Tonga's biggest export is its people. It manufactures them (in large numbers), refines them in government and church schools, and adds value by encouraging them to pursue postgrad degrees. An oft-quoted fact which may be urban legend but does have some truth to it is that Tonga has the highest per-capita rate of PhDs in the world. Tonga's exports go to work in a range of jobs at every level, and send back money from primarily the US, New Zealand, and Australia to their families in Tonga. And so, unlike most economies that are affected by the business cycle and market forces, the economy here is heavily affected by the employment rate elsewhere.
This money sent by overseas families, or remittances, are the greatest single contributor to the economy. Topping most other Pacific island countries, Tongan families overseas send money back totalling around 30% of its GDP. So when those families aren't making as much- when unemployment in the US remains high or when prices in NZ go up, the Tongan economy goes down.
In the last three years, remittances have dropped about TOP$80 million. Furthermore, the National Reserve Bank of Tonga, the national bank that keeps all the statistics, among doing many other things, noted that the value of the goods being exported out of Tonga is often far higher than the actual money coming in because of those exports. And the government reserves are high and stable, but are heavily propped up by donor funding. The reserve bank saw this alarming trend, and called an "Economic Dialogue" to bring together members of parliament, representatives from the banks, church leaders, small business owners, and major players in the three current productive sectors of the economy- tourism, agriculture, and fishing- to put their heads together to create strategies to fix this hole in the economy.
I attended both days of the two-day dialogue and heard some very interesting comments and presentations. There seemed to be general concensus about the un-business-friendly tax laws and lisencing regulations limiting business growth - lisencing at least is due to change this year apparently after a review by the Ministry of Labour and Commerce. Comments came up regularly showing dissatisfaction at the recent Chinese reconstruction loan the government took that required all construction work to be carried out by Chinese companies, therefore channeling all the money back to China.
Many pointed out the need for the three main sectors of the
economy to work more together; as of the present, there's a lot of
misunderstandings and competition between tourism, agriculture, and
fisheries, to the detriment of all. Some called for government support of remittances, such as lowering fees for money transfer, or facilitating work programmes with other governments. Others asked why tourism was often
relegated to last place in priority, even though it brought in roughly 5 times the
amount of both agriculture and fisheries combined last year.
The dialogue was due to end at 4pm on Thursday, after a session coalating all the strategies into a recommendation for government. When 5pm rolled around and we were still hurriedly rushing through presentations on tourism, I knew there wouldn't be much strategy discussion that day. The package of strategies to boost the economy will be ostensibly coalated and presented next week, and based on what I heard during the event, everybody will be watching closely to see if the government follows one of the commenter's exhortations: "Knowledge is not the problem. We know what we need to do. Now we need to 'fai ha me'a!" (do something!).