Kingdom of Tonga

MINISTRY OF LABOUR, COMMERCE & INDUSTRIES

29th November, 2006
Dear Sir / Madam,
Re: Reconstruction of Businesses Affected by the November 16th (referred hereafter as 16/11) Riot
With reference to the above subject, I am pleased to provide you with an update on the efforts made by the Ministry of Labour,
Commerce & Industries (MLCI) to recover businesses affected by the 16/11 riot. These efforts are as follows:
I.
Consultative Meetings:
In an effort to effectively identify measures for the immediate reconstruction of businesses damaged in the 16/11 riot, several
consultative meetings have been held, these included:
Meeting with all affected businesses
(Tuesday November 20, Police Training School, Longolongo)
Meeting with Chinese businesses
(Tuesday November 20, Chinese Embassy)
Meeting with Chinese Business Council
(Friday November 23, MLCI)
Meeting with the Tonga Tourist Association
(Friday November 23, Queen Salote Memorial Hall)
From these meetings, the following were identified as the significant immediate needs for the recovery of businesses:
i) Insurance
Government to assist with the assessment of the affected businesses insurance policies, and the extent of damages
caused to these businesses (NZ based insurance policy assessors are now in Tonga to look at this issue).
ii) Reconstruction Plan
Government to consider the following:
Extension of leases of the affected businesses to allow for sufficient recovery time.
Exemption of payment of CT and custom duties on all imported construction materials for reconstruction works.
iii) Wharf, Shipping Services & Containers on Wharf
That government ensure the protection and security of QS Wharf, and that shipping services are not
disrupted, due to the need for flow of food items and other necessary stocks to the country.
That government assist with the clearance of containers currently at the Wharf, as affected businesses are
virtually insolvent, and do not have the necessary cashflow to clear these containers.
iv) Safety & Security for businesses
That government:
provide assistance for current and future safety and security of businesses that have survived the
riot
liaise with security forces to provide access to businesses within the proclaimed restricted area
encourage the business community (and general public) to provide evidence to assist the security
forces with their investigations of the culprits and ring leaders.
v) Financial Assistance
PO BOX 110, VUNA RD, NUKUALOFA, KINGDOM OF TONGA
TEL: 676-23688 FAX: 676 23887 EMAIL: minister@mlci.gov.to

Government to consider, provide and facilitate the provision of funding for business recovery and rehab programmes.
II.
Assessment Survey on Damages Following the 16/11 Riot
An assessment survey was conducted by the Ministry to identify the extent of damages and appropriate measures for the
immediate recovery of the affected businesses. Annex 1 provides the results of this survey. As indicated, the current cost value
of losses to the affected businesses is estimated at around T$117m. However, this is only the current cost value, the
replacement cost value would be much higher, say with a 50%-60% premium. And with likely imported inflationary effects, the
final replacement cost value would be in the vicinity of T$200m.
Please note that the Ministry will continue to review this survey to establish more accurate and up-to-date information on key
issues vital to the recovery of businesses. Your business will be consistently updated on the progress of these efforts. At the
same time, the Ministry is conducting a separate survey on job losses by the affected businesses, and their impact on individual
families.
III.
Communication and Prioritization of Immediate Business Recovery Needs
As of date, the immediate needs for business recovery identified in the aforementioned assessment survey and consultative
meetings, have been tabled as a priority agenda item at meetings of Cabinet and Privy Council. Meetings with the Ministry of
Finance and the Cabinet Reconstruction Sub-Committee have also been called to discuss the issues raised by the affected
businesses.
IV.
Financial Assistance for Containers at the Wharf
In collaboration with the Ministry of Finance, Customs and Inland Revenue, MLCI has formed a Sub-Committee to assess and
recommend financial assistance for immediate uplifting of containers currently located or about to land at the Wharf. This effort is
a response to the call from the affected businesses to replenish their lost stock, and to immediately re-commence operation.
V.
Accessibility to Businesses inside the Proclaimed Restricted Zone
Despite difficulties because of security reasons, the Ministry continues to work closely with the TDF and TPF to facilitate
accessibility to the damaged premises. It is now stated that lifting of restriction to damaged premises would be made on or
around 5th December.
As of Tuesday November 27th, the Ministry has recalled all its staff members in an effort to efficiently and effectively carry out the
much needed tasks relating to immediate recovery of businesses in the Nukualofa area.
In closing, I would like to take this opportunity to sincerely thank you all for your cooperation during this very difficult time. In
particular, I would like to thank you for your cooperation with the assessment survey, and its subsequent reviews. Your input not
only forms the basis for governments action on its business recovery plan but also provides the threshold for governments
negotiations with the donor community. My Ministry and staff are committed to forming a closer working partnership with you all,
and we will continue to inform you on the progress of our discussions with the Ministry of Finance and the donor community in
the effort to expedite the recovery of your businesses.
I wish all of you the best during this trying time.
Sincerely

Hon. Lisiate Aloveita Akolo

Minister for Labour, Commerce & Industries

PO BOX 110, VUNA RD, NUKUALOFA, KINGDOM OF TONGA

TEL: 676-23688 FAX: 676 23887 EMAIL: minister@mlci.gov.to

ANNEX 1
SUMMARY REPORT ON ASSESSMENT SURVEY OF DAMAGES TO
BUSINESSES FOLLOWING THE NOVEMBER 16th RIOT
Objective of Assessment Survey:
A Ministry of Labour, Commerce & Industries effort to assist the immediate recovery and reconstruction of businesses
affected by the November 16th riot. Objectives were to identify:
the extent of damages caused to businesses following the riot
measures for the immediate recovery of these enterprises
2. Assessment Survey Data Collection Methodology:
Methodology
:
Questionnaires
Target Population :
Enterprises whose business premises were damaged during the November 16th riot.
(144 businesses incl. 33 enterprises owned by Chinese or naturalized Tongans of
Chinese origin).
NB: - 15 businesses are not included in the survey analysis (theses businesses were not located or had failed to submit
questionnaire forms)
- Survey analysis does not include damages to public infrastructure or government offices.
3. Assessment Survey Results:
i)

Total Estimated Cost of Damages to Businesses:

T$106,659,316 plus 10% contingency to cover errors and other unknown factors, thus
TOTAL ESTIMATED COST OF DAMAGES TO BUSINESSES : T$117,325,248
Note: the 10% contingency covers unknown costs such as the 15 affected businesses that have not provided
information required by the survey analysis, the cost of losses to other businesses whose premises were not
damaged but are affected by the incident, and the value of imported inventory that are yet to be cleared by damaged
businesses from the wharf.
Detailed information on the composition of the stated estimated total cost is as follows:
NB: A number of businesses failed to provide details on the cost of damages to their ventures thus explaining any
discrepancies in the calculation of each detailed cost relative to the above stated total cost of damages.

Total Cost of Damages to Stock on Shelf

Total Cost of Damages to Buildings
Total Cost of Damages to Inventories
Total Estimated Trading losses
Total Other costs

:
:
:
:
:

T$22,999,393
T$38,164,011
T$26,500,860
T$17,570,300
T$6,072,050

ii) Total Number of Job Losses

: 678 Jobs
These consequential job losses are predicted to significantly affect the future national employment rate,
unemployment rate and the national labour force participation rate.
iii) Insurance Status:
39% are insured (50 businesses)
58% are not insured (76 businesses)
2% are partly insured (2 businesses)
1% is uncertain on whether his business is insured or not (1 business).
iv) Insurance Coverage of Riots:
6% have insurance coverage for riots (8 businesses)
75% include businesses which are not insured against riots as well as businesses that are not insured at all
(96 businesses).
PO BOX 110, VUNA RD, NUKUALOFA, KINGDOM OF TONGA
TEL: 676-23688 FAX: 676 23887 EMAIL: minister@mlci.gov.to

 19% are unsure of whether they are insured against riots or not (25 businesses).
NB: - Total approximate cost of damages to businesses insured against riots: T$21,126,461
- Total estimated cost of damages to businesses not insured against riots: T$85,532,855
v) Businesses Willingness to Continue after the riot:
99% (128 businesses) are willing to continue business
1% (1 enterprise) is not certain on whether to continue operation or not.
vi) Immediate Needs for business recovery:
1. Financial Support (30.29%)
2. Locate new facility/location and equipment to continue operation (23.56%)
3. Tax concessions and exemptions from payments of Consumption Tax and Duty (9.62%)
4. Immediate access to businesses within the restricted areas of Nukualofa and to begin operation
immediately (7.21%)
5. Recover lost assets and replenish lost stock (5.77%)
6. Loan Assistance (soft loans, relax loan repayments, lift ceiling on loans (5.29%)
7. Political stability and Security (4.81%)
8. Government Assistance/Incentives to generate business (security, development license renewal, increase
land lease period, value of the paanga not to drop further) (4.33%)
9. Assistance for provision of basic needs (food, living space, transportation) (3.37%)
10. Utility connection (telephone, fax, internet) (1.92%)
11. Ensure that insurance covers losses (1.44%)
12. Subsidiary Staff Assistance (0.96%)
13. Government and other businesses to immediately settle debts (0.48%)
14. Extend Business Visa (0.48%)
15. Assessment of building structure and whether demolition is required (0.48%)
vii) Nature of Businesses Damaged in the November 16th Riot:
NB: Several businesses operate different branches in different sectors. This would explain any discrepancies in the
sum of the below given numbers relative to the total number of businesses surveyed.
Retail businesses
- 31% (54 businesses)
Entertainment & Food Vendors
- 10% (17 businesses)
Supermarket/Wholesale enterprises
- 9% (16 businesses)
Rental businesses (incl. real estates)
- 8% (14 businesses)
Semi-Professional Services
- 8% (14 businesses)
(e.g: hair salons, security services)
Professional Services
- 7% (11 businesses)
(e.g: consultancy services, accountancy services)
Tourism operators
- 5% (8 businesses)
(incl. travel/tour agencies)
Financial services
- 5% (8 businesses)
(incl. commercial banks)
Information/Communication Services
- 4% (6 businesses)
(incl. newspapers, communication services, etc)
Engineering & Electronic Repair Services 3% (5 businesses)
NGOs
- 3% (5 businesses)
Manufacturing Enterprises
- 2% (4 businesses)
Construction Services
- 2% (3 businesses)
Transportation Services
- 2% (3 businesses)
(incl. shipping agencies, airlines)
Power Generation
- 1% (1 business)
2.

Other Important Issues Arising from the Survey:

Need for government to consider the consequential distortions to the upcoming population census.
Need for government to consider hardship relief for employees who have lost their jobs due to the riot
and the general public who will also be ultimately affected.
PO BOX 110, VUNA RD, NUKUALOFA, KINGDOM OF TONGA
TEL: 676-23688 FAX: 676 23887 EMAIL: minister@mlci.gov.to

Appendices:
1. Graphic summary of survey data
Appendix 1: Graphic Summary of Survey Data
Insurance Status
2% 1%

39%

58%

Insured Businesses

Non-Insured Businesses

Partly Insured Businesses

Not Sure

Insurance Coverage of Riots

6%
19%
Covered

Not Covered

Not Certain if Covered or Not

75%

PO BOX 110, VUNA RD, NUKUALOFA, KINGDOM OF TONGA

TEL: 676-23688 FAX: 676 23887 EMAIL: minister@mlci.gov.to

Willingess to Continue Business

1%

Willing

Not Certain

99%

Immediate Needs of Businesses Damaged in the November 16th Riot

Extend Business Visa
0.48%
Assistance for basic needs (food,
living space, transportation,
employment)
3.37%

Stability & Safety

4.81%

Assessment of building structure

0.48%
Release containers from the
wharf
Tax concessions, exemptions
0.48%
from CT and duty payment
9.13%
Loan assistance (soft loans,
relax loan repayments, lift ceiling
on loans)
5.29%

Incentives from Government to

generate business (security,
development license, increase
lease period, value of the
pa'anga not to drop further)
4.33%

Access to shop and to

immediately begin operation
7.21%

Utility connection (telephone, fax,

internet)
1.92%

Insurance to recover losses

1.44%

New facility/location
(furniture,equipment)
23.56%

Recover lost assets and

replenish lost stock
5.77%
Government/cashiers to settle
debts to businesses immediately
.48%

Funding/financial support
30.29%

Subsidiary staff assistance

0.96%

PO BOX 110, VUNA RD, NUKUALOFA, KINGDOM OF TONGA

TEL: 676-23688 FAX: 676 23887 EMAIL: minister@mlci.gov.to

Nature of Businesses Damaged in the November 16th Riot

Financial Serv ices
5%
Transportation Serv ices
2%

NGOs Pow er Generation

3%
1%
Tourism Operators

Professional Serv ices

5%

7%
Information/Communication

Retail v entures

Serv ices

31%

4%
Entertainment & Food
Vendors
10%

Semi-Professional Serv ices

Rental Businesses

8%

8%

Manufacturing enterprises
Engineering/Electronic repair

2%

serv ices

Supermarket/Wholesale

Construction

Businesses

2%

3%

9%

PO BOX 110, VUNA RD, NUKUALOFA, KINGDOM OF TONGA

TEL: 676-23688 FAX: 676 23887 EMAIL: minister@mlci.gov.to