Seeking business overseas

New Minister outlines economic strategy

If the policy of appointing Ministers for life - or at least until retirement age - is maintained, then Dr Giulio Masasso Tu'ikolongahau Paunga can look forward to a long career in the Tonga Cabinet. At just 32, he has recently been been given the job of Minister for Labour, Commerce and Industries (with responsibility also for tourism). He may be relatively young, but the new minister has impressive academic credentials. He took a master's degree in Japan (in Japanese) and as we soon discovered, he has some new ideas about how to achieve economic development in his country.

Dr Masasso's portfolio covers a wide range of economic activities and we began by asking what he thought the main focus of his work would be. He identified three areas - agriculture, which is the single most important sector; fisheries which has potential for growth; and tourism. He would also like to see more manufacturing, particularly for export, but acknowledged that the current prospects in this area were very limited.

Looking first at agricultural production for export, we noted that a significant change had taken place over the last decade. Coconut-related products had been largely replaced by squash, a 'gap' in the Japanese market having been identified when other sources of supply were not available. Tonga may have been the first to spot the opportunity but was there not a danger that other countries might 'muscle in'? The government was 'very aware of this danger', said the Minister and was trying very hard to diversify its export products. He mentioned vanilla, papaya, beans and, in particular, carrots. The last-mentioned crop grows well in the islands and there is apparently a growing taste for carrot juice in Japan. A list of products with export potential, which could be grown successfully in Tonga, had been drawn up in cooperation with the Ministry of Agriculture, and Dr Masasso's department would be actively seeking new business overseas.

The government is obviously interested in developing trade with Japan and other countries in Asia, but the Minister felt that New Zealand and Australia were likely to remain the principal markets for Tongan farm products in the future. He was looking forward to easier access to New Zealand once new quarantine facilities had been set up at the international airport on Tongatapu. This, he said, should allow for a larger throughput of export crops.

Efficiency, of course, is the key to winning and keeping overseas customers. With this in mind, our discussion turned to the land tenure system. The allocation (at least in theory) of parcels of land to all male Tongans discourages the development of larger farms or plantations. Was this the most effective way of exploiting the country's fertile lands? Dr Masasso acknowledged that the system hampered efficiency but stressed that the question was a very sensitive one. The right to cultivate a plot of land is deeply rooted in Tongan culture, and radical changes to the property laws are not on the agenda. As the Minister put it; 'We are trying to maximise our efficiency under the present system of land tenure.'

Turning to tourism, Dr Masasso observed that 'this has been the most stable industry over the past ten years,' bringing an average of T$ 12 million into the country every year. In looking at possible growth, however, he stressed the need to take account of the environmental and cultural impact. 'Tonga is a very small country, and it would not be right to build too many hotels and related facilities. It might be possible, but the long-term effects would be a little too much for the country.' Dr Masasso said he favoured tourism which has 'e closer relationship with people - a cultural exchange, targeting people who really wish to understand our country.'

Fishing is a sector which appears to have huge potential given the size of Tonga's exclusive economic zone. Dr Masasso explained how Japanese assistance was being used in a boat building scheme designed to produce vessels that local people could afford. He also spoke enthusiastically of the research that had been carried out to determine the nature and size of the fish stocks. He recognised, however, that while most of Tonga's fishing was inshore, there was scope for a great deal more revenue from deep-sea fishing. In this connection, negotiations were underway with the United States, Taiwan and Japan, to allow vessels from these nations to fish in Tongan waters.

The conversation then moved on to the more general issue of entrepreneurship and the role of the state in the economy. The Minister indicated that the government believed in privatisation but stressed that this was not simply 'because other countries are doing ft.' The main issue at this stage, he said, was to create a sufficiently large pool of well-trained people to take over activities currently run by the authorities. 'The government wishes it didn't need to get involved but we are a small developing nation, and to get things started, you need capital and know-how - which locals sometimes don't have access to.' In these circumstances, the state had to activate projects which could later be privatised once the necessary skills had been built up. Another 'major strategy' was to develop a much closer relationship between the Ministry and the private sector.

This led us into a discussion about Tonga's attitude to foreign investors who might also be in a position to supply capital and know-how. The authorities had recently threatened that a number of residence permits would not be renewed. Was this not a disincentive to potential overseas investors ? Dr Masasso was keen to offer clarification. 'The media makes it look as if Tonga doesn't like investors but they have misinterpeted the situation. He insisted; 'we want the foreign investment here and are encouraging it in those areas where locals cannot get involved.' Defending the actions of the immigration authorities, the Minister stressed that what they were doing was normal practice. 'Those who stay here illegally and do not extend their visa have to be deported.' The action, he argued, was not directed against foreign investors and indeed, the latter should be encouraged by the government's commitment to upholding the law.'