Chinese companies still see opportunities in Tulagi

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Chinese companies continue to seek investment opportunities on Tulagi, one of the Solomon Islands that a Chinese company unsuccessfully tried to lease in its entirety several years ago, authorities said.

Once the capital of the Solomon Islands before that role was transferred to Honiara on the island of Guadalcanal, Tulagi is now home to the capital of the central province.

The tiny island attracted attention in 2019 when details emerged of a long-term deal struck by provincial leaders leasing the entire island to a Chinese company. National officials canceled the deal, which had raised concerns that the company intended to develop infrastructure that could be used for military purposes.

Polycarp Galaigu, the premier of the central province who took office in July, told VOA Mandarin last month that Chinese companies remained interested in investing in his province despite the about-face.

“We are trying to contact other businessmen to come and make their investment here in the central province. But for now, I cannot tell you which company,” Galaigu said.

Galaigu said some of the inquiries came from Chinese companies. Most are looking for opportunities in the fishing and tourism sectors, he said.

Allan Siale, provincial secretary of Central, told VOA Aug. 12 that several Chinese companies want to invest in coconut processing, fishing and tourism in the province’s Russell Islands, while others want to build factories in Tulagi. A company is interested in building an oil refinery, he said.

Sam Group, the company that tried to lease Tulagi, is still interested in investing, according to government records, he said.

Beijing-based Sam Group is a technology, investment and energy conglomerate founded in 1985 that has business relationships with the Solomon Islands, Brazil, Paraguay, Singapore and other countries, according to its website.

Sam Group did not respond to VOA’s request for comment.

Siale said Sam Group’s offer to lease Tulagi in 2019 fell through in part because it was not approved by the Solomon Islands Foreign Investment Division.

Stanley Manetiva, the former premier of the central province who entered into the original lease agreement with Sam Group, told VOA Mandarin on August 12 that he felt cheated by the Chinese company. He said he did not follow protocol which required signatures from a representative of the Chinese government, the Solomon Islands government and the company.

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Company officials “just drafted an agreement document, and they wanted you to sign it,” said Manetiva, who resigned in July after a no-confidence vote.

Siale said that based on the proposal, the Sam Group has no plans to install military-related infrastructure on Tulagi. The company wanted to develop the economic infrastructure of the island: the roads, the airstrip and the seaport. “For military strategic infrastructure, as far as we remember, the agreement does not mention anything to that effect,” Siale said.

Michelle Lam, a former employee of the state-owned China Harbor Engineering Company (CHEC) in the Solomon Islands, told VOA Mandarin that the suspicion that the Chinese Sam Group intended to lease Tulagi for military purposes did not was nothing more than exaggerated speculation.

“The Solomon Islands will be a port (for China) to supplement supplies and will never be a military base,” Lam said.

Quoting an unnamed CHEC representative, Lam said the Chinese government banned Chinese state-owned companies from participating in any tenders or development projects on Tulagi and nearby islands after the controversial lease was cancelled.

Neither CHEC nor the Chinese Embassy in the Solomon Islands responded to a VOA request for comment.

Prime Minister Manasseh Sogavare, who has dismissed fears that a security deal with China could undermine regional security, told the Guardian last July that there would never be a Chinese military base in his country.

Central province officials signed the “Strategic Cooperation Agreement” with China’s Sam Group on Sept. 22, 2019, a day after Sogavare officially severed ties with self-governing Taiwan and established diplomatic relations with China, which considers Taiwan as its territory.

Solomon Islands officials terminated the central province’s deal with the Sam Group on October 25, 2019, saying provincial authorities had no right to enter into a 75-year deal for Tulagi Island, which presents the type of deep water port attractive to naval forces.

Polycarp Galaigu, premier of the central province, was interviewed by VOA's Chinese correspondent, Liya, in his office on Tulagi Island.  (Kushima/VOA)

Polycarp Galaigu, premier of the central province, was interviewed by VOA’s Chinese correspondent, Liya, in his office on Tulagi Island. (Kushima/VOA)

“It is established practice that all agreements involving the Government of the Solomon Islands, which include provincial governments, must be approved by the Attorney General before being executed,” said a statement released by Sogavare’s office highlighting the central province agreement with Sam group omitted this step.

At the time, then-US Secretary of Defense Mark Esper applauded the veto, calling it “an important move to strengthen sovereignty, transparency and the rule of law”.

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