Business Advantage Pacific Islands 2010/11

Business Advantage

Y o u r g at e w a Y t o t h e P a c i f i c e c o n o m Y

PACIFIC ISLANDS 2010/11

american Samoa

cook iSlandS

eaSt timor/timor leSte

federated StateS of microneSia

fiji

french PolYneSia

guam

kiribati

marShall iSlandS

nauru

new caledonia

niue

northern marianaS

Palau

PaPua new guinea

Samoa

Solomon iSlandS

tokelau

tonga

tuvalu

vanuatu

walliS and futuna

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10 Feature Interview Pacific legal network’s john ridgway

12 Trends in Pacific investment and trade we survey the Pacific’s investment promotion agencies to uncover recent trends, examine the opportunities for greater trade and ponder the rise of chinese investment in the Pacific.

16 Gas ignites Papua New Guinea the uS$15 billion exxonmobil-led Png lng Project, the largest investment in the Pacific, is now under way.

18 Connecting the Pacific Pacific journalist dev nadkarni considers how progress in aviation and communications is bringing the Pacific closer together.

20 Renewable energy in the Pacific the european investment bank’s nigel hall observes the growth of the Pacific’s sustainable energy industry.

25 Trade and economic cooperation agreements in the Pacific Islands an update on the agreements that continue to move the region towards becoming a significant single economy.

4 Editorial

6 Business update: Putting the Pacific on the map

FEaTuREs

This publication is made possible through the support of the following Pacific businesses and organisations:

ANZ

AuStASIA HeALtH

BSP

CADDeN Crowe

DALtroN

DIgICeL PACIFIC

sECTOR PROFILEs27 Banking and finance

31 Tourism development

36 Transport and logistics

39 Infrastructure and construction

41 Information technology and communications

43 Mining and petroleum

45 agribusiness and manufacturing

48 Forestry

49 Fisheries

ForeIgN INveStmeNt DIvISIoN (SoLomoN ISLANDS)

INveStmeNt PromotIoN AutHorIty (PNg)

KINA SeCurItIeS

KrAmerAuSeNCo

KuLA FuND

NAtIoNAL CAPItAL

NeCD (toNgA)

NeStLé PACIFIC ISLANDS

BusINEss advaNTaGE PaCIFIC IsLaNds 2010/11CONTENTs

COuNTRY PROFILEs51 american samoa

52 Cook Islands (and Tokelau)

53 East Timor (Timor-Leste)

54 Federated states of Micronesia

55 Fiji

57 French Polynesia (and Wallis and Futuna)

58 Guam

59 Kiribati

60 Marshall Islands

61 Nauru

62 New Caledonia

63 Niue

64 Northern Marianas

65 Palau

66 Papua New Guinea

67 samoa

68 solomon Islands

69 Tonga

70 Tuvalu

71 vanuatu

PaCIFIC dIRECTORY72 Business councils & policy organisations

73 Regional investment funds

74 International development agencies

76 Major regional companies

78 useful Pacific information sources

80 Trade offices and tourist boards

81 Key Pacific business events in 2010

82 Map of the Pacific Islands and East Timor

PACIFIC ISLANDS trADe & INveSt

PACIFIC LegAL NetworK

Port moreSBy StoCK exCHANge

vANuAtu INveStmeNt PromotIoN AutHorIty

weStPAC

24 Remittances: a major contributor to the Pacific economy

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COMPaNIEs/ORGaNIsaTIONs INdEx

In April 2009, I attended the Islands Business Opportunities Conference in Honolulu, Hawai’i. The event, organised by the US Department of the

Interior’s Office for Insular Affairs, was designed to encourage investment in the US-affiliated Pacific. Although I was largely a stranger to the territories that fall within the US

sphere of influence in the Pacific, many of the speeches I listened to at the conference had a familiar ring to them. I heard about the need to create much-needed jobs by adding value to exports, about the need for better communications and services, about harnessing the Pacific’s natural advantages in fisheries and agriculture, and the need to reduce reliance on costly oil-based fuels by exploring renewable energy. I heard too about the Pacific Islands’ impressive natural advantages as tourism destinations and the need to encourage investment in the tourism sector. I heard about the need to reinvest in infrastructure, the need for development aid and a desire to attract new investors from Asia and further afield. The issues—and the opportunities—that the US Pacific canvassed at the conference were in many ways no different to those being canvassed in the islands of the Pacific Islands Forum and in the French Pacific too. What I noted, however, was not so much the large number of US-based businesses represented at the conference (which was understandable) but more the marked absence of people from the western side of the Pacific—from Australia, New Zealand, Papua New Guinea, New Caledonia. Absent too, with a couple of exceptions, were those potential investors from Asia. It does seem as though there are two sides to the Pacific and they are standing back-to-back rather than facing each other. One looks westwards and southwards to Australia and New Zealand, while the other looks northwards and eastwards to the United States. It’s time, I would suggest, to start thinking of the entire region as a single market for doing business, in spite of the three legal systems—English, American and French—that have historically hindered genuine integration. Some companies, such as Australia’s ANZ and Pacific Legal Network (PLN) and New Zealand’s Beca Group, are already overcoming these boundaries and have become genuinely Pan-Pacific businesses, operating across the various jurisdictions. Opportunities in renewable energy and communications, to name just two sectors, are undoubtedly encouraging more to do the same. When we first published Business Advantage South Pacific (as it was then called) back in 2008 there had never been a publication that

EdITORIaL

air Pacific: 36air niugini: 34, 36, 38anZ: 27, 29, 30, 42, 56, 76allied gold: 30, 44asia Pacific breweries: 8, 76austasia health: 41, 76avonsys: 18bank South Pacific: 2, 16, 27, 42, 76beca: 4, 39bemobile: 8, 42biscuit company of fiji: 46bred bank: 27,71cadden crowe: 39, 76credit corporation: 16, 76daltron: 8, 9, 42, 56digicel: 7, 13, 18, 56, 67, 71, 75, 76eib: 7, 20, 22, 73, 74exxonmobil: 6, 15, 16, 30, 43, 44 fiji water: 46, 55fintel: 18fletcher construction: 8goro nickel: 6, 43, 62hari Punja group: 55ifc: 7, 22, 27, 44, 50, 71, 73, 75 interoil: 16, 44iPa (Png): 23, 66k k kingston: 46, 73kina group: 27, 28, 76kramerausenco: 8, 19, 39, 76kula fund/aureos capital: 11, 73, 74lae builders and contractors: 48nautilus minerals: 38, 44, 69, 76nambawan Super: 28, 40

naSfund: 24, 28, 33, 34, 40national capital: 15nedc (tonga): 21, 69nestlé: 8, 46, 45, 46, 47, 83 new britain Palm oil: 8, 16, 47, 76océanie lawyers: 37, 76Pacific blue/Polynesian blue/virgin blue: 18, 19, 34, 36, 67, 71, 77Pacific forum line: 37, 77Pacific legal network: 4, 7, 10, 77Pacific Petroleum company: 24, 56Pacific Spices: 45Pacific islands trade & invest: 7, 8, 46, 81, 84Pactel: 18, 41, 42, 77PomSoX: 31, 45, 76r d tuna: 50reddy group: 55, 77rimbunan hijau group: 40, 48Sofrana: 37, 77Soltai: 50SPto: 8, 31, 32, 34, 78Swire Shipping: 37, 77ullrich aluminium: 19, 39, 77vatukoula gold mines: 44venui vanilla: 45viPa (vanuatu): 35, 71vodafone: 42warwick international hotels: 33, 34, 56, 69, 71, 77westpac: 5, 7, 8, 16, 28, 30, 42, 77Yazaki edS Samoa: 8, 46Xstrata: 43, 44, 62, 66, 77

Companies mentioned in this publication (advertisements in bold).

presented the region as a single market. Now, with the third edition (re-christened Business Advantage Pacific Islands), we have expanded that market to include also the islands of the US-affiliated Pacific—Guam, American Samoa and the Commonwealth of the Northern Marianas. We have also included for the first time the world’s youngest nation, East Timor (Timor-Leste), which sits strategically between Australia, Papua New Guinea and Indonesia. The Pacific is a region of enormous potential, possessing considerable natural advantages. In publishing this new edition, we hope we are contributing in a small way to the ongoing business conversation right across the region, and providing the islands of the Pacific with a shop window through which they can communicate their attractiveness to investors the world over.

Andrew Wilkins, PublisherBusiness Advantage International

the countries of the Pacific have a lot more in common that they do differences—a factor that can make it easier to attract investors to the region.

Business Advantage Pacific Islands is published by business advantage international Pty ltd, in association with Pacific islands trade & invest. it is also available online at www.businessadvantageinternational.com.

iSSn 1836-5663 (Print)/1836-5671 (online)

additional printed copies of this publication can be purchased for aud$33.00 (incl gSt and postage) from:

business advantage international Pty ltd level 27, rialto South tower, 525 collins St, melbourne, victoria 3000, australia tel +61 3 9935 2977 fax +61 3 9935 2750 email: [email protected] www.businessadvantageinternational.com

© copyright 2010 business advantage international Pty ltd

Project director: robert hamilton-jones ([email protected]) Publisher: andrew wilkins (aw@ businessadvantageinternational.com)

Editorial: Samantha magick, luke heine, andy Park, jo Shiells, jacqueline bennett, dev nadkarni, and roz edmond design: michael renga Front cover images: Png tourism Promotion authority, Samoa tourism authority, aerowatt, business advantage international

business advantage international would like to thank the following individuals for their invaluable assistance with this project: caleb jarvis, Patrick martin, chris brimble and robyn ekstrom of Pacific island trade & invest, julia tijaja, nigel hall of the european investment bank.

dIsCLaIMER business advantage Pacific islands is a general guide to some potential business opportunities in the South Pacific region and is not designed as a comprehensive survey. the opinions expressed herein are not necessarily those of the publisher and the publisher does not endorse any of the business or investment opportunities featured, nor does it accept any liability for any costs or losses related to dealings with entities mentioned in this publication. readers are strongly advised to pursue their own due diligence and consult with investment advisors before making any investment decisions.

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Westpac has the experience and local knowledge to offer banking solutions for business and personal customers right across the Pacific.

Since opening our first branch in the Pacific we have been more than just a bank, we’ve been part of the community – providing banking services and financial development to thousands of people.

We’re the Pacific since 1901.

We’re a bank you can bank on.

For more information visit a Westpac branch or westpac.com.au/pacificCook Islands +682 22014 Fiji +679 3300 666 Samoa +685 66100 Solomon Islands +677 21222 Tonga +676 23933 Vanuatu +678 22084 Papua New Guinea +675 3220 888Westpac Banking Corporation ABN 33 007 457 141. The liability of its members is limited. Westpac branch locations in Fiji, Vanuatu, Cook Islands and Solomon Islands. Westpac is represented in Papua New Guinea by Westpac Bank PNG Limited, Samoa by Westpac Bank Samoa Limited and in Tonga by Westpac Bank of Tonga. 191865 (05/10)

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Putting the Pacific on the mapthe islands of the Pacific, and east timor, have emerged from the global downturn in better shape than most, and with strong economic prospects across a range of sectors.

Geographic remoteness and a small population are undoubtedly the major reasons why the Pacific has not traditionally been seen as a major business destination. However, many companies across sectors as diverse as tourism, mining and petroleum, agribusiness, fisheries,

forestry, building and construction, transportation, logistics and communications are doing good business in the Pacific.

ThE PaCIFIC’s advaNTaGEThe reasons are many. Their pristine and picturesque environment has made the Pacific Islands the ultimate destination for tourists of all kinds. Their vast, unpolluted waters contain some of the world’s largest fish reserves and potentially cover significant mineral deposits. The region contains a disproportionate share of the world’s mineral wealth on land too. Its fertile soils, sustainable farming methods and warm climate make it a potential agricultural powerhouse, especially for organically certified produce. It is also a peaceful and largely stable region with low labour costs. Lastly, it is a developing market and, as such, has the potential to deliver a higher return on investment—although sometimes at a higher risk profile—than a first world economy.

ThE IMPaCT OF ThE GLOBaL dOWNTuRN‘While the region was sheltered from the global financial crisis—we didn’t have the levels of risk that the rest of the world had—we weren’t sheltered in any way from the downturn,’ notes Jane Kittel, General Manager—Pacific Banking for Westpac. This has meant a reduction in important remittances income for many Pacific territories, and a drop in tourist numbers, especially for those territories reliant on US and Japanese tourists. Some mining activity was temporarily suspended too, but improved commodity prices have meant activity in that sector has now resumed. Agribusiness and forestry activity was also been hit by similar price drops.

BIG TICKET ITEMsNotwithstanding the downturn, Pacific is hosting several projects of genuine international significance. The most prominent of these are the US$15 billion ExxonMobil-led PNG LNG (liquefied natural gas) project now under construction in Papua New Guinea (see page 16), the Goro Nickel and Koniambo nickel mines in New Caledonia (see pages 43–44), and the US$20 billion military build up in the US territory of Guam, occasioned by the planned relocation in 2014 of 8000 US Marines and their families from their current location in Okinawa, Japan. Adjacent to East Timor is the Greater Sunrise gas field, potentially over half the size of the PNG LNG gas reserves. These projects, with their strong demands for first-class infrastructure and services, are already stimulating economic activity and will have significant long-term impacts on their respective economies (some estimates suggest PNG’s GDP could double over the next 30 years thanks to LNG alone).

ThE PaCIFIC’s RELaTIONs TO ThE dEvELOPEd WORLdIn the western and southern Pacific, Australia and New Zealand are not only major aid donors but also major trading partners with and investors in the Pacific Islands. In the northern and eastern Pacific, the United States plays a similar role. All three countries have significant populations of Pacific islanders, many of whom send remittances back home (see page 24). France is a major aid donor to its Pacific territories (which are legally still part of France), providing an estimated 20% of New Caledonia’s GDP and 35% of French Polynesia’s. Both Australia and New Zealand now have schemes to bring Pacific workers into their countries for agricultural labouring and both are pushing for a new trading relationship with the Pacific through a new trading instrument, the Pacific Agreement on Closer Economic Relations (PACER) Plus. In their joint communiqué from the April 2010 Pacific Islands Forum Trade Ministers’ Meeting held in Pohnpei, Samoa’s Deputy Prime Minister Misa Telefoni Retzlaff, Australia’s then-Minister for Trade Simon Crean and Murray McCully, New Zealand Minister for Foreign Affairs, explained the motivation for PACER Plus: ‘We see building the capacity of Pacific nations as an essential element of PACER Plus—putting substance into the “Plus”. This is because trade liberalisation is not an end in itself. We also need to make sure that the economies of the Forum island countries are made stronger and more competitive.’ The United States Government has recently moved to make development of the US-affiliated Pacific a greater priority by strengthening its Interagency Group on Insular Areas, the organisation that provides policy direction for the development of the US Pacific. US Pacific territories are receiving millions of dollars in additional funding, much aimed at infrastructure development, under the 2009 American Recovery and Reinvestment Act—the Obama Government’s response to the global financial crisis.

IMPROvEd COMMuNICaTIONsOne of the key features of business life in the Pacific has been the undoubted improvement in communications of all kinds, both between the islands themselves and also between the region and the rest of the world. This has not only made it easier for current investors to

the Pacific ocean covers about 30% of the world’s surface—a massive 169.2 million square kilometres. Scattered across this massive expanse of water are almost 30,000 islands, only 2000 of which are inhabited.

these islands are grouped into three regions—micronesia (north of the equator), melanesia (south of the equator and in the western Pacific) and Polynesia (covering the central South Pacific). their combined population, plus east timor, is a little over 11 million people.

aBOuT ThE PaCIFIC REGION

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BusINEss uPdaTE

do business, but has also greatly improved the environment for new investment. While regular shipping services continue to facilitate regional trade, big gains have been made in an increasingly deregulated aviation sector. An increase in the number of airlines servicing the region has driven competition, lowering both the cost of travel and the frequency of air services. In communications technology, the advent of partial deregulation has seen the entrance of Irish mobile phone company Digicel in several markets, including Fiji, PNG and Samoa, with significant results. ‘The remote areas of the Pacific have bypassed the era of post offices, they have bypassed landlines, they have gone straight to the internet and the mobile device that gives them access to Google. It is a revolution that has happened in the Pacific, it has changed the way people are doing business and it has made an improvement to their lives,’ notes Digicel Pacific’s CEO, Vanessa Slowey.

Micronesiacommonwealth of the northern mariana islandsfederated States of micronesiaguamkiribatimarshall islandsnauruPalau

Melanesiafijinew caledoniaPapua new guineaSolomon islandsvanuatu

Polynesiaamerican Samoacook islandsfrench PolynesianiueSamoatokelautongatuvaluwallis & futuna

Timor seaeast timor (timor leste)

IsLaNds FEaTuREd IN ThIs PuBLICaTION

Inaugural summit on 12 and 13 august 2010 in sydney to bring capital and investment projects together.

for years, the Pacific has lacked an event that could bring the international investment community together with Pacific governments and businesses to discuss tangible investment projects face-to-face.

on 12 august 2010 that will change, with the opening of the inaugural Pacific islands investment Summit in Sydney.

the two-day event is the brainchild of business advantage international (publishers of this magazine) and Pacific islands trade & invest, the Pacific island forum’s trade and investment arm. it will cover not only

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business and investment opportunities in the 14 Pacific islands forum countries, but also those in the french Pacific, the united States-affiliated Pacific and timor leste (east timor). it will be run by informa, one of the world’s leading conference organisers.

attendees will receive briefings on the investment climate across the Pacific, as well as hear about investment projects across many sectors, including mining and resources, tourism, agribusiness, infrastructure, construction, forestry and fisheries.

Speakers so far confirmed include:

• togoila tulafono, governor, american Samoa

• misa telefoni, deputy Prime minister, Samoa

• joao mendes goncalves, minister for economic development, east timor (timor leste)

• Senior representatives from the asian development bank, european investment bank, international finance corporation, macquarie bank, anZ and westpac

• many successful private investors in the Pacific

For further information on the event, visit www.informa.com.au/pacific-investment or email [email protected].

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the Pacific islands has a strong presence at the massive 2010 world expo in the chinese city of Shanghai, taking place between may and october.

for five months, the Pacific pavilion in Zone b is hosting exhibitions by vanuatu, Papua new guinea, Palau, tonga, micronesia, Samoa, fiji, cook islands, kiribati, Solomon islands, tuvalu, marshall islands, nauru and niue, as well as the South Pacific tourism organisation (SPto) and the Pacific islands forum.

‘the establishment of a Pacific pavilion is very important,’ ilisoni vuidreketi, chief executive of the SPto told Business Advantage. ‘our presence in Shanghai will help long term plans for the region to attract visitors from emerging markets in asia, such as china, hong kong and india.’

PaCIFIC shOWs OFF aT WORLd ExPO

after a slow start, vuidreketi noted a gradual and accelerated number of visits to the pavilion, driven in part by local television and newspaper publicity. in the expo’s first two months alone, the Pacific Pavilion attracted over two million visitors.

the investment and trade promotion arm of the Pacific islands forum is now known as Pacific islands trade & invest (Piti), after a rebranding in early 2010.

the new identity is much more than a simple facelift and represents the organisation’s strengthening identity as the region’s premier export, tourism and investment facilitator.

‘our vision is one of greater international opportunities for businesses in Pacific island countries to build a better future through more sustainable communities and greater prosperity,’ said director for economic governance of the Pacific islands forum Secretariat dr chakriya

NEW BRaNdING FOR PaCIFIC’s TRadE aNd INvEsTMENT aRM

bowman. ‘through developing the export capacity and investment potential of Pacific island businesses we aim to improve the livelihood of the people who live here.’

formerly known as the Pacific islands trade and investment commission, the fiji-based organisation has offices in Sydney, auckland, beijing and tokyo.

Further information: www.pacifictradeinvest.com

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Increased competition has had a largely positive impact on incumbent telecommunications companies too, with PNG’s bemobile going through a partial privatisation and launching a new operation in the Solomon Islands. Great progress has also been achieved with internet connectivity, with undersea cables reducing the region’s reliance on costly satellite services and opening the opportunities for internet-enabled enterprises such as internet banking and call centres. (For more, see Dev Nadkarni’s article, ‘Connecting the Pacific,’ on page 18).

GROWING asIaN INvEsTMENTANZ is in the process of transforming itself into a super-regional bank across the Asia-Pacific and Rowland anticipates more Asian investment in the Pacific eventuating from this strategy. ‘We see the Pacific’s future linked to Asia. In PNG, for example, a lot of the infrastructure investment and suppliers are coming from Asia. We are seeing that across the region,’ ANZ’s CEO Pacific Michael Rowland tells Business Advantage. Certainly, the presence of Singaporean, Malaysian, Philippines, Korean, Japanese and Chinese investors in PNG—across sectors as diverse as retail, fisheries, mining and petroleum, hospitality, forestry, agribusiness and construction—bears evidence to a shift in the sources of capital flowing into the Pacific’s largest economy. PNG is not alone. In the North Pacific, Guam, the Northern Marianas and the Federated States of Micronesia have economic ties to Taiwan, Japan and the Philippines. China is currently a major investor in Tonga, Japan’s Yazaki EDS is Samoa’s largest employer, while Taiwan is a strong investor in territories such as the Solomon Islands (see page 14 for more on Chinese and Taiwanese investment in the Pacific). East

Timor, in spite of its recent history, continues to host investment from Indonesian companies. As Asian investors become more established in the Pacific, the likelihood of their investments spreading to other Pacific territories increases. For example, Kulim (Malaysia) Berhad’s PNG-based subsidiary New Britain Palm Oil Limited now has palm oil plantations in neighbouring Solomon Islands, while the February 2010 acquisition by Singapore’s Asia Pacific Breweries (APB) of Grande Brasserie de Nouvelle Caledonie SA is its second Pacific acquisition.

PaN-PaCIFIC BusINEssEsKulim and APB are not alone. Many companies are now becoming increasingly active across several Pacific jurisdictions, led by banks ANZ (12 territories), Westpac (7), Bank of South Pacific (4, including the recent acquisition of Fiji’s Colonial Bank) and the Bank of Hawaii (4). IT services company Daltron is another services business in multiple locations, as are engineers KramerAusenco and Fletcher Construction and food company Nestlé. (For a list of Pacific-wide businesses, see page 77.) The presence of a robust financial services network is in itself an incentive to explore business opportunities in the region. The regulatory framework to encourage such activity is also improving, with many countries revising or introducing more sympathetic investment laws. With its combination of world-class projects, under-serviced and under-developed markets, improving business conditions and a truly unique and unspoilt environment, it would appear to be an excellent time to explore doing business in the Pacific region. There can be few more pleasurable places to do business.

9www.daltron.com.pg

n PNG n FIJI n SOLOMON ISLANDS n VANUATU

Daltron stands apart from our competitors in terms of providing the complete IT solution for your business. As the leading ICT Service provider and with eight offices strategically located throughout the South Pacific, Daltron provides your business a reliable network built upon comprehensive regional market knowledge and expertise.

Backed by the largest IT support staff and field engineering service facilities in the South Pacific region, Daltron offers a wide range of support services, from business critical performance assessment to Internet and IT Management. Daltron provides a “one-stop-shop” for staging deployment and life cycle maintenance of customers ICT Solutions. Our service offering includes:

RETAIL SHOWROOM n Desktop computers and laptops n Education, Business & Gaming Software n Printers(Mono/Color/Multifunction) n Consumables(Paper, Toner, Ink Cartridges) n IT Accessories & Peripherals SERVER & STORAGE SOLUTIONS n Pre & Post Sales Support n Scalable solutions to grow with your business n Data Centre & Disaster Recovery Facilities n Server Builds INTERNET n Domain hosting n Webmail n Airspot n Wireless Broadband Internet

SOFTWARE DEVELOPMENT n Design & Development n SAGE ACCPAC Solutions

CONSULTING & TECHNICAL SERVICES n Deployment & Migration services n IT Audit and Strategy consulting n Break and fix services n Professional services n Project Management

NETWORKING n Cabling n Wireless LAN +WAN Networking n IT Security Solutions n PANGTEL registered cabling contractor

TRAINING n IT Specialist, Professional Development, Accounting & Microsoft Application Courses n Onsite or classroom based training options n Authorised Thomson Prometric Testing Centre FUJI XEROX/HP Copiers n Mono/Color/Multifunction n Fully certified technicians

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FEaTuRE INTERvIEW

Interview: John Ridgway, Pacific Legal Network

Business Advantage spoke with John ridgway, founder of the Pacific Legal Network (PLN), about the current state of business in the Pacific. the head office of PLN, Sydney-based PLN Lawyers, recently won an export award from the New South wales government in Australia and has representatives in every major Pacific territory through its network of independently owned and operated law firms. It also extends its reach into the uS and China via Dwt Pacific, its collaboration with international uS law firm Davis wright tremaine LLP.

What major legal developments have there been in the Pacific over the past couple of years? Has the investment climate improved or deteriorated from that perspective?

A number of Pacific jurisdictions are streamlining their foreign investment regimes, which will hopefully lead to strengthening of individual jurisdictions and the region as a whole. There has been significant advancement in commercial law reform in a number of jurisdictions, with changes to company and chattel security legislation. These types of changes certainly help to boost business and investor confidence. Fiji, for us, is still a work in progress at the moment. Australian and other companies have significant business investment in Fiji and from what we see, hear and feel, are very active in ensuring that those investments are secure.

Rapid progress in telecommunications and aviation services is improving the Pacific’s investment climate. What does the next phase in this development entail?

The next logical step in Pacific aviation is airline rationalisation and increased code share arrangements to enable more economic success for all airlines and to further enhance the already thriving tourism industry of the Pacific. In relation to telecommunications, the obvious next step is mobile phone banking, or ‘m-banking’. The Pacific has embraced mobile phone technology over the past several years and this has contributed to significant advancements in communications and ease of doing business. Reducing the need for travel in the islands and further

enabling the ease of doing business by performing financial transactions via mobile phones would only be a good thing. How is Asian investment reshaping the Pacific’s economy?

From merchandising, shipping, investment in the hospitality industry, via tourism, inter-government aid programs and through the fishing industry, Asian investment plays a significant role in both the Southern and Northern Pacific Island economies. For so long Asian investment in the Pacific or ‘cheque-book diplomacy’ as it is often referred to, has been viewed negatively and is well documented. As part of the Australian Government’s international diplomatic relations, Australia is already working on strengthening its relationship with Asia, and China specifically. The Australian Government should view Asian and specifically Chinese activity in the Pacific as an opportunity to work together in the Pacific and increase transparency within the region, rather than a threat.

Are there any other key trends you see emerging in the Pacific’s economy? What are the biggest risks to the region’s economic progress?

The key risk to development of the region remains the propensity for any one of more of the smaller Pacific states to take a ‘do it alone’ approach so that efforts to develop industries such as aviation and telecommunications on a regional basis are diminished. By working together, the states can further advance development and services in their own individual states while benefitting the region and the Pacific peoples as a whole.

Nitij Pal (PLN), Craig Miller (DWT Pacific), John Ridgway (PLN) and Anthony McFarlane (PLN).

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• Seekingfinanceforgrowthorexpansionstrategy?• Requirechangesandreviewofyourownershipandequitystructure?• Doyouwanttoownyourownbusiness?• Doyouwanttolistonanexchangeandmaximiseyourreturns?• Doyouhavesuccessionproblems?• DoprivatisationsofGovernmentbusinessesinterestyou?

INVESTMENT CAPITAL FOR THE PACIFIC ISLANDS

Various forms of investment capital can be provided for:

• DevelopmentCapital:fundingforanestablishedandgrowingbusinessforanexpansionand/oracquisitions.

• ManagementBuy-out:fundingthatenablesacurrentmanagementteamtobuythebusinesstheymanage.

• ManagementBuy-in:fundingtoenableanewmanagementteamtobuyintoabusiness.

• Pre-listingPrivatePlacement:fundingandstructuringthatcanimprovethemarket’sreceptionofafuturelisting.

Contact Andrew Crompton or Raman Anantharaman:

Tel:(61)733030894Fax:(61)733030895Email:[email protected]/[email protected]

www.kulafund2.com

KulaFundIILimitedcontributestothedevelopmentofPacificIslandsnationsbyprovidingriskcapitaltocompanieswhichhavestrongcommercialpotentialandwhichmeetinternationalsocialandenvironmentalstandards.

KulaFundIIhastheabilitytoinvestbetweenUS$100,000andUS$3,000,000ofequityand/orotherfacilitiesintoanyoneparticularproject.

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sPECIaL FEaTuRE: TRENds IN PaCIFIC INvEsTMENT & TRadE

‘What is most noticeable about the sources of investment in the Pacific is just how diverse they are.’

How seriously has investment in the Pacific been affected by the global financial crisis? what are new investors in the Pacific investing in and where are they coming from? Business Advantage asked the region’s national investment promotion agencies in order to find out.

Each of the 23 countries and territories covered in this publication, from East Timor to French Polynesia, from Guam to Tonga, has at least one agency with the official task of encouraging foreign investment. Some are stand-alone statutory bodies, such as Papua New Guinea’s

Investment Promotion Authority while others sit within a government department, such as Samoa’s Ministry of Commerce, Industry and Labour. In April 2010, Business Advantage asked all these organisations to respond to a short survey designed to give our readers an understanding of current investment trends across the Pacific. Our respondents came from across the region, from the Pacific Forum Countries, the French Pacific and also the US-affiliated Pacific. Their responses have been collated for this article. Our thanks go out to all those organisations that responded to the survey. We hope to run a similar survey in the next edition of Business Advantage Pacific Islands.

ThE EFFECT OF ThE GLOBaL FINaNCIaL CRIsIsOf the agencies that responded to the survey, all reported a negative impact on their economies from the global financial crisis, about 80% saying the crisis had affected their economies ‘significantly’, and the remainder saying its impact was ‘moderate.’ While the crisis appears to have affected business across the board in many territories, the sectors most commonly nominated as most affected by the downturn were tourism and mining. Another notable impact on Pacific economies was the high cost of oil-based fuel: ‘The rising cost of fuel has been the primary reason for signficant changes in our economy,’ noted the Guam Economic Development Authority, in a statement that characterised the position of many Pacific economies. ‘Guam, being a remote tropical island, imports almost all goods and commodities. The price of fuel ultimately affects the cost of living through freight, transportation costs and utilities.’

ThE ChaLLENGE OF aTTRaCTING INvEsTMENTEach economy has its own investment profile and particular strengths and weaknesses. One might therefore expect that each faces its own challenges in attracting foreign direct investment. While this is largely the case, there was one challenge that just about all the respondents to our survey shared in common: the relatively high costs of doing business in the Pacific (influenced in part by the region’s reliance on imports, the lack of scale in individual economies and the large distances between territories).

While several Pacific economies now have solid investment laws in place, the need for further investor-friendly legislation was identified by nearly two-thirds of respondents as a key agenda item. Interestingly, while a shortage of skilled workers is a major issue in economies with important mining industries, such as Papua New Guinea, Nauru and New Caledonia, this was less of an issue for other economies. Likewise, a lack of infrastructure was cited as a challenge by about 60% of respondents. A similar number spoke of the need to improve their profile among potential investors. The French territories of the Pacific face a barrier unique to them—that of the French language.

GROWING sECTORsIt would seem the Pacific is bouncing back from the global slowdown. In spite of the challenges of raising investment, repondents to the survey reported investment growth across several sectors, most notably the regional staple—tourism and hospitality. The response from Tonga’s National Economic Development Council was typical: ‘A significant number of projects implemented in Tonga come from tourism and it has the major contribution and impact on our GDP.’ Another sector nominated as experiencing investment growth is building and construction, while several respondents also reported increased investment in retail, agribusiness and fisheries. Papua New Guinea and New Caledonia both possess fast-growing mining sectors.

PRIORITY sECTORs FOR FuTuRE INvEsTMENTWe also asked the region’s investment promotion organisations to identify their priority sectors for future investment. Sectors nominated were:• Agribusiness• Fisheries• Healthandsafety• Informationandcommunicationstechnology• Mining• Renewableenergy• ResearchanddevelopmentonthecommercialisationofPacific

plants, fruits and marine resources• Tourism

Trends in Pacific investment and trade

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100616015PR Prospectus Magazine QP #1 Pacific.pdf 5 10-06-22 5:11 PM

WhO’s INvEsTING?The source of investment capital differs depending on several factors, including the economy’s geographical location within the Pacific, its historical cultural ties and recent diplomatic connections. Thus the two main French-speaking territories in the Pacific, New Caledonia and French Polynesia, may share a common cultural bond, yet receive investment from two different sources: New Caledonia’s largest source of investment is still France (and this in spite of its proximity to Australia), whereas French Polynesia—closer to Hawaii than Noumea—receives more investment from the United States. What is most noticeable about the sources of investment in the Pacific is just how diverse they are. Key investment source countries nominated in our survey included:• Australia• Brazil• Canada• China• Fiji• France• Japan• Korea• NewZealand• Philippines• Switzerland• UnitedStates

Japan, Korea and China were nominated as the fastest-growing sources of investment, a clear indication of the strengthening ties between the Pacific and neighbouring Asia.

The New Zealand Pacific Business Council’s Mike Flanagan considers the longstanding trading relationship between the Pacific Islands and the rest of the world.

trade with the Pacific islands may not be in the same multi-billion dollar league their trade with asia, europe and the

americas, but for australia and new Zealand it is probably the steadiest market since the financial downturn of September 2008—and the Pacific is a welcome traditional trading partner on their respective doorsteps.

however, two-way trade between the Pacific islands and australia and new Zealand has been anything but balanced in recent years. with the exception of major imports of petroleum, gas and minerals by australia from Papua new guinea, the remaining trade is severely slanted against the Pacific islands, with large trade deficits.

this was not the case prior to the 1960s, when sugar exports from fiji to the world were substantial, and copra, coir and tropical fruit (especially bananas) were major earners for many small islands such as tonga, Samoa and the cook islands, who enjoyed trade surpluses with the world.

however, with the growth of large multi-national trading companies like dole, that fresh fruit trade has virtually disappeared to locations such ecuador and the Philippines.

the important (essentially manual) sugar industry in fiji was largely displaced in the early 1970s by the large mechanised Queensland sugar cane farms. last year fiji’s total exports were over 16% lower, driven

significantly by a big fall in sugar exports to around just $80 million.

there is however good news on the horizon—in Papua new guinea and guam. Png is already on the path to a resources boom in natural gas and minerals mining, building on existing oil, gas, copper and gold mining, and forestry extraction. Palm oil has grown into a major agribusiness, with new on-shore fish processing plants, and a huge potential beyond coffee, for food products. Png is blessed with a large land mass, and a vast array of micro-climates, from temperate to tropical. it’s just a matter of training its large rural population and harnessing these natural resources.

guam could now be described as the ‘klondike of the Pacific’, as $20 billion is to be spent in guam and nearby islands by the uS military in the next few years. australian and new Zealand companies stand to share in this military expenditure—principally on infrastructure and housing construction. further large sums are spent each year on all four american micronesian islands via uS aid packages to these countries.

while the immediate potential in the Pacific islands lies in these two locations, business is particularly strong in the five melanesian countries, because of their natural land-based resources, and larger populations.

we must not overlook too the fact that all Pacific island nations are rich in resources—for fish and undersea minerals—from their huge 30 million sq km excusive economic zone. but they must band together if they wish to negotiate good outcomes from a position of combined strength.

Mike Flanagan is a Business Analyst on Pacific economies. He is a representative for the New Zealand Pacific Business Council.

TRadING OCEaNIa

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Fergus hanson of asia-Pacific think-tank the Lowy Institute provides an insight into China’s growing relations with Pacific countries.

china has longstanding ties to the Pacific, but has only recently ramped up its engagement. Quiet island capitals are littered with the fruits of its efforts, with grand looking, chinese-built edifices sprinkled across the region. over the last few years, the lowy institute has been measuring chinese aid pledges, finding that they have jumped from an estimated uS$33 million in 2005 to uS$206 million in 2008. in addition to its aid largesse are large chinese investments like the ramu nickel-cobalt mine in Papua new guinea (Png).

the Pacific has long been ignored by all but a handful of countries and businesses so, not surprisingly, china’s sudden interest in the region has raised eyebrows.

most of china’s aid is made up of concessional loans, not grants. that explains the large headline figures. these are used to fund much-needed infrastructure projects. but the bounty comes with some snags: the conditions attached to the loans generally require use of chinese contractors, materials and even labourers. this minimises the flow-on benefits to locals, and the quality of the finished products has caused occasional concern. china’s mineral investments in Png have also raised local protests about working conditions and environmental safeguards.

as to its motivation, the Pacific is still peripheral for china, despite the hype. Png is the only country with any sizeable natural resources.

ChINa IN ThE PaCIFIC: WhaT’s REaLLY GOING ON?

The rebuilding of Tonga’s capital Nuku’alofa has been greatly assisted by soft loans from the People’s Republic of China.

‘The real driver of China’s aid and engagement has been the diplomatic stoush with Taiwan.’

Solomon islands and fiji offer some, but beyond that the pickings are slim.

the real driver of china’s aid and engagement has been the diplomatic stoush with taiwan (the Pacific holds six of the remaining 23 countries that still recognise taiwan). with the 2008 election of a friendlier president in taiwan, both sides informally agreed to freeze their diplomatic rivalry. but the risk the truce might unravel has seen china maintain its engagement.

with the diplomatic battle as the central organising principle of its engagement in the region, shortcomings with china’s aid are not surprising. however, if the truce holds improvements will no doubt be made, and china’s interest is a positive development.

for a region that is mostly off the radar, it’s good to have a new major donor in town and, more importantly, one that is driving increased trade.

Fergus Hanson is a Research Fellow at the Lowy Institute and authors an annual Lowy Institute report on China’s aid program in the Pacific.

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Zoe Lyon of the australian Trade Commission—austrade—examines opportunities to supply goods and services to the Pacific.

they’re infinitely diverse in terms of their size, geography, history and culture, but there’s one thing the Pacific islands have in common—they present a wealth of opportunity for australian businesses.

last year, australian exports to the Pacific islands totalled around $12 billion—approximately equal to the value of those to the uS. in terms of exporter numbers, the region is home to four of australia’s top 20 export destinations: new Zealand (number 1), Papua new guinea (7), fiji (10) and new caledonia (20). last year, the Pacific islands was a destination of choice for approximately half of australia’s total 45,000 exporters. australia is also the largest investor in the Pacific.

austrade’s trade commissioner for fiji, dan williams, explains that an attraction of the Pacific islands for australian businesses is that they present export opportunities in a very broad range of product categories.

‘these are island nations, so they don’t tend to have the domestic manufacturing base that other export markets have, so it means that first and foremost they will turn to australia and new Zealand for

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a very broad array of goods and services,’ he says. in addition, the relatively small size of supply contracts coming out of Pacific island countries matches the supply capabilities of many australian companies. this makes the Pacific islands an ideal launching pad for their export endeavours.

williams added that another big advantage is the strong cultural and historical ties which exist between australia and Pacific island counties, which greatly increase the ease of doing business.

‘often the legal systems have similar origins, and the products and services standards are very familiar to australians because they’re based on australian or new Zealand standards,’ williams explained.

currently, key opportunities in the region include work emanating from exxonmobil’s uS$15 billion lng project in Papua new guinea, which is expected to be followed up with further large resources projects.

‘we’re hearing reports of companies effectively having to double their size of operations over the next couple of years in Png,’ williams says. ‘to give you an idea of the kind of infrastructure spend going on: Png has around 1200 registered engineers, but they’re going to need an additional 2000 in the next two years to meet the demand.’

with a quarter of the world’s nickel reserves and a number of large scale resources projects in the pipeline, new caledonia also presents some valuable opportunities. the global resurgence in resources prices, combined with high levels of disposal income, is resulting in strong demand for australian mining and services capability.

while opportunities are abundant, williams advises that companies looking to do business in the Pacific islands should take the time to ‘do their homework’ particularly with countries such as fiji experiencing some home-grown issues.

‘like anywhere, it takes time—you need to make an effort to develop relationships and do your homework. in particular you need to be culturally sensitive while ensuring you are dealing with a customer who has both the willingness and ability to pay you,’ he says. ‘for example, the legal system in fiji is currently in a state of change. if issues can’t be resolved amicably then pursuing a legal course of action could have some significant challenges for australian companies at the moment.’

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Gas ignites Papua New Guinea

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‘The project is already stimulating demand for goods, services, buildings and qualified personnel.’

LIquId NIuGINI GasWhile PNG LNG is now underway, InterOil Corporations’ Liquid Niugini Gas project could well be a second major LNG Project. The PNG Government announced its approval of the project agreement for the building of an US$5 billion LNG gas plant near Port Moresby in December 2009. The existence of InterOil’s infrastructure, alongside ExxonMobil’s facilities and the planned petroleum park at Konebada (see pages 43 to 44), make the future look promising for others looking to participate in PNG’s LNG boom. ‘The infrastructure envisioned to complete the LNG project firmly establishes incentive for further exploration in the country,’ InterOil’s Chief Executive Officer Phil Mulacek has said in a statement.

TaLIsMaN ENERGYAnd there’s more. In August 2009, TSX-listed Talisman Energy bought exploration company Rift Oil, and also took a 50% interest in petroleum exploration licenses operated by Horizon Oil in PNG’s Western Province, thereby extending its PNG assets significantly. Rift Oil had drilling operations in the Foreland basin of PNG’s Western Province. Concurrently, Talisman had identified significant gas reserves in the Gulf of Papua. Now the two liquefied natural gas projects will fall under the same umbrella.

PuTTING PNG aNd ThE PaCIFIC ON ThE MaPAs the largest LNG project currently on ExxonMobil’s books, the PNG LNG Project has been reported in business media across the globe, putting PNG firmly on the map as the latest member of the exclusive club of LNG-producing nations. As PNG’s economy grows (some estimates suggest the project could double the country’s GDP over its 30-year life), there will undoubtedly be flow-on effects in the PNG economy and beyond. The project is already stimulating demand for goods, services, buildings and qualified personnel within PNG, while the PNG Investment Promotion Authority is reporting record numbers of new foreign businesses arriving in the country, some new to the region. Once located in PNG, could some follow the lead of such PNG-based companies as Bank South Pacific, Credit Corporation and New Britain Palm Oil Limited and establish a presence in other Pacific economies? The notion is very appealing.

the uS$15 billion exxonmobil-led PNg LNg gas project is arguably the largest business investment ever made in the Pacific. Business Advantage investigates the potential of liquefied natural gas.

The final investment decision has been made, project finance secured and sales agreements finalised with customers in China, Taiwan and Japan. The long-awaited PNG LNG Project in Papua New Guinea (PNG) is a reality.

The project represents the single largest investment ever made in PNG—estimated at US$15 billion. Over a 30-year period, the ExxonMobil-led project is expected to export nine trillion cubic feet of liquefied natural gas (LNG).

LONG CONsTRuCTION PhasEDuring the construction phase of the project, estimated to take about three years, the project will involve a level of economic activity unparalleled in the Pacific region. The project is of military proportions. With limited road access to the gas field, a new airstrip capable of handling the world’s largest transport planes must be constructed in PNG’s Highlands so that the heavy components of the gas conditioning equipment can be flown in. A liquefaction and storage facility will be built near the capital Port Moresby, while a new workers’ village is also under construction. The gas itself will be treated at a gas conditioning plant in the Highlands before being transported via pipeline to the liquefaction facility. From there, it will be shipped to customers in Asia.

sERvICE aNd EMPLOYMENT OPPORTuNITIEsThe project will offer business opportunities, both directly and indirectly, to hundreds of businesses, many of which will be owned by local landowners, and create employment for thousands. ‘The project encourages the participation of PNG’s business community, both independent and landowner companies,’ says ExxonMobil’s Venture Manager, Peter Graham. ExxonMobil will invest 150 million kina (US$60 million) in new training facilities. Once the project’s engineering, procurement and construction phase is complete, they will be turned over to PNG educational institutions.

FEaTuRE

The PNG LNG Project will create between 12,000 and 15,000 full time positions. Of these, 30% will be filled by Papua New Guineans.

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FEaTuRE: CONNECTING ThE PaCIFIC

Connecting the Pacifictwo major advances—in telecommunication and aviation—are paving the way for new technology, cost-savings and efficiency, promoting business and economic progress across the Pacific region, writes Dev Nadkarni.

Isolation and the tyranny of distance have long been blamed for the slow pace of business growth and economic development in the Pacific islands region. Historically, sparse populations spread across wide swathes of ocean have made economies of scale hard to achieve and the

Pacific an expensive region to do business with because of the high costs of travel, communication and logistics. But the past few years have seen discernible changes in the business and economic environments of almost all the island nations. The two most visible advancements have been in telecommunication and aviation—with both sectors seeing more players join the fray, plummeting costs and steadily increasing volumes.

COMPETITION dELIvERs REsuLTs IN ICT: ThE dIGICEL EFFECT‘There has been considerable growth in ICT (information and communication technologies) infrastructure in the islands,’ says Franck Martin, founding director of Fiji-based IT firm Avonsys, which provides monitoring, system administration, quality assurance and software development for customers in the US. ‘Bandwidth and mobile call costs have dropped dramatically in Fiji as they have wherever some form of competition was introduced,’ says Martin, a French national who has lived in Fiji and the Pacific islands for several years. ‘The markets that saw most growth are the ones where Digicel competed against the local established provider, which forced the local incumbent to become more innovative. It also created a price battle to the bottom.’ In the Pacific, Digicel entered the Samoa, Fiji, Tonga, Vanuatu, Papua New Guinea and Nauru markets as it rolled out its plans to establish a pan-Pacific mobile service, competing head-on with long-established local players, lowering costs and introducing new and improved services, such as roaming between the islands. ‘We encourage governments to stop their monopolies and to open up and deregulate. It improves the lives of people in those countries,’ says Vanessa Slowey, Digicel Pacific’s Chief Executive Officer. ‘We haven’t seen any [incumbent] company going into financial crisis after Digicel launched. If anything, they have thrived. It has forced them to become more efficient and customer-centred. We are pro-competition—it causes prices to drop.’ In Port Vila, Vanuatu’s hotel industry association officials told Business Advantage that their members’ communications costs were now up to one-third lower than previously and that they now connect more frequently with their supply chains and employees, greatly improving efficiency.

sPEEdING aLONG ThE dIGITaL hIGhWaYBetter and cheaper bandwidth availability as well as a choice of internet gateways is spurring growth in ICT-based enterprises in countries like Fiji. Already, there are call centre projects, in collaboration with Indian business process outsourcing (BPO) outfits, close to commencing in Suva. ‘The bandwidth situation is far better now than it was a few years ago,’ says Sin Joan Yee, Librarian at the Fiji-based University of the South Pacific, which serves the entire region with satellite-based instructional services that are increasingly using internet protocol (IP) technologies. In 2007, Fiji’s main internet gateway provider Fintel permitted the University to tap into AARNET, the high bandwidth network that connects Australian universities, boosting connectivity from a mere 5Mbps to 122Mbps almost overnight. Similarly, French Polynesia, Federated States of Micronesia and Marshall Islands have joined the high-speed digital highway by landing submarine optic fibre cables to their main centres. The Honotua cable, which connects Tahiti and neighbouring French Polynesia, will help grow tourism and business in these internationally popular holiday destinations. Boosting bandwidth, driving costs down and ensuring reliable connectivity by providing back-up systems in more remote markets are companies like Sydney-based Pactel, which is passionate about the long-term opportunities in the Pacific, despite the challenges. Partnering with regional organisations such as the South Pacific Commission, Pactel has developed programs like the Rural Internet Connectivity System (RICS) platform. ‘It makes internet connectivity possible anywhere in the Pacific islands with the help of a 1.5 metre satellite dish,’ says Pactel’s chief executive officer Andrew Taylor. The company has also developed a satellite mobile platform for Tuvalu, which lost its own network after a cyclone and had no resources to replace it.

BudGET BOOM IN ThE TRavEL sECTORJust as Samoa revolutionised the region’s mobile telephony with Digicel, it also kick-started the revolution in Pacific aviation by partnering with Pacific Blue. The Samoan Government was quick to fly its loss-making flag carrier Polynesian Airlines out of the red and into profitability following its joint venture with the Australian subsidiary of Virgin Airlines to form Polynesian Blue. Budget airlines then entered the region and a whole new class of traveller—the backpacker. Backpacker tourism spurred the building of a range of accommodation directed at budget travellers, particularly in island

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destinations where budget airlines began flying. ‘Budget airlines have sent visitor numbers soaring—and that has helped the region’s economy greatly because it is primarily tourism-driven in many countries,’ says Misa Telefoni Retzlaff, Samoa’s Deputy Prime Minister and Minister of Tourism. ‘Air transport connectivity has increased with many new city-pairs either becoming competitive for the first time or opening new routes. Examples include the Fiji and Vanuatu markets and new routes like Brisbane to Samoa and Melbourne to Port Vila,’ says Our Airline chief executive Karam Chand, who helped set up Polynesian Blue in his previous assignment. Greater cooperation between private operators and code sharing has brought better connectivity and frequency. ‘Our Airline and its partner Air Kiribati provides the competitive tension on two key markets of Brisbane to Honiara and Nadi to Tarawa [Kiribati]—and much-needed price competition,’ Chand says.

FuTuRE PROMIsING BuT MORE ChaNGE NEEdEdRam Bajekal, Group Chief Executive of FMF (Flour Mills of Fiji), one of Fiji’s largest manufacturing companies, which makes baking and other food products for export throughout the Pacific, including Australia and New Zealand, believes both telecommunication and air travel have changed for the better in recent years. He finds the scenario encouraging for future business expansion for the FMF Group in the region. ‘We would certainly base our growth strategies on exports, which would rely on improved connectivity between the islands and Australia and New Zealand. In fact, our exports to these two markets will grow by about 30% this year,’ he says.But there is still a long way to go in building on these developments, according to Bajekal. For one, interconnectivity charges between providers and data roaming charges are too high to be viable. Franck Martin concurs: ‘Data roaming costs are prohibitive.’ Bajekal also says freight logistics in the region need to improve. ‘Shipping freight costs have marginally reduced but haven’t yet reached levels that can be accepted as “proportionate” to the distance involved.

We could provide a lot better service to our customers in the islands, Australia and New Zealand if only shipping services were more frequent and more reliable and punctual,’ he says.

BIG-sCaLE INvEsTMENTs uNdERWaYImprovements in telecommunications, aviation and logistics as well as the impressive growth of the minerals sector, particularly in Papua New Guinea, are already beginning to attract serious investors in the region. A European Union-funded study of the tourism sector in the Pacific islands earlier this year mooted a US$50 million investment vehicle to boost tourism in the region. The project, headed by an Australian fund manager with experience in financing major tourism projects, is beginning to gain traction. Another major infrastructure project, the US$20 billion building of the US military base in Guam—the biggest ever in the Pacific—is turning out to be a big opportunity for the islands as well as Australia and New Zealand. ‘It certainly offers big-money business opportunities, and even as sub-contractors, there is a big chunk of construction and infrastructure business,’ says Gilbert Ullrich, Chairman of the New Zealand Pacific Business Council, who led June 2010 delegation of New Zealand business people to Guam.

Dev Nadkarni is an Auckland-based Pacific current affairs and business commentator with a long history of reporting on the region’s telecommunications and aviation sectors.

‘We encourage governments to stop their monopolies and to open up and deregulate. It improves the lives of people in those countries.’

The advent of competition in the mobile phone sector of several Pacific territories has expanded coverage and improved service.

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Renewable energy moves forward

International funding and natural resources are helping to bolster exciting new advances—small and large—towards a more sustainable energy industry for the Pacific Islands, writes the european Investment Bank’s Nigel Hall.

While energy and oil prices have stabilised following the global financial crisis, fuel imports remain a heavy burden on the energy-intensive communities of the Pacific Islands. With a helping hand from aid agencies and international financial

institutions, the region is actively seeking to reduce this millstone by promoting the efficient use of energy and the exploitation of local renewable energy resources.

NORTh REPThe governments of the Federated States of Micronesia (FSM), Palau and the Republic of the Marshall Islands (RMI) have targeted the energy sector—especially new and renewable sources of energy—as the area of concentration for the 10th European Development Fund funding. These three countries have combined their allocations into a multi-country program—the North Pacific ACP Renewable Energy and Energy Efficiency Project (North REP)—which has a total budget allocation of 14.44 million euros (approximately US$19.44 million). The project will be staffed by a core of four technical experts, two based in Pohnpei and one each in Palau and the RMI. All three countries have distinct development challenges given their very small populations, their isolation in the Pacific Ocean, their varying GDP per capita (from US$3130 in RMI to€US$8268 in Palau) and their fragile environment. This scheme follows on from the successful REP-5 program (Renewable Energy Program—Support to the Energy Sector in Five ACP Pacific Islands—FSM, Nauru, Niue, Palau and RMI), which was implemented by the Pacific Island Forum Secretariat with 12.38 million euros in funding from the 9th EDF. Individual projects funded under REP-5 included outer island and grid-connected solar photovoltaic installations, as well as energy-efficiency measures.

TINa RIvER hYdROPOWER dEvELOPMENT PROjECTOn the island of Guadalcanal in the Solomon Islands, the cost of energy is high and nearly all electricity is generated by relatively old and inefficient diesel generators fired on expensive imported oil. In a country where the annual rainfall is high and the terrain is steep, the potential for hydro-electric power generation to alleviate dependence on high and volatile petroleum prices is striking, although this abundant and sustainable resource remains largely untapped. Obstacles to realising hydro potential in the country are substantial and include a lack of experience and know-how in the government and the power utility, an absence of reliable long-term hydrographic data, difficult access to possible project sites in the steep and jungle-clad terrain and the challenge of negotiating with disparate and loosely defined local landowner groups to secure rights for use of the land. In order to meet this challenge, the Solomon Islands Government has established a taskforce to manage implementation of a hydro-electric scheme on the Tina River, some 20km southeast of the capital. The Government commissioned a full technical-economic feasibility study at the end of 2009, funded by the European Investment Bank (EIB), to review the different options for generating power on the Tina River. It will then develop an optimal scheme that will be put out to tender for implementation by the private sector. The size of the hydropower station has yet to be finalised, however, it is planned to provide a large proportion of the energy currently generated by the Solomon Islands Electricity Authority (SIEA) from fossil fuels and may also provide electricity to the nearby Gold Ridge mine. The World Bank is supporting the SIEA by providing professional staff and training to improve financial and operational management,

FEaTuRE: RENEWaBLE ENERGY

The European Union’s REP-5 photovoltaic project covers five Pacific territories.Cr

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reduce technical and commercial losses, and improve reliability of the generation, transmission and distribution system. Funds have also been allocated through the Pacific Regional Infrastructure Facility (PRIF) to support the project office; and the International Finance Corporation is helping the Government establish the legislative procedures and agreements required for the project to go ahead.

PROvIdING FuNds FOR sMaLL-sCaLE ENvIRONMENTaL PROjECTsThe size of individual renewable energy projects and energy-efficiency schemes in the Pacific is often too small to make it feasible to provide direct financing from large international financing institutions. Help to the many small and medium-sized enterprises active in the environmental sector can be provided, however, by channelling funds through local financial intermediaries that have well-established relationships with the local business community and employ staff on the ground who are able to select, appraise and monitor smaller-scale projects. Over the past two years, the EIB has provided dedicated environmental credit lines to local banks in both French Polynesia and New Caledonia, which have been on-lent to businesses to finance a wide range of projects with significant environmental benefits, including small-scale wind farms, solar photovoltaic installations, solar hot water systems, biotechnology units and metal recycling facilities. In New Caledonia, the generation of electricity relies predominantly (more than 80%) on fossil fuels, however, coastal sites such as Helios Bay, some 40km from the capital Nouméa, enjoy a high level of solar irradiation (over 1900 h/year, equivalent to an average of 5.2 kWh/m2/day) and low rainfall, making solar power an attractive alternative. The grid-connected solar photovoltaic power plant, which was completed


us commitment drives local industry growth and opens opportunities for private-public partnership.

generally speaking, renewable energy sources are especially useful for smaller scale energy consumption. as such, islands are probably the most ideal platform for renewable energy development.

the islands of the uS Pacific, namely guam, american Samoa and the commonwealth of the northern mariana islands (cnmi), which are characterised by small populations dispersed over thousands of kilometres, have a practical need for renewable energy. resources in the region are abundant— with sun, wind, wave and even geothermal potential—but until recently have been under-utilised. fortunately, this is now starting to change.

as part of the insular areas of the united States of america (uSa), these territories’ energy plans are inextricably linked to the national objectives of the obama administration. one of the President’s specific goals in implementing the american recovery and reinvestment act of 2009 (arra) was supporting the renewable energy industry and providing capital over the next three years to eventually double domestic renewable energy capacity. in 2010 this equated to uS$475 million for the development of a variety of renewable sources of electrical generation such as solar, wind, and geothermal.

key programs within the arra, such as the State energy Program (SeP), have driven renewable energy development in the uS Pacific. in the 2009/10 fiscal year the SeP was appropriated uS$3.1 billion to help promote energy efficiency and clean energy deployment. of this, between uS$18 and uS$19 million of grants were awarded to each of the three island territories for the development of public and private

RENEWaBLE ENERGY IN ThE us PaCIFIC

projects. funding has been targeted at smart grid development and energy transmission through other agencies, in addition to tax credits to encourage renewable energy development.

home to an expanding uS military base, guam has used its SeP funds to promote energy efficiency and renewable energy through retrofits, strong policy leadership, and public education efforts. in public buildings across guam, the territory’s energy office is conducting energy audits and has put in place cost-effective energy-efficient retrofits. at the same time, the guam Power authority is seeking to acquire renewable energy resources with the goal to have at least 5% of electricity sales coming from renewable energy by 2015.

in american Samoa, the local government-owned power provider has developed a new metering policy to proliferate the use of renewable energy. the american Samoa Power authority’s (aSPa) interconnection and net energy metering Policy states that those who wish to install a renewable generating facility—solar or wind—which is 30 kilowatts or smaller and intended to offset all or a portion of their power needs, are able to ‘net meter’ with aSPa using a credit/debit system of billing.

in the cnmi, renewable energy development continues to focus primarily on geothermal potential, with the island being unique among the uS Pacific territories for its significant geothermal resources. opportunities continue to exist for private/public partnership in this area.

the uS commitment to renewable energy in the american Pacific has translated into political and practical action at the regional and local levels.

at the end of 2009, comprises 10,500 solar panels, each with a capacity of 200 Wp. Annual production from the plant is estimated to be 2800 MWh, sufficient to supply the needs of around 1000 households. The Touongo wind farm, located on the southern extremity of the island of Grande Terre in New Caledonia, comprises 18 demountable wind turbines, each with a capacity of 275 kW. The wind turbines can be lowered to the ground and secured to avoid damage in the event of a cyclone. The project was completed at the end of 2008 and is estimated to be able to generate up to 9400 MWh of electricity per year.

Nigel Hall is technical adviser at the European Investment Bank’s Sydney office.

Touongo wind farm in New Caledonia.

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Contact PO Box 5053, Boroko, NCD 111, Papua New GuineaPh: +675 308 4444/ 321 7311Fax: +675 320 2237/ 321 2819Email: [email protected]: www.ipa.gov.pg

Your one-stop business information centre

Papua New Guinea: Your Investment Destination

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FEaTuRE: REMITTaNCEs

Remittances: a major contributor to the Pacific economy

migrating overseas to find employment is a common practice among Pacific islanders, and a fair portion of their overseas earnings finds its way back home in the form of remittances.

There is no doubt that worker remittances—expat Pacific islanders sending money home—make a vital contribution to Pacific economies. The largest recipients of remittances are Fiji, Samoa, Tonga and Papua New Guinea. Relative to economy size, Tonga is the second

largest recipient of remittance flows in the world (Lesotho is first) and Samoa is the fourth. Pacific islanders tend to migrate for work due to limited employment prospects in their own small economies. The need to send remittances swiftly and safely has led to the proliferation in the Pacific of international money transfer agencies run by companies such as MoneyGram and Western Union. According to International Monetary Fund data cited in the ANZ Pacific Quarterly (April 2007), remittances to the Pacific grew from US$89 million in 1997 to US$425 million in 2005. One reason for the rise in remittance flows over that period was the strong economic performance of host countries such as Australia, New Zealand and the United States, where most islander expat workers are domiciled.

dOWNTuRN dROPOFFUnsurprisingly, remittances tailed off sharply during the global downturn, but according to data published in ANZ’s Pacific Quarterly in late 2009, they had stabilised throughout the region and in several countries were starting to increase again.

FLOW-ON BENEFITsAside from allowing residents to raise their standard of living (gaining greater access to consumer goods or health and education services), remittances increase the rate of capital accumulation in an economy and thereby boost its potential for growth. In Samoa, for example, a significant amount of capital is being invested into local real estate due to remittances. Remittances also provide an important cushion of foreign exchange; in Pacific economies, imports are almost equivalent to consumption and, without remittances, imports would have to diminish sharply in order to balance the trade account. Evidence also suggests that remittances have helped central banks in the Pacific to maintain relatively strong exchange rates.

‘Aside from allowing residents to raise their standard of living … remittances increase the rate of capital accumulation in an economy and thereby boost its potential for growth.’

Money transfer agencies proliferate across the Pacific. In the future, remittances may be enabled through the Pacific’s improving mobile phone network.

a dOuBLE-EdGEd sWORd?On the other hand, remittance-based currency inflows can distort an economy and its potential for growth. Remittances reduce the incentive to invest and raise employment levels in the home country, which can lead to a vicious cycle of dependency on overseas migrant workers. As a 2005 Asian Development Bank report into remittances in the Pacific observed, ‘maintaining remittance flows at high levels … requires a steady flow of new migrants.’ Furthermore, fewer remittances might encourage state authorities to enhance the competitiveness of their economies in order to support the balance of payments position.

Tahiti-based Pacific Petroleum Company (PPC) has made two recent moves that greatly expand its Pacific footprint.

in may 2010, it officially took over the operations of british Petroleum South west Pacific (bP). the move followed PPc’s 2006 acquisition of Shell oil’s downstream sales and marketing operations in new caledonia, vanuatu and french Polynesia.

the acquisition secures the future of bP’s Pacific operations, which employ about 200 staff across fiji, american Samoa, tonga, vanuatu, tuvalu and the cook islands. the business will be re-branded Pacific energy South west Pacific under the new ownership. the new company

PaCIFIC PETROLEuM TaKEs OvER BP aNd shELL assETs IN ThE PaCIFIC

will be managed from fiji by roko nabalarua, a former ceo of the fiji electricity authority.

in a second acquisition in june 2010, PPc subsidiary Pacific islands energy acquired a 51% stake in Shell oil’s last remaining asset in Papua new guinea, its refuelling depot at jacksons international airport. the new venture, to be called Pacific energy aviation (Png) ltd, has been set up by PPc in partnership with minority shareholder naS aviation ltd, a consortium of former Shell executives backed by Png superannuation company naSfund.

Pacific Petroleum company is owned by a consortium of french Pacific investors led by tahitian millionaire albert moux.

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Pacific IslandsInvestment Summit

The Inaugural

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Pacific Island Countries (PICs) have been engaging in trade and economic partnership negotiations in the past year with varying outcomes. The comprehensive Pacific–European Union Economic Partnership Agreement (EPA) is still under negotiation,

albeit slowly. The next meeting of the officials of the two regions is scheduled for September 2010. Elsewhere, regionalism thrives. Seven PICs are now trading under the Pacific Island Country Trade Agreements (PICTA) and negotiations on trade in services are underway. The Melanesian Spearhead Group (MSG) Secretariat was established in Vanuatu in 2008 and aims to facilitate the implementation of the Revised MSG Trade Agreement. Negotiations between the Pacific Islands and Australia and New Zealand under PACER Plus were launched in March 2010 (see box); and the Recognised Seasonal Employer (RSE) Scheme in New Zealand has been highly successful for participating PICs.

PICs & ThE EuROPEaN uNION (Eu)Fiji–EU Economic Partnership Agreement (EPA)http://trade.ec.europa.eu/doclib/docs/2010/january/tradoc_145671.pdf

Papua New Guinea–EU Economic Partnership Agreement (EPA)http://trade.ec.europa.eu/doclib/docs/2010/january/tradoc_145672.pdf

Everything But Arms (EBA) for least developed PICs i.e. Vanuatu, Solomon Islands, Samoa, Kiribati and Tuvaluhttp://ec.europa.eu/trade/wider-agenda/development/generalised-system-of-preferences

Generalised System of Preference (GSP) for other PICsStatus: operational

Since 2008, a range of trading regimes has replaced the Cotonou Agreement to govern Pacific–EU trade. After negotiations for a region-wide EPA failed, PNG and Fiji signed separate EPAs with the EU in 2009. These bilateral EPAs provide free market access for PNG and Fiji exports to the EU with transitional arrangements for sugar and rice, and simplified Rules of Origin for processed fish. In return, PNG opens 86% of its market to the EU. Fiji will eventually open 87% of its market over 15 years. PICs which did not sign an EPA are exporting to the EU under the Generalised System of Preferences (GSP). The six least developed PICs trade under the Everything But Arms (EBA) agreement. Other developing PICs revert back to the standard GSP, a unilateral preferential market access into the EU. The EU accepts the standard United Nations Conference on Trade and Development GSP Form A as a valid certificate of origin. The forms are available from PICs’ trade authorities. A sample is downloadable from www.unctad.org/sections/gsp/docs/gsp_form_a_en.pdf

FEaTuRE: TRadE TREaTIEs

Trade and Economic Cooperation Agreements in the Pacific Islands

Julia tijaja provides an update on current trade agreements affecting the Pacific Islands.

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PICs PLus ausTRaLIa & NEW ZEaLaNdMembers: Forum Island Countries (FICs)—PNG, Fiji Islands, Solomon Islands, Vanuatu (these ‘big four’ form the Melanesian Spearhead Group), Cook Islands, Samoa, Tonga, Nauru, Niue, Republic of Marshall Islands, Federated States of Micronesia, Kiribati, Palau and Tuvalu—Australia and New Zealand, unless otherwise stated.

The South Pacific Agreement on Trade and Economic Cooperation (SPARTECA)Status: operationalwww.worldtradelaw.net/fta/agreements/spartecafta.pdfSPARTECA provides duty-free market access for FICs’ exports into Australia and New Zealand. Its stringent Rules of Origin (RoO) has mitigated against FICs’ export development. RoO has been identified as a key area in PACER Plus negotiations.

The Pacific Agreement on Closer Economic Relations (PACER)Status: operationalwww.forumsec.org PACER entered into force in 2002 and provides a framework for gradual regional trade and economic integration. Its main component is the Regional Trade Facilitation Programme, which encourages cooperation in customs, quarantine, standards and conformance. PACER contains a provision that obliges members to commence trade negotiation by 2011, or earlier should the FICs begin formal negotiation with another developed country. This negotiation will come under PACER Plus (see box) and once realised will replace SPARTECA.

Recognised Seasonal Employer (RSE)Members: New Zealand and presently six FICs: Kiribati, Samoa, Solomon Islands, Tonga, Tuvalu, and VanuatuStatus: operationalwww.dol.govt.nz/initiatives/strategy/rse/index.asp The RSE Scheme was introduced in New Zealand to address labour shortages in the horticulture and viticulture industries. The RSE enables temporary engagement of overseas workers in planting, maintaining, harvesting and packing of crops. Presently six FICs have participated in the scheme. The scheme has been highly successful, demonstrating the potential for successful regional cooperation in labour mobility under PACER Plus.

PNG and Australia Trade and Commercial Relations Agreement (PATCRA)Members: PNG and AustraliaStatus: operationalPATCRA II replaced PATCRA I in 1991. It allows duty free access for PNG products into Australia.

TRadE aGREEMENTs aMONG PICsPacific Island Countries Trade Agreement (PICTA)Members: 12 FICs, excluding Palau and Marshall IslandsStatus: Trade in goods agreement operational in Cook Islands, Fiji Islands, Niue, Samoa, Solomon Islands, Tuvalu and Vanuatu Status: Trade in services negotiations underwaywww.forumsec.orgPICTA entered into force in 2003, and gradual tariff elimination started in 2007 (2009 for least developed countries) with a view to create a free trade area by 2021. Seven PICTA signatories have announced their readiness to trade. The Federated States of Micronesia (FSM) has ratified the agreement and is now working on domestic arrangements. Currently PICTA covers only merchandise trade. The fifth round of services negotiations is scheduled for September 2010.

ThE PaCER PLus NEGOTIaTIONs

National consultations and discussions underway

the Pacer Plus negotiations were launched by forum leaders in august 2009. four priority areas have been identified: rules of origin, regional labour mobility, development assistance and trade facilitation. to support the fics in the negotiations, the office of the chief trade advisor was established in march 2010 in vanuatu. dr chris noonan, deputy head of commercial law at auckland university, has since taken on the role of chief trade advisor.

Pacer Plus will go beyond a conventional fta to include development components. a workshop on rules of origin will take place in august and the next officials’ meeting is scheduled for october 2010.

Speaking at the may 2010 australia Papua new guinea business forum in townsville, australia’s Parliamentary Secretary for international development assistance bob mcmullan explained australia’s motivation for supporting Pacer Plus:

‘in the longer term, we want to live in a stable and prosperous region. no country can develop without opening markets to the world and selling to the world ... opening markets is not enough, however. we have to provide the capacity to take advantage of the opportunity.’

mcmullan highlighted the role of the private sector, noting that ‘no private sector can be efficient in the long term without competition and open markets.’

Melanesian Spearhead Group Trade Agreement (MSGTA)Members: Papua New Guinea, Solomon Islands, Vanuatu and Fiji IslandsStatus: operational www.worldtradelaw.net/fta/agreements/msgfta/pdfThe original MSGTA was signed in 1994, facilitating free trade on 240 goods. The agreement was reviewed in 2005 to establish a Free Trade Area with lists of exempted goods. The MSG Secretariat was established in 2008 to aid implementation and overcome administrative delays. Currently only Fiji has started trading under the revised MSGTA; other members are still working on their national procedures for implementation. An upcoming meeting of the MSG officials in June 2010 will explore the operation of the agreement.

The Compact of Free AssociationMembers: USA, Palau, the Federated States of Micronesia (FSM), and the Republic of Marshall Islands (RMI)Status: operationalwww.fm/jcn/compact/comframe.html ‘Compact’ provides the three compact states preferential trade access into the US market. The US has tabled a waiver for this arrangement with the WTO until 2013.

New Overseas Countries and Territories (OCT) Preferential Trade AgreementMembers: French Polynesia and New CaledoniaStatus: operationalAs members of the association of OCT, French Polynesia and New Caledonia enjoy duty-free access into the EU market.

Julia Tijaja (email [email protected]) was a trade policy analyst for the Solomon Islands Government (2005–2007). She is currently doing a PhD in international development at the Open University, UK.

FEaTuRE: TRadE TREaTIEs sECTOR PROFILE: BaNKING & FINaNCE

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sECTOR PROFILE: BaNKING & FINaNCE

Banking on technology


New technology and the drive to make banking services more accessible to more people are cornerstones of recent development in this sector.

The Pacific Islands’ banking and finance sector is diverse and competitive, ranging from international corporations to home-grown operations. Business people travelling and working in the region have access to bank branches, ATMs, EFTPOS and increasingly, online facilities, in a

wide number of locations, and services are consistently being upgraded to bring them in line with those available to foreign investors in their home countries.

ThE MaIN PLaYERs In the nations of the South Pacific and East Timor, Australian banks ANZ and Westpac have traditionally dominated, with operations in 12 and seven countries respectively. ANZ is the lead bank for the Papua New Guinea LNG project and in 2010 celebrates its 100th anniversary since first establishing a presence in PNG. Westpac also celebrates its centenary in PNG in 2010. The Port Moresby-headquartered Bank South Pacific (BSP) has become a significant player more recently. BSP has operations in PNG, Solomon Islands and Niue. It also acquired Fiji’s Colonial Banking Group in 2009, giving it 20 branches in that country. In June 2010, the International Finance Organisation finalised a US$140 million investment in BSP ‘to help expand financial services and bolster the bank’s presence across the Pacific islands.’ The investment is the IFC’s largest in the Pacific to date. In the US-affiliated Pacific, Bank of Hawaii and First Hawaiian are dominant. Bank of Hawaii operates in American Samoa, Guam, the Commonwealth of Northern Marianas (CNMI) and Palau. First Hawaiian celebrates 40 years of business in Guam—where it has three branches— in 2010. It also has two branches in CNMI. Other important financial institutions in these markets include the Bank of Guam and BankPacific. While the ANZ has a representative office in New Caledonia, the main financial service providers there and in French Polynesia are French banks Société Générale and BRED. BRED is linked to Banque Calédonienne d’Investissement (BCI) in New Caledonia and Socredo Bank in French Polynesia, and entered the Vanuatu market in 2008.

‘…continued deregulation of the telecommunications industry is essential to extend financial services to the under-banked and un-banked market.’

BSP’s head office in Port Moresby. The PNG-based bank now operates in four Pacific countries.

TEChNOLOGY OPENs dOORs TO ExPaNsIONOne of the strongest trends emerging from the banking sector is increased investment in new technology, with particular focus on facilitating mobile banking and expanding microfinance and rural banking services. The Fiji Government wants 150,000 citizens to have access to banking services by 2014. The experiences of the sector in that country are informing many of the programs now being developed in other Pacific islands, where as little as 20% of the population has access to financial services.

AusAID recently launched a new aid strategy focusing on ‘Financial Services for the Poor,’ whereby the Australian Government will spend AUD$10 million per annum across Asia Pacific, to ‘assist formal and informal financial institutions to offer quality, affordable and fair financial services to the poor, including through microfinance and new technologies such as mobile phone banking.’ The ANZ’s CEO Pacific Michael Rowland says there are opportunities for microfinance right across the Pacific. The ANZ is launching a new financial literacy program called ‘Money Minded Pacific’ in 2010 as part of its efforts in this field. Rowland says continued deregulation of the telecommunications industry is essential to extend financial services to the under-banked and un-banked market. ‘Our view is that enhanced electronic banking, SMS, mobile phone banking, internet banking, [and] using our merchant facilities more, will clearly be the future trend in banking across the Pacific—focused particularly in PNG.’

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ANZ’s new head office in the Tongan capital, Nuku’alofa.

The Inside View: Jane Kittel, General Manager—Pacific Banking, Westpac

the global economic downturn has posed significant challenges right across the Pacific islands region. growth has slowed and a number of countries are really into their second year of a contraction.

the finance sector needs to stay up to date with the impact of increased banking regulations in the rest of the

world. there is no doubt that funding costs for banks are increasing around the globe and we need to be prepared for that to flow on at some point in time, and impact in the Pacific.

we’ve also seen the challenges around natural disasters—in Samoa, the tragedy of the tsunami; floods in fiji; the cyclone that very much impacted aiutaki in the cook islands—so there have been a lot of challenges for countries to face in the last couple of years.

i think we are moving into a period—over the next 12 to 18 months—where we will start to see growth return. throughout the period of the global economic downturn, tourism opportunities have held up relatively well. that remains an area of opportunity and we’ve certainly seen vanuatu perform really quite well throughout this period of time.

as countries focus on reforms that really open up their markets and attract investors, we will see those opportunities continue.

the telecommunications industry has been a really great example of the effect that competition has had in the last couple of years. we’ve seen in recent times some of the telecommunications companies opening up new products and services in providing virtual cash opportunities. this is the start of a virtual cash network and i think we are going to see more and more of that, as eftPoS opportunities are enhanced. there are still a few countries working telecommunications through, but there have been transformational changes in that space.

the banking industry needs to work together to drive interchange. i think that is imminent. essentially, it means connectivity between the banks, so our customers can interact with any bank.

there has been also been some positive movement in air transport. we have flights coming into australia direct from rarotonga from july 2010. there have been opportunities and changes going into fiji and vanuatu. i think it’s really important that the region stays focused on continuing to open up the skies and encouraging competition in air transport because driving down the cost of actually getting to a country can only encourage people to look at that as an opportunity.`

we need to be careful because in the last couple of years, people in australia and new Zealand have not looked to long-haul travel as perhaps they might have previously. i think those long-haul markets will return and we need to make sure that doesn’t impact the number of people who might consider the Pacific as a destination.


suPER FuNds uNdERPIN PROPERTY dEvELOPMENTsSeveral of the region’s superannuation funds play an important role in providing funds for commercial developments. In PNG, Nambawan’s investment strategy involves PGK300 million (US$108 million) worth of projects, while NASFUND has a well-performing property portfolio in PNG and Solomon Islands and more coming online, including the large Harbour City and Konedobu construction projects.

In past years, Fiji’s national superannuation fund has been an active investor in property development. However, the Fiji National Provident Fund (FNPF) wrote off FJD$327million (US$165 million)—the equivalent of 9% of members’ funds—in May 2010. The largest portion of the write-off came from Natadola Bay Resorts Development, with other tourism-related projects accounting for most of the balance. The FNPF says the total in member accounts post write-off stands at FJD$2.69 billion (US$1.3 billion), and net assets at FJD$3.31 billion (US$1.69 billion). The Solomon Islands National Provident Fund (SINPF) total investment portfolio was SBD$822 million (US$103 million) on the most recently available figures, although the International Monetary Fund has cautioned that closer monitoring of the fund would be prudent ‘given the recent impact of adverse global conditions on operating income.’ Samoa’s and Vanuatu’s national provident funds also fund local investment.

REsOuRCEs KEEP FINaNCIaL sERvICEs hEaLThYThe Pacific Islands’ financial services sector is also strong, especially in the resource-driven economies of Papua New Guinea and New Caledonia. Kina Securities’ Kina Asset Management Limited—PNG’s first listed investment company—announced an encouraging maiden share dividend in March 2010 and now provides an alternative path for investors looking to benefit from PNG’s growth. Among the accounting and consulting firms represented in the region are PricewaterhouseCoopers and Deloitte, along with a large number of smaller specialist firms. Due to their well-established Offshore Financial Centres, Vanuatu and Samoa also have strong

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Westpac celebrated 100 years in Papua New Guinea in 2010. Pictured here is its branch in Mount Hagen in 1968.

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BSP’s Ian Clyne

Bank south Pacific (BsP) has continued to expand its regional operations with the acquisition of Fiji’s Colonial Banking Group in 2009, and is now focused on consolidation.

bSP operates in Papua new guinea, fiji, Solomon islands and niue. its total regional assets are in excess of Pgk9 billion (uS$3.3 billion) and it has nearly 3000 employees.

bSP chief executive officer ian clyne tells Business Advantage that its focus in 2010 is ‘a matter of building on the opportunities that are now before us in Png with the lng project, building the fiji franchise and further building the Solomon islands operations.’

the bank is headquartered in Png, where it has 53% of market share and is the dominant kina lender. clyne says the rolling-out of the lng project in that market ‘is one of the major turning points in the history of the country.’ bSP is preparing for the impact of the project on the banking sector and economy more widely. ‘we are the bank that local companies and land-owner groups, who will be in joint ventures with exxonmobil, will be coming to for support.’

bSP is looking to invest Pgk175 million (uS$65 million) in capital investment this year and next, with new internet banking and cash management products, the launch of bSP first (a priority banking initiative for ‘high net-worth individuals’), upgrades to its treasury platform, an additional 100 atms, more eftPoS capability and international credit card services.

another initiative, bSP rural, aims to get access to banking services to more of the community, mobilise savings, and ‘double our retail customer base from 550,000 to one million customers within the next three years,’ clyne says.

the bank is also formally launching its mobile banking services in fiji. the acquisition of the colonial group brings bSP’s holdings in fiji to 20 branches. ‘it has a good base but there has been an underinvestment in terms of building the business,’ says clyne. as in Png, the bank will introduce more atms, eftPoS machines, and a visa debit card. ‘fiji is a competitive market with some very astute businessmen looking for the best terms one can imagine, but bSP is committed to building the corporate side of the business as well and obviously, we will do that on a step-by-step basis with the focus on positive returns.’ clyne says the bank will reinvest its profits over the next three years in upgrading the business.

‘in Pacific countries all banks have a simple products offer and a simple service model. we want to raise the level of service to clients, to a level that you would get in australia and elsewhere,’ he adds.

‘The PNG LNG project is one of the major turning points in the history of the country.’

financial services sectors and a corresponding expertise in these operations.

sTOCK ExChaNGEs CONTINuE TO EvOLvEDespite a drop in the number and value of equities transactions in 2009—a response to the global economic crisis—the Port Moresby Stock Exchange (POMSOX) continues to evolve as the Pacific region’s de facto stock market. Domestic market capitalisation was PGK50.1 billion (US$17.9 billion) in December 2009, up 70.4% on the previous year. In Fiji, the South Pacific Stock Exchange has 16 listed companies. Market capitalisation was FJD$901 million (US$462 million) at the end of 2009, a decline of 10.06% on the previous year.

IssuEs TO WaTChFor BSP Chief Executive Officer Ian Clyne, there are many unresolved questions around the Papua New Guinea LNG project. ‘If you look at the banking sector in PNG, and the capital of the banks and their liquidity, the amount they can actually lend is limited. In coming years, there is going to be competition in terms of the demand from businesses for liquidity and banking services. The banks are going to have to use their capital as efficiently as possible. There will be enormous demands, and the pie is finite.’ The ANZ’s CEO Pacific Michael Rowland sees the Pacific’s future as being intrinsically tied to Asia. The ANZ recently acquired select Royal Bank of Scotland interests in Asia, and is looking at opportunities to connect those new Asian customers with the Pacific as part of the bank’s ‘super regional’ strategy.

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Port Moresby Stock Exchange (POMSOX) has achieved outstanding growth over the past few years and is a very attractive option for companies looking to raise capital. Some of the world’s most dynamic companies are already listed on our bourse.

If your business is operating in Papua New Guinea or the wider South Pacific region, contact us now to discover how listing on POMSOX can transform your business.

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sECTOR PROFILE: TOuRIsM INvEsTMENT

A sunny outlookHaving ridden the recent waves of economic turmoil, the region’s tourism industry is looking buoyant amid a flurry of activity.

Tourism authorities across the Pacific Islands region expect 2010/11 to be a period of recovery and growth following the global financial and oil crises of recent years. Former South Pacific Tourism Organisation (SPTO) Chief Executive Tony Everitt says tourism weathered the

global economic ‘storm’ pretty well. ‘Certainly, we have seen in the first months of 2010 that the business has recovered quite strongly and things are looking pretty promising moving forward,’ Everitt told Radio Australia before leaving the organisation in early 2010. ‘The Pacific has enormous potential as a high-value destination.’ Everitt has been succeeded by the former Fijian Trade Commissioner to the United States, Ilisoni Vuidreketi (see box on page 32).

a RaNGE OF sTRaTEGIEsThe Pacific’s tourism industry is very diverse, and island destinations have responded to global and local challenges with different strategies. In the South Pacific, this has led to more focus on emerging Asian markets like China and India, while Guam, the Northern Marianas and neighbouring islands are looking to opportunities presented by the impending military build-up. Guam has the Pacific’s largest tourism industry, with the territory’s most important income earner generating 30% of gross island product. More than 90% of Guam’s 1.2 million annual visitors come from Japan, Korea and Taiwan.

The neighbouring Northern Mariana Islands’ tourism industry has been in a state of decline for several years, but remains the country’s main vehicle for economic growth. Tourism attracted around 350,000 visitors in the 2009 fiscal year, less than half the arrivals for 2007. Palau’s economy is also dependent on tourism, with visitors mainly drawn from Japan, Taiwan, Korea and the US. Visitor arrivals dropped by 9% in 2009, although they showed recovery in the first quarter of 2010. Fiji records the second largest number of annual visitor arrivals in the region after Guam, at 539,405 in 2009. Arrival statistics for the first three months of 2010 have risen substantially, as Fiji invests heavily in media campaigns in the Australian and New Zealand markets. The industry is targeting FJD$900 million in direct tourism earnings in 2010. The recovery in Fiji numbers has been partly driven by improved airline services on Fiji routes and deep discounting. Discounting is a strategy that is starting to have an impact on some competing markets such as Samoa, which wrestled with other challenges in 2009, most devastatingly, the September tsunami, which killed 143

‘The business has recovered quite strongly and things are looking pretty promising moving forward.’

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The Inside View: Ilisoni Vuidreketi, SPTO

people and damaged a significant amount of tourism infrastructure. Despite the tragedy, Samoa achieved a 5.4% increase in visitors in 2009 compared to the previous year. New Zealand, Australia and American Samoa are its top-three source markets. The Cook Islands industry also competes with Fiji, but has benefited from opening up the aviation industry. New Zealand-based Mirage Group Ltd recently announced its intension to construct five-star accommodation there. On the other hand, the Crown Beach Resort laid off staff, with General Manager Rohan Ellis telling local media that he predicts other Rarotonga hotels would be forced to follow suit. Tourism contributes over 60% of the Cook Islands’ GDP. French Polynesia attracted 160,447 visitors in 2009, a significant decline on previous years, with the majority coming from North America and France. The territory’s government has stated it is focusing on high-end tourists and the emerging Chinese market. Fellow French territory New Caledonia also experienced a decline in tourism numbers, especially from key markets France and Japan.

uNFuLFILLEd POTENTIaL aNd ROOM FOR GROWThPapua New Guinea, with its diversity of landscape, attractions and cultures, is consistently cited as an underperforming tourism market. Holiday traffic to Papua New Guinea declined by 12% in 2009. However, there are a number of positive developments. Qantas was

scheduled to start a direct service between Cairns and Port Moresby mid 2010, and a second international airport is flagged for Alotau in Milne Bay. There has also been a significant amount of investment in hotels and tourism properties. Tourism has played a small role in New Caledonia’s development, representing just 4% of the territory’s GDP. In 2009, laws changed to allow visitors to officially marry without an obligatory 30-day residency period, opening up both New Caledonia and French Polynesia to the wedding market. In September 2011, Noumea will host an estimated 5000 athletes and officials during the South Pacific Games. Of the Pacific’s smallest economies, Niue’s tourism industry—4748 arrivals in 2008—is hamstrung by its size, limited hotel rooms, and limited accessibility by air, although Air New Zealand flies weekly between Auckland and Niue. Tuvalu, with arrival figures around the 1000 mark annually, has been looking at ways to turn its devastating annual high tide into a festival to attract environmentally-minded tourists. Kiribati, which markets itself as ‘For travellers, not tourists,’ saw just 5000 visitors arrive by air in 2008. The introduction of a new Air Pacific service to Christmas Island for fishing, diving and bird-watching enthusiasts was delayed in mid 2010. Once under way, the schedule will provide connections from Sydney, Brisbane, Auckland, Tarawa, Tonga, Honolulu and Suva. East Timor (Timor Leste) has a fledgling tourism industry focused around activities like diving, fishing, water skiing and snorkelling. Official records state 26,714 people visited on tourist visas in 2009. Merpati Airlines flies seven times a week from Bali to Dili, and Air North two to three times a day from Darwin, Australia. Austasia Airlines flies from Singapore twice a week. There is a small range of hotels in the capital, but just two other bona fide hotels outside Dili, at Baucau and at Com, along with guesthouses and camping options. The country’s Secretary of State says one of the East Timor Government’s biggest hurdles is fostering conditions for private sector growth, and that development of non-oil sectors is ‘a very long-term prospect.’

REBuILdING TOuRIsM sECTORsThe Solomon Islands tourism industry was decimated during the ethnic tensions pre-2003, and recovery has been slow. However, in 2009 improvements in airline services contributed to an 11% increase in visitors over the previous year. Honiara’s first international business-standard hotel opened in September 2009: the Heritage Park Hotel.


Honiara’s new Heritage Park Hotel is the Solomon Islands’ first international standard business hotel.

the tourism industry in the region is recovering from the global economic downturn, particularly the downturn in the uSa. there are a lot of efforts being made to win back tourists to the region with good offers and incentives.

our people are one of the biggest assets that differentiate the Pacific from other regions: the friendliness of the people, their diverse cultures. and also the safe, pristine environment. these could be the

biggest drawcards for the Pacific.

the challenges facing the industry in the region right now are: the need for more product development, human resources development and the need for more investment in the sector.

investment in the tourism sector is slow right now. investors and development agencies are taking a ‘wait and see’ attitude. investors are

looking for a return on their investment. Pacific islands therefore need to demonstrate their ability to attract tourists to the region. the region could be working harder to get public sector investment in tourism development—in infrastructure, for example—to stimulate growth.

all countries in the region are very much aware of the need to have an environment that is investor-friendly. the SPto and the Pacific islands forum work together to try and assist individual countries in putting together incentives so they become more and more friendly and supportive of foreign investors.

the bigger players like fiji, vanuatu, cook islands and Samoa have the legislation, infrastructure and incentives in place. these countries are attracting more of the investors. good infrastructure is very important.

my vision for the South Pacific tourism organisation is for it to be the organisation that operators in the region contact for the tourism development support they need.

Ilisoni Vuidreketi is new Chief Executive of the Pacific Islands Forum’s Fiji-based tourism promotion agency, the South Pacific Tourism Organisation (SPTO).

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while new tourism investment activity is spread across the region, it is most dynamic in Png.

among recent developments, the kumul hotels group has announced the construction of a new hotel—the holiday inn express—at its Port moresby property, and refurbishment of the existing hotel. the Pgk200 million project is expected to be complete in january 2012.

the airways hotel, gateway hotel and ela beach hotel have all recently added rooms, and the 290-room cmSS casino hotel is also being developed by korean investors in the capital.

once complete, the vision city development in Port moresby’s waigani district will include a 12-storey hotel. local superannuation fund naSfund estimates by 2014 there will be 1445 new hotel rooms in Port moresby.

investment has extended to smaller centres, such as kavieng, which has two new boutique properties. at uligan bay in madang, the new tupira Surf club is attracting japanese professional surfers and photographers.

elsewhere, warwick international hotels is proceeding with plans to establish new properties in tonga and Samoa. construction is due to start at vava’u, tonga on a four-and-a-half-star property at the end of 2010. warwick is also looking at a site in mulifanua, Samoa.

in french Polynesia, hilton moorea lagoon resort and Spa has completed a uS$12 million renovation. the group has permanently closed the hilton hotel tahiti and is concentrating on its two other properties.

in vanuatu, ihg (intercontinental hotels group) has assumed management of the former le meridien Port vila. it will be rebranded as a holiday inn resort when refurbishment is complete at the end of 2010.

the Sheraton new caledonia bourail resort & Spa is scheduled to open in 2013 with 180 rooms, a golf course and activity centre. in new caledonia’s capital, noumea, local investors plan to re-furbish the old club med site, closed in 2001. right next door, the established le meridien noumea is slated for extensive renovations, as is le meridien iles des Pins.

fiji’s tourism investment sector is still suffering from political uncertainty. the fiji national Provident fund (fnPf) is now looking to chinese investors to salvage the troubled momi bay project.

fnPf chief executive aisake taito says while consortiums and investors have expressed interest in the property, the fnPf wants investors who ‘bring their own money’. the fnPf has already written off more than fjd$50 million in members’ funds in connection with the project.

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The Vava’u islands group in Tonga is the planned location for two Warwick International Hotels resorts.

The hotel was established by PNG superannuation firm NASFUND and the Lamana Group. The Solomon Islands’ National Provident Fund has a 10% stake. The Kitano Mendana Hotel in Honiara has recently opened a new wing and Western Province hoteliers are also undertaking new investment—for example at the Gizo Hotel—but air access to this area needs improvement. Tonga expects growth of 10% in tourist earnings in 2010, supported by policy initiatives such as the Tourism Action Plan and new investment. The Kingdom had a difficult 2009. Although arrivals reached the 50,000 mark for the first time, receipts fell by 25%, with the tsunami in Niuatoputapu and the sinking of the Princess Ashika ferry compounding difficult global economic conditions. Tonga suffers from an absence of high-end resorts and underinvestment in marketing but planned investment in hotels and resorts, and new cruise ship facilities and a marina at Vuna Wharf will improve prospects. Vanuatu is also feeling the impact of regional competition. Vanuatu Tourism Office general manager Annie Niatu says positive growth is possible if significant marketing activity is undertaken in the major overseas markets. ‘2009 was a successful year for the industry, visitors were up around 11% and for the first time ever Vanuatu hit 100,000 visitor arrivals.’

sKIEs GET BusIERThe entry of low-cost carriers has transformed the tourism industry across the Pacific Islands region. Virgin Blue’s Pacific services now extend to Vanuatu, Samoa, Solomon Islands, PNG, Tonga, Cook Islands and Fiji. However, Virgin Blue’s new Chief Executive Officer John Borghetti has indicated that the airline may consolidate its Virgin Blue, Pacific Blue and V Australia brands. Australian media have also reported that the viability of some Pacific Island services will be reviewed. American carriers are also expanding their reach. Continental Airlines recently entered into a reciprocal codeshare agreement with Air New Zealand on services via Rarotonga, Apia and Tonga. Continental Micronesia and United Airlines are now codesharing through Fiji. Continental Airlines also added a new year-round flight service between Guam, Majuro and Honolulu in June, which supplements the current three-weekly island hopper service between Guam and Honolulu via Chuuk, Pohnpei, Kosrae, Kwajalein, and Majuro. Delta Air Lines has added a daily service between Guam and Tokyo-Narita following its merger with Northwest Airlines. Air service to PNG has improved, with Solomon Airlines indicating

its desire to start a Honiara–Port Moresby service. QantasLink began a Cairns–Port Moresby service in mid 2010. The future of its codeshare service with Air Niugini was still unknown at the time of writing. Fiji’s national carrier Air Pacific is reintroducing jet-operated international flights from New Zealand into Nausori Airport near Suva following upgrading of the airfield. The airline also plans to start a Fiji–Rarotonga service. Former Virgin America Executive Dave Pflieger recently took over the CEO’s mantle at Air Pacific. Outgoing Air Pacific CEO John Campbell told Islands Business that while the Fiji Government has largely kept a ‘hands-off stance in relation to Air Pacific,’ their interests have been aligned. ‘We have been very well aware of government’s desire for the development of its “Look North” policy. That also fitted in with the airline’s own strategy, so it’s a happy harmony for the two.’ Campbell says the recent opening of the Hong Kong route will make a substantial contribution to Fiji and to tourism. Aside from the new Air Pacific service, the Cook Islands will also see a new Sydney–Rarotonga service via Air New Zealand on a four-month trial late 2010. Pacific Blue started an additional flight between Rarotonga and Auckland in July 2010. Australia and Palau are now connected. Palau-based airline Pacific Flier has commenced a weekly service between Koror and Australia’s Gold Coast, adding to its Guam and Manila services.

CRuIsE shIP OPPORTuNITIEsCruise ships continue to be an important part of the tourism sector of a number of Pacific Island countries, particularly New Caledonia, PNG, Vanuatu, Samoa, Fiji and Solomon Islands. Their stays may be short, but the cruise operators and their passengers contribute to the local economy through day trips, purchases of local food and handicrafts, wharfing, refuelling and restocking. The South Pacific Tourism Organsiation (SPTO) has stated that there is room for much improvement in the sector, particularly in the variety and quality of land excursions, and the safety and security of passengers during these day trips. Guam’s Visitors Bureau believes the cruise sector is an underdeveloped opportunity, and would like to turn the island into a permanent port of call for cruise ships. In 2009, Guam hosted 7984 visiting cruise ship passengers. A similar number is anticipated for 2010.

LOOKING NORThPacific Islands countries were out in force during the 2010 World Expo in Shanghai, which expected over 70 million visitors during its six-month life. Fifteen countries were represented in the Pacific Pavilion. SPTO CEO Ilisoni Vuidreketi says 12 member countries are planning or implementing visa-free policies for all Chinese tourists: Cook Islands, Fiji, French Polynesia, Kiribati, New Caledonia, Niue, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu. Regional tourism leaders are looking to the results of Air Pacific’s Hong Kong–Fiji service as a test of the market into South China and other parts of Asia, while a new partnership agreement between the Pacific Islands Forum Secretariat and the SPTO aims to help small-scale tourism operators access markets such as China. In Guam and the Northern Mariana Islands, government officials have also been consistently lobbying for a visa waiver program for Chinese tourists. Tourism leaders believe the Guam industry could gain an estimated US$1.5 billion in additional revenues by 2013 if a visa waiver program for Chinese and Russian visitors is fully implemented. In November 2009 Hong Kong passport holders were permitted to travel to Guam visa-free for up to 45 days, leading to an immediate and significant increase in arrivals from Hong Kong. The Guam Visitors Bureau recently launched a Chinese website to support this market.

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sECTOR PROFILE: TRaNsPORT & LOGIsTICs

Moving right along

the Pacific region’s aviation sector continues to expand and has seen fierce competition on several routes, with positive effects for tourism and other businesses. Shipping services remain critical to trans-Pacific trade, and port improvement and expansion projects are underway in a number of countries and territories.

aIRLINEsAmerican carriers are widening their reach in the Pacific region. Continental Airlines has added a new year-round flight service between Guam, Majuro and Honolulu in June 2010, which supplements the current three-weekly island hopper service between Guam and Honolulu via Chuuk, Pohnpei, Kosrae, Kwajalein, and Majuro. Continental Micronesia moved its head office to Guam at the end of 2009. Continental Airlines recently entered into a reciprocal codeshare agreement with Air New Zealand on services via Rarotonga, Apia and Tonga. Delta Air Lines has added a daily service between Guam and Tokyo-Narita following its merger with Northwest Airlines. Papua New Guinea has seen an expansion in services over the past year, with Solomon Airlines indicating its desire to start a Honiara–Port Moresby service. QantasLink began a Cairns–Port Moresby service in mid-2010. Air Niugini has also started flying to Kuala Lumpur and in March 2010 introduced a second weekly flight to Narita, Japan. Airline chairman Sir James Tjoeng says flights to China and India are anticipated, and that its fleet is being modernised.

Fiji’s national carrier, Air Pacific, is reintroducing jet-operated international flights from New Zealand into Nausori Airport near Suva following upgrading of the airfield there. The airline also plans to start a Fiji–Rarotonga service. Former Virgin America Executive Dave Pflieger is Air Pacific’s new CEO. Qantas-owned Jetstar has also begun direct flights between Sydney and Nadi, four times a week. Qantas previously operated a codeshare with Air Pacific on this route. Virgin Blue Airline Group’s Pacific Blue flies from Brisbane, Melbourne and Adelaide to Fiji. Aside from the new Air Pacific service, the Cook Islands will also see a new Sydney–Rarotonga service via Air New Zealand on a four-month trial late 2010. Pacific Blue started an additional flight between Rarotonga and Auckland in July 2010. Polynesian Blue continues to perform well, presenting a WST$9 million (US$3.5 million) dividend to the Samoan Government in December 2009. For the financial year ended 30 June 2009, Polynesian Blue recorded a net profit after income tax of NZ$880,000 (US$623,000). Australia and Palau are now connected. Palau-based airline Pacific Flier has commenced a weekly service between Koror and Australia’s Gold Coast, adding to its Guam and Manila services.

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Increased competition and the global economic crisis has had a significant impact on the Pacific Islands’ shipping sector, with the apia-registered Pacific Forum Line (PFL) having its toughest year since being established 30 years ago, according to Chief Executive Officer sean Bolt.

Pfl was established in 1978 and is owned by the governments of 12 Pacific countries: cook islands, fiji, kiribati, marshall islands, nauru, new Zealand, niue, Papua new guinea, Samoa, Solomon islands, tonga, and tuvalu. they have varying financial stakes in the company, but all have equal voting rights. Pfl’s operating arm, Pacific forum line (nZ) limited, is based in auckland, new Zealand.

Pfl services five routes, linking new Zealand, australia, fiji, tonga, Samoa, american Samoa, the cook islands and Papua new guinea with each other and international ports. the cook islands service was re-established in march 2010 through a joint venture with Pacific direct line, using the mv forum Pacific on a 25-day cycle. Prl’s vessels

carry containerised and break-bulk cargo, plus bulk liquids to and from australia.

Sean bolt says they would like to extend services to all 12 shareholding countries, despite a tough 2009 that saw the merging of the company’s freight and cargo sections in auckland, amongst other cost-cutting measures.

‘there’s been a drop in remittances, and [consequently] in consumption in the islands, as well as increased competition from larger shipping companies, especially in fiji where they “marginally price” their services,’ bolt says. while Pfl’s major regional competitors are Swire Shipping and reef Shipping, there are also a number of smaller fiji-based operators.

bolt expects the trend of shifting trade away from australia and new Zealand and towards asia to continue. he notes the industry is also being affected by the decline in produce exported from tonga and Samoa, attributing this to strict biosecurity requirements in australian and new Zealand, and ‘disincentives’ created through remittances.

bolt’s main wish? that donor aid into the Pacific focuses on improving and building port infrastructure.

BREaKING ThE WavEs

The Pacific Forum Line’s CEO, Sean Bolt

Among a number of smaller operators, Air Austral connects New Caledonia to France, while a new airline, the Australian-owned Pacific Wings, wants to establish new routes between Noumea and Brisbane, using a Boeing 737-300 leased from Nauruan carrier Our Airline. Fiji domestic airline Sunflower began operating charter flights within Fiji mid-2010.

avIaTION ChaLLENGEs aNd sETBaCKsVanuatu’s Parliament approved a National Provident Fund loan of US$30 million to Air Vanuatu in June 2010 in a bid to help the struggling airline settle its debts. In 2009, Brisbane-based SkyAirWorld collapsed. The airline was running a service to Honiara, Solomon Islands, before being hit by the global economic downturn. The collapse had a flow-on effect to East Timor’s national carrier Timor Air, which had arranged to lease one of the airline’s jets. Cuts in airline service have affected tourism and other businesses in the Commonwealth of Northern Mariana Islands. Continental Airlines has announced it will no longer charter flights between Saipan and Japan outside the peak season. Northwest/Delta Airlines has reduced its Tokyo–Saipan flight frequency, as has Asian Airlines, flying between South Korea and Saipan.

shIPPING The region is generally well-served by international shipping services, with several larger players operating in the region. The largest is Swire Shipping, which links Australia and New Zealand with the Pacific Islands with two multi-purpose vessels, and has a four-vessel service connecting North Asia with the Pacific Island destinations of Majuro, Tarawa, Honiara, Port Vila, Noumea, Lautoka, Suva, Apia, Pago Pago, Papeete, Nuku’alofa, Santo and Noro. It also links South East Asia and South Pacific Ports. The Pacific Forum Line is another major player, and is focused on connecting the Pacific Islands with Australia and New Zealand (see box). New Zealand-registered Sofrana Unilines is well established in New Caledonia, New Zealand, Australia, Vanuatu, French Polynesia, and Wallis and Futuna. Its shipping activities extend to Papua New Guinea,


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the Solomon Islands, Tonga, Samoa and American Samoa. In May 2009, Sofrana resumed a service between New Zealand and Fiji on an 18-day frequency. Reef Shipping has provided a shipping service from New Zealand and Australia into the Pacific islands for more than 40 years, including small atoll nations like Kiribati and the Marshall Islands. It also connects Fiji in the South Pacific to the central Pacific islands of Palau, Guam and the Marshall Islands. Global shipping line the Mediterranean Shipping Company has a weekly round trip Sydney–Brisbane–Noumea service and offers connections to Europe and Asia, while Maersk Line operates between Noumea, Lautoka and Suva and New Zealand. Shipping links between Guam, Micronesia, the United States and Asia are dominated by two US-flagged operators, Matson and Horizon Shipping. Matson has a five-vessel fleet servicing the area, and provides a weekly service from four west coast port areas and Hawaii to Guam, with a port-to-port or door-to-door service. Horizon Lines also provides a weekly service from the US west coast to Guam, and operates a dedicated terminal facility in Apra Harbour, Guam’s deep water port. It has a weekly connecting service to Saipan, and biweekly service to Tinian and Rota in the Northern Marianas, on a through bill of lading. Matson and Horizon Lines partnered with Guam authorities in an US$18 million project to install three refurbished port cranes to Apra Harbor in 2009, and are preparing for increased shipping movement ahead of the Guam military-related buildup.

PORT INFRasTRuCTuREA lack of port infrastructure remains a major barrier to doing business in the Pacific. Substandard infrastructure drives up fuel costs and the length of voyages, as ships must sometimes take less direct routes to refuel or offload. In Papua New Guinea, the Asian Development Bank is helping to redress this with support for the tidal basin project to expand the port of Lae, PNG’s busiest and most important port. Work has already commenced and should be finished in 2014. Work is slated for many of PNG’s 15 other ports, including long-standing plans to move the Port Moresby port to a larger site away from the CBD and upgrade existing facilities. Part of the Rabaul port is to be rehabilitated for use by Nautilus Minerals, while harbour cranes, new container scanners and x-ray machines are to be installed in Lae and Port Moresby. Fiji’s main ports are in Suva, Lautoka, Malai, Levuka, Wairiki and Rotuma. Planned improvements in Suva include a new terminal to improve access for boarding and deboarding onto local vessels, and


construction of the integrated Rokobili container terminal over 55 hectares. Both Lautoka and Suva wharves have undergone significant upgrades in recent years. In the Solomon Islands, the Ports Authority is involved in a reclamation project at Noro in the Western Province and is building a new jetty in Honiara. Tonga’s Nuku’alofa port handles 99% of all international cargo. The current upgrade of facilities, funded largely by the Chinese Government, will cater for cruise ships, freeing up space at the main container wharf. Meanwhile in Vanuatu, a US$15million (AUD$19.3 million) upgrade of Port Vila’s port facilities is expected to solve problems with congestion. The port of Noumea in New Caledonia is also undergoing improvements to cater for larger vessels. The docks will expand by four hectares, coastal shipping will be moved from the main international dock and dredging is ongoing, in a project that is expected to be finished in 2011. The Guam port is undergoing a massive US$260 million modernisation project to meet growth of Guam’s economy, fuelled largely by the expansion of US military bases on the island. Improvements will include automation of systems for invoicing, cargo and container tracking and maintenance, expansion of wharf space to accommodate larger vessels, and installation of additional gantry cranes. The first phase, focused on critical maintenance and repair of waterfront facilities and dredging, is expected to be complete within five years. Future phases will extend over 30 years.

LOGIsTICsDHL is the dominant logistics service provider in the region, with operations to 17 Pacific Island nations and territories. Its Suva freight centre is the heart of its Pacific and Oceania courier and distribution market, servicing 12 centres, including Tahiti, New Caledonia and Samoa. The Suva premises house DHL Express, DHL Danzas Air and Ocean, the Express Logistics Centre and warehouse. Quarantine and customs officers are based on site, expediting clearance procedures. DHL also has a major presence in Sydney, reaching other parts of the Pacific. US-owned Pacific Air Cargo provides air cargo service between Los Angeles and Honolulu, including service to Pago Pago and American Samoa, using Boeing 747 freighters. It ships more than 80 million pounds of cargo annually. Australia’s Pacific Air Express services the South Pacific from facilities in Brisbane and Honiara.

In 2010, PNG airline Air Niugini announced a major agreement with international air charter company Chapman Freeborn for the provision of planes to transport construction cargo to the site of the PNG LNG gas project in Southern Highlands Province. The arrangement will see Chapman Freeborn provide charter aircraft, including a L-100 Hercules, to augment Air Niugini’s own domestic cargo services.

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Local resource constraints exist but a boost in tourism, necessary rebuilding after natural disasters and a new military base are keeping this sector active.

Raising the bar

The provision and maintenance of infrastructure in the Pacific Islands region is an ongoing challenge. However, development partners have made this a focus of assistance, and while initiatives such as the Papua New Guinea LNG project and Marianas military build-up

will initially put great strain on existing infrastructure, they also provide opportunities to greatly elevate the standard of infrastructure in the region. Across the region, Australia, New Zealand, the World Bank and the Asian Development Bank are coordinating existing and planned assistance to infrastructure through the Pacific Region Infrastructure Facility (PRIF) (see box on page 40). In its 2010/11 Commonwealth Budget, the Australian Government allocated an additional K100 million (US$40 million) to improving roads, ports and airports in PNG, and supporting implementation of PNG Government transport strategies. The Asian Development Bank (ADB) is playing a crucial role. In PNG, the ADB’s main strategic focus is transport infrastructure, says Charles Andrews, Country Director. ‘We’re positioned quite heavily in helping the Government to develop infrastructure in road transport, maritime and now civil aviation.’ Other ADB-financed projects include overhauling East Timor’s badly degraded road network; improving roads in Solomon Islands; designing and delivering renewable energy, starting with small pilot projects in PNG, Solomon Islands and Vanuatu; and improving urban infrastructure in Nuku’alofa, Tonga.

NEIGhBOuRhOOd PaRTNERsThe Pacific region’s construction and infrastructure sectors have a competitive mix of local and international participants. Companies such as Beca, a New Zealand-headquartered engineering and consultancy services group, operate throughout the Pacific. Its ongoing projects include upgrades at the College of the Marshall Islands, climate change adaption strategies in Kiribati, concept designs for a new inland road linking Faleolo Airport and Apia in Samoa, and rehabilitation of cyclone-damaged harbours in the Cook Islands.

sOME ChaLLENGEs BuT GROWTh OPPORTuNITIEs ExIsTUllrich Aluminium has a 30-year history in the region, and now operates in 23 island countries. CEO and New Zealand Pacific Business Council Chairman Gilbert Ullrich says while it is ‘doing pretty well,’ the global financial crisis has had an impact on new developments in the tourism industry, and the political situation in Fiji continues to discourage investment. ‘PNG is strong. Solomon Islands has been very good, I’m very pleased with the results coming out of there. New Caledonia is doing pretty well. Cook Islands has had a cyclone so there’s a lot of repairs. Tonga and Samoa are just normal. Steadily, across the Pacific, there’s business to be had.’ Ullrich Aluminium does good business in the US-affiliated Pacific. Ullrich says these are difficult markets to break into, but ‘certainly

worthwhile and well-funded’, while its business in New Caledonia and Tahiti is beginning to feel the impact of competition from Chinese-manufactured goods. In the PNG market, the Kramer Group, an established multidisciplinary engineering firm, merged with ASX-listed Ausenco in late 2009. The business works in Engineering, Procurement, Construction and Management (EPCM) across the Pacific and beyond.‘To grow, we need to get more involved in the EPCM project delivery systems,’ says Frank Kramer, Chief Executive Officer of KramerAusenco. ‘PNG’s market has matured to the point where it can accommodate a domestic EPCM business capability. This merger makes that a reality.’

‘We recognise local resource constraints, so we look for solutions that are as simple as possible…’

The Harbour City development in Port Moresby, PNG.

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sECTOR PROFILE: INFRasTRuCTuRE & CONsTRuCTION

NEW COMPLEx aNd LNG INvEsTMENT IN PNGIn PNG, construction is strong in the commercial, residential and hotel sectors, with the two main superannuation funds, NASFUND and Nambawan Super, among the biggest drivers of building activity. The K1 billion (US$380 million) Vision City complex in Waigani, developed by Rimbunan Hijau subsidiary Dynasty Development Limited, is a 9.2-hectare integrated mixed development slated for completion in 2012. Construction of the LNG project will take an estimated four years and create between 12,000 and 15,000 jobs. Major components include a new airstrip, a gas conditioning plant, a pipeline and a storage facility.

MILITaRY aCTIvITY IN GuaM aNd MaRIaNasThe relocation of a US Marine Corps base from Okinawa and other military projects are set to transform Guam and the Northern Marianas. In early 2010 the US Navy named seven companies that will be given the bulk of the design and construction work under the US$4 billion contract. It’s the largest contract to be awarded in the history of Naval Facilities Engineering Command Pacific, and the largest single contract that will be awarded in connection with the military relocation agreement between the US and Japan, according to naval officials. The first element is construction of a two-storey consolidated submarine training centre and headquarters facility for Commander Submarine Squadron 15, which is unrelated to the proposed Marine Corps relocation. A groundbreaking ceremony has also been held at the Ukudu Workforce Village, which will be able to house up to 18,000 temporary workers at a 252-acre property spanning Tamuning and Dededo; and a contract to manage the US$200 million Port Authority of Guam modernisation project has been awarded to EA Engineering, Science and Technology.

aCCOMMOdaTION ExPaNsIONTourism-related construction has slowed in markets such as Fiji but is on the rise in others, like Vanuatu and PNG. Whitesands Resort Limited has sold over half of Stage One of the residential lots at its Hotel and Golf Resort, which is currently under construction on Efate in Vanuatu. In PNG over the past two years, several established hotels have extended their room numbers, including the Airways, Gateway Hotel and Ela Beach Hotel. The Holiday Inn is also planning a significant expansion. A new property is being developed by an international group, the Korean CMSS Casino Hotel, and the large Vision City

Regional partners are helping to improve Pacific infrastructure on a sector-by-sector basis.

australia, new Zealand, the asian development bank (adb) and world bank group are coordinating their efforts to assist Pacific island governments develop and manage critical infrastructure through the Pacific region infrastructure facility (Prif). the Prif partner agencies have committed aud$407.38 million for infrastructure development in the Pacific over four years.

Prif activities currently underway include advisory services for national infrastructure planning in tonga and Samoa, water and sanitation planning in kiribati, the tonga energy roadmap 2010–2020, and a scoping study for the Port of Pohnpei.

the facility differs from previous programs in that it works on a sector basis. transport has been identified as an early priority and Prif has already commenced long-term transport infrastructure support in Solomon islands, vanuatu, Samoa and tonga.

in Solomon islands, this will include a greater focus on building domestic private sector capacity to undertake roads maintenance and rehabilitation. the Prif-supported vanuatu transport Sector Support Program will work with the vanuatu government to finance and manage infrastructure works and design and package contracts that can be delivered by the domestic private sector.

more than half the initial Prif commitment is allocated to the transport sector (aud$218.26 million), followed by energy (aud$110.97 million), water and sanitation (aud$67.88 million), multisector projects (aud$55.98 million) and telecommunications (aud$55.45 million).

assistance is currently available to the cook islands, federated States of micronesia, kiribati, nauru, niue, Palau, republic of the marshall islands, Samoa, Solomon islands, tonga, tuvalu and vanuatu.

PaCIFIC REGION INFRasTRuCTuRE FaCILITY

complex will eventually include a hotel, both of which will compete with established properties. NASFUND estimates there are 1445 new hotel rooms under construction in Port Moresby, which is more than double the existing supply. In Papeete, Tahiti, construction has begun on a new maritime terminal on the Quai de Moorea.

REBuILdING EFFORTsFiji and Samoa have been hit by devastating natural disasters over the past two years but rebuilding has begun in both countries. The ADB is helping to spearhead reconstruction in Fiji—which was also badly affected by floods—with an emergency loan of $17.6 million to rehabilitate roads, bridges, and other infrastructure, particularly on Viti Levu. New Zealand and Australia have also allocated further funding to help rebuild Fijian homes, schools and health facilities that were destroyed or damaged by Cyclone Tomas in March 2010. Samoa continues to rebuild following the tsunami of September 2009. Habitat for Humanity New Zealand has built about 133 new homes for tsunami survivors to date. Australia and New Zealand recently topped up their emergency aid provisions by AUD$10 million, saying the priority now is rebuilding communities, including housing, water, power, and roads. In Tonga, more than three years after pro-democracy demonstrations deteriorated into civil unrest, new buildings have begun to replace those destroyed by fire in Nuku’alofa’s business district. The Chinese, Australian and New Zealand governments are funding reconstruction, and building activity is helping to stimulate the economy. The construction efforts are being overseen by the Nuku’alofa Development Corporation, which is a sub-committee of Cabinet.

WORKFORCE IssuEsOne of the most commonly voiced concerns in PNG—the shortage of qualified contractors for building and construction work—holds true for other Pacific Islands markets. However, ADB Country Director Charles Andrews also sees this as an opportunity. ‘There’s a big body of work that ought to be of interest to international contractors and engineering firms. There’s hundreds of millions of dollars of contracts that we’re associated with that are just coming on stream,’ he told Business Advantage. International workers will also be employed on the Guam build-up and New Caledonian Koniambo Nickel construction projects, from markets including China, Philippines, South Korea and Thailand.

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‘Mobile banking is one of the new frontiers of ICT innovation in the Pacific.’

sECTOR PROFILE: INFORMaTION & COMMuNICaTIONs TEChNOLOGY

Next generation technology hits the Pacific

the information and communications technology sector continues to expand and diversify across the Pacific Islands region, with benefits to businesses and consumers.

The continued opening up of mobile phone markets, new landings of submarine optic fibre cables and economic opportunities in leading markets such as Papua New Guinea and Guam are transforming the region more broadly.

ChaLLENGEs REMaINA 2010 Pacific Islands Forum Secretariat review of the Pacific’s digital health suggests subregional solutions may assist countries still lagging behind in updating their ICT policies and laws. It notes the cost of international capacity continues to be a barrier, because of the reliance on expensive satellite services. Telecommunications company Pactel has business in every Forum member country and the three French territories. Pactel’s CEO Andrew Taylor agrees there are still challenges: ‘Optical fibre won’t get everywhere just because a lot of the islands don’t make commercial sense now. They’re being installed through various government grants, but they don’t make commercial sense. While they will make a big difference to the user experience on the internet, no one is prepared to pay for it.’ Taylor points to new satellite technologies such as the O3b network—which is due to come online in 2012—as likely to help

islands lower their costs. O3b signed an agreement with Telecom Cook Islands in June 2010 to provide 155 megabits of bandwidth for internet connectivity to web users on the islands.

us PaCIFIC dYNaMICThe sector is somewhat different in Guam and the CNMI, where the US Federal Communications Commission regulates all interstate and international telecommunications facilities and services. These markets are dynamic. All trans-Pacific undersea cables pass through Guam to and from Asia, and its fixed line, mobile, cable and satellite communications infrastructure support a full range of domestic and international services. Long distance and wireless providers include GTA, GuamCell Communications, IT&E Overseas, Verizon, Pacific Telecom (PTI), TelePacific Network, Inc. (TNI), Hafa Tel and I Connect.

A Pactel installation in the Solomon Islands

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g o l d c o a s t , q u e e n s l a n d , a u s t r a l i a Po Box 6397 g.c.M.c. Bundall, qld, 9726 australiaPhone: +61 7 5596 4622 Fax: +61 7 5596 0319Email: [email protected]: www.webbpacific.com.au

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uNdERsEa CaBLEsA limited number of Pacific Island countries, territories and states are served by submarine optic fibre cables: Fiji, Papua New Guinea, Saipan (Northern Marianas), Guam, Federated States of Micronesia, Marshall Islands, French Polynesia and New Caledonia. French Polynesia is a recent addition, while the FSM and Marshall Islands are recent beneficiaries as branches of a US military cable.

MOBILE sERvICEsThe region’s dominant mobile telephone service provider is Digicel Pacific (see box). It was most recently awarded a licence to operate in French Polynesia, where it plans to invest US$100 million in a new network. The entry of Digicel into the Pacific has transformed the industry. In PNG, competitor operator bemobile was partly privatised by PNG Telikom. Bemobile has also been granted a licence to provide a second mobile network in Solomon Islands, although at the time of writing it was having difficulties meeting deadlines set by the Solomon Islands Government. The net effect of increased competition is not only better coverage at lower prices, but also expanded capabilities such as Blackberry™ access and mobile banking.

MOBILE BaNKINGMobile banking is one of the new frontiers of ICT innovation in the Pacific. The linking of Marshall Islands to a high-speed submarine fibre-optic cable has enabled the Bank of Marshall Islands to roll out mobile phone banking services. Users of the new service will also be able to transfer money to remote outer islands, buy time on their mobile phones, pay phone and power bills, and recharge their electrical meters.In Fiji, Vodafone Fiji recently launched its mobile money transfer service. While the program is still in development, newly registered companies can deposit money on their mobile phones in exchange for electronic value that they can then send to another mobile phone in Fiji. Digicel is also working with Westpac, ANZ and Bank South Pacific (BSP) on mobile banking services.

dEvELOPMENTs IN PNGThe booming oil and gas sector in PNG is also driving change. Pactel’s Andrew Taylor says however that the licencing regime for satellite services remains a hurdle, although they are reportedly scheduled for deregulation in late 2010. Daltron is a technology provider headquartered in PNG and also working in Vanuatu, Fiji and Solomon Islands. Acting General Manager Kumar Baliah says deregulation and the entry of LNG-related businesses are starting to drive demand for new products: ‘We’re looking at our ISP, we’re looking at our infrastructure capabilities, [and] refreshing our network with new equipment so the quality of services our customers get is better.’ Baliah says several PNG government departments are also looking at upgrading their servers and networks. In other developments, Telikom PNG and PNG Power have recently announced they will bring optic fibre telephone and internet links to Lae and Madang. The PNG Government is due to introduce an Information and Technology Communications Bill in late 2010.

We started with a vision of building a pan-Pacific network. digicel now operates in six markets: samoa, Papua New Guinea, Tonga, vanuatu, Fiji, Nauru and, launching this year, Tahiti.

digicel continues to talk to governments that are keen for competition and liberalisation. we are huge advocates of competition across all sectors because

it ensures that companies operate effectively. i would encourage governments to stop protecting their monopolies and open up and deregulate. a revolution has happened in the Pacific that has changed the face of how people are doing business and brought improvements to their lives.

we are developing new products and services. a few years ago to have roaming in the Pacific on your mobile phone was impossible. now you

The Inside View: vanessa Slowey, Digicel

can roam all of our markets; we have 145 roaming partners worldwide. it has changed people’s lives and i think that is why we have survived and thrived in the Pacific.

digicel is also working on mobile banking and e-commerce solutions. it’s a very exciting product that is taking technology and smartly using it to bring value to your customers, using your mobile phones.

consumers are more and more conscious about value for money. we are developing several products to make it easier. in fiji, we launched a new campaign called ‘it’s Simple’, with an unrivalled rate.

digicel is very interested in east timor. we are working closely with the government of east timor in the liberalisation process. we would hope to have operations there soon.

‘A few years ago to have roaming in the Pacific on your mobile phone was impossible.’

Daltron’s technology training centre in Port Moresby.

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sECTOR PROFILE: MINING & PETROLEuM

Dependent on its own resources

Many Pacific territories sit within the ‘Pacific Ring of Fire’—a highly prospective area of geological activity that stretches from the North Island of New Zealand in the South, through Fiji, New Caledonia and the Solomon Islands, and north into the

region’s largest source of minerals, Papua New Guinea (PNG). The region is home to significant deposits of several valuable mineral commodities, including gold, silver, copper, nickel, cobalt, natural gas and oil.

IMPaCT OF ThE GFCAs a sector exposed to the vagaries of global capital markets, the Pacific’s mining and petroleum sector was undoubtedly more affected by the global financial crisis of 2008–2009 than most other sectors. As the prices of many commodities—notably gold, nickel and gas—fell dramatically, many exploration companies suspended their activities to conserve their capital until such time as prices rose again. Now that prices have rebounded, activity in the sector has risen sharply—both onshore and under the sea, most notably in PNG and New Caledonia, but also in the Solomon Islands, Fiji and Tonga.

WORLd CLass PROjECTsThe mining and petroleum industry has a long history in the Pacific. Petroleum exploration, for instance, commenced in PNG before the First World War. While major facilities such as the Ok Tedi copper mine in PNG and Societé Le Nickel’s Doniambo nickel smelter in New Caledonia—the world’s largest—have been fixtures of the sector for sometime, there is a new crop of new world-class resources projects currently under way that are likely to transform the economy of several Pacific countries. These include:

• TheUS$15billionPNGLNGliquefiedgasprojectinPapuaNewGuinea’s Highlands, led by ExxonMobil (see page 16)

• TheUS$3.8billionXstrata-ledKoniambonickelprojectinNewCaledonia’s North Province

• Vale’s$US3.2billionGoronickelprojectinNewCaledonia’sSouthProvince

• Xstrata’sFriedaRivercopper-goldprojectinPNG’sSandaunProvince

• TheUS$1.37billionRamunickel-cobaltprojectinPNG’sMadangProvince

PaPua NEW GuINEaPNG has the region’s largest mining and petroleum sector, which contributed 63% of the country’s export revenue in the third quarter of 2009. Because of the industry’s long history in the country and its importance to the economy, the regulatory framework for mining is relatively mature and stable, and there is a substantial body of geological data available for exploration companies, which can be sourced from the country’s Mineral Resources Authority. The big story in PNG is undoubtedly the US$15 billion PNG LNG Project, led by ExxonMobil. This enormous 30-year liquefied natural gas (LNG) project is now under construction, with first LNG expected in 2014. Other LNG projects are also in the offing (see page 16). Two new mines are about to go into production. The Ramu nickel-cobalt mine is not only the first major nickel project in PNG but also the first instance of Chinese investment in PNG’s minerals sector. The project, being developed in Madang Province by the Chinese Metallurgical Group Corporation in partnership with Highlands Pacific, is designed to produce 31,500 tonnes of nickel and 3300 tonnes of cobalt per annum over a 20-year mine life, with potential for further development. Work on the Hidden Valley gold mine in Morobe Province is now complete. The Harmony Gold-Newcrest Mining joint venture will produce gold for at least 10 years. As mentioned above, the Frieda River copper-gold project is a likely 30-year mine for the future. Exploratory drilling suggest the mine could produce as much as 160,000 tonnes of copper and 240,00 ounces of gold per annum for over 20 years. A feasibility study is due by January 2012. The Lihir Island gold mine in New Ireland Province is the fourth largest by reserves in the world. The mine’s operator, ASX-listed Lihir Gold Limited (LGL), is currently engaged in a major mine expansion which will raise annual production to a million ounces. At the time of writing, a merger of LGL and another gold miner with a strong presence in the region, Newcrest Mining, was close to finalisation.

NEW CaLEdONIaNew Caledonia possesses 25% of the world’s nickel reserves. With nickel a key ingredient in stainless steel, long term demand for this element seems assured, in spite of its typically volatile global price. For years, Eramet SA’s Doniambo nickel smelter, fed by three nickel mines, has been a feature of the landscape of New Caledonia’s capital, Noumea. It will soon be joined by two further projects, the Goro

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while the Pacific is a net importer of oil, it is a major source of other minerals, most notably natural gas, gold, copper and nickel. moreover, its mining and petroleum industry is currently undergoing transforma-tional growth.

The Xstrata Copper-led Frieda River project in Papua New Guinea is regarded as one of the world’s top emerging copper-gold projects.


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Nickel project led by Brazil’s Vale, and the Koniambo nickel mine, a joint venture between Xstrata and Société Minière du Sud Pacifique (SMSP). New Caledonia’s recently revised Mining Code encourages the onshore processing of higher grade nickel ore for export, but SMSP has also established a smelting operation in Korea in partnership with Korean company POSCO to process lower-grade ore.

sOLOMON IsLaNdsThe Gold Ridge mine has been closed since the social tensions of the early 2000s. Since 2005, work has been under way to reopen what has the potential to be a 120,000 ounce per annum gold mine. In late 2009, the mine owner Australian Solomons Gold was bought by Australia’s Allied Gold, which already has mining interest in neighbouring PNG. Contracts for the refurbishment of the mine have already been signed and, in June 2010, Allied Gold announced the finalisation of a US$35 million loan facility from the World Bank’s International Finance Corporation to assist with the mine’s reopening. Allied Gold has indicated gold production could resume as early as 2011. Until recently, exploration activity in the Solomons has been inhibited by social unrest, but there is a general acceptance that gold and other mineral deposits exist outside the Gold Ridge lease. Exploration company Solomon Gold, in partnership with major gold producer Newmont Mining, is currently exploring for gold and copper on Guadalcanal Island. Tokyo-based Sumitomo Metal Mining has been exploring for nickel-ore deposits since 2006 in Isabel Province and an international tender for a nickel mine there is being prepared by the Isabel provincial government.

ELsEWhERE IN ThE PaCIFICMany expectations are being aroused across the Pacific by the prospecting being conducted by Nautilus Minerals on the floor of the Bismarck Sea off the coast of Papua New Guinea and in deeper waters to the west of Tonga. The hope eventually is to harvest copper, gold, silver and zinc deposits from the sea floor using technology pioneered by the offshore oil and gas industry.

Nautilus, a company listed on London Stock Exchange’s Alternative Investment Market (AIM), was one of many exploration companies to slow down its operations during the global financial crisis but it is now forging ahead with its exploration and evaluation program. Fiji is home to the Vatukoula gold mine. Closed by previous owner Emperor Gold Mines in 2006, the mine re-opened in 2008 and is now owned by AIM-listed Vatukoula Gold Mines PLC. The company hopes to reach a production target of 100,000 ounces per annum at the mine by 2011.

EasT TIMOR (TIMOR-LEsTE)The world’s youngest country is currently in negotiations with a consortium led by Australia’s Woodside Petroleum to develop the Greater Sunrise field. Estimates suggest the field, situated in the Joint Petroleum Development Area between East Timor and Australia, holds 5.13 trillion cubic feet of gas as well as 300 million barrels of condensate. At the time of writing, the method of transporting and processing the gas remains a sticking point in negotiations.

sECTOR PROFILE: MINING & PETROLEuM

TOWaRds a REGIONaL PETROChEMICaL INdusTRY?

InterOil’s Napa Napa refinery outside Port Moresby in PNG

The Pacific’s dependence on imported refined oil is well-documented. however, with the development of Papua New Guinea’s petroleum and gas industry, more value may be added to oil and gas products within the region in future.

Since 2004, the Pacific petroleum and gas sector’s only downstream processing facility has been interoil’s oil refinery at napa napa near Port moresby in Papua new guinea (pictured left), which has a nominal capacity of 32,500 barrels per day.

with the arrival of liquefied natural gas (lng) in Png, however, exxonmobil is building a lng liquefaction and storage facility to be located 29km north-west of Port moresby. interoil plans to follow suit.

to take advantage of these new developments, the Png government has set aside land in the vicinity of the lng facility for the new konebada Petroleum Park.

it is hoped that the park will become the site for a nascent petrochemical industry for Png and the Pacific region, and incentives may be offered to attract businesses to the park. the konebada Petroleum Park authority will have responsibility for governance and infrastructure at the facility.

Construction of the new Koniambo nickel mine and processing plant in New Caledonia’s Northern Province is expected to be complete by mid-2012.

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sECTOR PROFILE: aGRIBusINEss & MaNuFaCTuRING

Growing it, making itwith its rich farming heritage and ideal climate, the Pacific is naturally strong in agriculture. the region’s need to add value to its agricultural commodities, and its access to favourable trade agreements, have also led it to develop a growing manufacturing sector.

AGRIBUSINESSThe vast majority of the Pacific’s population, and those in East Timor too, derive their livelihoods at least in part from agricultural activity. Growing conditions in the region are generally excellent, with reliable rainfall, rich soils and warm temperatures, and the variety of produce that can be grown is therefore broad. Cash crops such as copra, cocoa, coffee, sugar and oil palm are grown successfully in many Pacific island countries, as are a wide range of tropical fruits, vegetables and spices.

ORGaNIC OPPORTuNITIEsNotably, the region’s traditional farming methods lend themselves to chemical-free and organic produce. While organic yields are typically lower that they might be with more intensive farming methods, the widespread absence of pesticides and fertilisers gives Pacific producers the opportunity to tap into higher value organic niche markets. Venui Vanilla on the island of Espiritu Santo in Vanuatu is one company taking this opportunity: it has been producing organically certified vanilla, turmeric and other spices for export since 1997. Venui Vanilla is supplied by some 200 organically certified spice producers in the Vanuatu Spice Network, which has gained organic accreditation under the umbrella of the Farm Support Association. Papua New Guinea is the world’s second largest producer of vanilla after Madagascar. Pacific Spices is another business expanding operations thanks to its ‘organic community’ of Komgi in East New Britain Province. Also in PNG, Mainland Holdings’ Vanilla Rapid Curing Project will eventually provide a reliable market for 10,000 rural suppliers.

YOu shOuLd COCOa‘Cocoa is the obvious stand out of the commodities,’ notes Pacific Islands Trade and Invest’s Robyn Ekstrom. ‘Global production of cocoa is projected to fall short of demand for the fifth year in a row due to a number of factors, including political disruption, disease and lack of investment in new plantings. This has in part led to near record prices, with the London International Financial Futures and Options Exchange price of cocoa moving above £2500 in June 2010. To put this in perspective, a tonne of cocoa sold for around £600 in 2000.’ Papua New Guinea produces a particularly high grade of cocoa. With global confectionary companies such as Mars and Nestlé committing to buying certified sustainable cocoa in the future, producers in PNG—including New Guinea Islands Produce Company, which listed on the Port Moresby Stock Exchange in 2009—should be well-placed.

In the opinion of Mars Australia’s Dr Smilja Lambert, who addressed the May 2010 Australia PNG Business Forum in Cairns, if appropriate controls for the cocoa pod borer can be put in place, PNG’s cocoa exports could rise from 56,000 tonnes to 200,000 tonnes per annum.

aCCEssING OvERsEas MaRKETsDistance to market is a major challenge for agricultural producers. Many are also constrained by underdeveloped infrastructure: poor roads and wharfing, and infrequent ferry services and coastal shipping. Exporting primary produce also raises issues of compliance, quarantine and certification. Western countries often place quite strong demands on those that supply them, through food labelling, treatment and testing requirements. In September 2008, the European Union (EU) voted to scrap the Sugar Protocol that gives some African, Caribbean and Pacific countries privileged duty-free access at subsidised prices to the EU market. This development is a major concern to Fiji, the region’s major sugar exporter. In July 2010, Fiji’s Sugar Corporation announced the lay-off of 1000 workers, to take place over an 18-month period. To date, Tonga’s trade access to first world markets has been inhibited by stringent, first world quarantine and biodiversity requirements. However, as a result of investment in a hot air treatment plant, New Zealand allowed entry of fruits like mango and tomatoes from Tonga in 2009.

• Beef

• Cocoa

• Coconut(copra,coconutmilkandoil)

• Coffee

• Freshfruit—lime,papaya,tomatoes,melons,banana,noni,breadfuit, mango, avocado, tapioca

• Palmoil

• Spicesetc—vanilla,turmeric,ginger,sandalwood,chillies,pepper,essential oils

• Sugar

• Vegetables—rootcrops(kava,taro,cassava,yams)

TOP PaCIFIC IsLaNd aGRICuLTuRaL PROduCE

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opportunities for investment in the agribusiness sector in the Pacific island countries have not radically changed in the last two years. however, the good news is that there are new and emerging products that offer good returns for anyone with the will and flexibility to grasp the opportunity.

• Coolchaindevelopmentremainsanareaofpotential,withsomenotable success in Papua new guinea demonstrating that locally-sourced fruit and vegetables are viable and consumers are keen to support local growers.

• Beef/dairyherdimprovementandexpansionisrequiredforlocalconsumption and export.

• Thecommercialisationof‘exotic’nutsandfruitsviathedevelopment of orchards for domestic and export markets shows promise.

• Thereissignificantinternationaldemandforminimally-processed,organically certified fruit and/or vegetables

• ThereisalsoagrowingdemandforForestStewardshipCouncil(fSc) or Programme for the endorsement of forest certification (Pefc) certified timber.

• Generally,ethicallyorsustainablyproducedandcertifiednicheproducts have a strengthening market.

the most exciting new entry to the investment potential mix is young

INvEsTMENT OPPORTuNITIEs IN PaCIFIC aGRIBusINEss


coconut water; the must-have product for the trendy health conscious set in countries where most people have never set eyes on a coconut.

boasting a range of hollywood stars as avid fans, young coconut water is being marketed as the natural sports drink capitalising on naturally occurring essential vitamins and minerals, antioxidants, amino acids and lauric acid.

Several established international brands of coconut water and a number of australian companies are preparing to launch coconut water brands in australia in the next six to twelve months.

the good news for the Pacific is that these companies need to source their product from somewhere and there is significant demand for quality product either in bulk or bottled to specification. Particular interest is being expressed for organically certified and cold sterilised coconut water. this cold sterilisation process minimises the breakdown of the nutrients and ensures a nutritionally superior product to traditional heat dependant methods.

coconut water is currently being sourced from South america and asia. australian companies have indicated that they’d like to source from the Pacific (and possibly work this into their branding) but to date i am unaware of any business in our region that is capable of supplying their needs.

Robyn Ekstrom is Coordinator—Export and Enterprise Development at Pacific Islands Trade and Invest.

MANUFACTURINGThe manufacturing landscape in the Pacific consists of several large international companies, but also many smaller-scale, locally-owned firms. Manufacturing can not only add value to locally-produced raw materials, but can also provide much-needed employment in the formal sector.

GROWING MaNuFaCTuRING BasEAs the Pacific economy develops, so too manufacturing businesses of all kinds are becoming not only viable but profitable. The region’s manufacturing centres are Papua New Guinea and Fiji. PNG hosts not only branches of multinationals such as Coca Cola Amatil, Nestlé (see box) and Arnotts, but also locally-founded companies such as paper, chemical and food container manufacturer K K Kingston. With 15% growth per annum for the last five years, the firm is now looking to bring in additional investment to take advantage of the boom in PNG’s economy. The Biscuit Company of Fiji demonstrates the region’s ability to compete on the world stage, its modern factory near Suva exporting large volumes of biscuits to the US, Australia and New Zealand. With thirsty tourists and a growing local middle class, brewing is a manufacturing staple in the Pacific, with most countries having their own locally-brewed product. In December 2009, Asia Pacific Brands Ltd, who already owns PNG’s largest brewer, South Pacific Brewery

extended their manufacturing footprint in the region with the purchase of Heineken’s 87.3% interest in New Caledonia’s Grande Brasserie de Nouvelle Caledonie. Pacific companies are also having a tilt at the US$87 billion dollar global bottled water market. US-owned Fiji Water, which spearheaded this sector has now been joined by the South Pacific Water Co from Samoa. Meanwhile, Vanuatu’s Azure Pure Water is placing water in local hotels, restaurants and work places. All three companies have built their brands on the Pacific’s positive image as an untainted part of the world.

LOCaL TRadERs, GLOBaL TRENdsWhile Pacific Forum manufacturers have had preferential access to Australian and New Zealand markets under the non-reciprocal South Pacific Regional Trade and Economic Co-operation Agreement (SPARTECA), trade agreements by themselves do not guarantee success. The Fijian textile, footwear and garment industries have long benefited from duty free trade access to the US and Australian markets, but the phase-out of these quotas and the global downturn have resulted in a 25% export downturn and job losses. In Samoa, the Japanese-owned Yazaki EDS wire harness factory is Samoa’s biggest manufacturing facility and private employer. But the decline in global automotive sales has flowed on with a production downsize and subsequent layoffs, although Yazaki EDS did rehire 120 workers in March 2009.

sELF-PROMOTIONLocal manufacturers are not content to wait for the global situation to improve. In January 2010, the ‘Make it in Fiji’ marketing awareness campaign began, allocating $300,000 towards the revival of Fiji’s garment sector. Meanwhile, the Manufacturers Council of PNG bolstered its ‘PNG Made’ marketing campaign in 2010 with television advertising, to drive domestic demand for PNG products.

‘Cash crops such as copra, cocoa, coffee, sugar and oil palm are grown successfully in many Pacific island countries, as are a wide range of tropical fruits, vegetables and spices.’

Pacific Islands Trade & Invest’s agribusiness specialist Robyn Ekstrom considers new areas of opportunity and growth.

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an inspiring example for the huge regional potential in palm oil is PNG’s leading agribusiness and largest sustainable palm oil producer, New Britain Palm Oil Ltd (NBPOL).

in early 2010, nbPol established an £18 million refinery in the united kingdom to fulfil major supply deals with confectionery giants ferrero and united biscuits. the liverpool refinery underscores the organisation’s compliance with sustainability protocols as a member of the roundtable on Sustainable Palm oil (rSPo).

‘the uk facility will also ensure that nbPol will be the first palm

For a number of decades, Nestlé, the world’s largest food and beverage company, has maintained a strong product and manufacturing presence in the Pacific Islands.

with more than 2,500 product lines, 15 factories and over 5000 employees, nestlé oceania’s footprint totals aud$3.1 billion across australia, new Zealand and almost every country in the region.

iconic food brands such as maggi and milo form just a small part of the company’s solid product portfolio that reaches the thousands of diverse communities dotted throughout the Pacific islands. nestlé sells a wide range of food and beverage products in the region, ranging from instant

NEW BRITaIN PaLM OIL LTd

REaChING OuT TO ThE PaCIFIC CONsuMER


noodles in Papua new guinea to water and breakfast cereals in french Polynesia. key to its range is maggi noodles, Sunshine milk, nescafe coffee, and milo. other products include coffee-mate non-dairy creamer, infant nutrition, petcare, chocolate, ice cream and nespresso.

this year, maggi noodles celebrates its 25th anniversary in Papua new guinea. maggi noodles was first introduced into Png in 1985 and the initial demand was so strong that a noodle making factory was opened shortly thereafter in lae by the then Prime minister, Sir julius chan.

nestlé started trading in new caledonia in 1995 and in french Polynesia a year later. now, in 2010, it supplies products to many other Pacific island countries such as vanuatu, Samoa, tonga and fiji. in 2009, nestlé sold its factory at ba, fiji, to its long term partner, local manufacturer c j Patel.

nestlé understands the vital role it plays in helping to build and sustain healthy generations of emerging societies. in 2009, it undertook an ambitious nutritional education program in Papua new guinea as part of its creating Shared value initiative. this ‘nutrition roadshow’ visits consumers in villages to educate them about the importance of following a healthy lifestyle. nestlé also supports local farmers by sourcing coffee for its local nescafe niugini blend coffee.

but running a successful business is not just about the bottom line—it’s also about educating and empowering employees. today, it proudly notes that its factory in Papua new guinea is staffed entirely by locals.

NBPOL’s new refinery in the United Kingdom.

oil producer to offer customers fully traceable, sustainable, ethically produced palm oil product. we believe that our dedicated supply chain should ensure that nbPol will be able to supply palm oil that is traceable from “palm to plate”, giving manufacturers and consumers total confidence in their product,’ said nick thomson, ceo of new britain Palm oil ltd (nbPol).

nbPol is expanding locally too, acquiring some 25,000 hectares of Png oil palm estates in 2010 from cargill inc and the Singapore government’s temasek holdings. with its expansion outside of Png in the form of guadalcanal Plains Palm oil ltd in the Solomon islands, nbPol looks well set for the future.

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Nestlé Pacific Islands’ new Managing Director Graeme Toft succeeded Sylvain Pons in June 2010.

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sECTOR PROFILE: FOREsTRY

‘Many companies are already voluntarily adopting processes to ensure sustainability in export markets.’

Branching outHistorically, the value of forestry to regional development has been undermined by poor administration, regulation and lack of focus on socio-economic benefits and downstream processing. Pacific islands are discovering that to overcome these challenges, they must work smarter.

One big avenue of opportunity for forestry investors and local economies is ‘downstream processing’—adding value to timber before it leaves the shore. This keeps jobs in the region and is proving far more lucrative for local businesses and economies, with the price of logs

about US$60 per cubic foot and the same volume of processed timber worth up to US$500. In PNG, updated regulations and moves towards certification of processes for forest products are beginning to generate growth in the downstream industry. A 2009 revision to National Forest Development guidelines proposes that all new allocations of natural forest permits will be issued solely for the purpose of downstream processing. Similarly, pressure from international markets is compelling wood processing companies to be audited before products leave the country. Swiss certifier SGS, which has run certification programs in PNG for 15 years, was recently awarded the tender to develop new standards for forest products. However, many companies are already voluntarily adopting processes to ensure sustainability in export markets. One success story is the Malaysian forestry operator Rimbunan Hijau (R H) Group, which now runs five downstream processing operations in PNG, generating 19% of its total turnover. R H Group has also developed its own internal audit program to ensure that international standards are being met. Another leader is Lae Builders and Contractors Ltd, which has been exporting high-quality furniture to Australia and New Zealand for the last seven years.

susTaINaBILITY IssuEsIn the Solomon Islands, the picture is somewhat grimmer. Here, exports of round logs contribute over 70–85% of export earnings and 18% of total government revenue. Forest-based industries are also a major source of employment. However, the current level of harvesting from natural forests is not sustainable, environmentally or economically. Without intervention, the industry faces severe and inevitable shortages in the near future.

A number of strategies are coming to the rescue, including the more stringent policing of the Code of Logging Practice, increased plantation development and the EU-funded Facilitating Agricultural Commodity Trade (FACT) project. In its initial stages, this project seeks to develop a market information system for Solomon Island timbers. According to FACT Team Leader Dr Lex Thomson, ‘the study focused on identifying sources of price information for Solomon Island timbers, value-adding options, marketing of flueggea poles in Australia and New Zealand, and new market opportunities for Solomon Island wooden handicraft.’

Climate change adds an extra dimension to the environmental challenges facing Pacific nations.

Several Pacific countries are participating in the united nations’ redd program (reducing emissions from deforestation and forest degradation), which is designed to help countries reduce greenhouse emissions caused by deforestation and forest degradation.

CLIMaTE ChaNGE: PaCIFIC COuNTRIEs GET REdd-REadY

redd+ goes further, including the role of conservation, sustainable management of forests and enhancement of forest carbon stocks in reducing emissions. Papua new guinea is one of the program’s nine pilot countries, while the Solomon islands is waiting in the wings as a partner country. in 2010, the fiji government announced that it was on track to be redd-ready by the end of 2012, courtesy of a national redd+ policy.

CuLTIvaTING GROWThIn Fiji, forestry is considered a ‘growth sector’ and the estimated harvest is anticipated to increase. Around 52% of Fiji’s total land area is covered by forest, with plantations comprising 10% and native forest the rest. The outlook for the forestry sector is bright, but dependent on the large-scale utilisation of plantation resources. Today, Fiji has about 50,000 hectares of mahogany plantations, possibly some of the most valuable in the world, 40,000 hectares of pine plantations and about 11,000 hectares of other hardwood plantations. Current policy is to continue to enlarge the plantation areas, minimising the need to log natural forest. In May 2009, a teak plantation project by Future Forests Fiji was awarded a grant of AUD$190,000 under the Australian Government’s AUD$20 million Enterprise Challenge Fund program. The grant will enable Future Forests to expand and modernise its facilities, creating long-term employment and training opportunities for local indigenous landowners.

In May 2010, the Swire Papua New Guinea Rainforest Study was officially launched.The project, funded by John Swire & Sons, represents the first long term study of carbon dynamics in PNG forests and will increase scientists’ ability to assess the response of Pacific forests to global climate change.

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sECTOR PROFILE: FIshERIEs

Fresh angles on fishing

‘Over 50% of the world’s tuna comes from the South Pacific region.’

Pacific Island countries are working to preserve their marine interests and capture a larger benefit from the wealth of riches beneath their seas.

The South Pacific forms approximately half of the largest water body on earth. Even with some 25,000 islands, the exceptionally low land-to-water ratio means commercial fishing is a critically important industry for Pacific Island Countries (PICs). Many of the world’s marine species are

found in their Exclusive Economic Zone (EEZ) waters: tuna, mackerel, snapper, sea bream, trevally, grouper, coral trout, rock cod, marlin, sailfish, mahi-mahi, barracuda, opah, aquarium fish, prawns, crayfish, lobsters, abalone, giant clams, seaweed, coral and trochus shell account for the multibillion dollar subsistence, export and processing industries.

TuNa suPPLIER TO ThE WORLdUnique black pearls are found in French Polynesia and the Cook Islands, and New Caledonia benefits from the high export value of Pacific blue prawns, but it is tuna that dominates the region’s fishing industry. Over 50% of the world’s tuna comes from the South Pacific region. Skipjack, bluefin, bigeye, yellowfin and South Pacific albacore fishing are heavily scrutinised under sustainability measures to avoid further overfishing. Moves for a complete bluefin trade ban were narrowly defeated at the Convention on the International Trade of Endangered Species (CITES) in March 2010. While pole-and-line fishing appears more sustainable to consumers and conservationists over purse seine and long-line methods, one side effect is a strain on live bait catch.

REGuLaTIONs IN PLaCESeveral key bodies implement the regulatory framework for fisheries management. The Pacific Islands Forum Fisheries Agency (FFA) administers and supports the harvesting, processing and marketing of migratory fish in the South Pacific for its member states through a series of treaties. The Parties to the Nauru Agreement (PNA) is a group of eight Pacific island countries with a sub-regional agreement to manage tuna purse seine fishing licences. The PNA added a conservation levy to purse seine vessels operating in its member countries’ waters in July 2010. In addition, the Niue Treaty agrees on cooperation between FFA members on monitoring, control and surveillance of fishing (resulting in the prosecution of unlicensed fishing vessels), while the Western and Central Pacific Fisheries Convention (WCPFC) is an international fisheries agreement on long-term conservation and sustainable management of migratory fish stocks and the Secretariat of the Pacific Community (SPC) also provides technical research and strategic

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engagement through the Division of Fisheries, Aquaculture and Marine Ecosystems (FAME). Lastly, in May 2009, the six-nation Coral Triangle Initiative (CTI) set out a regional plan to sustainably manage biodiversity and the multi-billion dollar fishing industry in the triangular region between the Philippines, the Solomon Islands and Malaysia. The 5.7 million square kilometre region is home to 56% of all known coral reefs and some 120 million people.

MOvING ON FROM LICENCE FEEsHistorically, foreign fleets have paid licence fees to PICs to commercially fish within their EEZs. This has meant that the fish value and the profitable related industries of fish processing have moved offshore, leaving PICs with little more than licence fees or less than 5% of the overall resource value. The move to add value to the PICs’ fish revenue with onshore processing, which includes cooking, filleting, drying, canning, freezing and packaging, is on the rise, as with Papua New Guinea’s US$300 million dollar Pacific Marine Industrial Park in Madang (see box). But an easy reliance on foreign fishing fees and a desire to preserve lucrative dive waters has made some PICs reluctant to diversify. Of course, onshore processing in order to drag the revenue downstream is still subject to the free market: American Samoa’s economic dependence on tuna processing was highlighted in September 2009, when the Chicken of the Sea cannery closed to seek reduced labour costs in Thailand and alternative processing in Fiji. In June 2010, the US territory’s last remaining cannery, Korean-owned StarKist, announced 800 job losses.

CONsERvING ThE CaTChThe Parties to the Nauru Agreement (the ‘OPEC of tuna’) have sought eco-label certification from the Marine Stewardship Council for free-

sECTOR PROFILE: FIshERIEs

school skipjack tuna from purse seiners, while closing 4.5 million square kilometres of high seas surrounding their EEZs from the same fishing method from January 2011, thereby corralling a larger stake of the 25% of global tuna caught in that sub-region. In April 2010, Palau’s President Johnson Toribiong said his government was drafting legislation to limit fishing agreements with foreign companies to boost domestic use of Palau’s fish stocks. Preferential access to larger markets is a key motivator for investors; 14 PICs have preferential trade access to the European Union (EU), five have tariff-free exports to the EU with ‘least developed country’ status and several PICs enjoy the benefits from direct EU trade access from an economic relationship with France or to the US from a free association compact.

LuRING OFF-shORE INvEsTORsThe real opportunities for investors lie in further adding value in these production shifts. For example, the Solomon Islands was negotiating with Korean, Filipino and Taiwanese investors in early 2010 for onshore canning facilities that may almost double the production of one of its major players, Soltai (formerly Solomon Taiyo). With tariff-free export to the EU, there’s potential for more capital growth in the Solomon’s warming investment climate. In Tonga, while only deep-sea long-line fishing is open to international business due to chronic overfishing, there have been positive trials to develop other deep-sea varieties such as blue nose and alfosino, as well as sea cucumber.

The planned 215-hectare us$300 million Pacific Marine Industrial Zone (PMIZ) in the town of Madang in Papua New Guinea (PNG) is starting to take shape.

in early 2010, the Png government announced that it had obtained a 202 million kina (uS$71 million) concessional loan facility for the construction of the park from export-import bank of china. a chinese company, Shenyang international economic and technical cooperation co. ltd, has been engaged to construct the park.

madang, capital of madang Province, is already a major fish processing centre. it is hoped that the town can become a major processing centre not just for Png’s tuna catch, but also for fish caught in the waters of other Pacific countries.

the international finance corporation is currently assisting the Png government with the drafting of new legislation to cover special economic zones such as the PmiZ. the legislation is likely to include incentives and exemptions for businesses.

PaCIFIC MaRINE INdusTRIaL ZONE

Philippines-owned R D Tuna already has extensive fish processing operations in Madang, site of the proposed Pacific Marine Industrial Zone.

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PoPuLAtIoN: 66, 432 (2010)

CAPItAL: Pago Pago

SurFACe AreA: 199 sq km, EEZ 390,000 sq km

PeoPLe: Pacific Islander 91.6%, asian 2.8%, white 1.1%, mixed 4.2% (2000)

tIme ZoNe: GMT +11 hrs

BuSINeSS LANguAge: English

PoLItICAL StAtuS: unincorporated and unorganised territory of the united states

NomINAL gDP: us$462.2 million (2009)

CurreNCy: us dollar

mAJor INDuStrIAL SeCtorS: Food production

exPortS: Canned tuna (largely supplied by foreign fishing vessels)

mAJor exPort mArKetS: usa, New Zealand, samoa, Fiji

ImPortS: Materials for canneries; food; petroleum products; machinery and parts, building materials

mAJor ImPort mArKetS: usa, New Zealand

COuNTRY PROFILEs

American Samoa

Data compiled with the assistance of Pacific Islands Trade & Invest (Sydney).

As a result of the US naval presence in the Pacific (which predates World War II), American Samoa is officially an unincorporated territory of the US. American Samoa is halfway between New Zealand and Hawai’i. The tsunami of late 2009 saw sad losses for American Samoa, but the economy, which is heavily reliant on the declining tuna canning industry, is facing more long-term challenges. The Chicken of the Sea canning plant—which together with the Starkist cannery accounted for 80% of the islands’ employment—closed its doors in late 2009, although there have been reports of a cooperative arrangement being formed. US Government funding constitutes around two-thirds of American Samoan Government revenue, which means the territory is stabilised as it turns to new economic prospects. It has also benefited from President Obama’s Global Economic Crisis Stimulus Package. American Samoa has a number of unique advantages, including a first-world

CoNtACtSdepartment of Commerceamerican samoa Government

a P lutali executive office buildingPago Pago, american Samoa 96799tel: +684 633 5155fax: +684 633 4195

american samoa Chamber of Commerce

Po box 2446, Pago Pago,american Samoa 96799www.amsamoachamber.com

telecommunications and broadband internet infrastructure, an educated, English-speaking population, a stable political system and a legal framework based on US law. The US Federal Emergency Management Agency is overseeing the tsunami relief program of nearly US$25 million. Like many Pacific Island economies, tourism is a significant investment opportunity. Other opportunities are to be found in agriculture, transportation (American Samoa is an important regional hub) and alternative energy.

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tokelau has a population of 1416 and a surface area of just 12 sq km, about 500 kms north of Samoa. although increasingly independent, it remains a non-self-governing territory of new Zealand and successive referendums to amend this status have been narrowly defeated.

tokelau has the smallest gdP in the world and the mainstay of the economy is funding from new Zealand—nZ$19 million in 2009/10. fisheries licensing, handicrafts, tourism and stamps and coins provide locally generated

revenues. remittances from overseas tokelauans also account for revenue dollars.

no air access, a limited land mass and its low-lying position are challenges for tiny tokelau; there is only one tourist facility on the islands and there has been a decline in copra demand, formerly the major export. in early 2010, tokelau banned whaling in its 290,000 sq km eeZ.

PoPuLAtIoN: 24,400 (2009)

CAPItAL: avarua, Rarotonga

SurFACe AreA: 240 sq km

PeoPLe: Cook Island Maori (Polynesian) 87.7%, part Cook Island Maori 5.8%, other 6.5% (2001 census)

tIme ZoNe: GMT – 10 hours


PoLItICAL StAtuS: self-governing nation in free association with New Zealand


INFLAtIoN: 2.10% (2010)

CurreNCy: New Zealand dollar

mAJor INDuStrIAL SeCtorS: Tourism, black pearls, offshore finance centre, fruit (fresh and tinned), fish and clothing

exPortS: Pearls, pawpaw, clothing

mAJor exPort mArKetS: japan, New Zealand, australia, hong Kong, usa

ImPortS: Food, animals, machinery, mineral fuels

mAJor ImPort mArKetS: New Zealand, Fiji, australia

Named after Captain Cook, who visited in 1770, the Cook Islands consists of 15 widely dispersed islands, situated between Fiji and French Polynesia. Cook Islanders hold New Zealand citizenship and enjoy the right of free access. The past decade has seen many Cook Islanders migrate to New Zealand and travel abroad in search of employment opportunities. In spite of this, the Cook Islands’ tourism industry has developed into somewhat of a regional success story,

assisted by an increased number of scheduled flights between Rarotonga and New Zealand. Visitor numbers are currently growing steadily with over 100,000 visitors in 2009, as the Government continues prioritising this sector. While the Cook Islands relies on New Zealand’s support, especially after poor economic policies of the 1980s and 1990s, the export of black pearls from its large Exclusive Economic Zone

leads the economy forward. Together with a restructured debt agreement and strengthened fiscal policies, the Cook Islands has enjoyed restimulated growth.

COuNTRY PROFILEs

Cook Islands


CoNtACtBusiness Trade Investment Boardavarua, rarotonga, cook islandstel: +682 24 296email: [email protected]

CoNtACtCouncil for the Ongoing Government of Tokelauwww.tokelau.org.nz

TOKELau

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PoPuLAtIoN: 1.1 million

CAPItAL: dili

SurFACe AreA: 14,874 sq km

PeoPLe: Timorese, Chinese minority

tIme ZoNeS: GMT +9 hrs

BuSINeSS LANguAge: Tetum (official), Portuguese (official), Indonesian, English

PoLItICAL StAtuS: Republic

NomINAL gDP: us$590 million (2009)

INFLAtIoN: 4% (2010)

CurreNCy: us dollar, local coinage

mAJor INDuStrIAL SeCtorS: Petroleum, agriculture

exPortS: Coffee, oil

mAJor exPort mArKetS: Indonesia, singapore, australia

ImPortS: vehicles, food, refined petroleum products

mAJor ImPort mArKetS: australia, Germany, Portugal

worLD BANK eASe oF DoINg BuSINeSS rANKINg 2010: 164 of 183

COuNTRY PROFILEs

East Timor (Timor-Leste)

Situated 640kms from Darwin at the eastern tip of the Indonesian archipelago, Timor-Leste (East Timor) is a mountainous republic currently enjoying its longest period of post-independence stability. The predominantly Catholic population has the highest birth rate in the world and is also growing with returning citizens. It has been 10 years since Timor-Leste lost 70% of its infrastructure and over 300,000 people to exile or worse when the power vacuum from departing colonial administrator Portugal led to Indonesia’s invasion. Intensive United Nations support, largely administered by Australia, saw independence declared in 2002. Australia’s Official Development Assistance budget for East Timor in 2008–09 was AUD$96.34 million. The East Timorese economy’s saviour is off-shore fuel deposits. The national Petroleum Fund has now accumulated


CoNtACtTradeInvest Timor-Lestetel: +670 726 6909email: [email protected]

savings of over US$5.3 billion. Maritime border and gas field negotiations with Australia are ongoing. Both governments are courting the prospect of on-shore processing facilities from the Woodside Gas project in the Greater Sunrise gas fields. At the time of publication, the East Timorese have rejected Woodside’s latest plan for a floating processing platform, reputedly worth US$13 billion for both countries. But non-hydrocarbon industry will be vitally important to Timor-Leste’s future economic stability. An excellent fair trade

coffee crop provides for 90% of non-fuel exports and is set to rise in value with world prices. Agriculture, transportation, telecommunication, alternative energy and other infrastructure requirements are seen as priorities. The Investment and Export Promotion Agency’s creation of TradeInvest, together with reformed commercial legislature, have generated a more competitive and attractive investment environment in the private sector.

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The Federated States of Micronesia (FSM) is a group of 607 small islands in the Western Pacific subregion of the same name, about 6000 km southwest of Hawai’i and just above the Equator. While the country’s total land area amounts to only 702 sq km, its Exclusive Economic Zone covers over 2.9 million sq km of the Pacific Ocean. FSM is an independent country in a Compact of Free Association with the United States, first signed in 1986, and relies heavily on US assistance. The value of imports is six times that of exports and the trade deficit was as high as 50% of the GDP in 2004. FSM’s current Mori Government was appointed after elections in March 2007. The tourism sector, particularly eco-tourism and diving, are considered to have good potential but the prevailing tourism investment climate is weakened by poor public infrastructure and regulatory

frameworks. Around 15,000 tourists currently visit the country each year. FSM’s EEZ straddles the migratory tuna path and the fishing industry has been boosted by the construction of cold storage facilities and processing plants. Foreign

commercial fishing fleets pay over US$20 million annually for the right to operate in FSM territorial waters. Exports of marine products account for nearly 85% of export revenue. The presence of high-grade phosphate in the EEZ is another potential revenue source.

PoPuLAtIoN: 110,899 (2009)

CAPItAL: Palikir

SurFACe AreA: 702 sq km, EEZ 2.9 million sq km

PeoPLe: Chuukese 48.8%, Pohnpeian 24.2%, Kosraean 6.2%, Yapese 5.2%, Yap outer islands 4.5%, asian 1.8%, Polynesian 1.5%, other 6.4%, unknown 1.4% (2000 census)

tIme ZoNeS: Palikir GMT +11 hours; Weno, Truk GMT +10 hours; Palikir GMT +11 hrs; Weno, Truk, Colonia, Yap GMT +10 hrs

LANguAge: English

PoLItICAL StAtuS: independent democracy in association with the us


INFLAtIoN: 2.9% (2009)

CurreNCy: us dollar

mAJor INDuStrIAL SeCtorS: Fisheries, tourism, copra

exPortS: Fish, banana, copra, trochus shells/meat, kava and betel nut

mAJor exPort mArKetS: japan, usa

ImPortS: Food and live animals, mineral fuels, machines, transport and equipment, manufactured goods, textiles, beverages and tobacco

mAJor ImPort mArKetS: usa, australia, japan


COuNTRY PROFILEs

Federated States of Micronesia

Sulu Sea

Wallis andFutuna

PALAU

PAPUA NEW GUINEA

EAST TIMOR

AUSTRALIA

Tokelau

Ceva-i-Ra

Kingman Reef

Santa Cruz Islands

Norfolk Island

SAMOA

SOLOMONISLANDS

NAURU

FIJI

FEDERATED STATES OF

MARSHALL ISLANDS

NEW CALEDONIA

KIRIBATITUVALU

VANUATU

MICRONESIA

ÎLES TUBUAI

SOCIETYISLANDS

NIUE

Minerva Reef

Rawaki(Phoenix Islands)

TONGA FRENCH POLYNESIA

COOK

ISLANDS

Palmyra Atoll

Baker IslandHowland Island

Jarvis Island

Kermad

ec Is

lands

New Zealand

VIETNAM

Manila

Wewak

Lae

Majuro

Funafuti

Port Moresby

RarotongaNouméa

Honolulu

Fuzhou

W enzhou

Madang

Yaren

Honiara

Hawaii

Oahu

Maui

Eniwetak

Kwajalein

Tarawa

Banaba

Luzon

Guadalcanal

0 500 Km

Suva

KepulauanAru

SULAWESI

Kepulauan Tanimbar

Apia

Papeete

TahitiPort Vila

Alo�

Nuku’alofa

Mata-Utu

PalikirKoror

Viti Levu

VanuaLevu

Rotuma

Kiritimati(Christmas Island)(KIRIBATI)

KIRIBATI(Gilbert Islands)

Ashmore and Cartier Islands(AUSTRALIA)

Okino-tori-shima

Caroline Islands

AmericanSamoa

KIRIBATI

ÎLES MARQUISES

Yap

ARCHIPEL DES TUAMOTU

Adamstown

Banda Sea

Ceram Sea

Equator

Hagåtña

New Britain

CHATHAMISLANDS (N.Z.)

Lord Howe Island

Coral Sea

Solomon Sea

Bismarck Sea

Rapa

Arafura Sea TorresStrait

Coral Sea IslandsNorth Pacific Ocean

South Pacific Ocean

Pitcairn Islands

Tasman Sea

BouganvilleNew Ireland

Luzon Strait

INDONESIA

Wake Island

South China Sea

Saipan

P h i l i p p i n e S e a

Melekeok

Timor Sea

GUAM


CoNtACtdepartment of Economic affairsPo box PS-12, Palikir, Pohnpei 96941federated States of micronesiatel: +691 320 2646 fax: +691 320 5854email: [email protected]

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COuNTRY PROFILEs

Federated States of MicronesiaFocus on Fiji

With its articulate, comparatively small population, solid infrastructure and broad-based economy, [Fiji] could reasonably aspire to join the ranks of the OECD nations sooner rather than later.’

Fiji’s Denarau Island is the largest integrated resort in the South Pacific.

A natural hub for the Pacific, and the region’s second most populous country, Fiji has struggled to make the most of its advantages in recent times. Business Advantage travelled to Fiji to view its progress.

It is impossible to consider Fiji’s current economic situation or its immediate prospects, except through the prism of its politics. In late 2006, Fiji’s armed forces staged a coup d’etat (the country’s fourth in two decades), ousting the democratically-elected Qarase Government. The country remains governed by

an interim government, led the military commander, with elections unlikely before 2014 at the earliest. Sanctions imposed in the wake of the coup by key trading partners such as Australia, New Zealand and the European Union, the ‘militarisation’ of Fiji’s leading institutions (including the judiciary) and the negative effect on investor sentiment have inevitably taken their toll on Fiji’s economy. It actually shrank in the 2008/9 financial year, on the back of a weak tourism sector and the devastating floods that struck Fiji in January 2009. Moreover, skills migration has accelerated since the coup, and the global downturn meant that valuable foreign exchange generated by remittances from Fiji’s expat community has actually dropped sharply in the past two years.

sTaBLIsING ECONOMYWhen Business Advantage visited Fiji in March 2010, there was a sense that the local economy had stabilised. Visitor arrivals had rebounded strongly (although margins remain thin due to heavy discounting by tourism operators) and foreign reserves had increased (partly thanks to the government’s devaluation of the Fiji dollar), leading the Standard & Poors rating agency to upgrade the country’s outlook from negative to stable. For its part, ANZ bank expects Fiji’s economy to post ‘a modest recovery’ in 2010.

NEW INvEsTMENTWhile some foreign investors have wound back their operations since 2006, Fiji clearly remains essential to the new breed of company that has a Pacific-wide strategy, as illustrated by substantial recent investments by mobile phone operator Digicel, PNG-based bank BSP and French Polynesia’s Pacific Petroleum. Another encouraging sign is that foreign existing investors such as Daltron and the Warwick International Hotels Group are planning new investments. While new investment in tourism may have slowed, it has certainly not ceased. The impressive 275-room Intercontinental Fiji Golf Resort & Spa at Natadola Bay opened in 2009, and the associated Club Intercontinental ‘resort within a resort’ in early 2010. If the next step at Natadola is unclear, the Naisoso Island development project, close to Nadi, appears to have gathered a head of steam. Most residential lots are reportedly sold, with the developers now planning marina and resort developments. The commencement of flights to Fiji by Australian low-cost carrier Jetstar in 2010 should ensure there is no shortage of airline seats from Fiji’s largest tourism market.

NOT WIThOuT RIsKRisks remain, however. Devaluation has led to a spike in inflation (it was at 6.8% year on year in December 2009), and—to the extent that reliable data is available—the government appears to be finding it increasingly difficult to fund its budget. News of a large write-down by the Fiji National Provident Fund in early 2010 simply re-enforced the impression of endemic economic mismanagement.

RICh POTENTIaLFiji’s economic potential is irrefutable. With its articulate, comparatively small population, solid infrastructure and broad-based economy (see page 56), it could reasonably aspire to join the ranks of the OECD nations sooner rather than later. However, it is difficult to imagine this occurring until the country’s battered institutions have been rehabilitated and a sharp dividing line has been drawn between its economy and its politics.

COuNTRY PROFILEs

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PoPuLAtIoN: 883,000

CAPItAL: suva


PeoPLe: Fijian 50%, Indian 46%, other 4% (European, other Pacific Islanders, Chinese)

tIme ZoNe: GMT +12 hours


NomINAL gDP: us$3.2 billion (IMF forecast 2010)


CurreNCy: Fiji dollar

mAJor INDuStrIAL SeCtorS: Tourism, sugar, garments, gold, timber, ICT, agribusiness, fishing

exPortS: agribusiness, sugar, garments, gold, timber, fish, services

mAJor exPort mArKetS: usa, united Kingdom, australia

ImPortS: Manufactured goods, machinery and transport equipment, petroleum products, food, chemicals

mAJor ImPort mArKetS: singapore, australia, New Zealand


COuNTRY PROFILEs

Focus on Fiji (continued)

Fiji’s current predicament is all the more unfortunate because it is one of the region’s more developed economies. This is reflected by the World Bank’s Ease of Doing Business Index, in which Fiji ranked 34th out of 155 in 2006, but has since slipped to 54th, below Pacific neighbour Tonga. In the decade and a half leading up to the latest coup, Fiji had created a substantial tourist industry, with a varied inventory ranging from the world-class integrated resort of Denarau Island, family-friendly resorts on the Coral Coast, backpacker accommodation and upscale island retreats. Fiji is also something of a regional hub. Its capital Suva plays host to the considerable apparatus of the Pacific Islands Forum Secretariat (although this could be re-located, given that Fiji is itself currently suspended from the Forum), while Nadi, on the western ‘tourist’ side of the main island of Viti Levu, is a focal point for regional transport and home to Fiji’s successful national carrier, Air Pacific. In telecommunications, Fiji is the only Pacific Island nation to have direct


CoNtACtFiji Islands Trade and Investment Bureau6th floor, civic tower, victoria Parade, Suva Po box 2303 government buildings, Suva fiji islandstel: +679 331 5988fax: +679 330 1783email: [email protected]

access to the trans-Pacific Southern Cross undersea fibreoptic cable. This underpins a healthy local telecommunications sector, where consumers to enjoy reliable, leading-edge services at reasonable prices. It has also enabled Fiji to develop its own call-centre industry. If the growth of this sector has been unspectacular in its first seven years, Fiji’s time-zone (usefully positioned just to the west of the International Dateline, it is where ‘the new day begins’) and affordable, educated English-speaking workforce mean it has the potential to grow much larger. The arrival of Mindpearl, international provider of call centre services to the global airline industry, in late 2009 could provide the catalyst. Fiji is also home to some of the region’s most dynamic entrepreneurs, such as Y P Reddy, founder of the regional Tanoa hotel chain, and Hari Punja, whose diverse interests include the Flour Mills of Fiji firm that exports biscuits to Australia. Two of the largest employers remain the sugar and garment industries, although these traditional mainstays have both been in decline since preferential trade access

agreements started to be phased out. Symptomatic of the maturity of Fiji’s economy is that it is comparatively broad-based, with sectors such as mining (gold), fisheries, forestry and non-textile manufacturing also making notable contributions to local employment. Indeed, in Fiji Water, it can boast a genuinely world-class brand. Bottling water from a massive artesian aquifer in the north west of Viti Levu, the US-owned firm exports its distinctive square-shaped bottles globally and has benefited from a string of high-profile products placements.

57

PoPuLAtIoN: 291,000 (2010)

CAPItAL: Papeete


PeoPLe: Polynesian 78%, Chinese 12%, local French 6%, metropolitan French 4%

tIme ZoNe: GMT –10 hours

BuSINeSS LANguAge: French

PoLItICAL StAtuS: Overseas country within the French Republic

NomINAL gDP: us$5.6 billion (2006)


CurreNCy: CFP/xPF—French Pacific franc (pegged to the Euro)

mAJor INDuStrIAL SeCtorS: Tourism, pearls, agricultural processing, handicrafts, phosphates

exPortS: Black pearls, jewellery, coconut products, mother-of-pearl, vanilla, noni

mAJor exPort mArKetS: hong Kong, japan, France

ImPortS: Fuels, foodstuffs, machinery, equipment

mAJor ImPort mArKetS: France, singapore, usa

COuNTRY PROFILEs

French Polynesia


French Polynesia is officially classified as ‘an overseas country (pays d’outre-mer) within the French Republic’, according to a law passed in 2004, and now forms part of the ‘Euro-zone’. The position of President of French Polynesia and a new electoral system for the Assembly was established. General elections were held in January and February 2008 and the Flosse/Temaru Government appointed thereafter was dismissed in April after a vote of no confidence. Gaston Tong Sang was appointed President and Former President Flosse continued to face fresh corruption charges and detention in late 2009. This chronic political instability, which has led to nine changes of government in six years, seems to be about the only challenge to business confidence in French Polynesia. Otherwise, there is first-class infrastructure, a GDP boosted by France to about 35% of the overall GDP, and a

healthy black pearl industry. Tourism is the largest sector of the domestic economy and French Polynesia’s biggest earner of foreign income. French Polynesian islands such as Tahiti and Bora Bora are legendary and leading hotel brands such as Sofitel, Le Meridien and Sheraton have a local presence. There has been a 27% decline in visitation due to a weak US dollar and the global economic crisis, but it is hoped the 2013 Beach Soccer World Cup will create an up-trend. New investments include a Raffles Hotel, plus other projects in the areas of fishing, aquaculture and renewable energy. French Polynesia is drawing up a new foreign investment code, which it hopes will create a more attractive business climate to foreign investors.

Sectors with particular potential include:• tourism:hotels,realestateprojects

(freehold and strata-title), ancillary services

• aquaculture• transformationofrawmaterials(for

example, food and cosmetics)• agriculture• newtechnologies• renewableenergy(hydrogen,biofuel,

ocean thermal energy conversion).

CoNtACtTahiti Invest – Investment Promotion authority [Délégation pour la Promotion des Investissements]Po box 504-98713, Papeetetahiti, french Polynesiatel: +689 543 254fax: +689 543 255email: [email protected]

wallis and futuna are two groups of volcanic islands comprising a surface area of 142 sq km, surrounded by fiji, Samoa, and tokelau. they form part of french overseas territory. alongside the french political and judicial systems, wallis and futuna operate three customary kingdoms and recent tribal conflicts have been a source of unrest.

a pressing issue is unemployment: of the 15,343 wallisians and futunians, more live in

new caledonia than in the territory itself.

wallis and futuna are largely dependant on france for income. france also funds projects in economic development, environmental management, health, education and infrastructure, such as the newly upgraded airport that will reduce the islands’ limiting isolation.

despite the limited arable land, subsistence agriculture accounts for about 80% of labour

force earnings, from coconuts, vegetables, pigs and fishing. revenue is also gained from foreign fishing fleets using eeZ waters.

CoNtACtadministration supérieure des Îles Wallis et Futunab P 16, havelu, mata’utu 98600 ile de wallistel: +681 72 2727

WaLLIs & FuTuNa

COuNTRY PROFILEs

Focus on Fiji (continued)

58

PoPuLAtIoN: 180, 865 (2010)

CAPItAL: hagåtña

SurFACe AreA: 541sq km, EEZ 218,000 sq km

PeoPLe: Chamorro 37.1%, Filipino 26.3%, Pacific Islander 11.3%, white 6.9%, other asian 6.3%, mixed 9.8% (2000 census)


BuSINeSS LANguAge: English/Chamorro

PoLItICAL StAtuS: an unorganised, unincorporated territory of the united states



CurreNCy: us dollar

mAJor INDuStrIAL SeCtorS: us military, tourism, construction, transhipment services, concrete products, printing and publishing, food processing, textiles

exPortS: Refined petroleum products, fish, food, construction minerals

mAJor exPort mArKetS: japan, singapore, uK

ImPortS: Petroleum products, machinery, automobiles and transport vehicles, food

mAJor ImPort mArKetS: singapore, south Korea, japan

Guam—soon to be Guåhan—is the closest US soil to Japan, Korea, China, Hong Kong, the Philippines and Australia. It has a developed communications and transportation infrastructure, a well-established financial services sector and many of the features of a developed consumer economy: Guam has the world’s biggest K-Mart. Surrendered to the US after the Spanish/American war, Guam witnessed brutal wartime horrors, but today it prospers on a healthy tourist tide, 75% of whom are Japanese visitors. Major growth is expected over the next five years in the Guam ‘build-up’: the redeployment of 8000 US Marines and their 10,000 dependants from Okinawa in Japan. A recent pre-solicitation from the US State Department sought a

contractor with fuel storage facilities to handle 1.6 million barrels annually, while Naval Facilities Engineering Command awarded a US$4 billion contract to various Pacific contractors. As much as US$20 billion will be spent in developing this strategic military command, increasing the population by 10% and occupying up to 40% of Guam’s land mass.

Aside from the ship maintenance and marine services that come with being a major transhipment hub, Guam offers business investment opportunities across a wide range of industries such as tourism, financial and legal services, and, of course, a gateway into the US economy.

COuNTRY PROFILEs

Guam


CoNtACtSGuam Economic development authority590 S marine corps dr, itc bldgSte 511, tamuning guam 96913tel: +671 647 4332fax: +671 649 4146email: [email protected]

Guam Chamber of Commercewww.guamchamber.com.gu

COuNTRY PROFILEs

Kiribati

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PoPuLAtIoN: 108,000 (2009)

CAPItAL: Tarawa


PeoPLe: Micronesian 98.8%, other 1.2%

tIme ZoNeS: GMT +12 hrs, Tarawa GMT +11 hrs, Kiritimati GMT +14 hrs Rawaki, Phoenix Islands GMT +13 hrs

LANguAge: English/Gilbertese

PoLItICAL StAtuS: Independent republic



CurreNCy: australian dollar

mAJor INDuStrIAL SeCtorS: Fisheries, agriculture, remittances, copra

exPortS: Fish, copra, coconut oil, seaweed

mAJor exPort mArKetS: usa, Belgium, japan, australia, Bangladesh

ImPortS: Food and live animals, machines, transport equipment, manufactured goods, mineral fuels, beverages and tobacco

mAJor ImPort mArKetS: australia, Fiji, japan, New Zealand, Taiwan


COuNTRY PROFILEs

Kiribati

Kiribati is a group of 33 islands (23 inhabited) in the central Pacific that straddles the Equator. The islands lie about halfway between Hawai’i and Australia. The three island groups of Kiribati are spread over a 3.5 million sq km Exclusive Economic Zone (EEZ), which is equivalent to the landmass of New York City spread out across the width of continental US. The independent republic has a history of sound fiscal management but faces the kinds of challenges typical of Small Island Developing States. Kiribati’s isolation and geographical fragmentation make transport and communications costly. This poses substantial difficulties for remote communities on the outer islands who make up over 50% of the total population. Climate change is another challenge for the low-lying nation. The main sources of revenue are the Revenue Equalization Reserve Fund (RERF), established in 1956 by the British

administration and financed by phosphate mine royalties; foreign aid totalling 25% of the GDP; licence fees for foreign fishing in Kiribati’s EEZ; and remittances of seafarers on overseas ships. Anote Tong was returned for a second term as President of Kiribati following elections in October 2007. The Government’s National Development Strategy focuses on six key policy areas: partnership of public and private

investment in infrastructure and production; equitable distribution of services and economic opportunity; improving public sector performance; equipping people to manage social and economic change; sustainable use of natural resources and physical assets; and preserving financial reserves (the RERF) while using them to finance development. The country has large marine grounds abundant in both seafood and mineral resources and tourism is another potential area of opportunity.

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CoNtACtKiribati Ministry of Commerce, Industry & CooperativesForeign Investment Promotion divisionPo box 510, betio, tarawakiribatitel: +686 26 157/158fax: +686 26 233email: [email protected]

60


CAPItAL: Majuro


PeoPLe: Micronesian



PoLItICAL StAtuS: democracy in free association with the us since 1986



CurreNCy: us dollar

mAJor INDuStrIAL SeCtorS: Copra, tuna processing, tourism, craft items from seashells and pearls

exPortS: Copra, crude coconut oil, chilled and frozen fish, handicrafts, trochus shell/meat

mAJor exPort mArKetS: australia, Fiji, Guam, japan, hong Kong, New Zealand, Philippines, singapore, Taiwan, usa

ImPortS: Mineral fuels and live animals, machinery and transport equipment, crude materials, manufactured goods, beverages and tobacco

mAJor ImPort mArKetS: australia, Fiji, Guam, japan, hong Kong, New Zealand, Philippines, singapore, Taiwan, usa


COuNTRY PROFILEs

Marshall Islands

The Republic of the Marshall Islands (RMI) is located in the Micronesian subregion of the Pacific Ocean, about 3700 km southwest of Hawai’i. The country is composed of two nearly parallel chains of low coral limestone and sand islands, dispersed over an Exclusive Economic Zone (EEZ) of 2.1 million sq km. The country was under US administration for almost 40 years and two of its atolls were used for US nuclear testing between 1947 and 1962. The Marshall Islands attained independence in 1986 under a Compact of Free Association with the US. In October 2009, Jurelang Zedkaia was elected President. Aid, lease fees and compensation from the US contributes over 80% of revenue and employs a substantial proportion of the workforce in the public sector. Unsurprisingly, the state plays the dominant role in the local economy. Other sources of foreign earnings are

fees paid by international tuna fleets to access fish resources in the EEZ, copra production and adventure tourism (principally diving and game fishing). There has been no sustained growth since independence and per capita income has declined some 20% in that period. The RMI’s failure to use the Compact funding provided by the US to promote a sustainable income-generating economy was recognised by the RMI Government in 1996, when it commenced a reform program, assisted by the Asian Development Bank and other donors. In 2008, precipitated by the fuel price

hikes, the RMI declared a financial state of emergency. This included approaches to the ADB, the US and Taiwan to secure additional funding. RMI is now committed to implementing wide-ranging budget and administrative reforms aimed at promoting government efficiency and accountability, stimulating the development of a more dynamic private sector and attracting greater foreign investment.

CoNtACtTrade and Investment services divisionMinistry of Resources and developmentPo box 1727, majuromarshall islands 96960tel: +692 625 3206/4020fax: +692 625 7471email: [email protected] / [email protected]


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PoPuLAtIoN: 14, 264 (2010)

CAPItAL: Yaren (unofficial)


PeoPLe: Nauruan 58%, other Pacific Islander 26%, Chinese 8%, European 8%



PoLItICAL StAtuS: Independent democratic republic since 1968


CurreNCy: australian dollar

mAJor INDuStrIAL SeCtorS: Phosphate mining, financial services, coconuts

exPortS: Phosphates, coconuts

mAJor exPort mArKetS: south africa, India, Canada

ImPortS: Food and live animals, manufactured goods, building materials, fuel and machinery

mAJor ImPort mArKetS: south Korea, australia, usa, Germany

Nauru is a tiny, oval-shaped island located in the Micronesian subregion of the central Pacific, just south of the Equator and some 3500 kilometres directly north of New Zealand. It has a total land area of only 21 sq km, making it the smallest independent island nation in the world. After the major phosphate deposits were mined out in the 1980s, devastating 80% of Nauru’s landmass in the process, the previously enviable economy peaked. Nauru has since resorted to revenue by any means: recognition of rebel states; financing musicals; offering tax haven; and operating Australian detention centres. Mining tentatively resumed in 2006 through Australian company Incitec Pivot, and while potentially viable for some years to come, the industry’s future is limited to secondary phosphate. President Marcus Stephen has continued the reforms of Former President Ludwig Scotty, implementing key financial and

governance reforms to restore Nauru’s international reputation under a National Sustainable Development Strategy. In late 2009 the Pacific Regional Assistance to Nauru program concluded with the notion that crisis had been averted.

In the absence of strong revenues, the economy is reliant on income from licensing fishing in Nauru’s Exclusive Economic Zone and foreign aid, mainly from Australia. It’s hoped the emerging industry of exporting coral aggregate for concrete and an embryonic tile industry have potential.


COuNTRY PROFILEs

Nauru

Sulu Sea

Wallis andFutuna

PALAU

PAPUA NEW GUINEA

EAST TIMOR

AUSTRALIA

Tokelau

Ceva-i-Ra

Kingman Reef

Santa Cruz Islands

Norfolk Island

SAMOA

SOLOMONISLANDS

NAURU

FIJI

FEDERATED STATES OF

MARSHALL ISLANDS

NEW CALEDONIA

KIRIBATITUVALU

VANUATU

MICRONESIA

ÎLES TUBUAI

SOCIETYISLANDS

NIUE

Minerva Reef



COOK

ISLANDS

Palmyra Atoll


Jarvis Island

Kermad

ec Is

lands

New Zealand

VIETNAM

Manila

Wewak

Lae

Majuro

Funafuti

Port Moresby

RarotongaNouméa

Honolulu

Fuzhou

W enzhou

Madang

Yaren

Honiara

Hawaii

Oahu

Maui

Eniwetak

Kwajalein

Tarawa

Banaba

Luzon

Guadalcanal

0 500 Km

Suva

KepulauanAru

SULAWESI

Kepulauan Tanimbar

Apia

Papeete

TahitiPort Vila

Alo�

Nuku’alofa

Mata-Utu

PalikirKoror

Viti Levu

VanuaLevu

Rotuma




Okino-tori-shima

Caroline Islands

AmericanSamoa

KIRIBATI

ÎLES MARQUISES

Yap


Adamstown

Banda Sea

Ceram Sea

Equator

Hagåtña

New Britain


Lord Howe Island

Coral Sea

Solomon Sea

Bismarck Sea

Rapa


Coral Sea Islands

North Pacific Ocean

South Pacific Ocean

Pitcairn Islands

Tasman Sea


Luzon Strait

INDONESIA

Wake Island

South China Sea

Saipan


Melekeok

Timor Sea

GUAM

CoNtACtNauru department of Island development and Industrytel: +674 444 3133 ext. 303/306 email: [email protected] / [email protected]

62

PoPuLAtIoN: 249,000 (2009)

CAPItAL: Nouméa

SurFACe AreA: 18,575 sq km, EEZ 1.45 million sq kms

PeoPLe: Melanesian 44%, European 34%, Wallis & Futuna Islanders 12.7%, asian 5%


BuSINeSS LANguAge: French


PoLItICAL StAtuS: self-governing territory of France

INFLAtIoN: 0.9 % (2009)

CurreNCy: CFP/xPF—French Pacific franc (pegged to the Euro)

mAJor INDuStrIAL SeCtorS: Nickel mining and smelting, fisheries, tourism

exPortS: Ferronickels, nickel ore, fish

mAJor exPort mArKetS: France, japan, Taiwan

ImPortS: Machinery and equipment, fuels, chemicals, foodstuffs

mAJor ImPort mArKetS: France, singapore, australia

A former French penal colony only 1500km east of Australia in the Pacific’s Melanesian subregion, New Caledonia is surrounded by the world’s second largest coral reef, now on UNESCO’s World Heritage list. With its stable economy, first-world infrastructure, sophisticated domestic market (GDP per capita was US$37,678 in 2008—even higher than New Zealand), huge 1.45 million sq km Exclusive Economic Zone (EEZ) and direct trading route into the AUD$15 trillion European Union economy, New Caledonia has an economy rich in potential. Twenty-five percent of the world’s known resources of nickel are found in New Caledonia and world nickel prices surged back up by 45% in early 2010. Two multi-billion dollar nickel projects: Goro (run by Brazil’s Vale) and Koniambo (run by Switzerland’s Xstrata) have both been given the green light. Increased Chinese steel demand and competitor production problems are compounding positives for the New Caledonian nickel mining industry, presently shaking off recent uncertainty and price volatility.

The Koniambo project in North Province is considered to have a more profound effect on the social and economic ‘rebalancing’ between the developed South Province and the less-developed North Province. The mine’s majority shareholder is the Northern provincial government’s Société Minière du Sud Pacifique. Another project of importance is Dumbéa sur Mer, the single-largest suburban development in the Pacific. The planned project, just outside the capital Nouméa, will include eight schools, a hospital, a business park for 400 businesses and homes for over 10,000 people.

While 50% of New Caledonia’s imports and a massive US$1.2 billion per annum in aid comes from France—or La Métropole, as it is referred to in New Caledonia—greater integration with the rest of the Pacific is stated policy. To prove it means business, New Caledonia will host the next South Pacific Games in 2011. Under the Nouméa Accord, New Caledonians are set to definitively vote on their escalating autonomy from France some time after 2014.

COuNTRY PROFILEs

New Caledonia


CoNtACtNew Caledonia Economic development agency (adECaL) [Agence de Développement economique de la Nouvelle-Calédonie]immeuble centre Sud, 1bis, rue berthelot, doniamboPo box 2384, nouméa cedexnew caledoniatel: +687 24 90 77fax: +687 24 90 87email: [email protected]

Stade Numa Daly in Noumea, one of the sites for the 2011 South Pacific Games.

63

COuNTRY PROFILEs

New Caledonia

PoPuLAtIoN: 1514 (2009)

CAPItAL: alofi


PeoPLe: Niuean 78.2%, Pacific Islander 10.2%, European 4.5%, mixed 3.9%, asian 0.2%, unspecified 3%

tIme ZoNe: GMT – 11 hours


PoLItICAL StAtuS: self-governing parliamentary democracy in free association with New Zealand



CurreNCy: New Zealand dollar

mAJor INDuStrIAL SeCtorS: Tourism, handicrafts, food processing

exPortS: Canned coconut cream, copra, honey, vanilla, pawpaw, root crops, limes, stamps, handicrafts, fish

mAJor exPort mArKetS: New Zealand, Fiji, Cook Islands, australia, usa

ImPortS: Food, live animals, manufactured goods, machinery, fuels, lubricants, chemicals, pharmaceuticals

mAJor ImPort mArKetS: New Zealand, Fiji, japan, samoa, australia, usa

COuNTRY PROFILEs

Niue

Niue is a self-governing state in free association with New Zealand. It is located to the north-east of New Zealand, a three-hour (weekly) flight away. Niueans are New Zealand citizens with the right of free access to New Zealand. Under the terms of the constitutional agreement between the two countries, New Zealand provides substantial economic and administrative assistance to Niue. Economic assistance is provided in the forms of both direct budget support and project-related aid. Niue’s population stands at just 1600. Over 20,000 Niueans live in New Zealand and the government’s attempts to encourage them to return to Niue are proving fruitless. Remittances are thus a major contributor to the local economy. Geographic isolation, limited natural resources and a small unskilled population hamper the development of an independent economy. Cyclones such as Heta (January

2004) can have a devastating effect on the nation. Fishing licences and the international lease of Niue’s unique four digit telephone numbers are important income earners for the country. Local industry includes the production of noni-juice and fish processing. The tourist industry is very small but thriving (www.visit.nu).

Niue’s coastline.

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CoNtACtInvestment NiueePdS, Premier’s department, 20 main St, utuko, alofi SouthPo box 40, alofi, niue tel +683 4148fax +683 4148 or +683 4010email [email protected] www.investniue.com

64


CAPItAL: saipan


PeoPLe: asian 56.3%, Pacific Islander 36.3%, white 1.8, mixed 4.8% (2000)



PoLItICAL StAtuS: Commonwealth in political union with the us


INFLAtIoN: 0.8%

CurreNCy: us dollar

mAJor INDuStrIAL SeCtorS: Textile manufacture

exPortS: Tapioca, livestock, coconuts, breadfruit, tomatoes, melons, aquaculture products

mAJor exPort mArKetS: Fiji, Germany, Italy, japan, australia

ImPortS: Food and live animals, manufactured goods, mineral fuels and machines, transport and equipment

mAJor ImPort mArKetS: usa, China, japan

The Commonwealth of the Northern Mariana Islands (CNMI) consists of 14 islands and is positioned to the east of the Philippines, southeast of Japan, and north of Papua New Guinea. The Northern Marianas played a critical role in the Pacific conflict, and the US acquired what is now a Commonwealth in 1945. Voters decided not to seek independence in the 1970s and, in fact, have sought closer political and economic ties with the US. Proximity to major Asian markets, an educated English-speaking workforce and US governance are among the islands’ advantages, as is an attractive environment. The Northern Marianas also hopes to benefit from the flow-on effects of the Guam build-up, where the US is redeploying thousands of military personnel and their families from the Japanese island of Okinawa.

Almost half a million visitors visit the Northern Marianas each year, many from Japan, making the tourism industry vitally important to the economy. The garment industry enjoyed the Northern Marianas’ free trade status and, with an abundance of female labour, was a major employer until new labour laws brought it in line with the US mainland; it’s consequently in sharp decline. (The Northern Marianas has the unusual distinction of the lowest male to female ratio in the world.) But the US State Department has put an end to untoward labour practices with recent convictions and reforms. The Northern Marianas operates under most other US federal laws, except US customs, and income tax is locally determined.

The investment climate fosters opportunities in tourism development, education, agriculture, aquaculture and infrastructure.


CoNtACtdepartment of CommerceGovernment of the Northern Marianas email [email protected]

COuNTRY PROFILEs

Commonwealth of Northern Mariana Islands

65


CAPItAL: Melekeok


PeoPLe: Palauan 69.9%, Filipino 15.3%, Chinese 4.9%, other asian 2.4%, Caucasian 1.9%, Carolinian 1.4%, other Micronesian 1.1%, other or unspecified 3.2%

tIme ZoNe: GMT + 9 hours


PoLItICAL StAtuS: Independent republic in free association with the us since 1994



CurreNCy: us dollar

mAJor INDuStrIAL SeCtorS: agriculture, tourism, subsistence fishing

exPortS: handicrafts, agricultural goods, taros and coconuts

mAJor exPort mArKetS: usa, japan, singapore

ImPortS: Mineral fuels, manufactured goods, machinery, food

mAJor ImPort mArKetS: usa, asia, singapore


COuNTRY PROFILEs

Palau

Consisting of over 340 islands, of which only nine are continually inhabited, Palau’s strategic position close to the Philippines has seen five different imperial influences. Under the Compact of Free Association, Palau maintains a close ongoing relationship with the US, from which it receives budget support, infrastructure development and more recently, US federal detainees. Palau is also working hard on developing other foreign ties, including with Asia and its Pacific neighbours. The newly renovated Palau International Airport serves five major airlines, connecting Palau to major cities in the region and the rest of the world. Palau has one of the lowest taxed business environments in the Asia-Pacific region and recently created a duty-free zone. Despite its low population, Palau enjoys one of the highest standards of living among the Pacific Island Countries (GDP per capita was estimated at US$8911 in 2008). Its outstanding natural

environment, well-developed infrastructure and proximity to many heavily populated Asian markets give it tremendous potential as a high-end tourist destination. Palau’s foreign investment promotion centres around luxury tourism projects and associated services. The country has one of the world’s most diverse marine habitats, with many endemic and rare species. Palau’s status as a top diving destination is well established, but it has also made substantial inroads into diversifying its product. There are several small, medium and large-scale hotels under various stages of

planning and/or construction. The Marina Landmark Hotel is a totally refurbished, newly opened luxury hotel on the waterfront. There are also opportunities on Palau’s largest island, Babeldaob, which is the second largest island in Micronesia. It boasts a modern and expanding airport and a new 85km paved ring road. Other than tourism, Palau’s major foreign exchange earner is the fisheries sector, which exports heavily to Asia, especially Japan. While Palau looks to promote its domestic fishing sector, it seeks to do so sustainably: in a world first, it recently banned all commercial shark fishing in its Exclusive Economic Zone.

Sulu Sea

Wallis andFutuna

PALAU

PAPUA NEW GUINEA

EAST TIMOR

AUSTRALIA

Tokelau

Ceva-i-Ra

Kingman Reef

Santa Cruz Islands

Norfolk Island

SAMOA

SOLOMONISLANDS

NAURU

FIJI

FEDERATED STATES OF

MARSHALL ISLANDS

NEW CALEDONIA

KIRIBATITUVALU

VANUATU

MICRONESIA

ÎLES TUBUAI

SOCIETYISLANDS

NIUE

Minerva Reef



COOK

ISLANDS

Palmyra Atoll


Jarvis Island

Kermad

ec Is

lands

New Zealand

VIETNAM

Manila

Wewak

Lae

Majuro

Funafuti

Port Moresby

RarotongaNouméa

Honolulu

Fuzhou

W enzhou

Madang

Yaren

Honiara

Hawaii

Oahu

Maui

Eniwetak

Kwajalein

Tarawa

Banaba

Luzon

Guadalcanal

0 500 Km

Suva

KepulauanAru

SULAWESI

Kepulauan Tanimbar

Apia

Papeete

TahitiPort Vila

Alo�

Nuku’alofa

Mata-Utu

PalikirKoror

Viti Levu

VanuaLevu

Rotuma




Okino-tori-shima

Caroline Islands

AmericanSamoa

KIRIBATI

ÎLES MARQUISES

Yap


Adamstown

Banda Sea

Ceram Sea

Equator

Hagåtña

New Britain


Lord Howe Island

Coral Sea

Solomon Sea

Bismarck Sea

Rapa


Coral Sea Islands

North Pacific Ocean

South Pacific Ocean

Pitcairn Islands

Tasman Sea


Luzon Strait

INDONESIA

Wake Island

South China Sea

Saipan


Melekeok

Timor Sea

GUAM


CoNtACtForeign Investment Board Po box 1733 koror, Palau Pw 96940 tel: +680 488 1135fax: +680 488 3722email: [email protected] www.palau-investment.com

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PoPuLAtIoN: 6.1 million (2007)

CAPItAL: Port Moresby


PeoPLe: Melanesian, Papuan, Negrito, Micronesian, Polynesian



PoLItICAL StAtuS: Parliamentary democracy



CurreNCy: PGK—PNG kina

mAJor INDuStrIAL SeCtorS: Mining, crude oil petroleum refining, copra crushing, palm oil, plywood and wood chip production, construction, fisheries, tourism

exPortS: Oil, gold, copper ore, logs, palm oil, coffee, cocoa, seafood

mAJor exPort mArKetS: australia, japan, China

ImPortS: Machinery and transport equipment, manufactured goods, food, fuels, chemicals

mAJor ImPort mArKetS: australia, singapore, China


The Independent State of Papua New Guinea (PNG) is the largest economy in the Pacific, situated strategically between Australia and New Zealand to the south, the ‘tiger economies’ of south-east Asia to the north and west, and the rich fisheries of the Pacific to the east. PNG has proved resilient in the face of the global downturn. In fact, the country is entering a period of unprecedented economic activity. During 2009, inflation came down, bank liquidity was sustained and GDP growth was maintained at around 3.5%. The current surge in business confidence and activity is due in no small part to PNG’s resources sector and the US$15 billion ExxonMobil-led PNG LNG project in particular. This massive project, which will export an estimated nine trillion tonnes of gas from the Highlands of PNG to markets in Asia over 30 years, has put PNG on the world business map following the announcement in December 2009 that the project would go ahead. Some estimates suggest that the PNG LNG project alone could double the gross domestic product of the country

over the next 30 years, providing the PNG Government (which has a 19.6% shareholding in the project) with a revenue stream to invest in badly needed infrastructure, health and education. While the ExxonMobil project has received the headlines, there are at least two other LNG projects in development. Major mining projects include the Lihir Island gold mine expansion, the Xstrata-led Frieda River copper/gold project and the Ramu nickel mine. When Business Advantage visited Port Moresby in February 2010, the building and construction boom that commenced three or four years ago was still evident. Agriculture is an area with enormous potential—particularly in palm oil and coffee—while investment in forestry and fisheries looks set to increase with a greater emphasis on onshore value-adding. With PNG’s extraordinary geography and unique cultural assets, tourism is another sector full of promise. While an estimated 85% of Papua New Guineans still make a living in the informal economy, the formal sector is growing, leading to growth in PNG’s

superannuation funds, which in turn are investing in sectors such as construction. Business in PNG is not without its challenges. While investment in infrastructure is occurring, more needs to be done to bring PNG’s airports, ports, roads and public utilities up to international standards. There is currently a shortage of skilled workers, while law and order and corruption are also acknowledged problems.

COuNTRY PROFILEs

Papua New Guinea


CoNtACtSInvestment Promotion authority of PNGPo box 5053, boroko, Port moresby, ncd Papua new guineatel: +675 308 4444/321 7311fax: +675 321 2819www.ipa.gov.pg

Port Moresby Chamber of Commerce & Industry+675 321 3077www.pomcci.org.pg

Lae Chamber of Commerce & Industry+675 472 2340www.lcci.org.pg

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PoPuLAtIoN: 192,000 (2009)

CAPItAL: apia


PeoPLe: samoan 92.6%, Euronesians 7%, Europeans 0.4%

tIme ZoNe: GMT –11 hours


PoLItICAL StAtuS: Independent parliamentary democracy


INFLAtIoN: 14.2% (2009)

CurreNCy: WsT—samoan tala

mAJor INDuStrIAL SeCtorS: Tourism, food processing, building materials, automotive parts

exPortS: Fish, coconut oil and cream, copra, taro, automotive parts, garments, beer

mAJor exPort mArKetS: australia, american samoa, us, Taiwan

ImPortS: Machinery and equipment, industrial supplies, foodstuffs

mAJor ImPort mArKetS: New Zealand, Fiji, singapore, australia


COuNTRY PROFILEs

Samoa

The Independent State of Samoa (formerly Western Samoa and distinct from its smaller neighbour American Samoa) is a picturesque, fertile, politically and economically stable nation with two main islands—Savai’i and Upolu—strategically positioned at the centre of the South Pacific. Samoa was the first Pacific Island country to achieve independence in 1962 and continues to lead the way in terms of economic reform. The country has risen from the economic lows of the early 1990s under current Prime Minister Tuilaepa Sailele Malielegaoi. The tsunami in late 2009 had an undeniable impact on Samoa, but a US$20 million loan from the World Bank is kick-starting the rebuilding process. Samoa’s fastest growing sector is undoubtedly tourism and there are opportunities to use tourism as a seed to grow other key areas such as agriculture, fisheries and manufacturing. Samoa is also one of

the region’s leading centres for offshore finance, and is thus served by a reliable and increasingly efficient financial services sector. The present framework for economic and social development in Samoa is the Strategy for the Development of Samoa 2008–2012. The strategy identifies seven goals for the country over the medium-term. The number of ministries has been reduced and the country has won international praise for the deregulation of its key aviation and telecommunications sectors leading to recent investments by Virgin Blue and mobile telco Digicel.

Alternative energy investment is considered a growth area. The United Nations reviewed Samoa’s Least Developed Country status in March 2006, and in December 2007 recommended graduation to Developing Country status in 2010.


CoNtACtMinistry of Commerce, Industry and Labourlevel 4, acc housePo box 862apia, Samoatel: +685 20 441fax: +685 20 443email: [email protected]

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PoPuLAtIoN: 609,794 (2010)

CAPItAL: honiara

SurFACe AreA: 28,900 sq km, EEZ 1.5 million sq km

PeoPLe: Melanesian 94.5%, Polynesian 3%, Micronesian 1.2%, other 1.1%, unspecified 0.2% (1999 census)


BuSINeSS LANguAge: English/Pijin

PoLItICAL StAtuS: Parliamentary democracy



CurreNCy: sBd—solomon Islands dollar

mAJor INDuStrIAL SeCtorS: Fish (tuna), mining, timber, agribusiness, tourism

exPortS: Timber, fish, copra, palm oil, cocoa

mAJor exPort mArKetS: China, Korea, japan, Philippines, uK

ImPortS: Food, plant and equipment, manufactured goods, fuels, chemicals

mAJor ImPort mArKetS: australia, singapore, japan, New Zealand, usa


COuNTRY PROFILEs

Solomon Islands

The Solomon Islands, a collection of about 900 coral islands in the Melanesian Pacific, has an independent constitution and is a member of the Commonwealth. The country is recovering well from over a decade of social, political and economic volatility. The years 2003 and 2006 were particular low points in ethnic tensions, and a 15-nation security contingent (Regional Assistance Mission to Solomon Islands) is still providing civil security and economic stabilisation. The global economic crisis also affected the Solomon Island economy, with government austerity measures likely to continue into 2010. But 2010 also marks new territory with the Truth and Reconciliation Commission talks, slated federal elections and continued post-tsunami rebuilding expected to move the country forward. The World Bank has just approved US$3.2 million for the Rapid Deployment Project, stimulating urban employment and providing much-needed labour. Increased economic activity such as a second mobile network, new shopping


CoNtACtForeign Investment divisiondepartment of commerce, employment & industries, honiara, Solomon islandstel: +677 22856 ext 209/210fax: +677 25084email: [email protected]

COuNTRY PROFILEs

Tonga

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The Gold Ridge Mine, now owned by Allied Gold

and commercial construction in Honiara and the promise of a more reformed, deregulated commercial environment are boosting investor confidence. A major problem for the country is the decline of its forestry industry due to over-production. While sustainable practices and plantations will alleviate some of the decline, there is no doubt that other sectors of the economy must take up the reins if the Solomons is to maintain economic progress. Mining industry hopes are pinned to the reopening of the Gold Ridge gold

mine in 2011 and the flow-on effects to other copper, nickel and undersea deposits. The Sikua Government has overseen the Medium Term Fiscal Strategy with lower inflation, increased foreign reserves, a Secure Transactions Act and a reformed Companies law. A promising 2009 feasibility study into the Tina River Hydropower Development Project could reduce notoriously high power costs by two thirds and US$24 million was granted for roads development.

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COuNTRY PROFILEs

Solomon Islands

PoPuLAtIoN: 104,000 (2009)

CAPItAL: Nuku’alofa


PeoPLe: Tongans 98%, other 2%


BuSINeSS LANguAge: English/Tongan

PoLItICAL StAtuS: sovereign monarchy

NomINAL gDP: us$328.4 million (2008/9)

INFLAtIoN: 2.25% (2009)

CurreNCy: TOP—Tongan pa’anga

mAJor INDuStrIAL SeCtorS: Tourism, agriculture, fishing

exPortS: squash, fish, vanilla beans, root crops, coconut, tuna.

mAJor exPort mArKetS: usa, japan, NZ, Korea

ImPortS: Foodstuffs, machinery and transport equipment, fuels, chemicals

mAJor ImPort mArKetS: NZ, Fiji, usa, australia, China, singapore, japan


The Kingdom of Tonga’s 176 islands have never succumbed to colonial rule and remain the last surviving sovereign monarchy in the Pacific, under King George Tupou V. Dubbed the ‘Friendly Islands’, Tonga is an idyllic marine economy with strong links to New Zealand and surrounding Pacific territories. Tonga is underdoing a process of gradual constitutional reform following damaging civic disturbances in the capital Nuku’alofa in 2006. Democratic elections are slated for late 2010. In the meantime, a low-interest US$55 million loan from the Chinese Government to rebuild Nuku’alofa’s CBD has stimulated a three-year civic redevelopment, still underway. Together with a new cruise ship marina at Vuna Wharf and foreign investments such as Warwick International Hotels’ plans for Vava’u island group, Tonga’s tourism sector assumes an optimistic outlook. Further manifestations of economic confidence are found in the creation of a possible new industry in Tonga:

undersea mining. Nautilus Minerals Inc. is conducting promising exploration in the seas to the west of Tonga. While the global financial crisis impacted on the economy’s expatriate remittances, a strong subsistence farming sector mitigated a major drop in the standard of living. Growth is expected to reach 1.75% in 2010/11 on the back of historically low inflation and interest rates. Fortunately, the recent seismic and meteorological events affecting Tonga’s Pacific neighbours, while destructive, only

tended to reach the Kingdom’s outer-lying islands. However, the tragic MV Princess Ashika ferry sinking in August 2009 highlighted the shortcomings of inter-island shipping services. The National Economic Development Council, created in 2007, has encouraged a dynamic dialogue between Government and the private sector. The privatisation of key enterprises, such as telecommunications, plus introduced tax reforms of a 15% consumption and a flat-rate 25% corporate tax, have created a more regulated, business-friendly economic framework for foreign investment. Tonga is currently top of the World Bank’s ‘Doing Business’ ratings for the Pacific.


COuNTRY PROFILEs

Tonga

CoNtACtNational Economic development Counciltel: +676 25168fax:+676 26039email: [email protected]

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CAPItAL: Funafuti


PeoPLe: Polynesian 96%, Micronesian 4%



PoLItICAL StAtuS: Independent democratic government since 1978



CurreNCy: australian dollar, Tvd—Tuvaluan dollar

mAJor INDuStrIAL SeCtorS: Fishing fees, remittances, copra

exPortS: Copra, stamps, handicrafts, garments

mAJor exPort mArKetS: Fiji, Germany, Italy, japan, australia

ImPortS: Food and live animals, manufactured goods, mineral fuels and machines, transport and equipment

mAJor ImPort mArKetS: australia, Fiji, New Zealand, japan, China

COuNTRY PROFILEs

Tuvalu

Tuvalu, formerly the Ellice Islands, became independent from the United Kingdom in October 1978. Its nine coral atoll islands are located about halfway between Hawai’i and Australia, scattered across an Exclusive Economic Zone (EEZ) of 900,000 sq km. In 1987, the Tuvalu Trust Fund (TTF) was established to provide a safety net against fluctuations in Government income. The earnings of the fund are used to help the Government finance the gap between its annual budgeted revenue and expenditure. The governments of Australia, New Zealand and the UK have made major contributions to the TTF. Revenue from the fund has enabled the Government to undertake development programs, including upgrading outer island schools and fishing centres. Subsistence farming and fishing are the main economic activities. Commercial licence fee earnings, remittances from

overseas workers, official transfers and income from TTF have provided the country with the main sources of income. Windfall revenues have derived from internet domain name ‘.tv’ and from telecommunications, but these are now declining. Tuvalu’s low-lying position was widely mentioned in relation to climate change susceptibility in the 2009 Copenhagen talks. But scientific research released in June 2010 suggested that instead of sinking, Tuvalu’s land mass may have actually grown from debris, sediment and land reclamation.

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CoNtACtTuvalu Trade and Investment agency email: [email protected]

717171

PoPuLAtIoN: 221,552 (2010)

CAPItAL: Port vila

SurFACe AreA: 12,200 sq km, EEZ 68,000 sq km

PeoPLe: Ni-vanuatu 98.5%, other 1.5% (1999 Census)


BuSINeSS LANguAge: English/French

PoLItICAL StAtuS: Parliamentary republic



CurreNCy: vuv—vanuatu vatu

mAJor INDuStrIAL SeCtorS: Tourism, agriculture, offshore financial centre, fisheries, forestry

exPortS: Copra, beef, cocoa, timber, kava, coffee

mAJor exPort mArKetS: Thailand, India, japan, australia, Eu

ImPortS: Machinery and equipment, foodstuffs, fuels

mAJor ImPort mArKetS: australia, japan, singapore, New Zealand, Fiji


COuNTRY PROFILEs

Vanuatu

Vanuatu is the quiet achiever of the South Pacific and retains a charming French flavour after gaining independence from joint administrators France and the UK in 1980. Vanuatu’s population is growing rapidly. It has also enjoyed strong growth driven by tourism and real estate investment, and this, together with 75% of the population subsisting outside the formal economy, has helped to shelter Vanuatu from the global economic downturn. The US Government’s five-year compact (via the Millennium Challenge Corporation) of approximately US$65.7 million concludes next year. It has been greatly responsible for assisting the transport needs of tourism and agricultural providers and improving infrastructure such as the construction of a ring road around Vanuatu’s main island, and the Santo East Coast road. The Vanuatu Investment Promotion Agency (VIPA), with help from the International Finance Corporation, has streamlined the foreign investment

application process. The second phase, which involves review of the VIPA Act itself, is expected to be completed in 2010. Vanuatu remains a tax haven with no income, withholding or capital gains tax. It also has an offshore finance centre and is well serviced by financial services providers, making it a welcoming investment environment. Tourism, particularly by Australian visitors, has been growing steadily and inadequate room inventories have created new investment opportunities, such as

Warwick International Hotels’ Le Lagon redevelopment. Other prominent recent investors are French bank Bred, Digicel, Virgin Blue and PNG finance company Credit Corporation. The other sector with growth potential is agriculture. Vanuatu has some world-class products such as coffee, organic beef and vanilla that could benefit greatly from foreign investment, but this sector is currently making limited progress. In early 2010, Vanuatu played host to a United Nations-sponsored conference on the economic challenges for Pacific islands, allowing Port Vila to show off its European Union-supported wind farm that now supplies 25% of the town’s electricity.


CoNtACtvanuatu Investment Promotion authority1st floor, Pilioko house, Port vilaPrivate mailbag 9011Port vila, vanuatutel: +678 24 096/24 441fax: +678 25 216email: [email protected]

Port Vila Harbour

7272

These non-profit membership-based organisations promote investment, trade, cooperation, communication and economic development between the countries mentioned in their titles. They also provide networking opportunities and contacts and are a useful resource for information on their respective markets. In addition, they raise awareness of business issues and open a channel of communication for business to articulate policy concerns to the Australian, New Zealand and Pacific governments. Many of these organisations hold annual events providing interested parties with an ideal chance to find out more about the Pacific Islands countries concerned—please refer to our calendar on page 81 for more information.

ausTRaLIa PaCIFIC IsLaNds BusINEss COuNCILemail: [email protected] www.apibc.org.au

ausTRaLIa-FIjI BusINEss COuNCIL email: [email protected] www.afbc.org.au

ausTRaLIa-PaPua NEW GuINEa BusINEss COuNCILemail: [email protected]

all the above c/-P o box 422wynnum Qld 4178australiatel: +61 7 3348 5142fax: +61 7 3348 5172

NEW ZEaLaNd PaCIFIC BusINEss COuNCIL733 great South rd Papatoetoe, auckland 1701 new Zealandtel: +64 9 2703746 fax: +64 9 2703747 email: [email protected]

ausTRaLIa-NEW CaLEdONIa BusINEss COuNCIL/CERCLE d’aFFaIREs ausTRaLIE NOuvELLE CaLédONIE (CaaNC)(works in collaboration with the australia Pacific islands business council)bP 324998846 nouméa cedexnew caledoniawww.caanc.nc

ThE LOWY INsTITuTEThe Lowy Institute for International Policy is an independent international policy think tank based in Sydney, established in 2003. It generates new ideas and dialogue on international developments and Australia’s role in the world. The Institute’s recently launched Melanesia Program encompasses Papua New Guinea, Solomon Islands, Fiji, Vanuatu and East Timor and focuses on the political, economic and social challenges affecting these countries, the impact of aid, and the role of Australia in Melanesia and the wider Pacific Islands region.

CoNtACtthe lowy institute for international Policy31 bligh St, SydneyPo box h-159, australia Square nSw 1215australiatel: +61 2 8238 9000fax: +61 2 8238 9005email: [email protected]

BusINEss COuNCILs & POLICY ORGaNIsaTIONs

PaCIFIC dIRECTORY PaCIFIC dIRECTORY

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PaCIFIC dIRECTORY

KuLa FuNd II LIMITEdKula Fund II Limited (Kula), was launched on 1 June 2006, and has raised committed capital of US$22 million. The current investors are CDC Group plc, Asian Development Bank, European Investment Bank, International Finance Corporation, Fiji National Provident Fund and ANZ Banking Group Limited. Kula is a successor of Kula Fund Limited and was established as a result of the Commonwealth Private Investment Initiative (CPII) as endorsed by the Commonwealth Secretariat. Kula is managed by Pacific Capital Partners Limited, a wholly owned subsidiary of Aureos Capital Limited. Aureos is a unique private equity fund management company, domiciled in Mauritius, which specialises in providing expansion and buy-out capital to unlisted small and medium-size businesses (SMEs) across Asia, Africa, Latin America and the Pacific Islands. Kula invests between US$100,000 and US$3 million in SMEs in the Pacific Islands (specifically, PNG, Fiji, Cook Islands, Samoa, Solomon Islands, Tonga, Vanuatu, Kiribati, Micronesia, Marshall Islands, Nauru and Tuvalu). Kula generally invests by way of significant minority equity stakes with board representation and the right to participate in or influence the conduct of management in its investee companies.

Details of Kula’s investments:

data Nets Limited (PNG)Kula participated in the partial management buyout and 100% change in control of Data Nets Limited (DNL) in October 2006 and holds 30% of the equity. DNL is a leading supplier of data, voice and communications solutions in PNG and has been operating for over 17 years. DNL’s subsidiary NEC PNG is a channel distribution partner for NEC Business Solutions in PNG and Solomon Islands. DNL is also a significant shareholder in i-Pac Communications Limited, a Fiji-based ISP that runs a 4G Wimax network.

Pacific Communication solutions Limited (Fiji)Kula acquired 33% equity in Pacific Communication Solutions Limited (PCS) to assist with the expansion of the business. PCS is a channel distribution partner for NEC Business Solutions in the Western Pacific and is based in Fiji.

Wilco hardware holdings Limited (vanuatu)Kula completed the acquisition of a 15% equity stake in Wilco Hardware Holdings Limited in December 2007. The company is one of the major retailers of hardware and building construction materials in Vanuatu. Wilco has completed the construction of new trading premises at Port Vila and Santo where customers can access not only a comprehensive range of building and construction products but also have the choice of many brands.

Pacific Retail Limited (Tonga)Kula acquired a 30% stake in the Tongan company, Pacific Retail Limited (PRL) in July 2008. PRL is a leading retailer in Tonga, specialising in office equipment and printing supplies and hardware and construction products.

Chemica Limited (PNG)Kula completed the acquisition of a 15.33% equity stake in Chemica Limited in June 2008. The company is one of the largest retailers of agro-chemicals, stockfeed and agricultural hardware products in PNG. Kula facilitated the exit of a former shareholder and the entry of the General Manager and will assist with the execution of the company’s expansion plans.

BBs holdings Limited (PNG)Kula completed the acquisition of a 15% equity stake in BBS in July 2009. BBS is PNG’s largest nationally owned security group. It provides a full range of services and has the most comprehensive infrastructure and branch network in the country.

REGIONaL INvEsTMENT FuNds

PaCIFIC dIRECTORY

KK Kingston Limited (PNG)Kula completed the acquisition of a 16.5% equity stake in KKK in April 2010. Kula partnered with International Finance Corporation to hold a 33% equity stake in the company. KKK is one of PNG’s largest and longest established manufacturers and produces a wide range of products. KKK is seeking assistance to manage and finance its considerable growth opportunities, including exports to other Pacific Island countries.

CoNtACtPacific capital Partners (Png) limitedlevel 24, amP Place10 eagle Stbrisbane Qld 4000australiatel: +61 7 3303 0894fax: +61 7 3303 0895www.aureos.com

ENTERPRIsE ChaLLENGE FuNdThe Enterprise Challenge Fund (ECF) is an AusAID-led Australian Government pilot program with the long-term goal of reducing poverty by developing a strong private sector in South East Asia and the Pacific. Grants of between AUD$100,000 and AUD$1.5 million were available for viable commercial projects that improve the lives of people and generate improved access to vital goods and services for disadvantaged communities. ECF has funded 24 projects in total with 16 grants allocated to Pacific business ventures in Fiji, PNG, Solomon Islands and Vanuatu. These private sector Pacific projects are in the agribusiness, seafood, renewable energy, inter-island shipping and tourism sectors. A mid-term review will inform a decision by the Australian Government about the future of the Enterprise Challenge Fund.

CoNtACtwww.enterprisechallengefund.org

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asIaN dEvELOPMENT BaNKThe Asian Development Bank (ADB) and its following offices:- South Pacific Subregional Office

(SPSO), Suva, Fiji Islands;- Pacific Liaison and Coordination Office

(PLCO), Sydney, Australia; - Papua New Guinea Resident Mission

(PNRM), Papua New Guinea; - Special Liaison Office (SOTL), Dili,

Timor-Leste; and the- Pacific Department at ADB

headquarters, Manila, Philippines,work together to organise ADB operations, align them with the evolving needs of the Pacific Islands and deliver services to the region. ADB provides a mixture of loan and grant financing and technical assistance to its 14 Pacific developing member countries. It also provides direct support to the private sector in the Pacific Islands through an equity investment in the Kula Fund (see Page 73). Responding to developmental constraints in the South Pacific, ADB’s Pacific Strategy 2005–2009 focuses on private sector development, improved delivery of social services and good governance. SPSO in Fiji and PLCO in Australia provide assistance in the Cook Islands, Fiji Islands, Kiribati, Nauru, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu. The ADB is also involved in policy dialogue and formulation, capacity development, country reporting, economic analysis, aid coordination, external relations and information dissemination.Some of its activities in the Pacific include:- Helping develop national planning and

budgeting processes in Palau, PNG, Samoa and Tonga

- Preparing new results-focused country strategies for Tonga and Samoa, and

- Post-tsunami infrastructure

rehabilitation in the Solomon Islands.

CoNtACtPacific liaison and coordination office (Plco/adb Sydney) level 18, 1 margaret St (corner of clarence and margaret streets) Sydney nSw 2000 australia tel: +61 2 8270 9444 email: [email protected] www.adb.org/Plco

South Pacific Subregional office (SPSo/adb Suva) 5th floor, ra marama building 91 gordon StPrivate mail bagSuva, fiji tel: + 679 331 8101 email: [email protected] www.adb.org/SPSo

EuROPEaN INvEsTMENT BaNK The European Investment Bank (EIB) was established in 1958 as the long-term lending bank of the European Union and has been an active development partner in the Pacific since 1963. It assists the integration, development and economic and social cohesion of the EU Member States and raises funds on the capital markets, which it then lends to projects furthering EU policy objectives. In the Pacific, it has contributed more than €380 million euros to sustainable development and poverty alleviation. The EIB recently opened a regional office in Sydney to help develop activities in the Pacific, including investment projects in the communications, transport infrastructure, energy and environmental protection, manufacturing and mining sectors.

CoNtACteuropean investment bank – Pacific regional officelevel 32, 88 Phillip StSydney nSw 2000australiatel: + 61 2 8211 0536www.eib.org

EuROPEaN uNIONThe European Union also has development aid programs directed to the Pacific region, delivered through regional offices in Papua New Guinea, Vanuatu, and the Solomon Islands. Its Centre for the Development of Enterprise (CDE) assists small-to-medium size businesses, professional associations and service providers with funding aimed at improving social and economic development. Since 2002, this program has funded 454 projects to the tune of €2.3 million euros. Its current priorities in the Pacific are tourism, agribusiness, marine resources, energy and financial institutions. Ad hoc funding is also available for other sectors. The CDE also administers PRO INVEST, a 58 million euro program that provides technical assistance and finance for large-scale projects aimed at delivering an improved business climate and services.

CoNtACtaustralian office18 arkana StYarralumla act 2600 tel: +61 2 6271 2777email: [email protected]

fiji officedevelopment bank centre4th floor, 370 victoria PdeSuvatel: +679 331 36 33email: [email protected]

new Zealand officelevel 6, Sybase house101 lambton Quaywellingtontel: +64 4 472 9145email: [email protected]

INTERNaTIONaL dEvELOPMENT aGENCIEs


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Papua new guinea officethe lodge3rd floor, brampton StPo box 76, Port moresbytel: + 675 321 35 44email: aldo.dell’[email protected]

Solomon islands office2nd floor, city centre building honiaraPo box 844honiaratel: +677 21 575email: [email protected]

vanuatu officePo box 422Port vilatel: +678 22 501email: [email protected]

INTERNaTIONaL FINaNCE CORPORaTIONThe International Finance Corporation (IFC), a member of the World Bank Group, aims to reduce poverty in the Pacific region by creating opportunities and improving people’s lives. To attain this goal, IFC provides two main products to its business and government clients: long-term investment and advice. IFC has been active in the Pacific region for nearly 20 years and is currently operating in Papua New Guinea, Solomon Islands, Timor-Leste, Tonga, Samoa and Vanuatu. Private firms and financial institutions comprise IFC’s main clients. IFC uses a range of investment instruments, such as equity, debt and guarantees. IFC clients demonstrate the business case for sound environmental and socially sustainable practices and good corporate governance. IFC then seeks to replicate these good practices across other companies, so that large numbers of people in the Pacific region can benefit.

In addition to operating at the firm level, IFC also engages at the systemic level to improve the business environment for all companies. This work is done in partnership with governments in the region and with other stakeholders, such as other parts of the World Bank Group, bilateral donors and civil society. IFC Advisory Services in the Pacific region is supported by the governments of Australia, New Zealand and Japan. Some of the projects in which the IFC has played a role include: investing in Digicel; the part-privatisation of Polynesian Airlines in Samoa; and the reform of company law and the introduction of an electronic company registry in Tonga.

CoNtACtinternational finance corporation—east asia and the Pacificlevel 18, 14 martin PlaceSydney nSw 2000 australia tel: +61 2 9235 6511 fax: +61 2 9223 2533www.ifc.org

ausaId

CoNtACtausaid head office255 london circuitgPo box 887 canberra act 2601 australia tel: +61 2 6206 4000fax: +61 2 6206 4880www.ausaid.gov.au

ausaid offices can be found in australian embassies/consulates in the federated States of micronesia, fiji, kiribati, new caledonia, Papua new guinea, Samoa, Solomon islands, tonga and vanuatu.

INTERNaTIONaL dEvELOPMENT & aId aGENCIEs

NZaIdCoNtACtnZaid195 lambton QuayPrivate bag 18-901wellingtonnew Zealandtel: +64 4 439 8200fax: +64 4 439 [email protected]

PaCIFIC dIRECTORY

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This directory includes major companies that operate in multiple Pacific jurisdictions.

allied Gold +61 7 3252 5911 www.alliedgold.com.au

air Pacific www.airpacific.com

aNZ (Pacific) www.anz.com/pacific

asia Pacific Breweries Ltd www.apb.com.sg

austasia Pacific health +61 7 5596 4622 www.webbpacific.com.au Corporate healthcare services

Bank of hawaii www.boh.com

Bank south Pacific Limited (BsP) +675 321 1999 www.bsp.com.pg

Beca +649 300 900 www.beca.com

Bluescope steel +687 282 944 www.bluescopesteel.com

Cadden Crowe +61 7 3003 0466 www.caddencrowe.com.au

Continental Micronesia (airline) www.continental.com

Credit Corporation +675 321 7066 www.creditcorporation.com.pg

daltron + 675 302 2200 www.daltron.com.pg

dhL Pacific Islands +679 337 2766 www.dhl.com

digicel www.digicelpacific.com

Fintel +679 331 2933 www.fintelfiji.com

First hawaiian Bank www.fhb.com

Fletcher Construction +64 9 525 9000 www.fletcherconstruction.co.nz

Goodman Fielder +61 2 8874 6000 www.goodmanfielder.com.au

hari Punja Group (incl. Flour Mills of Fiji) +679 330 1188 www.fmf.com.fj

john davidson & associates www.jda.com.au

jones day +61 2 8272 0506 [email protected] French-qualified lawyer, based in Sydney

jTa International www.jtai.com.au

Kina Group of Companies +675 308 3888 www.kina.com.pg

Kramerausenco +61 7 3870 1455 www.kramerausenco.com

National Capital +675 321 6333 www.nationalcapital.com.pg

Nautilus Minerals +61 7 3318 5555 www.nautilusminerals.com

Nestlé Pacific Islands +61 2 8756 2000

New Britain Palm Oil Limited +675 985 2177 www.nbpol.com.pg

Oceanie Lawyers +61 423 298 007 www.oceanie.com.au

Olex +613 9281 4444 www.olex.com.au

Origin Energy +612 8345 5444 www.originenergy.com.au

Pacific air Cargo +617 3268 6633 www.pacificaircargo.com.au

MajOR REGIONaL COMPaNIEs


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PaCIFIC dIRECTORY

Pacific Blue/Polynesian Blue www.virginblue.com.au

Pacific Forum Line www.pflnz.co.nz

Pacific Legal Network +61 2 9267 7344 www.pln.com.au

Pacific Petroleum Company www.pacificpetrole.com

Pactel International www.pactelint.com

Port Moresby stock Exchange Limited +675 320 1980 www.pomsox.com.pg

Pacific Petroleum Company (PPC) www.pacificpetrole.com

qBE (Pacific Region) +612 9375 4444 www.qbepacific.com/Insurance.html

Reddy Group www.reddygroup.co.nz

Reef shipping www.reefship.co.nz

sofrana unilines www.sofrana.co.nz

swire shipping +61 2 9272 9261 www.swireshipping.com

Toyota Tsusho south Pacific holdings +61 7 3512 9797 www.toyota.tsusho.com.au

ullrich aluminium +64 9 262 6262 www.ullrich.co.nz

Warwick hotels International www.warwickhotels.com

Westpac +61 2 8253 0222 www.westpac.com.au/pacific

xstrata www.xstrata.com

MajOR REGIONaL COMPaNIEs

PaCIFIC dIRECTORY

7878

usEFuL INFORMaTION sOuRCEs FOR ThE PaCIFIC

Unsurprisingly, the region’s media is rather fragmented so it can be hard to keep up with what is happening in various countries. Fiji-based Islands Business magazine has an online news service that gathers most of the major business stories and is updated regularly (www.islandsbusiness.com/news). REGIONaL INFORMaTION sOuRCEswww.islandsbusiness.com/newsIslands Business is a monthly magazine covering Pacific Islands regional business issues. Its online news service is updated daily.

www.radioaustralia.net.au/pacbeatRadio Australia provides in-depth features on issues relating to the Pacific region. Listen on the radio or download podcasts.

www.nzherald.co.nzThe New Zealand Herald, NZ’s leading newspaper, provides thorough coverage of major issues relating to the Pacific Islands.

www.businessadvantageinternational.com/publications.shtmlBusiness Advantage’s own series of investment promotion publications, covering some of the larger Pacific Islands economies, is freely available in magazine format and online.

www.austrade.gov.auOf special interest is Austrade’s up-to-date country profiles of many of the larger South Pacific economies, found by clicking on the ‘Market Information’ link.

www.dfat.gov.au/geoThe Australian Government’s Department of Foreign Affairs and Trade has general economic and political overviews of all of the 16 countries and territories featured in this publication.

www.forumsec.orgThe new website of the Pacific Islands Forum Secretariat provides regular updates on what’s happening in the Pacific region.

www.south-pacific.travelThe website of the South Pacific Tourism Organisation (SPTO), the peak body for the region’s tourism industry, provides a wealth of information.

FIjIwww.islandsbusiness.com/fiji_businessFiji Islands Business provides business news on Fiji in magazine and electronic format.

FRENCh POLYNEsIawww.tahitipresse.pfTahitipresse is an up-to-date bilingual news service on what’s happening in French Polynesia.

GuaMwww.guambusinessmagazine.com

NEW CaLEdONIawww.cci-nc.comThe Chamber of Commerce website has a useful downloadable ‘investor guide’. [bilingual]

www.166e-focus.ncThis website is focused on business-to-business information in New Caledonia. A subscription is required (from 300 Euros for three months). [French-only]

www.lnc.ncLes Nouvelles Caledoniennes, the leading local newspaper, is online. [French-only]

PaPua NEW GuINEawww.postcourier.com.pgThe Post Courier, owned by News Limited, is one of two national newspapers.

www.thenational.com.pgThe National newspaper covers news throughout Papua New Guinea.

www.pngindustrynews.netAn online news service. A subscription is required for full access.

www.energy-pubs.com.auPNG Resources is a quarterly magazine on PNG’s resources sector.

www.pm.gov.pgThe website of the Prime Minister’s Office is also a good source of news.

www.pngchamberminpet.com.pgThe Papua New Guinea Chamber of Mines and Petroleum produces a number of useful publications including Profile magazine, which is produced to coincide with its major biennial conference.


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usEFuL INFORMaTION sOuRCEs FOR ThE PaCIFIC

saMOawww.samoaobserver.wsThe Samoa Observer, Samoa’s main local newspaper is online.

www.wsamoa.wsSamoa Online is an online information resource page.

sOLOMON IsLaNdswww.solomonstarnews.com www.peoplefirst.net.sbThese are the two main news sources for the Solomon Islands.

TONGawww.matangitonga.toMatangi Tonga Online is a local news service.

www.pmo.gov.toWebsite of the Government of Tonga.

vaNuaTuwww.vanuatunews.comAn online news service for Vanuatu.

OThER usEFuL REsOuRCEswww.southpacific.org/phone.htmlOnline telephone directories for the Pacific Islands.

www.timeanddate.com/worldclockOnline global time zone resource. Invaluable when you consider that Tonga is a full 24 hours ahead of its close neighbour Samoa!

www.xe.comOnline resource for checking exchange rates.

PaCIFIC dIRECTORY

8080

TRadE OFFICEs

australian Trade Commission (austrade) www.austrade.gov.au

Fiji (also covers Kiribati, samoa, Tonga and Tuvalu)Australian High Commission 37 Princes Rd, Tamavua, Suva, FijiPO Box 1252, Suva, FijiTel: +67 9 338 2825 Fax: +67 9 338 2805Email: [email protected]

New Caledonia (also covers vanuatu and French Polynesia)Australian Consulate-General 8th Floor, 19–21 Avenue Foch Noumea, New Caledonia Tel: +68 7 270 127 Fax: +68 7 278 270

Papua New Guinea (also covers the solomon Islands)Australian High Commission Godwit Road Waigani, Port Moresby, NCDTel: +67 5 325 9150Fax: +67 5 325 9727

New Zealand Trade and Enterprise (NZTE)www.nzte.govt.nz

New Caledonia (also covers vanuatu, solomon Islands, Wallis and Futuna Islands)c/- New Zealand Consulate-General3rd Floor, 4 Boulevard Vauban, NoumeaBP 2219, 98846 Noumea Cedex Tel: +687 287 278Fax: +687 287 280

French PolynesiaAve. du Prince Hinoi, Imm. Vini Vini - 1st FloorPapeete, Tahiti, French PolynesiaB.P. 40180 Fare Tony Vaiete, 98713 Papeete, Tahiti, French PolynesiaTel: +689 540 335Fax: +689 540 336

Fiji (also covers Cook Islands, Guam, Kiribati, Marshall Islands, Nauru, Niue, samoa, Tonga, Tuvalu)c/- New Zealand High CommissionLevel T 10, Reserve Bank Building, Pratt Street, Suva, PO Box 1378, Suva, FijiTel: +67 9 330 6090Fax: +67 9 330 5675

sydney, australia (covers Papua New Guinea)Level 7, 55 Hunter Street, Sydney, GPO Box 54Sydney NSW 2001, AustraliaTel: +61 2 9234 2700Fax: +61 2 9234 2701

PaCIFIC TOuRIsT BOaRds

american samoa visitors Bureauwww.americansamoa.travel

Cook Islands Tourism Corporationwww.cookislands.travel

East Timor Tourismwww.turismotimorleste.com

Federated states of Micronesiawww.visit-fsm.org

Fiji visitors Bureauwww.bulafiji.com

Guam visitors Bureauwww.visitguam.org

Kiribati visitors Bureauwww.kiritours.com/Tourism/tourism.htm

Marshall Islands visitors authoritywww.visitmarshallislands.com

Nauru Tourismwww.discovernauru.com

New Caledonia Tourismwww.newcaledoniatourism-south.com

Niue Tourism Officewww.niueisland.com

Palau visitors authoritywww.visit-palau.com

Papua New Guinea Tourism Promotion authoritywww.pngtourism.org.pg

samoa Tourism authoritywww.samoa.travel

solomon Islands visitors Bureauwww.visitsolomons.com.sb

Tahiti Tourisme (French Polynesia)www.tahiti-tourisme.pf (in French)www.tahiti-tourisme.com (North America)www.tahitinow.com.au (Australia)

Tonga visitors Bureauwww.tongaholiday.com

Tuvalu Tourismwww.timelesstuvalu.com

vanuatu Tourism Officewww.vanuatutourism.com

TRadE OFFICEs & TOuRIsM BOaRds

PaCIFIC dIRECTORY

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PaCIFIC dIRECTORY CaLENdaR

Key Pacific Business Events in 2010/11 Coconut palms in Tonga.

11 august australia Fiji Business update (australia fiji business council), Sydney, australia www.afbc.org.au

12–13 august Pacific Islands Investment summit (informa/Pacific islands trade & invest/business advantage international), Sydney, australia www.informa.com.au/pacific-investment

this is the first regional event to explore the investment potential that exists across the Pacific islands including the 14 nations of the Pacific islands forum, as well as east timor and the uS- and french-affiliated territories.

this is an exciting and critical time in the Pacific. Some of the largest projects ever to be undertaken in the Pacific islands region are just getting underway, eg the Png lng project and the relocation of uS military forces to guam. with these huge projects there are the obvious opportunities in engineering and associated services, as well as many other indirect areas of opportunity resulting from the inevitable economic growth, such as construction, retail, accommodation and transport.

as well as examining the exciting regional investment opportunities in such diverse sectors as telecommunications, transport, agriculture and tourism, this essential investor’s summit will discuss events and policies that will impact investment decisions in the region in the coming economic cycle including trade negotiations, political stability and the emergence of asian investment in the region.

29 October australia solomon Islands Business Forum (australia Pacific islands business council), brisbane, australia www.apibc.org.au

15–19 November New Caledonia Nickel Conference (informa), noumea, new caledonia www.newcaledonianickel.com

the new caledonia nickel conference, supported by the new caledonian government, has become a regular meeting place for the global nickel community and offers direct access to the island’s nickel industry. it will provide insight information on existing operations, projects being developed and in-depth analysis on future developments and opportunities.

gathering over 300 delegates, speakers, sponsors and exhibitors, this event represents a major networking opportunity. the program will feature presentations from an exclusive and expert speaker line-up on the most crucial issues the nickel industry is facing; it will also include a series of site visits to new caledonia nickel operations.

for more information visit www.newcaledonianickel.com or contact the conference manager: diana lauzi on + 612 9080 4313 ([email protected]).

5–7 december Fiji australia Business Forum (australia fiji business council), fiji www.afbc.org.au

6–8 december 11th Papua New Guinea Mining and Petroleum Conference (Png chamber of mines and Petroleum) Sydney, australia www.pnginvestment.com

14–15 March 2011 3rd Pacific Trade Conference and Expo (new Zealand Pacific business council), auckland, new Zealand www.pacificte2010.com

* nb dates and event details correct at the time of going to press.

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Sulu Sea

Wallis andFutuna

PALAU

PAPUA NEW GUINEA

EAST TIMOR

AUSTRALIA

Tokelau

Ceva-i-Ra

Kingman Reef

Santa Cruz Islands

Norfolk Island

SAMOA

SOLOMONISLANDS

NAURU

FIJI

FEDERATED STATES OF

MARSHALL ISLANDS

NEW CALEDONIA

KIRIBATITUVALU

VANUATU

MICRONESIA

ÎLES TUBUAI

SOCIETYISLANDS

NIUE

Minerva Reef



COOK

ISLANDS

Palmyra Atoll


Jarvis Island

Kermad

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lands

New Zealand

VIETNAM

Manila

Wewak

Lae

Majuro

Funafuti

Port Moresby

RarotongaNouméa

Honolulu

Fuzhou

W enzhou

Madang

Yaren

Honiara

Hawaii

Oahu

Maui

Eniwetak

Kwajalein

Tarawa

Banaba

Luzon

Guadalcanal

0 500 Km

Suva

KepulauanAru

SULAWESI

Kepulauan Tanimbar

Apia

Papeete

TahitiPort Vila

Alo�

Nuku’alofa

Mata-Utu

PalikirKoror

Viti Levu

VanuaLevu

Rotuma




Okino-tori-shima

Caroline Islands

AmericanSamoa

KIRIBATI

ÎLES MARQUISES

Yap


Adamstown

Banda Sea

Ceram Sea

Equator

Hagåtña

New Britain


Lord Howe Island

Coral Sea

Solomon Sea

Bismarck Sea

Rapa


Coral Sea Islands

North Pacific Ocean

South Pacific Ocean

Pitcairn Islands

Tasman Sea


Luzon Strait

INDONESIA

Wake Island

South China Sea

Saipan


Melekeok

Timor Sea

GUAM

8383

Sulu Sea

Wallis andFutuna

PALAU

PAPUA NEW GUINEA

EAST TIMOR

AUSTRALIA

Tokelau

Ceva-i-Ra

Kingman Reef

Santa Cruz Islands

Norfolk Island

SAMOA

SOLOMONISLANDS

NAURU

FIJI

FEDERATED STATES OF

MARSHALL ISLANDS

NEW CALEDONIA

KIRIBATITUVALU

VANUATU

MICRONESIA

ÎLES TUBUAI

SOCIETYISLANDS

NIUE

Minerva Reef



COOK

ISLANDS

Palmyra Atoll


Jarvis Island

Kermad

ec Is

lands

New Zealand

VIETNAM

Manila

Wewak

Lae

Majuro

Funafuti

Port Moresby

RarotongaNouméa

Honolulu

Fuzhou

W enzhou

Madang

Yaren

Honiara

Hawaii

Oahu

Maui

Eniwetak

Kwajalein

Tarawa

Banaba

Luzon

Guadalcanal

0 500 Km

Suva

KepulauanAru

SULAWESI

Kepulauan Tanimbar

Apia

Papeete

TahitiPort Vila

Alo�

Nuku’alofa

Mata-Utu

PalikirKoror

Viti Levu

VanuaLevu

Rotuma




Okino-tori-shima

Caroline Islands

AmericanSamoa

KIRIBATI

ÎLES MARQUISES

Yap


Adamstown

Banda Sea

Ceram Sea

Equator

Hagåtña

New Britain


Lord Howe Island

Coral Sea

Solomon Sea

Bismarck Sea

Rapa


Coral Sea Islands

North Pacific Ocean

South Pacific Ocean

Pitcairn Islands

Tasman Sea


Luzon Strait

INDONESIA

Wake Island

South China Sea

Saipan


Melekeok

Timor Sea

GUAM

BusinessAdvantageINTERNATIONAL









SPECSUnivers ExtraBlack 44pt – Optical -30Univers 45 Light 44pt – Optical -30Univers 55 13pt/13 – Optical 10LOGO colour – 100m0y0k70

BA

Helping local communities with nutrition education

through the Nestlé Hamamas Dei Program

PAC003 PACIFIC ISLANDS AD.indd 1 11/06/10 10:22 AM

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The international trade & investment promotion arm of the Pacific Islands Forum Secretariat (PIFS) based in Fiji.

Our offices in Auckland, Sydney, Beijing and Tokyo focus on trade facilitation, investment attraction & tourism promotion.

investmenttrade tourism

facilitationpromotion

Unique because we:We are: Contact us:

p + 612 9290 2133f + 612 9299 2151e [email protected] www.pacifictradeinvest.com

z Actively promote and connect export ready Pacific Island businesses and their products to overseas markets;

z Support exporters and tourism businesses to connect with international buyers for their products and services;

z Introduce potential investors to businesses in the Pacific Islands;

z Provide export promotion support, business advice and technical expertise.

Business Advantage Pacific Islands 2010/11

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Transcript of Business Advantage Pacific Islands 2010/11