Criticism of new foreign investment guidelines are ‘misleading’, says Minister, but petitioners say it may harm future generations

Tonga’s new regulations for foreign investors benefits government and the locals, says the Minister of Trade and Economic Development, Dr Viliami Uasikē Lātū.

Telēsia Mā’asi (L) handing the petition to Parliament Deputy Chief Clerk Dr Sione Vikilani. Photo/Tonga Parliament

He was responding to a petition criticising the government’s policies. Petitioners say the new regulations endanger future generations by potentially taking away jobs from local people.

Hon. Lātū told Kaniva News the petition was misleading.

He said investors could only apply to invest in the “processing and marketing” of produce and services they were allowed to do in the kingdom.

Revised regulations were approved by the government this month under the Foreign Investment Act 2020. They have yet to be made available online. Parliament has been contacted for a copy.

The Foreign Investment Regulations 2021 allow foreign investors to do business in Tonga, but they must have a local business partner and hold a limited business license.

An overseas investor cannot carry on business in Tonga that is prohibited under the regulations as a prohibited or reserved activity.

The overseas investors also cannot carry on a business activity in Tonga which is “a restricted activity unless the overseas person satisfies the conditions prescribed by the Regulations for carrying on that activity.”

The regulations list retail sales of non-specialised stores with food, beverages or tobacco on the “restricted list”. Foreign investors are expected to have at least $250,000 in paid up capital for companies in the form of cash from the operating date, to be fully brought into Tonga within the implementation period.

Activities such as growing of fruit bearing vegetables in the form of squash and growing of perennial crops in the form of pandanus, growing of kava and silviculture and other forestry activities relating to paper mulberry and scandal wood are also listed as restricted.

Foreign businesses can only invest in these areas if they have at least $250,000 to contribute or paid up capital for companies in the form of cash from the operating date, to be fully brought into Tonga within the implementation period.

Global trend

The government’s Fishing chief executive Dr Tu’ikolongahau Halafihi said the policy was in line with a “global trend” that had proved beneficial in New Zealand, the US and UK.

The Trade and Economic Development’s chief executive Distaquaine Pele Tu’ihalamaka said Asians in Tonga counted as foreign investors who hold valid Tongan passports and could do whatever business they wanted.

She said the policy was aimed at bringing investors from overseas who could compete with these Tongan businesses in areas like retail sales.

“Say for example we can get an investor from New Zealand who wants to set up just one Pak N Save store here in Tonga that’s enough and they will bring new technologies and things we could not get here in Tonga,” she said.

The petitioners

Critics of the policy believed otherwise.

The Tongan National Workers’ Council claimed the Minister’s “processing and marketing”-only campaign was untrue.

They claimed this was not specified in the regulations.

 “The government will open an opportunity to allow foreign investors to come to Tonga and grow squash pumpkins, pandanus plants, kava, paper-mulberry, scandal wood and operate retail convenience stores”, the council said in Tongan.

They said Tonga’s children would be badly affected by this.  

“There is nothing in the regulations which state that foreign investors can only invest in the processing and marketing of the produce,” the council said.

“If these investors come and do what we could afford to do what are we going to do then? Where will our children end up at in the future?”

A petition by the policy’s opponents was submitted to Parliament yesterday, August 23.

The Parliament said the petitioners were unhappy with the government’s Foreign Investment regulations for 2021.

It is understood copies of the petitions were also submitted to the king’s office as well as the Prime Minister.

The petitioners wanted authorities to scrap the policy which allows investors to operate retail sale stores as well as growing squash pumpkin and perennial crops.

Sometimes when a business is growing, it needs a little help.

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