co-prosperity sphere

A greater Japan-Tonga co-prosperity sphere

King Taufa’ahau of Tonga retur ned from a visit to Japan in Novem ber full of plans for possible closer commercial ties between the two countries. The most important, im mediately, is agreement by All Nippon Airlines to become a joint share holder with the Tongan Govern ment in launching a Tongan airline (see Transport section). Tonga will finalise arrangements after a Japan ese airline team visits Tonga soon.

The king also announced that two (un-named) Japanese hotel compan ies had offered to become sharehold ers with the Tonga Government in building more hotels in the kingdom; and he said he was approached by no fewer than six oil companies in Japan for prospecting rights to search for oil in the northern part of the kingdom (which is not included in the area the government has granted to the Tonga Oil Consortium).

Ha’apai and Vavau are included in the area available.

The Mitsui shipyard has offered to assist in building a slipway for Tonga, and Japan’s biggest television and broadcasting network, NHK, has agreed in principle to supply Tonga tapu, Tonga’s main island, with colour television—a complete pack age deal including technical equip ment, sets and programmes, on a loan to be repaid. The network will be closed circuit. Tonga has no tele vision at present.

NHK will go ahead with the ser vice when it gets a plan of the new automatic telephone network which is about to be laid in Tongatapu, so it can supply TV cables to be put

down in conjunction with the tele phones. NHK estimated that a large TV set including its wiring to the circuit would cost about $2OO.

King Taufa’ahau and Queen Mata ’aho were guests in Japan of the newly formed Japan-Tonga Assoc iation, represented by its chairman, Mr Ryokichi Sasakawa, who is a millionaire businessman and director of All Nippon Airlines, who also has tourist interests.

The association was formed by Mr Sasakawa after his visit to Tonga last August, and its membership in cludes leading politicians, and indus trialists. The king said the associa tion’s aim was to provide assistance to the kingdom, as “well as to pro mote friendly relationships between the two countries.”

Before he left Japan, King Taufa ’ahau appointed Mr Sasakawa as Tonga’s consul-general in Japan.

Date set for

Bank of Tonga

The new Bank of Tonga hopes to become a going concern on July 1, 1974, according to Mr G. H. Hiller man, secretary of the bank’s board, who was in Nukualofa in late No vember for discussions. He was accompanied by Mr C. Flint, the bank’s manager-designate.

The bank’s board includes repre sentatives of the Bank of New South Wales, the Bank of New Zealand and the Bank of Hawaii. The ac counts of the Tonga Government

Savings Bank will be taken over by the new bank, which has yet to decide on the details of services it will offer, and interest rates.

Mr Hillerman said he would re commend that Savings Bank accounts i be restricted to genuine savings and attract an interest rate of about four' per cent. But there will be no interest on “very small accounts”.

Among the amendments to be; made to Tongan laws in time for operation of the new bank is one: allowing Tongan residents to repat riate money from overseas.

Mr Flint with the assistant man ager, Mr B. Holt, who is from NZ„ and an accountant, from Hawaii, arei all expected to take up permanent! residence at the end of February,, and the bank’s staff will be engagedl in April and begin their training.

Norfolk Burns

Philp in doubt

The closure of Norfolk Island as a tax haven has jeopardised the future of Burns Philp and Co Ltd on the island. Although it has been a tradei there for about 50 years it may nol be able to enjoy the tax-free statin of other local traders and bring itsell into a competitive position with them The chairman, Mr J. D. O. Burns told shareholders why at the annua

meeting. , , , . ,

The Norfolk Island branch s trad ing activities had been conducted a a branch of Burns Philp (SS) C< Ltd and were subject to Fiji taxatioi of 32 per cent. The profits showe< an inadequate return on mvestmenl and Burns Philp (SS) Co Ltd wa not prepared to invest further mone; urgently needed for a hardwar operation. .

To overcome the problem, Consol: dated Holdings Ltd, a New Hebnde subsidiary of Bums Philp and C Ltd, acquired the Norfolk Island trac ing activities from Burns Philp (SS Co Ltd, and Bums Philp (Norfol Island) Ltd was incorporated.

Mr Burns said the Norfolk Islan profits were no longer subject to Fi taxation, and should have placed th company in a competitive positio with untaxed traders on the islan< The reorganisation, decided on tw years ago, only came into effect i the year ended last June 30. It c< incided with Australian federal legi lation preventing Norfolk Island s u: as a tax haven.

“The legislation, unfortunate! goes further than closing loophol. for taxation schemes,” he said. A though Burns Philp are genmr traders on the island and have bet so for approximately 50 years ar

there is no element of Australian source income in the Norfolk Island trading activities, nor any element of a tax haven scheme for which the legislation was drafted, it appears that Burns Philp is to be subject to full ' Australian taxation of 47J per cent on its profits from Norfolk Island.

This will place us at a severe dis- I advantage with locally-owned com petitiors who are not subject to taxa tion, and as a result the future of our trading in Norfolk Island is in

I doubt.”

As for the Papua New Guinea subsidiary, Mr Burns said the govern ment policy of speeding up localisa tion of the public service and industry was presenting grave problems, as the training rate for indigenes could not keep pace with the expatriates’ de ‘ parture.

The trading interests in PNG were maintained, although profits were reduced through continually rising costs and a marked decline in spend ing by the expatriate sector, particu larly on cars and other major items.

The drought affected trading in all centres. The PNG operations con tributed $1,633,239, or 21.8 per cent to the group profit of $7,482,072.

Looking to the future, Mr Burns said results from PNG merchandise trading would almost certainly be down in the current year. While Bums Philp had confidence in the future, it would be unrealistic to ignore the short-term adverse effects which must follow the exodus of a large number of expatriates, the tem porary drop in spending power and efficiency that would create, and the sale of a further 13i per cent of the PNG company to the PNG Invest ment Corporation.

Mr Burns said profits from Island plantation subsidiaries were better by 16.8 per cent than in the previous year, through higher world prices.

The plantations contributed $330,201, or four per cent to the group profit.

Burns Philp (SS) Co Ltd, covering Fiji, Samoa, Tonga and Niue, pro duced a net profit of $F1,019,778, compared with $F825,718 the pre vious year. That company con tributed $695,088 or 9.3 per cent of the group profit. The improved profit largely flowed from better results in Samoa and Tonga, higher produce prices and larger government and private spending. . There could be problems in Fiji in the future as restrictions by the Central Monetary Authority and scarcity of local finance compelled the company to look overseas for the additional money, with ensuring ex change fluctuation risks. The Fiji Prices and incomes policy was re

ducing margins and causing a sub stantial increase in costs.

Burns Philp (New Hebrides) Ltd contributed $390,581 (5.3 per cent) to the group profit. The problems there were problems of growth, as after a setback or two in copra and land subdivision, there was a strong recovery and renewed confidence in the group was expected to continue.

The latest result shows the effect of the policy announced in 1972 of making the group less dependent on its Island operations. The earnings from Islands operations in the latest year were 40.8 per cent, compared with 54.1 per cent the previous year.

New golden

age for Vafukoula

The operational life of the Emperor mine at Vatukoula in Fiji will end about 1998 at current rates of extrac tion, the chairman of Emperor Mines Ltd, Mr J. L. Reid, said at the com pany’s annual meeting in Melbourne.

Emperor’s operating subsidiary at Vatukoula is the Emperor Gold Mining Co Ltd.

There was little to be gloomy about at the annual meeting. The directors announced a two-for-one bonus issue, which the meeting duly endorsed; there will be an interim dividend of 5c a share on February 14 on the new capital, and the chairman fore cast a substantial increase in the price of gold in the next few months.

Mr Reid said the bonus issue rose from a $12,930,189 revaluation of the shares Emperor Mines Ltd held in Vatukoula Gold Mining Co Ltd.

Mr Reid said prospects looked en couraging. Profit for the first four months of the current financial year were significantly better than for the first four months of the previous year. With an expansion scheme under way, shareholders could ex pect to benefit from capital and in come growth.

In PNG, gold and silver min ing is paying off for the indigenous people. They earned $451,638.76 from 6,146.322 fine oz of gold and $7,509.84 from 4,239.91 fine oz of silver in the three months to Septem ber 30, 1973. Biggest production was in the Morobe District—s,l2l.49s fine oz of gold, worth $376,446.33 and 4,056.81 fine oz of silver, worth $7,192.77. • A 250-acre cocoa plantation on the Gazelle Peninsula is about to pass into Tolai hands, the New Guinea Islands Produce Co, which is believed to be paying Mr David Coleman about $40,000 for the estate.

The estate has a potential of 100 tons a year.

Fuel crisis

hits the islands

The sudden Arab cutback in fuel supplies after the latest war with Israel caught the world unprepared.

The Pacific Islands were no exception when it came to fuel rationing.

Transport and industrial, commercial and domestic users were affected, some severely, some marginally.

Shipping lines on regular schedules had to plan ahead carefully for the crisis has created operational prob lems. Ships use the heavier grade oil, and for ships operating out of Aus tralia that means an imported pro duct. Up to the middle of December there was no indication that shipping services from Australia to the Islands would be curtailed but charter ser vices were running into problems, as suppliers, unsure of the future were catering only for contract customers.

Some airlines reduced services, or ordered captains to fly aircraft at slower speeds to conserve fuel. In some areas, commercial and domestic supplies fell at an alarming rate, and services had to be reduced to the barest essentials.

In Papua New Guinea, soon after it became obvious that supplies would be restricted, the Chief Minister, Mr Michael Somare, said foreign shipping could no longer expect to get oil at PNG ports. Fiji could only supply bunkers to contract customers, and there was a strong possibility that some overseas shipping could be stranded.

US Lines, which serves Hawaii and Guam from the US east and west coasts, in response to a directive by the Federal Maritime Commission, said it expected to make fuel savings of 18 to 28 per cent by deleting two un-named ports, and cutting speeds from 23 to 20 knots.

The situation was bad in Japan, where the shortage was likely to have a drastic affect on Japan’s trade with the South Pacific, as well as with other areas. Japanese fishing ships in the Pacific were also expected to have bunkers problems.

British Airways cut eight of 20 scheduled flights over four weeks from November 16. Qantas ended three of its daily services to San Francisco. Air New Zealand can celled the Auckland-Honolulu-Los Angeles return flights, scheduled for December 4. American Airlines and Pan American World Airways carried on as usual, although American Air lines, before the crisis, cut out one transpacific service.

Airlines using Nadi were put under a fuel restriction, although it was not severe. The Joint Users Hydrant In stallation, at Nadi Airport, sent letters

to all overseas airlines, Air Pacific, and other regional services, saying fuel would be restricted to the off take rate in force in 1972, and that no extra fuel would be supplied.

Fiji tried a voluntary cut of 20 per cent in internal fuel consumption, with Prime Minister Ratu Sir Kami sese Mara indicating more drastic steps might be needed if the people did not co-operate. The Emperor Gold Mining Co Ltd, at Vatukoula, rationed petrol for all departments; restricted private sales; restricted street lighting; used motor-cycles and small cars instead of big cars; and ordered that hot water thermostats be lowered. The company, which controls the distribution of electric power to Vatukoula, Tavua and Ba through a subsidiary, made a 20 per cent cut in power supplies.

Restrictions became necessary in Papua New Guinea when there was a 20 per cent cut in imports of fuel oil, motor spirit, diesoline, kerosene, aviation fuel and bitumen. The PNG Government set up a National Energy Conservation Task Force to ensure there was minimum disrup tion to the national economy.

Motorists were asked to limit them selves to $ 1 a time for refills in urban areas and $2 a time in the country.

There was something of panic buying by motorists in American Samoa, even though retailers were receiving about 95 per cent of normal supplies. The government asked the US Government for a complete exemption from an order limiting allocations for some fuels to 95 per cent of the November, 1972, usage.

It feared the fishing industry would be in jeopardy if fishing ships were unable to refuel in Pago Pago.

Nauru, which relies on steady supplies of light marine diesel oil to run its electricity power station, also felt the pinch. Calls went to house holders to economise. Two sugges tions for saving on electricity were, to turn off all office air-conditioners outside office hours and not to use strings of coloured lights for outside parties. Another suggestion—which could only apply to the richest island in the Pacific—turn off all unessential home air-conditioners.

Micronesia’s fuel cut was about 12 per cent, and the Trust Territory administration, after receiving advice from Mobil Oil Micronesia, appealed for a voluntary reduction in fuel con sumption.

The New Caledonia Government Advisory Council brought in special restrictions early in December pro hibiting the sale of petrol from 3 pm on Fridays till 6 am on Mondays.

US and British suppliers have cut supplies by 20 per cent for diesel oil and 15 per cent for petrol.