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 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