Islands economy

Vast empty hotel might save Cook Islands economy

AVAST incomplete hotel,

an unsightly grey con crete mass against a backdrop of lush, green hills in Rarotonga, represents both the bulk of the Cook Islands debt and its biggest hope of economic recovery.

Built with Italian money in this Pacific territory, it ground to a halt months from completion, when Rome began cracking down on Mafia corruption four years ago.

Now known as the Vaimaanga Hotel, it looks set to be sold.

Finance minister Papamama Pokino in December announced the government had reached a deal with Italy, Nauru and New Zealand to write off over half of the coun try’s US$lO6 million (Asl7l million) debt. The Cook Islands are home to just over 20,000 people. The state was liable for U 55121.6 million (A 5196.9 million)

under the original agreement for what to have been a 200-room luxury Sheraton group hotel.

Other than to say a “significant propor tion” of the amount has been written off, the government has not disclosed how much is still owing or the repayment terms.

The government borrowed millions from Italy’s Institute Nazionale di Credito per il Lavoro Italiano all’Estro ICLS SpA (ICLE) bank, underwritten by an Italian government loan insurer, SASI.

The project came to a standstill when Italian contractors Sicel SpA Corporation went into “controlled administration” after it hit difficulties in a project in China.

Construction was then taken over by Italian firm Stephany. When nearing com pletion, the entire project came to a stand still because of what prime minister Sir Geoffrey Henry said were Mafia related

arrests in Italy of person nel involved with the development.

The property was renamed the Vaimaanga Hotel Project by the gov ernment when the Sheraton hotel chain pulled out because of continuous delays in completion. The Cook Islands is still in the throes of the worst eco nomic recession in its 33-year history of self governance. This has meant the country has been able to only service interest on most of its overseas loans rather than retiring the debts.

The empty hotel is now

set to be sold and all that’s needed are the signatures of the buyers on a new 60-year lease which landowner and traditional paramount chief Pa Ariki has signed. It is understood the new owner of the hotel will be consortium of Japanese investors and the Honolulu-based Castle resort and Hotel Group. A condition of the lease of the 10 hectare site calls for construction, comple tion and opening of the hotel by June 2000.

Work is expected to begin as soon as legal formalities are completed, says Pa Ariki.

She added her execution of the lease is a “clear green light to all concerned”.

“I’ve been pushing the negotiations for some time”. Pa Ariki said the hotel project “has got real potential to kick-start the economy in 1999 and into the new millen nium, but it’s now up to the investors and government to make sure it all happens that way”. (AFP) ■