Despite the gloom and a growing sense of doom towards the end of this year because of the worldwide financial crisis, the past 12 months have been quite significant for the general Pacific business environment, though for much of the early part of the year, the region had to struggle because of the impact of peak oil and high food and commodity prices.
Perhaps the most important of the significant developments for the business environment was in the telecommunications and information technology fields with the unprecedented expansion of mobile phone services across several islands nations including Tonga, Papua New Guinea, the Solomon Islands, Fiji, Vanuatu and Kiribati and a few others still in the offing.
This expansion saw competition between two or more players and the inevitable consequence of better services and cheaper rates.
Having been subjected to some of the most expensive mobile phone tariffs in the world, competition saw rates plummet to the delight of both business and individual users.
Hospitality industry representatives in Vanuatu said communication costs had fallen by as much as 30 percent after competition was introduced in that country.
Services like roaming, cheaper international connectivity and data access (internet and email) through the mobile network are becoming increasingly commonplace throughout the islands. These moves will undoubtedly stimulate the business climate across the islands in coming years.
An international study of the telecommunications industry in emerging Pacific Islands markets predicted this year that mobiles will outstrip fixed line phones within the next three years.
Deregulation of the telecommunication industry in several island economies has also seen internet access rates become increasingly affordable while bandwidth capacities have been growing simultaneously. Options for island governments to tap into undersea cable networks also became available in the past year, notably the French cable that has brought such an opportunity to the Cook Islands, although not without much controversy on the cost and pricing issue.
The past year also saw several developments in the IT corporate sector with company ownerships changing hands in Papua New Guinea and Fiji as well as new companies setting up shop or existing ones scaling up operations in the IT services and business process outsourcing sectors especially in these two countries that are leading the IT revolution in the islands region.

The coming mining boom
Quite a number of prospecting and mining contracts were signed across the Pacific in the past twelve months --the most important ones being in Papua New Guinea, Tonga, the Solomon Islands, the Cook Islands and Fiji.
One company has already presented the ore of gold it mined in the Bismarck Sea to the mining ministry of PNG, raising great hopes of ushering in an era of what may well turn out to be the gold rush for undersea minerals in the world’s least explored region—the Pacific Ocean.
Similar contracts were also signed in Tonga, Samoa and Fiji where prospecting work has already begun with contracts for actual mining still on the negotiating table in some cases.
In addition, the past twelve months saw hectic activity among island nations to redraw their continental shelf boundaries in time for the March 2009 United Nations’ deadline for submissions aimed at increasing their exclusive economic zones (EEZ) under the Law of the Sea.
Australia and New Zealand have already had their submissions accepted and have been successful in adding several millions of square kilometres to their EEZs over the past few months. The two nations have been helping island countries prepare their submissions along with SOPAC and other international agencies in time for the deadline early next year.
This activity has brought a number of issues into the spotlight --ranging from protecting the interests of the island nations’ sovereignty to protecting their environments and fragile marine ecosystems. Environmental groups have already begun raising concerns about the methods that are being used for prospecting and mining.

The world financial crisis
The effects of these impressive steps in telecommunications, however, may take a while to translate into any tangible benefits in the region because of the impact the financial crisis will have on the world economy for months.
Even at the best of times, Pacific islands economies are slow growing except in the case of the Melanesian bloc, which has seen impressive growth in the past few years because of the mining boom and the continuously growing demand from China and to a lesser extent from India.
This rate of growth is expected to slow down but the effects are yet to be seen because the full impact of the credit crisis is yet to percolate down to the Pacific islands.
The effects that have been most discernible in the past few months have been on funds invested by Pacific Islands governments.
Tuvalu, for example, does not expect to receive its $6 million annual proceeds from its invested trust funds in Australia and will have to look elsewhere to supplement its budget for next year.
Kiribati too has seen the volume of its fund diminished partly because of the crisis. Nauru is another nation that has seen its phosphate trust fund been affected.
Sourcing credit has been problematic in the islands even in normal circumstances because of issues related to immovable property-based collateral. But the market has tightened even more over the past few months because of the worsening worldwide credit situation.
As yet, no significant decreases in remittances have been noticed though overall tourist numbers marginally fell in the past few months owing to soaring travel costs.

Remittances and
seasonal employment
One of the most positive developments of the past twelve months is the success of the New Zealand government’s Regional Seasonal Employer (RSE) scheme that saw over 5000 Pacific islanders employed in the country’s horticultural sector. Not only did that result in remittances growing by several million dollars but the success of the idea also spurred on neighbouring Australia to trial a lookalike scheme that is to kick off next year. This augurs well for the idea of labour movement regionally.
The RSE scheme introduced remittances as a revenue channel for a country like Vanuatu for the first ever time since it never had any sizeable population based overseas.
Revenue thus earned is turning out to be a revolution for rural communities that are pooling in resources earned abroad by their members for community-based economic projects like investment into fishing and agricultural initiatives—which is a first for that country.
As well as the establishment of the seasonal employment scheme, the region also saw some significant developments in efforts to reduce the service costs related to remittances because of some proactive intervention by the Australian office of the World Bank.
Costs that were at one time as high as 40 percent of the remitted amount are now a fraction of that. A series of meetings with concerned agencies held over the past one year contributed to this and there are indications that the costs might decrease even further in the coming years, saving millions of dollars in commissions.
On the offshore financial sector front, Vanuatu’s tax haven status saw some turmoil after the Australian Federal Police raided several outfits in Port Vila investigating charges of money laundering in the middle of this year.
This divided Vanuatu’s political leadership on whether the country ought to continue with its tax haven status. That question is being partly been addressed by an expert group that is in the process of suggesting ways and means to bring greater accountability into the country’s financial system and its obligations to international agencies. 
Meanwhile, offshore financial activities of other countries like Nauru and Samoa received a tick of approval from international monitoring agencies over the past year.

Eco-friendliness gets a fillip
High fuel prices and the need to keep transportation costs low as well as the imperative for developing self-sufficiency saw a number of initiatives taken in the region. As well as bulk ordering of fuel, several entrepreneurial forays were made on developing alternative fuels.
Perhaps. the most significant among these was South Korean investment firm Changhae Tapioka PNG’s announcement that it was building a US$100 million plant to process cassava for use as a biofuel additive in Papua New Guinea’s Central Province.
Its technicians are testing 10 different varieties of the tuberous root for yield most suitable as additive for diesel and petrol. Besides, this experimentation with all sorts of plant derivatives for developing them into biofuels has been happening all over the Pacific.
After zeroing in on the right variety by the end of this year, it will encourage participating farmers across the nation to cultivate it. This is the first time that cassava is being grown and processed on such a scale just for its use as fuel additive in the Pacific region.
Biofuel additives—ethanol mostly processed from coconuts—increasingly power not just farm machinery and diesel power generators but also cars and trucks. Small quantities of ethanol can be used with petrol and diesel in most internal combustion engines with no modifications required.
Meanwhile, in the middle of this year, during Australian Prime Minister Kevin Rudd’s first visit to Papua New Guinea, he mooted a new carbon partnership between the two countries to reduce gas emissions from deforestation. Rudd said PNG could play a major part in reducing emissions from deforestation and set a trend for the region as a whole.
He also expressed confidence that the two countries would reach an agreement on protecting the world famous Kokoda Trail, which has been threatened by the prospect of a new copper mine being promoted by Australian interests.
In another highlight on the conservation front, Anote Tong, President of Kiribati, was honoured in Harvard for the work his country had done in establishing a sanctuary for whales in its territorial waters.

Aviation turbulence
The Aviation industry saw turbulent times worldwide with nearly 25 airlines closing shop in the past year alone. A bit of turbulence also hit the region’s aviation scene though for different, more localised reasons.
Flights between Tarawa and Christmas Island were culled for a period until the government of Taiwan stepped in with a grant and towards the end of the year, trans-Pacific flights connecting New Zealand, Tonga, Samoa and the United States are on the verge of being grounded.
On the other hand, private airlines helped expand services connecting Australia with the Solomon Islands with servicesgoing from two-a-week to almost a daily service adding immensely to the country’s growing economic opportunities, while Papua New Guinea too added a few destinations despite the downturn in the industry.
As with global airlines, profitability in the airline operators of the Pacific was also squeezed because of the combination of higher fuel prices and lower load factors, which also affected the islands’ tourism industry with lower arrivals.
Meanwhile, the universal ratification of the Pacific Islands Air Services Agreement (PIASA) still hangs fire with a few countries yet to sign it.

The Guam opportunity
As the US military’s planned move from Okinawa in Japan to Guam got under way earlier this year, Guam’s land prices have begun booming like never before.
The island will shortly be home to some 8000  armed forces personnel and there has been a continuing scramble in the region to cash in on the economic opportunity.
From average sales of US$130 million a year between 2001 and 2003, it grew nearly fivefold to US$686 million last year—and shows no signs of peaking, reports have said.
While the US$15 billion opportunity may not be directly open to Pacific Islands businesses because of their small sizes, sources believe there are plenty of opportunities for subcontracting as well as for labour contracting from the islands over the next 10 years over which period the product is expected to develop