Ministry of Labour, Commerce and Industries

Ministry conducts public hearings on economic strategy

The Ministry of Labour, Commerce and Industries conducted a one day workshop on December 3rd, for the private sector and members of the public to present and invite comments on two policy documents, namely National Investment Policies and National Private Sector Strategies. The policy papers are a result of the economic summit of 2006, which called for closer cooperation between Government and the private sector. Acting Secretary for the Ministry, Vika Fusimalohi said that the strategy for private sector development is in line with the mission statement of the Ministry which aspires "To create a dynamic private sector which will generate gainful employment, expanding opportunities for people to earn income and improve their standards of living". An executive summary of the strategy for private sector development was presented by Carloz Rodriguez, a consultant from the Commonwealth Secretariat. Carlos said that if Tonga's private sector is to be the engine of economic growth, then it is necessary that we "must know precisely what the private sector is". Taking Government figures and Ministry licensing data, it was found that the structure of the private sector in Tonga is 91% microenterprises, 5% small enterprises and 4% medium to large enterprises. With such a distribution,it is clear that private sector development in Tonga therefore means microenterprise development. A comment from the floor claimed that the above characterisation of the private sector gives a distorted view of the sector, and more work should be done to relate the classification to other parameters like business turnover, number of employees and other similar metrics. According to strategy findings, there are two core problems which microenterprises need to overcome in order to develop and grow.The first is a lack of information and the second is "no access to credit". The solution suggested to overcome the information deficit is the establishment of a specialised training center to provide adequate skills development and relevant business information. The way out of the no credit dilemmna for microenterprises is to create micro finance services. Participants from the finance sector did not agree with the assertion that microenterprises have no access to credit. It was claimed that the Tonga Development Bank for example has a microfinance service, but microenterprises have difficulty meeting the loan conditions, that the service might as well be non-existent. A more fundamental disagreement emerged during the discussions with a banking sector official calling the idea of a Credit Union Bank and microfinances, "very concerning stuff". There is an inherent contradiction, it was claimed, in trying to establish a bank based on the deposits of those who do not have any money. There is a suspicion that in such a case, the Government will put in the money, which will distort and disrupt the normal operation of the banking sector. Furthermore, where is the infrastructure to provide such a service, like staff, branch offices and communications networks ? Regardless of the reservations of the traditional banking community, the meeting welcomed the attempt to solve the lack or absence of credit to microenterprises.Independent observers urged the gathering to keep an open mind and pursue the course of action which will be in the best interest of the country.It was noted that in some developing countries microcredit transactions took place using mobile phones and not reliant on physical branches and expensive dedicated networks. A spokesperson from the farming sector said that in addition to the problem of a lack of information and no access to credit, other fundamental impediments to microenterprises are the lack of market access and the absence of a supply chain infrastructure. Furthermore, such an infrastructure should be a distributed one, where local growers can sell their produce to a district facility for storage and onward sale to the market, or for export. The paper on the National Investment Policy is simply a compilation of all exisiting policies and regulations that have an impact on investing in Tonga.There was a request from the floor to streamline the process for applying for various licenses and registrations and to provide a one-stop shop where all relevant Government Ministries can discharge their services at a single point of contact. The meeting supported the Ministry's efforts to address the issue of consumer protection with more vigor and vigilance. One participant said that "a whole year of consumer protection education will be good", as it is important to inform consumers of their rights, and to remind merchants of their obligations. One area of interest is compensating the consumer for disruption of services or below par contracted service provisioning. The meeting was reminded that the Government needs to spell out what it is committed to do, so that the private sector can make plans based on a well defined set of assumptions and covenants. The public hearing on the policy documents will continue in the next few weeks, with meetings scheduled for the outer islands, before the official launch of the national strategy early in the new year. ENDS  

Remarks on NIPS unveiling

Statement of CHRISTOPHER ANDREW HARTWELLWorld Bank/IFC International Business Environment SpecialistNational Investment Policy Statement (NIPS) ForumDecember 3, 2008 Thank you. It’s my pleasure to be here today at this forum on the National Investment Policy Statement and the National Private Sector Development Stategy, presented by the Ministry for Labor, Commerce, and Industry.  As we all know, it is the private sector which drives economic growth and makes the lives of all Tongans better, from Ministers to shopkeepers to teachers to children. People pursuing their self-interest allows for commerce to thrive, and for jobs to be created, livelihoods to be sustained, and goods to be  produced.