BENEFITS OF MAKING BUSINESS IN TONGA W W W. M E R G E R S C O R P. C O M
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W W W. M E R G E R S C O R P. C O M
BENEFITS OF MAKING BUSINESS IN TONGA
W W W. M E R G E R S C O R P. C O M
Country Overview Tonga is a Polynesian kingdom of more than 170 South Pacific islands, many uninhabited, most lined in white beaches and coral reefs and covered with tropical rainforest. The main island, Tongatapu, is protected by lagoons and limestone cliffs. It’s home to the rural capital of Nuku'alofa, as well as beach resorts, plantations and the Ha'amonga ʝa Maui, a monumental coral gate from the 1200s. Tonga was a protected state of the United Kingdom until 1970. It is the South Pacific's last Polynesian kingdom, a constitutional hereditary monarchy. A group of more than 170 islands spread over an area of the South Pacific roughly the size of Japan, Tonga is the last Polynesian monarchy. A deeply conservative, Christian country, Tonga voted in its first popularly elected parliament in 2010, ending 165 years of feudal rule.
Tonga has no strategic or mineral resources and relies on agriculture, fishing and the money sent home by Tongans living abroad, many of them in New Zealand. Unemployment is high, particularly among the young. Tonga was first inhabited about 3,000 years ago by Austronesian-speaking people of the Lapita culture, best known from their elaborately decorated pottery. From at least the 10th century CE Tonga was ruled by a line of sacred kings and queens, the Tu‘i Tonga.
Executive Summary The capital of Tonga is Nuku'afola, which is also the country's largest city, and can be found on the main island of Tongatapu. Tonga, officially the Kingdom of Tonga, is a Polynesian sovereign state and archipelago made up of 170 islands with a total area of 290 square miles that are spread over 270,000 square miles in the southern Pacific Ocean. In 2019, the population of Tonga is estimated at 104,494, ranking it 199th in the world. The traditional diet of the Tongan people consisted mostly of taro, yams, bananas, coconuts and of course seafood the staple of any island nation. The official language is Tongan, but English is taught in the schools and is widely spoken in the main towns. Tongan is similar to Samoan. The consonants are sounded as they are in English. These islands are not volcanic. Located east of Tonga, in the depths of the ocean, is the Tonga Trench one of the deepest parts of the Pacific.
Introduction – Doing business in Tonga The Tongan government has identified its growth areas as agriculture, fisheries and tourism, although there are lots of opportunities for new business in infrastructure, building and construction, freight, and renewable energy. Tonga is ranked 103 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of Tonga deteriorated to 103 in 2019 from 91 in 2018. Ease of Doing Business in Tonga averaged 71.08 from 2008 until 2019, reaching an all time high of 103 in 2019 and a record low of 46 in 2008.Tonga's development plans emphasize a growing private sector, upgrading agricultural productivity, revitalizing the squash and vanilla bean industries, developing tourism, and improving the island's communications and transportation systems. Substantial progress has been made, but much work remains to be done. A small but growing construction sector is developing in response to the inflow of aid monies and remittances from Tongans abroad. The copra industry is plagued by world prices that have been depressed for years.
Conducting business in Tonga Industrial production was growing at a rate of around 0.5% in 2012, with the main industries being tourism, construction and fishing. Agricultural products such as squash, fish, vanilla beans and root crops make up the majority of exports. If you want to register a business in the Kingdom of Tonga the first thing to do is to search the register in order to see if the name of your future business is still available. Every application to form a company must be preceded or accompanied by a name reservation. The name reservation is active for twenty days after it is filed, so your company application form must be submitted within this twenty day window. You may submit the name reservation form with the application to incorporate. Your application form must be delivered to the Registrar of Companies together with the payment of the appropriate fees and a copy of the constitution of the company if it differs from the standard constitution. Once the application has been approved, you will be sent a Certificate of Incorporation and the company is entered on the Tongan Register. Visas for foreign investors choosing to reside in Tonga (business visa) are granted by the Immigration Division of the Ministry of Foreign Affairs.
Taxation in Tonga Total tax rate (% of commercial profits) in Tonga was 27.50 as of 2019. Its highest value over the past 14 years was 27.50 in 2019, while its lowest value was 22.70 in 2009. Consumption tax15% (standard rate). Company Tax :Corporate tax: 25% Withholding Taxes :Dividends: 15%; Interests: 15%; Royalties: 15%. Sales Tax Rate in Tonga averaged 13.57 percent from 2014 until 2020, reaching an all time high of 15 percent in 2015 and a record low of 5 percent in 2014. The tax is worked out by applying the rate of tax 3% to the gross amount derived by the non-resident for the carriage of passengers, livestocks, mail, merchandise, or goods embarked in Tonga, whether for carriage outside or within Tonga.
Trade Tonga had a total export of 18,879.50 in thousands of US$ and total imports of 218,185.76 in thousands of US$ leading to a negative trade balance of 199,306.27 in thousands of US$The trade growth is 3.84% compared to a world growth of 0.12%. GDP of Tonga is 450,353,313.88 in current US$. Tonga services export is 90,501,087.34 in BoP, current US$ and services import is 105,265,833.54 in Bop, current US$.Tonga exports of goods and services as percentage of GDP is 22.30% and imports of goods and services as percentage of GDP is 75.92%.
Banking in Tonga Tonga has a small and underdeveloped financial sector. There are three registered commercial banks: Westpac, the largest, ANZ and MBF. Westpac and ANZ are Australian multinationals, whilst MBF is Malaysian owned.
Westpac began as the Bank of Tonga in 1974 and has been a fully owned subsidiary of Westpac Banking Corporation since 2008. Westpac provides full commercial and savings facilities for Tongan residents. ANZ and the MBF Banking Group have operated in Tonga since 1993 and they too provide full commercial banking facilities. There is a government-owned developmental financial institution, Tonga Development Bank, which lends money to key sectors of the business community including agriculture, manufacturing and tourism. It also provides savings accounts.
Our M&A Process TARGET APPRAISAL
APPROACH
DUE DILIGENCE
NEGOTIATION & CLOSE
POST MERGER INTEGRATION (PMI)
Revisit indicative valuation & prepare detailed valuation based on due diligence findings; SPA negotiations with the seller; Development of final structure (share/asset deal) and final valuation; Approvals; Signing of SPA & Close.
Consider the extent of integration; Development of 100 Day PMI Plan; Consider short & long term objectives; Estimate requirements to capture synergies; Determine resource needs & optimal allocation.
Company general counsel; Lawyers; Senior management.
Company general counsel; Lawyers; Senior management/HR.
Key Areas Target & market analysis; Initial assessment of synergies & value drivers; Indicative valuation; Go or No-Go decision; Preparation of transaction documents (NDA – Nondisclosure Agreement/LOILetter of Intent); Select Transaction team; Appoint advisors; Consider funding ability.
Initial approach letter; Signing of NDA; Prepare & share initial information requests; Formulation of LOI (Letter of Intent) & possible negotiations; Initial meeting and Q&A; Circulate information on the Target to the Transaction team.
Set scope of due diligence; Set up VDR (virtual data room); Coordinating of due diligence, further meetings and Q&A sessions; Consider points relevant to the Post-Merger (PMI) phase;
Parties Involved CFO; Head of M&A; Accountants; Corporate finance advisors; Consultants.
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Senior management; CEO, CFO, CTO; Strategy director; Head of M&A; Head of Business Development; Consultants.
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© Midaxo 2018
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