Tonga trade

Tale of woe in Tonga trade

Foreigners seeking to do busi ness in the Pacific Islands have been warned, in an article in the influential Australian commer cial magazine Rydges, of the region’s sometimes curious rules and its several pitfalls.

Some islanders, they say, have become adept at a kind of reverse carpet-bagging and look upon would-be investors as suckers for the taking.

That Pacific governments are conscious of the problem is shown by the fulsome publication in the May 17 issue of the Tonga Chronicle of the tale of woe told by a Mr Ray Brooks, a Sydney-based man agement consultant who had a less than happy experience in the balmy tropic isles.

Mr Brooks took his story to Rydges which used it as the basis for a review of unhappy investment experiences in the islands.

Obviously aware of the damaging effects of such publicity the Tongan ministry of Labour, Commerce and Indus tries issued a statement saying it hoped to “expose the miscon duct of those involved in deal ing with foreign entrepreneurs and build up an awareness amongst those who might be interested in investing within the Kingdom.” Baron Vaea of Houma, who is the minister of the department, said his staff would be very happy to guide potential investors and to ease any problems they might have.

In fact, the baron has been exceedingly active in recent months, pushing for foreign investment in Tonga in the United States and elsewhere. In general the conditions for in vestment are very good, with quite generous terms, low-in terest loans and tax holidays available. Yet the level of in vestment in Tonga remains quite small, which is possibly why so much attention is being paid to stories such as that told by Mr Brooks of Sydney.

His saga began in 1983 when he called at Vava’u while cruis ing the South Pacific on his ketch. Much taken by the beau ty of the harbor and its surroun dings he was receptive when approached by a local involved in tourism with the offer of a partnership.

“My contribution,” Brooks said later, “was to be my expertise, my boat and goods for the venture,” which was to be a sort of casual “club” for cruising yachts.

The Tongan partner had a private beach where yachts could be moored, a coral jetty there could be extended quite easily, and showers, laundry, bar and other facilities built without enormous outlay of capital.

Mr Brooks said he was told that under Tongan law he could use his earning power in Aus tralia as equity against a deve lopment loan from the Bank of Tonga. This, together with his ketch and some capital he could raise, was to give him a substantial share in the venture.

The Tongan partner said he had good family connections with those in power in Tonga and that a development licence would present no problems.

Back in Australia Mr Brooks checked his information and found that under the licence goods for the business indeed could be imported to Tonga duty free, that the loan would carry only five per cent interest and that both he and the business would pay no tax for five years.

Thus encouraged, Mr Brooks returned to the kingdom with such items as toughened glass for glass-bottomed boats, kit chen equipment and other items for the enterprise, includ ing 1000 specially-printed T shirts.

Back in Vava’u he found the frame of the projected re staurant had been erected, but very little else on the schedule had been done. Nor had a development licence been obtained. His partner pleaded sickness in the family. He pro ceeded with the building, but would arrange a meeting and found progress difficult and quality of work poor. “I was

assured it was the ’Tongan Way,’ ” he said. “I became very very tired of that phrase.”

He had a row with his partner over accounting methods at the restaurant, including the dispo sal of “unsold” beer through the partner’s own home and the mark-up on supplies of food bought locally.

“There was still no business agreement and whenever I tried to discuss some remuneration for the goods I had bought he then failed to turn up,” said Mr Brooks.

When, finally, Mr Brooks lost patience the partner assured him that he had the police and customs officers “in his pocket” and if Mr Brooks tried to cause any trouble it would be Mr Brooks who would end in prison.

That, in fact, was what hap pened in the end, after a long series of difficulties, among them accusations by the partner that Mr Brooks had trafficked in marijuana and had stolen money.

Both Mr Brooks and his partner were jailed, but the partner was released. Mr Brooks was charged in the Magistrate’s Court for importing goods without a proper licence.

His goods were confiscated and he was fined SIOO.

“Tongan law is based on the British system, but is interpreted in a totally Tongan way. I have since had several offers of hon est partnership, but after my experience with Tongan law I would never go back,” he said.

The Tonga Chronicle writer commented; “An article such as the one in Rydges magazine can easily undo all the work done by Baron Vaea and his ministry in promoting overseas investment. Such case histories are, unfortunately, fairly typical.

“There are businessmen making a success here and elsewhere in the South Pacific, but even they have consider able frustrations in terms of labor relations, Customs delays and legal problems,” said the writer.

Excuses for inactivity were legion ... “My brother’s wife was sick, so I had to take time off” ... my family has been feuding with his family for 20 generations, so we won’t work on the same site ... “the minis

ter has to sign the permit, and he is in London for three weeks” ...

Rydges ended its article, which detailed quite a number of tropic idyll scams, with sage advice: Anyone who sought to get involved in the South Paci fic should do his homework and get proper government advice.

Then the region could be a good place to set up a business.

The Tongan government has echoed the advice and said it is more than willing to guide investors and smooth the way for them, so that they do not become involved with those guilty of “misconduct in dealing with foreign entrepreneurs.”

Tonga needed to build up awareness amongst those who might be interested in investing in the kingdom, the ministry said.