Role of the Financial Services Sector in

 Expanding Economic Opportunities

Financial Services are fundamental to economic growth and Development; •Banking, savings and investment, and debt and equity financing, all help us to save our money, guard against uncertainty, and build credit, while enabling our businesses to start up, expand, -increase efficiency, - and compete in local and international markets;

•The financial sector provides six (6) major functions to the companies (investors) and the savers. They provide the payment services;

•matching savers and investors;

•generating and distributing of crucial information,

•allocation of credits efficiently;

•pricing, pooling and trading risks;

•and finally the increasing of asset liquidity.

•Financial services is the largest sector in the world in terms of earnings, comprised of range of businesses including merchant banks, insurance companies, and development institutions;

The commercial banks (Westpac, MBF and ANZ) including the Tonga Development Bank do have the expertise, the reputation, and geographic reach (Vava’u, Ha’apai, ‘Eua. And the Niuassss) to have significant direct impact and engagement to change the way the entire domestic market operates.

•They use deliberate strategies to expand economic opportunity through business models that serve us individuals and small businesses as clients.

•They also develop initiatives to build human capital and institutional capacity, and using their experience and influence to shape the government policy frameworks in Tonga.

•For us, these financial services:

•Have Reduce our vulnerability;

•and enable us to manage our small assets in ways that generate income, and for other options –

•ultimately it is the creation of pathways out of poverty.

Despite the potential of the banks, their impact on expanding of economic opportunity has remained limited;

•Where a vicious cycle of insufficient information,

•Difficult and expensive to access to financing,

•Inadequate infrastructure – and High interest rate, bank charges and levies,

•All have kept the costs and prices high, and limiting our companies to expand in stages

In conclusion – we see the opportunity for growth – but we need to create a business model that develop trust between us borrowers / the savers and the banks:

•So what role of Financial Services we need in-order to expand economic opportunity

•We need Financing of Capital Equipment on Industrial Development and on New Industries.

•The Manufacturing Association of Tonga is developing a business model that includes the entrepreneurs, the suppliers and the customers in paving the way forward. An industry investigation mission is planned for Malaysia in April with the intention to diversify – production to reach economy of scale and develop new industries – Innovation.