Business plan for starting up a business in Kiribati

121202128 | Vijay vittal

Business plan for starting up a business in Kiribati Country: Kiribati Capital: South Tarawa This remote island nation which consists of 33 atolls scattered across more than 3.5 million square kilometers of the Pacific Ocean is one of the least developed countries in the world. With limited domestic production, it relies heavily on imports. Facts about Kiribati Population - 0.1 million Currency- Australian dollar Communication- Dialing code: +686 URL code: ki Time zone- UTC +12, +13, +14 hours GDP- US$167 million
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Major industry- Tourism, agriculture, fishing, handicrafts Growth industry- Tuna industry and services for hotel and entertainment Advantage- Relatively young workforce who are dedicated and easy to

Environmental analysis

Demographics
The native people of Kiribati are called I-Kiribati. Ethnically, the I-Kiribati are Micronesians. Recent archaeological evidence indicates that Austronesians originally settled the islands thousands of years ago. Around the 14th century, Fijians, Samoans, and Tongans invaded the islands, thus diversifying the ethnic range and introducing Polynesian linguistic traits. Intermarriage among all ancestral groups, however, has led to a population reasonably homogeneous in appearance and traditions.

Language
The people of Kiribati speak an Oceanic language called "Gilbertese". Although English is also an official language, it is not used very often outside the island capital of Tarawa. It is more likely that English is mixed in its use with Gilbertese. Older generations of I-Kiribati tend to use more complicated versions of the language.

Religion
Christianity is the major religion, having been introduced by missionaries in the 19th century. The population is predominantly Roman Catholic (56%), although a substantial portion of the population is Congregationalist Protestant (34%). Many other Protestant denominations, including more evangelical types, are also represented.

Human development/ labor market standard of living

The Kiribati Census in 2010 enumerated the population at 103,058. The vast majority (>90%) of people inhabit the Gilbert Islands, with more than 33% populating an area of about 16 km2 (6.2 sq mi) on South Tarawa. Until recently, the people of Kiribati mostly lived in villages with populations between 50 and 3,000 on the outer islands. Most houses are made of materials obtained from coconut and pandanus trees. Frequent droughts and infertile soil hinder reliable large-scale agriculture, so the islanders have largely turned to the sea for livelihood and subsistence. Most are outrigger sailors and fishermen. Copra plantations serve as a second source of employment. However, in recent years large numbers of citizens have moved to the more urban island capital of Tarawa; increasing urbanization has raised the population of South Tarawa to 50,182.[6]

Health
The population of Kiribati has a life expectancy at birth of 60 years (57 for males, and 63 for females) and an infant mortality rate of 54 deaths per 1,000 live births. Tuberculosis is present in the country. Government expenditure on health was at US$268 per capita (PPP) in 2006.In 19902007, there were 23 physicians per 100,000 persons. Since the arrival of Cuban doctors, the infant mortality rate has decreased significantly. Most health problems are related to consumption of semi-raw seafood, limited amount of food storage facilities, and bacterial contamination of fresh water supplies. In the early 2000s, between 1 and 7% of the population, depending on the island, were annually treated for food poisoning in a hospital. Modernization and cross-cultural exchange of the late 1900s brought new issues of unhealthy diet and lifestyle; heavy smoking, especially among the young population; and external infections, including HIV/AIDS.

Education
Primary education is free and compulsory for the first six years, now being extended to nine years. Mission schools are slowly being absorbed into the government primary school system. Higher education is expanding; students may seek technical, teacher or marine training, or study in other countries. To date, most choosing to do the latter have gone to Fiji, and those wishing to complete medical training have been sent to Cuba.

Economy
A least developed country, Kiribati's per capita GDP is about $1,600. Although 63.6% of Kiribatis population above the age of 15 are economically active, only 23% participate in the formal wage economy and over 60% of all formal jobs are in South Tarawa. The monetary economy of Kiribati is dominated by the services sector, representing a GDP share of 63.4%, and the public sector which provides 80% of monetary remuneration. In one form or another, Kiribati gets a large portion of its income from abroad. Examples include fishing licenses, development assistance, tourism, and worker remittances. External sources of financing are crucial to Kiribati, given the limited domestic production ability and the need to import nearly all essential foodstuffs and manufactured items. Historically, the I-Kiribati were notable seafarers, and today about 1,400 I-Kiribati are trained, certified, and active as seafarers. Remittances from seafarers are a major source of income for families in the country, and there is a

steady annual uptake of young I-Kiribati men to the Kiribati Maritime Training Institute. Remittances from Kiribati workers living abroad provide more than $11 million annually. Fishing fleets from South Korea, Japan, China, Taiwan, and the United States pay licensing fees to operate in Kiribati's territorial waters. These licenses produce revenue worth about U.S. $20 million to $35 million annually. Kiribati's exclusive economic zone comprises more than 3.55 million square kilometers (1.37 million square miles) and is very difficult to police given Kiribati's small land mass and limited means. Kiribati probably loses millions of dollars per year from illegal, unlicensed, and unreported fishing in its exclusive economic zone. The largest donors of development assistance to Kiribati are Japan, the European Union, Australia, New Zealand, and Taiwan. U.S. assistance is provided through multilateral institutions. Tourism is a relatively small, but important domestic sector. Attractions include World War II Tarawa battle sites, game fishing, and ecotourism. The majority of American tourists only visit Christmas Island in the Line Islands on fishing and diving vacations. Transportation and communications are a challenge for Kiribati. Air Pacific, Our Airline, and Air Kiribati provide international air links to the capital of Tarawa. Air Kiribati provides service to most of the populated atolls in the Gilberts using small planes flying from Tarawa. Small ships serve outlying islands, including in the Line Islands, with irregular schedules. A joint venture between Air Pacific and the government of Kiribati operates a flight linking Christmas Island to Fiji and Honolulu. Telecommunications are expensive, and service is mediocre. Major industries Kiribati mainly relies on foreign aid, remittances and a sovereign wealth fund to prop up its economy. The following industries play a role in the nations economic performance:

Tourism An October 2012 report7 stated that, in comparison to other Pacific nations, tourism was booming in Kiribati; and it continues to deliver an important source of revenue. Potential development areas include the government owned islands in the Phoenix and Line Group, which also form part of the Republic of Kiribati. Kiritimati, the largest atoll in the world, remains undeveloped and is a prime location for ecotourism adventures. Agriculture Copra and coconuts comprise the primary crops; with copra accounting for more than 60% of exports. Aquaculture is a still developing, ranging from clam farming to harvesting beche-de-mer (sea cucumber). Learn more about Agriculture in Asia Pacific Fishing Foreign fishing fleets pay licensing fees to operate in Kiribatis vast territorial waters. A tuna processing plant also recently opened in Betio, Tarawa with further plants planned in Kiritimati.

Emerging industries Based on regional insights, we have identified these emerging industries:

Ecotourism Diving and fishing are popular activities, driving the growth of ecotourism in Kiribati. Tuna processing As the world demands more supply of fish protein, Kiribati stands to gain as one of the key suppliers of this commodity. The Kiribati government is also looking at JV partnership options with experienced operators in the industry.

Marine Conservation Kiribati is home to the largest and deepest Marine Conservation Park in the world. The Phoenix Islands Protected Area (PIPA) consists of 480,000 square km of ocean, covering 8 uninhabited atolls.

Technological With 80% of people under BPL coupled with the fact that only 25% has access to electricity most of the people have no experience with the modern technology and products like cell phones or personal computers. The construction and maintenance of electrical and telecommunication network has been shattered by frequently occurring natural calamities.

Cultural and regulatory environment

these business and cultural tips when dealing with Kiribati regulators, officials and business people.

Dress appropriately In Kiribati, a shirt and smart trousers or skirt will suffice for most business dealings. You only need to wear a tie or similar on formal occasions. Island time Most businesses in Kiribati operate on island time that is, 8am to 12:30pm and then 1:30pm to 4:15pm, Monday to Friday. Government maintains strong ties to broader groups Kiribati is a member of the Pacific Community, the South Pacific Forum and the Asian Development Bank; as well as various regional groups formed to promote economic development. Donors and Development Partners are well represented Australian and New Zealand High Commission offices have a presence, as does the Taiwan Embassy. The United Nations Development Programme, Japan International Cooperation Agency, World Bank, EU and the Asian Development Bank also have representatives on the ground for cross border and large projects participation. Kiribati has no exchange control and repatriation of profits is fairly straightforward Withholding tax is applicable on dividend payments and contractual fees. Eager, unskilled workforce that is easy to teach Recent experience from fish processing plants and the quality of graduates from Kiribatis local Asia Pacific Technical College indicates the proficiency of the local population.

Business plan : Starting up a tuna fishing and canned production company

Products Tuna fish raw in frozen container

This product will be launched initially as to export to Australia and New Zealand and I do have a plan to introduce canned tuna which is processed for household use. For both export and domestic market.

Mode of entry: Importing sub-assemblies from Australia to Kiribati. Acquiring a sick fishing unit

Assembling to the order at a company (wholly) owned facility in island using native labor Distribution Initially its only exporting to Australia, where associated dealers will push it into their market on commission basis. Operational plan The assembling will be done in a building purchased in Kiribati.. Property values are really low in Kiribati.. A 20002500 square foot facility in capital city of can be purchased for approx.30 lakh Indian rupees. External debt will be taken as financing for equipment import by A&Z bank in Kiribati. . The revised property rights allows foreigners to own 100% of property in Kiribati.. The details of buildings available for rent / purchase are provided by govt. in their website. This city is a port city so importing sub assembling from Australia will be easy. Suppliers The sub-assemblies will be shipped from australia to the companys facility at Port and stored. Manufacturing / assembling Manufacturing is restricted just to tightening of nut and bolts and making some electrical connections as the product comes in modules.it needs inexpensive tools and little labor expertise. Distributing This will be done through local logistic providers to ship products to port docking site. Employees: 30 employees for fishing and two management employees are required. All employees will be locals. Cost of labor is cheap (<4 $ per day) and unskilled labor is available in plenty. They can be mentored and given training to do the routine work.