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How to Start an HVAC BusinessI. What is HVAC?Let’s start off by describing what HVAC is and what kind of day to day work you can expect as an HVAC technician.HVAC stands for Heating, Ventilation, and Air Conditioning – sometimes HVACR where the R is for Refrigeration. The types of projects range from working on heating systems, cooling systems, and ventilation systems. Essentially, HVAC works on the equipments that control the temperature and quality of air in the building, generally working in homes, schools, office buildings, factories and other commercial properties.What kinds of projects do HVAC technicians work on?These are some typical jobs and projects that a technician may have to complete:Install or repair HVAC systems and/or parts according to design specificationsInstall electrical wiring and controlsConnect HVAC systems to air ducts or water linesInspect HVAC systems as part of maintenanceDetermine HVAC systems’ energy use and make recommendations to improve the system’s efficiencyHowever, there are some drawbacks of these projects. While most of the work is done indoors, sometimes you may have to work on a heat exchanger outside in really bad weather. Occasionally, the workspace is cramped or small because of the way the HVAC systems are designed. HVAC work can vary greatly but deciding on your specialization can impact the types of jobs you do.II. Overview of the HVAC IndustryHere’s a fun fact for people considering the HVAC industry, according to the U.S. Bureau of Labor Statistics, “employment of heating, air conditioning, and refrigeration mechanics and installers is projected to grow 14 percent from 2014 to 2024, much faster than the average for all occupations.”So what does this mean?For the people looking for a relatively high paying job without having to complete a four year degree program, HVAC gives them a strong chance of finding a well paying job after graduating.Additionally, prospects for those with degrees from accredited technical schools or apprenticeships have never been better. Systems are becoming more complex and ‘smart’ so many firms are turning to experienced, educated, and trained graduates.For those already in the HVAC industry looking to start their own business, this means that the industry is growing and there is going to be a continued increase in demand for HVAC services over the next decade. For example, units already installed have to replaced in the next 10 to 15 years.Why is HVAC growing?Apart from the continued maintenance and replacement of existing HVAC systems, environmental concerns are causing many buildings to switch to newer energy saving heating and air-conditioning systems that are more efficient. This efficiency reduces costs and helps save the environment.Existing systems that have already been installed will have to be replaced in 10 to 15 years. And of course, the maintenance of these systems requires on-site checks by technicians.III. How to Become an HVAC TechnicianThere are primarily two paths to becoming an HVAC technician: complete a degree from a trade or technical school or receive training through an apprenticeship.The Apprenticeship Route:Many HVAC technicians receive training through an apprenticeship that can last three to five years. This process typically includes an annual 2,000 hours of on-the-job training and at least 144 hours of technical education. Through an apprenticeship, students learn how to read blueprints, learn about the tools of the trade, safety practices, and about the various heating and cooling systems.Basic Requirements to Become an HVAC ApprenticeAt least 18 years of ageMust have a high school diplomaPass a math testHave a valid driver’s licensePass a drug testThere are many trade associations through which you can apply to become an apprentice. You can find one by searching for ‘HVAC apprenticeship’ in ‘Your Location,’ where your location is where you want to complete your apprenticeship. The apprenticeship programs vary in requirements by state and city. For example, the California HVAC Apprenticeship program is a five year program requiring you to work 8000 hours to the status of journeyman.The biggest benefits of becoming an apprentice is that you earn while you learn, even though you may only get paid a small percentage of a journeyman’s wages. This is a great option for people who cannot afford to go to college.The Technical School Route:You can become an HVAC technician by completing a postsecondary program from a trade school, technical school or community college. Today, many community colleges offer courses in heating, air conditioning, and refrigeration. You will graduate with an associate’s degree or certificate, and typically, these courses range from 6 months to 2 years.Since the programs are relatively short and inexpensive, this is a good option for people who don’t want to spend four years completing a bachelor’s degree or who can’t afford to not work while studying.However, it doesn’t end there. Some HVAC technicians need to get certified while others could also benefit from certifications.HVAC CertificationsNote: These certifications are different from licenses or other formalities that are required by states. Those licenses vary from state to state, which we will cover later in this post.1. EPA 608 CertificationThe EPA 608 certification is required for any HVAC technician buying, handling, or working with refrigerants. To get certified, you must pass a written test. Apprentices are exempt from certification if they are continuously supervised by a certified technician. There are four levels of certifications:For servicing small appliances (Type I).For servicing or disposing of high or very high-pressure appliances, except small appliances and MVACs (Type II).For servicing or disposing of low-pressure appliances (Type III).For servicing all types of equipment (Universal).2. NATE CertificationThe North American Technician Excellence (NATE) certification is an industry approved written exam that is nationally recognized throughout the industry. NATE certified HVAC technicians tend to earn more money and have better job prospects too.3. HVAC Excellence CertificationThe HVAC Excellence certificates test experience rather than book knowledge. You are required to have a couple years of experience before you can take the tests. However, these certificates are widely recognized in the HVAC business.Benefits of HVAC CertificationsGives you credibility if you run your own HVAC businessOpens up opportunities to work on larger and more complex projectsYou may earn more money than those without certificationsIt is a competitive advantage if you’re looking for a jobIV. How to Start an HVAC BusinessStarting an HVAC business can be a rewarding experience but it comes with the normal challenges of running a small business. As you may know, 50% of small businesses fail within the first year and 95% fail within five years. There are many mistakes that contribute towards the failure rate but with careful planning, a detailed business plan, and a watchful eye over finances, you can be a part of the 5%.There are four levels of value that you can provide to your customer, with the fourth one (relationships) being the most important in building a long and successful business.Products and FeaturesPrice and CostValue Added ServicesRelationshipsBefore you build good relationships you must earn credibility and trust. Every interaction with a customer reinforces trust and credibility, including pricing, quality of the work, consistency of the quality, certifications, customer service, and much more.As you speak with customers and prospects, you should be prepared to answer any objection they may have. By thinking about these questions, you are going to build trust and a long term relationship with your client who will stick with you and refer you to other people. These are some common questions and concerns HVAC contractors face that you may want to address:Which new HVAC systems are the most efficient and why this is the right system for you?What are the costs and benefits of repairing your system versus replacing it?What is your return on investment?What kinds of financing options are available for you?How can you maintain the system to avoid costly repairs?Many individuals are concerned that HVAC businesses aren’t always honest about estimates and try to overcharge them since they don’t know much about the system. Be transparent and honest and it will pay off in the long run. Some thing you can do to build trust:Offer a detailed written quote, clearly stating what is includedBe open about contingencies – if you find something that is beyond what you expected, be clear about itOther things you may want to include are estimated completion date, payment policy, warranties, and information about the parts you’re going to use.There are many resources such as books, blogs and websites for running a small business successfully, so we are going to focus on the two methods of starting your own HVAC business and the specifics that relate to the HVAC industry.I. HVAC FranchiseThere are many nationally and regionally recognized HVAC franchises that you could buy. The advantage of buying a franchise is that you’re able to buy credibility and trust of the brand. Think of it this way, if you opened a McDonalds franchise tomorrow, people would be lining up to buy fries and hamburgers without thinking about who actually owned the business. In addition, you would also get expert help in setting up the business, from the business plan to finances and purchasing.On the other hand, there are some downsides to becoming a franchisee too. It is important to remember that a franchisor will normally take an up front fee (can range from $50,000 – $80,000) for licensing out their rights and reputation. In addition, you will have to annually pay a percentage (5-8%) of your revenue regardless of whether you actually turn a profit or not.This site lists most of the available HVAC franchises. Before you decide to go the franchise route, do a lot of research to make sure it is the right fit for you.II. Your Own HVAC BusinessWe are going to first give you an overview of starting an HVAC business and later cover topics like HVAC software, state requirements, and startup costs.You can still own a successful HVAC business without being a franchisee. The costs are generally a lot lower since you aren’t paying the one-time ‘buy-in’ fee. You would essentially need to pay state HVAC license fee, certifications costs, a truck and your equipment. As we stated earlier, completing an HVAC certification can make a big difference as an employee and business owner.For staff, you can hire part time workers to help manage your office or even full-time employees or HVAC contractors to interact with customers and complete repairs and installations on site. You may want to hire as few people as possible initially to keep costs low. This means handling a lot of work by yourself.Insurance is necessary to run an HVAC business. There are two types of insurance you may want to get:General Liability InsuranceThis type of insurance is also called Commercial General Liability Insurance and is necessary for any small business owner. It protects you from accidents and mishaps. This insurance can also cover litigation costs and settlements.Worker’s CompensationIn most states, worker’s compensation is only required if you hire employees. It acts as insurance if your worker gets injured or hurt while working. It provides medical benefits and wage replacements to the injured worker.V. HVAC License Requirements (By State)States may have different licensing requirements for HVAC technicians. The rules vary greatly, with some not requiring a license while others reciprocating licenses from certain states.VI. HVAC Business ModelIf you are planning to start your own HVAC business, you will want to consider all the services you can offer and price them appropriately. These are some common services that are offered:HVAC RepairThis is pretty straightforward. You offer repair services for HVAC systems to different types of customers like hospitals, schools, office buildings, and residential homes. Typically, you will be called out to a job for a non-functioning system, will have to diagnose the problem, and then replace the part with inventory you carry with you if approved by the customer.Carrier HVAC InstallationAs stated earlier, the number of HVAC replacements are increasing as customers seek newer, more efficient systems, so there is still a good opportunity to specialize in new system HVAC installations.HVAC MaintenanceAs an added bonus to installing HVAC systems for clients, you can offer an annual maintenance package. You can also sell this service to clients other than the ones you’ve installed systems for.VII. HVAC Business Startup CostYou’re all set to start your own HVAC business (not franchise). Now comes the most important question before beginning any new venture:How much is it going to cost?Well surprisingly not that much!According to Entrepreneur Magazine, the average startup cost for an HVAC business can range between $2,000 and $10,000. This figure assumes you’re buying a used van or truck and you’re keeping equipment cost to a minimum. However, this startup cost can run up to $100,000 if you purchase everything up front. This unlikely though since you would lease most of the equipment.What are common expenses for a new HVAC Business?Van for transportation and equipmentHVAC toolsSpecialty toolsSafety equipmentHVAC softwareSuppliesOther monthly expenses:Business insuranceRentWagesUtilitiesCertificationsMarketingOffice suppliesCar insurance/fuelVIII. HVAC Business ProfitFirst we are going to discuss a little about salaries for HVAC technicians since this is a relatively high paying field that does not require a four year degree.The median salary for an HVAC technician was $45,110 in May 2015. The lowest 10% earned around $27,800, while the highest 10% earned more than $71,700!Apprentices usually earn half the amount of what an experienced technician earns but this increases as he/she becomes more experienced.Now, to the economics of an HVAC business. Most successful HVAC contractors aim for a 12% net profit margin.Installing a new HVAC system, which can cost a few thousand dollars, can net an HVAC business between 5-10% in profits. According to Contract Excellence, a trade magazine, a normal service call costs about $225 while an annual maintenance contract can net roughly $400 a year. However, there is a lot of discrepancy as prices vary greatly by location. So take these numbers with a pinch of salt.Due to the seasonality of the HVAC business (in most climates, the prime season lasts 7 months), many HVAC contractors include a high gross profit margin (about 45%) on equipment and limit the use of labor hours. They prefer getting jobs done quickly and moving on to the next project.IX. HVAC Marketing PlanThere are a ton of ideas that you can read up online for marketing small businesses. So we are going to go over just some of our favorites tips.Start SmallMarketing can become very expensive especially if it doesn’t generate any leads. “Industry sources estimated that acquiring a single customer costs an HVAC contractor between $200 and $300,” which would not be sustainable. You want to be around the average or below, at least when you’re starting out. Hustle hard and keep your marketing budget small until you continue to grow. Word of mouth and organic growth are the best marketing channels for small businesses.DirectoriesYou have to register your business on business directories like Yelp and Angies List. It helps with search engine listings and helps customers find you.SignageYou may want to invest in adding your branding or logo to your van. It gives you more visibility. You can also buy yourself and your team uniforms with your logo on it.Web PresenceYou have to your own website. Keep it simple and professional. It is not very expensive to get a good website made now days, and here’s a quick guide from us on how to setup a simple site using Squarespace. However, there is also a benefit to hiring a professional to build and manage your website as they can better bring in traffic and ultimately customers using your website. SEO (Search Engine Optimization) is very important for local businesses as it allows you to rank in search results when people search for your services in your location. Outsourcing SEO to experts can give you the boost in traffic you need to get going.Pay per click search advertising can also be an effective tool for marketing your business. When users search for services you offer in Google in your served location, your ads could appear at the top of the results. Click here to learn more about local PPC advertising for service businesses.We also recommend you create social media accounts and post occasionally. However, you don’t want to post often initially and then two months later have zero posts, so keep it consistent and balanced if you go that route.Last LessonGet used to rejection. Starting a new business is hard and being rejected is even harder, but you should be prepared to hear “no” many times. Keep your head up, work hard and it will pay off.X. HVAC SoftwareToday, HVAC businesses and technicians have plenty of options to choose from when it comes to picking HVAC software. At the basic level, most of the softwares provide estimates, invoices, customer management, and scheduling features. We are going to go over some of the popular options on the market.AcowinAcowin is a Windows based software that can integrate with accounting software like Quickbooks. You can use Acowin to gather customer site information, track equipment and warranties, generate service agreements, schedule jobs and a lot more. The ACOWIN Project Management system is one of Acowin’s most prominent features which allows you detail out extensive information about the project.Intac InternationalIntac International is another popular field service software that can be used by a wide variety of field service businesses like plumbing, cleaning and landscaping services. Wintac need to be downloaded and used on your computer. The most popular license costs $2,695, which is recommended for HVAC services. Intac’s software allows you to create estimates, schedule jobs, manage inventory and your fleet. It also integrates with many other applications like Quickbooks and TomTom.FieldPulseFieldPulse is a monthly subscription software (starting at just $39 a month) for HVAC businesses. Not only is it easy to setup and use, but it’s affordable with no contract obligations, which makes it a great option for new and growing businesses. FieldPulse has a modern interface with full functionality for mobile apps (iPhone, Android, and tablet) in addition to a computer based WebApp. Schedule jobs with detailed information and notes to dispatch team members, then track status updates with geotagged locations from your team members. Create detailed estimates and invoices from the office or at the job site and provide your customer instantly with an invoice PDF to quickly and professionally service your customer. All of your customer history is conveniently stored in their customer profile for full traceability. Seamlessly manage your operations in the office or on the go with FieldPulse.

Economy of TuvaluFrom Wikipedia, the free encyclopediaJump to navigationJump to searchLocation of TuvaluTuvalu is a Polynesian island nation located in the Pacific Ocean, midway between Hawaii and Australia.[1] The economy of Tuvalu is constrained by its remoteness and lack of economies of scale. Government revenues largely come from fishing licences (primarily paid under the South Pacific Tuna Treaty); [2] direct grants from international donors (government donors as well as from the Asian Development Bank); and income from the Tuvalu Trust Fund (established in 1987 by the United Kingdom, Australia, New Zealand).[3] The lease of its highly fortuitous .tv Top Level Domain (TLD) also contributes revenue;[4] however, revenue from the sales of stamps have significantly declined in recent years.The Tuvalu Trust Fund was established for the intended purpose of helping to supplement national deficits, underpin economic development, and help the nation achieve greater financial autonomy.[5] The Trust Fund, has contributed roughly (A$79 million) 15% of the annual government budget each year since 1990.[3] With a capital value of about 2.5 times GDP, the Trust Fund provides an important cushion for Tuvalu's volatile income sources from fishing and royalties from the sale of the .tv domain.[6]World Bank Statistics outline that in 2010 Tuvalu produced a bottom-tier ranking Gross Domestic Product of $31,350,804 and Gross National Income of $4,760.[7] In terms of GNI the nation compares, adequately with other Pacific SIDS states such as Kiribati ($2,010) and the Marshall Islands ($3,640). Fishing licensing agreements with Taiwan, Japan, South Korea, New Zealand and the United States generating an income of A$9 million in 2009.[8][9] In 2013 revenue from fishing licenses doubled in 2013 to more than 45% of GDP.[10]A large proportion of national income is obtained through the employment of 15% of adult male Tuvaluans, overseas in the maritime industry. The value of these remittances was valued at A$4 million (est. 2006) and on average accounts for 10% of GDP. A UN Report makes reference to the fact that these revenue streams are vulnerable to macroeconomic change while the national budget remains heavily subsidised through international aid and funding schemes such as the Tuvalu Trust Fund (TTF) with a strong reliance on the importation of food (imports $15.5 million 2007 est).[11]Tuvalu joined the International Monetary Fund (IMF) on 24 June 2010.[12] On 5 August 2012, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Tuvalu, and assessed the economy of Tuvalu: “A slow recovery is underway in Tuvalu, but there are important risks. GDP grew in 2011 for the first time since the global financial crisis, led by the private retail sector and education spending. We expect growth to rise slowly”.[13]The IMF Article IV consultation with Tuvalu, which was completed in August 2014, concluded that: “Large revenues from fishing licenses, together with substantial foreign aid, facilitated a sizable budget surplus in the past two years but also an expansionary budget in 2014. The large increase in budget spending is set to cause some inflationary pressure. More importantly, the likely difficulties in unwinding the budget expansion and potential liabilities arising from weaknesses in state-owned banks and public enterprises make fiscal sustainability a major concern over the medium to long run.”[14]In 2018, the IMF Article IV consultation with Tuvalu concluded that growth is projected to accelerate to 4.3 percent on higher fiscal expenditure and infrastructure projects and the fiscal balance is projected to weaken in the medium term following a surplus of 6 percent of GDP in 2018 due to higher fishing revenue.[15]Islands of TuvaluContents1 Geography of Tuvalu2 Tuvalu's economy2.1 Fishing resources2.2 Remittances from Tuvaluan seafarers2.3 Economic performance from 19963 Public sector enterprises4 Private sector enterprises5 Development of economic and social policy (Te Kakeega)6 The Tuvalu Trust Fund7 Falekaupule Trust Fund8 Government revenue9 Least developed country (LDC) status10 International aid11 Climate change mitigation and cyclone recovery expenses12 GDP and other economic performance indicators13 External sources14 ReferencesGeography of Tuvalu[edit]See also: Geography of TuvaluLat. and Long. 8.31°S 179.13°E (Funafuti)Agriculture in Tuvalu is focused on coconut trees and growing pulaka in large pits of composted soil below the water table. Subsistence farming of coconut palms to produce copra and fishing remain the primary economic activities, particularly off the capital island of Funafuti. There is no apparent large income disparity among the residents, although virtually the only jobs in the islands that pay a steady wage or salary are with the government, which make up about two-thirds of those in formal employment. About 15% of adult males work as seamen on foreign-flagged merchant ships.[10] Population growth on the outer islands, the limits as to available land and the lack of employment opportunities, results in a flow of people from the outer islands to the capital in Funafuti with further pressure to migrate to Australia or New Zealand.[16] There is high youth unemployment and few new jobs being created. Given the absence of natural resources (apart from tuna in the territorial waters), and the constrains imposed on the Tuvaluan economy by its remoteness and lack of economies of scale, practical policies are needed for improvements to the livelihoods of the growing numbers of young Tuvaluans who aspire to a more affluent lifestyle than older generations.Tuvalu comprises four reef islands and five true atolls that result in a contiguous zone: 24 nmi (44 km) exclusive economic zone: 200 nmi (370 km) territorial sea: 12 nmi (22 km)[10] Its nearest neighbours are Kiribati, Nauru, Samoa and Fiji. Tuvalu has worked with Secretariat of the Pacific Community (SPC) and the European Union and enacted the Seabed Minerals Act 2014. The SPC-EU Pacific Deep Sea Minerals Project involves cooperation between the Cook Islands, Fiji, Tonga and Tuvalu with the object of those countries making informed decisions about future deep seabed mineral activities.[17]The population at the 2012 census was 10,460,[18][19] which makes Tuvalu the third-least populous sovereign state in the world; as compared to its immediate neighbours, it has a larger population than Nauru, but is smaller than Kiribati which has a permanent population of just over 100,000 (2011).[20] In terms of physical land size, at just 26 square kilometres (10 sq mi) Tuvalu is the fourth smallest country in the world; as compared to its immediate neighbours, Tuvalu is larger than Nauru, which is 21 km2 (8.1 sq mi), and smaller than Kiribati, which comprises groups of atolls dispersed over 3.5 million square kilometres, (1,351,000 square miles) of the Pacific Ocean. Tuvalu's Exclusive Economic Zone (EEZ) covers an oceanic area of approximately 900,000 km2.[21]Tuvalu is considered a safe country of unspoiled natural beauty and friendly people. However, due to its remoteness, the cost of travelling to the island and limited air traffic to the country, limited numbers of tourists visit each year. The majority of visitors to Tuvalu are government officials, aid workers, NGO officials or consultants.[22]Tuvalu's economy[edit]See also: Agriculture in TuvaluFishing resources[edit]Tuvaluans are primarily involved in traditional agriculture and fishing. Job opportunities also exist as observers on tuna boats where the role is to monitor compliance with the boat's tuna fishing licence.[23]The Tuvaluan economy, therefore, relies heavily on its fishing income, with 42% of the Tuvaluan population involved in fishing activity at various levels. UN Data calculated a gross value of fisheries at US$43,773,582 (2007 est), which accounted for the output of coastal commercial fishing, coastal subsistence fishing, locally based offshore fishing, foreign-based offshore fishing, freshwater fishing and aquaculture. In recent years all of the income has been generated through the listed activities in Tuvalu waters, rather than through exports direct from Tuvalu. The activities of international fishing vessels, which in 2008 comprised 42 longline fishing vessels, 3 pole/line vessels and 126 purse seiners, far outweigh domestic activity, with a production volume of 35,541 tonnes worth US$40,924,370 (2009 est) or 93.5% of gross value, although Tuvalu retains a sizeable share in income via licensing. The fishing in the 900,000 km2 of water area mainly consists of Skipjack Tuna, Yellowfin Tuna and Bigeye Tuna.On 29 June 2017, the National Fishing Corporation of Tuvalu (NAFICOT), signed a joint venture agreement with the Republic of Korea's SAJO Fishing Industry to operate the fishing vessel M.V. Taina within the Tuvaluan Exclusive Economic Zone (EEZ) and other Pacific Island waters.[24]Remittances from Tuvaluan seafarers[edit]Tuvalu men are employed abroad working on container ships, primarily on German-owned ships. Remittances from seafarers is a major source of income for families in the country. In 2002, the Asian Development Bank approved an assistance package to upgrade the Tuvalu Maritime Training Institute (TMTI) which trains young Tuvaluans so they can work aboard foreign vessels.[25] This project was completed in 2011.[26] The Global Economic Crisis (GEC) that began in 2007 has impacted on global export-import activities and the demand for shipping, which reduced the need for seafarers from Tuvalu.[27][28]The 1991 census identified 272 seaman working on merchant shipping. In 2002 the Tuvaluan Overseas Seaman's Union (TOSU) estimated the number as 417 seaman working on shipping.[29] Remittances from seafarers is a major source of income for Tuvaluan families. However, the Global Financial Crisis has impacted on export/import activities with a resulting drop in job opportunities for Tuvaluan seaman on merchant shipping.[30] In 2011 the Asian Development Bank (ADB) estimates there are 800 TMTI graduates registered for employment as seafarers.[26] The ADB identify that the number of Tuvaluans employed as seafarers has decreased steadily from about 340 in 2001 to only 205 in 2010; so that of a total pool of 800 qualified seafarers, including those on leave, almost 450 were unemployed. This decline in seafarer employment has reduced remittances from $2.4 million in 2001 to a projected $1.2 million in 2010.[26] The International Labour Organization (ILO) also estimates that in 2010 there were approximately 200 Tuvaluan seafarers on ships. The International Monetary Fund 2014 Country Report described the effect of the global financial crisis (GFC) as reducing demand for the services of Tuvaluan seafarers. As of October 2013, there were about 112 Tuvalu seafarers working on cargo boats, compared to 361 in 2006. The consequence is that remittances from seafarers to their families in Tuvalu fell by about 9 percent of GDP for Tuvalu. In 2012 remittances from seafarers amounted to 10 percent of GDP in Tuvalu.[31]While a budget deficit of A$0.4 million was projected for 2015, the Asian Development Bank (ADB) assessed the budget as being A$14.3m in surplus as the result of high tuna fish license fees. The ADB predicted that the 2% growth rate for 2015 would continue into 2016.[32]Economic performance from 1996[edit]From 1996 to 2002, Tuvalu was one of the best performing Pacific Island economies and achieved an average real gross domestic product (GDP) growth rate of 5.6 percent per annum. Since 2002 economic growth has slowed as Tuvalu was exposed to rapid rises in world prices fuel and food with the level of inflation peaking at 13.4% in 2008,[33] and falling to -1¾% in November 2010.[6] The International Monetary Fund 2010 Report on Tuvalu describes the economy as contracted over recent years, with real GDP growth of: 7.0 (2008), -1.7 (2009), 0.2 (2010), 0.0 (2011 est.).[6]However, due to the acute level of geographic, macroeconomic and financial isolation, scale of area, population infrastructure and agriculture, climate change, oil dependency, contracting GDP and economic dependency many sources in this decade view Tuvalu as an extremely vulnerable economy.[7] The country is also imported-fuel dependent, with gas prices quoted at $12/gal (2009). The high cost of petroleum products has encouraged the development of projects to access renewable energy in Tuvalu.Although listed by the UN as a Lower Middle Income LDC, it scores very high in terms of EVI (Economic Vulnerability Index), with a rating of 79.7 out of 100 in 2009, leading the UN to state that Tuvalu is the most "economically vulnerable country in the world". Due to the factors addressed earlier, Tuvalu yields a limited revenue from exports.[34] Figures in 2007, estimated a Tuvalu export value of $100,410 derived from Copra and miscellaneous items such as stamps.[35]Public sector enterprises[edit]Offices of the Tuvalu Telecommunications CorporationThe public sector enterprises are the National Fishing Corporation of Tuvalu (NAFICOT), National Bank of Tuvalu, Development Bank of Tuvalu, Tuvalu Electricity Corporation, Tuvalu Telecommunications Corporation, Tuvalu Philatelic Bureau, Tuvalu Maritime Training Institute and Vaiaku Lagi Hotel.[6][36]The government is the primary provider of medical services through Princess Margaret Hospital on Funafuti, which operates medical clinics on the other islands.Banking services are provided by the National Bank of Tuvalu. Effective of 7 October 2016, Tuvalu accepted the Article VIII obligations of the IMF Articles of Agreement, to maintaining an exchange system free of restrictions on payments for international transactions.[12]The Tuvalu Media Department of the Government of Tuvalu operates one station on the AM frequencies under the title of Radio Tuvalu.[37] Fenui – news from Tuvalu is a free digital publication of the Tuvalu Media Department that is emailed to subscribers and operates a Facebook page, which publishes news about government activities and news about Tuvaluan events, such as a special edition covering the results of the 2015 general election.[38]The Tuvalu National Provident Fund (TNPF) and the Copra Trading Co-operative (CTC) are owned by the members of each organisation. The TNPF provides its members with loans, for which each member's account is used as collateral.[36] The Tuvalu Cooperative Society is the main wholesaler and retailer in Tuvalu.[6]Private sector enterprises[edit]The Tuvalu National Private Sector Organisation,[39] the Tuvalu National Chamber of Commerce and Tuvalu Business Centre are active in supporting private sector enterprises. In order to set up a business in Tuvalu, an investor needs a start-up capital of AUD$20,000, a Tuvaluan partner and pay a business registration fee of AUD$100.[40] As of 2010 there are only seven foreign-owned businesses operating in Tuvalu, which were mostly set up by Asian small business operators in the retail and restaurant sector.[40]Mackenzie Trading Limited, established by Mackenzie Kiritome in 2008, operates small retail outlets in the outer islands to sell merchandise in competition with the Co-operative Society (which is a community-owned enterprise).[40] In 2010 Mackenzie Trading Limited employed 40 people.[40]Development of economic and social policy (Te Kakeega)[edit]Flag of TuvaluTe Kakeega is the statement of the national strategy for the sustainable development of Tuvalu, with economic and social goals intended to be achieved in the period 2005 to 2015.[41] After consultations on each islands the National Summit on Sustainable Development (NSSD), was held at the Tausoalima Falekaupule in Funafuti from 28 June to 9 July 2004.[42] The meeting resulted in the Malefatuga Declaration,[43] which is the foundation of Te Kakeega II.[41] The follow-up document, the 2008 Kakeega Matrix Returns, “contained all the known aid projects, programmes, development initiatives and ideas adopted by the donors and the two successive Tuvalu governments (2004-2006 and 2006 to present)”.[44]The Te Kakeega III - National Strategy for Sustainable Development-2016-2020 (TK III) includes new strategic areas, in addition to the eight identified in TK II. The additional strategic areas are climate change; environment; migration and urbanization; and oceans and seas.[45]The Tuvalu Trust Fund[edit]The Tuvalu Trust Fund (TTF) was established in 1987 by the United Kingdom, Australia, New Zealand with about A$27 million in capital.[3] The TTF, a prudently managed overseas investment fund,has contributed roughly (A$79 million) 15% of the annual government budget each year since 1990.[3] With a capital value of about 3.5 times GDP, the TTF provides an important cushion for Tuvalu's volatile income sources from fishing and royalties from the sale of the dot-TV domain. The ".tv" domain name generates around $2.2 million each year from royalties, which is about ten per cent of the government's total revenue.[46][6] The IMF 2014 Country Report noted the market value of the TTF dropped during the global financial crisis, however by 2014 the total value of the fund had recovered to more than $A140 million (3.5 times of GDP).[47] In 2018 the TTF amounted to about A$179 million.[15]The capital of the Trust Fund is known as the “A Account”. The "B Account" or “Consolidated Investment Fund” (CIF) is a revolving “buffer account” that receives funds from the returns or “disbursements” of the "A Account". The operation of the Trust Fund through two accounts assists in stabilising the long-term financial situation of the Government of Tuvalu as well as addressing short-term budget needs. The "B Account", which belongs exclusively to the Government, holds income distributions from the "A Account" until funds are needed to be used for the national budget. It, therefore, serves as a buffer against the volatility of the ‘A Account’ returns, i.e., during years when there are no returns or low returns. Brian Bell, a member of the Tuvalu Trust Fund Advisory Committee since the inception of the Trust Fund in 1987, describes the purpose of the Trust Fund as being:“The Tuvalu Trust Fund was aimed at providing a source of revenue to overcome a chronic budget deficit situation. The revenue is distributed to the Government from the A Account to the B Account. The amount needed is then drawn down into the consolidated revenue account as an additional source of revenue for expenditure on government services through the recurrent budget.”[48]The 20th-anniversary review of the Tuvalu Trust Fund described the performance as being that:“In the first twenty years of operation the Fund has grown to $106.6 million in Market Value as at 30 June 2007. The real rate of return on the Fund has averaged 6.2 percent per annum providing $65.7 million in revenue to Tuvalu. Of this $24.1 million has been used to help fund budget deficits, $29.2 million has been reinvested in the Fund and $12.4 million is held in the CIF awaiting drawdown as at 30 June 2007. The Government’s subsequent reinvestments back into the Fund since inception raises Tuvalu’s contributions to the Fund to $29.8 million including the initial contribution of $1.6 million. It makes Tuvalu the major contributor to the Fund, which is evidence of Tuvalu’s commitment to the long term sustainability of the Fund.”[49]Falekaupule Trust Fund[edit]In 1999 the Asian Development Bank (ADB) and the government of Tuvalu set up the Falekaupule Trust Fund, which is intended to improve services on the outer islands.[50] The island councils – composed of traditional leaders – are responsible for managing their own finances from a budget allocated from the Tuvaluan government from the Falekaupule Trust Fund.[51] Under the Falekaupule Act, Falekaupule means “traditional assembly in each island...composed in accordance with the Aganu of each island”. Aganu means traditional custom and culture.[41] The initial capital of Falekaupule Trust Fund was A$12 million. The market value of the FTF has increased:“As at 30 June 2007, the FTF’s market value stood at $25.3 million. After eight years of operation, the FTF has made three distributions totalling to $4.7 million. A Reserve Account was established in 2005 having the exact same purpose as the CIF, which is to smooth out the stream of revenue from the main investment. At 30 June 2007, the FTF’s Reserve Account was $1.4 million.”[49]The global financial crisis affected the FTF, which is required to maintain its value in real terms before a distribution can be made. As of 30 September 2010, the maintained value was $27.3 million; the result of capital growth and contributions from development partners. This is some $3.5 million higher than the market value of $23.8 million. The gap of 15% between the market value and the maintained value must be recouped before another distribution can be made.[52] Since the commencement of FTF, there have been four years in which distributions were made. The FTF has distributed $6.4 million with some $5.3 million allocated to island development (the balance of $1.1 million is held in reserve by the communities). This equates to an average of $55,000 spent per island per year.[52]Government revenue[edit]Government office building in FunafutiThe Tuvalu Trust Fund was established for the intended purpose of helping to supplement national deficits, underpin economic development, and help the nation achieve greater financial autonomy.[5][50] The Trust Fund, has contributed roughly (A$79 million) 15% of the annual government budget each year since 1990.[3] With a capital value of about 2.5 times GDP, the Trust Fund provides an important cushion for Tuvalu's volatile income sources from fishing and royalties from the sale of the .tv domain.[6] Meeting the needs of the 2013/14 budget of the Tuvaluan Government will require drawing from funds held in the “B Account” of the Tuvalu Trust Fund.Government revenues largely come from sales of stamps and coins, fishing licences, income from the Tuvalu Ship Registry, income from the TTF, and from the lease of its highly fortuitous .tv Internet Top Level Domain (TLD).[53][54] VeriSign, Inc manages the .tv domain with the agreement running until 2021.[55] Commercial businesses consider "tv" to be the most recognisable letters in the world and significant for representing how consumers will use the Internet in the future. Major League Baseball created MLB.TV Out-of-Market Packages to stream games. Other businesses have sought out .tv domain names due to the relative difficulty of creating a brand in the crowded .com space.[56]Fishing licences are an important source of revenue. The fishing in the 900,000 km2 of water area mainly consists of Skipjack Tuna, Yellowfin Tuna and Bigeye Tuna. Payments from US government made under the South Pacific Tuna Treaty (SPTT) was about $9 million in 1999.[2] In May 2013 representatives from the United States and the Pacific Islands countries agreed to sign interim arrangement documents to extend the Multilateral Fisheries Treaty (which encompasses the South Pacific Tuna Treaty) to confirm access to the fisheries in the Western and Central Pacific for US tuna boats for 18 months.[57][58] In 2015 Tuvalu has refused to sell fishing days to certain nations and fleets that have blocked Tuvaluan initiatives to develop and sustain their own fishery.[59] In 2016 Dr Puakena Boreham, the Minister of Natural Resources, drew attention to Article 30 of the WCPF Convention, which describes the collective obligation of members to consider the disproportionate burden that management measures might place on small-island developing states.[60]The Asian Development Bank described the Global Economic Crisis (GEC) as impacting on Tuvalu through: “(i) lower demand for Tuvalu seafarers and, therefore, falling remittances; (ii) volatile exchange rate movements affecting the value of remittances, revenues from fishing licence fees, and food prices; and (iii) lower market value of the Tuvalu Trust Fund (TTF), which at the end of May 2010 was about 12% below the maintained value. Thus, as a direct result of the GEC, no distribution was made from the fund to the budget for 2010 and further distributions are unlikely while there is uncertainty in international financial markets.”[61]The IMF 2010 Country Report describes economic activity in Tuvalu as dampened by lower offshore earnings, with “[t]he economy is expected to have almost no growth in 2010, and growth is projected to be zero or even turn negative in 2011, led by lower government spending, and remain low over the medium term.”[6]The IMF 2014 Country Report noted that real GDP growth had been volatile averaging only 1 percent in the past decade. The 2014 Country Report describes economic growth prospects as generally positive as the result of large revenues from fishing licenses, together with substantial foreign aid, "while, over the medium to long run, growth prospects may be hampered by the dominance of inefficient public enterprise in the economy, uncertainty in the fisheries sector, and weak competitiveness."[14]Least developed country (LDC) status[edit]The United Nations designates Tuvalu as a least developed country (LDC) because of its limited potential for economic development, absence of exploitable resources and its small size and vulnerability to external economic and environmental shocks.[62] Tuvalu participates in the Enhanced Integrated Framework for Trade-Related Technical Assistance to Least Developed Countries (EIF), which was established in October 1997 under the auspices of the World Trade Organisation.[63][64] In 2013 Tuvalu deferred its graduation from least developed country (LDC) status to a Developing country to 2015. Prime Minister Enele Sopoaga said that this deferral was necessary to maintain access by Tuvalu to the funds provided by the United Nations's National Adaptation Programme of Action (NAPA), as "Once Tuvalu graduates to a developed country, it will not be considered for funding assistance for climate change adaptation programmes like NAPA, which only goes to LDCs". Tuvalu had met targets so that Tuvalu was to graduate from LDC status. Prime minister, Enele Sopoaga wants the United Nations to reconsider its criteria for graduation from LDC status as not enough weight is given to the environmental plight of small island states like Tuvalu in the application of the Environmental Vulnerability Index (EVI).[65]International aid[edit]Australia and New Zealand continue to contribute capital to the Tuvalu Trust Fund and provide other forms of development assistance.[3][66] Financial support to Tuvalu is also provided by Japan, South Korea and the European Union.[67]Tuvalu joined the Asian Development Bank (ADB) in 1993. To improve aid effectiveness, the government of Tuvalu, ADB, AusAID, and NZAID signed the Development Partners Declaration (DPD) in 2009. The DPD is designed to improve aid effectiveness, both in the implementation of specific projects and in assisting the Tuvaluan government achieve performance benchmark indicators.[6][51]Tuvalu became a member of the International Monetary Fund (IMF) in July 2010[68] and also joined the World Bank. In 2013 the World Bank approved US$6.06 million in finance for the existing Tuvalu Aviation Investment Project (TvAIP) for the purpose of improving operational safety and oversight of international air transport and associated infrastructure at Funafuti International Airport.[69]Tuvalu participates in the Enhanced Integrated Framework for Trade-Related Technical Assistance to Least Developed Countries (EIF), which was established in October 1997 under the auspices of the World Trade Organisation.[63][70] In 2013 Tuvalu deferred its graduation from Least Developed Country (LDC) status to a Developing country to 2015. Prime Minister Enele Sopoaga said that this deferral was necessary to maintain access by Tuvalu to the funds provided by the United Nations's National Adaptation Programme of Action (NAPA), as “Once Tuvalu graduates to a developed country, it will not be considered for funding assistance for climate change adaptation programmes like NAPA, which only goes to LDCs”. Tuvalu had met targets so that Tuvalu was to graduate from LDC status. Prime minister, Enele Sopoaga wants the United Nations to reconsider its criteria for graduation from LDC status as not enough weight is given to the environmental plight of small island states like Tuvalu. Sopoaga said that:“The present application of those criteria we feel is totally unrealistic and perhaps very very wrong. We need to address that. The application of the current criterias - we have no problem with the criterias but the application - EVI (Environmental Vulnerability Index) must be one of the two.”[65]On 18 February 2016 Tuvalu signed the Pacific Islands Development Forum Charter and formally joined the Pacific Islands Development Forum (PIDF).[71] In June 2017, Tuvalu signed the Pacific Agreement on Closer Economic Relations (PACER).[72][73]Climate change mitigation and cyclone recovery expenses[edit]Main article: Climate change in TuvaluThe South Pacific Applied Geoscience Commission (SOPAC) suggests that, while Tuvalu is vulnerable to climate change, environmental problems such as population growth and poor coastal management also affect sustainable development. SOPAC ranks the country as extremely vulnerable using the Environmental Vulnerability Index. Tuvalu's National Adaptation Programme of Action (NAPA) describes a response to the climate change problem as using the combined efforts of several local bodies on each island that will work with the local community leaders (the Falekaupule). The main office, named the Department of Environment, is responsible for coordinating the non-governmental organizations, religious bodies, and stakeholders. Each of the named groups are responsible for implementing Tuvalu's NAPA, the main plan to adapt to the adverse effects of human use and climate change.[74]The establishment of the A$5 million Tuvalu Survival Fund (TSF) in the 2016 Tuvaluan budget was expected to be a one-off allocation that was intended for climate change mitigation and the recovery expenses that followed the impact of Cyclone Pam, which impacted Tuvalu in 2015.[75]Tuvalu's National Adaptation Programme of Action (NAPA) describes a response to the climate change problem as using the combined efforts of several local bodies on each island that will work with the local community leaders (the Falekaupule). The main office, named the Department of Environment, is responsible for coordinating the non-governmental organizations, religious bodies, and stakeholders. Each of the named groups are responsible for implementing Tuvalu's NAPA, the main plan to adapt to the adverse effects of human use and climate change.[74]GDP and other economic performance indicators[edit]Information sourced from:This article incorporates public domain material from the CIA World Factbook website Central Intelligence Agency."Tuvalu: 2010 Article IV Consultation-Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Tuvalu". International Monetary Fund Country Report No. 11/46. 8 February 2011. Retrieved 4 September 2011."Tuvalu: 2014 Article IV Consultation-Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Tuvalu" (PDF). International Monetary Fund Country Report No. 14/253. August 2014. Retrieved 21 March 2016."Tuvalu: 2016 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Tuvalu" (PDF). International Monetary Fund Country Report No. 14/253. 4 October 2016. p. 7. Retrieved 4 February 2018."Tuvalu: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Tuvalu". International Monetary Fund Country Report No. 18/209. 5 July 2018. Retrieved 5 September 2018.2017 Tuvalu National Budget Speech by the Honourable Maatia Toafa, Deputy Prime Minister and Minister for Finance and Economic Development.[76]The Tuvaluan dollar and the Australian dollar (A$) are both official currencies of Tuvalu.Currency: 1 Tuvaluan dollar ($T) or 1 Australian dollar (A$) = 100 centsGDP: purchasing power parity $37.35 million (2015 est.); $40.76 million (2016 est.); $42 million (2017 est.)[10]GDP: official exchange rate $40 million (2017 est.)[10]GDP - nominal: A$47 million (2015 est.);[77] A$49 million (2016 est.);[77] A$53 million (2017 est.);[77] A$57 million (2018 proj.);[77] A$61 million (2019 proj.)[77]GDP - real growth rate: -1.7% (2009); -2.7% (2010);[78] 8.4% (2011);[78] 0.2% (2012);[78] 1.3% (2013);[78] 2.2% (2014 est.)[10][78]GDP - per capita: $2,447 (2009);[6] $3,400 (2015 est.);[10] $3,700 (2016 est.);[10] $3,800 (2017 est.)[10]GNI - GNI per capita: $4,760 (2010)[11]GDP – composition by sector:Agriculture: 24.5% (2012 est.)[10]Industry: 5.6% (2012 est.)[10]Services: 70% (2012 est.)[10]Industrial production growth rate: -26.1% (2012 est.)[10]Inflation rate (consumer prices): -1.9% (2010);[78] 0.5% (2011);[78] 1.4% (2012);[78] 2% (2013)[78] 3.3% (2014 est.)[10][78]Total population: 10,640[18][19]Labor force - by occupation: people make a living mainly through exploitation of the sea, reefs, and atolls and from wages sent home by those working abroad in Australia and New Zealand and sailors working on merchant ships.See also: Tuvalu Overseas Seamen's UnionLabour force: 3,615 (2004 est.)[10]Unemployment rate: 16.3% (2004)[6]Population below poverty line: 26.3% (2010 est.)[10]Budget (2010 to 2013):Budget 2010 2011 2012 2013[78]Total revenues and grants A$24.9 million A$26.3 million A$32.5 million A$42.7 millionTotal expenditures A$33.2 million A$29.7 million A$28.9 million A$32.2 millionBudget (2014 to 2019):Budget 2014 Actual 2015 Actual 2016 Forecast 2017 Budget[79] 2018 Proj.[79] 2019 Proj.[79]Total domestic revenue A$41.97 m A$52.12 m A$61.92 m A$51.47 m A$49.38 m A$50.7 mTotal recurrent expenditure A$37.07 m A$46.82 m A$41.32 m A$48.69 m A$49.63 m A$50.62 mStructural balance A$4.90 m A$5.30 m A$20.60 m A$2.81 m (A$247,427) A$73,225Non recurrent expenditure A$4.42 m A$13.8 m A$18.76 m A$22.21 m A$27 m A$27 mDomestic funding gap A$479,778 (A$8.5 m) A$1.85 m (A$19.4 m) (A$27.25 m) (A$26.95 m)Funded by: development partner assistance – recurrent A$5 m A$3.22 m A$10.02 m A$8.33 m A$8.5 m A$8.67 mFunded by: development partner assistance – non recurrent A$6.62 m A$9.86 m A$6.41 m A$8.8 m A$8.97 m A$9.1 mBudget surplus (deficit) A$12.11 m A$4.58 m A$18.28 m (A$2.27 m) (A$9.78 m) (A$9.1 m)Growth and inflation:Growth and inflation:(percentage change) 2015 est.[80] 2016 est.[80] 2017 est.[80] 2018 proj.[80] 2019 proj.[80]Real GDP growth 9.1% 3.0% 3.2% 4.3% 4.1%Consumer price inflation (end of period): 4.0% 2.6% 4.4% 4.0% 3.4%Government finance:Government finance:(as a percentage of GDP) 2015 est.[80] 2016 est.[80] 2017 est.[80] 2018 proj.[80] 2019 proj.[80]Revenue and grants 136% 138% 122% 161% 113%Current Revenue: 102% 113% 97% 118% 82%Of which, fishing licence fees 51% 68% 50% 80% 46%Grants: 34% 25% 25% 43% 32%Total expenditure 121% 131% 126% 155% 118%Current expenditure: 99% 111% 97% 103% 101%Capital expenditure (note 1): 22% 19% 29% 52% 17%Overall balance 15% 7% -4% 6% -4%Of which, domestic current balance (note 2) -47% -67% -49% -65% -65%Note 1: Includes Special Development Fund and infrastructure development.Note 2: Domestic current balance excludes fishing revenue, grants, and capital expenditure.Electricity - installed generating capacity: 5,100 kW (2011)[10]Electricity - from fossil fuels: 96% of total installed capacity (2015 est.)[10]See also: Renewable energy in TuvaluIndustries: fishing, tourism, copraAgriculture - products: coconuts; fishExports: $1 million (f.o.b., 2004); $600,000 (2010 est.)[10]Exports - commodities: copra, fish[10]Exports - partners: US 18.2%, Bosnia and Herzegovina 17%, Fiji 14.8%, Nigeria 14.2%, Germany 8.2%, South Africa 5.9%, Colombia 5.1% (2017)[10]Imports: $12.91 million (c.i.f., 2005); $238.6 million (2012 est.); $136.5 million (2013 est.)[10]Imports - commodities: food, animals, mineral fuels, machinery, manufactured goods[10]Imports - partners: Singapore 33.4%, South Korea 11.5%, Australia 10.8%, NZ 8%, Fiji 7.5%, Chile 6.1%, South Africa 5%, Japan 5% (2017)[10]Economic aid - recipient: $30.4 (2009); $19.7 million (2010 est.)[6] note - major donors are Australia, New Zealand, European Union, Japan, and the USExchange rates: Tuvaluan dollars or Australian dollars per US dollar - 1.0902 (2010), 1.2822 (2009), 1.2137 (2007), 1.3285 (2006); 0.9695 (2011 est.); 0.97 (2012 est.); 1.1094 (2013 est.); 1.67 (2014 est.); 1.33 (2015 est.)[10]Fiscal year: calendar year