1. How would you describe today the economic panorama of French Polynesia and what are the main dynamics of growth supporting the local economy?
Jean-Louis Pelloux: The Polynesian economy has been growing steadily, with GDP increasing by 2.8% in 2023 and 1.1% in 2024. It remains largely driven by tourism, which represents around 14% of GDP, generates approximately 99 billion Pacific francs in revenue, and employs about 13,000 people. The government has set ambitious targets, aiming to welcome more than 600,000 visitors annually by 2033.
Beyond tourism, key sectors include the primary sector, digital industries, energy, and the blue economy, which is particularly important given French Polynesia’s vast exclusive economic zone, comparable in size to Europe and encompassing around 120 islands. Another critical pillar is financial transfers from the French state, which account for roughly a third of the economy and significantly shape public investment.
Other important sectors include construction, fisheries, and pearl farming, historically a major export industry, although it has faced challenges in recent years. Emerging sectors such as vanilla, sugarcane, and especially rum production are also gaining traction.
Nicolas Tanseau: Agriculture remains limited due to geographic constraints, but it is becoming a strategic priority. 75% of products consumed by the local population come from imports, making food autonomy a key issue. There are promising private-sector initiatives, particularly in logistics, aimed at improving the transport of fresh goods between islands.
2. What are the main challenges linked to French Polynesia’s geography?
Nicolas Tanseau: The biggest challenge is insularity. French Polynesia is extremely remote, about eight hours from the United States and five from New Zealand. Internally, the islands are scattered, making transport and infrastructure development costly and complex. For example, justifying infrastructure investment on islands with very small populations is difficult.
This impacts everything, from logistics and the cost of goods to access to information and digital connectivity. While progress has been made, including partnerships with global tech companies to improve connectivity, these challenges remain central.
3. Which sectors offer the most promising outlook for the future?
Jean-Louis Pelloux: Tourism remains the cornerstone, but growth is constrained by limited accommodation capacity and air connectivity. While connections to the United States have improved significantly, links to Asia remain underdeveloped. New routes, such as direct flights to Australia, are expected to enhance accessibility.
There is also strong potential in developing a regional air network across the Pacific, linking destinations like Hawaii, Japan, and the Marquesas Islands. However, this requires investment in appropriate infrastructure and fleet modernization.
Nicolas Tanseau: The blue economy, particularly fishing, also holds untapped potential. Despite a large maritime area, local fishing capacity remains limited, and foreign vessels often operate near territorial boundaries. Strengthening maritime resources and enforcement is a key issue.
4. How would you describe the business climate in French Polynesia today?
Jean-Louis Pelloux: Overall, the business climate remains positive. The post-COVID recovery brought strong economic performance, although there has been some slowdown over the past 18 to 24 months. Inflation is a major concern, as the territory relies heavily on imports, which amplifies global price increases.
Nicolas Tanseau: The high cost of living is a structural issue, driven by expensive imports, limited land availability, and infrastructure constraints. There is also a need to decentralize economic activity, but this requires improved transport and connectivity.
5. What are the main advantages for international investors?
Jean-Louis Pelloux: French Polynesia offers a stable and secure legal framework based on French law, which is a major advantage. The currency, the Pacific franc, is pegged to the euro, providing additional financial stability. The territory benefits from political stability, strong institutions, and a reliable banking system aligned with European standards.
Nicolas Tanseau: Compared to other regions, French Polynesia is considered geopolitically stable and secure. This is a significant factor for long-term investors, particularly investment funds.
6. What should foreign investors understand about the fiscal and regulatory framework?
Nicolas Tanseau: Taxation is determined locally and remains relatively simple. However, the applicable tax regime depends on the investor’s structure, whether they establish a local entity, operate remotely, or set up a permanent establishment. Each option has different implications.
7. Are you seeing growing interest from foreign investors, particularly from the United States?
Jean-Louis Pelloux: Yes, especially from digital and technology companies. Many are not necessarily looking to establish a physical presence but want clarity on their tax obligations related to activities involving French Polynesia. We frequently advise on issues such as VAT, withholding taxes, and territorial taxation.
8. How can French Polynesia leverage its strategic position in the Pacific?
Nicolas Tanseau: Its geographic position is a major asset. With improved air and maritime connectivity, it could serve as a hub linking the United States, Asia, and Oceania. However, infrastructure, particularly port capacity, must be upgraded to accommodate larger vessels and maintain trade routes.
9. Can economic diversification reduce dependence on tourism?
Jean-Louis Pelloux: Tourism is so dominant that replacing it in the medium term would be very difficult. While sectors like fishing, agriculture, and marine resources offer opportunities, they are unlikely to match tourism’s economic impact.
Nicolas Tanseau: The real question is not replacing tourism but redefining it, focusing on sustainable and diversified tourism while gradually developing complementary sectors.
10. What are the key priorities to strengthen long-term competitiveness?
Nicolas Tanseau: First, fiscal stability is essential. Investors need predictable tax frameworks to plan over five to ten years. Second, infrastructure, ports, airports, and transport networks, must be upgraded and maintained.
Jean-Louis Pelloux: Education and workforce training are also critical, particularly in hospitality. Maintaining high service standards is essential for competitiveness in tourism.
11. What message would you like to convey to readers of the Los Angeles Times about investing in French Polynesia?
Jean-Louis Pelloux: French Polynesia is more than a travel destination, it is a serious investment opportunity. It combines a stable legal framework, a secure currency, and attractive tax incentive programs, both under France's Girardin scheme and local territorial provisions, that provide significant tax relief to investors.
Strategically located in the Pacific, it sits at the crossroads of major economic regions. With ambitious development goals and a modern economic vision, it offers strong potential for long-term investment. For investors in Los Angeles, it is also highly accessible, just an overnight flight away.
Nicolas Tanseau: It is a rare combination: a stable, secure, and well-regulated environment in the heart of the Pacific. That is a compelling proposition for any international investor.
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