Samoan economy soars

Business

by Alan Ah Mu

In the last decade growth in Samoa’s key earners have never been higher than now creating an optimism that prosperity beck ons in the new century especially as eco nomic reforms has formed an environment liked by entrepreneurs.

Secretary of the Samoa Chamber of Commerce, John Boyle, said government figures indicate that the economy has grown by between three and four percent per annum for the last two years in real terms using gross domestic product as a measure.

Exports grew 43.4 percent from 1996 to 1998 when it reached $50.9 million, tourism earnings increased 9.3 percent with a new high of $114.6 million last year, private remittances increased 10.2 percent totalling $109.9 million last year - also a new high according to the Central Bank.

With such rises in earnings, the shortfall after an import bill (that has climbed for that three-year period by 8.2 percent) dropped from $32.6 million in 1996 to $10.3 million last year while the inflation-CPI dropped to 2.2 percent last year from 5.4 percent three years earlier, it says. The revival in exports, brought to its knees by cyclones in the early 90s then almost killed off by the taro leaf blight in 1993, goes to the sudden emer gence of fishing industry - and “amazing development” Akauola, secretary of Tonga’s Ministry of Fisheries, called it. Tongans are in Apia to study fishing methods.

“We had no fish exports export to speak of in 1994,” said Boyle, who runs an eco nomic consultancy and is also secretary of the Apia Export Fish Packers Ltd (AEFPL).

“As we speak fishing is almost half our total merchandise exports. And continuing ( to grow.”

It is up 81 per cent on the previous year, at $22 million in 1998.

“I would predict that in 1999 there will be $36 million, up another 50 per cent or so,” said Boyle. “Perhaps a younger fisher man who is in his 20s, 30s now comes in with $2OOO or $3OOO to buy ... things they would never had money to buy with before,” said Mark Puckey, owner of the

Apia Traders, a prominent seller of elec trical appliances, television sets, videos

and refrigerators mostly.

It helps that the rural electrification project has ended allowing such appli ances to operate in the furthest comers of the country. The first quarter of this year was the busiest Apia Traders have had in seven years of trading, despite a sharp rise in the price of electricity, though not because of the “fishing” dollar alone.

“And there just seems to be a general feeling of confidence and a willingness to spend in the economy which hasn’t been there before,” Puckey said.

“I mean you’ve only got to look around town to see the number of new pickups on the road,” he said. “New cars are no longer the domain of the (Cabinet) minis ters.”

For years Toyota was the only car deal ership in town. Two Nissan outlets opened this year. Two major supermarkets have appeared. Most encouraging for business is government’s freeing of the private sec tor to be the engine of economic growth through recent reforms, some based on advice that came from the private sector in the first place - and as a result of dia logue begun formally by government in 1995.

“Now where else in the region would you find an honest exchange of views being initiated jointly by the two organi sations (government and the private sec tor)? *’ said Boyle.

“One where government asks early, business to advise ... and demonstrably hears the advise - in which you can see the influence of it in the actions taken. Now the private sector couldn’t ask for more than that,” he said. Boyle credits the Minister of Finance, Tuilaepa Sailele Malielegaoi, who presided over bold tax reforms even before he became prime minister as well November last year for taking the initiative.

“The private sector can assist, it can support and take advantage of opportuni ties, but the government has to have the

initiative,” he said.

Government slashed tariffs on goods down to 20 percent maximum in last year’s budget giving businesses a sense of free dom to focus on business alone rather than quarrels with Customs over valuations.

As well as more investment in the dis tributive trades which is creating employ ment, a wider range of goods of better qual ity, has flooded in and government revenue has not dropped because better compliance resulted with the black market not so need ed. Customs officials are no longer forced into having to make big subjective judg ments about the value of good. “You haven’t got disputes over valuations and types of good,” said Puckey. The reduction of categories of goods has rid the system of silly anomalies where a radio was in a dif ferent category from a CD player and made it much easier to import goods.

Government’s introduction of perfor mance budgets has forced department to be more accountable for the public funds they spend, to go with a new attitude in front line departments like Customs, Inland Revenue, Central Bank, Ministry of Transport, who now treat businesses as clients instead of annoyances.

Previously getting paid for services per formed for government often took months.

“Without a doubt the government is now probably one of the most prompt payers on the island,” said Puckey, who also praises a new transparency in government corpora tions and department - which provide half his trade so that “If you can supply the goods at a good quality at a good price, you will get the business.”

“I am confident now about expanding into better plant, into a better range of good, (now) that the Central Bank is a far more realistic ... you haven’t got a shortage of money at Central Bank where you have to wait until they have New Zealand dol lars before you can send it.”

“Telecommunications are better, all the things that one needs in a business ... are there,” said Puckey.

Vital to the buying process are the remittances Samoa rely on. “I’ve been in Samoa 20 years and people have been say ing that foreign remittances are going to drop off and they never have. They’ve just

kept growing,” said Boyle.

Whilst loyalties to relatives in Samoa lessens as some families overseas enter their third, fourth generation locals leave for New Zealand at a rate of 1 100 because of a quota system and other avenues, and for Australia and the United States too. “I think we’re still exporting people at a rate each year that must go a long way towards replacing the generation dissipation,” said Boyle. Set up under New Zealand aid to fill the gap in business skills, the Small Business Enterprise Centre (SEED) is

advising villages to view beach fales along with “marine activities” like snorkeling and nature walk as income opportunities to supplement income from their primary

produce.

Head of SBEC, Leota Laki Sio, says the importance of investing remittances in business projects instead of spending them all on consumption, is beginning to be realised. Certainly «for sustained growth, the chamber of commerce is not looking much

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beyond agriculture and tourism. “It’s an industry for which we have some excellent resources (in beaches and the environment generally),” said Boyle of tourism.

Though tourism earnings have grown they’re mostly from overseas Samoans popping over for holidays or family mat ters, not true tourists attracted by a com petitively priced and attractive destina tion. Putting up more accommodation on which growth depends and which airlines can then move to fill up, continues to be blocked by a lack of capital. \The Tourism Development Plan 1992- 2001 gives quality resort facilities the

“highest priority” but for that attracting

overseas investors seems inevitable.

Coconut products - mainly copra, coconut cream, coconut oil - continue to be erratic earners, with one company. Wilex Ltd, now making chocolate and to develop overseas markets for other crops.

The fruit fly threat has banned exports of pawpaw, mango, avocado and a host of other fruit to New Zealand and other mar kets but hope for farmers has arisen due to an announcement that a heat treatment plant is to be established by the end of the year. ■