James Cook had been invited to the royal fertility festival (inasi) when he visited Tonga in 1773. Cook declined but was pleased enough to give a name “Friendly Islands” to this Southwest Pacific Ocean archipelago composed of 169 islets. Ironically, local chiefs set that day to get rid of Cook and his crew.
The rest of Tongan history had been relatively more peaceful. In 1845, it produced a peculiar monarchy remotely modeled after and subjugated to the British crown. In 1970 Tonga gained its independence from UK but stayed with the Commonwealth. Tongan economic and social progresses had been slow and put it behind many other Pacific nations.
After 2010 reforms Tonga has had two major political parties: Democratic Party of the Friendly Islands (DPFI) and People’s Democratic Party (PDP). However, only DPFI participates in 26-members unicameral local Parliament — Fale Alea.
Tongan society is divided to three social groups — royals, nobility and commons. Currently, members of first two groups only are present in Tongan Parliament. Opposition press is muted and the critic of Royal family is actively discouraged.
Tongan tourism industry is underdeveloped compare to that of other Pacific Ocean states. At the same time, local Royals are internationally known for their fascination with grandiose business projects, including building a depository for radioactive materials and sponsoring Chinese cigarettes factories.
Tonga is a small island nation ruled by an hereditary elite. As a result, all of key industries, including the telecommunications, are under the control of small group of people close to the throne. That doesn’t create an hospitable environment for high-tech entrepreneurship.
Additionally, Tonga’s cumbersome bureaucratic procedures, harsh regulatory environment and its small agriculture based economy do not provide enough incentives for innovations. On a positive side, low competition, developing tourism industry and large Tongan diaspora (living primary in USA, Australia and New Zealand) create a number of niche markets opportunities for local startups founders.
Business Notes for Startups Founders:
- political climate: not friendly;
- economic climate: not friendly;
- regions to focus: locally;
- industries to focus: FinTech (remittances), e-services (tourism);
- major limitations: geographical isolation, GDP is under $500 million, high taxes (total tax rate on business is 30%), fixed Internet penetration rate is under 50%, agriculture based economy, heavy reliance of locals on remittances, population is about 100,000;
- stimulus: high-low income population (per-capita is at $4,000), low competition, large diaspora.
- opportunities: to launch an e-businesses aimed at Tongan diaspora.