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Economics and Business at Tonga

Since the 1990s, Tonga has struggled with high inflation, high unemployment and varying agricultural production. The authorities are trying to establish a more differentiated business community. In order to reduce energy imports, work is being done, among other things. by utilizing wave power and solar energy, which in 2004 accounted for a production of 41 million kWh. Since 1996, the outer islands have been equipped with solar panels.

Business of Tonga

According to COUNTRYAAH, almost half of the country's population is largely outside the monetary economy with agriculture, fishing and self-sufficiency. In addition, agriculture dominates the public economy, employing 32% of the working population and contributing 28% of the gross domestic product (GDP) in 2003. The most important products are coconuts, vanilla and pumpkin. It also grows yams, taro, sweet potatoes, watermelons, tomatoes, cassava, lemons, peanuts, squash and breadfruit. Tonga has large coconut plantations, but since the 1990s, the disposal of copra (dried coconut meat) has been difficult. Pigs, goats, cattle and chickens are kept in particular by livestock. Fishing is conducted, mainly for local consumption. Attempts have been made to breed pearl mussels.

All land is owned by the Crown, which has distributed it among the kingdom's 33 noble families for further lease.

The industrial sector is exposed to competition from cheap import goods. Along with construction, it employed 26.4% of the working population in 2003 and contributed 14.6% of GDP. The industry is to a large extent based on the processing of raw materials from agriculture and the production of some consumables, among other things. furniture, building materials, leather goods and sports equipment. Some local crafts are sold to tourists.

The majority of the working population is employed in service industries, and here the tourism industry is very important. It is the beautiful nature and the mild climate that attracts tourists. In 2004, Tonga was visited by more than 41,000 foreigners, most from the United States, Australia and New Zealand. Development of tourist facilities is a priority task. Whale watching in Vava'u is one of the major tourist attractions.

Significant cuts in the public sector and the introduction of 15% VAT (VAT) in 2005 have brought the state budget into better balance.

Foreign Trade

Tonga has large trade deficits abroad, and the country receives significant financial assistance from New Zealand, Australia and the EU through the Lomé Convention. In 2004, the People's Republic of China pledged $ 20 million in aid, as well as investment, in the period 2005-10. Money shipments from Tongan abroad, estimated at at least $ 35,000, are also an important source of revenue. It mainly exports agricultural products, especially pumpkin and vanilla. Foods, crude oil and processed industrial products are imported.

New Zealand and Japan are major trading partners.

Transport and Communications

Tonga has a total of 680 km of roads, of which 180 km paved, mainly on Tongatapu and Vava'u. The main port city is the capital Nuku'alofa with regular boat connections to Australia and New Zealand as well as Neiafu on Vava'u. Fua'amoto International Airport is close to the capital.

The national airline Royal Tongan Airlines went bankrupt in 2004, with negative consequences for the tourism industry. Two smaller companies have since operated inland routes. In 2006, three foreign airlines had flights to Tonga.

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