A current attempt by the Tongan government to attract business investments, and to revitalize business growth by offering very low interest loans packages so far remains an unattractive proposition for businesses in Tonga.

A loans package, launched in early August and handled by the Tonga Development Bank, offered 1% to 4% interest on loans to investors in Agriculture, Fisheries, Tourism, Manufacturing and Wholesale, Retail Trades and Priority Sectors. However, since the investment incentives were launched in August, there have not been any takers other than for education.

A spokesperson from the lending section of the Tonga Development Bank said that after a burst of interest at the beginning because of the very low interest rates, it appeared that potential lenders were put off by the terms of the loans package, which varies from sector to sector.

The Agriculture Sector has two allocations:

• $1 million to be lent at 1% but to be repaid within nine months. (The maximum amount that one may borrow is $100,000).
• $4 million to be lent at 4% and the terms for repayment to be negotiated.

Other sectors and their allocations are:

• Fisheries – $1.5m;
• Priority Sector - $500,000;
• Livestock - $500,000;
• Forestry - $500,000;
• Tourism - $1.5m;
• Manufacturing - $500,000;
• Construction - $1m;
• Retail and Wholesale - $500,000.

According to the Tonga Development Bank, the only sector that is rolling out, is a $1 million allocation for Educational Loans at 1% interest to be repaid within four years. Parents are snapping up this opportunity for pay for their children's education.

Despite the virtual standstill in the lending of the loan allocation for other sectors the Tonga Development Bank is hopeful it will be able to restructure the investment incentive loan terms to make it more appealing to investors.

Meanwhile,Tufui Faletau from the Ministry of Finance and National Planning told Matangi Tonga that processing of enquiries about the investment incentive loans had been realigned so that instead of investor's applications coming straight to the ministry, then to Cabinet, it now had to go the Ministry of Commerce first and after the application had been formalised, it would go to the Ministry and to Cabinet.