By EDDIE OSIFELO
Member of Parliament for Small Malaita, Rick Hou, has expressed optimism that the Central Bank of Solomon Islands (CBSI) Amendment Bill would effectively tackle the issue of high margins and interest rates in commercial banks.
Mr Hou made these remarks during his contribution to the bill’s discussion in Parliament yesterday.
The CBSI Amendment Bill seeks to amend the CBSI Act of 2012 (No.6 of 2012) to address legislative gaps, adapt to technological advancements in the financial sector, expand the scope of CBSI’s participation in the securities markets, rectify ongoing interest market failures in the Solomon Islands, and address related financial matters.
Hou, who is a former prime minister and a former Governor of CBSI, highlighted the exorbitant cost of doing business in the Solomon Islands, with the banking sector being one of the most expensive sectors.
He noted a lack of confidence in the economy, which is largely influenced by these high costs.
The Member of Parliament expressed his concern over the determination of lending rates in the country, which are heavily influenced by these factors. He pointed out that this has led to a situation where interest margins in the Solomon Islands are among the highest in the world.
Hou specifically mentioned that margins of 10 percent or higher are virtually unheard of in most parts of the world, including among regional neighbours where margins are less than 5 percent.
He underscored the challenges faced by individuals and businesses, where they are not only required to keep money as deposits but also pay fees to the banks for the privilege of holding their deposits.
In light of these concerns, Rick Hou expressed his hope that the CBSI would utilize the provisions within the Amendment Bill to guide the nation toward a scenario where margins and interest rates are significantly reduced and more sustainable for both the government and the public.
The CBSI Amendment Bill, if successful in addressing these issues, could potentially lead to a more cost-effective and accessible banking system in the Solomon Islands, contributing to a more favourable economic environment for its citizens and businesses.
