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The member nations of the South Pacific Tourism Organisation are characterised by several key features:
- their small populations;
- their limited resource base, including natural and
human resources and capital;and
- their remoteness from the major world markets.
None of the SPTO member countries are industrialised nations. However, their level of economic development varies widely.
Table AI
summarises the key features of the SPTO member country economies.
Whilst foreign aid is significant in many SPTO member countries there is, a growing determination in many SPTO member countries to move towards a much greater degree of economic self-sufficiency. There is also an awareness of the need to attract increased foreign investment. For many of the island countries this has not been an easy task, nor has there been desired results. Most are conscious of the need to safeguard traditional lifestyles and customs and preserve the natural environment. These needs have had to be balanced against desires for greater self-sufficiency, increased employment opportunities and the other social benefits of greater economic activity such as improved education and health systems.
Many SPTO member countries seek to maximise the benefits of overseas investment by prescribing preferred types of proposals and features of proposals. There is a strong preference for new investments that will:
- create employment;
- reduce the cost of imports;
- increase export earnings;
- result in increased skill levels among local workers;
- otherwise contribute positively to economic
development; and
- conserve the environment and cultural heritage.
SPTO member country Governments' policies are generally supportive of foreign investment. This reflects both a growing desire for economic self-sufficiency and the need to support worthwhile social objectives including increased employment.
Further opportunities for investment in other activities are limited by the small size of the island and its population.
All the countries and territories within the region have recognised the future importance of
tourism development.This is particularly the case in the Cook Islands,Fiji,French Polynesia,
New Caledonia,Niue,Palau,Samoa,Tonga and Vanuatu.These countries,together with
five other Pacific Forum Island nations (Federated States of Micronesia,Kiribati,Marshall
Islands,Nauru and Papua New Guinea)and American Samoa,make up the region.
Tourism generates substantial incomes for the majority of countries within the region.
Tourism dominates the economies of the Cook Islands and Palau and generates a
substantial part of GDP in Fiji,French Polynesia,New Caledonia,Samoa and Vanuatu.
Table A2 summarises the economic
importance of tourism in countries within the region.
Tourism in the region can be analysed in terms of the number of visitor arrivals,and the
nature of the outbound tourism markets on which they draw.On this basis tourism
destinations in the region fall into four groupings:
-
Those able to draw on a range of originating markets
and with visitor flows of 100,000 a year or more.These are Fiji,French
Polynesia and New Caledonia. Fiji,French Polynesia and New Caledonia,which
draw on European,Japanese, Australian and New Zealand markets.Fiji also
attracts business from Korea, dependent on a Korean Airlines service,while
both Fiji and French Polynesia have substantial business from North America.
-
Those able to draw on a range of markets but which
are more limited in terms of tourism plant:Cook Islands,Papua New Guinea,Samoa
and Tonga.These have around 30,000 to 70,000 visitor arrivals a year.While
most have substantial business from Australia and/or New Zealand,they have
also developed longer- haul markets.The Cook Islands,Samoa and Tonga benefit
from the services of Air New Zealand,which includes travellers using Round the
World (RTW)fares. Palau draws on Asian (Japan,Taiwan and Philippines)and
American markets,but also seeks to develop European markets
-
Destinations limited to a smaller number of
originating markets,but otherwise similar to the above in terms of the number
of visitor arrivals.FSM and Vanuatu are in this category,with FSM drawing on
Asian and US markets and Vanuatu on Australia and New Zealand.
-
Countries with a more modest level of visitor arrivals:American Samoa,Kiribati,
Marshall Islands,Nauru,Niue,Solomon Islands and Tuvalu.All of these destinations
tend to suffer from access constraints,with airline flights from only a limited number
of originating points,tending to lead to high costs of hotel and resort operation.
Table A3 indicates the level of arrivals for individual countries in the region.
In global terms the tourism in the South Pacific is small,with the region receiving less
than approximately 0.15 percent of world tourist arrivals.
Although there are approximately 1,500 tourism related businesses in the region,the
majority of which are small and medium sized businesses.This modest size of the
industry,leads to a limited market access.
Importantly for the future,tourism
has been widely identified as a key sector for future economic growth and the
provision of employment.At regional level it is identified as a priority sector
for development and for the alleviation of poverty.
A majority of the SPTO member countries offer incentives to new investors. The nature, scope and duration of incentives vary markedly between each country. In some cases, clear written guidelines are available. Other countries do not provide documentation but assess the level and type of incentive or concession for each individual investment proposal. At present, a number of countries have indicated that they are in the process of revising their investment policies.
The specific tourism related investment incentives offered by each SPTO member country at the time of this publication are listed in the individual country profiles.
There are relatively few areas of economic activity which are not open to overseas investors. In PNG for example, several activities are restricted to foreign investment, including:
- land transportation;
- manufacture, wholesale and retail sale of handicraft
and artefacts; coffee and copra production and export;
- small-scale alluvial gold mining; and
- coastal fishing (within a distance of five kilometres of the shoreline);
Most SPTO member countries have some form of legislation and regulations governing the formation of companies and other business entities. Generally, it is up to the overseas investor to determine what form of business structure is most appropriate and the circumstances of each project.
Wages and salaries in the SPTO member countries are low compared with those in the developed and industrialised countries. They are, however, higher than in most of the developing Asian countries such as China, Vietnam and Indonesia.
The SPTO member countries generally have a shortage of semi-skilled and skilled workers and experienced business managers. Many overseas investors are required to provide training for local workers. Indeed, this is an aspect of foreign investment strongly favoured by most SPTO member country Governments.
Several SPTO member countries have established measures that provide minimum requirements for employees, in such areas as wages, working conditions and retirement benefits.
The SPTO member countries are generally free of labour disputes. While trade unions do not exist in all of the SPTO member countries they are not prohibited in any of the countries.
Capital markets in the SPTO member countries are not highly developed, other than Fiji and PNG. Most facilities exist to assist in the financing of new businesses. The extent to which finance is available for overseas owned or controlled businesses varies between SPTO member countries.
In some of the SPTO member countries, government sponsored development banks or provident funds are able to provide funds for development projects. Provident funds are usually managed by statutory corporations.
The taxation regime varies widely between SPTO member countries. Specific details on company taxes and personal income taxes as listed separately under each country.
The two common types of limitations imposed on foreign investors in the SPTO member countries relate to access to overseas workers and access to land.
Table
AI provides details for each of the SPTO member countries.
It is not possible in an investment guide like this to cover the full range of information of potential interest to overseas investors, especially as many SPTO member countries lack readily available reference material.
Each country review contains at least one contact address where interested investors may gain more comprehensive and detailed information.
It is strongly recommended that investors visit countries they are interested in to get a first hand view of the investment opportunities, advantages and disadvantages.
SPTO acknowledges information obtained from Tourism Investment Guide in the Pacific Islands by the Pacific Islands Trade and Investment Commission.
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