sound climate
p. 32 · Read in the full issue
Investing in a sound climate
IN only the second Tradewinds column I wrote for PIM, back in 1991, I discussed a big trade and investment forum that was about to be held in Fiji. I made the point that no matter how well organised it might be, any investment forum “will achieve little if the country it is promoting lacks one essential element a favourable investment climate”.
I said a forum might bring potential investors face-to-face with a thousand opportunities but they wouldn’t take them up if closer investigation suggested problems with land titles, restrictive labour requirements and industrial pro cedures, high taxes or repatriation of capital and dividents, to name a few.
Potential investors were not going to waste too much of their time if they couldn’t get firm, quick answers to their
questions, or they were hedged about with only promises of supporting legislation.
I added “serious investors looking for opportunities to expand need to know not just what a government is offering but to feel that the offer is secure before they devote time and expense on the finer details”.
No forum country has worked harder than Fiji to establish a favourable investment climate. It regards private sector investment as the key to economic growth. It has a long track record of officially encouraging investment, recognising that no investor can afford to spend serious money unless the rules are spelt out. Because of it, Fiji has built up a comparatively broad industrial base despite its political upsets.
Its success has been'encouragement to others. In recent well-supported investment seminars in Australia, the Tongan government stressed that its investment rules could be depended upon, and that investment decisions were made quickly. Tonga, like Fiji, has a “one-stop-shop” that enables investors to get all approvals through the one department.
Papua New Guinea has recently streamlined its services for investors with the establishment of the Investment Promotion Authority which replaces the old National Development and Development Authority. The IPA grants approval for foreign investors to carry on business in PNG, acts as matchmaker for overseas and local venture capital, and works with them in dealing with government departments. The IPA is run by a managing director and a board on which the private sector is strongly represented and its main emphasis now is on promotion and assisting foreign investment.
The IPA is distributing to potential investors the best summary review of Papua New Guinea that I have seen anywhere. Dated March 1993, its 80 pages offer every type of information any investor could want to know about the country, including its population breakdown, system of
government, its economic prospects and statistics of all kinds. It includes detailed information on small business opportunities, agriculture, fisheries, forestry, mining, oil and gas, and gives key invest ment contacts.
But I especially like its honesty.
On the matter of law and order, for example, it says “It is a commonly held view that there has been a signifi cant deterioration in law and order in recent years, especi ally in the main urban areas.
The government recognises that this is both a cause and an effect of the country’s poor
economic performance over the past decade. A priority over the medium term is therefore to improve the current law and order situation, which discourages investment, deters the recruitment of needed technical skill, and imposes severe financial and psychological costs on government, enterprises and individuals. At the same time, the whole focus of the government’s development strategy of encouraging a faster rate of economic growth and the creation of productive work opportunities, will reduce the pressure of economic hardship that generates crime.”
The PNG government is doing something about the law and order problem but to draw attention to the situation so frankly, the IPA is certainly approaching its task with an honesty that will be applauded by potential investors. Facts, not make-believe, are vital in business, and the IPA approach to investment gets my personal commendation.
The successful Tonga investment mission, by the way, created interest with its long, detailed list of “industrial investment opportunities” thought suitable for overseas investors. They are listed under headings such as agri-based industries (which include grinding and packing of spices, production of snack foods, coconut oil refining), marine industries (fish canning or processing, lobster processing); import substitution (stationery) items such as envelope production, tile production, assembly of auto radiators); export oriented industries (including fashion garments and production of essences from flowers) and general opportunties (bamboo furniture, fibreglass products, a small dairy plant). There is some opportunity there for just about everybody. Phone or fax us at the Trade Commission if you want the full list, or any other information on opportunities in Tonga. • Bill McCabe is Senior Commissioner of the South Pacific Trade Commission , Sydney, an arm of the South Pacific Forum.