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Tourism, remittances casualties o f recession
The recession experienced in Australia, New Zealand and the US is having a drastic effect on tourism in the Pacific and the flow of remittances to the region.
According to the Asian Development Bank’s Pacific Economic Monitor of May 2009, the recession is also putting pressure on their labour markets. Unemployment has risen to 8.9% in the United States, 5.4% in Australia, and 5.0% in New Zealand.
On the state of the Pacific economies, the ADB report said overall growth for 2009 is projected to slow to 3.1% compared to 5.1% in 2008.
“The contraction in gross domestic product (GDP) forecast for 2009 in Fiji and Samoa is likely to be larger than originally expected. Conditions are deteriorating rapidly in Solomon Islands. Vanuatu is now expected to perform better than originally forecast.
“Inflation is easing across the region, mainly because of lower world fuel prices. The devaluation of the Fiji dollar will, however, add to inflationary pressures in Fiji.
“A key downside risk for the commodity-intensive Pacific economies is a larger than expected decline in world demand and commodity prices.
“The tourism-intensive economies of the Pacific are exposed to the continued deterioration in international tourism now forecast for 2009,” the report said.
Tourism departures from Australia to the Pacific weakened in early 2009, so as departures from New Zealand. Departures from the US and Asia were also down over 2008.
Such declines will contribute to a slowdown of growth in the Pacific and tourism dependent economies face the prospect of an economic contraction.
Other highlights of the report:
• A key downside risk for the commodity-intensive Pacific economies is a larger than expected decline in world demand and commodity prices.
• The tourism-intensive economies of the Pacific are exposed to the continued deterioration in international tourism now forecast for 2009.
• The response to the global economic crisis is best tailored to the individual circumstances of each Pacific economy. A proactive, targeted, and coherent policy response is called for.
• Poor revenue outcomes are raising the imperative to act early to trim low-priority expenditure. Increased revenue effort will also be required. Additional fiscal resources may also be needed. Options include external grants, where made available, and borrowing, where it is affordable.
New challenges for customs authorities
Vanuatu’s deputy prime minister Ham Lini (pictured) has warned customs authorities in the region to remain vigilant because of the many new challenges facing the world.
He said there are no simple solutions to the new challenges and it must be realised that traditional Customs methodologies can no longer cope adequately with the challenges of the new globalised environment.
Lini was guest speaker at 11th annual conference of heads of Oceania Customs Organisations (OCO) hosted by Vanuatu last month.
The conference was attended 23 member countries in the region and 20 institutions as observers.
Lini said regional meetings such as this provide an excellent opportunity for administrators in the region to foster closer ties and exchange knowledge and experience.
“I am pleased to note that this year’s conference is focused on the theme “Customs in the 21st Century”. While there are a number of organisations where such issues could potentially be discussed, none appears to be well suited for the purpose.
“Most of the existing organisations, like the World Customs Organisations, World Trade Organisations and others cover either a broader or different geographical area, or focus on issues that are not directly applicable to the Pacific island countries.
“The OCO is therefore in a unique position to provide a forum that focuses specifically on the Customs administration issues faced in the region,” said Lini.
“Our main objectives are to provide our governments with sufficient revenue and protect our borders. Whilst collection of revenue is paramount, border management is becoming a great challenge to all national customs administrations. It is well recognised that working together to develop regional responses to the growing complexities of border security within the region is fundamental and should be encouraged.
“As the member countries think about the future of Customs, it is fair to say that customs administrations throughout the world are at the crossroads. The OCO and its members are also at the crossroads.
“How do Customs stay relevant and important in the 21st century? How do the customs agencies assume a role of even greater importance with their nations? Those are the main questions that are facing the member countries today. But surely the role of regional customs organisation and the OCO in the 21st century ought to be viewed in the light of the environment of the 21st century. This is a time of global challenges, of difficult issues, but it is also a time of great opportunity for customs administrations and the OCO.
“When we talk about the challenges, one of these is the global terrorist threat that affects and impacts on all nations and all regions. It is in the light of this environment that national customs administrations and the OCO must decide to go beyond the limited role of collector of the government revenue.
“Will we move beyond the other more traditional Customs role of interdicting illegal drugs, contrabands and the counterfeit goods? Will customs administrations and the OCO take on a larger, more strategic role in the security and facilitation of global trade?
“Going even further, should Customs assume greater authority in border control functions for the movement of goods and people?”
Vanuatu’s deputy prime minister says for those reasons, the Customs in the region must remain vigilant because there are no simple solutions to the new challenges and it must be realised that the traditional Customs methodology can no longer cope adequately with the challenges arising from the new globalised environment. – By Hilaire Bule
New minimum wage rates
The federal minimum wage for employees in American Samoa and the Commonwealth of the Northern Mariana Islands (CNMI) have been increased effective May 25 and May 26 respectively.
With the increase, the new minimum wage rates in American Samoa, which vary by industry, will range from $4.18 for garment manufacturing to $5.59 for certain types of shipping and transportation. Employees who work in the CNMI can expect to receive $4.55 per hour.
“With this next phased increase, workers in American Samoa and the Commonwealth of the Northern Mariana Islands are on their way to receiving the same minimum wage as mainland workers,” said Secretary of Labor Hilda L. Solis.
FIL expands to Samoa
Cement factory Fiji Industries Limited (FIL) has opened a distribution centre in Samoa in anticipation of a construction boom in Apia.
According to FIL General Manager, Josese Daveta, the centre is being established for the purpose of better serving the needs of customers in the islands.
FIL re-entered the export market in 2005 after pulling out in 2002 and has since been able to grow its export volume from 2% of local sales in 2006 to 30% in 2008.
The company intends to explore other opportunities within the Pacific despite the tough competition from producers in New Zealand and Asia.
Daveta said “our plan is to open other centres in markets that will present good values to FIL. We are looking at opportunities in the Northern Pacific too if logistics are right for us.”
FIL currently service customers in Vanuatu, Cook Islands, Tonga, American Samoa, Western Samoa, Solomon Islands, Wallis and Futuna and Kiribati.
ESOP for cannery
The American Samoa Government has been urged to consider exploring the potential of developing an Employee Stock Ownership Plan (ESOP) for the Chicken of the Sea (COS) cannery.
Aumua Amata, a former congressional candidate, made the suggestion in a meeting with Acting Governor Faoa Aitofele Sunia.
Under an ESOP, a new company, owned in whole or in part by the plant’s employees, would take control of the facility when the current owners pull out on September 30.
“While the Governor and the delegate are looking at ways to create new jobs for cannery workers who will become unemployed on October 1—as rightfully they should be—I thought it might be useful to think outside the box to see if there might be a way to save the existing plant,” said Amata.
The cannery has more than 2000 workers and is one of the territory’s largest employers.
The governor of the US state of Georgia confirmed that Chicken of the Sea International is setting up a plant in the city of Lyons.
US$20m tuna processing plant
The construction of a US$20 million (K55 million) on-shore tuna processing plant in Morobe province will be a first for any Chinese company investing in the local fishing industry, according to the local newspaper, the National,
It will be the fourth tuna cannery to rise in Lae.
Zhoushan Zhenyang Deep-Sea Fishing Co, a subsidiary of Zhejiang Hailisheng Group Co Ltd with a joint venture partner from Taiwan, will build the plant to process 250mt to 300mt of tuna a day. The new plant will employ some 3000 local workers.
Vanuatu targets French investors
French investors have been targeted by Vanuatu to invest in its tourism industry.
A study by the Vanuatu National Tourism Office found that the country gets only 10 or so French-speaking investors a year but in the tourism sector, it is very limited—less than 10%.
For many years France has been the world’s leading tourist destination. Vanuatu is hoping that with the current global economic crisis, it can encourage French entrepreneurs and young executives to have a change of scene and seek new opportunities in a new and more stable environment.
The South Pacific remains one of the areas seeing the highest growth rate in tourism and this has been the case in the last 4 to 5 years. Prospects for the coming years remain good.
For the metropolitan French investors, Vanuatu is still totally unknown as an investment opportunity.
Timber revenue drops
After an all time high, revenue from logging in Solomon Islands has nose-dived. This was revealed in the Central Bank’s 2008 annual report released last month.
The report said the demand for Solomon Islands logs has fallen in early 2009 due to the global economic crisis.
“Whilst anticipation for domestic log performance varies, it is projected that production will fall in 2009,” the report said.
“The operations of logging companies will be affected like other exporting industries,” the report said.
The bank said the volume of logs exported in 2008 hit a record level of 1.5 million cubic metres compared to 1.4 million cubic meters a year ago.
This accounted for 16% of Gross Domestic Product (GDP) and $974 million in export receipts and 13% of government revenue.
In terms of prices, based on World Bank data, the average international price for logs rose by nine percent over the year to US$292 per cubic metre.
The average export price of Solomon Islands logs remained unchanged at US$79 per cubic metre.
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