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Pacific trade: Sisters doing it for themselves

Pacific trade: Sisters doing it for themselves
Published 4 Aug 2014   Follow @TimHarcourt

There's been a lot of talk about getting women into top positions in business in Australia, but our friends in the Pacific have been walking the walk. The inaugural Pacific Export Survey 2014 reveals that around 27% of exporting small and medium enterprises (SMEs) in the Pacific are run by women, compared to 11% of exporters in Australia according to the DHL Export Barometer. That's almost a 3:1 ratio.

Why is this so?

Part of the reason could be that, historically, women in Pacific island countries have taken on more community leadership positions relative to other cultures (although this has not translated into representation in national decision-making). There may be some modern reasons too, as micro finance programs have mainly been aimed at female entrepreneurs in developing countries, including in the Pacific. The other explanation could be trade and migration ties, which are closely related to family businesses moving between the Pacific and New Zealand and Australia; this is most noticeable in relation to Polynesian countries. The matriarchs in the family often head up small businesses to keep family members in touch when migration occurs, as it inevitably does to Australia and New Zealand.

The survey – commissioned by Pacific Islands Trade & Invest and the Department for Foreign Affairs & Trade and timed for the Pacific Islands Forum leaders' meeting — also uncovered some new details about the exporter community in the Pacific.

First of all, they are keen to export although the small scale of each island country holds them back. Fiji is the biggest exporting nation (25% of Pacific exporters are in Fiji), followed by Samoa, Tonga, Vanuatu, Cook Islands and Solomon Islands. As there is minimal scale in the Pacific, they have to export to larger markets such as Asia, the US, Australia and New Zealand, instead of to their Pacific neighbours. They tend not to sell to each other, although Vanuatu has exported beef to other Pacific Islands and there is some movement of goods between some members of the Melanesian Spearhead Group as a result of the trade agreement. This focus on larger markets increases transport costs, and thus erects a further barrier to export success.

Secondly, exporters in Pacific nations are not after more aid money but do see a need for better access to capital and foreign investment. [fold]

This is because the cost of capital is high domestically compared to Australia and New Zealand, with their more mature financial markets and larger customer bases. Most Pacific nations are looking to joint ventures to give them access to infrastructure (which is under-developed in Pacific Islands) or injections of foreign equity to make the investments viable when they set up. Public private sector partnerships (PPPs) also make sense in this space. Progressing aid projects onto a commercial footing with enterprise initiatives – such as is occurring in Vanuatu with tourism and agribusiness supply chain projects — is a good example of aid progressing to trade.

Thirdly, there is a view that a formal trade pact across Pacific nations with Australia and New Zealand will reduce trade costs between countries. The argument goes that this would really help Pacific nations, given the tyranny of distance (meaning high transport costs, small scale and very small consumer markets). But the reality is that there are few tariff barriers left to reduce and for the most part, market access will not benefit Pacific island countries unless more is done to boost their productive capacity.

When it comes to the Pacific, small is still beautiful. Over half the Pacific nation exporters are small, with less than 20 employees and less than AS$1 million revenue per annum. Most are new to the game too. More than a third of them only started exporting in the last three years. Agriculture, tourism, manufactured goods and services (evenly divided) made up the majority of the exports with resources only representing around 5%.

Whilst some Pacific countries have exported their best rugby players to New Zealand and Australia, they are also trying to expand their markets across a range of products and services so they are not just losing (very famous) human capital. Rugby may be a masculine-dominated affair, but when it comes to SME exporting in the Pacific, it is not just a man's game anymore.

Thanks to Tess Newton Cain, Jodie McAlister and Caleb Jarvis for their comments and expert assistance.

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