Stimulating investment in pearl farming in ... - World Fish Center

6. Forms of co-investment6.1 Partnerships and incorporated joint venturesThere are several legal forms of joint enterprise, in which two or more persons share thecosts and benefits of the business in ways they decide and record in a formal agreement.Professional groupings (lawyers, doctors, accountants) often take the form of partnerships,in which responsibility for group income, expenses and profits is shared according to adetailed partnership agreement. That does not seem to fit the likely circumstances of apotential pearl farm in SI. A possible preliminary period of collaboration and knowledgetransfer between WorldFish at Nusatupe and an incoming investor in pearl oyster farmingwould most likely lead to the investor moving to a separate location to establish thecommercial operation.A form commonly used for business ventures in SI involving substantial fixedinvestments and the sharing of costs and benefits between public and private sectorentities is the formally incorporated joint venture. There is no obvious public sector coinvestorfor a private investor to team up with, but there is a possibility of an establishedmariculture business joint-venturing with an incoming pearl farm investor. In that case theformal structure of their collaboration would be developed by them with their own legaland accountancy advisers6.2 Specific terms of leaseAs noted earlier, the participation of local communities stakeholders, particularly thekinship group or groups owning rights to land and/or reef areas to be included in theoyster farm and shore base, may be crucial to a successful long-term investment. This maybe initially achieved by the terms of the lease to the pearl farm owner/operator, whichwould be implemented after the Commissioner of Lands had acquired the perpetual estateand transferred it to the appropriate kinship group(s).Here, a rent structure may be negotiated that recognises the high risk and relatively longlead time that characterises a pearl oyster project, but provides for a significant increase inrents as and when commercial viability is achieved. Payment of an agreed share of grosssales and/or gross or net profits (with deduction before ‘net’ clearly defined) may beagreed on top of an ‘unimproved value’ fixed rental payment . There are many precedentsfor such successful agreements in the field of tourist hotel and resort development, andcompetent independent advice to the kinship group(s) concerned could readily bearranged.6.3 Participation through out-grower operationsDepending on the form of operation chosen, which will depend on the method of oysterculture that appears to investors to be best suited to SI circumstances, participation in thepearl farming project may take the form of collection and sale of juvenile oysters to acentral farm, where they are grown to seedable size, implanted with the prospective pearlnucleus and all being well are harvested after about two years. Outgrower rearing ofoysters to seedable size and the seeding of oysters in outgrower farms seems likely to be a15