Chinese visit prompts Tonga government to review business investment policy [1]
Friday, May 24, 2013 - 11:26. Updated on Monday, September 9, 2013 - 18:40.
Tonga government officials told a Chinese business delegation that they would review a policy that imposes 15% consumption tax on business investments in Tonga.
They also told the potential investors that tourism is "Tonga's most vibrant industry" and that Tonga has fish to give for fishing boats and it will speed up its process of issuing licenses to fish in Tonga's waters.
The Chinese delegation were in Tonga this week looking for investment opportunities and attended a meeting organized by the Tonga Chamber of Commerce and Industries on Wednesday, 22 May 22.
Tonga's taxation policy on the movement of funds to Tonga by foreign investors remains a stumbling block because a 15% Consumption Tax is demanded by government on the incoming funds, before an enterprise is up and running.
Hon Samiu Vaipulu told the Chinese Delegation that government is looking at doing away with this policy.
With regards to how long it would take for investors to acquire a business license, the CEO of the Ministry of Commerce, Tourism and Labour said that "it would depend on the type of license".
A member of the Chinese the delegation asked, "does that mean that you could go through the back door to get a business license?"
There was a burst of laughter from the meeting. A suggestion was made by the Chinese delegation that there should be only one licensing policy for all applicants.
When one of the delegation wanted to know how long would it take to get a fishing license, Tonga's Minister of Agriculture, Fisheries and Food, Hon. Sangster Saulala answered that it could take "one day".
He also said that the fisheries policy had changed and the tonnage per vessel per year had increased from 1000 tonnes to 8000 tonnes.
"You give us the fishing boats and we will give you the fish," he told the delegation.
China trade council
The 14-members Chinese Business Delegation led by Wang Jinzhen, the Vice Chairman of China Council for the Promotion of International Trade was made up of leading figures from business enterprises, such as financial management, high-tech enterprises, a machinery and equipment corporation, and official members of the China Council for the Promotion of International Trade, with a wide range of interests.
The scope for foreign investment in Tonga was outlined by the CEO for the Ministry of Commerce, Tourism and Labour, Tatafu Moeaki, covering four industries: tourism, agriculture, fisheries and manufacturing.
The Deputy Prime Minister, Hon. Vaipulu, also outlined efforts by government to develop Tonga's infrastructure, which could be beneficial to any investments in Tonga. These included a high speed fiber optic telecommunication network expected to arrive next month, and the recent signing of an open sky policy with Singapore with the hope of attracting Asian Airlines to use Tonga as a gateway to the Pacific, along with an effort to bring cheaper bulk fuel supply direct from Singapore, and the plan to expand Tonga international airports.
He stressed that tourism is currently Tonga's most vibrant industry.
Tonga in June last year signed a USD$25m grant agreement with China, under which China would provide Tonga an aircraft for its domestic air service, the training of Tongan pilots and engineers, and the maintenance of the aircraft for three years.
This aircraft was supposed to provide a second domestic air service for Tonga, but instead forced Tonga's existing domestic airline, Chatham Air out of Tonga because it claimed that the domestic market was too small for two airlines.
Big ask
A presenter, Dr Tu'i Uata, economic advisor to the newly established Tonga Economic Growth Council (TEGC), was very frank in his presentation and point blank told the delegation that in order for the TEGC to fulfill its obligations to its members they needed 45 tractors, a $2 million grant to start with, and a 2% soft loan for an unspecified amount.
The visit to Tonga of the Chinese Business Delegation was organized by the Tongan ambassador in Beijing, Hon. Siamelie Latu, who accompanied the delegation, on their three-days visit to Tonga, which ends today.