Resort investors push for $1 million owed

www.fijilive.com-October 14, 2009

Investors in a Fiji resort are pushing to get more than $1 million they are owed.

The New Zealand Herald reports Grant Watson, head of a new group of investors in the Fiji Beach Resort & Spa managed by Hilton, said a priority was to get finances flowing again.

The Villa Owners' Group met last week and wanted to recoup money owed from late last year and most of this year, Watson said this week.

Fiji's Hilton continues to operate although investors who own beachfront apartments at the Denarau Island resort are out of pocket.

A group of 141 New Zealanders, 52 Australians, 16 Americans, 30 people living in Fiji, one from Dubai and one from Canada poured millions into the resort developed by Neville Mahon of Greenlane.

Last month, both the development company and the business which paid investors went into receivership and KordaMentha was appointed.

Regular income payments and the benefit of a free 10-weeks-a-year stay in studios or villas were some of the benefits which investors had expected. The beachfront resort opened in 2006 and is continuing to operate successfully, despite problems behind the scenes.

Watson said the group had been working closely with KordaMentha receiver Grant Graham and representatives had also had "one brief meeting" with Mahon.

Priorities were to recoup more than $1 million owed from rental of their villas and studios from the last quarter of last year throughout this year.

Crisis impacts tourism, remittances: Reddy

www.fijilive.com-October 15, 2009

Fiji is beginning to feel the impact of the global financial crisis through a drop in earnings from tourism, remittances and the resource sectors, says economist Dr Mahendra Reddy, the dean of the Faculty of Commerce, Hospitality and Tourism Studies at the Fiji Institute of Technology.

In a paper titled “Understanding Financial Crisis: Some Implications on Remittances, Tourism and Resource Sectors”, Reddy said while Fiji had put in place policy responses to the global financial crisis, it is yet to be “out of the woods.”

“The global recession reduces demand for exports of goods and services. The fall in export and tourism earnings and in worker remittances also reduce private sector incomes and, therefore, demand for private consumption and residential housing. Also, business investment demand will be adversely affected by greater uncertainty about the prospects for the domestic and global economy and possibly also by a tightening of access to foreign capital,” Reddy said.

“Fiji’s tourism sector was already well below its past maximum performance due to political problems at home and the resulting negative publicity in the source countries, in particular Australia and New Zealand. However, while the sector started to get back on the growth track, the declining incomes in developed and emerging countries, where most tourist flows originate has dampened the rate of growth in tourism numbers.”

He said remittances, which have become a major source of external financing for Fiji, have been adversely affected by the slowdown in developed countries.

“The total volume of remittances to Fiji stood at F$310.9m in 2005 which further increased to F$322.3m in 2006. However, following 2006, it declined to F$256.4m in 2007 and further declined to F$188.0m in 2008. The decline in the volume of remittances has a direct negative impact on the well-being of households since such transfers - unlike other types of transfers - are directly used to cover primary needs such as food, education and healthcare,” Reddy said.

As a policy response, he said, Fiji has had to devalue its dollar, but rather than this being a competitive response, it was more a response to the dwindling level of international reserves and falling liquidity levels and has allowed it to buy time.

“While Fiji seems to be safe now, it is yet to be out of the woods - we need to examine government ability to repay some very large bonds which will be maturing in the next few years. That will be the crunch time.”

In the meantime, fiscal discipline along with prudent monetary policy tool use must be exercised,” Reddy said.

Fiji land reforms wait on global funding

www.fijilive.com- October 14, 2009

Fiji’s Prime Minister is hoping the World Bank and the International Monetary Fund will finance his Government’s land reform to be implemented early 2010.

The land reform agenda is part of a set of reforms Commodore Voreqe Bainimarama said were designed to help Fiji achieve its true potential.

Bainimarama returned last week from the annual meetings of the IMF and World Bank in Istanbul.

Following that meeting, representatives of the World Bank and IMF are expected to visit Fiji early next month to get a better sense of the situation here before a decision on its loan to Fiji is made.

Bainimarama said the Reserve Bank of Fiji and Finance Ministry will work with the visiting party.

In July this year, Bainimarama announced his roadmap to returning Fiji to democratic elections in 2014, conditional to the implementation of certain reforms.

He said that the land reform is planned to salvage Fiji's struggling sugar industry and will open up more tourism opportunities.

He encouraged native land owners to put their land up for productive use.

He assured that Fiji’s land ownership system will remain as it is, quelling fears that sparked the insurrections of 1987 and 2000 led by indigenous Fijian extremists.

“We cannot realise our potential in agriculture, improve the living conditions of the taukei(indigenous Fijians), if land is not made available on a long term, sustainable basis,” Bainimarama said.

He said his government will ensure that taukei landowners get an attractive return when they give out their land for lease.

Fiji’s Ministry of Agriculture has also been urging native land owners to make their lands available for investment and assist Government’s efforts in getting the country out of the economic doldrums.

Agriculture Minister Joketani Cokanasiga said potential investors want assurance that their investment will be secure which means long term tenure for land leases.

“I am all for releasing more land for economic development,” he said.

“We have just noticed that 30 years isn’t enough for big investors to come in and get their returns, we are now looking at increasing to between 60 to 99 years leases.

“Mahogany requires 30 years, teak requires about 15 years to get a full crop and maybe from there on two or three harvests for investors to get a full return on their investment.”

His ministry has been working with the Ministry of Indigenous Affairs in getting land ready for investment.

“Opening up new land which is unused has been one of the key areas we have been working on, particularly in the east coast of Natewa, various areas in Ba and Nadi,” Cokanasiga said.

Meanwhile, the Wall Street Journal reports that the World Bank has just signed agreements to lend $4.2 billion (Rs19,572 crore) to fund infrastructure projects and strengthen banks in India as the government steps up investment to boost economic growth.

The agreements for three loans to the Union government, India Infrastructure Finance Co. Ltd (IIFCL) and Power Grid Corp. of India Ltd were signed on Tuesday.

Cane production down

Cane production down 200,000 tonnes

www.fijitimes.com - Saturday, October 10, 2009

CANE production dropped by 200,000 tonnes from 2.5 million tonnes in 2007, the Fiji Sugar Corporation reported.

The company's 2009 report said total sugar produced also dropped to 207,966 tonnes from the 237,418 tonnes recorded last year.

Chairman Gautam Ramswarip said the significant increase in burnt cane was of concern as burning during the season increased to 50 per cent from the 33 per cent recorded the previous year. He said the inconsistent supply of quality cane was another worrying factor.

Mr Ramswarup said FSC was in the process of investigating a number of initiatives and programs to streamline harvesting and transportation operations

Chief executive officer Deo Saran said this year's cane was from an area of 50,907 hectares and average yield per hectare had also dropped by 3.4 per cent.

He said at the end of the season about 35,000 tonnes remained un harvested, mainly due to lack of harvesting efforts by growers and above average rainfall towards the end of the season

FIJI'S Financial Intelligence Unit Plans Network

FIU plans network

www.fijitimes.com - Thursday, October 08, 2009

FIJI'S Financial Intelligence Unit has its sights set on four more domestic agencies to add to its network of intelligence sharing.

Unit director Razim Buksh confirmed this yesterday following the signing of a memorandum of agreement with the Lands Transport Authority on Monday that will facilitate timely exchanges and sharing of intelligence and information.

Mr Buksh said the FIU had identified a licensing authority, a regulatory authority, a law enforcement agency and a semi-government agency.

He said the FIU would continue to explore other agencies that could contribute to its effort of cracking down on criminal offenders.

"We have plans to expand our network to include domestic agencies and work together with foreign FIUs," Mr Buksh said.

The LTA joins the Department of Immigration, Fiji Islands Revenue and Customs Authority, Fiji Police, the Fiji Islands Trade and Investment Bureau and the Ministry of Justice in FIU's existing network.

Mr Buksh said the addition of the LTA would greatly improve the intelligence that the FIU developed. He added the MOA would allow the FIU to conduct "more comprehensive profiling of individuals or parties under investigation for serious crimes".

He emphasised the importance of building a strong inter-agency co-ordination as the key to combating today's ever-changing "criminal environment".

"What ever information we can get from the database of the LTA for instance, will benefit us in our profiling."

LTA chief executive Etuate Koroi said the signing of the MOA would assist LTA crack down traffic offenders.

Mr Koroi said with the assistance of the FIU and other government agencies, the authority would make sure traffic offenders did not evade the law.

Calls to Restructure Fiji education

Restructure education

www.fijitimes.com - Wednesday, October 07, 2009

THERE is a need for education to be restructured on a need basis, says a Fiji Institute of Technology academic.

The head of department for Management Dr Kunneth Ramakrishnan said education was not just about acquiring a degree.

"The level of education for those who have the opportunity to be educated is quite good compared to developing countries in Asia," he said.

"The problem is many of the people who want to be educated can't get that facility because of financial problems, poverty and other things.

"I feel that education can be restructured to be on a need base and not just giving a degree.

"I think all institutions particularly FIT, which will be the National University of Fiji have a serious role to rethink and restructure education."

Dr Ramakrishnan, who is from India, and has taught in universities in Sri Lanka, India and Fiji, said he had a lot to contribute to the institute and Fiji's work force.

"Employers look for people who are useful to them from day one they don't want to be trainers.

"Our job is train people to be useful to the employers so the employee need is the prime consideration in our management education.

"I have a responsibility now to play a useful role at FIT since I have been appointed the HOD for management.

"We wanted to introduce a number of short courses for different categories of people at different levels in the industries.

"Short courses mean one or two days, which is useful to them in their day to day functioning so there has been positive response from the industries."

Fiji taps into sports tourism niche

Fiji taps into sports tourism niche

www.fijilive.com

This niche is sports tourism.

As Fiji's tourism industry targets $1billion in revenue from tourism by 2007 another niche in the industry has opened up and promises to be the mother load in as far as the industry is concerned.

This niche is sports tourism.

And there is no other way to illustrate this vividly then the hosting by Fiji of the Table Tennis World Junior Circuit (WJC) from next Saturday (June 25) to July 2.

The Fiji Table Tennis Association won the bid to host the tournament and reports say this year's event promises to be the best ever.

What worked in FTTA's favour was that it successfully hosted the 2003 South Pacific Games and 2002 Oceania Table Tennis Championships.

The tournament in the Fiji capital, Suva, will draw participants from China, Japan, Korea, India, Hong Kong, Brazil, Australia, New Zealand,Fiji, Tahiti, Vanuatu, New Caledonia , Kiribati, Cook Islands, Tuvalu and well officials from those countries as well as Spain ,Poland and Sweden.

Major tourist destinations such as the Warwick International, Shangri-Las Outrigger on the Lagoon, Sheraton Fiji, Beachcomber Island Resort and Malolo Island Resort have put together special one-off pre-event and post-event packages for the players, families and friends to enjoy while they are here while a number of the hotels ,motels and apartments in Suva are being booked out for around 10 days with more than 200 players and officials arriving from overseas.

This does not include families and supporters who coming for "a smashing experience", which is the official slogan for the event.

"The spin-off for the economy, especially around Suva, will be substantial," says Anthony Ho of the FTTA.

The organisers have also secured the services of Jarek Kolodziejczyk, a top table tennis coach from Poland, together with world famous professional player, Peter Karlsson of Sweden to conduct a three-day training camp before the tournament starts.

Many teams are reportedly flying in earlier than scheduled to take advantage of this offer.

After the championship, teams have been invited to stay one more day for the "Fun Day at the Beach" programme organised by the Fiji Visitors Bureau.

According to FTTA some participants making use of the post event packages "will linger on Fiji's azure waters and white sandy beaches".

And what are the benefits for Fiji or more importantly Suva, which will host the event.

It will:

- generate economic activity for hotels, restaurants, attractions, retail and service businesses;

- indirectly lead to years of follow-on tourism;

- create new revenue streams and resources for local event organisers and sports-friendly businesses;

- promote Suva's tourism development;

- improve media exposure and enhance Suva's image to potential visitors;

- maximise the use...

Fiji's ‘Bula Spirit

A fresh wave of the ‘Bula Spirit’

www.fijilive.com

Staff at a Fiji island resort serenade and greet guests as they come ashore.

The ‘Bula Spirit’ is a smart catch phrase developed by Fiji’s tourism players to describe the sentiment that endears Fiji to the visitor.

The word ‘bula’ is essentially a greeting in the native Fijian language to mean ‘hello’. But to the people of this country, it means a whole lot more than just a greeting. It conveys with it that sense of warmth, affection and community, caring spirit that makes Fiji what it is … a mix of diverse cultures intermingling in ways that are special, and, perhaps even rare.

It couldn’t have been a smarter idea than for Fiji’s tourism leaders to launch the ‘Bula Spirit’ two years ago, as a theme that would convey to the country’s tourism workers how visitors to Fiji should remember the country.

A description of the theme at its launching read: “A commitment to make that extra effort to ensure that the visitor enjoys the very best in hospitality , warm thoughtful service and the kindness that has made Fiji special among destinations in the world”.

“The ‘Bula spirit’ is traditionally one of Fiji’s most endearing qualities,” Tourism Fiji CEO, Josefa Tuamoto says.

Which is why, following on from the national launch in Fiji in 2007, Tourism Fiji recently carried out a television campaign in New Zealand to re-connect New Zealanders with the Fijian people and their uniquely famous ‘Bula spirit’.

And during a visit to Auckland, New Zealand at the end of June, Tuamoto took the opportunity to launch the national tourist office’s newest trade DVD which has footage based on Tourism Fiji’s recent TV campaign in Kiwi land.

“The ‘Bula spirit’ … is what sets us apart from the rest of the world and is one of the main reasons why Kiwis have traveled to the destination for more than 40 years,” he says.

Tuamoto also thanked key members of the New Zealand travel industry for their ongoing efforts in helping to promote Fiji as a destination.

“Our Kiwi numbers are coming back and we are confident that with the continued efforts of our New Zealand industry colleagues, particularly the airlines and wholesalers, we will reach our target of 120,000 Kiwi visitors within the next two years.”

Where to Now for Fiji Sugar?

Where to for sugar?
By Patricia Garcia-Duran, Elisa Casanova and Montserrat Millet,

Wednesday, September 30, 2009

www.fijitimes.com

ON September 30, 2009, the Sugar Protocol will officially expire. Following a six-year transition period, the Protocol -- which provides a group of ACP countries with guaranteed access to the EU market for fixed quantities of sugar at preferential prices -- will be replaced by a non-reciprocal duty and quota-free preferential trade system on October 1, 2015.
This article examines these changes to the EU-ACP sugar trade regime.
The Sugar Protocol
The Sugar Protocol has been a feature of EU policy to ACP countries since 1975.
The Protocol, which was attached to the first LomÚ Convention, granted non-reciprocal, preferential conditions regarding sugar exports to a group of ACP countries.
These conditions were retained in the later LomÚ Conventions and the Cotonou Agreement.
Under the Protocol, only 19 of the 77 countries which comprise the ACP group were to benefit from these privileged trade relations.
Eleven were from Africa, seven from the Caribbean region, and only one (Fiji) is located in the Pacific.
Of these countries, six are Least Developed Countries (LDCs) and 13 non-LDCs. These countries have had quota-based access to the EU market.
Under the Protocol, the European Community undertook to import, duty-free, specific quantities of cane sugar (raw or white) from these countries, which in turn undertook to deliver it.
The tariff quota has always been around 1,279,700 million tonnes (mt) per campaign.
Since 1995, other additional quantities of sugar have been allowed into the EU under preferential conditions in amounts which vary in each campaign, depending on the "basic supply needs" of European refineries; on average, they have amounted to 300,000 mt per campaign.
Last, but not least, the Protocol has also offered producer countries a guaranteed price.
The quota of the 19 ACP countries can only be purchased at a price negotiated for each campaign that is close to the internal intervention price set by the Common Market for Sugar.
The transition period
Provisions have been made to allow for a gradual adaptation to the new reality from October 2009 to October 2015.
During this period, three major changes will be introduced: guaranteed prices will decrease and finally disappear, quotas will be increased, and the number of ACP countries which can benefit from preferential relations with the EU for sugar will tripple.
After 30 September 2009, the EU will offer preferential non-reciprocal treatment to sugar originating from any ACP country that has signed or initialled an Economic Partnership Agreement (EPA) with the Community and, as a result of the 'Everything But Arms' (EBA) initiative, from any country of the world recognised as an LDC by the United Nations.
Taking into account the number of ACP countries involved, the EPA regime will apply to almost half the ACP countries (36), and the EBA regime to 31.
All 19 ACP beneficiaries of the Sugar Protocol will come either under the EPA (17) or the EBA regime (2).
The only ACP countries excluded from the preferential regime will be the 10 non-LDCs that have neither signed nor initialled an EPA with the EU.
In both the EPA and EBA initiatives, the provisions regarding sugar during the transition period are the same.
Guaranteed prices will be reduced but maintained until September 2012 and limits on imports will apply until October 2015.
Regarding the guaranteed prices, imports of sugar from the ACP countries concerned will be subject to a minimum price between 1 October 2009 and 30 September 2012.
This price shall be no lower than 90 percent of the EU reference price for the marketing year in question. After September 2012, prices shall be determined by the market.
As the EU reference price for sugar is being reduced as the result of the 2006 reform, the guaranteed price for ACP raw sugar has already been reduced by at least 33 per cent during 2008 and 2009.
Quotas will be maintained until 2015 but in an indirect way and, in principle, only for EPA non-LDCs imports.
Country-specific quotas and immunity from safeguard measures will no longer apply.
During the period between October 1, 2009, and September 30, 2015, there will be no country or EPA quotas.
Access will be duty free within automatic safeguard ceilings.
The EC may impose the applied Most Favoured Nation duty on products originating in EPA non-LDCs, of tariff heading 1701 sugar, if they are imported in excess of two volume-safeguards at the same time.
The first ceiling is based on ACP non-LDC imports: 1.38 tonnes in 2009/10; 1.45 tonnes in 2010/11; and 1.6 tonnes in the following four marketing years.
The second ceiling concerns the sugar imports from the whole ACP group: 3.5 tonnes in a marketing year. If both ceilings are exceeded in the same marketing year, the EU may decide to impose duties on EPA non-LDC imports.
LDC imports do not necessarily need to be subject to the same treatment.
It is important to emphasise that although the second ceiling takes into account all ACP imports -- that is, imports from both EPA and non-EPA ACP LDCs and non-LDCs -- EPA and EBA LDCs imports will only be subject to a regular safeguard clause.
After the transition
As of 1 October 2015, sugar from EPA and EBA countries will have non-reciprocal duty and quota-free access to the EU market.
In principle, both regimes will be compatible with WTO rules: The EBA regime on the grounds of the so-called World Trade Organization's "Enabling Clause", and the EPA regime on the grounds of Article XXIV of the GATT.
After the transition period, the only remaining language regarding sugar will be a safeguard clause.
Under the EPA regime, this clause will no longer be defined on the grounds of the volume of imports but rather on the sugar price.
In other words, there is a move away from a preferential system based on quantitative limits, as seen in the Sugar Protocol or the transition regime, to a system of control based on price.
Both EPA LDCs and non-LDCs will be subject to the same safeguard mechanism: The EU will be able to impose duties "in situations where the European Community market price of white sugar falls during two consecutive months below 80 per cent of the European Community market price for white sugar prevailing during the previous marketing year." As for non-EPA LDCs, the present General System of Preferences (and thus EBA) Regulation does not provide for any specification of the general safeguard clause.
Nonetheless, as the Regulation covers the period from 1 January 2009 to 31 December 2011, it would not be surprising if the EPA safeguard specification were to be included in the EBA regime in the near future.
Conclusion
Sugar Protocol legally expires in October 2009 but some of its benefits will continue until 2015 through the EPA and EBA regimes.
These benefits will no longer be limited to the 19 beneficiaries of the Sugar Protocol: under the EPA regime they will be offered to all 36 countries that have signed or initialled an EPA, and under the EBA regime, they will be offered to 31 ACP LDCs (as well as to 9 LDCs that are not ACP countries).
At the end of the day, sugar originating in 67 ACP countries, rather than 19, will benefit from preferential access to the EU market.
As of 1 October 2015, the only restriction on their sugar access to the EU market will be a price-based safeguard clause.
From October 2009 until October 2015, the access for LDCs will, in principle, be freer than for EPA non-LDCs.

Fares to Go Up

Fares go up
By ASHWINI PRASAD

www.fijitimes.com - Tuesday, August 04, 2009

COMMUTERS will have to dig deeper to meet transportation costs from tomorrow. Yesterday the Transport Ministry announced bus fares would increase by an overall average of 13 per cent, with taxi flagfalls and waiting rates to also increase. This follows a decision to cut back on the number of fare stages across the country by, in most cases, merging fare stages. The changes will result in an increase in some areas by up to 25 per cent. For example, fares in Suva and Lautoka will now cost either 70 cents or $1 for adults, with school bus fares at 50 per cent of the new adult fare. This follows the merging of the Suva and Lautoka stages 1 and 2 50 cents and 70 cents into a single stage. That single stage (the new Stage 1) will cost 70 cents from tomorrow. The current Suva and Lautoka City Stage 3 (75 cents) will from tomorrow be called Stage 2 and cost $1.

In other parts of Viti Levu, adult fares for stages 1 and 2, previously 50 cents and 70 cents, will now be counted as a single stage Stage 1 attracting a fare of 70cents. The current Viti Levu stages 3 and 4 (85 cents and $1.05) will be merged into a new Stage 2, attracting a charge of $1.15. The bus fare changes continue merging in this manner right through to the current Viti Levu Stage 79 $16.90 which from tomorrow will become Stage 40, attracting a fare rate of $17.75. For Vanua Levu the current 64 fare stages have been merged into 32 stages. Taxi fares will also rise, with the industry granted an increase in the flagfall of 50 cents, while the waiting rate will be 10 cents per minute. The Transport Ministry said the increases were the result of the devaluation and increases in fuel prices.

Fiji Bus Operators Association president Zain Dean welcomed the increase but refused to comment any further on the matter. Attempts to contact Fiji Taxi Union general Secretary Rishi Ram remained unsuccessful last night.

Electricity Users to Pay More

Consumers to pay more for electricity bills over $50
www.fijitimes.com - Tuesday, August 04, 2009

ALL electricity consumers whose bills are higher than $50 will have to pay 15 per cent more come September 1. This after the Fiji Electricity Authority was given the green light yesterday to increase its tariff by an average of 3.2 cents per unit (a 15 per cent increase) on September 1.
The increase will go across the board for all customer categories, except those considered "Life-line" domestic customers - whose monthly bills are less than $50 - and some institutions such as religious bodies, schools, council street lights and other non-profit organisations. A statement released by the Information Ministry said around 90 per cent of FEA's domestic customers fell into the "Less than $50/month" category, which means they would see no increase.

But it says for someone whose current consumption is around $60/month, the tariff increase would see their bill increase by $9 a month. This would mean that the 15 per cent increase in tariff is charged over the entire bill, not just the amounts over $50. "For a bill of $80/month - an increase of $12/month, for a bill of $100/month - an increase of $15/month," the statement said. The Transport Ministry justified the tariff increase, saying it was necessary because of the adverse financial impacts of devaluation of the Fiji dollar on April 15 this year, as well as the Commerce Commission's decision to remove the FEA fuel surcharge rate from March 11.

The increasing price of diesel and a possible El Nino later in the year were also contributing factors to this increase, the Transport Ministry said. It said the 15 per cent increase in the tariff rate would see the FEA gain additional revenue of about $2million per month. "This will help to improve FEA's cash flow as well as its financial covenants in its offshore loan agreements." The Transport Ministry said increases in customers' power bills could be mitigated if they reduced their consumption levels by using energy efficient fittings, changing electricity consumption habits and being energy-efficient. It said "the tariff increase was modelled as part of the Corporate Planning by FEA for 2009 to 2011".

Opportunities in Pacific - EC DG

Crisis offers region opportunities: EC regional director-general
www.fijitimes.com - Tuesday, August 04, 2009

"A SERIOUS crisis should never be allowed to go to waste... they hold real opportunities to refocus priorities, to make quantum leaps in terms of regional integration, to invest more and better, to stimulate economies, to achieve green growth and to redesign the international economic, financial and environmental architecture." This was the view of the European Commission's Director-General for Development and Relations with African, Caribbean and Pacific States, Stefano Manservisi.

He made the comment at yesterday's Lowy Institute conference on the impact of the global economic crisis on the Pacific Islands region in Brisbane. The conference was a lead-up to the Pacific Island Forum, which opened in Cairns, Australia today. "The global economic crisis shows how deeply the prosperity and the future of advanced economies and developing countries are linked through globalisation and that a global system of rules was needed for equitable sharing of benefits and costs," he said. Mr Manservisi stressed that advanced countries must create the conditions for a more inclusive and regulated globalisation, and to fight poverty and exclusion as a necessary element of a sustainable global recovery.

Mr Manservisi said participation of poor countries must be promoted in global forums such as the G20 where economic and political decisions were taken. "But," he said. "developing countries also needed to take measures to mobilise their domestic resources and stimulate private sector activities and growth". A statement released after his speech said the EU, that is the Commission and the Member States, remained a strong supporter of Pacific regional integration, being the second largest donor of aid in the Pacific region with $449.55m ($US227.7m) in 2007.

It said last year the Commission alone tripled its financial support for regional cooperation in the Pacific. The EC was also adminsitering a new financial instrument, dubbed the EU Vulnerability FLEX to assist ACP countries to the tune of $1423.8m (500m Euro) by 2010. "The EU also stands ready to support social safety nets and to promote investments in coordination with other donor countries in the region such as Australia and New Zealand", he said. The statement said the EU was interested in joining the Pacific Regional Infrastructure Facility that Australia, New Zealand, the World Bank and the Asian Development Bank launched at last year's Pacific Forum.

Fiji not immune to global crisis

Fiji not immune to global crisis
http://www.fijitimes.com/

By Geraldine Panapasa, Thursday, July 30, 2009

THE Pacific, including Fiji, is not immune to the impact of the global economic crisis, says Aus-tralian High Commissioner James Batley. Mr Batley was chief guest at the Fiji Economy Update 2009 presentation at the University of the South Pacific yesterday. The presentation was a co-orperation between the USP's School of Economics, Faculty of Business and Economics, the Crawford School of Economics and government and the Australian National University. "The update is taking place a week ahead of the Pacific Island leaders meeting in Cairns, Australia, and the global economic crisis is likely to be the key issue for discussion," Mr Batley said. "One of the significant issues that leaders will discuss is whether to start negotiation on a new regional trade and economic integration agreement, known as PACER Plus." Mr Batley said trading relationship between Fiji and Australia continued to be a strong one, reflecting the strong link between the two countries. He said Fiji continued to benefit from privileged access to the Australian market under international agreements and arrangements. "Australia has a keen interest in the update as a neighbour who wants to see Fiji fulfill its economic potential." he said.
Mr Batley said the University should continue fulfilling its traditional role of providing space for the free and respectful exchange of ideas and opinions. The Fiji Economic Update 2009 was held at USP Lower Laucala Campus yesterday. Presentations will also be held in Labasa at Hotel Northpole tomorrow.

More poverty around
Thursday, July 30, 2009

THE unemployment rate has been hovering above the 8 per cent mark since 2000, says an academic. The changing of the retirement age from 60 to 55 will increase the number of vacancies. The associate professor of economics at the University of Queensland, Renuka Mahadevan, made the comment while presenting her survey at the 2009 Fiji Economy Update yesterday.

"Along with other factors, increasing unemployment is a likely underlying factor for the consistent decline in Fiji's ranking on the UNDP's human development index," she said. "The index, however, understates the real situation as it excludes gender discrimination, income inequality and more-difficult-to-measure indicators such as respect for human rights and political freedom which have taken a nosedive." She said poverty has worsened three-fold.

Most fuel for energy
www.fijitimes.com

By Geraldine Panapasa, Thursday, July 30, 2009

FIJI'S energy sector relies heavily on imported fossil fuel for industrial, domestic, transport and power generation needs, says associate professor of physics Anirudh Singh at the University of the South Pacific. Speaking at the Fiji Economy update 2009 presentation, Mr Singh said a significant part of imported fuel was directed to electrical power generation. "The commercial sector was the heaviest user of electricity accounting for 43 per cent of generated electricity in 2007," he said. "By far, the greatest consumer of imported fuel is industrial distillate using 45.6 per cent of the 808 million litres imported in 2007. "The aviation industry is the next biggest consumer, using 35.5 per cent of the total. "It is followed by road transportation which takes up 17.1 per cent of total fuel imports." Mr Singh said a significant fraction of total energy demand in Fiji was met by biomass energy. He said coconut oil and biofuel derived from it could be used as alternatives to diesel. While the country's non-fossil fuel generation capacity has remained fixed, total energy demand has risen steadily and rising imported fossil fuel costs have placed pressure on Fiji's imports bill. "The best approach to contain or reverse this is to introduce more indigenous sources of energy into the electricity generation system with the obvious one being renewable energy," Mr Singh said. He said reductions in fuel imports will result when the land transport sector begins to switch to bio fuels.

Fiji Tourism Collapse Not Good

Tourism collapse not good
www.fijitimes.com - Thursday, July 30, 2009

A COLLAPSE in the tourism or sugar sector will have a negative flow-on effect on the economy, says University of Queensland associate professor of economics Renuka Mahadevan. She made the comment in her assessment of the Fiji economy at the 2009 Fiji Economy Update presentation yesterday. She said there was a need for diversification into other crops apart from sugar as non-agricultural production contributed to six per cent of Gross Domestic Product. "The huge potential in this area remains unexploited. About 50 per cent of the people are rural farmers," Ms Mahadevan said. "Creation of employment opportunities is necessary to lift them out of poverty. Local production is insufficient and cannot be depended on to meet the high standards required by the tourism sector which imports food because of the poor quality and lack of continuity in supply." Australian High Commissioner James Batley said Australia was serious about providing direct support for Fiji's export-related sectors. He said the assistance was consistent with Australia's long history of assistance to Fiji. "We also maintain significant programs of assistance in the education and health sectors as well as working on community sector development," Mr Batley said. He said Fiji was benefiting from an Australian pilot program, the Enterprise Challenge Fund, which provides grants to business projects to improve.
livelihoods, incomes and access to vital goods and services for local communities.

Housing affordability in Fiji

Housing affordability
http://www.fijitimes.com/ - Reports by GERALDINE PANAPASA

Thursday, July 30, 2009

A squatter settlement at Muanivatu outside Suva

RURAL-urban migration, low wages, expired land lease and financial demands are some factors that contribute to the housing crisis in Fiji, says Father Kevin Barr. In his report presented at the 2009 Fiji Economy Updates on housing affordability on Tuesday, Fr Barr said these factors led to the growth in squatter settlements in the country.

"About 15 per cent of Fiji's population live in overcrowded, sub-standard and unhygienic housing in more than 200 squatter settlements," Fr Barr said. "There is inequality and the percentage of those in poverty has grown drastically. Quality of life for the ordinary people has not improved and we have seen the development of the very large Fiji of the poor and struggling and the small Fiji of the rich." Fr Barr said subsidy for housing was not a large commitment by the government particularly when it acknowledged that housing was a human right. "Those responsible for housing the nation's population must think in terms of availability and affordability," Fr Barr said. "It is not just a matter of acquiring land, developing lots and building houses. The lots and houses must be affordable for the people. "Any national housing scheme must take into account the income level of the people to determine what is affordable for those in the particular income levels." Fr Barr said housing agencies need to be able to deliver houses at a level of affordability.
He said when majority of the population earned low income, housing must be provided so that they can afford it.

Professor Wadan Narsey said in his analysis of poverty in Fiji that low income earners in 2002 and 2003 spent about 60 per cent of their pay on food. "The price of basic food is increasing, which leaves little with which to pay rent or pay off a housing loan," Fr Barr said. He said about 25,000 poor people were receiving family assistance which came to a minimum of $60 a month or maximum of $120 a month.

Reassess Housing Authority, PRB role: Barr
www.fijilive.com - July 30, 2009

Fiji Wage Council chairman and poverty advocate Father Kevin Barr has called on government to re-look the roles played by Housing Authority and the Public Rental Board as there was “a very real danger” that their commercialization would go against their intended role to provide housing for the poor. Barr said allowing the two state companies to operate along commercial lines and charging market rates and market rents may make good economic sense but if a high percentage of the population could not afford to pay these rates, there was a serious need to question how they would be provided with affordable homes. “In 1997 when, on the advice from the World Bank, the HA and PRB were separated, the World Bank advisor who came to Fiji said that the PRB must charge economic rents for its rental units. This meant that rents for those living in the Four Storey flats at Raiwaqa would pay $58 a month instead of $12 a month. Someone asked: ‘What happens to those who cannot afford to pay the increased rent?’ The reply was: ‘Just flush them out.’ Many were horrified that this unfeeling, economic/commercial attitude should dominate the man’s thinking. He didn’t seem to be concerned where people went if they couldn’t pay. He didn’t think of the social consequences. His attitudes were dominated by principles such as ‘user pays’ and the theories of ‘economic rationalism’ and ‘free market economics,’” Barr said.“If HA and PRB are to be relevant in today’s world, they need to do careful research to find out what ‘low income’ really means so that their products can be affordable to this group. “With such a high level of poverty in the country, over 35 percent, and such a large number of full time workers receiving wages below the poverty line (between 55 and 60 percent) and 71 percent of workers earning incomes below $15,000, serious reassessment of the demands placed on HA and PRB is needed,” Barr added. Among the many ways that housing could be made affordable to the poor, Barr suggested the provision of government subsidies as well as getting the poor to participate in schemes to build houses, thereby reducing costs.

FHL Investigated

Sidelined chair backs FHL probe
By ASHWINI PRASADMonday

www.fijitimes.com - July 06, 2009

THE Fijian Holdings Limited board should carry on with its investigations, says Chairman Isoa Kaloumaira. Mr Kaloumaira who was sent on leave said he would let the board do its investigations and stand by the statement made by the board last Friday. He did not wish to further comment on the matter. Last week in a statement to the South Pacific Stock Exchange acting chairman Ioane Naiveli had said FHL CEO Sereana Qoro, chairman Isoa Kaloumaira and deputy chairman Lieutenant Colonel Mohammed Aziz were sent on leave to allow "corporate governance" investigations. Mr Naiveli said this was the request of the FHL board, adding it was business as usual for the group's companies. Mariana Saumadu is acting CEO. Efforts to contact Lt Col Aziz or Mrs Qoro yesterday were futile. FHL is in the midst of settling its acquisition of BP Southwest Pacific Limited at a cost of $190million. A deposit of $20m was paid out last year. Two months ago, the company sold its interests in the Fosters Group for $40m. It is still searching for capital to complete the purchase of the oil company's operations in Fiji

Fiji PM to look into fare increase: Chand

Fiji PM to look into fare increase: Chand

www.fijilive.com - 07/04/2009

Leading Fiji bus operator Dewan Chand said interim Prime Minister Commodore Voreqe Bainimarama, who today authorised the release of subsidies due to the industry since last year, also promised he would look into a request for 20 percent increase in bus fares.“The prime minister promised today he would look into the matter,” said Chand. He said Bainimarama asked to meet him today after Chand’s warning in the media yesterday that bus operators including his own company would close down if the interim government did not immediately provide them with subsidies.Chand said the subsidies, which for his company alone came to $300,000 for October to December 2008, would solve a lot of problems.“It will solve a lot of problems or my company. It will help our cash flow, we can get our buses repaired and buy spare parts,” he said.A statement from Fiji Islands Revenue and Customs Authority chief executive Jitoko Tikolevu said that in July 2008, the interim government had agreed to provide bus operators a revenue-based direct subsidy of 21.9 percent to be administered by FIRCA.“The subsidy was granted in view of the escalation of global fuel prices at that time. Government has already made payments of up to $2.2million to the bus operators for the months of July to September, 2008,” said Tikolevu.The interim government agreed to pay all outstanding subsidies up to December 31, 2008. Chand said the subsidy was only effective until December since fuel prices had dropped in January.He said while the industry would not request further subsidies, they had asked for a 20 percent increase in fares.Chand said the request, lodged last year, was still with the Land Transport Authority and Bainimarama today promised he would look into the matter.

The debate on age in Fiji

The debate on age
By Sivia QoroTuesday

www.fijitimes.com - April 07, 2009

Currently 33 per cent of our population are under 15. This youth population is projected to decrease to 18 per cent by 2045-50.

I read with interest the unequivocal stand taken by the interim Government, which is now under much discussion, to reduce the retirement age to 55 and, amongst other reasons, to save much needed cash required for capital works and, as a by-product to provide employment for younger recruits who are actively seeking employment.
These goals although commendable are often short lived if not looked at within the context of social, economic and policy environment that exists both now and into the future.
Such major policy decision must be based on quantitative research and findings, and comparative analysis undertaken with other PICs and developed countries.
There must be very close consultations with the Ministry of Employment, Bureau of Statistics and the Ministry of Commerce in particular the Micro-Enterprise Development Unit.
Available statistics reveal that the formal sector in Fiji and other major Pacific Island countries represents between 25-40 per cent of the economically active labour force.
This is due to the low realised investments and how the formal sector employment has failed to meet the burgeoning supply of new job seekers.
The private sector has only been capable of absorbing approximately one-half of the new labour market entrants yearly in previous years. Based on the 2000 - 2003 figures of the 17,000 persons seeking employment each year, about 8000 are expected to succeed in gaining formal sector work.
This is assuming that the formal sector employment would grow at a rate of 2 per cent per annum or a total of 2400 new jobs created annually combined with the expected natural attrition rate and replacements for emigrating persons.
With the current political situation and ADB's recent analysis of the worsening economic trend and growth in Fiji the situation would be reaching critical levels now.
Consequently it is the informal sector, representing between 60-75 per cent, that should be the focus of any government policy decision.
It would continue to absorb the bulk of the job seekers who annually enter the labour market and particularly for countries like Fiji where the bulk of its workforce is still employed in the traditional agricultural occupations including those in the informal sector.
In total 9000 are expected of those seeking employment to enter the informal sector.
It, therefore, stands to reason that reducing the retirement age to 55 does not in any way have a major impact on the national figures in as far as the 'flow' of labour supply and demand situation is concerned.
Especially when one considers that those proposed to be retired are still able to work given their physical and mental abilities and would be expected, with some exceptions, to join the long line of job seekers.
So on the one hand one is 'successful' and is able to absorb the new graduates in numbers, the equivalent number representing those over 55 years retired, due to new compulsory retirement, will again try to re-enter the job market by joining the long line of job seekers especially in the informal sector.
One, therefore, asks the question what should be the appropriate retirement age?
Earlier media statements have underscored a number of reasons to keep retirement age at 60.
It is important to highlight that the proposed low retirement age of 55years, as is the case here, is often perceived as a partial solution to youth unemployment - retiring persons are replaced by unemployed youths - but statistics abound worldwide that demonstrate that this does not happen in practice.
Retirement age must also be set to avoid persons retiring when their skills are still needed.
This is critical for Fiji when seen in the context that so many skilled workers have left for greener pastures overseas due largely to the political instability in this country.
Such policy must also be looked at in line with the demographic trend in Fiji.
Currently 33 per cent of our population are under 15. This youth population is projected to decrease to 18 per cent by 2045-50.
Under this scenario the problem of unemployment will gradually diminish so the issue would be maintaining a work force which can produce output for the entire population.
The effect of population ageing needs to be also researched and factored into the framework if the policy is to be meaningful and enjoy some form of continuity.
Such policies in my view cannot be introduced 'willy nilly' without extensive consultations with the major stakeholders.
It must be taken in the context of other developments taking place in other sectors.
Such policy must not reflect the nature of the tenure of the government, be it interim.
It must be designed for long term solutions keeping the very interests of our people in mind and to form a firm foundation on which other policies can be built upon.

Fund Transfer Cost $45million

FIJI - SUPERANUATION FUND

www.fijilive.com Mon 06 April 2009

Repatriation cost Fiji National Provident Fund $45 million

06 APRIL 2009 SUVA (Pacnews) -----The repatriation of over F$300 million of offshore investment by the Fiji National Provident Fund (FNPF), which began in late 2005 and completed during the first half of its 2007 financial year cost it F$45 million (US$25 million).

In its recently released 2007 annual report, the country's only pension fund stated that the repatriation of its offshore funds was a result of a directive of the Reserve Bank of Fiji (RBF).

This is understood to be linked to Fiji's weak external reserves position, in which import bills have ballooned against a strained export earning ability, causing foreign exchange reserves to dwindle.

"A special KPMG Report on the reduction in investment earnings due to the Fund's repatriation exercise put the cost of this to FNPF at some F$45 million," FNPF CEO Aisake Taito told Fijilive.

The repatriation exercise reduced its offshore investments - held in equities and term deposits - to around two per cent of its F$3.14 billion investment portfolio in 2007.

Although the repatriated funds, reinvested in cash and fixed deposits locally, were exposed to very low interest rates initially, Taito said the recent interest rates environment is now favourable to these investments.

"Local banks are currently offering deposit interest rates of up to 8&#xpa; for terms from 1 to 12 months. You only need to refer to the Reserve Bank of Fiji (RBF) website to see that Fiji Government related borrowing rates are now quite attractive with 10 year term rates over 10 percent per annum, 15 year terms close to 11 percent per annum and 20 year terms at 12 percent per annum. These offer the Fund and its members a positive return over inflation," Mr Taito said.

FNPF experienced a drop in investment income by 42.7 percent from F$240.04 million in 2006 to F$138.08 million in its 2007 financial year, which ended June 31, 2007.

This was attributed to the "abnormally high capital gains and foreign exchange gains" experienced in 2006 when most of FNPF's offshore investments were liquidated.....PNS (ENDS)

Fiji need best minds on the economy

We need best minds on the economy
www.fijisun.com.fj - 4/3/2009

It is time to think about the financial crisis we’re now facing and the economic future of this nation we are proud to call home.
Fiji is beginning to feel the twin impact of the global economic crisis, and the financial fallout from the political crisis here.
But we wonder if our current leaders are getting all the advice that could help in these tough times.
We have highly qualified economic and business experts. The country needs their help.
Such experts, irrespective of their political affiliations, should be asked to advise on the best way forward.
Obviously some, perhaps many, will not want any formal appointment from the interim Government. They will not want to be hit by the post-coup sanctions enforced by Australia and New Zealand.
But this nation, proud to have nurtured some of the region’s best economic and business brains, needs good, workable ideas quickly.
Not for the sake of the interim Government. But for the long-term future of Fiji.
Personal politics and agendas should be put aside to help ease the pain ahead. There needs to be a genuine commitment by all to see that the people do not feel lasting economic pain.
There are alarming warning signs. More people will lose their jobs this year, poverty will rise and the economy contract.
A just released Asian Development Bank Outlook Report says: “There are indications that the incidence of poverty is rising, a result of long-term declines in the sugar and clothing industries, the impact of several coups, and, more recently, external shocks that raised food and fuel prices and further undermined growth.”
It said pockets of deep poverty are found in town squatter settlements and more widespread poverty is apparent in rural areas.
It underscores that our economy needs much more than a political settlement.
Reforms are needed to create a better climate for private sector development to create jobs and exports, it stresses.
All this as the global economic crisis continues, and our own political crisis adds to the problems.
Our priority now must include to save our economy and not just political settlement to advance Fiji to democratic rule.
The two are obviously inter-linked.
But the way things are going we cannot afford to wait for a political settlement before we use all skills available to address the economic challenges.
We need all our best business and economic minds, no matter what their political views, working on this. Right now.
Carry on against corruption
Returning from his six-day visit to India, interim Prime Minister Commodore Voreqe Bainimarama opened the FICAC (Fiji Independent Commission Against Corruption) website.
He did so with the strong message that his Government will eradicate corruption in Fiji.
He said the interim Government pursued the clean-up campaign
to rid the country of corruption and bring about reforms that stop corruption growing.
The campaign would continue in Government departments, the business community and wherever corruption rears its ugly head.
Everyone who cares about a better Fiji will welcome this.
Corruption respects no borders, knows no economic distinctions and can infect all forms of government. In the long run, no country can afford the social, political or economic costs that corruption entails.
There is no place for corruption in Fiji.
Corruption is one of the biggest problems today in the developing world.
It takes many forms.
Let us all support the fight against it. Use the new FICAC website (www.ficac.org.fj) to report suspicious dealings or activities.

Controversial $190m BP acquisition going ahead: FHL

$190m BP acquisition going ahead: FHL - www.fijilive.com - 30/03/2009
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Fijian Holdings Limited (FHL) has confirmed that the $190 million acquisition of BP SWP is going ahead.

And FHL managing director Sereana Qoro said the settlement of this acquisition would be made in a few weeks upon finalisation of overseas funding agreement.

She said this deal was not only the biggest but one of the most significant investment breakthroughs in FHL’s history.

“It has always been the desire of FHL to invest in the lucrative petroleum industry,” Qoro said.

“In fact, FHL participated a few years ago in the bid to purchase Shell Company in the early stages of the bidding process, which was eventually won by Total,” she said.

Qoro said this move was in line with FHL’s three year strategic plan to selectively grow its investment portfolio by expanding into the Pacific region.

She said the acquisition should also be a milestone for Fiji because for the first time, a major petroleum company operating in the Pacific would be locally owned.

She added this would have positive implications on Fiji’s foreign reserves in the long term.

Three major provinces in Fiji had questioned FHL’s move to acquire BP SWP saying the acquisition was too huge a deal for FHL’s size and that risks would be extremely high.

But FHL maintained that it could not go wrong with oil.

“The petroleum business is well established with 60 years of successful trading history, well integrated around six countries in the Pacific and highly profitable as a going concern,” Qoro said.

Qoro reassured shareholders that the investment in BP SWP Ltd met all the investment benchmarks that FHL had always used over the years.

Meanwhile, the Fiji Islands Revenue and Customs Authority (FIRCA) has issued a garnishee order against FHL for taxes owed by BP SWP.

BP SWP general manager Matt Elliott said the company was now inn discussion with the tax commissioner to resolve tax issues so to complete the deal with FHL.

State, Fiji banks to battle crisis

State, banks to battle crisis
www.fijisun.com.fj - 3/19/2009

The recent announcement by the Association of Banks to work with the Interim Government in finding ways to counter the economic crisis has been welcomed by the business community.
Businessman Mick Beddoes yesterday said the announcement that banks would guide government to establish measures to help Fiji overcome the global financial crisis is good news.
And he has called on the banks to announce what measures it would be taking to help people with their mortgage repayments and other commitments so that Fiji could avoid the impact of the financial crisis. Mr Beddoes suggested that the first step taken by the banks should be to reduce by up to 50per cent housing and other loan repayments for the next 12 months before reviewing things and adding back any arrears existing to the balance owed.
“This will bring immediate relief to the people and allow them to make adjustments to their budgets,” he said. “Although many people have already taken their deposits out of the banks in fear of losing their money, government can encourage people to start re-depositing their funds.
“Thereby assisting banks in improving the liquidity problem we face by issuing a government guarantee for every person’s savings similar to measure taken in other countries.” He said people are worried but this could be reduced significantly if banks and the government announce measures that would help assure them that they won’t lose their homes. “This will also help them to maintain reasonable cash flow to better manage the finances and survive through these difficult times,” Mr Beddoes added.

Huge drop in tourist arrivals

Huge drop in tourist arrivals
http://www.fijisun.com.fj/ - 3/19/2009

A total of 32,955 tourists arrived in the country in January which is a 27.6per cent drop compared to last year.
Tourism Fiji board chairman Patrick Wong yesterday said the first quarter of 2009 is likely to record a drop of 25per cent but they are working hard to bring in more tourists.
“We are having tactical campaigns in New Zealand and a stimulus package campaign in Australia,” he said.
Mr Wong said a “Fiji Me” roadshow is currently being held in New Zealand where they have visited places like Whangarei, Auckland, Hamilton, Christchurch and Dunedin. “Tourism Fiji and our industry partners are presenting Fiji directly to trade partners under one roof in the locations.
“It effectively trains and provides our trade partners with up-to-date knowledge of Fiji as a destination as well as the range of products we have to offer penetrating the markets.”
Mr Wong said the roadshow is a marketing initiative that is cost effective, focused and suitable for a market such as New Zealand that has such a diverse geographical spread.He said Tourism Fiji’s activities in Europe includes the DAS BOOT in Dusseldorf, Germany, an event serving boat owners, yachts, divers and tourism destinations, BIT in Milan, Italy, ITB in Berlin, Germany and MITT in Moscow.
“These leading trade shows showcase the best international tourism suppliers and presents the entire spectrum of products of the tourism industry”
Mr Wong said these trade shows are prime meeting places that provides outstanding opportunities for the private sector to present their product and enhance their image serving the travel and tourism industry.
“In light of the global financial crisis, it is critical that Fiji maintains its market stamina, being visibility and remaining focused for long term benefits of Fiji’s Tourism Industry investing into the future of our country”.
He said occupancy levels are also soft throughout the region as February and March are our traditional low season months of the year which are further impacted by the financial crisis.
“Hotel worker are exhausting all annual leave owing prior to temporary workers released from their duties. Depending on occupancy after exhausting all avenues permanent employees are worked on a shorter working week.
“I would say the worse is over with February and March being traditionally our lowest tourism season of the year.”

Fiji trade deficit widens, remittances down

www.fiilive.com - Fiji trade deficit widens, remittances down
02/03/2009
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Fiji continues to buy more than it sells, adding to a deteriorating trade balance that has worsened by 30 per cent to $1.9 billion by November last year, the Reserve Bank of Fiji has revealed.

In its economic review for last February, the central bank said that although Fiji’s exports rose by 16.7 per cent, it was overshadowed by the 24.2 per cent growth in imports.

The review showed that the increase in export receipts was underpinned by re-exports, predominantly of mineral fuels, as well as higher earnings from sugar, fish and gold.

The increase in imports, on the other hand, was across all categories.

“Mineral fuels, food, machinery and chemical imports contributed well over 80 per cent to the growth,” the report adds.

Remittances, which has in recent years assisted the Tourism industry in propping the economy, continued its downward trend and registered a 26.7 per cent annual decline in 2008.

The Reserve Bank governor Savenaca Narube, on Friday, called on key players to avoid the blame game and focus on rebuilding the economy.

“While Fiji is isolated from the financial mess, we unfortunately cannot avoid its economic fallouts. What is happening around us is unprecedented,” he said.

“If ever a time that the country needs to work together to build our economy this is one of them. The economy is our bread and butter. It is our livelihood. It puts food on the table. It pays for our children’s education. It protects the future of our grandchildren.

“So we should all play a part in building this economy right now. We should avoid the blame game. We should focus all our energy in getting things done in a coherent and consistent fashion.

Narube also said that now is the time to take action.

“We are forever setting up committees. The only growth industry now is conferences. We study that. We review that. We review the review and so forth. What we very much lack is action. It is action that makes things happen.

“I believe that if we all implement 50 per cent of what we say we will do, we will be far better off than where we are today."
Fiji cost of living eases: RBF
02/03/2009
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Inflation eased slightly to 6.1 per cent in January this year, the Reserve Bank of Fiji reveals.

This is compared to 6.6 per cent in the previous month (December) and 7.4 per cent in January last year.

The RBF’s February-end economic review said the slight slowdown in January inflation was mainly strengthened by lower oil prices filtering into the transport and heating and lighting categories.

“Nonetheless, food remained the largest contributor to inflation, buoyed by higher charges for market items as a result of the recent flood,” the report said.

“In the months ahead, domestic price pressures are expected to mount given the supply constraints of market items,” it said, adding the supply of these products was anticipated to be restored by mid year.

The report added that the 2009 year-end inflation forecast remained unchanged at 4.5 per cent.

“Some of the upside risks to this forecast include the volatility in crude oil and wheat prices, and the higher-than-expected increase in costs of market items due to the recent flooding.

“The decline in taxi fares is nonetheless expected to mitigate some of these price pressures.”

Foreign reserves, on the other hand, stood at around $672.2 million, sufficient to cover 2.7 months of imports of goods.
Productivity ‘can lift Fiji economy’
01/03/2009
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One of the easiest way to grow the economy is to raise productivity, says Reserve Bank of Fiji governor Savenaca Narube.

However, Fiji’s rate of productivity growth is extremely disappointing, he said while speaking at the Rotaract Club of Suva’s business seminar on ‘Productivity and Ethics’ yesterday.

“My estimate is that if we raise productivity rate by one percentage point, it will raise GDP (Gross Domestic Product) by nearly twice that.”

He said productivity is firstly a way of thinking and secondly a mechanical process.

“You can have the best processes in the world but if the people behind them do not want to follow them, productivity will suffer.

“If you have the best degree from the best university but you lack the willingness to work you will not go far.”

A good frame of mind he said, is the first thing to have.

Narube added everyone thought the sub prime problem was over but all were wrong.

“The crisis has deepened and widened beyond anyone’s imagination. While Fiji is isolated from the financial mess, we unfortunately cannot avoid its economic fallout,” he said.

Fiji growth revised, needs stability: RBF

www.fijilive.com - 24/02/2009
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Fiji’s central bank is working on revising its prediction for the economy given less than three months ago as it braces for an unexpected downturn.

Reserve Bank of Fiji Governor Savenaca Narube said the Macroeconomic Policy Committee, which helps government formulate policies and make forecasts, is “extremely busy” revising the prediction for the economy in light of the floods last January and the global economic meltdown.

“Given what is happening around us, we will do extremely well to achieve the 2.4 per cent growth that was released in November last year,” Narube said, while addressing guests at the launch of a book, “A Voice of Reason: The Writings of Savenaca Siwatibau”, at the University of the South Pacific yesterday.

“I hope that the Reserve Bank will not be blamed for this economic scenario.”

Earlier this week the Fiji Labour Party issued a statement putting much of the blame for Fiji’s rapidly declining foreign reserve levels, falling exports, tight liquidity and escalating interest rates on the RBF.

The party said the latest RBF economic review revealed that foreign reserves were down to $767 million, liquidity was tight, rising interest rates and expected decline of exports subsequent to flood damage to sugar cane and other crops.

The Party said this was the complete opposite to six months ago when party leader Mahendra Chaudhry was interim Finance Minister.

It said foreign reserves stood at $910 million then, liquidity was flush, interest rates low, investment levels rising, exports upped 33 per cent compared to 2006 and debt level brought down to 45 per cent of GDP from a high of 53 per cent under the Laisenia Qarase-led government.

The party said the RBF had relaxed monetary controls too soon and triggered rapid outflow of local funds.

“It also relaxed exchange controls on importation of capital goods, permitting payment in Fiji dollars,” it added.
Narube has hinted that managing foreign reserves has been difficult.

“My hair is not only grey they have turned all white in the last six months,” he said.

He has also emphasized the need for stability before Fiji can solve its economic problems.

“We live in challenging times,” he said.
.
“The world economy is buckling from the fallouts from the financial crisis. Fiji will not be immune from this global recession. Our economy was already under some stress.

“Siwa (tibau) was a stickler for economic stability. I am sure that he would emphasise to us today that while we have a host of economic problems we must deal with the stability first before we can solve the others.

“This would be a wise counsel. We will do well to heed it. Without stability you do not have a foundation for growth.”

A looming cash crisis

A looming cash crisis
Dr Mahendra Reddy
www.fijitimes.com - Saturday, February 21, 2009

THE continuous increase in interest rates over the past six months does not augur well for Fiji's economy.

The raise in interest rates will affect the economy via two channels - the construction and consumption channels.

As interest rates rise, home values fall and consumers feel they are losing on their value of total stock of assets.

They will cut their consumption.

That is, they will cut down general spending as well as avoid borrowing against their homes.

Thus new construction will be less forthcoming.

If this situation is prolonged and simultaneously, real income declines either as a result of inflation or pay cuts or layoffs, we may trigger a crisis in the sub-prime mortgage market where borrowers are just making theirs ends meet with multiple payment demands.

The banks are behaving this way (raising interest rates) because due to shrinking liquidity, retail and wholesale deposit rates have been increasing and no bank would want their interest rate spread to continue to worsen.

Hence, they have rushed into raising lending rates to maintain the interest spread.

The Reserve Band of Fiji is also a contributory institution to this rise in interest rates.

It must now immediately examine its two main tools - the RBF funds rate and the discount rate.

The RBF funds rate is the bank to bank borrowing rate.

At any given time, some banks have extra reserves and some have a shortage of reserves. In the funds market, banks with excess reserves lend to those that are short handed.

The RBF can intervene in this bank-to-bank transaction by buying and selling bonds to the banks thus restricting the liquidity at the level.

When RBF sells bonds, it pulls funds out of the bank, thus reducing liquidity.

Secondly, the RBF also uses a discount rate which it employs when it lends directly to a bank.

Thus raising this discount rate will also cause the banks to raise their lending rates.

Therefore, it is not the banks only which are trying to protect their interest spread by responding to the retail and wholesale market, but rather, they are also responding to RBF's use of the two key tools at its disposal.

We must also note that prolonged use of government expenditure without raising the productive capacity of the economy also raises inflation rates and thus the interest rates.

It is for this reason that we must be prudent in use of government expenditure particularly when it comes to debate of whether established international benchmarks should be compromised.

* Dr Reddy is the Dean of the Faculty of Commerce, Hospitality and Tourism Studies at the Fiji Institute of Technology. The views expressed in this article are his and do not necessarily reflect that of his employer.