Revelations by the Prime Minister in a recent press conference of Government negotiations for a stake in one of Samoa’s iconic hotels is perplexing to say the least.

An article (Government in negotiations on hotel ‘investment’) in the Wednesday 12 October 2022 edition of the Samoa Observer reports on behind-the-scenes negotiations between the Government and the Sheraton Samoa Aggie Grey’s Hotel & Bungalows.

Prime Minister Fiame Naomi Mata’afa, in response to questions from the media on an additional $10 million loan for Sheraton, confirmed that negotiations are underway between the Ministry of Finance and the hotel’s owners on becoming a shareholder in the hotelier business.

She indicated that the thinking behind the move is so that the financial institution (DBS) doesn’t incur any losses.

“The truth is DBS has no money and the Government has to look at what should be done,” the Prime Minister added. “Whether that is by assisting the hotel for tourists and how that will be done. 

“But at this time the last update is there were negotiations between the hotel and the Ministry of Finance.”

According to Fiame, the hotel is in negotiations with the MOF because it was the Government  [during the term of the Human Rights Protection Party Administration] that facilitated and approved the hotel’s initial loan of $53 million.

But why is the Government negotiating to become a shareholder in a hotel when we all know how muddy the water can become if and when the different Ministries put on their regulator hats and try to enforce the law?

It just doesn't make sense for the Government through the DBS becoming a part-owner of the hotel when it [State] is mandated by the people to create a conducive environment for businesses to thrive while also enforcing consumer protection, worker safety and other laws and leaving business opportunities to citizens.

Can the current Fa’atuatua i le Atua Samoa ua Tasi (FAST) Government give us an example of a business that was successfully run by the Government and has gone on to become a profitable enterprise for the benefit of its shareholders?

We can only refer to the term of the former Administration, when the State as the sole shareholder in the national airline Samoa Airways, used its executive powers to get the investment vehicle Unit Trust of Samoa (UTOS) to approve millions of tala in loans to prop up the airline’s operations. By the time there was a change of government following last year’s general election, a total of $33 million in loans was approved and disbursed by the UTOS to the national airline. To date the airline is yet to declare profit.

And then there is the danger of being pro-tourism at the expense of other sectors in Samoa, as the Government does not have direct business shareholding in those areas. For example, in a critical sector such as agriculture and fisheries, for which the DBS was initially established to assist through the provision of credit lending facilities. 

How about the tourism sector in Samoa and what are its views of the Government becoming a shareholder in Sheraton? Are they afraid of losing business from the Government which include offering their venues for hire to host Government Ministry conferences or international summits? 

How will the Government’s decision to become a shareholder of Sheraton affect the perception of hoteliers, resort owners and beach fale owners and will they have concerns about the “regulator” of their industry now becoming a player in that very industry and competing with them?

We believe the Government’s core responsibility should be managing the economy, promoting economic growth, lowering inflation and creating a conducive environment for foreign investment in order to provide more jobs for citizens.

For the Government to become a player in Samoa’s private sector, through its ownership of shares in one of Samoa’s top hotels, puts itself in a conflict of interest position and raises questions about the independence of its regulatory functions.

In fact, for the Government to become a shareholder in a hotel, it will also raise red flags among international investors eyeing Samoa as a potential investment destination. International investors would want guarantees of investor rights and protection – becoming a shareholder in a local rival company will only create fears of unbalanced scales of justice.

If the Government fears it could lose the $53 million loan the former Administration initially gave to Sheraton, then like every other company with an outstanding debt, the process of recovery should be allowed to take its course which can and should include legal proceedings.