2013
MCTL Quarterly
Business Update
April – June 2013
A quarterly update on business registrations, foreign investments, company
registrations, and inspectorate trends recorded by the Ministry of Commerce,
Tourism and Labour
Policy Division
MCTL
24-09-13
Table of Contents
1.
Executive Summary ........................................................................................................................ 3
2.
Business Licenses ........................................................................................................................... 4
3.
4.
5.
2.1
New and Operating Business Activities.................................................................................. 4
2.2
Closed Business Activities ...................................................................................................... 5
2.3
Nature of Licensed Business Activities in Tonga ................................................................... 6
2.4
Location of Licensed Businesses in Tonga ............................................................................. 6
Foreign Investment Registrations ................................................................................................... 7
3.1.
Number of Foreign Investments Received.............................................................................. 7
3.2.
Nature of Foreign Investments Received ................................................................................ 7
3.3.
Estimated level of investment ................................................................................................. 8
Company Registrations ................................................................................................................... 8
4.1.
New Registered Companies .................................................................................................... 9
4.2.
Location of registered companies ........................................................................................... 9
Inspectorate Statistics...................................................................................................................... 9
5.1.
Business License Regulatory Enforcements ........................................................................... 9
5.2. Regulatory Enforcements of the Price and Wages Control Act 1988 and Weights &
Measures Act 1988 ........................................................................................................................... 10
6.
5.3.
Consumer Complaints ........................................................................................................... 11
5.4.
Consumer Protection Regulatory Enforcements ................................................................... 11
Implications for MCTL ................................................................................................................. 12
MCTL Quarterly Business Update: Quarter1 Jan – March, 2013
Page 2
1.
Executive Summary
The Quarterly Business Update Report is a quarterly publication of the Ministry of Commerce,
Tourism & Labour. It seeks to better inform stakeholders of business trends in the country, using data
collected by the Ministry on business licence registrations, company registrations, foreign investment
registrations and regulatory enforcement activities during the period of April - June 2013.
Statistical business trends identified from April - June 2013 include the following:

There were 320 renewed business licenses, and 165 new business licenses issued during the
period from Apr – June. There was a decrease in the number of new licenses issued (-53%)
compared to the same quarter in the previous year. There was however an increase of 70% in
business licence renewals from the same quarter of the previous year.

A total of four businesses closed during the June Quarter 2, 2013. The same amount as the
previous quarter and an 81% decrease from the same quarter in the previous year.

42% of business activities registered during Quarter 2 were in the Service sector, followed by
39% in the Trade sector, 14% in the Tourism sector and 5% in the Manufacturing sector.

Business license registrations in the second quarter of 2013 identified 60% of licensed
business activities were registered in Tongatapu, followed by 14% in Vava’u 12% in ‘Eua,
10% in Ha’apai and 4% in the Niua’s.

There were a total of eight Foreign Investment Registration Certificates (FIRC’s) issued
during the Second Quarter of 2013, with one coming from Fiji, two from New Zealand, and
five from ‘Other’ which includes USA, Europe, Asia. The number of FIRC’s issued
decreased by 20% from the First Quarter of 2013.

There were three FIRC’s issued for both service and trade investments while two were issued
for tourism related activities. There was an overall estimated investment cost of
TOP$2,709,951.

Employment opportunities from the issued FIRC’s are estimated to be 81 Tongan employees
and 71 foreign employees. Five of the FIRC’s were issued for Tongatapu, two for Vava’u and
one for Ha’apai.

There were 20 new companies registered during the Second Quarter, with all of them coming
from Tongatapu.

The Inspectorate Division conducted inspections of 778 business activities in all of Tongatapu
during the Second Quarter of 2013. From these inspections, one closing letter was issued.

A total of 209 retail stores were inspected, with 128 weights and measurement equipments
tests being carried out.
MCTL Quarterly Business Update: Quarter1 Jan – March, 2013
Page 3

51 inspections of existing Service Stations and their individual bowsers were conducted
during the Second Quarter of 2013 to enforce the monthly maximum petroleum prices
regulated by the Competent Authority under the Price and Wage Control Act 1988. Five
bowsers were found to be non-compliant, and therefore rejected. There were 272 calibrations
of bowsers carried out also.

There were eight complaints received about consumer goods, three about service, and one
regarding wages.

There were 222 consumer inspections completed with 76% of inspections resulting in no
breach of acts or regulations, up from 47% in the First Quarter of 2013.
The Second Quarter has bought in lower business registrations due to the majority of businesses
registering at the start of the new-year.
The impact of the reinforced regulatory enforcements by the Ministry on business compliance
suggests a positive implication on the promotion of businesses as well as improved health and safety
for the general public. The ministry however recognizes that there is a need to consolidate and
strengthen its inspectorate functions for greater compliance achievements.
2.
Business Licenses
2.1
New and Operating Business Activities
The number of new business registrations for the Second Quarter of 2013 is considerably lower than
that of the same period in the previous year, see Figure 1. However new tourism sector business
registrations have increased from 12 in Quarter 2 2012 to 28 during Quarter 2 2013. The tourism
sector represents an important sector within the Tongan economy as a major source of funds to The
Kingdom of Tonga.
MCTL Quarterly Business Update: Quarter1 Jan – March, 2013
Page 4
400
348
Business Licences
350
320
300
250
188
200
150
165
Renewed
New
101
100
50
-
June - 2011
June - 2012
June - 2013
Quarter
Figure 1: New and re-registered business license applications during the June Quarter of 2011, 2012 and
2013. Nb. 2011 renewal data not available
2.2
Closed Business Activities
The number of closed businesses recorded during the Second Quarter of 2013 has decreased
compared to the same quarter of 2012. Four businesses closed during the Second Quarter 2013 while
21 businesses closed down in the same quarter of 2012. The number of closed businesses was the
same in both the First and Second Quarters of 2013.
25
Closed Businesses
20
15
10
5
Mar-2012
Jun
Sep
Dec
Mar-2013
Jun
Figure 2: Number of closed businesses over two years up to Quarter 2 2013
MCTL Quarterly Business Update: Quarter1 Jan – March, 2013
Page 5
2.3
Nature of Licensed Business Activities in Tonga
As can be seen in Figure 3, the service sector has had the largest amount of new business
registrations, at 74 new registrations or 45% of all new business registrations. There were a total of
14, 28, and 49 new business registrations in manufacturing, tourism, and trade respectively.
180
160
Business Licences
140
120
100
2011
80
2012
60
2013
40
20
Manufacturing
Services
Tourism
Trade
Business Activity
Figure 3: New business licenses by sector for June Quarter, 2011-2013
2.4
Location of Licensed Businesses in Tonga
At the end of June 2013, 60% of licensed businesses were located in Tongatapu, followed by 14% in
Vava’u, 10% in Ha’apai, 12% in ‘Eua, and 4% Niuatoputapu. Of the newly registered businesses,
83% are from Tongatapu, while 8% come from Vava’u, 2% from Ha’apai, and 6% from ‘Eua.
Niuatoputapu
4%
'Eua
12%
Ha'apai
10%
Vava'u
14%
Tongatapu
60%
Figure 4: Location of business registrations at end of June 2013
MCTL Quarterly Business Update: Quarter1 Jan – March, 2013
Page 6
3.
Foreign Investment Registrations
3.1.
Number of Foreign Investments Received
There were a total of 8 foreign investments registration certificates (FIRC’s) issued during Quarter 2,
2013. Figure 5 below shows the number of FIRC’s issued over the last two quarters, and shows that
there has been a 20% decrease since Quarter 1 of 2013.
Number of Foreign Investment
Registration Certificates Issued
12
10
8
6
4
2
Qrt 1
Qtr 2
Figure 5: Foreign Investment Registration Certificates issued for quarter 1 and 2 of 2013
3.2.
Nature of Foreign Investments Received
During the June Quarter, 2013, there were a total of eight FIRC’s issued. Of the new FIRC’s issued,
three were in services, two in tourism, and 3 in trade. Table 1 below shows each FIRC issued, where
the investment is being made, the investment country, business activity, investment amount, number
of local employment, and number of foreign employment.
As depicted in Table 1, it can be seen that five of the foreign investors are from Europe, and Asia.
While two are from New Zealand and one is from Fiji.
It can be seen in Table 1, that from the eight FIRC’s issued in the June Quarter, 2013, there will be an
estimated 81 Tongans employed and 71 foreigners employed.
The main location of issued FIRC’s are based in Tongatapu (5) while two are based in Vava’u and
one is to be based in Ha’apai.
MCTL Quarterly Business Update: Quarter1 Jan – March, 2013
Page 7
Business
Address
No. of
Foreign
Investors
Country
Business Activities
Investment
Amount ($)
No. of Local
Employment
No. of Foreign
Employment
Ha'apai
2
German
Tourist Accommodation
TOP 121,951.00
13
2
Tongatapu
1
Computer Sales & Services
TOP 8,000.00
2
1
Tongatapu
1
Bangladesh
New
Zealand
Construction
TOP 60,000.00
40
60
Tongatapu
2
Fiji
Fast Food Retail
TOP 5,000.00
3
1
Tongatapu
2
Japan
Food retail
TOP 110,000.00
5
2
Tongatapu
1
Taiwan
Hardware store
TOP 2,000,000.00
15
3
Vava'u
1
1
1
2
Environmental & Ecotourism Consulting
Tourism - Diving, Snorkelling,
Spearfishing, Sailing, Island Tours
TOP 5,000.00
Vava'u
UK
New
Zealand
TOP 400,000.00
2
1
Total
12
TOP 2,709,951.00
81
71
Table 1: Foreign Investment Registration Certificates Issued, June Quarter 2013
3.3.
Estimated level of investment
The estimated investment cost of all eight FIRC’s issued is TOP$2,709,951. This value is down from
the First Quarter investment of TOP$5,799,164. There were fewer FIRC’s issued during the June
Quarter of 2013. The average investment per FIRC in June was TOP$338,000, a fall from
TOP$580,000 in the March 2013 quarter.
Foreign Investment Cost TOP(Million)
7
6
5
4
3
2
1
Mar - 2013
Jun - 2013
Figure 6: Estimated investment cost for Quarters 1 and 2, 2013
4. Company Registrations
Comparable with business license registrations, the trend of the total number of company’s registered
increased by 2% from Quarter 1, 2013 to Quarter 2, 2013. There were a total of 20 new company
registrations during the 2nd quarter of 2013. There are now therefore 979 companies registered.
MCTL Quarterly Business Update: Quarter1 Jan – March, 2013
Page 8
4.1.
New Registered Companies
New company registrations saw a decrease in the Second Quarter of 2013 (20) compared to the same
quarter of 2012 (25). As shown in Figure 11, new company registrations tend to fluctuate around 25
per quarter.
40
37
33
New Company Registrations
35
31
30
30
25
26
23
25
30
26
20
20
15
10
5
-
Figure 7: Ney company registrations, showing Quarterly data from March 2011 – June 2013
4.2.
Location of registered companies
All of the newly companies registered during the June Quarter of 2013 were located in Tongatapu.
5. Inspectorate Statistics
5.1.
Business License Regulatory Enforcements
The Inspectorate Division conducted inspections of 778 business activities in Tongatapu during the
Second Quarter of 2013. From these inspections only one business was issued a closing letter and no
businesses were found to be operating without a valid business license. A comparison with the
previous last three quarters of the year 2012 indicates significant improvements in business
compliance for the first two quarters of 2013. For example, the number of businesses identified to
have failed to notify closure of business decreased from 58 businesses in the Fourth Quarter of 2012
to no businesses in the First Quarter 2013 and one business in the Second Quarter 2013.
The minimal rate of non-compliance suggests that the reinforced inspectorate functions of the
ministry are enforcing higher business conformity.
MCTL Quarterly Business Update: Quarter1 Jan – March, 2013
Page 9
5.2.
Regulatory Enforcements of the Price and Wages Control Act 1988 and
Weights & Measures Act 1988
A total of 209 retail stores were inspected, in the Second Quarter of 2013, to ensure the stores were
meeting the requirements. Under the act prices for regulated products need to conform to the
regulated minimum prices and weight and scales use must be correct. Of the 209 retail stores
inspected during the Second Quarter of the year 2013, no stores were found to be non-compliant.
Table 2: Retail store inspections April-June 2013
Price control/Weights and measures unit
Retailing Stores inspected
Closed during inspection
Weights and measurement equipment tested
Apr
May
58
0
4
Jun
84
0
58
Total
209
67
2090
128
66
12128
A total of 51 inspections of service station bowsers were conducted during the Second Quarter of
2013 to enforce the maximum price regulated by the Competent Authority. As a result, five rejections
were recorded of bowsers that did not comply and 11 bowsers were also found to be out of service.
The overall result from Quarter 2 2013 was that there were less bowser inspections than the previous
quarter, there were also fewer rejected bowsers, and fewer out of service bowsers. The value of
rejected bowsers is up however on the same period in 2012, due to there being fewer inspections and
more rejections there is a need for servicing of bowsers to keep up the standards.
80
70
60
Bowsers
50
Bowsers Inspected
Rejected
40
Out/Service
30
Closed
20
10
Jun-2012
Sep
Dec
Mar-2013
Jun
Figure 8: Bowsers tested by inspectorate, June Quarter 2012 – June Quarter 2013
MCTL Quarterly Business Update: Quarter1 Jan – March, 2013
Page 10
5.3.
Consumer Complaints
During the Second Quarter of 2013, 12 complaints were received, with eight received on consumer
goods, three on service, and one on wages. There were 20 fewer complaints during the Second
Quarter of 2013 compared to the First Quarter of 2013, and there were the same number of complaints
received as in June Quarter, 2012, as shown in Figure 13.
35
Complaints Received
30
25
Consumer Goods
20
Service
15
Wages
Others
10
5
Mar-2012
Jun
Sep
Dec
Mar-2013
Jun
Figure 9: Complaints received by inspectorate, March 2012 – Jun 2013
5.4.
Consumer Protection Regulatory Enforcements
Of the 222 consumer inspections carried out during Quarter 2, 2013. 54 (76%) were in breach. The
most common breach was found to be expired goods (65) followed by non English/Tongan goods
found (14), and incomplete label goods found (11). Businesses have improved in following consumer
laws as 76% of inspections during the June quarter resulted in no breach, up from 47% during the
March quarter 2013.
Table 3: Consumer protection unit findings, Quarter 1 & 2, 2013
Consumer Protection Unit
Consumer Inspections
(1) Defective Goods Found
(2) Expiry Goods Found
(3)Counterfeit Goods Found
(4)Misleading Goods Found
(5)Incomplete Label Goods Found
Quarter 1 2013
423
38
177
9
43
61
MCTL Quarterly Business Update: Quarter1 Jan – March, 2013
Quarter 2 2013
222
2
65
1
6
11
Page 11
(6)Non English /Tongan Goods
Found
Stores Inspected with no Breach
Percentage of total with no breach
62
198
47%
14
168
76%
6. Implications for MCTL
The Second Quarter of 2013 brought about a decrease in business license renewals and new
applications. This is expected however as most businesses apply for their licenses during the First
Quarter.
Analysis of the business license data indicates that businesses in Tonga continue to be concentrated in
the Service and Trade sectors with few new businesses in manufacturing and tourism. The new grant
provision of TOP$1 million for the manufacturing and tourism sectors aims to encourage growth in
these two sectors.
The business license data also continues to confirm that Tongatapu is the centre of business. There is
minimal business growth in Vava’u, Ha’apai, ‘Eua and the Niua’s. Hence there is a need for the
Ministry to consider how to stimulate rural growth and how to address investment constraints in these
outer islands.
Foreign investments have continued on a declining trend since the Second Quarter of 2012.
Investment costs have been fluctuating over the past quarters however the average investment did
drop during the Second Quarter of 2013. Irregularities in the type of investments and source of
investments suggest that there are no clear targeted incentives for foreign investors to invest in the
country. Nonetheless, given the ability of foreign investments to drive growth in other economies,
there is a need for Tonga to consider effective measures to stimulate investment in the country.
Investment costs have been fluctuating over the past quarters however the average investment did
drop during the Second Quarter of 2013.
The trend of the total number of company registrations are identified to have consistently increased
over recent years up to current. New company registrations tend to fluctuate around 25 registrations
per quarter.
The impact of the reinforced regulatory enforcements by the Ministry on business compliance
suggests a positive implication on the promotion of businesses as well as improved health and safety
for the general public. There is pressure on the Ministry to continue to strengthen and consolidate its
inspectorate functions given the positive impacts of increased compliance on the business playing
field and the welfare of the general public.
MCTL Quarterly Business Update: Quarter1 Jan – March, 2013
Page 12