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Written By : Maika Bolatiki. To attract investors to invest in Fiji, government must create the right environment.
This is very critical especially after the coup of December 2006.
One key component to creating the right environment is confidence. Confidence is hard to build but very quick to fall. It takes years to build the confidence investors want.
There is a saying that business must go on whatever the environment.
Governor of the Reserve Bank Savenaca Narube recently said that investment must continue.
“We need that now more than ever before. Investment is the locomotive of growth. Without it, the economy will lose steam,” he said.
Mr Narube also said the right environment must be created with sound policies and appropriate infrastructure and support services.
It must be stable – politically, economically and socially.
We must be mindful of the fact that if the environment is not conducive it scares away potential investors who want to invest in Fiji and visitors.
Because of this local business people would be the first to feel the pinch.
He said: “The phrase that we are part of the global village remains highly applicable for us, if we don’t have the right environment in place, if we don’t nurture and feed such an environment, then we are swimming against the tide. If we don’t have the right environment in place, there are many other countries that tourists and holiday-makers can go to instead of Fiji and that investors can put their money into just as readily, if not easily, than in Fiji.”
He says the RBF is already offering all kinds of enticements to lure tourists and investors and so on.
However he stressed these types of `carrots’ won’t be effective if the environment is unstable.
But life here in Fiji must go on and the onus is really on our current leadership.
As a result of the December military coup, 16 foreign investment projects are on hold and this had been confirmed by the Fiji Islands Investment Board in a recent press conference.
These projects would only get off the ground once Fiji’s political situation stabilises.
According to board chairman, Francis Narayan these 16 projects are part of 50 “large” projects the FTIB identified, registered and facilitated permits and licences last year.
However, the very reason why the 16 projects are on hold because the environment is not right.
Offshore financiers are not going to release the funds to start these projects fearing, from their perspective, the “too” high risks.
27 projects are ready for implementation but are on hold until the country stabilizes.
We need to create a friendly environment where all will benefit.
He said the FTIB had continued to bring to the attention of the interim government through its line ministry to push for the reform of the investment approving agencies and also for the government to create a stable investment environment in order to secure investor confidence.
It is a fact that any kind of event such as the December takeover would reflect negatively on investments and create uncertainties, adding the onus was on government to ensure existing investors were given the confidence that their investments would not be affected.
Just recently the interim Cabinet after a presentation by Minister for Finance Mahendra Chaudhry approved to impose a 20 cents/litre export duty on all Fiji’s mineral water exports and a 20 cents/litre excise duty on mineral water sold for domestic consumption.
This approval I must admit had created an unhealthy environment to all the 10 bottlers of Fiji-manufactured artesian water.
Because of this they had collectively agreed to cease production immediately until the “extraordinary attack” against the bottled water industry is resolved.
Now Mr Chaudhry had called on all these companies to make submissions.
Fiji Water has just made its submission to the Interim Minister for Finance.
It said – “We are hopeful that after reading all of the industry’s submissions, he and his colleagues in the Cabinet will agree that the taxes levied without warning last week on the bottled water industry are the absolute wrong way to go.”
I must admit we are all feeling the pinch of the December 20006 military coup.
We need overseas investors to come to Fiji.
We know they are closely monitoring the political crisis the country is now facing.
There is only one sure way to create the right environment for our foreign and local investors.
And that is to return the country to parliamentary democracy by March 2009 as promised by the interim Prime Minister Commodore Voreqe Bainmarama-led interim government.
However, now this promise will only be delivered if the March 2009 election is held under the proposed electoral reform that will be discussed by the President’s Political Forum. The promise made was to have election under the 1997 Constitution.
There is confusion and it is building up day by day.
One of the drafters of the 1997 Constitution now based at the Australian National University Dr Brij Lal said “I think there is a great deal of confusion emanating from the interim administration. They make commitments and then renege on them; there is obfuscation and a certain degree of stubbornness, an unwillingness to consider compromise. In one breath we hear Ratu Epeli Nailatikau make a solemn promise to the international community to abide by the regime’s commitment to hold elections around March 2009, and in another the Attorney General saying that there could be extenuating circumstances which could lead to delay.”
What we need now is to create the right environment and this for firm decisions to be made. A major contributing factor to creating the right environment will be the constitutionality of the way forward chartered by the government of the day.
The way forward is the People’s Charter. Part of the charter is the new electoral reform package.
The National Council for Building a Better Fiji according to Mr Lal is proposing substantial changes to the electoral system, which should now be discussed widely by the people of Fiji.
“There is no perfect electoral system anywhere. Electoral systems are a means to an end, not an end in themselves. The best electoral systems are context-specific, taking into account the culture, geography and history of the country into account. What kind of political culture will the new system generate should be thoroughly debated. The UN-Commonwealth forum could form the venue for such a discussion. It will be counterproductive to steamroll the recommendations into legislation without the consent of the governed.”
When asked about the Charter Dr Lal said: “The whole charter process if flawed and it will fail. It does not have any moral or political legitimacy. It is not derived from the freely expressed will of the people. It is the brainchild of a few well-heeled retired expatriates who think designing the future of a country is a like a consultancy. The charter cannot be binding on future governments. The charter is not neutral. The only true charter Fiji has is the constitution. It is not a flawless document. It can be changed or amended following proper procedures laid down in the constitution. With significant segments of the community opposing the charter initiative, an expensive failure looks like the only outcome. The principles intended for the charter may be noble, but the process is deeply flawed.”
It is a fact that the government of the day must tread very cautiously in charting the way forward as it will also be the leverage to creating the right environment for the business people and the nation as a whole.
An environment that will address one our major problems which is our too low growth rate.
Mr Narube said: “Even excluding last year’s contraction, our growth rate has averaged only 2.8 percent over the previous years. Looking ahead, over the next three years, although the economy is forecast to grow, this growth is expected to be modest, averaging only 1.5 percent. I think it is obvious to all of us that we need to do more; for one thing it is insufficient to absorb many of our school leavers, which means a rise in unemployment.”
An environment that will enable us to raise investment to over 25 percent of GDP.
Unfortunately Mr Narube said this ratio has fallen from around 18pc of GDP in 2006 to around 15pc last year, and there is little sign of a pickup so far.
“We need to turn this around. Attracting foreign investment is not easy for small nations like Fiji. Other countries, many of which are bigger and richer are competing fiercely to entice the same investment dollar that we are chasing. We are basically up against strong competition. We are the ‘small fish’ in a very big sea. This makes our task even harder.”
We must give all our support to the government of the day to quickly return the country to the polls.