Cook Islands Explores Creation Of Sovereign Wealth Fund

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Fund will store revenue from marine mineral projects

By Rachel Reeves

RAROTONGA, Cook Islands (Cook Islands News, June 14, 2012) – Government is looking to establish a sovereign wealth fund for storing revenue generated from the Cook Islands’ mineral assets.

Opposition leader Wilkie Rasmussen commended government for proposing the fund, which will encompass revenue generated from exploratory mining licenses and any other associated with mineral assets.

He asked finance minister Mark Brown to explain the fund during question-and-answer time yesterday.

"There’s been a lot of talk about the value of our mineral assets estimated into the billions of dollars’ worth," Brown said.

"A lot of work has been done in particular through the deputy prime minister’s office in putting together the legal frameworks for the commencement of the harvesting or the harnessing of revenues that can be gained from these resources.

"We have passed legislation for the seabed mining program already... It is timely, Madam Speaker, that we also look at establishing a sovereign wealth fund similar to what has been established in other countries who are reaping the benefits of their natural resources," he said, making reference to the situation of Norway, whose sovereign wealth fund is fed by its North Sea oil program.

Brown said that Solomon Islands, Papua New Guinea and East Timor also have sovereign wealth funds, and that the latter has accrued over NZ$10 billion [US$] from oil field revenues.

"This sovereign wealth fund is to protect for generations to come any wealth that is generated from our resources so we do not repeat the lessons we can learn from other countries who have squandered the wealth from their natural resources, countries such as Nauru."

Brown says an independent consultant has met with government and the opposition to discuss the potential of establishing a sovereign wealth fund, and will submit his report to government "very shortly."

"When the report is ready (there will be) a community consultation process to explain to people the purpose of this fund."

He estimated the motion to establish the fund will be tabled within the next 12 months.

Rasmussen replied that he agreed with the fund in principle, but said government must be sure to include a mechanism that prevents government from having its "hands in these funds."

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