Interview, Prime Minister Baron Vaea

'Constrained by our geography'

No-one can accuse Tonga's Prime Minister of being a starry-yed optimist. As the following interview reveals, Baron Vaea, who heads a twelve-member ministerial team, is refreshingly honest about the economic difficulties facing his small island country. The Courier interviewed him in July, at his office in Nuku'alofa.

· You have suffered a GDP drop and a general slowdown of activity in recent years. What is the government doing to restore the situation ?

- It is true that the economy has been declining. The main cause is the excessive demand from the private sector for imports from New Zealand and Australia, combined with diminishing exports. Our exports fell when the price of copra dropped. Another problem is New Zealand's quarantine rules. New Zealand is very particular on quarantine against insects, notably fruit flies, which may damage their own export trade. We have endeavoured to balance this out by selling squash to Japan and indeed, it has been a saviour as far as our economy is concerned. Squash is something our farmers know how to grow. Of course, the market goes up and down. Recently, we made the mistake of over-producing and quite a lot of the crop could not be sold abroad. I think our farmers are now realising this, and that they have to plant according to the quota that we ourselves have imposed. Tourism is another important area although levels of room occupancy are very dependent

on the economic situation in other countries. Then there are passport sales.

· Is this something you are still doing ?

- Yes, but it has been hit by technical difficulties. A number of Hong Kong Chinese bought our Tongan Protected Persons Passport (TPPP) in the hope that they could travel. The immigration authorities in other countries decided they would not accept the document so this source of income dried up. We have changed to national passports which people can use to travel. We are hoping to revive this in order to suit the conditions of the Hong Kong people.

· Is this being done on the assumption that the people who purchase such a passport would not ultimately settle here ?

- Yes. The main reason people in Hong Kong want a passport is to keep open the option of leaving after the changeover.

· Has this policy prompted any criticism from other countries ?

- No. The main problem is the Chinese themselves who are due to take over Hong Kong next year. It is possible that they will not recognise these passports. We are planning to have discussions with the Chinese on this.

· Going back to the agricultural sector, are you not putting too many eggs in one basket in focusing so heavily on squash. What efforts are you making to diversify ?

- We have just signed a trade agreement with Fiji. They are such a close neighbour yet we have had virtually no trade with them. This should change with the agreement, to the benefit of our economy.

· What products are we talking about here ?

- Mainly vegetables, particularly those that are favoured by the Indian community, such as chills and spices. A trade mission has just returned from Fiji where they picked up a number of orders. The representative of a group of growers also recently returned from Japan. He took a sample of dried pawpaw, a crop which is popular with the Japanese, and apparently received an excellent response. This is an area which is promising.

The key issue, however, is the amount of space available in the aeroplane. You can't ask everyone to grow pawpaw when the airline tells us that they can only take eight tonnes at a time. Only a limited number of farmers can be involved, so that we can continue to supply the tonnage that the airline can handle. We will encourage the rest of the farmers to concentrate on other products.

· What is your policy regarding foreign investment ?

- We encourage overseas investors to engage in activities that local people are not involved in. Land leases are available for anything they want to do which fits in with this policy.

Tonga has an extremely limited manufacturing sector and there appears to have been a long-term decline. What prospects are there for reversing this trend ?

- For many years, the policy of the government has been to encourage exports. We have had entrepreneurs here who have exported things like woollen garments, small boats, horse saddles and so on - but it didn't last. The sad fact is that hardy anything is exported from Tonga. The main reason is that we are constrained by our geography. We are so far away from the main markets. The raw materials have to be brought in and by the time the article is finished, there is no way that it can compete in price terms. This has always been our problem. We are always looking for new markets but it is not easy.

A second limitation is the private sector in Tonga. This is weak in terms of technology, marketing and product quality.

· What about further processing of local products - perhaps value-added agricultural activity ?

- Yes, this is something that we would hope to do, though the same kinds of problem arise. People don't set up the processing plant because they say there isn't enough local cultivation to make it worthwhile. And the farmers don't grow the crop because they say there is no market.

· So it is 'chicken and egg' situation ?

- Yes. The result is that people only grow for home consumption.

I should mention here that there are other resources we have yet to exploit, notably in our waters. We have reserved these for ourselves and do not allow foreign fishing vessels. So we are trying to recover resources from the sea.

There is also the possibility of drilling for oil. Research ships operating in the Pacific have found a limited number of locations where it would be worth looking for oil reserves and two of them are in our waters. We have been publicising this with a view to encouraging further exploration.

· This would presumably involve drilling licences for oil multinationals.

- Yes. Some companies have done this in the past although only on a small scale. The answer we got from the oil companies is that they are interested in exploitation - but not now because of the low oil price. When the price goes up, I think we may attract interest again but that is clearly only a long term possibility.

· A lot of young Tongans leave the islands to work overseas. What is the explanation for this ?

- It is true that a high percentage of our population migrates. These are people in search of a better life, who seek to reap the benefits of their abilities by working overseas. They can have a nice house and get a good education for their children.

I should stress that we have a good education system here but there is a heavy emphasis on gaining qualifications in order to get into the civil service. Where we are lacking is in the field of technical education. We have some facilities of course - an Institute of Science and Technology and a Marine Institute to train people to go to sea. This is very much in its infancy and we hope it will help for the future. But even some who have gone through this system end up looking for jobs overseas.

· Turning to political issues, you have a monarchy here which is still very powerful. Do you anticipate any changes in the system ?

- There has been some public pressure for change. I don't think people want a radical upheaval but there is a feeling in certain quarters that the present system could be improved upon. As you probably know, Parliament has nine members elected by the people and a further nine selected by the 28 nobles from among their own number. The third component is the government - 12 ministers who are appointed by the King. It has been suggested that qualified people who don't presently sit in Parliament should be there to help deal with the economy. One idea is to change the Constitution so that whole population elects 30 members. The King would then choose his ministers from these 30.

· Has this idea made any headway ?

- No, not so far. We are maintaining the old system. The proposal has been aired but it hasn't been passed in the House. There are a lot of people, I think, who prefer the present system because they feel the monarchy works for the benefit of all the people. Would a new team necessarily stick to this principle? There must be a danger that they would tend to favour just one section of the population.

· Can you comment, finally, on Tonga' relations with its partners in development cooperation ?

- As you know, we have good relations with the EU through the Lomé Convention. We also have strong bilateral links with Australia and New Zealand which have been giving us assistance. But I think we have to face up to the fact that the aid cannot continue. The UK, for example, used to provide us with our judges. That has been taken over by Australia and New Zealand - but for how long ? I think it is bound to be phased out.

So we will continue to have relations with our partners, but we need to recognise that they are concentrating their efforts now and adapt accordingly.