From Matangi Tonga Magazine Vol. 14, no. 4, December 1999.

Photos © Pesi Fonua / Matangi Tonga

By Pesi Fonua

The Orient and China, known through history as an exotic treasure house for textiles, jewellery, spices—and today as the source of cheap electronic goods, motor vehicles and aircraft.

Marco Polo opened up the first trade route from China to Western Europe in the Middle Ages, but since then there has never been a time when the world was so eager to establish trade links with China than the last decade of the 20th century, as countries and individuals are scrambling over each other to establish trade links with the new China’s recently opened market of 1.2 billion people.

Tonga is one that has been trying to access the Chinese market. The King of Tonga, Taufa‘ahau Tupou IV, successfully facilitated the missing link when a Bilateral Trade Agreement was signed between the two countries during the king’s State Visit to China in October.

According to Dr Masaso Paunga, Tonga’s Minister of Labour, Commerce, and Industries, who signed the agreement at the Great Hall of the People, Beijing, on October 7, the Bilateral Trade Agreement, in general, provides a frame work for the two countries to co-operate in the development of their trade, economies and technology.

“The finer details of the agreement will be explored later but the principal of the agreement is that the two countries agreed to treat each other as favourable trading partners.”

Masaso hailed the agreement as a positive move to find a new market for Tongan exports, “and more importantly to make it easier for Chinese investors to invest in Tonga and for Tongan investors to invest in China. We have to look beyond our traditional export and re-export industries. We have to look at high cost effective projects, particularly in telecommunications in order to trickle down its benefit to the development of grass-root industries,” he said.

Business partners

As a Minister of Labour, Trade, Commerce and Industries, Tonga’s membership in the World Trade Organisation, is very much at the top of his mind. His hope is that if there is going to be a boost in the development of the telecommunications industry and vibrant financial institutions, “it will be a step forward to the development of our economy,” he said.

“If we can boost the development of these two areas then we will be in a position to take advantage of our membership in the WTO.”

The signing of the trade agreement signalled the go ahead for a number of business ventures between Tongan interests and their Chinese partners, which were awaiting a closer co-operation between the two countries.

Sonatane Tu‘a Taumoepeau, Tonga’s Secretary for the Ministry of Foreign Affairs, said that the signing of the Bilateral Trade Agreement showed the willingness of the Chinese to work closely with Tonga. “This State Visit is a confirmation that we are serious about our relationship with China. Following the termination of our relationship with Taiwan, the Chinese were waiting to see if we were going to be hanky-pankying around, trying to play one against another, but this State Visit shows that we are serious about our relationship. Now they are willing to take our relationship a step further to encourage trade and investments, and co-ventures with our private sector.”

Tu‘a said that the opening up of trade opportunities with China was a break through for the Tongan private sector. “Government has been talking for years about developing the private sector, and it has become like a scholarly exercise to write about how the private sector could be the driving force in our economic development, year after year. But now we can say here you are, China has all the potential that you can dream of.”

Satellite co-venture

Anna Tupou, the Marketing Manager of the Pacific Asia Global Holdings Ltd, the marketing arm of TongaSat sincerely believed that the new trade agreement is a blessing for Tonga. “The whole world is at China’s doorstep because of its 1.2 billion people, but Tonga stands to gain a huge mileage, if we know how to come together with the Chinese in joint ventures. The Chinese government has a pool of funds that Tonga can tap into if they want to raise soft loans. For example, like the Dateline Hotel project. Our advice is for people to carefully scrutinise individuals who are involved in those projects, because Tongans could be easily misled to believe that the project has been approved by the Chinese government, and after getting approval from Tonga then at the end find that the fund is used for something else. But if we are talking about benefits, time will tell, but I am confident that both sides will have benefits,” she said.

“We have just received positive news from Beijing that the Chinese government has already nominated one of its companies, China Orient, to form a co-venture with us, and to seek opportunities in the area of satellite telecommunications in China and world-wide.

It also should be noted that the coverage of Tonga’s six orbital slots is on China.”

Anna refutes claims that Tonga switched relations from Taiwan to China, purely for the advantage of TongaSat.

“That is not true,” said Anna, “we already had a relationship with China, APSTAR is Tonga’s number one client, and China is the major shareholder in APSTAR.

“We already have China as a client, but we want to further enhance that because the whole world is at China’s door step, because of its huge market. Volume is the key to telecommunications.”

Anna said that the involvement of Pacific Asia Global Holdings Ltd. in the State Visit of the King and party to China deals only with very small expenses, “all the expenses while we are in China were taken care of by the Chinese government. On the other hand we have spent millions of dollars in trying to set-up the initial infrastructure, and when we were commanded by the king to take up the normalisation of the relationship between the two countries, we came here so many times. To set up the ground work on any project is always very difficult,” she said.

Hong Kong office

The movement toward normalising the relationship between the two countries began to speed up after Tonga’s satellite company TongaSat ventured out and started doing business in China and then set up an office in Hong Kong.

Anna, who is a devout Christian, believed it was the will of God that led them to China. They met Fred Wang, who is now their Chinese partner, when they were trying to rescue TongaSat from threatened with litigation and take-overs in the US, and with Fred Wang they made a headway into China.

Sione Kite, Tonga’s former High Commissioner to London, and now the General Manager of TongaSat, said that their involvement in normalising Tonga’s relations with China, “is not an issue of TongaSat being behind it, it was a mandate for us to take the initiative forward and to make it happen.”

Sione pointed out that it took Princess Pilolevu and her staff two years to normalise the relationship between the two countries. “We have been coming to China during the past three and a half years, and the intention was to do business, but during the first part of our presence in China we have been concentrating in brokering the normalisation of the relationship between the two countries.

United Nations

“Following the normalisation, Princess Pilolevu was given another mandate to establish the United Nations New York mission. These two missions are on the verge of completion, particularly the New York one, and we hope that we will not receive any further mandates, and we will now concentrate on business at hand,” Sione said.

Anna said that the key of a $2 million building for the Tongan mission in New York would be handed over to the Tonga government on November 4.

The proposed co-venture between TongaSat and China Orient Company offered a lot of opportunities. Anna said that once such a co-venture arrangement was in place, they would be looking at everything, “from the orbit to the ground infrastructure, where the real money is, on the ground. Because it may cost $250 million to put up a satellite, but the ground infrastructure may cost only $1 million, so we have to work in parallel, because there is no use having a satellite if you can’t land [a signal] on these countries.

“It is also important to be understood that the coverage of Tonga’s six slots is into China. We have four satellites in position and for all of these positions the coverage is in Asia.”

Anna said that the Satellite telecommunications business in China was very competitive. “We are not the only one who can make a satellite available to China. However, the Chinese have not allowed anyone to have a landing right apart from their own enterprises, but what we are trying to do is to have their OK to be a partner with one of their major enterprises in satellite telecommunications, so it can take our relationship forward. At the moment it is looking very positive. So far our dealing with the Chinese, with UPSTAR has been just leasing, but with China Orient, there is a good chance of a co-venture.”

Trans Pacific Link

The other project that TongaSat has been trying to establish is a Trans Pacific Link, with the Forum island countries using a TongaSat satellite for their telecommunications network. “We now have six major operators who are interested, and we are still working on it. Our biggest downfall is that Tonga has no landing rights into the USA, because we are not a WTO member. We do not allow anyone to have any landing rights in Tonga so the value of our 170, 175 and 142 slots are not much at the moment. We could have earned $5 million per annum from a slot, but now we earn only $3 million.”

Normalisation

The process of normalising the Tonga-China relationship accelerated after the King gave Princess Pilolevu a mandate in 1996 to normalise Tonga’s relations with China.

It was thought that China would support Tonga to become a member of the United Nations if Tonga would terminate its relationship with the Republic of China Taiwan and establish diplomatic relations with the People’s Republic of China. (Chinese officials don’t like their country being called Mainland China).

On October 26, Prince ‘Ulukalala Lavaka Ata, Tonga’s new Minister of Foreign Affairs, signed a joint communique in Beijing, declaring that “the Kingdom of Tonga recognises that the government of the People’s Republic of China is the sole legal government representing the whole of China and, that Taiwan is an inalienable part of the Chinese Territory.”  

State Visit

The State Visit from October 6–18 started in Beijing and went to Baotou, Inner Mongolia, the Genghis Khan Mausoleum at Ejin Horo Qi, and Shanghai, Xiamen, Zangzhou and Hong Kong. The Tongan party of 22 people included five members of the Royal Family, the Directors of Tongsat and their Adviser on Asian affairs; Tonga’s Minister of Labour, Commerce and Industries; Tonga’s Secretary for Foreign Affairs; royal attendants, security officers and private secretary; and two journalists from Tonga. The Chinese delegation accompanying the King included the Chinese Ambassador to Tonga, Mr Zhang Binhua, and his wife, Madam Tong Jinying.