Prime Minister Sevele meets McCully during his May visit
DecisionMaker Talking Pacific business column
Tongan business leaders say NZ Foreign Affairs sounds keen on the JV-incentive scheme proposed to NZ Prime minister John Key and Foreign Affairs and Trade minister Murray McCully in Nuku’alofa in July. But we have no formal confirmation of anything yet from the NZ Government said Pousima Afeaki, chair of the Tongan New Zealand Business Association immediately after the talks.
Afeaki would like a direct answer from John Key about whether his government is in favour of a JV-incentive scheme and if so, whether a joint working group is being set up. This would help clarify where we all are, said Afeaki.
Prime Minister Dr Feleti Sevele had called for New Zealand and Tongan government and business to set up a joint working group to consider proposals for encouraging joint ventures, when he met Mr Key in Wellington in June.
Between the two Prime ministerial meetings consultations with stepped up by the New Zealand Pacific Business Council (NZPBC), the Tonga New Zealand Business Association (TNZBA) and other agencies.
The TNZBA report takes into account consultations in Tonga with Tongan sector associations and its Chamber of Commerce.
Confident new JV- incentive scheme possible
Afeaki said immediately after the mid year ministerial talks he was very pleased with progress made so far. “We started two years ago with an idea which went nowhere. The idea was resurrected just four months ago. The idea has been taken up and been expanded on in both our countries. Our two PMs are talking. I am confident we will end up with a new JV-incentive scheme of some sort plus action to remove barriers to Tongan produce - win/win outcome!!” he says.
More Tongan fresh produce for NZ?
“It became apparent that we in Tonga needed to look more widely than just setting up a JV-incentive scheme. We also needed to keep pushing NZ to open up imports, especially of fresh produce, (and) to allow increased opportunities for JVs in farming and processing” Afeaki, chair of the TNZBA says. The TNZBA briefing report and recommendations requested by Dr Sevele for his July talks with Mr Key reflects this.
Win win
Jim Willett, a specialist in Pacific development, says the Tongan proposal is a win win for both groups. “The strength of the joint venture concept is that it draws on the best of both Tonga and New Zealand. Tongans can use their skills to grow and cultivate tomatoes, other vegetables, fruit, coconuts and such like. The New Zealanders can specialize in the marketing and distribution of those products to the NZ and other consumers” says Mr Willett, drawing on his business background in Australia and New Zealand, former role in trade development at the Pacific Islands Forum secretariat, volunteer assignments for the Solomon Islands and exchange of ideas with Afeaki.
Melino Maka, co chair of the New Zealand Pacific Business Council (NZPBC), assisted by Rachel Wolfgramm from Auckland university’s business school and Jim Willett put together reports on what joint venture encouragement could entail.
Tonga accepts feedback
Afeaki says the TNZBA, which has been driving the joint venture idea this year with the supporting advocacy of the NZPBC also got feedback from NZ’s ministry of foreign affairs and trade (MFAT) via NZ high commission staff in Tonga following the June Prime ministerial discussions.
The first feedback was that MFAT is not interested in a revival of the Pacific islands industrial development scheme ( PIIDS) which the NZ government introduced in the 1970s, and subsequently suspended after it had contributed to progress, but also had some problems.
TNZBA are not fazed by this - we never intended what it initially called JOVE to be a replacement PIIDs says Afeaki.
“In large part, we think PIIDs failed overall because it was driven and controlled by government and not by the private sector” Afeaki says on behalf of his Tongan business members.
Feasibility study funding sought
Our idea for a JV-incentive scheme is for some help such as small-funding to get potential JV partners get together. This might include funding for feasibility studies and visits of up to say, NZD30,000. Then, if the partners agree to get into a JV, they do this on the basis that there is a viable/profitable venture - i.e., a hard-nosed business decision by the JV partners themselves. We propose further incentives, but non-cash, so that JVs are funded upfront by the partners themselves Afeaki says.
Working group needed to sort details
The second feedback from NZ MFAT was that they want a joint Tonga-NZ working group set up to look at details. Prime minister Sevele raised this in NZ during his Wellington visit.
TNZBA’s idea for the working group is to keep it small so it can work better, say five members, with reps from NZ being from MFAT, NZ trade and enterprise (NZTE) plus NZPBC, and from Tonga, reps from the Ministry of labour, commerce and industries plus TNZBA - then bring in other reps as needed, e.g., from the ministries of agriculture in Tonga and NZ to get bilateral quarantine agreements sorted out.
NZPBC advocacy continues
Melino Maka, representative of the NZPBC in the design talks on the joint venture incentive scheme proposal, wants maximum private sector involvement in the scheme design and implementation, and to avoid under performance associated with past government development initiatives in the Pacific. He calls now for positive NZ interest in the constructive Tongan business initiative, with its strong Tongan government support.
New Pacific compact supports business partnerships inc jvs
There are specific Tongan requests to New Zealand in TNZBA’s June 2009 recommendations in its briefing paper “Proposal for a New Pacific Compact” for the Tongan PM’s discussion with his NZ counterpart about “stimulating New Zealand Tonga business partnerships”, including by “increasing joint ventures”.
The briefing provided by TNZBA to PM Sevele recommends a “New Pacific Compact”, which focuses on market access for Tongan exports, current state of private sector development in Tonga, pathway to New Zealand, developing the private sector in Tonga, actions New Zealand and Tonga can each undertake, fund and administration.
Tonga asks NZ for:
• Bilateral Quarantine Agreement (same as NZ-Australia BQA for dipping produce subject to fruit-fly) – urgent processing by NZ with target for BQA to be finalised by Dec 2009;
• Financial assistance to set up the dipping-centre with equipment plus technical assistance to train operators;
• Incentives for Joint-Ventures, including:
o grants for feasibility studies (of up to NZD30,000 per application) – for up to 10 grants per year over three years so NZD900,000 total;
o other non-cash incentives that NZ companies would consider attractive.
The TNZBA says the most likely JVs at present are for farming and fishing ventures and for processing of agricultural and marine products – but it is also interested in tourism and other sectors.
Afeaki stresses agreement is sought from the NZ government to set up a joint NZ/Tonga working group to implement these actions.
An element in the proposed “New Pacific Compact” is that Tonga will provide a range of incentives for NZ JV partners, including:
o Long term working visas (up to 10 years) and/or permanent residence;
o exemption from restricted list of businesses under the Foreign Investment Act;
o simplification of and facilitation with Government-related requirements (licences, permits, approvals, etc);
o development and support for trade and investment promotion facilities within Tonga;
o tax concessions.
Tonga’s proposal is structured as a compact as it outlines ways in which New Zealand and Tonga can help to increase private sector development within the Kingdom of Tonga, but more importantly outlines pledges from each party to undertake specific actions for the economic development of the Kingdom and to strengthen ties between the two countries says Afeaki, a Tongan farmer of Tongan Maori descent, a commerce graduate and matapule as well as business community representative.
By Anthony Haas, publisher, DecisionMaker Group, This e-mail address is being protected from spambots. You need JavaScript enabled to view it