Misa Wants More Foreign Investment

Pacific Islands finance ministers know that every dollar made or saved counts for the health of the national accounts of their small countries. Samoa's finance minister and deputy prime minister, Misa Telefoni Retzlaff, has six million dollars he wants saved for his treasury plus at least another million earned by Samoa's lawyer and accountants.

He's urged the Samoa accountants' association to help support the country's offshore finance centre in resisting pressure for its closure by the Organisation for Economic Cooperation and Development (OECD), a consortium of wealthy industrialised countries, that want to protect their revenue by closing down several offshore finance centres in the South Pacific used by their citizens to escape taxation.

He says Samoa's centre is worth a million tala in annual fees for local lawyers and accountants and at least 6 million tala revenue for the government.

OECD members are hypocritical since they ignore offshore business run by their own members, he says.

Samoa 2004-05 budget sets spending at a record 573.9 million tala and projects a 22.4 million tala deficit or one percent of GDP. It prescribes no new taxation and sets aside more money for health, education and buildings for the 2007 South Pacific Games.

It allocates 9 million tala for the government-owned Polynesian Airlines, a sensibly operated enterprise, currently in need of financial support through no fault of its own. The airline got 19 million tala in 2003 and paid a 10 million tala penalty for prematurely terminating the lease of a jet.

Samoa had a 3.5 percent growth for 2003. This is expected to fall to 2-3 percent this year because of a steep fall in the tuna catch, rising oil prices and heavy agricultural commodity, and local food crop losses caused by Hurricane Heta damage in January.

Inflation, which was down to 0.1 percent by the end of December 2003 from 8.1 percent at the end of 2002, had climbed to 2-3 percent by the end of February, pushed up by food prices sent soaring by crop losses. It is forecast to run at an average of three percent through the year as the impact of rising fuel costs becomes more pronounced.

Misa told parliament that the government will sell its shareholdings in Computer Services Ltd, National Pacific Insurance, Hellaby Samoa, a meat packing business, and a 15.5 percent stake in the highly profitable Samoa Breweries. Carlton Brewery Fiji Ltd, which owns 78.3 percent of the Apia brewery, has offered to buy the government's shares.

The Samoa Broadcasting Corporation, Samoa Shipping Services and the government agricultural supplies store will be sold in the next one to two years.

He says the airline is vital to the delivery of tourists and after three years of losses is expected to return to profitability within two years. The International Finance Corporation is advising on the airline's affairs. The 37.6 million tala health budget allows for 2.06 million tala for establishing a dialysis unit to curb the high cost of sending patients for treatment in New Zealand.

Samoa's tourism industry, for years stunted by an inadequacy of high-class accommodation, will be embellished by two new luxury resorts and possibly a third.

The family owners of a South Pacific icon, Aggie Grey's hotel in Apia, have set a May 2005 opening for a 46 million tala 140-room beach resort and golf course under construction on a 220-acre site near Faleolo International Airport.

The government has approved a 54 million tala resort to be built on a small island it leased to a New Zealand developer, Gordon Day. The first phase of 40 rooms is due to open in 18 months to be followed by penthouse apartments and sports facilities.

In April, Richard Chiu, owner of the Warwick hotel chain which has properties in Fiji and Vanuatu, visited Samoa to discuss a hotel proposal. Misa has announced that a Japanese company, Yazaki, which employs more than 2000 people in an electrical component assembly plant in Samoa, has won a General Motors contract that guarantees it work until 2010.

He told a law society meeting that Samoa isn't attracting sufficient foreign investment partly because, according to a World Bank study, foreign investors complain it takes too long to establish businesses in the country. Foreign investment is needed for the privatisation of some government assets. In a privatisation policy published in April, the government says that all government bodies are now required to operate commercially for a profit although some will continue to have to be subsidised.

Those that won't be privatised because of their strategic or social importance are the airport's authority, electricity corporation and ports and water authorities.