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Outgoing Chamber President concerned with foreign investors

By Aigaletaulele’ā F. Tauafiafi APIA, Samoa (Samoa Observer, Dec. 30, 2010) – Samoa has been warned.

The riots in Solomon Islands and Tonga that destroyed more than 90 percent of Chinese owned businesses could happen here.

The warning comes from the outgoing President of the Chamber of Commerce, Lemalu Sina Lima as businesses gear for a tough 2011.

"It’s very concerning seeing that foreign investors are setting up everywhere in the retail sector, she said. This is very visible in past six months. The private sector is very concerned as the Foreign Investors Act exits to protect the smaller operator and Samoan people in areas where there are too many players in the market. And the retail corner store is one of them. We’re seeing so many retailers that are foreign investment."

The Act has a reserve schedule protecting five sectors: Buses, Taxis, Vehicles for Hire, and Retailing and Sawmilling.

It’s very clear in its wording, "The business or economic activities listed in the Schedule shall be reserved for citizens of Samoa exclusively, and no approval may be given under this Act, or any other law, for a non-citizen to own or participate in any business or venture that includes any of the activities in the Reserved List."

Commenting on the violent 2006 riots in the Solomon Islands where 90 percent of Honiara’s Chinese-dominated business district were burned, civil servant George Manimu told local newspaper the Solomon Star: "business areas, often referred to as reserved for nationals, have become dominated by Asian entrepreneurs.

The actions of the people (the riots), although criminal, reflects the release of bottled up frustrations and anger that they could not contain any longer."

The same issue was behind the Tonga November 2006 riots noted Lintner, "there were hardly any Chinese-owned grocery stores in the capital Nuku’alofa 20 years ago. Now, more than 70 percent are owned by newly-arrived Chinese, whose wealth and savvy have pushed local shopkeepers out of business."

This concern was written about by Swedish journalist, Bertil Lintner and author on several works on Asia in 2007.

"Fear of domination by economically more powerful immigrants may spark further clashes between Chinese and locals in the Pacific island states, introducing unrest in a region that until now has been relatively peaceful."

And this is the same concern aired by Samoa’s Chamber of Commerce today.

"Don’t get me wrong, said Lemalu. We welcome foreign investment for a big hotel chain and the like, but when it’s a small corner shop, well that’s what our people are doing. As long as we’re a LDC (Least Developed Country) I don’t think we need foreign investors in areas where our people are capable. The last thing we need is all the corner shops to be owned by a large chain of people that are wealthier and are more capable than our people at running a retail store because this is retailing, it’s about making 5 and 10 sene [US 2 cents and 4 cents] per item. So it’s not really something that we should open up to foreign investors. There’s no way our people can compete with foreign investment in that type of business."

There is also the aesthetic environment and tourism perception of Samoa as a paradise that may be damaged as a result.

"We all know that in Tonga there are those overseas investors literally operating behind bars.

They take your money through a pigeon hole and pass you the goods through the same pigeon hole. And everywhere else they’re barred up, why? Because they’re protecting themselves from the locals. We don’t want that here in Samoa.

"Here in Samoa, I don’t think a foreigner operating in the village will be protected. Village councils still have a big say in law enforcement so villagers are protected by the village council so I don’t think our young people, in my own opinion, would see a foreign shop as someone that the village rules apply to. Essentially our youth will probably feel they won’t be penalized if they dong a foreigner over the head because they’re not from the village."

An example where local ownership works well is the bus sector.

"Traditionally the guys from the village have always owned the buses, said Lemalu. Savai’i for example is full of bus owners and the bus association is full of our high ranking chiefs and orators so that’s a great protection let’s hope that will not be penetrated with foreign ownership. But the retailers have been feeling it. Our traditional retailers and small businesses are starting to highlight it and it’s an area the Chamber membership really thinks should be tightened up."

To better administer the Act, President Lemalu says there’s a need to tighten up certain areas. Company registration is one that needs greater vigilance.

"The requirement [for a foreigner to set up business] is they must have a local partner but we doubt those local partners are true partners in the real sense of the words. They may be overnight partners who just sign the agreement as partner for the sake of establishing and then those partners are paid off and never seen again and the overseas investor are allowed to grow. And we as Samoa’s private sector is concerned about this because there’s the risk that all of the profits made are taken overseas. And more importantly we don’t want to see the social issues and crime climbing and impacting on foreign business owners."

In 2007, Timil a Papua New Guinean commented on Bertil Lintner’s article, highlighting impacts if an Act is not monitored closely. Inaction that can lead to tensions and worst, to riots as seen in Tonga and Solomon Islands, 2006.

"I am from Papua New Guinea (PNG), a legal officer to the Investment Promotion Authority of Papua New Guinea. Chinese immigrants are increasing every year in PNG. Some are entering illegally into the country and also doing business illegally (I am in the process doing of an investigation).

"[The] PNG government has removed most reserved activities from the reserve list and Chinese are taking advantage of it. They are doing small businesses that Papua New Guineans can do. The Papua New Guineans are unable to compete with the skilled Chinese. It is true that this is starting to cause a tension between them. I have more to say but I just stop here."

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