weighted score 3.5 · ten dimensions
Sourcing Attractiveness Index · ten dimensions
Vanuatu
Labour cost, supply base depth, logistics infrastructure, trade access, and innovation scores for Vanuatu as a sourcing destination.
Labour cost competitiveness
5
Wages low in absolute terms. Very small labour pool across 83 islands. Cost advantage theoretical — no manufacturing base to exploit it.
Supply base depth
2
Minimal supply base. Copra, cocoa, kava exports only. No industrial manufacturing. Offshore finance sector is services-based.
Logistics & infrastructure
3
Remote Pacific archipelago. Basic port infrastructure repeatedly damaged by cyclones. Geographic fragmentation across 83 islands adds complexity.
Workforce skills
4
Bilingual population (English/French — former condominium). Tourism sector provides hospitality skills. Emigration of skilled workers to NZ/Australia.
Scalability
5
~320,000 population across fragmented geography. No path to manufacturing scale. Agricultural exports limited by arable land and cyclone damage cycles.
Ease of doing business
4
No income tax attracts offshore registrations. But CPI 47 indicates governance concerns. Political instability with frequent government changes. Customary land tenure complex.
Trade access & tariffs
4
LDC graduation (2020) progressively reducing preferential access. Melanesian Spearhead Group trade agreement. PACER Plus signatory. Small trade volumes.
Sustainability baseline
4
Strong climate advocacy internationally (Vanuatu led ICJ climate opinion request). But extreme physical vulnerability undermines operational sustainability. Cyclone rebuild cycles dominate.
Innovation & IP
1
No R&D infrastructure. No patent activity. Innovation ecosystem non-existent. Dependent on development partner technical assistance.
Quality standards
3
Kava and cocoa exports meet some international quality standards. Tourism sector has quality frameworks. No broader industrial quality certification.
Key Export Sectors
Key Export Sectors
- Agriculture
- Copra, cocoa, kava, and coconut oil are the primary agricultural exports. Kava has growing international demand as a natural anxiety remedy. Cocoa is high-quality but low volume.
- Tourism
- Tourism is the largest economic sector, accounting for a significant share of GDP and employment. Cruise ships and resort tourism from Australia and New Zealand dominate. Extreme weather events (Cyclone Pam 2015, Twin Cyclones 2023) periodically devastate tourism infrastructure.
- Offshore finance
- Vanuatu operates as an offshore financial centre with no income tax. This has attracted international business registrations but also raised concerns about transparency and money-laundering risk from FATF and other bodies.
Trade Access & Business Environment
Trade Access & Business Environment
- LDC graduation
- Vanuatu graduated from Least Developed Country status in 2020, which will progressively reduce preferential trade access (EBA, GSP+) as transition periods expire.
- Governance
- CPI score of 47 (2025) reflects moderate corruption concerns. Political instability with frequent government changes — coalition politics are volatile. Land tenure is customary and complex for foreign investors.
- Scale constraint
- Population of approximately 320,000 spread across 83 islands. Geographic fragmentation adds internal logistics cost. No realistic manufacturing scale available.
Infrastructure & Climate Risk
Infrastructure & Climate Risk
- Extreme climate vulnerability
- Vanuatu is among the world's most climate-vulnerable nations. Cyclone Pam (2015) was a Category 5 event causing 64% GDP damage. Twin Cyclones Judy and Kevin (March 2023) struck within 48 hours, causing widespread destruction. Climate risk score of 8 reflects this extreme exposure.
- Infrastructure recovery
- Repeated cyclone damage means infrastructure is in a perpetual rebuild cycle. Port and road infrastructure is basic. Inter-island connectivity depends on small aircraft and boats.