Samoan prime minister Tuilaepa Lupesoliai Neioti Aiono Sailele Malielegaoi talks to Brian Caplen about how the country has tackled money laundering concerns, pressures for the financial centre to keep up to date, and why it might be time for the national airline to go it alone again.

Samoan prime minister Tuilaepa Lupesoliai Neioti Aiono Sailele Malielegaoi says the country is committed to its financial centre despite international pressures. He also wants to see the national airline upgraded to bring in more tourists.

“The financial centre should play a very big role in Samoa’s development. Ever since it was established in 1992, we have continued to grow. What happened was [that] because of its belated development, we tended to take the best experience of the other centres and avoid complex policies and try to maintain the good name of the financial centre,” he says.

“Of course, the centre has been facing many problems with the Organisation for Economic Co-operation and Development [OECD] zeroing in on money laundering control and we were on the grey list for a short time. But we have been to the international committees for [advice and oversight on] the control of money laundering. The money that the financial centre gets has been very useful to help with the funding of our budget but mostly it helps in the sponsoring of our sports.

“One of the things with the international financial centre is the great competitiveness between centres to maintain the clientele. These clients are up to date with what they can get [in incentives] from the different centres, so they play us off one against the other. The trust companies that are licensed here follow up on developments at all the centres and the moment a jurisdiction puts up a law to give itself a comparative advantage they immediately pick it up and advise our centre.”

The prime minister says the Samoan parliament then has to update its own laws to stay competitive. “The essential thing the OECD is after is to have disclosure of information on the activities and to ensure there is no money laundering passing through the centre. Ours is one of the most reputable centres.”

Staying grounded?

Finance is one mainstay of the Samoan economy. Tourism is another, and here Mr Malielegaoi says that air travel is a major issue: “We have been very active recently in writing to airlines to [ask them to] use the centrality of Samoa's [geographical] position as a stop for the refuelling of long-distance flights to South America. We have excess room capacity here yet to be filled and all we need is more tourists to come.

“We [Polynesian Airlines] have a joint venture with Virgin [Australia Airlines] and there are quite a lot of flights from New Zealand, but still we think it is not enough. We are now looking at the possibility of having our own planes again. Our joint venture is coming up for review and the feeling is generally that, subject to a review, we should fly our own planes once again [internationally].” (Polynesian Airlines got into financial difficulties and stopped flying internationally after the downturn that followed the terrorist 9/11 attacks of 2001.)

“This would give a real boost to tourism because it’s quite possible that Virgin will still fly its planes in if we terminate our joint venture so that would mean extra flights and more tourists. The first planes would be on a leasing basis. We do not consider that we should go all out. We would have to proceed very cautiously and restrict flights to the more profitable routes of New Zealand and Australia. It was when we flew to the US that we began to face problems. That’s where we should enter into a co-share with other airlines," adds Mr Malielegaoi.

“What we want to do is get more flights and more visitors in. As it is now, both Virgin and Air New Zealand are deliberately controlling the flights into Samoa to ensure that fares are raised as high as possible. The fares from here to New Zealand are extremely expensive and they are doing that by limiting the flights.”

A Virgin Australia spokesperson says: “Virgin Samoa offers a range of highly competitive fares and holiday packages for travel between Samoa and both Australia and New Zealand. As joint venture partners for 10 years, Virgin Australia and the government of Samoa are undertaking reviews of the future of the joint venture. We look forward to discussing the outcomes of these reviews with the government in due course.”

Anna Cross, external communications consultant for Air New Zealand, says: “There are a number of factors that determine fare prices including operating costs, such as airport landing and navigation costs, and passenger demand for a particular route. In the case of Samoa, we recently announced that due to strong demand we will operate an additional six flights between Auckland and Apia in late December [2016] – nearly 1000 additional seats on the route.”

Mr Malielegaoi adds that, apart from tourism and finance, there are also investment prospects in energy, IT and infrastructure in Samoa, and investment applications go through the government rather than an agency. “We have an investment committee and a major investor would put in an application. The committee might ask for additional information but as soon as the consultation is finished, it’s plain sailing: the recommendation comes to the cabinet and the OK is given,” he says.

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