Tonga’s economy is heavily dependent on remittances from Tongan communities overseas, but transferring money to Tonga has become challenging, Tonga’s Prime Minister Hon. ‘Akilisi Pohiva said yesterday.
He was the keynote speaker at the launch of a new voucher remittance service called ‘Ave Pa’anga Pau, offered by the Tonga Development Bank.
The Prime Minister cited the high costs of making transfers by commercial means and the non-compliance of some local money transfer operations with strict rules around international money transfer.
Almost 30% of our economy is propped up by remittances and we are dependent on our Tongan communities overseas sending money home to support loved ones here. …However, sending money to Tonga has been challenging over the years.”
He said the sender overseas faced high costs as well as time and effort to send money to Tonga, while the receiver in Tonga also had to make an extra effort to collect it. “Sometimes they may have to wait or keep coming back.”
Locally owned money transfer businesses had been shut down by commercial banks, “mainly due to non compliance with anti-money laundering and counter financing terrorism requirements.”
Hon. Pohiva said that, “established money transfer operators have been forced out of business…. and all the signs, in fact, point to a further diminishing of the money transfer operators servicing the New Zealand-Tonga remittance channel.”
The government had asked the Tonga Development Bank to help in keeping the remittance channel open. He said the bank was viewed as trustworthy and stable and was committed to the development of Tonga.
The voucher remittance service was developed with the technical assistance of the IFC (World Bank) over the last three years.
The new ‘Ave Pa’anga Pau voucher remittance service, an online product, was described as a low cost service, which can be used from anywhere.
The CEO of Tonga Development Bank, Ms Leta Kami said that the new service is an innovative product and the first of its kind in the Pacific. It operates differently from other kinds of money transfer.
Funds are transferred from bank accounts in New Zealand to a TDB account in New Zealand. Then TDB provides the funds in Tonga either through a TDB bank account or by cash from a TDB branch. The correspondent bank in New Zealand is Kiwibank.
The TDB will have an important role in educating Tongans in the use of electronic technologies and bank accounts.
The service is starting with New Zealand where around 3,000 seasonal workers from Tonga are employed each year.
The service will be extended to Australia and USA in the future.