Tonga government offers millions to business investors [1]
Wednesday, December 10, 2014 - 17:58. Updated on Wednesday, December 10, 2014 - 18:03.
The Tonga government has made millions of pa'anga available on soft loans for business investors, and Tatafu Moeaki, the CEO for the Ministry of Finance is calling on Tongan businesses to take advantage of the opportunities.
Attracting investors to invest in Tonga and boost its economic development remains an up-hill battle for the Tongan government. But there is optimism that a recent revision of the government's $13 million Business Investment Incentive Fund launched in August, would attract businesses to take advantage of the opportunities, offered by 1% to 4% interest on loans to priority sectors of the economy.
The revision of the Fund was approved by Cabinet at the end of November, and it was formally declared by Tatafu Moeaki, the CEO for the Ministry of Finance and National Planning and Mrs Leta Kami the General Manager of the Tonga Development Bank on 5 December.
Leta said that since the program was launched in August $2.2 million has been lent, and most of it was for educational loans to pay for fees of students on higher education. But following the revision of loan terms, a number of adjustments had been made. She said that agricultural loans were increased from $20,000 to $50,000, and fisheries loans from $30,000 to $100,000; and the repayment period had also been increased from nine months to three years.
Leta was hopeful for business investors to take advantage of these opportunities.
Tatafu said that the initial plan was for the fund to be a revolving fund, but the short-term loan repayment period of within a year at a very low interest rate was not very attractive to borrowers.
The revision of the loan term that was approved by Cabinet at the end of November extended the term and therefore government in the coming years needed to invest some more money into the scheme.
He said that the initial fund was derived from tax revenue and a government loan in the form of the sale of government bonds.
Sitino Maka, the TDB loan manager said that loan security was also another stumbling block for borrowers, because normally they demand a security that was either double or more the value of the loan but "depending on who is the borrower, we could settle for a security that has a value the same as the loan."
The Priority Sectors that the government business investment incentive fund aims at are: Agriculture, Fisheries, Livestock, Forestry, Tourism, Manufacturing, Construction, and Retail and Wholesale.