Tuvalu, a small island nation in the South Pacific Ocean, faces unique challenges as it strives for economic development and sustainability. With a population of almost 10,000 and a land area of about 26 square kilometres, its geographic isolation and modest size limit traditional avenues for growth. Despite these constraints, Tuvalu possesses a vast exclusive economic zone (EEZ) spanning nearly a million square kilometres rich with marine resources that could serve as a cornerstone for economic progress. The nation’s traditional development partners and allies, such as Taiwan, Australia and New Zealand, have provided support over many years.
The recent and unique Australia-Tuvalu Falepili Union Treaty is an example of a partnership that is much needed by Tuvalu. But questions linger about whether the efforts of Tuvalu’s partners and allies are sufficient to unlock the island’s potential, especially in critical industries like fisheries. In the Falepili Union Treaty, under component four, “Uplifting Our Partnership”, the sectors listed are telecommunications, education, fiscal support, connectivity and health. That leaves out Tuvalu’s biggest revenue generator and asset.
Foreign investment remains uncertain and the recent review of the Tuvalu National Investment Policy Framework (TNIPF) highlights both opportunities and obstacles that continue to shape the country’s future.
Tuvalu’s small landmass and population naturally raises doubts about its attractiveness to foreign investors. The nation’s economy relies heavily on external support, including direct grants from traditional development partners and banks like the World Bank and the Asian Development Bank, as well as revenue from the Tuvalu Trust Fund.
Traditional industries such as agriculture and tourism are restricted — small businesses that locally trade traditional products made from coconuts and seashells are very much limited. These businesses involve time-consuming, manual processes and are labour-intensive, especially for women. Tourism remains negligible due to uncontrollable external factors such as the expensive fares charged for inbound travel by Fiji Airways, which compounds Tuvalu’s isolation. This leaves the ocean as Tuvalu’s most promising asset, yet foreign investment in harnessing this resource has been slow to materialise.
The vast EEZ offers untapped potential beyond licensing fees. A fisheries processing centre, for instance, could leverage Tuvalu’s strategic location in the region to supply markets in Asia, the European Union and beyond. However, the risks associated with Tuvalu’s size, remoteness, and vulnerability to climate change deter many investors. The perception that “Tuvalu is sinking” — a narrative driven by rising sea levels and global warming — further complicates efforts to attract capital. While this threat is real, with the country’s average elevation just barely three metres above sea level, it overshadows the immediate opportunities that exist, particularly in the marine sector. Development partners have supported climate resilience projects, such as the Tuvalu Coastal Adaptation Project, but these efforts often prioritise survival over prosperity. A shift toward investment in productive industries, like fisheries processing, could counter this perception, proving that Tuvalu is not just a victim of the climate crisis but a viable player in the global economy.
However, migration trends are shrinking the population as Tuvaluans seek opportunities abroad, often through labour mobility schemes in Australia and New Zealand. This brain drain depletes the workforce needed to drive new industries, while the loss of residents shrinks the domestic market, further discouraging investment.
Although it was never specifically captured in the current Tuvalu Government’s 21 priorities, the fisheries sector is a vital revenue source and the nation’s biggest asset, with fishing licenses — primarily for tuna — generating significant income through agreements with nations like Taiwan, Japan, South Korea and the United States. In 2024, the Tuvalu government was projected to earn A$33.7 million from fishing licenses, which is a large proportion of the total projected domestic revenue of A$47.1 million but a figure that fluctuates depending on the global market. Yet, the country lacks the infrastructure to process and export its own catch on a large scale. Almost all the fishing activity in Tuvalu’s waters is conducted by foreign vessels, which extract fish and process it elsewhere, leaving Tuvalu with licensing fees but little control over the value chain.
Building a major fisheries processing centre could transform this dynamic. Such a facility would allow Tuvalu to process its abundant tuna — species like skipjack, yellowfin and bigeye — and export value-added products to international markets, creating jobs, boosting revenue and fostering economic independence. The TNIPF talks about the possibility of developing such a facility in Tuvalu, and allies like Taiwan, with their advanced fishing industry and expertise, are well-positioned to lead this effort. Investments in cold storage, canning facilities and training programs for local workers could turn Tuvalu into a regional hub for fisheries products. Yet, the contributions of Tuvalu’s traditional development partners have largely focused on smaller-scale aid rather than transformative industrial projects, leaving a gap that undermines partnership potential. A neighbouring country, Solomon Islands, does have a viable fish canning industry and also exports tuna loins to the European Union market. This model requires less investment than a full canning facility and can be used as a model by Tuvalu.
Building such infrastructure in Tuvalu raises a challenging question: is it feasible to construct this kind of facility in such a small country, given the costs, climate change risks, limited land area, labour supply constraints, low market demand and competition from established facilities like SolTuna in Solomon Islands? So far, very few feasibility studies have been conducted on setting up such a facility in Tuvalu. The only comprehensive published study was completed by The Pacific Community (SPC) in the late 2000s, which concluded that infrastructure deficits, high freight costs and limited markets are major barriers to developing a cannery in Tuvalu. However, the study suggested that focusing on value-added fish products, such as tuna jerky, could be realistic for Tuvalu, since this is similar to traditional products like Tuvaluan salted fish (ika masima). For example, the global market for fish jerky snacks is forecasted to reach US$1.3 billion by 2033.
It might be time for Tuvalu to start having more direct and sometimes uncomfortable conversations with its partners.
The ocean is Tuvalu’s lifeline and its allies possess the resources and expertise to transform this asset into a thriving export industry. Until bold moves are made, the question remains: are Tuvalu’s partners truly doing enough? Given Tuvalu’s potential and the challenges it faces, the answer right now seems to be no.
