What Are The Biggest Industries In Tonga?

By Benjamin Elisha Sawe on January 19 2020 in Economics

Aerial view of a beach in Tonga.
Aerial view of a beach in Tonga.

Tonga is a country located in Polynesia, and it is an archipelago made up of about 169 Islands out of which only 36 are inhabited. The country covers a land area 290 square miles and all the islands are scattered covering an area of 270,000 square miles in the Southern part of the Pacific Ocean. Tonga is home to 100,651 inhabitants, and 70% of the population lives on the main island of Tongatapu. The nearest neighboring island nations include Fiji, Samoa, Niue, Vanuatu, Wallis and Futuna, which is a French territory, New Caledonia, and Kermadec, which is part of New Zealand. The economy of Tonga is characterized by a huge non-monetary sector which relies heavily on remittance from its population; half of whom live abroad, particularly in Australia, New Zealand, and the US. The royal family and other nobles are the largest owners of the monetary sector in the country, especially the telecommunication and satellite services. In 2008, Tonga was listed by Forbes Magazine as the world's 6th most corrupt country and in 2011, and the country was ranked as the 165th nation with the safest environment for investment in the whole world. According to the estimates in 2012, the country had a GDP of $85 million and GDP per capita of $7,500. In 2012, the GDP growth rate in Tonga was estimated at 1.4%, and agriculture was the main contributor to the country's GDP accounting for 20.4%, while manufacturing accounted for 18.6%.

Agriculture

Agriculture in Tonga plays a critical role in the economy, and it is a major employer as well as the leading earner of foreign exchange. In the rural part of the country, subsistence agriculture is the most common and widespread practice. Some of the cultural crops cultivated for the local market and home consumption include coconuts, bananas, beans, coffee, potatoes, taro, and cassava. Root crops are the most common on the island, and about two-thirds of the arable land as of 2001 was under root crops. Keeping livestock is also common in Tonga and particularly the keeping of poultry and pigs. Beef imports in the country have been declining because there has been an increase in the keeping of cattle. The feudal land ownership system in the country has discouraged farmers from growing long term tree crops because they did not own the land. By the end of the 20th-century large-scale plantation of vanilla, lava, and squash became some of the leading crops particularly, for exports. At the beginning of 1987, exports of squash particularity to Japan brought some relief to the struggling economy, but the local farmers became increasingly wary of the price fluctuations in the Japanese market. By 2010, agriculture, together with forestry and fisheries, accounted for 20% of the GDP.

Manufacturing

The manufacturing industry in Tonga is relatively underdeveloped, and they are mainly related to timber processing and food processing, primarily for the local market. Special trade agreement between Tonga and Australia and New Zealand through SPARTECA, allows Tonga to export manufactured items free of duty, and few items have successfully established market such as woolen items and other products produced at home or in small factories. Most of the advantages of the trade agreement have significantly fallen as a result of the liberalization, which led to the opening up of Australia and New Zealand to markets of cheaper items from Asia. Processing of coconut into cobra was at one point the most important industry in Tonga, but the falling prices in the international market and lack of replanting of coconut trees brought down the once most vibrant industry, not only in Tonga but in other neighboring countries in South Pacific. The most important manufacturing items in the country are made up of the handicrafts and other small scale industries, and they account for about 3% of the GDP. Plans are underway by the government to grow the private sector, to upgrade agricultural productivity, to develop tourism, to revitalize squash industries, and to improve transport and communication.

Tourism

The tourism industry in Tonga is still underdeveloped, and the government has recognized its potential and the impact it would have on the economy if the industry is fully tapped. There are numerous cruise ships that often dock at Vavaʻu, which is a famous whale watching site as well as a game fishing location. Tonga is an upcoming tourist market in South Pacific because it has beautiful landscapes with active volcanoes as well as a fantastic tropical rainforest. There are also beautiful coral atolls, pristine coral reefs, and beautiful beaches with unique flora and fauna which can attract tourists from different parts of the world. Activities such as surfing, scuba diving, whale watching, snorkeling, fishing, camping, hiking, kayaking, sailing, and horse riding among other activities are some of the potential activities which can be developed in Tonga to attract tourists.

Mining

Currently, there is no mining carried onshore in Tonga, but different minerals have been found offshore which has attracted different international companies. In the past, different companies have been granted licenses to explore minerals in the country, and they include the Korean Oceanographic Research Development Institute and Bluewater Metals Pty Ltd. The country for a long time has been involved in the Pacific Deep Sea Mineral Project which receives funds from the European Union and managed by SOPAC, which helps the communities in the Pacific to manage deep-sea mineral reserves. Different companies have carried out mineral exploration of the deep sea in 2008, which led to the discovery of several seafloor sulfide systems with sizable deposits of Zinc. In 2012, Tonga offshore mining together with the International Seabed Authority signed an agreement to explore polymetallic minerals in the deep sea and the contract was to run for 15 years. So far, exploration has led to the identification of at least 19 locations with high prospective sites, which means further evaluation is needed. Out of this, 18 locations are within the vicinity of North East Lau Basin close to Niua’s, while the other 11 are found near the Valu Fa ridge close to the island of Tongatapu. Quarrying is also carried out throughout the country, which includes the production of crushed rocks utilized in building and construction as well as a source of aggregate materials.

Challenges Facing Tonga

Most agricultural practices in the country have exhausted soil fertility while the forest cover has declined significantly because of the demand for agricultural land. Several attempts for reforestation have not succeeded in the past. Water pollution in the country has become a huge problem as a result of salinization and toxic chemicals from farms and sewers. The island nation of Tonga is also vulnerable to natural disasters such as flooding, cyclones, drought, and earthquakes. The government has come up with a water master plan to address the country's water resources in the next 20 years, and the national development plan is a comprehensive plan trying to address all the environmental problems in the country.

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