Foreign investment tango
p. 21 · Read in the full issue
WITH just eight years to go until the dawn of the much talked of “Pacific Century”, the time when trade in the Asia Pacific region will dominate the world economy, the Pacific Island nations are scrambling to be part of the action.
Western Samoa is the latest country to try to boost its own trade by attracting Austra lian foreign investors with manufacturing interests.
In Sydney, last month, Western Samoa launched its first investment promotion program. The Cook Islands is set to follow, with its own investment mission late this year, Vanuatu, on the other hand, is already well away with an innovative and multi-faceted trade program with the booming Northern Rivers region of Australia’s New South Wales North Coast.
For Vanuatu, the Northern Rivers region has the advantage of already having a direct shipping route to Port Vila and of being small enough to get away from the marketing difficulties which come with big cities such as Sydney or Melbourne.
Although the program is 18 months old Andrew Kelly, Chairman of the Grafton and District Development Board (the main institutional player in Australia), says it is very much in its early stages.
Already some contracts have been signed.
Vanuatu will export timber to a Northern Rivers coffin maker who will return some coffins.
Other Northern Rivers businesses are exporting paint and building supplies while a boat builder, who makes shallow 3unts for transporting livestock and other bulky produce, has bund a ready market in landowners who need transport for
ihort inter-island hops.
Until now, the Northern Rivers Clarence River port has only )een open for exports. With new imports on their way from /anuatu, the Grafton Development Board is arranging all the iccessary customs and government approvals to receive goods lirect from Port Vila.
It is also organising a special three-month business course for mall businesspeople from Vanuatu at the Grafton College of fechnical and Further Education.
In March, Western Samoa began its investment promotion ampaign with a visit from a delegation led by Finance
/linister, Tuilaepa Sailele.
After Western Samoa’s happy experience with its new utomotive parts factory put in by Yazaki factory, which pened in 1991, employs 800 people and plans expansions soon 5 1000 and later on to 1500.
Tuilaepa Sailele says it was the devastation of three major in as many years, which really focussed Western amoa s mind on the need for investment in export-based
lanufacturing.
At the moment Western Samoa depends on agriculture for s survival. While both tourism and agriculture take time to ;cover from cyclones, manufacturing can usually be up and inning again in the space of a few short weeks.
After devastating cyclones elsewhere in the Pacific this year, Western Samoa’s experience is one which other Island nations e likely to identify with.
But cyclones are not the main problem for small Island :onomies.
Australia
The world recession and rapidly growing youth unemployment are more lasting prob lems.
The recession has meant poor demand in countries which traditionally take island ex ports and increased the number of emigrants returning home, but it is also a time when Australian and New Zealand businesses are
planning major restructuring.
Often that restructuring can mean a move off-shore to lower costs and hence opportunities for Island nations to snare a big-time, long term and committed foreign investor such as Yazaki.
Youth unemployment is a more intractable problem.
Even if they achieve annual economic growth rates of three per cent some Island countries would still not be growing fast enough to provide jobs for school leavers
flooding into the towns.
If those young people are not to become disillusioned, and then become part of the urban crime problem, they need jobs.
In the longer term, those jobs need to include some skilled positions which could provide a springboard for the develop ment of an indigenously owned business sector.
While garment manufacturing, with its need for large numbers of workers, has big benefits in the short and medium term, it also has the disadvantage of providing few opportunities to develop local entrepreneurial skills.
Not only that, but because the equipment used is portable, the industry can easily move on as soon as tax incentives come to an end.
In the long term, the Island nations need investment which will add to the skill base of the country and help develop local entrepreneurs.
Just how to attract that sort of investment is the issue with which Pacific leaders are grappling.
In the case of both Yazaki’s investment in Western Samoa and the Northern Rivers-Vanuatu trade program, the impetus for investment essentially came about through personal contacts.
While Zazaki did a careful comparative study of Fiji, Tonga, Western and American Samoa before making its decision, its initial interest in the Pacific Islands was prompted by its experience in New Zealand, where more than 50 per cent of its workforce is Samoan.
In the case of the New South Wales, Northern Rivers, Wayne Taylor, the man who is the brains behind the scheme, is married to a ni-Vanuatu.
While there is a natural tendency amongst the smaller Island countries to look to Fiji, with its numerous trade missions, as a model the value of the personal contact should not be underestimated.
Those with personal contacts value their reputation within the community, both here and in the Islands.
They are, therefore, less likely to exhibit some of the carpetbagger tendencies which, all too often, have been prevalent amongst would-be investors. □