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RAROTONGA, Cook Islands (September 22, 1999 – Cook Islands News)---Economist Vaine Wichman says the main problem with Prime Minister Dr. Joe Williams' economic theory "is in his assumption that there is no capital or capacity in the local private sector or community to boost growth by injecting in investment dollars."

"This is a sad observation," says Wichman.


She says at the beginnings of the reform, there was a critical mass of die-hard locals - both PRs and brown skinned islanders - who dug themselves into the economy's doldrum trenches and persisted.

"I'm talking here about the growers who agreed to switch from traditional crops to exotic. I'm talking about accommodators and tourist related businesses who reinvested in human and technological skills to market and promote their units independently. I'm talking about the handicraft producers in the outer islands who revised production quotas; and the mama's along the side of the road at Punanga Nui who patiently read booms and slumps in sale of their produce in a month."

Wichman says, "This is the observation that the PM continually misses out on in his economic growth model of today. These were the critical masses who had to pull out reserves and risk all their property with banks to restructure their operations without public sector help."

She adds one only needs to look around the Cook Islands to notice a lot of deferred maintenance programs. She agrees with the PM's observation that no one in their private sector right mind would build the Sheraton and so forth.

"But was it a viable option in the first place?"


Wichman believes Dr. Williams' economic advisors have failed to tell him that in the years 1997 to 1998, the banking sector remained confident in an economy in recession.

She says this is shown in banking statistics put out by the Statistics Office, where loans to all industries increased by 4.8% in 1997/98 FY ($57.5 million). During the real recession year 1996/97, loan advances dropped to $54.9 million, a drop of 5.7% from the previous fiscal year.

"So the current government's observations that there is no capacity in the local private and community sector of the economy needs to be corrected.

"Government investment interventions into the economy should be in those areas that the private sector cannot invest in.

"Government must ensure it invests wisely because if it is not money from all taxpayers of this country, it is taxpayers money from another country," says Wichman.

"I believe we all need to remind ourselves of the events of 1996 and what happened in that year, and how we all turned inwards as a nation, family and people to build ourselves up because the international community wasn't going to."

She says, "There was a critical mass of people then who voted to dig themselves into trenches to weather the battle then. I see the same people as I go about community and business timetables. They are the unsung heroes of this nation. Let us always remember this: Lest we forget."

For additional reports from the Cook Islands News Online, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/Cook Islands New Online.

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