On behalf of the Tonga Chamber of Commerce & Industry (TCCI) and businesses in Tonga I would like to acknowledge the very kind assistance of the House in allowing TCCI and businesses the opportunity to be consulted and make input into the Foreign Investment Bill 2019. We deeply appreciate this opportunity.
The Chambers usual consultation practice is to forward the Bill to members and businesses for comment. We then collate those comments and forward to the appropriate Ministry as the TCCI and private sector submission.
Given the urgent need for the House to pass the Bill, Chamber sent out the Foreign Investment Bill (FIB) 2019 on Wednesday 20 February 2019 for comment with a deadline of Friday 22 February 2019, 10am for receipt of comments.
We would like to take this opportunity to make some comments on the consultation process between government Ministries in general with Chamber and the private sector. Generally, we think the current process is good, but like all processes, improvements should always be sought and made. Chamber proposes the following to improve the current consultation process for consideration.
Comments on the Consultation Process and How It Could be Improved
2. Consultation on business related legislations must be timely.
(a) Businesses must be given sufficient time to consider & prepare
written submissions on pending legislation. Frequently in Tonga the person that should write, comment is also the manager of the
business and has limited time to prepare submission as well as running the business.
(b) In addition, consultations must be recent. For example,consultation conducted in say 2016 for legislation to be passed in 2019,
may well be dated and need to undergo a fresh round of consultation in 2019 as business conditions & environment may have
changed markedly from when the consultation took place.
the final decision in what constitutes a Reserved and Restricted List and in granting the Foreign Business Certificate and not the CEO
and Minister. The current proposed law may lead to favouritism if only two (2) people make all the decisions where a lot of money
will be involved
2. Section 19Again, regarding this Committee, it is proposed this same Committee should handle Appeals from dissatisfied
customers/clients and not the Minister alone. The process will be improved if the Committee is allowed to evaluate the worthiness of
3. Clause 15 (1) of the Bill states:“The Registrar shall determine an application for the issue of a certificate within 5 working days after
receiving the application.”
Surely 5 days is far too short to make a proper assessment and proper checking of most applications…Suggest that at the very
minimum a month would be a more reasonable time frame
4. Clause 6: Meaning of an overseas person
In this Act, “overseas person” means
(b)a body corporate that is incorporated outside Tonga
Does this mean that a Tongan subject (irrespective of where he lives)? who has a company incorporated overseas will have to go
through the process of applying for a certificate? Clarification is needed on this please.
5. In Part 3, perhaps make reference to the following:
Reserved list mainly to assist with local and small business enterprises and in some areas where large scale investment are not necessary to start a business investment.
However, there is scope for foreign investment, especially in areas beyond local financial capabilities, advanced technology and in areas of major tourism resorts etc. where investment capital of more than ToP5 million would be required as minimum investment level. Foreign investment in these areas would significantly boost Tonga's economy, create new markets and new local jobs and as a catalyst for other related small local businesses to thrive.
6. TCCI understand that the passing of the FIB will lead to the release of $35 Million in Budget Support by aid donors. Chamber proposes that government consider using part of these funds to support import substituting business that have operated
successfully in Tonga for more than 2 years eg in the manufacturing sector
7. A fair and credible system for vetting and approving foreign investment applications is needed.
8. On the whole the Bill is good; Its main drawback is that there is no mechanism in the Bill to ensure that there is ongoing and regular
consultation with the Tonga Business Community, most/many of whom are represented by the Tonga Chamber of Commerce &
Industry, and on whom the effects of foreign investment will be most felt.
9. This Bill when it becomes law will have significant impact on the Tongan-owned businesses. The disappearance or death of the
‘village falekoloa’ is a direct result of the Govt – over the past 20 years – not taking appropriate measures to assist and to protect
the Tongan falekoloa. Ko e kolo pe ko e ‘oku ‘ikai ke ‘iai ha fale koloa muli (eg Kolonga) ko e kolo ia ‘oku kei mo’ui pe e ngaahi
falekoloa ‘a e Tonga.
10. A “rethink” of our licensing system, immigration and employment laws and regulations is imperative.
11. To include in the Bill provision for the establishment of an oversight committee to oversee the administration of this Act and its
regulations, membership of which will include the CEO/Registrar, as Chairman, plus a Representative of the Chamber and a Business
person, and others as the Min sees fit. This will ensure constant/ongoing consultation and oversight…..NZ has the OIO – Overseas
Investment Office – which oversees overseas investment in NZ – to encourage but at the same time protect those business and assets
which NZ determine to reserve for New Zealanders.
12. This Committee will also consider and make recommendations on all applications for F/Inv certificates/approvals; also, be the
Committee to consider/review and make recommendations to the Minister for any changes to the Reserve, Restricted and Prohibited
Lists, and any other relevant issues to be included in the Regulations.
13. The consultation on Prohibited, Reserved and Restricted Lists is a must, and should be ongoing and regular. The only way that this
can be done is by establishing a Standing Committee written in to the Bill, as suggested above.
14. My concern with the Foreign Investment Bill 2019 is the risk that current local businesses face when they have spent considerable
time and money into developing not just their business, but the sector in which they operate as well. Some existing businesses have
over the years build up their business or sector from scratch ie identified a new export market oversea and build that market over
the years, taking a lot of risks along the way. Then government or aid donors, fund competing operations to operate in the same
market that was first developed by existing local business who took the early risks. Also, these first local investors may have build-up
supporting local industries involved in their sector value chain. Such local business that took the early risks & survived should no
to compete against govt or donor funded/subsidised companies - this is not fair competition. Let other local business compete with
them, but without govt or donor assistance just like the first businesses did - that is fair competition.
15.In addition, if foreign investment in the form of aid is used to start-up businesses in Tonga, once the donor leaves or funds
provided is finished Tonga may not have the capacity to sustain the business and it becomes a short-term handout rather than a
long-term business investment, not to mention undermining effect they would have on our local businesses. Government and donors
should ensure they do their homework and work only with Tongan partners who are capable & experienced to continue on with the
business once the subsidies or donor funds is finished.
16. Establishment of an advisory investment board, consisting of a good mix of representatives (public and private sector) from the key
sectors such as energy, Chamber of Commerce, Tourism Association, energy, environment and planning. This Board to give advice
from time to time in decision on major foreign investment and to help the Minister in making key decisions.
17. I thought somewhere in the beginning and Introduction, the overall position of Tonga in terms of foreign investment be
summarised and viewed. Perhaps something like this:
Tonga is committed to creating an attractive investment climate for both local and foreign investors. Tonga is politically stable with a
growing economy, offer skilled, well-trained but relatively low labour costs, a favourable exchange rate, conducive environment for
investment with political and economic stability. Tonga provides a highly favourable investment environment.