Tonga has been ranked among the Pacific region's top performers for implementing business reforms over the last year, according to a World Bank Group annual report, however, the reason for the ranking is being questioned by those who look at business performance in Tonga.

Tonga along with Palau and Vanuatu had improved borrower's access to finance, according to a report that measures the ease of doing business in 189 economies worldwide.

Tonga was ranked 57^th among 189 countries for the Ease of Doing Business in 2012-13 by the International Finance Corporation (IFC), in its report that analyzes regulations that apply to an economy's businesses. Rankings are based on 10 indicators.

"Creating an enabling business environment and attractive investment climate are key to increasing incomes and reducing poverty, so it is very encouraging to see some of smaller Pacific Island nations introducing effective reforms over the last 12 months," stated Jonathon Kirkby an IFC Senior Officer on Investment Climate, in announcing the rankings on October 29. “Overall, the Pacific is still a relatively hard place to do business and much work still needs to be done across the region to open up business opportunities that cerat jobs and change lives.”

Surveys by IFC provide data highlighting the main obstacles to business activity as reported by entrepreneurs in 189 economies. Among the factors that the surveys have identified as important to businesses have been access to finance and electricity.

Private credit bureau

Tonga was ranked highly in the Pacific region by the IFC because it had established a private credit bureau, with the objective of improving the access of the private sector to finance from commercial banks.

A private credit bureau is a data bureau, which gathers information on business loans from commercial banks. It allows commercial banks to prospect borrowers' loan records.

However, not much is known locally about the “Data Bureau Tonga” that was established in 2010 as a subsidiary of Data Bureau Fiji.

Neither the Ministry of Finance nor the Tonga National Reserve Bank spokespeople knew the whereabouts of the bureau.

Seini Movete, from the loans division of the Tonga Development Bank said that though the Data Bureau was offering useful information about borrowers to banks, but Tonga was too small with only four banks offering commercial services, the Westpac Bank of Tonga, ANZ Bank, MBF Bank Ltd and the Tonga Development Bank.

Seini said that the Data Bureau was looking at extending its services to include the debts records of other businesses, and they had approached big enterprises, including some public enterprises, but she did not think that they were successful in convincing them to use their service.

"It makes sense to extend their services to other businesses, because a first time borrower in a bank, could have a very high debt with other businesses, but the bank does not have access to that information," said Seini.

Benchmarks

With regards to the concept that Tonga tops the Pacific in the ease of doing business, because it has a private credit bureau, 'Aloma Johansson, the president of the Tonga Chamber of Commerce, did not think that a private credit bureau was a good benchmark for the ease of doing business in Tonga. She was also concerned with what appeared to be a lack of due diligence in the process of gathering and releasing information by the Data Bureau.

However, the IFC's Jonathon Kirkby, who was one of the authors of the Ease of Doing Business report stressed that with their report they specifically looked at certain things including company registration, land registration and investment incentives, and not at results and business practices.

The top 11 countries among the 189 countries surveyed on the ease of doing businesses are:

1. Singapore
2. Hong Kong
3. New Zealand
4. USA
5. Denmark
6. Malaysia
7. South Korea
8. Georgia
9. Norway
10. UK
11. Australia.

The top five countries in the Pacific with their placing among the 189 countries of the world are:

1. Tonga – 57th
2. Samoa – 61st
3. Fiji – 62nd
4. Vanuatu – 74th
5. Palau – 100th