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New Zealand business looks north
By Dev Nadkarni
The Pacific Islands are one of New Zealand’s biggest trading partners with volumes in excess of NZ$1 billion.
Much of the trade, though, is accounted for by the islands states of the Southern Pacific—particularly Papua New Guinea, Fiji and Samoa. The country is now beginning to make concerted efforts to strengthen its trade links with the Northern Pacific states.
Trade between New Zealand and the Northern Islands has seen slow growth mainly because of reasons of poor air and shipping links, which make the costs of travel and freight far higher than between New Zealand and the South Pacific Islands.
Last month, the Pacific Islands Trade and Investment Commission (PITIC) and the Private Sector Development Unit of the Pacific Islands Forum Secretariat (PIFS) helped organise a visit to New Zealand by a team of businesspersons from the Federated States of Micronesia, Palau and the Marshall Islands. The timing of the visit also enabled the group to visit Fiji and attend the inaugural Pacific Islands Private Sector Organisation (PIPSO) convention.
For many of the businesspersons in the delegation, several of them women, this was the first ever visit to both Fiji and New Zealand.
“We are impressed with the development levels that Fiji has reached and the way they have organised their economy around tourism,” says Debra Omegemar Neas, a skin-care products manufacturer, based in Koror, Palau.
She is looking at expanding the distribution footprint of her product range beyond her immediate vicinity into the rest of the Pacific and New Zealand and Australia.
Fellow Palau resident, Kassi Berg, originally from the mainland United States, runs a television production house and broadcasting station with her husband. “Wherever I went both in Fiji and in New Zealand, media content producers have shown great interest in collaborating with us,” she says.
Her company, Oceania TV, is the first television station in Palau, broadcasting daily for five hours, and since February when it launched has been popular with locals.
Most of the programming originates from Asia and Berg is a strong advocate for more local content not only from Palau but around the Pacific.
However, finding Pacific content has proved challenging, as there isn’t a lot of Pacific programmes out there, she says.
In Auckland, she has met with a number of content producers and television channel managers and says the response for collaborative ventures has been encouraging.
Francis Carlos Dominic, who heads one of Majuro, Marshall Islands’ most established construction companies, is interested in New Zealand’s construction industry products.
There is high interest in the building, construction and infrastructure industry products from the Northern Pacific mainly owing to the US$14 billion investment into infrastructure that will go into the region—mainly Guam—as the US rolls out its plans for the military base there.
Thousands of armed forces personnel are being moved to the region from Japan’s Okinawa in the next few years.
The business delegation met with over 50 interested companies in Auckland over a luncheon that was attended by several business councils that facilitate business between New Zealand and Fiji, Papua New Guinea and other Islands states. They also visited manufacturing plants around New Zealand’s North Island.
PITIC Trade Commissioner Chris Cocker is happy with the initial outcome of the Northern Pacific business delegation’s visit.
“The interaction was excellent and there is considerable interest from businesspeople from both sides to engage with each other to explore the many opportunities that exist on both sides,” he says.
The New Zealand and the US governments have jointly decided to look into facilitating better flight and freight logistics between the two regions. Shipping services that connect the two while calling at South Pacific ports along the way would undoubtedly benefit the entire region.
There is disappointment in the country’s business circles that the New Zealand industry lost out on the construction opportunities at Samoa’s South Pacific Games (SPG) in a big way. Almost the entire bulk of the construction projects went to Chinese designers and contractors.
“Everything down to the last chopstick came from China,” says New Zealand Pacific Business Council (NZPBC) chairman, Gilbert Ullrich.
Tax exemption bails out airline?
French Polynesia’s President Gaston Tong Sang is hoping Air Tahiti Nui’s anticipated 2007 deficit could be cut by half as a result of the French Budget Minister’s announced support for a tax exemption for the airline’s fifth Airbus purchase.
The president made the comment following a meeting last month with the French Budget Minister, Eric Woerth.l
Besides announcing a tax exemption for the purchase of an Airbus 340-300, Woerth also said he was supporting the airline’s proposed flight plan change for New York-Papeete flights.
Starting this month, the airline’s New York flights will do a Los Angeles stopover.
Tong Sang said he was pleased to learn of Woerth’s support for the tax exemption and the change in the flight plan.
“That is extraordinary for us and good news to announce to our Tiare airline. Thanks to this agreement from the budget minister, the estimated deficit of one billion French Pacific francs (US$11.63 million/US$8.38 million) this year should practically be cut in half,” the president said.
However, Tong Sang added that the purchase of a sixth plane for Air Tahiti Nui is not being put on hold. Instead, the Bora Bora plane now being rented needs to be replaced before considering the purchase of a new aircraft. A decision, however, will be made before the end of the year, Tong Sang said.
On the subject of Air Tahiti Nui, Tong Sang noted that the airline’s 2006 deficit was largely due to money lost on the Papeete-New York route.
In order to improve the airline’s 2007 balance sheet and operating account, Air Tahiti Nui has proposed to modify its service by rerouting all New York-Papeete and Papeete-New York flights via Los Angeles. The goal, he said, is to increase passenger volume.
But a month ago, Tong Sang said, the Direction Générale des Impôts (DGI), the equivalent of the US Internal Revenue and the British Inland Revenue, sent a message saying it was not accepting Air Tahiti Nui’s proposed route modification. That decision risked weakening the airline’s financial situation for 2007, he said.
During their meeting, Tong Sang and Woerth also discussed several economic development projects.
Prepaid billing, the way to go for Tuvalu?
The Tuvalu Electricity Corporation (TEC) may have to adjust its tariffs and introduce a prepaid billing system to address its financial problems caused by steep increases in fuel supply cost, says an independent tariff consulting company.
TEC will also have to reduce its operating costs through a variety of measures.
In a consultation with Tuvalu consumers, Richard McGeorge of Rigway Capital Projects, explained “the priority was to improve revenue collection through prepaid metering”.
Pacific Islands Applied Geoscience Commission (SOPAC) energy expert, Gerhard Zieroth said that “prepaid metering system had been a huge success in the other Pacific Islands Countries”.
The consultants also recommended that TEC reduces its fuel costs through a joint fuel procurement with neighbouring countries and an internal loss reduction programme.
At the same time, they suggested that local renewable energy resources should be developed.
“First results of a wind monitoring programme by SOPAC has shown that the Funafuti power station could save up to 200,000 litres of fuel a year by installing a wind turbine,” said Zieroth.
The consultants recommended that a lifeline tariff be introduced. “Lifeline tariffs reduces costs of the first 50 units of electricity that are used per month. This benefits low income households.
“For high consumption customers, a conservation tariff should be introduced to reduce electricity wastage.”
Consultants also suggested that a fuel adjustment charge be included.
“This means that TEC’s fuel costs will be handed down to the consumer. When the price for fuel goes up, electricity tariffs will be increased and decreased when it goes down.”
In a consultation meeting with the consultants, consumers expressed concern at the prospect of increases in electricity costs but also acknowledged the need to ensure financial viability of Tuvalu’s power company.
TEC’s General Manager, Mafalu Lotulua asked consumers in Tuvalu to work with TEC “to ensure that reliable and affordable electricity supply is available throughout the country”.
“Prepaid system is the way to go from here, which is essentially the answer to our problem,” said Lotulua.
Polynesian Blue flying high
After less than two years of operation, the joint venture airline between Virgin Blue and the Government of Samoa, Polynesian Blue, has more than tripled its maiden profit to a record pre-tax profit of NZD$5.363 million ($10.5 million Tala) for the 12 months ended June 30, 2007. This is in comparison to last year’s pre-tax profit of NZD$1.19 million for the period October 1, 2005 to June 30, 2006.
The result has been directly attributed to the strength of air travel to and from Samoa and the resulting boom in Samoan tourism.
The latest figures from Samoa’s National Department of Statistics highlight the continuing growth in people travelling to Samoa to holiday, as well as those visiting family and friends.
Over the past 12 months (July 06-June 07), holiday arrivals to Samoa have increased 16.1% from Australia and New Zealand, while the number of VFR (visiting friends and relatives) travellers has increased a whopping 28.7% to Samoa from Australia and 18.7% from New Zealand, the two countries where Polynesian Blue operates flights to and from Samoa.
The increased visitor numbers translates to a 17.3% increase to total tourism earnings for Samoa (source: Research and Statistics Department, Central Bank of Samoa).
Tuilaepa Sailele Malielegaoi, Prime Minister of Samoa, said: “The Polynesian Blue profit for the 12 months is a fantastic achievement for Samoa and her people.
“Not only has the airline achieved strong profitability but it has also boosted tourism and affordability of air travel to and from Samoa.”
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