Mundo’s Freedom Rating is a freedom index that takes into consideration aspects such as political stability, personal safety, taxes and investment potential based on our experts’ exhaustive research.

Political Stability: 8

The Republic of the Marshall Islands (RIM) is a democratic, independent and sovereign nation governed by the 1979 constitution where it is defined as a mixed parliamentary regime that holds elections every four years. Its last electoral process was carried out in 2020 and the winner was David Kabua, who was elected by the parliament (Nitijela) to serve as head of state and head of government.

According to Freedom House, the RMI is a stable democracy with regular and competitive elections, where freedom of the press is present and civil liberties are respected. Elections are officially non-partisan; however, legislators have the ability to create and change alliances after taking office. Another element that should be highlighted is that this nation has a history of democratic transfers between rival groups, with tribal chiefs playing an influential role in these processes.

Finally, according to Country Watch´s Political Stability Index. An index that measures political stability by taking into consideration levels of governance, record of constitutional order, respect for human rights and strength of democracy, the RMI scores an eight out of ten. It should be understood that the closer the score is to ten the less political risk there is, which is why the IMR can be considered a politically stable nation with an enshrined democratic regime. However, some of the problems that persist to a lesser extent are corruption and gender discrimination in the public sphere. For this reason, we give the Marshall Islands an eight out of ten for political stability.

Personal Safety: 7

Generally speaking, travel to the Marshall Islands is quite safe, as crime levels are quite low and in the worst case you could be the victim of an occasional act of vandalism, no different from other parts of the world. However, it is always advisable to keep your valuable possessions safe at your place of accommodation.

The U.S. Department of State Travel advisory indicates that, in case of traveling to the Marshall Islands, only “normal precautions” should be taken since this nation is in risk level 1, which is the lowest level in risk considerations. To understand this, we can mention that it shares this category with countries such as Liechtenstein. On the other hand, precautions are recommended for activities related to aquatic or extreme sports that could incur a potential risk. 

The last factors to take into consideration is that the RMI has a rudimentary medical system with only two hospitals, another aspect to be considered is the poorly developed communications and transportation, drivers must be especially cautious, because in some cases, especially in the rainy season, roads can flood, representing a risk for tourists and locals; also, it is important to mention the poor signage and the absence of traffic lights. For the latter, we can give the Marshall Islands a seven out of ten in personal safety.

Taxation: 8

It is important to mention that the RMI has no bilateral tax treaties. We can also point out that due to the existence of the Marshall Islands Business Corporation Act, all International Business Companies (IBC) or Non-Resident Companies are exempt from paying local taxes.

The local government also offers tax exemptions for investments in sectors with potential such as fisheries, manufacture or exports. To qualify for these exemptions the investor must make an investment of at least USD 1 million, or provide employment and wages in excess of USD 150,000 per year to Marshall Islands native workers.

The government also offers tax exemptions for investments in the area of mining of hard seabed minerals that can be found in the country's exclusive economic zone. In order to qualify for this benefit, investors must pay to the government a production fee or a portion of the net income derived from the mining activity. Only the payment of taxes on wages and salaries, personal income tax and social security contributions must be complied with.

 In the RMI there is no obligation to pay taxes on the wages and salaries of non-resident domestic companies and their employees, as mentioned above. On the other hand, as for the employees of resident companies, they will be requested to withhold an annual tax of 8% on the employee's wages and salaries to be paid to the national government. Once the first USD 10,400 is exceeded, the tax will increase to 12%. Exemptions of up to USD 1,040 will be allowed for those employees whose salaries are less than USD 5,200.

All these ease together with the absence of tax information exchange agreements and the existence of confidentiality laws make the Marshall Islands a very favorable location for business, we give them a nine out of ten in taxation.

Investment Potential: 7

To invest in the RMI, the investor must have a Foreign Investment Business License (FIBL) which is obtained from the Foreign Investment Registry of the Attorney General´s office, for which the web portal of the Trade and Investment and Tourism Bureau has been enabled. The RMI government greatly promotes the arrival of foreign investments. Especially in areas such as fishing, an activity of vital importance in which one can already see even important investments from China and Taiwan, thanks to the ease that the RMI has for the European and U.S. market through marketing agreements. It is also important to highlight that this territory is located in the largest tuna fishery in the world, which makes the Marshall Islands a center of fishing operations of great relevance.

The RMI has all the characteristics of a tropical paradise, sandy beaches, huge lakes, and added to this it is located in one of the fastest growing tourist regions in recent years. Self-described as the pearl of the Pacific, it offers these unique characteristics that become even more valuable as it is located between Asia and North America, two profoundly important regions in world tourism consumption. This is another area where the government strongly encourages foreign investment.

This territory also has a manufacturing industry with great potential for development, currently with a production capacity of 15,000 tons of copra and derived products that demonstrate the potential for large-scale production in areas that can be developed with the right investment, such as seafood, food, personal hygiene products and waste management. Finally, the RMI government is also promoting investment in renewable energy and services, such as telecommunications, to overcome geographical constraints such as distance or lack of infrastructure in the area of transportation.

The Government of the RMI considers that in order to overcome geographical difficulties as the remoteness of the Islands it is important to promote investment in modern telecommunication links, as this will help to highlight services such as ship registration. The Marshall Islands has the third largest ship registry in the world and it is acknowledged as a modern and quality service with international recognition and important contributions to maritime safety.

In order to invest in the RMI, it must be taken into consideration that it is not possible for the non-Marshallese to purchase land; to make use of it, an agreement has been reached with the local landowners. Because of this and other factors such as limited transportation development or its remote location, it may be considered difficult to invest in the Marshall Islands. However, according to the Country Watch Political Risk Index, a tally of political, social and economic factors, including economic risk, investment considerations and corruption index, the RIM received a six out of ten, indicating that the closer this figure is to ten, the lower the economic risk is. We believe that due to the ease offered by the government in numerous areas in conjunction with its political stability and desire to attract foreign investment the RIM represents a seven out of ten in investment potential. If you wish to invest in the Marshall Islands you can count on us at Mundo.

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