Strength Through Partnership

Samoa’s thriving subsistence economy is on display in Apia’s market. Photos: Scott Whitney

Speaking to a group of Pacific Island News Association delegates in Apia recently, Samoa’s Finance Minister and Deputy Prime Minister Misa Telefoni Retzlaff said that Samoa’s economic success over the last decade has made it the darling of international lenders and donors. Retzlaff says that in issues of transparency and accountability, “It’s as if we were the teacher’s pet of the Pacific. And we all know what happens to the teacher’s pet when he’s alone in the schoolyard.”

Talking to people around the country and sensing the confidence the citizens have in the government, the teacher’s pet will likely not be beaten up by its own citizens. Led by the Human Rights Protection Party, under Prime Minister Tuilaepa Sailele Malielegaoi, the country is moderately prosperous, has good roads, water, telecom and power infrastructure. The government has good relations with investors, donors and its own business community. External aid money has been put to good use, with heavy targeting of education and skill building in its domestic work force. With these key elements in place, along with a track record of racial, economic and political stability, the country is well positioned to attract not only aid donors, but private sector investors, too.

Unlike many smaller Pacific countries that have little or nothing to export, Samoa has several key exporting sectors. Fish (see our companion story on Page 20) is the biggest export earner. In the first six months of 2003, the value of fish exports was ST$1,917,608 (US$635,727). But this amount has fallen dramatically due to declining catches. The first six month’s fish earnings in 2002 were US$1,254,739 and, a year earlier in June 2001, the figure was even higher at US$2,035,527. This dramatic decline in catches is one possible cloud over Samoa’s economic horizon.

Construction on Samoa Tel’s new headquarters helps stimulate the economy. Photos: Scott Whitney

Next, in descending order after fish, the first six months of 2003 saw the value of exports of coconut oil at US$742,068; garments, US$496,765; beer, US$165,915; coconut cream US$81,848; nonu US$52,573 and taro US$39,629. There is one product that is classified as a “re-export” in government accounting. This is the manufacture of automotive wire assemblies at the Yazaki Samoa plant. In the first six months of 2003, this plant exported US$5,379,172 in auto wire assemblies, woven connections that are used in automobile electrical systems.

Tourism, an important sector in Samoa with significant growth potential, has been doing well. In the first six months of 2003, visitor arrivals were at 41,039, up from 40,480 in the first half of 2002. Revenue from tourism for the first half of 2003 was US$23,206,471, up 3 percent over the same period in 2002.

According to Finance Minister Retzlaff, the government is committed to supporting tourism development. Improving tourism infrastructure is a key priority as seen in the government’s willingness to tolerate losses in its national carrier, Polynesian Airlines. According to Retzlaff, who in August was handed responsibility for Polynesian by his Prime Minister, “What it comes down to is who will provide the service to Samoa if we should shut down Polynesian tomorrow? That would leave us at the mercy of one airline, namely Air New Zealand. We’ve had our difficulties with them. What we really need to do is emulate the success of [Fiji’s] Air Pacific. It’s been expensive, but we’ve learned our lessons. We have to bank on the new management’s ability to streamline and bank on tourism coming right for us.”

The government is also in partnership with Aggie Grey’s Hotel, investing 50 acres of government land near Faleolo Airport as equity in a project to build a four-star Aggie’s II. This will increase the hotel room inventory by 140 rooms, a 25 percent increase for the country.

Another key element in the Samoa economy are remittances—money sent from overseas Samoans to relatives in the home country. Remittance figures are down this year. At $US27,781,461 they are 7 percent lower than last year. No one is sure why this decline has taken place.

One of the hopeful things about the economic and political situation in today’s Samoa is the strong and open interaction between the business community and the government. (See also our interview with Finance Minister Retzlaff on page 18.) It helps that Samoa has one of the strongest Chambers of Commerce in the region. Its leadership is keenly aware of how well the country has done in recent years, and how serious the challenges are to continued growth.

Says Chamber Secretary John F. Boyle, “We had three-to-four years of unsustainable growth. We want to sit down with government and share our views. We hope our concerns will mean that action is taken. I’m personally very concerned about the decline in fish exports, which has been very dramatic. We need to look at building up the tourism and agriculture sectors, too. These are the only two areas where Samoa has a competitive advantage.”

Lesa ma Penn, a partner in a chartered accountancy, says his priority for the government is to “generate income for the rural areas. After the taro blight, we need to help people generate more cash crops like copra and coconut oil. We need to increase the disposable income for the rural areas, which in turn would really help our retail sector.”

Executive council member Patrick K. Chan Mow is himself a retailer who also wants the government’s agriculture division to help increase the variety and disease resistance of cash crops.

“On the positive side,” says Chamber President Norman Wetzell, a construction company executive, “we had growth above 6 percent annually for several years. There’s a lot of institutional strength in the country and we have a very open partnership with government and this is a big step forward.”

Chamber Vice President Sala Epa Tuioti adds that the Chamber “is in ongoing dialogue with government. The challenge is that the dialogue remain open. Reform takes awhile to get to all government employees, but there’s been a major shift in government attitudes.

“We’re such a small economy, there are sometimes outside forces beyond government control. We’re forming a common agenda between government and business. Some of us worry about the efficiency of government-run monopolies like the power company. We worry that business might be paying for the inefficiencies in these utilities,” says Tuioti.

Boyle adds that the business community does want improvements in the power grid. “There’s almost as much back-up generator power on island as there is on the grid.”

Chan Mow mentions another issue. “The duty was reduced on importing vehicles so that has increased the number of cars on the roads.” Tuioti adds, “demand is outstripping roading capacity.” Anyone who has been to Apia recently will have noticed the rush hour, bumper-to-bumper traffic—a sign both of current prosperity and of problems to come.

But despite the worries, the Chamber’s leadership is clearly pleased with a government that values the advice of business executives. Wetzell sums it up: “All the government ministers have an open door policy to the Chamber.”

And the current government seems to understand that the prosperity of Samoa lies in partnership, an attitude rarely found in most Island capitals. “This is a government,” says Finance Minister Retzlaff, “that sees the private sector as our engine of growth.”