Tonga

has never been a cash-con scious society, and most Tongans live a subsistence life. More than half the adult population is unemployed and many of those who work the land do so only a few days a week. GNP is about slls per person.

The Government of King Tupou IV is concentrating on economic activity that will not markedly disrupt the Tongan life style. Apart from some agreements with foreign fishermen, such as US tuna boat owners, Tonga has been reluctant to allow commercial enterprises to exploit its seas for fear that fish stocks would be depleted to a level below that necessary for Tonga’s own needs.

Economic activity is taking three main forms, all of which come within the guide lines: a small industrial estate on Nukualofa, increased investment in tour ism and the establishment of Nukualofa as a world banking operation.

The third development is the most in triguing. Legislation has been passed to permit four foreign banks to establish themselves in Tonga, allowing foreign cor porations and individuals to use Tonga for tax minimisation purposes along the lines of the banking havens of the Caribbean.

No Tongan nationals use the system; they will continue to use the Bank of Tonga (owned jointly by the Government, Bank of New Zealand, the Bank of Hawaii, and Westpac), which has a local monopoly.

Tonga’s Honorary Consul-General in Sydney, Mr William Waterhouse, has been involved in drafting the new law, and is now promoting the idea of Tonga as an other Leichtenstein, Switzerland or Cay man Island. The new banks will offer complete secrecy Tongan law will spec ify the disclosing of information about de positors as a criminal offence and a tax holiday.

The problem with business operations in Tonga, as with its role as a tourist des tination, is the poor air service. To get to Tonga at the moment, travellers have to spend a night in either Fiji or Auckland, or from Pago Pago by Hawaiian Airlines. ►

◄ The airport, which can now take 707 and 767 aircraft, is being lengthened and strengthened for 7475.

In the past, Tonga has not been able to offer the number of tourist beds that would make it any threat to Fiji. But given the disruptions in Fiji, New Caledonia and Tahiti, Tonga is looking for foreign inves tors to build more hotels. The Govern ment will be selling the country to investors on the basis of being four hours from Syd ney (once direct flights come into exist ence); no award wages: no civil disruptions and a climate that varies little throughout the year. New companies setting up also qualify for a tax holiday, while some fi nance is available through the Tongan De velopment Bank.

On the industrial estate, the Tongan Government already provides buildings and services to companies: a range of products is now being manufactured there, including woollen jumpers and a black coral factory, while a Swedish company is a partner in a new brewery.

Because of the small size of the cash economy (the Government’s annual budget amounts to about SAI6 million) there is not a great demand for imported products: major imports are foodstuffs from Australia and New Zealand. Tonga’s major exports are copra and bananas, with New Zealand being the largest customer.

Tonga wants foreign investment, but it wants neither smokestack industries nor to become another Hawaii.

Bananas are still a major Tongan export.