterprises to the conditions of their initial Foreign Investment Certificate (F.I.C.) approval.
• Reminding foreign businesses of their statutory obligations under Act including the submission of their status reports “no later than six months after each financial year to which the report relates.”
• Remind foreign investment enterprises of their annual investment certificate approval.
• Collection of an updated database on registered foreign enterprises for reporting purposes.
• To take note of the contributions foreign enterprises from past years have made to the economic development and growth of Samoa through employment, export, technology, foreign income and skill transfer.
The report stated a total of 98 F.I.E.s were inspected and, of this number, 18are still active and in operation while 80 have ceased operations.
“Given these 80 F.I.E.s have not renewed their F.I.C. over the last two years as well as the absence of any notification to the Ministry of the operational status of their businesses, they will be deregistered from the F.I.C. registry… due to these businesses being closed down [while] others have obtained Samoan citizenship,” the report says.
Some businesses were confirmed to have returned back to their countries of origin and ceased operations some time ago.
Foreign enterprises that were found only to be partially in compliance were advised accordingly and are being monitored through email(s) and telephone(s) follow ups to ensure compliance with the Act and all other relevant legislation.
“The majority of registered F.I.E.s from the Financial Year 2016/17 period has been confirmed to be inactive but have failed to notify the Ministry as per normal procedures,” the report noted.
It also added that 62.5 per cent of partially compliant businesses are foreign enterprises that have approved their commercial activities but which are yet to renew their F.I.C. as well as failing to submit their annual status reports.
“The important thing to note here is that there are no non-compliant F.I.E.’s.
“The [partially compliant businesses…] have been advised on how to be fully compliant, that is, write to the Ministry for renewal of their F.I.C. and to submit their status reports,” the report said.
“The team has noted this as a continuous issue between the team and the inspected businesses. Most of the cases inspected are primarily owned by Chinese and these businesses were unable to answer any questions relayed by the team.”
The inspection team also noted that the majority of the registered foreign enterprises have changed their business locations and activities but have not notified the Ministry.
This has made inspections challenging , the report said.
The report recommended that all inspected foreign business entities, especially the 18 that are still active, of the monitoring and evaluation findings.
“In addition, to also include for the 12 (67%) [partially compliant operations…] the requirements under Section 8B and Section 11 [are] to renew their F.I.C.s and submit their status reports respectively,” the report says.
“The Ministry of Customs and Revenue and Ministry of the Prime Minister and Cabinet will be copied accordingly for relevant information and action where they see fit.
“To cancel F.I.C.s and deregister the 80 FIEs who have ceased operations. This will also include the two F.I.E.s with shareholders who have obtained Samoan citizenship.”
The list of deregistered foreign enterprises will be published in the Savali Newspaper and other local newspapers in accordance with Section 12(5) of the Act.
Advertisements will continue every Financial Year to remind F.I.E.s of their obligations for annual renewals of their F.I.C.s and other required documentation.