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TONGA
Bank's reserves under stress
On January 13, the National Reserve Bank of Tonga (NRBT) announced a credit ceiling on banks for the curbing of lending and braking of eroding foreign reserves. While at the end of November 2005 reserves were still quite comfortable at 4.3 months of import cover and 4.6 months ($T86.7 million equivalent to US$43 million) at the end of December, they would fall through 2006. The bank said reserves would come under pressure and inflation flare back to double digit figures of about 14-15% from about 8% due to the strong growth of credit and imports influenced by the 2005 civil service pay rise. A six-week civil service strike that ended in September 2005 forced the government to agree to pay rises backdated to July 1, 2005 ranging from 60 to 80%, with 60% to be paid in 2005 and the balance in 2006. The estimated cost is about T$35 million (US$17.5 million). The ministry is intent on balancing its 2005/06 budget by cutting spending and reallocating votes. In a December statement, finance minister Siosiua 'Utoikamanu said that in 2006 the government would have to somehow achieve savings of T$50 million (US$25 million). Without cuts to offset the pay rise, it is estimated that the 2005/06 deficit would rise to 5.4% of GDP and the 2006/07 deficit 9.6% of GDP. Left unmanaged, the 2006/07 deficit could trigger a balance of payments crisis, sap foreign reserves and the exchange rate dangerously and push inflation higher. The government would be forced to cut government services drastically, so worsening the economic and financial downturn.
NORTHERN MARIANAS
Japan visitors plunge 29%
Tourist arrivals from Japan plunged by 29 percent during the first month of the year, showing a consistent sharp decline since the departure of Japan Airlines last October. Data from the Marianas Visitors Authority showed that the Commonwealth of the Northern Marianas received only 25,555 visitors from Japan last month, compared with the 35,795 visitors in January 2005. Another key market, South Korea, posted a 9 percent drop in arrivals, registering only 6902 visitors last month from the 7554 posted during the same month last year. The slump comes after three consecutive months of growth in arrivals, said the authority.
NEW CALEDONIA
New laws to cool labour climate
Trade union laws, enacted in June 2005 to be effective from March 31, are intended to cool New Caledonia's stormy labour climate somewhat.
Unions will have to be registered for two years and have the support of 10% of the staff of private sector employees and 5% of the staff of public sector employees to win recognition. In return, recognised unions will be entitled to representation on the boards of various public enterprises and institutions such as the Economic and Social Council.
The labour department is working on an industrial relations regulatory code, it said was needed to avert economically damaging and potentially violent industrial combat. Several hundred New Caledonian employers, infuriated and frustrated by a wave of wildcat and violent strikes that made 2005 the worst for industrial relations in the territory's history, recently staged their own protest procession through Noumea.
They urged the government to uphold the law and freedom of movement and work. Jean-Yves Bouvier, president of the employers' federation (MEDEF-NC), complained that its members were under siege since militant Kanak trade union officials consistently resorted to strikes, demonstrations and picket and blockade tactics without first attempting negotiations.
Business was losing the incentive to invest, he said. One strike by some of its employees backed by trade union militancy brought an announcement from the Noumea downtown upmarket Surf Novel hotel that it was closing down for good because of its inability to trade.
A three-week strike during November/December by the newly formed New Caledonia Workers' Federation (CSTNC) union over the sacking of two employees by the Society le Nickel (SLN) nickel smelting company was estimated by it to have cost US$50 million.
Tactics used by the union leader, Sylvain Nea, caused his arrest for trial in April on charges of blocking roads and access to public facilities and obstructing employees wishing to get to work. Pickets demonstrated outside the police station where he was detained pending his release on bail.
The strike badly disrupted movement and business throughout Noumea. On one day, from 9am to 7pm all roads to and from town were blocked.
Aquaculture industry to contract
New Caledonia's aquaculture industry, hailed in the past as a major economic diversification hope, will contract because of the closure of the heavily government subsidised SOPAC shrimp farm from March 31. Founded 15 years ago and the recent recipient of a US$5 million cash injection, SOPAC built up exports of 2300 tonnes of shrimp a year to Europe and Japan and had a capacity to handle 7000 tonnes. It said it couldn't compete against cheap South American producers and had suffered slumped prices in Europe, its main market.
SOLOMON ISLANDS
Debt restructure
The government and the Central Bank of the Solomon Islands (CBSI) have agreed on the restructuring of S$175 million (US$23.08 million) in debt.
The agreement will help strengthen the central bank's balance sheet as bad debts become performing assets. The bank is expected to begin paying dividends to the government for use in further reducing debts. The CBSI has agreed to forgive S$45 million (US$5.93 million) in interest arrears that are part of the debt and will be repaid over the next 15 to 20 years.
The government will no longer be in default of domestic debt from the signing of the agreement early in 2006. Domestic debt of about S$500 million (US$65.96 million) will become fully performing. Australia has granted the government a two-year moratorium on debt payment and in 2007 will forgive at least 60% of the debt provided the government maintains satisfactory budget management and follow through on started reforms.
It has repaid over 98% of domestic business debts and arranged with several major creditors for the forgiveness of up to 75% of outstanding debt. Influenced by the exchange rate movement, formal debt stock at the end of November rose slightly by S$1 million (US$131,000) to $1634 million (US$215.56 million), of which $1115 million (US$147.09 million) was external debt and $519 million (US$68.46 million) domestic debt. Debt arrears rose to $154.2 million (US$20.34 million) due to exchange rate movements.
More men to work on palm plantation
Guadalcanal Plains Palm Oil Limited (GPPOL), the subsidiary of a large Malaysian palm oil producer, by January has so far hired about 1000 workers for the rehabilitation of 6500 hectares of plantation abandoned by a former management after the political and communal unrest that began in 1999. GPPOL expects to reopen a 30-tonne per hour capacity oil mill by May or June and commence oil exports to Europe soon afterwards. The company intends to double the area of its plantation to 15,000 hectares.
Leasing deal
Commerce and Industries Minister Walton Naezon has announced that Lever Pacific Holdings Pty Ltd will take the lease of properties owned by Russell Islands Plantations Estate Ltd, while Australian Biodiesel Group (ABG) Limited will take over the assets of Commodities Export Marketing Authority. A Lever proposal is for a wide range of developments focused on cocoa, coconuts, cattle, reafforestation and tourism in cooperation with local landowners. ABG will develop coconut oil and fuel products with local partners and copra buyers.
VANUATU
Growth expected in 2006
Predictions of 3.7% growth rates for 2006 and 2007 have been made by the finance ministry, based on improving agricultural production, buoyant tourism and a steep increase of foreign aid from Australia, New Zealand, the European Union, and for the first time the United States. A great coup for Vanuatu is its inclusion, announced in January 2006, in the US Millennium Challenge Corporation programme for least developed countries. It is the first Pacific Island country to obtain such US government support.
An agreement for it was due to be signed between the two governments in February. Vanuatu will receive US$65.60 million which is expected to lift average income per capita by 15% and benefit 65,000 people. The money will be spent on eleven infrastructure projects. These will range from roads, wharfs, an airstrip and warehouses to institutional strengthening and policy reform.
Court grants monopoly
Telecom Vanuatu, co-owned by the government, France Telecom and Cable and Wireless Plc had its monopoly confirmed in December when the Supreme Court ruled against a decision by the public enterprises minister Edward Natapei to approve a telecommunications licence to a local company, Pacific Data Solutions. The court said a 1989 monopoly granted to Telecom Vanuatu was valid for seven more years. It ordered Pacific Data Solutions to refrain from advertising itself as a telecommunications provider.
Biscuit strains trade relations
Vanuatu's biscuit war with Fiji continues to strain trade relations between the two countries as governed by the free trade requirements of the Melanesian Spearhead Group. In January, Fiji lifted a ban on imports of kava from Vanuatu worth over US$2 million a year imposed when Vanuatu banned Fiji biscuit imports worth over US$1 million a year. Under pressure from Fiji, Vanuatu lifted and then reimposed the ban several times. A frustrated Fiji was driven to impose the kava ban. The biscuit ban was again lifted in January. Fiji, after readmitting kava imports, was infuriated by a new Vanuatu 50% import tax on biscuits. By mid-February it hadn't retaliated.
PITCAIRN
Regular shipping service
Isolated Pitcairn Island-the British colony centre of sexual abuse trials last year-is to finally get a regular shipping service. The French Polynesian inter-island ferry Taporo VIII, operated by Compagnie francaise maritime de Tahiti, will carry passengers and freight six times a year from Mangareva, 500 kilometres away, at the southeastern end of the archipelago. Pitcairn Governor and British High Commissioner Richard Fell signed a memorandum of understanding with French Polynesian President Oscar Temaru.
Both French Polynesia and Pitcairn share the same status as overseas territories associated with the European Union. Pitcairn, 2160 kilometres southeast of French Polynesia, seldom has a population of more than 50 people, used to be served by freight and container ships operating between Auckland and Panama. But with bigger ships and tighter schedules, fewer of them have been willing to call, tending to isolate the small island which has no airstrip.
Many of the men on Pitcairn have been caught up in a protracted series of legal battles around allegations of sexual abuse involving children and minors.
Pitcairn's human settlement followed the 1789 mutiny aboard HMS Bounty, led by master's mate Fletcher Christian. The mutineers cast their captain, William Bligh, adrift and with eight mutineers led by Christian, six Polynesian men, 12 Polynesian women and a small girl went to Pitcairn. They set the ship ablaze and remained undiscovered for 18 years. Many of the people on Pitcairn are direct descendants, while other descendants now live in Australia's Norfolk Island.
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