Pacific export confidence grows with opportunities through digital trade

With small populations but vast distances and complicated logistics, the Pacific has a lot to gain from online commerce, writes Tim Harcourt, former Chief Economist of Austrade and J.W. Nevile Fellow in Economics at UNSW.

The Pacific continues to play its key role as a ‘nursery’ for Australian and New Zealand exporters. That’s the key finding of the third Pacific Islands Export Survey for 2018.

Australian exporters, in general, try the Pacific (including each other) to get their sea legs as an international exporter before expanding to Asia and beyond. The proportion of new exporters (those who started exporting in the past three years) is at 41 er cent, up from 31 per cent in 2014 and 38 per cent in 2016. They are generally mature businesses though new to export.

The new exporters are boosting exporter confidence. The growing proportion of new exporters is driving confidence in the 22 countries that make up the Pacific, with new services, particularly in tourism and manufacturing being more bullish than agriculture and services more cautious. However, the number of exporters overall showing confidence has declined between 2016 and 2018, from 56 per cent to 49 per cent, but still well above the 39 per cent recorded in 2014.

Australia and New Zealand are the key export markets for Pacific Island exporters, with 92 per cent of exporters regarding them as main destinations, but intra-regional trade is growing too, with two out of three businesses trading within the region.

With small populations but vast distances and complicated logistics, the Pacific has a lot to gain from online commerce. And exporters are taking it up with 79 per cent surveyed using online channels for business purposes. Tourism exporters (91%) are the most active online with social media the most popular channel with 2 out of 3 businesses and 71 per cent of new exporters.

Exporters, as found in other economic studies, are innovative and proactive finding new ways to boost sales. According to the survey, 43 per cent of exporters developed new products and services for export markets, enhanced marketing through online channels, and improved efficiency through improved business processes. Government assistance makes a difference too in the Pacific, with 28 per cent of exporters using Pacific Islands Trade & Invest for assistance.

What are the barriers to export in the Pacific?

Naturally, given the unique geography, shipping routes and transport and energy costs are a barrier. Pacific exporters would also like to see more direct flights. But access to finance is also a barrier, with the majority of exporters (59 per cent) finding it difficult to obtain finance for their exporting activities, and 70 per cent of new exporters.

Exporters are also looking for agents, Joint Venture (JV) partners, access to grants, and a majority (56 per cent) would welcome foreign investment in their business. Most need assistance with marketing their own business (50 per cent), 40 per cent suggested better marketing of the Pacific was needed and 46 per cent wanted hep with introductions to overseas customers.

Tim Harcourt

Tim Harcourt


JW Nevile Fellow in Economics, UNSW Sydney and Host of The Airport Economist on Sky News and Qantas