Islands Business - WE SAY: Trade imbalance a matter of concern

‘Unfortunately, the same cannot be said about
Pacific Islands-oriented business councils which
continue to be biased towards export that only seeks
to contribute to the trade imbalance. PITIC is
ploughing a lonely furrow and the government of New Zealand needs to strengthen its efforts and encourage business councils to take a leaf out of its book’

Over recent years, the trade imbalance between New Zealand and the Pacific Islands has ballooned to a figure that has been hovering at about NZ$1 billion, which has been a matter of concern.
Commenting on this situation soon after taking up office as the newly elected national government’s Minister of Foreign Affairs, Murray McCully said: “The trade figures are not figures that should give us any pride whatsoever. And I think we have to ask ourselves…whether we can do a lot better at providing infrastructure that is going to make it possible for smaller countries to trade more profitably with us, or look carefully at some of the barriers to trade.
“If you don’t provide a basis for a substantial improvement in self-sufficiency and don’t provide a vehicle for increased trade back to New Zealand, then I think we’re not working towards a long-term, sustainable solution.” McCully added that New Zealand must address its massive trade imbalance with the islands. Against exports of NZ$1.1 billion from New Zealand, it imports just NZ$135 million worth of merchandise from the islands collectively.
The question needs to be asked: is this being addressed in any meaningful way? Delegation after trade delegation of New Zealand businesspeople tours the Pacific Islands every year but their profile and approach have for the most part reflected a largely export bias. There is a desire in these businesses to sell and export and more often end up ploughing back the aid funding resources that originate from their home countries.
Most Pacific Islands-oriented business councils have exports written all over their agenda. Few have any import or investment strategy (except perhaps in the case of the hospitality industry).
Strict quarantine regimes are another big stumbling block for Pacific Islands in exporting their produce to New Zealand and Australia, although in recent years there have been serious attempts to rationalise the regime and encourage exports.
Perhaps, the only agency that is almost completely oriented and committed to encourage the flow of investments to the islands from New Zealand is the Auckland-based Pacific Islands Trade and Investment Commission (PITIC), which is a Pacific Islands Forum sponsored organisation.
It has been working intensively towards increasing outward trade from the islands into New Zealand while at the same time designing, coordinating and implementing a number of programmes and initiatives to encourage investment from New Zealand into the islands.
PITIC has led several trade and investment missions to the Pacific Islands over the past few years, which have not only raised awareness in potential New Zealand investors about investment possibilities in the islands but have actually resulted in investment.
In November 2007, PITIC in association with Air New Zealand flew a delegation of 14 businesspersons of Samoan and Tongan origin living in New Zealand to their home countries to explore possibilities of investing and doing business there under a programme called the “Return to Roots Mission”.
“We thought successful persons of Pacific Islands origin would have a greater empathy in investing back in their countries of origin and also have the necessary knowledge of both markets to bring gains to both their businesses and the economy back in the islands,” trade Commissioner Chris Cocker said, explaining the rationale for the mission.

That mission raised investment interest in areas as diverse as real estate, animal farming and wireless technology. In the months since, projects are at different stages of development in these sectors, both in Samoa and Tonga.
In 2008, another mission—this time to Vanuatu—took several businesspeople from New Zealand’s large agriculture sector in a bid to look at both investment opportunities in the agribusiness sector in Vanuatu and the possibilities of employing seasonal farm workers from there to work in New Zealand under the government’s Registered Seasonal Employer scheme.
The visit proved an eye-opener for the New Zealand businesspeople. The workers they had employed had successfully invested their earnings in a number of community-based projects, including purchasing new fishing and farming equipment, thereby creating further local employment opportunities and stimulating the local economy.
As New Zealand’s Ministry of Agriculture works closely with the islands to put in place better quarantine measures, the list of produce being allowed for importation into New Zealand has been steadily increasing.
This would undoubtedly encourage greater imports of vegetables and fruit from the islands as has already begun to happen in the case of Vanuatu, Samoa and Tonga. A similar mission for agriculturists from New Zealand is being planned for Samoa and Tonga this year. Most recently, PITIC’s mission to the Cook Islands, termed the “business explorers mission” gave an opportunity to several New Zealand businesspeople to look at investment opportunities in one of the South Pacific’s fastest growing tourism markets.
Owners of several properties who were looking for equity participation, partners to work with in expansion plans and those looking to sell holiday properties to the increasing numbers of retired baby boomers wanting to settle down in warmer climes had an opportunity to meet with potential investors face to face.
The feedback from the visiting businesspersons has been excellent and many are looking at pursuing the leads that were generated during the mission.
In all of these missions, PITIC makes it possible for investors to meet with a range of government departments and private agencies such as ministries of investment and industry, chambers of commerce and locally operating commercial banks, as well as professionals from the legal and financial sectors.
“This gives potential investors a bird’s eye view of the investment possibilities in each of the islands’ environments—designed to make available to them as much information as possible to make informed decisions,” says Manuel Valdez, PITIC’s Investment Officer.
PITIC’s investment closely follows through on the leads generated and is always available to help out with procedures leading to the next steps in the investment process, coordinating between interested investors and with various agencies in the islands.
Unfortunately, the same cannot be said about Pacific Islands-oriented business councils which continue to be biased towards export that only seeks to contribute to the trade imbalance. PITIC is ploughing a lonely furrow and the government of New Zealand needs to strengthen its efforts and encourage business councils to take a leaf out of its book.