New Caledonia. Country Profile 2003

Transcription

1 Country Profile 2003 New Caledonia This Country Profile is a reference work, analysing the country s history, politics, infrastructure and economy. It is revised and updated annually. The Economist Intelligence Unit s Country Reports analyse current trends and provide a two-year forecast. The full publishing schedule for Country Profiles is now available on our website at The Economist Intelligence Unit 15 Regent St, London SW1Y 4LR United Kingdom

2 The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The Economist Intelligence Unit delivers its information in four ways: through its digital portfolio, where its latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group. London The Economist Intelligence Unit 15 Regent St London SW1Y 4LR United Kingdom Tel: (44.20) Fax: (44.20) london@eiu.com Website: New York The Economist Intelligence Unit The Economist Building 111 West 57th Street New York NY 10019, US Tel: (1.212) Fax: (1.212) dantecantu@eiu.com Hong Kong The Economist Intelligence Unit 60/F, Central Plaza 18 Harbour Road Wanchai Hong Kong Tel: (852) Fax: (852) hongkong@eiu.com Electronic delivery This publication can be viewed by subscribing online at Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, on-line databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office Copyright 2003 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author s and the publisher s ability. However, the Economist Intelligence Unit does not accept responsibility for any loss arising from reliance on it. ISSN Symbols for tables n/a means not available; means not applicable Printed and distributed by Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK.

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4 Country Profile The Economist Intelligence Unit Limited 2003

5 New Caledonia 1 Contents 2 Regional overview 2 Membership of organisations 4 The regional economy 7 Basic data 8 Politics 8 Political background 8 Recent political developments 9 Constitution, institutions and administration 10 Political forces 11 International relations and defence 11 Resources and infrastructure 11 Population 11 Natural resources and the environment 12 Transport, communications and the Internet 12 Energy provision 12 The economy 12 Economic structure 13 Economic policy 13 Economic performance 14 Economic sectors 14 Agriculture 14 Mining and semi-processing 15 Manufacturing 15 Other services 15 The external sector 17 Appendices 17 Sources of information 17 Reference tables 17 Estimated population 17 Gross domestic product by sector 17 Territorial finances 18 Net official development assistance 18 Gross domestic product 18 Inflation 18 Metallurgical exports 19 Visitor arrivals 19 Trade balance 19 Main imports The Economist Intelligence Unit Limited Country Profile 2003

6 2 New Caledonia Regional overview Membership of organisations The PIF is the leading regional organisation An Australian is the next PIF secretary-general The Pacific Islands Forum (PIF) is the most important regional organisation. It was formerly known as the South Pacific Forum, which in turn developed from the South Pacific Bureau for Economic Co-operation, established more than 40 years ago. The Forum officially adopted its new name at its annual meeting in 2000, recognising that not all of its members are in the South Pacific since the admission of former US trust territories north of the equator. The Forum was created in 1971 in response to the spread of self-government in the region and the need of the new states to have a political forum. The current members are Australia, the Cook Islands, the Federated States of Micronesia, Fiji, Kiribati, Nauru, New Zealand, Niue, Palau, Papua New Guinea, the Marshall Islands, Samoa, the Solomon Islands, Tonga, Tuvalu and Vanuatu. The Forum meets each year at head of state/government level, and immediately after the meeting ministers spend two days in consultation with the Forum dialogue partners! Canada, China, the EU, France, Indonesia, Japan, Malaysia, the Philippines, South Korea, the UK and the US. A separate dialogue session is held with Taiwan by the five Forum members that have diplomatic relations with it. The Forum Secretariat (based in Suva, the capital of Fiji, with a staff of about 70), administers a series of programmes aimed at promoting regional cooperation among member states through trade, investment, economic development, and political and international co-operation. It has also developed a growing portfolio of technical training programmes as part of broader initiatives for institutional strengthening, good governance and accountability. Operations are funded by contributions from member governments and donors. Current donors are the dialogue partners, together with Australia, New Zealand, the Commonwealth Secretariat and Germany. Since October 1994 the Forum has had observer status at the UN General Assembly. Island governments have used the PIF and other regional forums to make their voices heard on other issues, such as climate change and the impact of rising sea levels, and shipments through the Pacific of radioactive materials, notably by the UK-based company, British Nuclear Fuels (BNF). An extensive sea-level monitoring network has been established by Flinders University in Australia, and the PIF secretariat has, for several years, been negotiating with BNF and the other parties involved in nuclear shipments and reprocessing, over an agreement to cover possible mishaps. In a surprise development and a break with tradition, Greg Urwin, an Australian and a former high commissioner to Fiji, Samoa and Vanuatu, was appointed secretary-general-designate of the PIF at the organisation s annual summit in August Mr Urwin will replace Noel Levi, from Papua New Guinea. The post of secretary-general, the senior regional position, has always been filled by a Pacific islander, and the leaders of some of the smaller PIF member states, including Nauru and the Cook islands, were unhappy at the aggressiveness of Australian lobbying for their candidate and suspicious of Country Profile The Economist Intelligence Unit Limited 2003

7 New Caledonia 3 Australia s motives in seeking the top position in the organisation. Nevertheless, Mr Urwin, who is married to a Samoan, was finally appointed in a secret ballot. The issues discussed at the 2003 annual summit give an indication of the future direction of debate. Central to the agenda were issues such as pooled regional governance, greater co-operation on regional air transport, security and crossborder crime, and the role of foreign aid, as well as the perennial issues of climate change and the impact of globalisation and trade liberalisation on small island economies. One concrete measure agreed at the summit was the creation of a new regional police training centre, to be based in Fiji. The initiative, to be sponsored by Australia and New Zealand, will see several hundred police officers from the Pacific islands receive training at the centre each year in an effort to improve policing skills and standards across the region. The Pacific Community Other regional organisations A second regional organisation is the Pacific Community (formerly the South Pacific Commission), formed in 1947 by Australia, France, the Netherlands, New Zealand, the UK and the US. They were then the colonial powers in the region and insisted that the organisation be non-political, dealing only with technical issues and matters of practical co-operation. It now has 26 members and continues as a non-political body, offering technical advice, assistance, training and research. Its headquarters are in Nouméa, New Caledonia, with a substantial presence in Suva. It is a bilingual organisation (English and French), with a staff of around 175 and a limited budget, augmented by special funding for particular projects. It has an integrated work programme based around the development of the region s land-based, marine-based and human resources. The secretary-general of the Forum Secretariat chairs the Council of Regional Organisations of the Pacific (CROP), which brings together the Forum and the Pacific Community, as well as six other regional organisations: the Forum Fisheries Agency (based in Honiara, Solomon Islands); the Pacific Islands Development Programme (based in Hawaii); the South Pacific Regional Environment Programme (based in Apia, Samoa); the South Pacific Applied Geoscience Commission (based in Suva, Fiji); the South Pacific Tourism Organisation (also based in Suva); and the University of the South Pacific (based in Suva, but with campuses and centres throughout the region). A further regional organisation, although narrower in membership than either the PIF or the Pacific Community, is the Melanesian Spearhead Group (MSG), which brings together the Solomon Islands, Papua New Guinea, Vanuatu, Fiji and the New Caledonia independence coalition, the Front de Libération Nationale Kanak Socialiste (FLNKS). The MSG aims to promote co-operation between members in economic, political and cultural matters, and is implementing a free-trade agreement between its members. The EU-ACP Convention The 14 island members of the PIF are also members of the 78-state ACP (Africa, Caribbean and Pacific) group within the Cotonou Agreement. This agreement, which was ratified in February 2003, is the successor to the Lomé Convention and gives the ACP nations preferential trading access to the EU market and a share in EU aid programmes and other assistance. The secretariat of the PIF is The Economist Intelligence Unit Limited Country Profile 2003

8 4 New Caledonia charged with the task of drafting a joint position for negotiations between the PIF members and the EU provided for under the agreement. The Cotonou Agreement, which is to last for 20 years, has a strong political dimension. As well as respect for human rights, democratic principles and the rule of law, which were all essential components of the Lomé Convention, the ACP countries have also agreed!reluctantly!to promote good governance and to combat corruption and illegal immigration into the EU. Under previous conventions, ACP products, whether agricultural or industrial, entered the EU duty-free, but four agricultural products!beef, sugar, bananas and rum!were subject to a more restrictive system of tariff quotas. The new agreement offers a negotiating framework for tailor-made regional free-trade agreements (RFTAs), under which ACP countries, preferably within existing economic groupings, will gradually open their domestic markets to European products. Given the adjustment costs involved, a preparatory period of eight years has been agreed, during which the old system of preferences will continue to apply. In any event, Kiribati, Samoa, the Solomon Islands, Tuvalu and Vanuatu, which are classified as least developed countries (LDCs), will still be given the option of entering the EU generalised system of preferences (GSP). By 2004, one year before the GSP is to be renegotiated, the EU will assess which other ACP countries are not in a position to enter an RFTA. Unlike the Lomé Convention, the GSP, which benefits all developing countries, complies with the rules of the World Trade Organisation (WTO), because it is based on the dual principles of non-reciprocity and non-discrimination. The regional economy The region is diverse Economies dependent on aid and external conditions The 22 island countries of the Pacific region are spread across more than 30m sq km, but occupy less than 2% of that area. Although almost all of the countries are politically independent and have their own governments and heads of state, aid from the former colonial powers, and from other bilateral and multilateral donors, remains important. The importance of aid reflects the relative weakness of most of the economies in the region, as well as problems of poverty, law and order and poor governance. Agriculture, in particular the export of agricultural commodities, is central to the economies of many of the Pacific islands. Other important industries are fishing and tourism. Fiji and New Caledonia have important mining industries, but none of the other small island communities has significant natural resources. The high degree of dependence on such sectors renders the islands vulnerable to external shocks, the weather (most island countries are vulnerable to cyclones, among other things) and the vagaries of commodity markets. The economic performance of trading partners also has a direct and usually rapid impact on the island economies. Tourist arrivals fell in the wake of the terrorist attacks on the US on September 11th 2001, although not to the extent initially feared. Inbound tourism rose once again in 2002, partly as a result of Country Profile The Economist Intelligence Unit Limited 2003

9 New Caledonia 5 the October bombings in Bali, Indonesia, which had the effect of diverting some tourists to the Pacific. Over the same period, the recovery in world gold and nickel prices has benefited Fiji s small gold production industry and New Caledonia s important nickel industry, which is attracting a high level of new investment. But political instability within the region remains a major obstacle to investment and growth. Islands struggle with problems such as crossborder trade The Australian-led multilateral intervention in the Solomon Islands, which began in late July 2003, should be seen in the context of the wider difficulties faced by island-state governments. Regional governments, including those of Australia and New Zealand, have for some time been intensifying their efforts to deal co-operatively with a range of new problems arising from organised crime and the impact of globalisation, but the smaller states lack the ability and resources to deal effectively with issues such as the smuggling of drugs, arms and people through and into the region, overpopulation, environmental degradation, money-laundering and corruption. The governments of Australia and New Zealand have been reluctant to be seen to be intervening in their neighbours affairs in a neo-colonialist fashion, but faced with the effective collapse of the Solomon Islands, and the security implications of having a failed state on their doorstep, they have obtained support from the government in Honiara, the capital of the Solomon Islands, and more widely among the Pacific island countries, for intervention. The other island states depend on patrol and surveillance operations carried out by Australia, New Zealand and France (from New Caledonia). Regular meetings are held between law enforcement, customs, immigration and legal officials to review developments and exchange information. However, the joint implementation of a modernised legislative framework and co-ordinated border control systems has been slow. Six island jurisdictions have offshore financial centres (tax havens) to augment their meagre revenue. Most of these have implemented new laws following the threat of sanctions, made in 2000 by the Paris-based Financial Action Task Force (FATF), which operates under OECD auspices, unless regulatory regimes were strengthened to minimise opportunities for money-laundering and other criminal activities. A Pacific free-trade area has been established The Pacific Island Countries Trade Agreement (PICTA), first envisaged at the inaugural meeting of the Pacific Islands Forum in 1971, came into force on April 13th The free-trade agreement, which will be phased in over the next ten years, aims to remove gradually trade barriers such as import duties, quotas and tariffs between the 14 PIF island nations, to help boost trade, promote regional integration and improve the economic efficiency of the island economies. There are, however, some concerns about the benefits of a freetrade area relative to the costs, especially given the low level of intra-island trade (which accounts for just 3% of total trade within the region) and the impact on government revenue of lower export taxes and import duties, which represent the main source of income for most island governments. The main beneficiary of the free-trade agreement is likely to be Fiji, which has the most developed economy and is the biggest trader with the other islands. The Economist Intelligence Unit Limited Country Profile 2003

10 6 New Caledonia Closely connected with PICTA is the Pacific Agreement on Closer Economic Relations (PACER), which provides a framework for the future development of trade relations between the 16 PIF countries. Under this agreement, the two developed PIF members, Australia and New Zealand, have agreed to provide technical assistance to and preferential market access for products from the developing PIF members, which in return have assured Australia and New Zealand that they will not be disadvantaged by any trade arrangements the developing PIF members may enter into with other developed countries. Country Profile The Economist Intelligence Unit Limited 2003

11 New Caledonia 7 Basic data Land area Population Major islands Capital Climate Weather Languages Measures Currency Time Public holidays, ,103 sq km 235,000 (mid-2003 unofficial estimate) New Caledonia island (la Grande-Terre), 16,750 sq km; and the Loyalty Islands (principally Lifou, Mare, Ouvea and Tiga), 1,981 sq km Nouméa (population 76,293 at 1996 census) Tropical Average annual temperature of 23 C with little variation. Cyclones can occur during the wet season, December to March. Average annual rainfall in Nouméa is 1,000 mm French (official language); many local languages also in use Metric CFPfr (the French Pacific franc!communauté française du Pacifique, CFP). Average exchange rate in 2002: CFPfr126.6:US$1. Exchange rate on September 5th 2003: CFPfr126.6:US$1 11 hours ahead of GMT January 1st (New Year s Day); April 12th (Easter Monday); May 1st (Labour Day); May 8th (1945 Victory Day); May 20th (Ascension Day); May 31st (Whit Monday); July 14th (Bastille Day); August 15th (Feast of the Assumption); September 24th (New Caledonia Day); November 1st (All Saints Day); November 11th (Armistice Day); December 25th (Christmas Day) The Economist Intelligence Unit Limited Country Profile 2003

12 8 New Caledonia Politics The Nouméa Accord of 1998 defined New Caledonia as an overseas country of France, a status that required the French government to adopt a constitutional amendment because of its unprecedented nature. It was a mark of the French government s determination to resolve the long-simmering, and sometimes violent, struggle between the proponents of independence in New Caledonia, led by the Front de libération nationale kanak socialiste (FLNKS), and supporters of the status quo, represented by the Rassemblement pour la Calédonie dans la République (RPCR). Both groupings and the French government are signatories to the accord, which lays out a process of irreversible transfer of powers over 15 years, leading to a referendum on independence. However, progress on implementing the accord has been slow. The first government of New Caledonia was inaugurated after elections in May Communal violence is a growing problem, and exchanges of gunfire between rival neighbourhoods occur frequently. Political background From its annexation in 1853 until the Nouméa Accord of 1998, New Caledonia was an overseas territory of France. However, the pro-independence sentiment of the Kanaks, the country s indigenous Melanesian people, has always been strong, leading to violence as far back as the 19th century. By the 1980s they faced the possibility of becoming a voting minority and violence erupted again. Successive French governments had encouraged the growth of the French population in the territory as a buffer against the independence movement. At the 1996 census the Kanaks remained the largest ethnic group, but at 44% of the total population of 196,836, they did not constitute a majority. French and other Europeans accounted for 34%, and Wallisians and Futunians (Polynesians from the Wallis and Futuna islands, a French possession in the Pacific) for 9%, with Indonesians, Tahitians and several smaller groups making up the balance. Recent political developments The relationship with France has been at the centre of political debate for three decades, with the FLNKS arguing for independence and the RPCR (which is affiliated with the Rassemblement pour la République in France) seeking continued close association with France. Years of violence led to the signing of the Matignon Accord in 1988, and then, in May 1998, the Nouméa Accord, which accepted the principle of shared sovereignty in New Caledonia. The accord provided for the creation of new institutions, including representative assemblies, and the progressive transfer of powers from France to New Caledonia over a period of 15 years. Eligible voters would then decide whether to take a final step to independence. Divisions in the territory, however, flared up again at the end of 1998, after a resounding endorsement of the Nouméa Accord in a referendum. Country Profile The Economist Intelligence Unit Limited 2003

13 New Caledonia 9 The RPCR and FCCI coalition government The Fédération des comités de coopération indépendantistes (FCCI), a breakaway group from the FLNKS, allied itself with the RPCR after elections in May 1999 to form the first executive government of New Caledonia under the new arrangements. The territory s first president, Jean Lèques of the RPCR, resigned in March 2001 and was replaced by the current president, Pierre Frogier. Mr Frogier is also a member of the RPCR, which holds 24 of the 54 seats in the Congress. In coalition with the FCCI, it commands a majority and initially held seven of the 11 executive positions in the government. The FLNKS and its affiliate party, the Union Calédonienne (UC), held the other four positions. The decision of the only UC cabinet member, Gerald Cortot, to resign his place forced a re-election of the executive by the Territorial Congress in November This was under a provision contained in the Nouméa Accord that requires a fresh executive election when one member of the cabinet resigns and is not replaced by a member of his party. Although the re-elected executive was largely unchanged!mr Frogier remains president!the precedent that Mr Cortot has set highlights the extent to which a single party can unsettle the government under the collegiality provisions of the Nouméa Accord. The new cabinet was reduced in size to ten: the RPCR holds six seats, its FCCI allies one seat and the FLNKS and UC have one seat and two seats respectively. Mr Cortot rejoined the cabinet following the re-election. Kanaks protest over voting rights The visit of the French president, Jacques Chirac, to New Caledonia in July 2003 was disrupted by demonstrations, controlled by the police using tear gas, as Kanaks demanded progress on electoral reform. The central issue for proindependence politicians is the fear that without reforms to limit electoral rolls to long-term residents, the votes of the indigenous Kanak population on matters affecting the long-term future of the territory will be outweighed by those of newcomers. However, the French government has shown little enthusiasm for implementing the provisions in the acccord relating to electoral reform. Several EU officials also visited the islands in 2003, leading to speculation that New Caledonia will eventually adopt the euro. Constitution, institutions and administration New Caledonia is a largely autonomous territory within the French state, except in areas such as foreign relations, defence, justice, currency and credit. The Nouméa Accord, signed in May 1998, provides for the devolution of power to New Caledonia. A referendum on complete independence is due to take place in The head of state is the president of France, Jacques Chirac. The legal system is based on the French system, augmented by mandatory consultation with the Territorial Custom Council (Conseil coutumier territorial, comprising 40 members) on matters of customary and land law. Magistrates preside over the decentralised lower courts. The Court of Appeal is based in Nouméa and there is access to the higher appeal court of France for certain matters. The Economist Intelligence Unit Limited Country Profile 2003

14 10 New Caledonia The provincial assemblies The Territorial Congress Compétences are transferred to the territory New Caledonia has provincial assemblies for the Northern Province (with 15 members), Southern Province (32 members) and the Loyalty Islands Province (seven members), elected by direct universal suffrage for six-year terms. The next provincial elections fall due in The provincial assemblies are responsible for local economic development, land reform and cultural affairs. Together, the members of the provincial assemblies constitute the 54-seat Territorial Congress, which is responsible for New Caledonia s fiscal affairs, infrastructure and primary education. The congress and assemblies each elect a president who joins the High Commissioner (also responsible for the French Pacific territory of Wallis and Futuna) appointed by the French government, as part of the territory s executive. The High Commissioner is responsible for external relations, defence, law and order, finance, and secondary education. There are also eight local councils, as well as the Territorial Custom Council, which is consulted by the congress and the French government, and which is responsible for maintaining Kanak tradition and culture. Local government is in the hands of 32 communes (local government units). New Caledonia elects two members to the French National Assembly and one member to the French Senate. From 2007, it will elect two members to the French Senate. The scope of New Caledonia s political institutions is gradually changing under the Nouméa Accord as state powers, or compétences, are transferred. The first transfer, in January 2000, covered external trade and economic affairs. Political forces The FLNKS and the RPCR Representation in French National Assembly When the Nouméa Accord was signed, the main political forces were the FLNKS, the RPCR and the FCCI, along with the French government, but the political scene has since become more splintered. In 2001 a group of younger activists from the UC (the largest of a number of pro-independence parties that make up the FLNKS coalition) began agitating for greater recognition of UC in its own right, including in the congress, to which they were elected on an FLNKS ticket. The consequent infighting within the FLNKS has left the alliance leaderless since 2001, and there is a possibility that the FLNKS will be dissolved. In August 2002 the FCCI reconsidered its coalition with the RPCR after losing its sole seat in the executive government. The FCCI leader, Raphaël Mapou, was sacked from the executive, where he was responsible for customary affairs, after criticising a government decision on the granting of mining and prospecting rights. However, the later appointment of the FCCI s Léopod Jorédié as minister for customary affairs has kept the coalition intact so far. Jacques Lafleur, leader of the ruling RPCR and president of the Southern Province, is one of the two deputies to the French National Assembly (the lower house). The other deputy is Pierre Frogier, the president of the New Caledonian government. The president of the Territorial Congress is Simon Loueckhote, of the RPCR, who is also a member of the French Senate (the upper house). New Caledonia will elect two senators from Country Profile The Economist Intelligence Unit Limited 2003

15 New Caledonia 11 International relations and defence Defence of the territory is the responsibility of France. The FLNKS is a member of the regional grouping known as the Melanesian Spearhead Group (MSG), along with the governments of Fiji, Papua New Guinea, the Solomon Islands and Vanuatu. The MSG met in Nouméa for the first time in 2001, with the government and the FLNKS acting as joint hosts. For several years, the FLNKS and the RPCR were invited to attend the annual meeting of the largest regional grouping, the Pacific Islands Forum (PIF), as guests. Only the FLNKS took up the invitation but after the approval of the Nouméa Accord, New Caledonia was given observer status in the PIF in The accord also provided for a New Caledonian diplomatic presence within each French mission. Resources and infrastructure Population Internal migration is towards Nouméa The 1996 census showed that New Caledonia s population totalled 196,836, up from 164,173 at the time of the 1989 census and 145,368 at the time of the 1983 census. Later estimates from the Bank of Hawaii put the population at 209,222 in A fresh census was due to be held in 2003, but the French president, Jacques Chirac, objected to a question on ethnic origins in the census. The census has therefore been delayed until Average annual population growth rate of around 2.4% between 1990 and 1996 was supported by both a high birth rate, especially among Kanaks, and the arrival of people from France and other French overseas territories (in 1996 around 23% of the population comprised people born outside New Caledonia). But population growth slowed to around 1.7% per year between 1997 and At the time of the 1996 census, nearly half the population was aged under 25, with 68% of the territory s population living in the Southern Province, 21% in the Northern Province and 11% in the Loyalty Islands. Despite attempts to rebalance development away from the capital, Nouméa, the main internal pattern of population migration has continued to be towards the city and its neighbouring suburban areas. Natural resources and the environment The islands possess substantial nickel reserves New Caledonia is the third largest nickel producer in the world, after Russia and Canada. It is estimated to have reserves of about 50m tonnes, around 25% of the world s total, all in the central mountain chain that runs for most of the length of the main island. Apart from nickel, there are reserves of cobalt, iron and chrome and smaller amounts of copper and lead. The mountain chain creates two distinct regions. The east coast is humid, with abundant and varied vegetation and most of the cropping land. The west coast, which is much drier, supports extensive eucalypt stands and most of the livestock production. The climate is temperate, with in effect only two seasons. The Economist Intelligence Unit Limited Country Profile 2003

16 12 New Caledonia The warm season, from November to April, can be subject to cyclone activity. Average temperatures in the cooler season still reach 20-23ºC. Transport, communications and the Internet There is heavy reliance on air transport The territory relies heavily on air transport for both international and internal movement of passengers and freight. There are frequent international services linking Nouméa s international airport, La Tontouta, with neighbouring countries and with the US, Japan and Europe. There are regular services from the domestic airport, Magenta, to the outer islands and major towns on the main island. There is a good road system in and around Nouméa, the most populous region and, although the road infrastructure is more basic in the rest of the country, it continues to improve. The same is true of the telecommunications infrastructure. Internet facilities and usage have grown rapidly in recent years but statistics are lacking. Overseas shipping is predominantly through Nouméa. The publication Les Nouvelles Calédoniennes has a monopoly position in the daily newspaper field. French government services tend to dominate radio and television, although some variety is provided by two pay-tv services and some private-sector radio entertainment. Energy provision New Caledonian electricity generation was around 1,565m kwh in 2000, according to the US Department of Energy, of which 1,215m kwh was generated from thermal sources and 350m kwh from hydroelectricity. Wind power is a viable option in the islands. A French company, Vergnet Pacific, has plans to install up to 31 wind power generators at Prony in the Southern Province at a cost of CFPfr1.9bn (US$16m). This would provide 3.5% of the country s residential electricity demand. The company believes that wind power could eventually meet 30% of residential electricity demand in New Caledonia. The economy Economic structure The economy depends on nickel and French payments The economy is highly dependent on the growing nickel industry and payments from the French government. Nickel production accounts for around 10% of GDP and about 90% of total export earnings. The territory s reliance on imports means that it runs a persistent and large trade deficit, the value of which has surged from CFPfr35.6bn in 1995 to CFPfr64bn (US$540m) in The large trade deficit is offset by French transfer payments comprising direct economic assistance, payroll subsidies and other expenditure. Other industrial activity is mostly in the small/medium business sector, with 15% of these businesses employing ten or fewer workers. However, transport and communications, other services (including tourism) and commerce accounted for more Country Profile The Economist Intelligence Unit Limited 2003

17 New Caledonia 13 than 70% of total GDP in Formal economic activity is largely confined to the main island. Economic policy The emphasis is on regional development Under the Nouméa Accord of 1998 and the earlier Matignon Accord (1988), the French government committed itself to providing high levels of economic development assistance. From the time of Matignon, it also began to scale back the special allowances and subsidies given to civil servants seconded from France, making secondment less attractive and helping to make local living costs more realistic. An important provision in both accords is economic rebalancing, meaning an emphasis on economic development in areas other than Nouméa and its environs. Moves towards achieving this aim have centred on further development of the nickel-mining industry, in particular the US$1bn joint venture between the Société Minière du Sud Pacifique (SMSP) and a Canadian company, Falconbridge, for a smelter in the Northern Province, which involves the construction of an international port and airport and the creation of about 2,000 jobs. There is a similar joint venture, originally costed at US$1.45bn, between Franches Bureau de Recherches Geologiques et Minières and Inco of Canada in the Southern Province. The French government s 30% stake in Société Le Nickel (SLN) has been turned over to the provincial governments. SLN is also planning to raise output. As the economy relies so heavily on nickel and French transfer payments, it is vulnerable, in particular, to global developments that affect demand for nickel and global nickel prices, as well as developments in France. The sizeable tourism industry is also dependent on wider economic trends. There is considerable potential in the agricultural and fisheries industries, which has yet to be fully tapped. However, with the exception of mining, significant increases in private-sector investment are unlikely to occur until the political process has progressed further. Economic performance Growth depends on nickel production and prices The dependence of the economy on nickel production means that economic performance varies with world nickel prices and domestic nickel production. Rapid expansion of nickel production, and high prices in the late 1980s, produced rapid real GDP growth, which slowed in the 1990s. According to the Bank of Hawaii, the economy contracted by an estimated 3.2% in 1998, largely because of the Asian economic downturn, but expanded by 0.9% in 1999 and 2.1% in There are no recent GDP figures, but a 40% rise in world nickel prices in 2002 helped to offset sharply lower production and lower export volumes, with the result that nickel export earnings fell by only US$7m to US$162m. Strong nickel prices should allow New Caledonia to earn more from nickel exports in The Economist Intelligence Unit Limited Country Profile 2003

18 14 New Caledonia Economic sectors Agriculture Commercial agriculture is underdeveloped About 30% of the population live or work on farms. However, commercial agriculture is a small component of the economy (together with food processing, it accounted for only 3.7% of GDP in 1997), so food still accounts for around 20% of total imports. The prospect of lower-cost, large-scale farming still appears distant, but increasing numbers of farmers are looking to generate more income from eco-tourism. Fisheries are also underdeveloped, but shrimp exports to Japan and China are increasingly important to the economy. Shrimp exports were the second largest export category in 2002, after nickel and nickel products, earning the country US$22m. The Northern Province and Loyalty Islands authorities are implementing plans for significant expansion of their fishing fleets, and aquaculture has expanded rapidly in the last ten years. Mining and semi-processing Mining, metallurgy and energy together accounted for more than 10% of GDP in 1997, although the economy is much more dependent on the mining of nickel and other metals than this statistic suggests, with nickel and associated products accounting for 80% of New Caledonia s total export earnings in The various nickel industry investments have become caught up in the islands ethnic politics. A Canadian company, Falconbridge, is investing at Koniambo in the Northern Province, populated by the indigenous Kanaks, and another Canadian nickel corporation, Inco, is investing at Goro in the Southern Province, where the population is mainly pro-french. The Koniambo venture will have a production capacity of 60,000 tonnes of nickel/year, and the Goro venture will have a capacity of 54,000 tonnes of nickel and 52,000 tonnes of cobalt. In addition to this, the established local player, Société Le Nickel (SLN), plans to raise output from 57,000 tonnes to 70,000 tonnes by Kanak politicians had raised fears that the Southern venture would render the Koniambo venture unviable, but the government believes that the upturn in global demand for nickel means that there is enough room in the market for both ventures to come on line. Spiralling costs at Goro, the commissioning of which was originally budgeted at US$1.45bn, a figure that is now likely to rise to US$2bn, caused Inco to suspend work there in November 2002, pending a cost-saving assessment. However, Inco announced in July 2003 that it had identified cost savings and would therefore resume work at Goro in 2004, with production now expected to begin in Meanwhile, there were protests in 2002 when Inco was given six-year exploration rights at Prony in the Southern Province. The protesters argued that New Caledonia s rich mineral reserves were being given away. A nickel venture at Prony could see a further 180,000 tonnes of nickel output capacity being put in place in 6-10 years time. Country Profile The Economist Intelligence Unit Limited 2003

19 New Caledonia 15 Manufacturing Manufacturing is small-scale and of limited extent; even low-value consumer items are flown in from France. In approvals for residential and commercial buildings averaged about 100 per month for the territory as a whole, three-quarters of which related to projects in and around Nouméa. There is some local food processing, and a small building industry. Many Kanaks work in cottage industries producing artefacts for the tourist trade. Other services Tourism shows promise Large-scale tourist resorts outside the capital, Nouméa, have been difficult to develop because of opposition from Kanak communities, who own most of the land, but facilities on a smaller scale have been developing steadily. Tourism was affected when France resumed nuclear testing in the Pacific in 1995, but there was a marked resurgence in visits in 1996, after France declared an end to the tests. Traditionally, the largest numbers of visitors have come from Japan, France, Australia and New Zealand. There were 103,933 visitor arrivals in 2002, up by 3.4% year on year, with hotel occupancy rates standing at 64%. Around half the visitors were cruise line passengers; the Pacific Princess, a P&O cruise liner, began visiting New Caledonia in November However, visitor arrivals in early 2003 were disappointing, largely owing to the global insecurity and the outbreak in Asia of Severe Acute Respiratory Syndrome (SARS). A 164- unit hotel complex with two restaurants, to be run by the Marriott hotel chain, will be completed in Nouméa in July The external sector A trade deficit persists New Caledonia s merchandise trade deficit has crept up in recent years, with imports regularly coming in at around twice the value of exports. This is only sustainable because of the huge transfers (around 20% of GDP) provided by France. France supplied 40% of imports in 2002, with Australia the second largest supplier at 13%. France is also New Caledonia s most important export market, absorbing 23% of the territory s exports in 2002, followed closely by Japan. The various nickel industry developments provide the only real hope of New Caledonia s substantially raising its export earnings. Despite a 40% increase in world nickel prices, earnings from nickel exports fell to US$162m in 2002 owing to sharply lower local production. However, strong nickel prices and the resolution of some of the production problems that plagued the industry in 2002 are likely to support stronger export earnings in 2003: nickel export earnings in the first quarter rose by 8.2% year on year. The Economist Intelligence Unit Limited Country Profile 2003

20 16 New Caledonia Main trading partners, 2002 Exports CFPfr m % of total Imports CFPfr m % of total France 14, France 50, Japan 12, Australia Taiwan 11, Singapore 12, Spain 5, New Zealand 6, Australia 4, US 5, South Korea 3, Japan 4, Italy 3, Germany 3, India 1, Italy 3, US 1, China 3, Wallis & Futuna 1, UK 2, Total incl others 61, Total incl others 126, Source: Service des Douanes en Nouvelle-Calédonie. Country Profile The Economist Intelligence Unit Limited 2003

21 New Caledonia 17 Appendices Sources of information National statistical sources Institut territorial de la statistique et des études économiques, Tableaux de l économie Calédonienne Institut d Emission d Outre-Mer, Service des Douanes en Nouvelle-Calédonie, International statistical sources OECD, Geographical Distribution of Financial Flows to Aid Recipients (annual) Reference tables These tables provide the most up-to-date statistics available at the time of publication. Estimated population Total 195, , , , ,222 Source: Bank of Hawaii. Gross domestic product by sector (CFPfr m) Agriculture & food processing 11,681 11,687 12,835 n/a n/a Energy, mining & metallurgy 33,734 34,065 37,232 n/a n/a Mechanical assembly & other industry 13,887 13,298 13,815 n/a n/a Construction & public works 18,928 16,776 17,447 n/a n/a Transport & telecommunications 20,908 22,634 23,415 n/a n/a Other services & commerce 230, , ,516 n/a n/a GDP by industry 329, , , , ,170 Source: Bank of Hawaii. Territorial finances (CFPfr m unless otherwise indicated) French state spending 78,091 80,088 81,668 83,023 88,758 % of GDP Territorial revenue 66,465 78,555 65,150 71,736 77,747 Territorial expenditure 65,774 68,630 68,729 73,198 74,218 Budget balance 691 9,925-3,579-1,462 3,529 % of GDP Source: Bank of Hawaii. The Economist Intelligence Unit Limited Country Profile 2003

22 18 New Caledonia Net official development assistance (US$ m) Bilateral n/a France n/a Australia n/a New Zealand n/a Japan n/a Multilateral n/a EU n/a Total n/a Source: OECD, Geographical Distribution of Financial Flows to Aid Recipients. Gross domestic product Total (CFPfr m) At current prices 335, , , , ,303 At constant (1990) prices 289, , , , ,810 % change, year on year Per head (CFPfr 000) At current prices 1, , , , ,660.0 At constant (1989) prices 1, , , , ,409.1 % change, year on year Source: Bank of Hawaii. Inflation (period averages) % change, year on year Source: Central Bank of the French territories in the Pacific. Metallurgical exports (CFPfr m; fob) Nickel ore 8,577 7,561 7,253 11,532 12,100 Chrome ore Ferro-nickels 21,825 22,844 25,198 29,382 27,992 Mattes 4,292 4,986 5,995 6,889 7,067 Other 3,878 2,710 3,260 3,432 3,066 Total 38,585 38,101 41,706 51,235 50,225 Source: Institut territorial de la statistique et des études économiques, Tableaux de l économie Calédonienne. Country Profile The Economist Intelligence Unit Limited 2003

23 New Caledonia 19 Visitor arrivals Visitor arrivals 86,256 91, , ,835 99,735 Japan 25,066 26,987 34,629 35,420 31,017 France 24,707 27,640 30,149 28,805 29,500 Australia 15,325 14,401 17,229 15,455 14,567 New Zealand 7,168 6,768 7,448 7,164 7,090 Source: Institut territorial de la statistique et des études économiques, Tableaux de l économie Calédonienne. Trade balance (US$m) Exports fob Imports cif , ,065.7 Balance of trade Source: Service des Douanes en Nouvelle-Calédonie. Main imports (CFPfr m; cif) Foodstuffs 15,162 15,285 16,497 16,126 16,708 Minerals 7,175 8,616 8,948 8,517 9,107 Chemicals 6,198 6,531 6,493 6,851 7,078 Rubber 3,424 3,492 3,788 4,037 4,244 Timber & wood products 1,201 1,286 1,515 1,376 1,277 Paper & paper products 2,590 2,577 2,924 3,029 2,901 Textiles 3,719 3,781 3,613 3,530 3,611 Metal & metal products 5,813 6,464 5,528 5,917 6,416 Machinery, appliances & electrical supplies 18,085 14,901 14,427 14,646 16,765 Vehicles & spare parts 15,046 15,189 13,882 13,671 15,879 Other 10,747 9,829 9,691 9,196 9,102 Total 89,160 87,951 87,306 86,896 93,088 Source: Institut territorial de la statistique et des études économiques, Tableaux de l économie Calédonienne. Editors: Kate Allard (editor); Graham Richardson (consulting editor) Editorial closing date: September 5th 2003 All queries: Tel: (44.20) london@eiu.com The Economist Intelligence Unit Limited Country Profile 2003