Trade Winds

SOUTH Pacific economists seem divided over whether the region’s small island economies can ever become self-sufficient. Professor Felix Wendt of the Western Samoan agriculture ministry told the Asian Development Bank workshop on South Pacific devel oping countries that the concepts of self sufficiency and economic independence were no longer fully applicable.

Professor Wendt said island societies were becoming more money-oriented with wages, remittances, credit and cash in comes in much greater demand. He told about 70 delegates in Auckland that the target of economic growth should not be at the expense of broader social and cul tural needs in South Pacific countries. In practise, reconciling these had proven elusive.

“On the one hand, national develop ment plans still reflect the assumption that the economic systems inherited from the previous colonial powers will not be changed,” Professor Wendt said. “Yet this very assumption implies the acceptance of massive changes to the socio-cultural systems of Pacific Islands countries.”

Professor Wendt contended that island societies were not yet ready to decide on this dilemma as an either/or choice. If it did come to the choice, the no-growth al ternative would rank “of the highest order”.

Economic planners who aimed for do mestic employment growth to counter the lure of foreign labour markets would have to make agricultural production much more attractive. Pacific Islanders who had set up communities in the rim countries were simply working in extensions of “home”. Remittances should be seen as a form of take-home pay rather than a con straint on production. Professor Wendt said.

The poor returns from agriculture were the main reason lessening islanders’ in centives to produce if this were other wise more remittances would be ploughed into agriculture, remittances should be seen as raising the country’s standard of living and if agriculture were made more rewarding actually encouraging greater production.

But the bank’s vice president, M Nar asimhan, said after the workship sessions that a number of South Pacific countries had shown themselves to be committed to paying their own ways for future economic development. Mr Narasimhan said one of the economic aims for South Pacific de veloping countries was to wean them from aid as a significant factor in their eco nomic growth.

This was already happening, in a sense, as traditional bilateral leaders, such as New

Zealand and Australia, cut back their help.

But South Pacific countries were building a more diverse network of aid and loan sources as other countries, such as Japan, the United States and the EC boosted their presence in the region.

All the workshop sessions were held be hind closed doors so it is difficult to assess any trends that emerged. However, the main issues confronting the delegates seemed to be traditional ones: how to di versify small island economies normally reliant on a single cash crop at the mercy of world market prices. And, perhaps more importantly, whether South Pacific na tions can seriously hope to diversify when their small size, isolation, lack of skilled workforces and regular transport seem in separable barriers.

Resource speakers emphasised the need for a curb on the traditionally large public sectors in South Pacific countries and the need to put more into private sector eco nomic development. The island societies had built high expectations of a consumer lifestyle as a result of the region’s largely open economies. But the absence of pri vate sector employment had tended to push the public sector to the fore as a source of jobs.

Several speakers suggested island governments needed to relax restraints on foreign investment, particularly joint ven tures, and offer incentives to private enterprise.

One speaker suggested that financing development would be relatively easy for South Pacific countries; the main con straint is the ability of the countries to ab sorb and use these overseas funds efficiently. The lack of skilled workers, protectionist hindrances to foreign mar kets, customary land use and the need to link tourism to local goods and services were all major issues confronting island governments.

In addition, some countries such as Fiji had embarked on ambitious infrastruc ture programmes after independence and now faced huge bills to maintain these as sets roads, water and electricity reti culation, energy sources such as hydro dams and so on.

The bank president, Masao Fujioka, said one of the main aims of the work shops had been to let the South Pacific de veloping countries get their message across to the bigger donor nations. So far the bank has lent SUSIOI million to small regional countries like the Cook Islands, Kiribati, the Solomons, Tonga, Western Samoa and Vanuatu. Half of that has gone into agri culture and agro-industrial development.

In 1986, the bank lent $l3 million for sim ilar projects as well as money to develop technically skilled workers.

Fiji has received SUS6O.S million so far from the bank two thirds for energy projects. Last year Fiji got $4.4 million for farm upgrading in the Sigatoka Valley. Pa pau New Guinea is the largest recipient of bank loans in the South Pacific: $U5272.6 million so far and $49 million last year.

More than a third of that has been spent on transport and communications.

Mr Fujioka announced a fast-track soft loan scheme for Pacific nations hit by cy clones. The bank would make up to SUSSOO,OOO available to each nation for reconstruction. □

Computer Bank

The Pacific Islands Association of Chambers of Commerce has set up a re gional computerised trade data bank in Suva. Information on importers, export ers and their products will be available to member chambers.

Second Bank

A second bank has opened in Kiribati.

The Kiribati Development Bank is ex pected to stimulate growth in the private sector. When fully operational it will take over the assets of the National Loans Board. Its lines of operation will be com patible with the Bank of Kiribati, 51 per cent owned by Westpac.

Flight Talks

Negotiations are going on between Fiji and Air New Zealand to resume flights into Fiji. The airline banned all flights after an attempted hijack in May. The Air New Zealand office in Suva still functions, but passengers are booked on other airlines out of Fiji.

No Surplus

Fiji sugar earnings for the 1987 crop are expected to be down nearly SF6O million on the previous year, due to harvesting problems and the drought in the cane belt.

The harvest is expected to cover its export commitments but there will be no surplus to sell on world markets.

Bank Takeover

The Bank of Hawaii has acquired the Chase Manhattan Bank’s retail banking operations in Agana on Guam.

New Number!

The Overseas Telecommunications Commission (OTC) is negotiating an agreement with Kiribati to give it control of the nation’s communications system.

OTC is currently talking with at least four other nations in the Pacific to undertake similar upgradings.