Remittances start to dry up as global economic crisis bites

[Stacey King]

ABC RADIO AUSTRALIA
Updated Tue Apr 7, 2009 3:39pm AEST

The sending of remittances plays a major part in providing much needed foreign currency to many of the Pacific Island states, but as the economic crisis bites deep into developed economies, the knock on is also starting to be felt in the Pacific. There is anecdotal evidence that some Pacific Islands workers overseas are turning to loan sharks to tide them over in tough times.
Presenter Michael Cavanagh
Speakers: Tonga's deputy High Commisioner to Australia Mr Raymond Taufui, New Zealand National Distribution Union Organiser Mark Muller
Listen: Windows Media

CAVANAGH : The Fiji Reserve Bank in its February economic review acknowledged the fall in remittances and this was reflected in a slowdown in consumer spending. In Tonga, where remittances are second only to overseas development aid when it comes to providing foreign currency it's also slowing. In the most recent data available for the June quarter last year remittances in Tonga were worth around $A40 million. It had dropped just over one per cent for the previous March quarter, and this was before the global financial crisis really started to take hold. Tonga's Deputy High Commissioner to Australia Raymond Taufui who was also head of Treasury says his compatriots need to realise that the economic meltdown is being felt everywhere. He says it is placing pressure on those who live overseas who feel obligated to their families back home.

TAUFUI: It's about time for all of us back in Tonga to realise the critical this global financial crisis that will impact not only back in Tonga but importantly Tongans in Australia New Zealand and also the States who are sending money to Tonga.

CAVANAGH: This pressure and sense of obligation is resulting in some people preying on those who are finding it a strain to ensure their families back in the Pacific are being taken care of. Mark Muller is an organiser with New Zealand's National Distribution Union. Many of its members are Pacific Islanders with little education working in industries which are often the first to feel the impact of an economic downturn which results in jobs going.

MULLER: It's on the increase these instant loans, loan sharks in general getting loans at phenomenal interest rates and now you are even getting some shops that were like a dairy now they just deal in mainly giving out loans and there's a price to pay when you don't pay it back. The odd thing that is happening is not in a big way but it is starting to creep in at some work sites there's the odd Pacific Island person setting up loan schemes amongst the work force and you know that is a sign of the times really.

CAVANAGH: And what sort of reaction is there from the people that are on those work sites?

MULLER: It's half and half, some because they are desperate for the money they'll get it from anyway they can and, the others are trying to do something about it. There are a lot of arguments and disgruntlement about it.

CAVANAGH: Mr Muller's family is from Samoa. He's noticed that some Pacific Islanders born overseas, maybe second or third generation are starting to be more open about refusing to send remittances. He says others who have closer links tend to bottle up their concerns.

MULLER: Traditionally it goes back to that pride thing, they wouldn't normally they wouldn't talk about it in great length, so its more in a family connection, that people talk to each other they are not in an extended sort of amongst people that are not from the same family.

CAVANAGH: Mr Muller says others are seeking advice from their churches. In an attempt to ease the burden on those working overseas, Tonga's deputy High Commisioner Mr Taufui says attempts are underway to try and provide help in other ways instead of just sending cash.

TAUFUI: They have been working on certain projects like back and do some farming and fishing and also with the help of their families overseas they are starting to look at other options of not sending money but try and look at building up a small medium industry like fixing tyres and things this. So these are things that people are starting to to look at the moment apart from our traditional activities like fishing and farming we are looking at going into small and medium industries.