Highlighting the impact of COVID-19 on business in Tonga


    A recent report by Pacific Trade Invest (PTI) focusing on the impacts of COVID-19 on Tonga’s private sector has found that less than a quarter of businesses in Tonga were fully operational over 2020, compared to 36% across the Pacific Islands.

    The Pacific Business Monitor Tonga Focus 2020 Report aggregates results from respondents in Tonga across all the PTI Pacific Business Monitor surveys conducted in 2020. The report provides insight into the impact COVID-19 had on Tonga’s private sector last year, in comparison to businesses in the Pacific region.
    The report found in line with fewer businesses in operation, the very negative impact on businesses in Tonga continued to be higher than the Pacific Islands across the course of last year. During November to December 2020, 85% of businesses in Tonga faced very negative impacts caused by COVID-19, compared to 58% overall across the Pacific Islands.

    Similarly, the proportion of businesses reporting a negative impact on the local economy in Tonga was much higher than the rest of the Pacific Islands over the year. However, positively the end of 2020 saw a sharp 20% decline in perceived very negative impacts of COVID-19 upon the local Tongan economy.

    The negative impact of COVID-19 on mental health is also significantly greater in Tonga, a pattern seen consistently throughout 2020. On average, 82% of business owners and leaders in Tonga reported COVID-19 as having negative effects on their mental health, in comparison to 63% across the Pacific Islands.

    The timeframe of recovery is expected to be much later in Tonga with 85% expecting to return by 2022 or later and only 8% expecting to return by end of 2021.

    By the end of 2020, the proportion of businesses receiving government support in Tonga was significantly higher at 85%, compared to 55% in the Pacific Islands overall.

    Earlier this month at the panel discussion ‘How are businesses in the Pacific really doing?’ with PTI Australia and Griffith University Minoru Nishi, Managing Director of Nishi Trading Co in Tonga said export logistics during COVID-19 had negative impacts on the local economy.

    “The majority of our businesses are in agriculture, so we have suffered a lot over 2020. What surprised us was our exports actually increased, there was demand from the market. So, while that was great for the farmers, the downside of it is that as the year went on we had so many logistic issues. Delays of borders, increased cost for freight, all because of COVID and that really impacted our bottom line. A lot of people in Tonga rely on export pathways for our fresh produce.”

    PTI Australia’s Trade & Investment Commissioner, Caleb Jarvis, said the safe and sustainable return to fast and functioning international trade routes are imperative for the recovery the Tongan economy.

    “The global pandemic has slowed many global supply chains and trade routes, right down to a halt. This makes business conditions for remote island nations like Tonga incredibly difficult. The effects of COVID-19 also compounded with also having to deal with effects of Cyclone Harold and Yasa last year. PTI Australia uses the results of the Pacific Business Monitor coupled with feedback from our in-country networks to communicate to regional governments, donors, and organisations the real and nuanced challenges Pacific countries are facing and also to tailor our response. There is not a one size fits all approach to charting a course to economic recovery in the Blue Pacific.”