Tonga

Tonga at a Glance

Location, Climate and Geography

Map of TongaTonga is known as the Friendly Islands and as the last Kingdom of the South Pacific it is located about 4,000 kilometres (2,500 miles) southwest of Hawaii and about 1,600 kilometres (1,000 miles) northeast of New Zealand, just below the tropic of Capricorn. The country consists of 171 islands, clustered into 3 main groups: Tongatapu, Ha’apai, and Vava’u. The total land area is 748 square kilometres (289 square miles). The coastline is 419 kilometres (260 miles). The capital Nuku’alofa, where most of the central government administration is situated, is located on the main island of Tongatapu.

Climate in Tonga is characterized by a Wet Season (Nov- April) and Dry Season (Oct-Mar). About 50-60% of the rain (up to 1,700mm per year) falls during the wet season. During summer the temperature is between 25-32ºC and between 20-25ºC during winter season the highest temperature recorded in Tonga is 37ºC and the lowest is 8 ºC. This balmy climate, combined with very fertile soils, is instrumental in the development of the agricultural and livestock industries.

Flag of Tonga

Population

The friendly population of Tonga was composed of 102,321 inhabitants in 2006 (2006 National Population Census). A high birth rate is counterbalanced by an important emigration, which reaches 15.1 ‰. Most of this migration is to New Zealand, but Tongans have also settled in Australia, the United States and Europe. The population is predominantly of Tongan (Polynesian) ethnic origin, although there are small numbers of Europeans and Chinese. The Tongan population is very young, with nearly 42% under 15 years of age. Those between the ages of 15 and 64 make up 54% of the population, with the remaining 4% 65 years old and over. For more information on the Tongan population

Political Status

The Kingdom of Tonga is a hereditary constitutional monarchy and is the only Pacific Island nation with a monarchy. The country has never been colonized and was a protectorate of Britain from 1900 to 1970. The government is made up of the King, the Privy Council, the Cabinet, the Legislative Assembly and the Judiciary. Its constitution was established in 1875.

The population and the People’s Representatives have asked for a more inclusive form of government that will enhance competition, accountability and transparency and improve the business environment in the Kingdom to promote economic growth. Businesses now in Tonga, both local and foreign-owned, are expecting positive changes.

Up to date, Tonga is a member of the WTO, UN, EU, Commonwealth, World Bank, ADB, SOPAC, SPC, FAO, One of the reasons for joining these large organizations is to promote the investment environment.

Language and Education

The country has a good portion of highly educated people. Literacy is estimated at more than 98%. The 2 official languages are Tongan and English, and a fair portion of the population can communicate in English.

Normal Business Hours

The normal working hours in Tonga are from 8:30am to 4:30pm 5 days a week (Mon-Fri). However some organizations and businesses are open from 8:00am to 5-6pm 6 days a week (Mon-Sat).

Overall economic structure

Tonga is dependent on foreign aid and remittances from Tongans living abroad, but also on tourism (39,000 visitors in 2006), agriculture (squash, vanilla beans, yams, coconuts) and fisheries exports. Together agricultural and fish exports make up two-third of total exports. The Government is seeking to encourage private-sector led economic growth, and to reinforce three major sectors of development: tourism, agriculture & fisheries.

New Foreign Direct Investment is beginning to have an observable impact on the economy. A more competitive market and higher foreign investment is expected to lift growth after the public sector reform. In agricultural and fisheries export, new facilities and improved infrastructure are created to help boost the industries. It is a positive sign of economic improvement in the country.

Why invest in Tonga?

Tonga can offer much to investors, including attributes that cannot be found elsewhere in the South Pacific region:

An economy with strong potential

  • Developed financial sector and presence of international banks with no capital controls
  • Currently under-developed tourism sector with high potential, including in ecotourism
  • Emphasis placed on Private-Sector led economic growth

A strong human capital

  • Well-educated, friendly and welcoming English-speaking people
  • A unique cultural heritage

Attracting natural resources

  • extremely rich soils and excellent growing climate
  • varied marine life and marine culture

A strategic location

  • Good transportation and communication links to Australia, New Zealand, the United States and other South Pacific Countries
  • Location on the international dateline

Investment Opportunities

The Government of Tonga welcomes Private Sector investment in all sectors of the economy, and believes there are areas of great comparative advantage for Tonga. These include: tourism, agriculture and fishing sectors. Government will encourage investment in these areas to the fullest extent possible. Opportunities also exist in manufacturing and in the construction industry and Private Sector work in these areas is encouraged.

Tourism

The tourism sector has great future potential. Within the tourism industry, sustainable tourism, drawing on the unique and largely untouched natural environment with a strong and authentic local culture, was considered to be a significant opportunity. Traditional Tongan customs and culture provide a friendly welcome for visitors. Promoting tourism should help to create jobs in Tonga as well as bring in revenue to Tonga-owned and joint-ventures activities. Investment in tourism can be targeted most crucially in the accommodation sector, in order to expand the number and improve dramatically the quality of accommodations available to tourists within Tonga. Investment should also be solicited for tourism-related activities, including high-end restaurants, tour operators, and other activities that will make a tourist come and stay in Tonga.

Fisheries and Marine Businesses

Fishing is a key contributor to the Tongan economy. It is also an important source of income and food for a significant portion of the population. Commercial fishing and aquaculture are established industries that require support in both “hard” and “soft” infrastructures. In particular, investment is sought to assist in exporting, with an example of such possible investment a purpose-built export pack-house, located wharf-side with room to expand if and as the industry grows. Other investment to expand the industry can be located in bottom fishery and commercial sport fishery, with perhaps an eye on expanding tourism-related fishing.

Agriculture

Agriculture remains the most important source of livelihood for many Tongan people. It contributes around one quarter of GDP, and together with fish, constitutes almost all of Tonga’s merchandise exports. Tonga has land and a climate suitable for a wide array of agricultural, livestock and horticultural pursuits. Tonga provides opportunities for potential investors, particularly those that lead to agro-processing and export, provision of agricultural stores, and support services are also opportunities. Specific investment in the agricultural industry in Tonga could be made in several areas, including in grains (especially maize and soy beans) and livestock (poultry – including eggs – pork and beef). The industry believes that there are synergies to be had between the two, with grains driving a feed industry, which in turn would dramatically improve the viability, scale, and options of livestock. An objective of the Government and the industry would thus be for import substitution, essentially to attain self sufficiency in these items grown in Tonga. building on these investments, it is possible that Tonga can bring in higher-level investments to support a premium beef industry.

Manufacturing

While acknowledging the constraints imposed by small market size, the Government is supportive of growing Tonga’s manufacturing base. Current production includes furniture, food and beverages (bakery lines, soft drinks, and beer), fabrication using imported materials, manufacturing of construction materials, and small boat building. Paint is exported from Tonga to a number of nearby Pacific Island markets.

Source Tonga Chamber of Commerce and Industry