An international expert on Free Trade Zones has recommended against Vanuatu establishing such a zone, or EPZ, in Santo.
Vanuatu's Lands Minister has signed an MOU with an American investor he names as Ralph E. Fair representing Pacific Vanguard Corp, who wants to purchase freehold land in Santo to establish an EPZ.
But Robert Haywood, who is the Director of the World Economic Processing Zones Association, says that Vanuatu doesn't have the right conditions for an EPZ.
Mr Haywood, who produced a report in 2003 for the Vanuatu government that clearly advised against an EPZ, says a primary reason for this is the country's overvalued currency.
And he says Santo doesn't have the size to support a management structure that could properly administer such a zone.
"The population doesn't really support that very well, too diosperse a population and too limited amount of transportation. You need to be able to have direct international flights, wide body aircraft if you're going to make a significant impact. And Espiritu Santos just didn't have that."