Vanuatu's Foreign Investment Agency will no longer accept new applications for wholesale and retail businesses.
The agency's Chief Executive, Howard Aru, said one the responsibilities of his office was to protect the reserved business lists for indigenous ni-Vanuatu, which included such shops.
Aru said now that Parliament had made dual citizenship legal, refusing foreign investors could be a challenge.
But he said 20 years ago foreign businesses were restricted to limited areas but now there were foreign wholesale and retail operators spread throughout the capital of Port Vila.
"I think the point here is that the Government of Vanuatu, like all other governments of the Pacific for that matter, wants to see indigenous citizens participate more in business, for obvious reasons - livlihoods, incomes for families, for extended families and so on.
"Unfortunately that has changed."