Economy
of
Samoa
Samoans operate on a predominantly informal economy, with only 18% of the population formally employed in a salaried position. The figures given below reflect percentages of the formal economy, not necessarily the informal one, which represents more people but not much of the country’s wealth. The Samoan economy is dependent on agricultural exports, tourism, and capital flows from abroad. The effects of three natural disasters in the early 1990s were overcome by the mid-1990s, but economic growth cooled again with the regional economic downturn and the September 29, 2009 Pacific tsunami, which devastated many of Samoa’s tourist resorts and connecting roads. Long-term development depends upon repairing and upgrading the tourist infrastructure, attracting foreign investment, and further diversification of the economy.
In the early 1990s, Samoa’s economy suffered blows from two consecutive cyclones (Cyclone Ofa in 1990 and Cyclone Valerie in 1991) and an outbreak of taro leaf blight (a root crop which is the staple food and was the largest export). The government responded to these shocks with a major program of road building and post-cyclone infrastructure repair. Economic reforms were stepped up, including the liberalization of exchange controls. GDP growth rebounded to over 6% in both 1995 and 1996 before slowing again at the end of the decade.
The primary sector (agriculture, forestry, and fishing) employs less than 2% of the labor force and produces 3.6% of GDP. Important products include coconuts and fish.
The service sector accounts for about three-quarters of GDP and employs approximately 50% of the labor force. Tourism is the largest single activity, more than doubling in visitor numbers and revenue over the last decade. In 2009, Samoa’s tourism industry encountered major obstacles, namely the global financial crisis and the devastation of the September 29 tsunami. The tsunami ravaged 25% of Upolu Island’s south and southeastern coast, which housed some prime resorts and beach “fales” (villas). This, however, did not undermine the booming industry, with tourism arrivals increasing to more than 128,000 in 2009 and contributing over $120.8 million to the local economy. The tourism industry started rebuilding a week after the devastation, making use of subsidies and concessional loan assistance from the Samoan, New Zealand, and Australian Governments. Some hotels have since opened and others are in the process of rebuilding.
Industry accounts for about 13% of GDP while employing less than 6% of the work force. The largest industrial venture is Yazaki Samoa, a Japanese-owned company processing automotive components for export to Australia under a concessional market-access arrangement. The Yazaki plant employed more than 2,000 workers, making up over 20% of the manufacturing sector's total output. The pressures of the global financial crisis led to as many as 1,200 job cuts at the Yazaki plant by 2009; however, in 2010 conditions were more favorable and employment at the plant increased to 1,200. New Zealand is Samoa's principal trading partner, typically providing between 35% and 40% of imports and purchasing 45%-50% of exports. The growing number of Asian-owned businesses in Samoa has led to increasing trade with Hong Kong and Japan. Australia, the United States, including American Samoa, and Fiji, are also important trading partners. Samoa's principal exports are coconut products, nonu fruit, and fish. Its main imports are food and beverages, industrial supplies, and fuels.
The collapse of taro exports in 1994 has had the unintended effect of modestly diversifying Samoa's export products and markets. Prior to the taro leaf blight, Samoa's exports consisted of taro ($1.1 million), coconut cream ($540,000), and "other" ($350,000). Ninety percent of exports went to the Pacific region, and only 1% went to Europe. Forced to look for alternatives to taro, Samoa's exporters have dramatically increased the production of copra, coconut oil, and fish. These three products, which combined to produce export revenue of less than $100,000 in 1993, now account for over $6.7 million. There also has been a relative shift from Pacific markets to European ones, which now receive nearly 15% of Samoa's exports. These exports are still concentrated in fish ($5.8 million), nonu fruit products ($3.27 million), and coconut products ($0.9 million worth of copra, copra meal, coconut oil, and coconut cream), but are at least somewhat more diverse than before.
In April 1998, Samoa applied for World Trade Organization membership. Samoa's bid for membership has moved forward through the accession process, but as of end-2010 negotiations on opening market access continued at a bilateral level.
Samoa annually receives important financial assistance from abroad. The more than 150,000 Samoans who live overseas provide two sources of revenue. Their direct remittances have amounted to $128.2 million per year recently (about 24% of GDP), and they account for more than half of all tourist visits. In addition to the expatriate community, Samoa also receives more than $28 million annually in official bilateral development assistance from China, Japan, Australia, and New Zealand. These three sources of revenue--tourism, private transfers, and official transfers--allow Samoa to cover its persistently large trade deficit.
In March 2006, the United Nations reviewed Samoa's status as a Least Developed Country and recommended graduation into Developing Country status. Samoa sought a review of the decision on grounds of economic and environmental vulnerability, citing the 2009 tsunami and global financial crisis as grounds for extension. The UN agreed to extend Samoa’s transition period to 2014.
GDP (2009): $584.4 million.
GDP per capita (2009 est.): $3,193.
GDP composition by sector: Services 75.3%, industry 13.1%, agriculture 3.6%.
Industry: Types--tourism, coconuts, small scale manufacturing, fishing.
Trade (2007): Exports--$13.37 million: fish, coconut products, nonu fruit products, processing of automotive components, beer, taro. Export markets--New Zealand, Australia, U.S. (includes American Samoa). Imports--$247 million: food and beverages, industrial supplies. Import sources--New Zealand, Hong Kong, U.S. ($19.99 million), Australia, Japan, and Fiji.
External debt (2007): $202.8 million (99.9% is owed to multilateral lenders).
Currency: Tala (or Samoan dollar).
Government
of
Samoa
The 1960 Constitution, which formally came into force with independence, is based on the British Westminster parliamentary system, modified to take account of Samoan customs. Malietoa Tanumafili II held the post of head of state for 45 years until his death in May 2007. His successor, Tui Atua Tupua Tamasese Efi, was selected by the unicameral legislature (Fono) for a 5-year term.
The Fono contains 49 members serving 5-year terms. Forty-seven are elected from territorial districts by ethnic Samoans districts; the other two are chosen by non-Samoans on separate electoral rolls. Universal suffrage was extended in 1990, but only chiefs (matai) may stand for election to the Samoan seats. The voting age is 21 years and over. There are more than 30,000 matais registered but only 16,000 are in the country, about 8% of whom are women. The prime minister is chosen by a majority in the Fono and is appointed by the head of state to form a government. The 12 cabinet ministers are appointed by the head of state on the advice of the prime minister, and subject to the continuing confidence of the Fono.
The judicial system is based on English common law and local customs. The Supreme Court is the court of highest jurisdiction. Its chief justice is appointed by the head of state upon the recommendation of the prime minister. Unique to Samoa’s judicial system is the Lands and Titles Court, which hears customary/traditional land and matai title grievances.
Principal Government Officials
Head of State--His Highness TUI ATUA Tupua Tamasese Efi (since June 20, 2007)
Head of Government--Prime Minister TUILAEPA Lupesoliai Aiono Sailele Malielegoai
Ambassador to the United States--Ali'ioaga Feturi ELISAIA
Samoa maintains its diplomatic representation in the United States at the Mission of Samoa to the United Nations, 800 2nd Avenue, Suite 400J, New York, NY 10017; tel: 212-599-6196; email: [email protected]
POLITICAL CONDITIONS
The Human Rights Protection Party (HRPP) has held a majority in the Fono for the past six consecutive 5-year terms. As of end-2010 there was no officially recognized opposition party. HRPP leader Tofilau Eti Alesana served as prime minister for nearly all of the period between 1982 and 1998, when he resigned due to health problems. Tofilau Eti Alesana was replaced by his deputy Tuilaepa Sailele Malielegaoi.
Parliamentary elections are held every 5 years, and the last was held in March 2006. The Human Rights Protection Party, led by Tuilaepa Sailele Malielegaoi, won 35 of the 49 seats. The Supreme Court ordered by-elections due to bribery and death of a member of parliament, leading the HRPP to gain two extra seats; the HRPP held 37 of 49 seats at the end of 2007. After the 2006 elections, the Samoa Democratic United Party (SDUP) was the opposition party but later suffered defections and divisions that reduced it below the eight members required by parliamentary orders to constitute an official parliamentary party. Its remaining adherents thus officially become independents.
In March 2008, two HRPP members left the party in a dispute over legislation proposed by the Prime Minister to change the "road code" from driving on the right (American) side to driving on the left (British) side, which took effect September 2009. These resignations--the first in recent years--left the HRPP with 35 seats. In July 2008, two new political parties were formed: the Tautua Samoa Party (TSP), consisting of independents and the two individuals who had defected from the HRPP (however, not recognized in parliament because standing orders state they must have registered before the general election); and the People's Party (TPP), formed from a group protesting the government's legislation to switch the driving side of the road.
In June 2009, the Speaker of the House ordered that the nine parliamentary seats that claimed membership in the Tautua Samoa Party were void and ordered by-elections for the nine seats. The decision was made based on the Electoral Act, which states that no new party can be formed in parliament if it was not registered before the last general election. The TSP sought a legal injunction against the Speaker’s decision, and in July 2009 the Chief Justice ruled against the Speaker’s decision, noting the weak Electoral Act wording and interpretation by the Speaker. The members of TSP have since returned to parliament.
On September 7, 2009 Samoa made history by becoming the first country since the 1970s to switch the driving side of the roads from right (as in the United States) to left (as in the U.K.), after three of the biggest, most peaceful protest marches in Samoa’s history and an unsuccessful lawsuit against the government to stop the switch and/or delay the date of implementation. The switch happened as announced, with September 7 and 8, 2009 as mandated public holidays for Samoans to become accustomed to the change.
In October 2009 and February 2010, parliament amended the Electoral Act and Samoa’s Constitution, respectively, to disallow current members of parliament from being part of or associated with political parties other than parties of which they were members during their initial swearing of the oath of allegiance. As a result, in March 2010 three Independent members resigned from parliament, as they indicated their association with the Tautua Samoa Party. Two members of TSP were re-elected and another seat was gained by HRPP in the June by-election. Samoa’s next general elections are expected to take place in March 2011.
Type: Mix of parliamentary democracy and Fa'a Samoa (Samoan custom/"way").
Independence (from New Zealand-administered UN trusteeship): January 1, 1962.
Constitution: January 1, 1962.
Branches: Executive--head of state (5-year term; elected by parliament), prime minister (head of government), cabinet. Legislative--unicameral parliament (Fono). Judicial--Court of Appeal, Supreme Court, and supporting hierarchy.
Major political parties: Human Rights Protection Party (HRPP), Samoa Party (SP), Tautua Samoa Party (TSP), and The People's Party (TPP).