Q1. MR. Rokovunisei,
FNPF is a compulsory savings plan for the workers
in Fiji. The main responsibility of FNPF is to ensure
that the money is there when a worker retires. You
have always said that Safety comes first. What is
your strategy for the next three to four years to
keep investing safely the funds that you are holding
for the workers?
A1. In our investment approval process, there
are a number of criteria that we use; the first
one is safety based on the ability to repay and
appropriate security, the second is the return on
the investment, the third one is liquidity and last,
we can generally say contribution to economic and
infrastructure development and employment. FNPF
was set up in 1966 to provide an old age retirement
scheme for workers by legislation, requiring all
workers to be registered. It is a national scheme
where the employers pay contributions monthly on
behalf of their employees. So safety is very important
as we look after other people's money until they
retire. We started with 5¢ per dollar from
the employer and 5¢ from the employee, then
it went up to 6%, 7% and now it's 8%. The contributions
come in every month and we keep updating the members'
accounts until they retire when they are 55. When
we started, we only had the lump sum scheme, but
in 1975, we introduced a pension scheme, where members
can withdraw as a lump sum or as a pension. Since
the late 70s, we have also introduced schemes to
assist members in housing, education, medical treatment
overseas, funeral, and small business. But we have
a reserving policy where one third of the balance
must be left for retirement at the age of 55. Members
can take up to two thirds of their balance for other
benefits. Going back to your question on our investment
strategy, we have strengthened the fund management
structure to include a Management and Board Investment
Committees that screen each investment proposal
before going to the full Board for consideration.
We also abide strictly by the trustee requirements
in the Trustee Act and always aim for a unanimous
decision at Board level. Our due diligence is done
thoroughly in house and when necessary, we seek
expert advice as required under the Act also. We
act very quickly on defaulters and actively manage
our equity portfolio. In summary, our strategy is
to invest within the Trustee Act and increase our
portfolio in growth assets both domestic and offshore
for diversification and higher returns.
Q2. But increasing returns is another key objective
of the company, what are the plans, following
the Trustee Act, to increase the returns in the
next 3 to 4 years?
A2. Our new strategy now is to move towards
increasing our growth assets by acquiring shares
in profitable companies listed on the stock exchange
and investing more in properties both here and abroad
if necessary. A strategy we also adopted since 1998
is to invest offshore, for which we need the Reserve
Bank Clearance. At the moment, there are just over
F$200million invested overseas both in equity and
term deposits. The reserve bank gives us an allocation
every year, which was F$10 million this year. The
new strategies aim to diversify in order to both
increase returns and minimize risks. The message
we get from Government is to invest more domestically
and that is what we are trying to do while not deviating
from our investment criteria I stated above. There
appear to be many investment opportunities around
but most will not qualify under our guidelines because
of the Trustee requirements.
Q3. Besides investing safely, sound management
of FNPF is, more than in any other institutions,
a key aspect for the security of the people of
Fiji. Would you say that FNPF is an example of
an organization with sound management and how
can you verify this?
A3. We have been very proud of our performance
in terms of our collection efficiency, cost control
and processing of benefits. Collection efficiency
is around 98.5%, total operating expenditure around
4% of contributions received and average processing
period around 5 days. These are excellent results
which we set as targets every year with a 5% improvement
on the previous year until they become the "standard"
when they cant be improved upon any more. Members
can get their funds within a week and some like
funeral assistance within 24 hours. Now we can deposit
funds straight to the bank accounts when they request
a lump sum. If they decide to take a pension, we
send pensioners a cheque with six monthly vouchers,
or we can send it directly to their bank account
here or overseas. This is a service we provide very
efficiently. Our target for cost control has been
the 4% of the total contributions, which is a very
low target at an international level. On our investments,
our current return is matching the long-term bond
rates within 5-6% but we make sure that we don't
lose any of our initial investment. That is, no
loss of assets. We ensure safety first before we
invest and act quickly on defaulters. We use technology
wherever we can so that there is minimum manual
intervention in our procedures. This is what we
mean by sound management; efficiency and effectiveness
under strict cost control with no loss of assets.
Q4. FNPF has not suffered any losses in its investments.
Taking into account that Fiji is a developing
country and that it is not normal to achieve this
in developing countries, how have you accomplished
this?
A4. We have been very fortunate to have a Board
that has had no political interference in its investment
decisions. I think that's the key. You will find
that in a lot of countries where provident funds
have failed, it is because of political interference.
In the past, our Governments had left us alone and
the public has appreciated it and has also left
us alone except for some questions in Parliament,
which we use as a feedback on our policies and our
performance. We act on any comments or criticisms
we face. We are left to make our own and recommendations
based on our knowledge, skills and experience and
the Board makes the decisions independently and
with the best advice available. The Board has very
experienced members who can make decisions independently
and with wisdom. We also always strive to have unanimous
decisions, otherwise we take back proposals to be
refined and resubmitted. This way, whatever decision
is made is made with the support of all the members:
employers, employees and Government.
Q5. At the beginning of the interview, you said
that safety comes first, then returns, and then
liquidity and then you talked about economic development
and infrastructure. Could you enlighten us a little
bit on what has FNPF done for the economic and infrastructure
development in Fiji?
A5. The economic and infrastructure development
of the country is part of the role of a provident
fund in a developing country like Fiji as in other
parts of the world. The development of the country
and the capital market is in our interest. Anything
that improves the standard of living in the country
is also good for our members during their working
life and in retirement. So indirectly we are investing
in infrastructure for our members comfort apart
from earning a return for them. We have been assisting
the Government through development loans and securities,
which in turn provide employment. On mortgages,
we funded most of the hotels built in Fiji since
1968, two years after we started. We also invested
in Semi-Government institutions for the provision
of water, electricity and housing. Fiji would not
be what it is today if it was not for the savings
accumulated in FNPF which Government and businesses
could borrow from to create economic activities
and generate economic growth for the country and
its people. |
Q6. Which projects
would serve as an example for foreign investors
to change the perception on Fiji among the international
business community? If foreign investors arrive
into Fiji or start investing in Fiji, in what aspects,
if any, could FNPF contribute?
A6. We have funded many hotels and office complex
built by companies with foreign investors through
debt funding and they are now successful. The Sheraton
Fiji and the ANZ House in central Suva are examples.
Our contribution to those that want to invest here
in the current environment will be in debt funding
although we would also be interested in equity if
allowed under the Trustee Act and the investment
guidelines. The first requirement is compliance
with the Trustee Act. But we are now examining ways
in which we can participate in new projects through
a private equity trust.
Q7. The business community in Fiji argues that
FNPF should play a more active role in investing
in Fiji. Only if Fiji institutions invest in Fiji
then foreign investors will follow. How do you
feel about this issue?
A7. We have excess funds to invest but the investment
has to meet our requirements. We are playing an
active role given the constraints we operate in.
We are contributing to economic activities in agriculture,
housing, energy and businesses through wholesale
funding to Fiji Development Bank, Housing Authority
and Fiji Electricity Authority. We are looking at
a number of proposals in fairly large hotel projects
and we are likely to participate in one or two such
projects. We would also look at funding Commercial
Office Complex with a first mortgage as security
again given the ability to repay and recover in
the event of default. But we would not want to fund
a project that will not be completed and be stuck
with a property that cannot earn a return. In our
overall investments, our best judges are our members.
We collect our investment income and every 30th
of June we distribute the income as an interest
on their account. If we don't earn enough and the
interest rate is low, they will start to ask for
reasons.
... So if a foreign investor comes and invests
in a project with FNPF they can be sure that it
is going to be a safe investment…
… Safe in the sense that we have done all
we can to ensure that, with compliance with the
Trustee Act, the investment will earn a return
until the initial investment is fully recovered.
We haven't lost any of the funds we invested in
the past. We may have lost some of the interest
but the Trustee Act ensures that we invest in
Government Securities, first mortgages or investments
guaranteed by Government or a commercial bank,
so at least we ensure the monies lent will come
back. If a foreign investor invests in a project
with FNPF, our strict guidelines will test all
aspects of the project that may otherwise have
been overlooked. Being a Trustee, we will ensure
that a project is completed. That is why sometimes
it takes us longer to make a decision. It is investing
safely and prudently. It is still the responsibility
of the investor to ensure that his interests are
protected. But we will have the last call on the
land and buildings, as we are required to invest
in first mortgage only up to two thirds of its
value. We normally would like to work with the
investor to ensure the project is successful.
Hence, to the best of our abilities, the project
we participate in should be successful.
Q8. Having in mind the Trustee Act, what sectors
would you recommend foreign investors to come
to Fiji to invest?
A8. We would now support growth industries like
tourism and manufacturing, provided the security
complies with our requirements. There are also I
believe opportunities to invest in infrastructure
such as power, airports and bridges which are in
a way monopolies to the extent that it is costly
to compete with.
Q9. In Tourism and Manufacturing, in what aspects
would a foreign investor benefit by contacting
the FNPF?
A9. We cannot buy shares in an investor's company
coming in for the first time. The only way we can
participate is in the debt funding. We know that
Tourism and manufacturing will be viable in the
future because of our location and low cost of labor.
Q10. Regarding the National Budget 2003. In
your opinion, how are the new measures and policies
going to affect Fiji's financial systems in 2003
and the future of FNPF in particular?
A10. We have always supported increases in public
investments as it creates an opportunity for investments
and create employment for our members. Anything
that encourages investment is not only good for
us but is also good for our members because if there
is growth in the economy, the employers will employ
more workers and more contributions will come in
which we can again lend for investment.
Q11. You are a businessman in Fiji that travels
abroad, when you go there, what is your impression
about what people think about Fiji as an investment
destination and how do you think that perception
is going to change in the next three years?
A11. Australians and New Zealanders know about
Fiji but when I go to Europe, I find that not many
people know about Fiji. The Fiji Visitors Bureau
is doing a lot and they should go world wide instead
of just focusing in Australia and New Zealand because
people travel more around the world now. And as
our growth industry is tourism, people should have
more information. I think that people outside the
Pacific haven't heard that much about the coups
and about the cyclones and tourists keep coming.
It sounds like the media exaggerates but people
know this and in turn can decide weather to come
or not. Fiji is a quiet and peaceful place, which
is why hotel projects will be successful because
nowadays people are searching for that kind of holidays.
Q12. Our readers always like to know more about
who is behind a company, could you tell us more
about your personal background?
A12. I have a supporting family with my wife
Siteri and four children, two boys and two girls.
I started my career as a computer programmer. I
was at Massey University in Palmerston North in
New Zealand when the Fiji Government called me to
join the Government EDP Center and go to Canberra
for further training. I joined the civil service
as a computer programmer and never went to Canberra.
A few years later I joined NLTB in 1974 as its EDP
Manager and in 1976 I joined the FNPF as a Systems
Engineer. In 1981 I did part-time courses in USP
graduating with the degree in Accounting in 1986
and then gradually moved to administration. In 1991
I was fortunate to be given an Australian Scholarship
and graduated with an MBA in finance and got promoted
to Deputy General Manager in 1993. I was appointed
Chief Executive in June 2001. So my background was
initially programming but I have always wanted to
be in finance. The most important thing for me now
is that I have reached the top of my career and
must maintain the Fund's excellent achievements.
I am fortunate to have a very experienced Board
and Executive team to work with. I owe a lot for
my success to Mr. Lionel Yee who was my boss for
25 years, previous Board Chairmen Hon Ratu Jone
Kubuabola and Mr. Savenaca Narube for their encouragement
and guidance and my family and the staff of FNPF
for their support.
Winne cannot be held responsible for unedited
transcription
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MR. OLOTA
T. ROKOVUNISEI
