News Item

Lord Fakafanua speech at the New Zealand Tonga Business Council Bilateral Business Forum 2019

News 4 Nov 2019

Acknowledgements Ms Rachel Afeaki Taumoepeau, Chair of the NZTBC and Members of the NZTBC Executive Committee; Members of the New Zealand Tongan Business Community; Invited Guest Speakers

Distinguished Guests, Ladies and Gentlemen;

Mālō e lelei and Kia Ora,

I am extremely delighted to be here today, although it is quite daunting, as I look out at this room, that I have been selected to deliver a talk on Bilateral Trade and Investment Opportunities for Tonga to a crowd of experts on this subject. However, I do thank the NZTBC for the invitation and I will endeavor to give the topic some justice.

Tonga and New Zealand have shared a long-standing, warm and friendly history as close neighbors in the Pacific. New Zealand is inextricably part of the Pacific and island nations such as Tonga together with New Zealand define our regional identity, we enjoy shared security, and jointly uphold democratic values, we both participate in international peacekeeping and we share prosperity in the region. Our oceanic boundaries may bind us geographically but it is our common interest towards policies such as climate change action, regional security, economic cooperation and sporting that brings us together.

In fact, earlier this week, I had the honor of welcoming The Right Honourable Trevor Mallard, Speaker of the New Zealand Parliament and a delegation of MPs at our Parliament in Tonga for the first time. The aim of his visit was to deepen and strengthen friendly bilateral relations and to discuss ways of promoting a partnership between our two Houses of Parliament. This exchange is on the back of my own visit to the New Zealand Parliament by invitation of the New Zealand Speaker late last year. He stressed New Zealand’s commitment under the Pacific Re-Set policy, to taking a refreshed approach to Tonga and the rest of the Pacific. Such high level face-to-face interactions go a long way in forging meaningful and deep-rooted bilateral relations between our nations.

In comparison, our small parliament over the last decade would receive a senior delegation from China every year followed by an invitation to reciprocate a visit to China. China’s growing influence in the Pacific is not only due to its competitive cheque book diplomacy but its perceived ability to engage small island nations as equal partners. The level of diplomatic engagement with competing regional and global powers in the Pacific is felt in Tonga as one of the ground zeros for competing interests. There are only four permanent diplomatic missions in Tonga.Australia, New Zealand, China and Japan and soon to reopen the United Kingdom. A former monarch once said that we do not make policies but instead navigate them.

As you are all aware Tonga’s economy is fragile and is undermined by its vulnerability to natural disasters, being the second most vulnerable nation in the world. There is continued over reliance on external aid and inwards remittances from the Tongan diaspora in New Zealand and other countries such as Australia and the United States. Our narrow resource base and geographic isolation, coupled with Tonga’s exposure to external shocks and relatively weak institutional capacity, are only some of the main factors that present a challenge for any serious potential investor.

But ladies and gentlemen, it is not all doom and gloom; in fact, I am both enthusiastic and optimistic that the opportunities are ripe for increased bilateral trade and investment in Tonga. As a developing country, the potential opportunities for investment are plenty in the tourism, fisheries, and agriculture sectors. They share the same basic raw ingredients for development, fertile arable land, plenty of sunshine, beaches and turquoise sea for days. In agriculture over 50% of arable land is left fallow. The pristine natural environment is ripe for tourism however a lack of direct international connections is limiting tourist numbers and consequently you’d struggle to find 500 hotel beds in Tonga. New direct flights are being discussed from China and Hawaii. Fisheries are still underdeveloped even though the fish is there.

I understand that over 60,000 Tongans reside in New Zealand, the third largest Pacific Island group after Samoans and Cook Islands Maori and last year, two-way trade between NZ and Tonga amounted to NZD $240 million, with goods exports to Tonga totaling at NZD $74 million whilst goods imports was around NZD $4 million.

New Zealand total development funding for Tonga annually is around NZD $21 million with an estimated $NZD 66.7 million, between 2018 and 2019.

In addition, part of these funds includes support for upgrading Tonga’s electricity network (providing improved electricity connections to 55 villages on Tongatapu, providing communities and schools with safe and reliable access to electricity) and the development of its health and education system. From Parliament, I am pleased to report that the New Zealand and Australian Governments have committed to rebuilding the Legislative Assembly.

To promote a stronger and more resilient Tongan economy, the New Zealand Government has been committed to supporting the growth and sustainability of Tongan vanilla as well as improving the sustainability of the wider fisheries and agriculture sector.

Furthermore, the Prime Minister in his inaugural statement indicated that the Government of Tonga is committed to completing a large roads upgrade work program for the remainder of this parliamentary term. This, in addition to strong communication links, increased flight and shipping links creates a much more favorable investment environment than was perhaps available a decade ago.

These are exciting opportunities for the NZ Tongan Business Community to access for bilateral trade and investment. The top imports from Tonga in 2018 were travel services and agricultural products. Furthermore, the business opportunities for the handicrafts and artifacts market continues to thrive as we continue to promote our culture and traditions to our people in NZ who still feel ties and wish to perpetuate their connections with their Tongan heritage.

In saying that, I wish to recognize the huge success of our rugby league team in reinvigorating the sense of pride Tongans have for Tonga as well as creating direct and indirect advantages for not only the NZTBC but also for our 2 nations.

About 2,000 Tongans are also participating in New Zealand’s Recognized Seasonal Employer Programme. Labour mobility to New Zealand contributes to the growth of New Zealand’s industrial and agricultural sectors and provides a substantial revenue stream towards the Government, families and communities back in Tongan.

I understand that there will be a session on the Foreign Investment Act later and whilst there was a bit of controversy earlier this year when a new Foreign Investment Bill was tabled, I have to report that this Bill currently awaits royal assent. This Bill’s intention was basically to create a framework that balances welcoming foreign investment for growing the economy with the need to ensure that all Tongan citizens benefit from participation in the local economy.

In the meantime, foreign investment continues to be governed by the Foreign Investment Act of 2007 which still applies a list of reserved and restricted business activities which tends to favour those of Tongan nationality, underpinned by the rationale that Tonga is a small, developing economy which must protect its own.

There is always much debate in Tonga about empowering and strengthening of the private sector as they are in the engine that drives the Tonga economy. As members of the private sector here in New Zealand and in Tonga, I wish to thank you very much, on behalf of Parliament and the Government for your tireless efforts and your ongoing contributions to strengthening and empowering the Tongan diaspora here but also for all the commendable work you do for the Kingdom. Without your support and assistance, Tonga would definitely be missing out on so many opportunities.

As a legislator, I remain committed to supporting the work of NZ Tonga Business Council and the private sector. I look forward to learning much from this Business Forum and I wish to congratulate you all on the success of launching this program.

MALO