He says while Pa Enua residents are on Rarotonga for Te Maeva Nui celebrations, Merchant of Paradise will roll out our Paradise Prosperity Plan (PPP) on a “need to know basis”. “Essentially, it is a tourism-led development that integrates seven parts of the economy on 10 pa enua islands with a feeder resort on Rarotonga as gateway to the world,” Webb says. “It targets concessional finance already set aside by China for commercial sector development under OCP to make it happen.”
Yesterday Webb supplied what he described as an “executive summary” to CINews, setting out the development company’s plans.
Webb says the development is a community sector-driven, tourism led, integration of seven parts of the economy on 10 pa enua islands, with a feeder resort on Rarotonga that he says will not disrupt the current tourism led economies of Rarotonga and Aitutaki.
He claims it will enable the outer islands to contribute to the Cook Islands economy instead of depending on it.
“A hybrid of China’s One Belt One Road initiative of inclusive development for the prosperity of all, the matrix of assets developed will operate as one on completion and expands economy of scale and prosperity outcome exponentially,” he said in a statement to CINews
Webb said the development would “quantum leap” current tourism and develop 4-6 star signature resorts unique to each island, integrated with agriculture and fishing developments for food security and shipping and air services for sustainability. Trade and finance would be integrated on completion of the project to balance trade deficits and provide microfinance services, he added.
The pa enua islands to be developed are Penrhyn, Manihiki, Rakahanga, Pukapuka and Nassau in the northern group and Palmerston, Atiu, Mitiaro, Mauke and Mangaia of the southern group. Webb sayd Aitutaki already has a sustainable enough tourism led economy, and will be dealt with in a later stage of the overall plan
“All developments on-land will employ the Unit Titles Act 2005, which allows subdivision of assets developed in the airspace above the land and not the land itself. The land will remain whole for the common use of all title holders, thus restricting security over assets developed above the land and not the land.
“Developing unit titles is akin to developing ancestral land, as retained by Pukapuka, Mitiaro and Mangaia. Only Rarotonga and Atiu have adopted unit titles thus far, meaning other islands need to adopt it in order to progress their developments.”
According to Webb, the development funding targets concessional finance already set aside by China for commercial sector development under the OCP aid platform in 2014, which expires next year, and adds that this makes it “imperative” that the plan is undertaken sooner rather than later.
“The development programme is 18 months – six months for documentation and 12 months for construction, with the construction of assets on all islands to be undertaken simultaneously and synchronised to all complete at the same time,” he says.
“The development will be implemented in 2 stages; Stage 1 being to develop the matrix of assets as described herein and Stage 2 being to streamline tourism and develop Aitutaki, expand agriculture to farming for export and expand fishing to farming lagoons and national waters for export. Details of stage two will be presented later.”
Webb says tourism and agricultural development on each island will be undertaken by landowners who will hold 67 per cent shares and share their prosperity with non-government organisations (NGO) of their community including the Religious Advisory Council, traditional leaders (Ui Ariki), Women’s League (Vaine Tini), Grey Power pensioners (Pa Metua), and sports bodies and cultural bodies. They will gift 5 per cent beneficiary shares to each NGO and retain 37 per cent shares.
“The other 33 per cent shares will be held by mainland China partners skilled in tourism and agriculture developments and able to source supplies and technologies out of China to save cost.
“In addition to their 37 per cent shares of profit, the landowners will receive 1.5 per cent of gross revenue turnover and goodwill paid at $100,000 an acre for tourism use, $75,000 for commercial use, $50,000 for farming and $25,000 for nonproductive use such as roads and golf course.
“MOP will form a local trust with all Cook Islanders as beneficiaries, indigenous and immigrants alike, and hold 67 per cent shares in developments ‘off-island’, namely fishing, shipping, airline, trade and finance, again with mainland China partners to hold 33 per cent shares.”
Webb claims that under the plan, community sector assets will include:
Tourism: a chain of 20 village style signature resorts on pa enua islands offering 628 beds, with a 274 bed feeder resort on Rarotonga, adding 902 new beds to national tourism.
“Included is a 78-bed international class golf resort on Atiu. The chosen signature is “Christianity”, which comes with a church centre stage in the village resort with Sundays dedicated to God. An international brand operator able to take Cook Islands tourism to the world will be engaged to operate the chain of signature resorts,” Webb says.
“Attached to main resorts on island will be community health clinics and community security stations operated by the Ministry of Health and Cook Islands Police Service respectively, which will provide health and security services at the cost of resorts and free to tourists and public alike.”
Agricultural activities will include a mix of 85 stock and crop farms to supply fresh produce to domestic markets, with some non-perishable products such as vanilla and noni farmed for export,” Webb adds.
“Included will be a processing facility on Mangaia for agriculture export.”
He says a fleet of 15 fishing boats will supply fresh fish to domestic markets, with surplus catch exported. Included will be a fish transshipment facility at Penrhyn, where both the local fleet and international fleets of boats fishing nearby international waters can transship their catch to international markets.
Webb says the plan also allows for a fleet of two wet leased container ships for international and domestic services, including six barges, six ocean ferries and three lagoon cruisers for domestic services, with 24 port facilities developed for checking in passengers and freight.
“An international wet lease operator able to operate a virtual shipping service will be engaged to operate this service.”
According to Webb, the plan also includes air services, with two jets connecting Rarotonga to islands with airports and two amphibian aircraft connecting Palmerston to Rarotonga and Rakahanga to other Northern Group islands.
“All will be wet leased, with facilities developed at all eight airports and amphibian landings for checking in passengers and freight. An international wet lease operator able to operate a virtual airline service will be engaged to operate this service.”
Webb says this “matrix” of assets will require 1,535 full time workers on completion and becoming operational, including 950 for tourism, 291 for agriculture, 149 for fishing, 80 for shipping and 65 for the airline.
“Some 1,000 workers will be sourced from New Zealand, with 535 sourced from the public sector and immigrants, and all will be paid New Zealand’s $20 per hour livable wage to entice them.”
Webb adds that the development allows for the private sector to engage in tourism and associated activities that feed off the matrix of assets developed, at their cost, so as to ensure the sustainability of the plan.
As far as financing of the plan is concerned Webb says the involvement of Chinese partners is essential to its viability.
“They can access technology, supplies and labour directly out of China, which can shave some 40 per cent off build costs.
“And pivotal to operational sustainability is the quantum leap to 4-6 star tourism, which takes average daily rate of beds to $500 and $300 more than current sustainable tourist facilities. The development cost for fixed and mobile assets will be $300 million, Webb adds.
“The valuation on completion, taking into account the development risk, is $500,000,000, which represents added value and/or development profit of $200,000,000, levelling the loan to value ratio at 60.00 per cent which is sufficient for security purposes.”
The predicted operational revenue on year one trading for the assets developed is $700,142,241, Webb says.
“This will triple current gross domestic product and take it over the billion dollars mark, excluding revenue generated by private sector feeding off the matrix.
The predicted earnings before interest and taxation is $200,978,800 and represents a return on investment of 31.40 per cent, which is more than enough to service debt.”
The loan interest is still to be finalized but being concessional finance loan, interest coverage is expected to exceed 2,000% and bankable.
Assuming the post-development operation proves up and the usual 10% return on investment applies, it will increase valuation to $2,009,788,000.
The predicted tax take for government is still to be finalised but is expected to exceed $100,000,000 and more than enough to compensate our loss of some $70,000,000 aid if we ascended to “developed” status.
Webb says Merchant of Paradise is a collective of indigenous Cook Islanders who are concerned that depopulation has taken its toll of the pa enua and left those on islands “suffering in silence with no economy to speak of”.
“They have the combined skill to scope and oversight the PPP development and the hearts to develop and give it all away to their fellow Cook Islanders.
“MOP is on a mission to raise the economic status of Cook Islanders on par with New Zealanders, so those who left to work in New Zealand and beyond may come home to work the new PPP economy and rebuild our indigenous population, and perhaps earn our right to ascend to developed status and full sovereignty with own seat at the United Nations.
Webb says Merchant of Paradise’s plan was inspired by prime minister Henry Puna, who foresaw dying economies on pa enua islands on coming to power in 2010 and told the nation it was time to help our pa enua brothers and sisters.
“His words gave birth to the Paradise Prosperity Plan.”
Webb also paid tribute to China’s president, Xi Jinping, who he said had foreseen the need for commercial sectors of Small Island Developing States to step up and engage in growth developments. “He told a meeting of their leaders in Fiji, in 2014, that China would set aside concessional finance for commercial sector developments under the One China Policy. His words gave purpose to the presentation of this plan and provided a roadmap to funding it.
His accolades also included New Zealand’s prime minister Jacinda Ardern and deputy prime minister Winston Peters.
“He told us during their Pacific Reset visit that they will walk beside us and not interfere with our internal affairs.
“Their words made a mockery of current scaremongering that we will lose our New Zealand citizenship if we ascend to developed status (by) employing Chinese funding.”