Despite the gloom and a growing sense of doom towards the end of this year because of the worldwide financial crisis, the past 12 months have been quite significant for the general Pacific business environment, though for much of the early part of the year, the region had to struggle because of the impact of peak oil and high food and commodity prices.

Perhaps the most important of the significant developments for the business environment was in the telecommunications and information technology fields with the unprecedented expansion of mobile phone services across several islands nations including Tonga, Papua New Guinea, the Solomon Islands, Fiji, Vanuatu and Kiribati and a few others still in the offing.
This expansion saw competition between two or more players and the inevitable consequence of better services and cheaper rates.

Having been subjected to some of the most expensive mobile phone tariffs in the world, competition saw rates plummet to the delight of both business and individual users.
Hospitality industry representatives in Vanuatu said communication costs had fallen by as much as 30 percent after competition was introduced in that country.

Services like roaming, cheaper international connectivity and data access (internet and email) through the mobile network are becoming increasingly commonplace throughout the islands. These moves will undoubtedly stimulate the business climate across the islands in coming years.

An international study of the telecommunications industry in emerging Pacific Islands markets predicted this year that mobiles will outstrip fixed line phones within the next three years.

Deregulation of the telecommunication industry in several island economies has also seen internet access rates become increasingly affordable while bandwidth capacities have been growing simultaneously. Options for island governments to tap into undersea cable networks also became available in the past year, notably the French cable that has brought such an opportunity to the Cook Islands, although not without much controversy on the cost and pricing issue.

The past year also saw several developments in the IT corporate sector with company ownerships changing hands in Papua New Guinea and Fiji as well as new companies setting up shop or existing ones scaling up operations in the IT services and business process outsourcing sectors especially in these two countries that are leading the IT revolution in the islands region.

The coming mining boom

Quite a number of prospecting and mining contracts were signed across the Pacific in the past twelve months --the most important ones being in Papua New Guinea, Tonga, the Solomon Islands, the Cook Islands and Fiji.

One company has already presented the ore of gold it mined in the Bismarck Sea to the mining ministry of PNG, raising great hopes of ushering in an era of what may well turn out to be the gold rush for undersea minerals in the world’s least explored region—the Pacific Ocean.

Similar contracts were also signed in Tonga, Samoa and Fiji where prospecting work has already begun with contracts for actual mining still on the negotiating table in some cases.
In addition, the past twelve months saw hectic activity among island nations to redraw their continental shelf boundaries in time for the March 2009 United Nations’ deadline for submissions aimed at increasing their exclusive economic zones (EEZ) under the Law of the Sea.

Australia and New Zealand have already had their submissions accepted and have been successful in adding several millions of square kilometres to their EEZs over the past few months. The two nations have been helping island countries prepare their submissions along with SOPAC and other international agencies in time for the deadline early next year.
This activity has brought a number of issues into the spotlight --ranging from protecting the interests of the island nations’ sovereignty to protecting their environments and fragile marine ecosystems. Environmental groups have already begun raising concerns about the methods that are being used for prospecting and mining.

The world financial crisis

The effects of these impressive steps in telecommunications, however, may take a while to translate into any tangible benefits in the region because of the impact the financial crisis will have on the world economy for months.

Even at the best of times, Pacific islands economies are slow growing except in the case of the Melanesian bloc, which has seen impressive growth in the past few years because of the mining boom and the continuously growing demand from China and to a lesser extent from India.

This rate of growth is expected to slow down but the effects are yet to be seen because the full impact of the credit crisis is yet to percolate down to the Pacific islands.

The effects that have been most discernible in the past few months have been on funds invested by Pacific Islands governments.

Tuvalu, for example, does not expect to receive its $6 million annual proceeds from its invested trust funds in Australia and will have to look elsewhere to supplement its budget for next year.

Kiribati too has seen the volume of its fund diminished partly because of the crisis. Nauru is another nation that has seen its phosphate trust fund been affected.

Sourcing credit has been problematic in the islands even in normal circumstances because of issues related to immovable property-based collateral. But the market has tightened even more over the past few months because of the worsening worldwide credit situation.

As yet, no significant decreases in remittances have been noticed though overall tourist numbers marginally fell in the past few months owing to soaring travel costs.
Remittances and

seasonal employment