Special Report

Making Money

Your Guide To Pacific Business Opportunities

By Robin Bromby

KIRIBATI has a range of tax and other incentives to attract the for eign investor ... but no major companies have moved into Kiribati to take advantage of them. Fiji, desperately trying to repair the damage to business confidence caused by the coups, has set up lax free zones for export industries. Amer ican Samoa is advertising its access to the United States market.

Yet, on the face of it, investment in the South Pacific holds few attractions: the in ternal markets are small, often minute; skilled labour is in short supply; infras tructure is poor (or simply non-existent) and then there is the distance and cost involved in travelling to some of the smaller territories.

For all that, however, it is possible to identify real business prospects in most of the territories.

At the head of the list is Papua New Guinea, which is set up to undergo an eco nomic transformation in the next decade with the exploitation of its huge mining, agricultural and timber resources. PNG is probably the only country in the region with a population large enough to encour age major import substitution industries.

Until May, 1987, Fiji would have been regarded as the prime investment spot in the region; its clothing industry, in three and a half years, had gone from nothing to exports worth several million dollars a year SF4.I million in 1986).

Now, investment has stopped. Busi nessmen want to wait and see what hap pens and some knowledgeable observers believe it may be 10 years before Fiji be-

comes a safe investment again, though tourism is already picking up and will continue, provided there is no further trouble.

What is particularly worrying as far as Fiji is concerned is that it is losing much of its middle management as Indians leave.

There are also indications that manufac turers are reluctant to invest in replace ment plant, which will have long-term effects on the quality of Fijian products.

Other territories have limited options.

Tourism stands above all others as the in dustry that offers these countries a way out of their dependence on aid. But it will take more than just building hotels. Air serv ices will need to be improved and natural advantages exploited: on one small island in the western Solomon Islands, for ex ample, the Gizo Hotel in the middle of a lagoon attracts tourists who enjoy diving for underwater relics from World War 11.

The second major potential is fishing.

Several island states now earn some in come from licensing foreign boats, but their actual participation in the industry is limited. Under a variety of incentive

packages, foreign companies could estab lish processing plants close to the rich sea food resources of the southern Pacific ocean.

A few Pacific nations have little to offer investors: Nauru, with its own invest ments abroad, has little interest in attract ing foreign companies and even if they were interested there is little opportunity.

In French Polynesia, the demoralisation of the French community and the depar ture of many makes for a depressed in vestment climate. New Caledonia does offer some tourism opportunities, but lo cal law makes it necessary to have French partners and have the project cleared in Paris. From the point of view of Aus tralian and New Zealand companies, Mi cronesia is too far away and too expensive in terms of travel; and even then there are built-in disadvantages, with just 75,000 people spread over 800 square kilometres of ocean.

With the exception, again, of PNG, South Pacific markets are too small for any company to set up its own distribution for imported products. The only companies that can afford to be distributors are the major trading companies such as Burns Philp, which handles a staggering variety of both exports and imports.

The strategy, rather, is to use the low labour costs of the islands and the finan cial incentives they offer to cater to the huge (by regional standards) Australian and New Zealand markets, either in providing holidays or producing goods that qualify for duty-free entry under Sparteca or other agreements.