The great Fijian Paradox

By Dev Nadkarni

Ever since Commodore Frank Bainimarama’s December 2006 action in which he toppled the Laisenia Qarase government and established his military backed administration, Fiji has been turned into a pariah – at least in the western world.

Next week, heads of government of all the Commonwealth nations will gather in Perth, Western Australia, for their periodic jamboree. Fiji will miss the event because it remains suspended from the Commonwealth. Just as it was absent from last month’s fortieth Pacific Islands Forum in Auckland – because it stands suspended from there as well.

Interestingly, the headquarters of the 16-nation Pacific Islands Forum is in the Fijian capital of Suva. The country’s suspension from the Forum, therefore, is quite like what it would be if the United Nations (which is headquartered in New York) were to suspend the United States from its membership.

The Forum and the Commonwealth are but two of the world’s international and regional clubs that Fiji has been suspended from. But despite being thus ostracised and in spite of the negative publicity perpetuated by governments and media in the western world – not to mention the continually ranting activists demanding its isolation – business is putting more and more faith into Fiji.

It’s quite counterintuitive, really. Consider this: first, we have had a relentless campaign in the western media about things progressively going pear shaped in the tropical island nation. There have been warnings against doing business in Fiji, investing there or even travelling there for holidays. There has even been an incredibly pigheaded campaign to shun Fiji Water, which has little to do with the government.

Then, the world has been in a recession. Real estate prices the world over have tumbled and are still scraping rock bottom. Credit is hard to come by and most economies seem to be in a tailspin.

Despite so much going against it, things are looking up in Fiji. Or so indicate news reports from Australia and New Zealand, where criticism about Fiji in official and government circles has been the most stringent.

According to a report about property investment in New Zealand’s leading business publication the National Business Review, successful real estate professionals are reporting increased sales in properties around Fiji.

Australian-born Fiji-resident Bob Lowres is quoted saying, “There are definite signs of improvement, with new buyers coming into the market from other countries.” He is advertising the latest stage of his Naisoso Island development – a NZ$500 million gated community off the coast of Fiji in Nadi Bay, scheduled for completion in 2014. He has already sold 73 of the 112 residential lots, of which five were sold in just the past month for NZ$3.9 million.

A whopping 85% of the land and house packages that start at half a million dollars has been sold to Australians and New Zealanders and the balance to North Americans. Which indeed goes to show that investors don’t quite buy into their governments’ stubbornly rigid stand on Fiji. Lores dismisses the scaremongering about investing in Fiji’s free hold real estate – and he is being proven right by the increasing sales.

And Naisoso is not an isolated case. The magazine says Fiji-born Auckland-based real estate agent Rick Kermode “is targeting the world’s wealthiest people for his listings. Mr Kermode’s listings include a $US6.95 million house on Wakaya Island … not too far from Mago Island where he sold a large area to actor Mel Gibson.”

A couple of years ago, media in New Zealand including the National Business Review raised concerns about repatriating funds from Fiji – particularly proceeds from time share revenues and the sale of property. But rules and procedures are far clearer now, say marketers. For instance, a new 10% capital gains tax has clarified obligations of investors.

Also, Suva based lawyer Satish Parshotam told the magazine, “There’s no written policy [about length of time in repatriation of property sale proceeds]. Inland revenue authorities are pretty ruthless anywhere. But if you have your records in order and you’ve completed the necessary forms there isn’t a problem I’m aware of. Time share income is only taxed once.” According to Mr Parshotam, tightening tax rules have resulted in the growth of government reserves – now higher than they have been for years.

The Anzac nations’ isolationist policy has compelled Fiji to increasingly look north and several resource hungry nations in the Pacific rim and beyond have been only to happy to oblige. Chinese investment in Fiji has been growing by leaps and bounds and Fiji had more Chinese tourists this year than ever before, boosting overall tourist numbers to record highs.

It’s not just China that is investing. Malaysia, Indonesia and even Russia and the Baltic states are showing interest. Russia’s Rusal, the world’s biggest aluminium company, is investing big into Fiji’s natural resources sector.

But that’s not to say tourist numbers from its traditional markets – Australia and New Zealand – have declined. In fact quite the opposite has happened. Fiji’s flag carrier Air Pacific is looking at nearly doubling its services between Sydney and Nadi. The airline plans to operate 13 flights a week to Nadi from next year. This will give visitors a choice of morning and afternoon departures as well as same-day connections to Fiji’s outer-island resorts.

A representative of Australian online travel company travel.com.au has been quoted in the media saying, “[Fiji is] trying to demonstrate that they are a destination for all travellers, rather than trying to pin themselves to one market.” Which is extending its appeal from a traditional family holiday market to the highly lucrative weddings and honeymoons market as well as the whole gamut from adventure tourism to backpackers.

It’s completely counterintuitive.

Families on holidays, brides and grooms, industries, real estate investors and speculators all seem to be flocking to a nation where a coup is supposed to be in place; where for five years an unelected government has been presiding over a nation suspended from virtually every international and regional grouping worth the name; a country that a slew of aid agencies have summarily blacklisted.

As the world waits to see if the Fijian administration will ultimately carry out its promise of holding elections in 2014, the big question is who has got it wrong: the western governments who have painted the country and its people into a corner – or the growing hordes of common people who continue to flock to Fiji in ever bigger numbers despite all sorts of warnings from their own governments.

First appeared in Indian Weekender, October 21, 2011

Melanesia still a speck in NZ’s South Pacific map

By Dev Nadkarni

With the rise and rise of the South Pacific as a region of great geopolitical importance and huge, untapped hordes of natural resources, resource hungry nations from every continent have been joining the lengthening beeline at every successive annual Pacific Islands Forum summit.

As continents run out of natural resources and oceans of their fish stocks, the world has its attention trained on the last frontier – the island nations of the Pacific Ocean, particularly those in its southern quarters.

In recent years, these nations have had their exclusive economic zone boundaries redrawn – or are in the process of being redrawn – putting larger areas of open sea under their sovereign control. This potentially reduces the swathes of ocean that were no go zones because they belonged collectively to the world – the world’s commons, so to speak.

Besides natural resources and geopolitics, small island states also are important because of their voting power on international platforms, which is another reason for the biggies to woo them.

New Zealand’s deep relationship with the nations of the South Pacific has been acknowledged widely by the world’s nations. It was on show once again at the landmark 40th anniversary of the Pacific Islands Forum held in Auckland last month in the run up to one of the world’s biggest sports events – the Rugby World Cup.

The country flaunted its long and deep ties with the nations of the South Pacific by putting up an engaging showcase of its culture, heritage, cuisine and opportunities for investment.  It certainly has reason to be thankful to Pacific nations for the supplying the continuous stream of legendary players that have sharpened the cutting edge of the All Blacks over the years.

New Zealand’s biggest city and business capital Auckland also takes pride in calling itself the world’s largest Polynesian city because more Pacific Islanders live there in any other city anywhere else in the world. For instance there are more Niueans in Auckland than there are in Niue. Ditto for the Cook Islands as well.

A couple of years ago the United States started to realise that its neglect of the Pacific was sure to cost it dearly in coming decades. It began sending a string of senior envoys and officials to tour the region. While visiting New Zealand, one of them famously said the US needed “New Zealand’s eyes” to view the region. That visit has been followed up none less than the Secretary of State, who warned the US would not “cede” the Pacific to any nation – as if it already had ownership of it!

So New Zealand’s importance as the local expert in the South Pacific Ocean has grown considerably.

But its involvement in the region though undoubtedly deep, long and enduring, is quite lopsided. For New Zealand and New Zealanders, the South Pacific is still mainly Polynesia. The Melanesian states don’t quite figure in their reckoning the same was as Polynesia does. That lopsidedness by and large shows in much of the country’s Pacific initiatives.

For many New Zealanders, Papua New Guinea, the Solomon Islands and to a lesser extent Vanuatu don’t figure on their radar as much as the Polynesian countries do. The only exception is Fiji, which straddles the Melanesian-Polynesian divide because of both its geography and history. It is undeniably the gateway to the South Pacific – literally and figuratively. One can’t travel directly to most of the Melanesian countries from New Zealand unless you change planes in Fiji (or Australia).

Australia, on the other hand, has struck a deep, engaging and mutually beneficial relationship with the Melanesian island nations. This is both because of its geographic proximity and its deep interest in the natural resources sector. The Melanesian states are growing at rates comparable to China and India on the back of the natural resources boom in their respective countries.

In that sense, New Zealand has missed out on building a steady growing relationship with the Melanesian states. For whatever reason, Melanesia still does not figure in its scheme of things in the Pacific the way Polynesia does, though it must be said that New Zealand has allowed in far more Melanesian seasonal labourers to work in its horticulture sector than Australia has.

Though New Zealand has stepped up its engagement in Melanesia in recent years, particularly in Vanuatu and the Solomon Islands’ education sector, it needs to do much more in building its business and investment relationship with Melanesia if it wants to take advantage of the entire region’s booming economy. It must realise that engaging with Melanesia would be like taking an opportunity that is right on its doorstep.

 

Islands’ investment promotion activity needs boost

Pacific Island countries’ investment promotion websites are good but not good enough.

Working with experts across a range of disciplines, the World Bank Group has evolved a set of tools and benchmarks to help investment promotion agencies in countries around the world tune up their investment handling processes at all levels – from technology and human resources to organisational processes.

The World Bank Group’s Global Investment Promotion Benchmarking (GIPB) system periodically provides a comprehensive overview of global best practices in investment facilitation, evaluating the performance of 189 countries.

According to GIPB surveys, online sources are among the most important influencers of corporate executives with respect to perceptions of business climate, while making investment decisions in any country.

It rates investment promotion websites across four criteria critical to websites as a tool to attract global investors and help garner precious foreign direct investment  (whether regional or international) – something that has been increasingly hard to come by in the present global investment climate since the worldwide financial crisis.

Its reports indicate that while the websites of investment promotion organisations of the Pacific Islands are good in some respects, they fall behind best practice standards in others.

These four are content, promotional effectiveness, design and information architecture in order of priority (the last two have equal weightage). Pacific Island websites compare fairly well with design and information architecture best practice standards but fall short when it comes to content and promotional effectiveness.

This clearly reveals that government ministries and departments charged with the operations of investment promotion agencies need to do much more to keep websites going with the right type of fresh and useful updated content as well as promote it both online and offline.

The study points to the fact that once websites are created, the responsible agency does not allocate financial and human resources to keep content fresh and engaging enough to entice prospective investors.

Last month the World Bank Group held a three-day “training the trainer workshop” for Pacific Island investment promotion practitioners and consultants in Sydney to address these issues.

As well as providing the participants with tools and course content to help tune up their own organisational systems and develop better human resource skills, the clear message to governments and funders of investment promotion agencies was the need for continuous resource allocation for promotional activity, particularly for websites and digital media.

First appeared in Islands Business, October 2011