An island of hope

Introduction - Tourism, a billion dollars in Sea, Sand and Sun - Garment and food leading manufacturing exports - A strong financial sector in the middle of the Pacific - Unique mineral and natural resources - Positioned for more trade - Reliable by Sea, regular by Air - Generous incentives for investment - A haven for investors - The world only a dial away - Fiji Sugar restructures for world trade - Conclusion: The Rush is on


An air of excitement has descended on the tropical island of Fiji in the Pacific and it is not only because the country will be hosting the region's 12th South Pacific Games in June this year. While the bringing together of 5,000 athletes and officials at a games budget and investment that is running into $100 million FJD (@ $50m USD), there are other reasons for the feeling of enthusiasm and optimism in this island nation. After an impressive economic growth rate of 4.4 percent in 2002, the country is now bracing for an almost 6 percent growth for 2003. To achieve this, the Fiji government, which is being led by a former banker as Prime Minister, intends to raise investment levels from the current low of 11 percent to 25 percent of its Gross Domestic Product.

Fiji, Back In Business Investment in this South Pacific nation has been lethargic at best. To show its seriousness in achieving its targeted growth, the government has been investing heavily in capital development. For 2003 alone, this amounted to $240 million FJD (@ $120m USD), some 20 percent of its total expenditure. Now the private sector is taking up the cue with the powerful employers' bloc, the Fiji Employers Federation, estimating proposed investment in Fiji at about $1 billion FJD (@ $500m USD). Such an ambitious plan is a far cry from the severe battering the Fiji economy had suffered from three coups, two in 1987 and another in 2000. Investors fled in droves and the country's professionals followed, emigrating in worrying numbers, mainly to Australia, New Zealand and North America.

GDP Growth Rate

But Prime Minister Laisenia Qarase and his government believe the negative trend has been arrested and figures are beginning to show a turnaround. Prime Minister Qarase believes the policies his government have put in place are pro-investors and the climate to invest in Fiji has never been better. "The Foreign Investment Act that became law a few years back has some deficiencies and we have taken the opportunity to review it so that we strengthen the legislation with the aim of attracting more and more FDI into the country," says Qarase. "Our 2003 Budget is pro business but it is also pro poor and pro rural. There is a lot in the budget to strengthen the business sector but there are also a lot of programmes that work towards alleviating poverty."
Prime Minister Laisenia Qarase during a speech

Savenaca Narube, Governor of the Reserve Bank of Fiji was among those that drew up an economic recovery plan. Fiji, he said, was never in any threat of a financial crisis during and after the coup, which would normally be the sequence of events in such a crisis. "When a political crisis happens the next thing you see is a financial crunch, and that never happened here. That is the best message we could send to safeguard financial stability," Narube explains. Fiji's Foreign and External Trade Minister, Kaliopate Tavola, explains the current situation: "The economy now is almost 100% recovered. We have maintained financial stability and the figures for economic growth are looking very promising. We are looking at a 5% or 6% this year and another positive growth in the year 2004". Explaining how the turnaround came about, the head of the Fiji Trade and Investment Bureau, the trade and investment agency of government, Jesoni Vitusagavulu says a lot of the Bureau's efforts were about testifying that Fiji had a good record bouncing back very strongly after a political turmoil. "If you look at this country's economic record you will realise that some of the best economic performances in Fiji's independent history took place during the five-year period after 1987. This shows the relative resilience of our economy," Vitusagavulu said.
Savenaca Narube, Governor of the Reserve BankThe feeling of optimism in this island nation is evident despite the pending result of an important court decision at which the legality of the Fiji Government is being questioned. Fiji's independent Supreme Court presided by a panel of overseas judges will in June hear and rule on an appeal by Prime Minister Qarase: that two lower courts erred in law in declaring his cabinet unconstitutional. The plaintiff is Qarase's predecessor, Mahendra Chaudhry and leader of the second largest party in parliament, the Fiji Labour Party. At issue is the multi-party cabinet provision of Fiji's constitution, which Qarase has labelled as impractical and unrealistic. He has however given the assurance that his government will deem the pending Supreme Court decision as final and will abide by it.

Fijian Optimism

Shedding Bureaucracies Through Corporatisation.The Fiji Government has a public sector reform programme that has seen a number of selected public enterprises undergone corporatisation and privatisation. The programme has seen government bodies being turned into public companies. Telecom Fiji and Post Fiji are case in point as well as Airports Fiji Limited, Ports Terminal Limited, Land Transport Authority, Fiji Hardwood Limited and Fiji Pine Limited. Some of these companies have quickly learnt the ropes, of the new way of doing business and being customer and service oriented. Quite a number have developed into multi-million dollar businesses, helped in no small measure of course by the exclusive licence they have negotiated for themselves. This is especially true for Telecom Fiji, Post Fiji, Airports Fiji Limited and Land Transport Authority. The financial performance of enterprises monitored by the ministry of Public Enterprises has improved steadily. They made a combined Net Profit after Tax of $11.7 million FJD in 2001. They paid taxes of $1.6 million FJD in 2000 and $1.7 million FJD in 2001 and also paid dividends of $1.6 million FJD in 2000 and $1.9 million FJD in 2001. The reform objectives are to ensure the efficiency of the enterprises and because of their strategic importance they contribute directly to the cost of doing business in Fiji. Mr. Irami Matairavula, Minister for Public Enterprises and Public Sector Reform says that "the efficiency of the Ports and Airports, availability of air freight cargo spaces, effective water and power supplies as well as the overall standard of infrastructure in the country are some of the fundamentals for increased investment." Concerning the Government policy on the privatization of national strategic assets, Matairavula says Qarase's cabinet "considers privatization cautiously and Parliamentary approval is required. Nevertheless, foreign participation as strategic partners in our enterprises will be always welcomed as they bring in technical and management expertise required to improve operations of the enterprises as well as the finance to adequately capitalize them." The country's international carrier Air Pacific has undergone a successful privatisation exercise. Australian airline QANTAS now owns 46 percent shares in the company. Previous governments had expressed their interests in injecting the corporate culture in other industries like power, water, printing and government supplies.
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