FIJIthe diamond that has yet to shine

Team Gold Diggers:

1. Jacob Sreekumaran

2. Anand S Ravisankar

3. Kritika Rajeev

4. Ma Moru

5. Ni Chao

6. Zhu Ye

7. Natasha Singhal

Indians

46%Indige

nous

Fijians

50%

Others

4%

Ethnic Groups in Fiji

Location Oceania, Melanesia

Capital City Suva (+12 GMT)

Chief of State

President Epeli Nailatikau

Head of Govt.

Prime Minister Frank Bainimarama

Currency Fijian dollar (FJD)

Major Languages

English (official), Fijian (official), Hindi

Source: globalEDGE.msu.edu and EXPORT.GOV

Source: fijiguide.com

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-5.98-6.62

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GDP Growth Rate

Source: The World Bank

Key Economic Facts

Income Level (by per capita GNI): Upper Middle Income

GDP, PPP (current international $): $7.00 billion (2013)

GDP growth (annual %): 2.74% (2013)

GDP per capita, PPP (current international $): $7,948.26 (2013)

External debt stocks, total (DOD, current US$): $731,688,000.00 (2012)

Manufacturing, value added (% of GDP): 13.57% (2012)

Current account balance (BoP, current US$): -$0.06 billion (2012)

Inflation, consumer prices (annual %): 2.91% (2013)

Labor force, total: 342,174 (2012)

Unemployment, total (% of total labor force) (modeledILO estimate): 8.40% (2012)

Imports of goods and services (current US$): $2.54 billion (2012)

Exports of goods and services (current US$): $2.43 billion (2012)

Source: globalEDGE.msu.edu and EXPORT.GOV

Resources

Ideas

Implementation

The three pillars of the conceptual

political-economy framework

Re

sou

rce

s • Sugar & Confectionery

• Fisheries

• TourismId

ea

s • Gains Independence in 1970

• Unstable leadership and economic growth

• New constitution created

Po

licy Im

ple

me

nta

tio

n • Balanced growth approach

• Involvement of mainly the government in the spending –leading to deficit

Phase I: 1970-1987

Phase I: 1970-1987

IDEAS

Political Highlights

Became Independent in 1970 and a new constitution was

created.

In 1987, the Fiji Labor Party formed a Coalition to contest

election after the coup.

Phase I: 1970-1987

IDEAS

Economic Highlights

Economic growth: slow

and unstable.

Partially attributed

towards the unstable

leadership prevalent.

Inflation has been on an

unstable trend during

this period owing to

economic growth being

hampered

Conclusion – Ideas

Ethnic Clashes around land issues.

Increased factors of production leading to growth

General desire among public was - sustainable economic

growth.

Military coups hampered the growth

High levels of dissatisfaction of people and expectations

from leaders.

Phase I: 1970-1987

Phase I: 1970-1987

RESOURCES

During the initial years of Fiji’s new-found freedom, the sugar industry was known as an important contributor to the economy’s growth.

Although tourism has seen a steady growth, this growth was periodically disrupted by military coups.

Growth in tourism has been mainly due to Fiji’s four rounds of national tourism development since 1973 which targeted different aspects.

Phase I: 1970-1987POLICIES

1970 - Balanced growth approach to development

Agriculture development

Urban industrial sector through protection of domestic industries through import substitution measures.

Overall objective of all development plans was to achieve high growth levels & equitable distribution of income

Creating employment opportunities

Diversification of economic base

Regional and rural development

Development plan Six (DP6) [1970-1975] & Development Plan Seven (DP7) [1976-1980] – focused on agricultural sector and public infrastructure

Development plan Eight (DP8) [1981-1985] – focused more on diversification with continued emphasis on agricultural & industrial development

Phase I: 1970-1987

Development plan Nine (DP9) [1986-1990] articulated goals for the

economy which were vague at best and lacked focus.

- Achieve economic growth, including growth in real per-capita

incomes

- Generate job opportunities for Fiji’s growing labor force

- Promote a more equitable distribution of the benefits of development

and improve social conditions, especially in the rural areas

- Maintain greater financial stability

- Foster a greater sense of national unity and national identity.

Overly ambitious targets for structural changes seem to lack a

sense focus

Phase I: 1970-1987

While plans & policies were formulated, the lack of an

agency/ministry to ensure implementation and overall co-

ordination greatly reduced the effectiveness of these policies.

Most of the policies that the government formulated to spur

economic growth involved government spending, this eventually

led to fiscal constraints vis-à-vis a deficit situation.

Phase II: 1987-1999R

eso

urc

es • Land

• Sugar & Confectionery

• Serenity that drives tourism

Ide

as • Minimal to Zero

technological growth & advancement.

• New constitution created with changes to ethnic representation

Po

licy Im

ple

me

nta

tio

n • World Bank & IMF encouraged SAPs

• Deregulation

• Vague policy formulation

Phase II: 1987-1999

IDEAS

This phase in the history of Fiji saw minimal technological

advancement.

The philosophy of the Fiji Constitution of 1990 was to give

protection to the interests of indigenous Fijians, thus ethnic

groups received representation in parliament.

The figure besides displays

the percentage of land

that is used for pasture &

crops.

While Fiji saw a steady rise in this variable in the run up to

1990, it plateaued after a

specific level.

This can be seen to have

had a direct impact on output.

Phase II: 1987-1999

Value of sugar cane production: While there is some sort of an

upward trend prior to 1990, the period after 1990 sees nothing but a

downward trend.

A lack of technological growth to augment the already increased

factors of production can be a cause for this.

Phase II: 1987-1999

Phase II: 1987-1999RESOURCES

LAND:

Leases under the Agricultural Landlords and Tenant Act began

expiring in 1997.

Between 1997 and 2002, while some leases were renewed, the

majority of them reverted back to Native Lands Trust Board (NLTB).

The role of the NLTB has been controversial over the last 10 years.

SUGAR:

Experienced a fall in production towards the end of this period due to land lease issues in the industry.

Phase II: 1987-1999

POLICIES

World Bank and IMF imposed agenda for Structural

Adjustment Policies (SAPs) before the military coup in 1987

Deregulation of economy to bring domestic prices in line with

the world prices

Government expenditure growth restraint to ensure resource

availability for growth sector

Taxation system reform – to minimize market distortions and

improve incentives for risk taking and effort

Wages policy that recognizes importance of international

competitiveness

Increased Fijian participation in commerce and industry

Reorientation of sector policies in accordance to the above

Phase II: 1990-1999

POLICIES

Deregulation - of product and factor markets

Reduction of tariffs and removal of import quotas

Increase exports: Towards end 1980s, tax-free factories receiving

heavy concessions if exports were more than 95%

Fijian garment export: F$8.8m in 1987 -> F$141m in 1994 -> F$332m

in 1999

Despite government efforts, Fiji’s economic growth since 1987 has

been poor

Most policies were formulated with the idea that the Indo-Fijians were

rich & the Indigenous Fijians were poor. However, it was noted in a

study that not all Indo-Fijians were rich, it was only a part. Thus, we see

that the basis for policy formulation wasn’t accurate and

representative of the country’s demographic.

Phase III: 2000-PresentR

eso

urc

es • Sugar &

Confectionery

• Serenity that drives tourism

• Fisheries resources

Ide

as • Military Coups

• Ethnic Clashes causing unresolved land agreements.

Po

licy Im

ple

me

nta

tio

n

• Independence of the judiciary called into question

• Foreign exchanged controls relaxed

• Land regulation reforms

Phase III: 2000-PresentIDEAS

Ethnic Clashes and Military Coups

• This period saw two military coups take place adversely affecting economic growth.

• Besides this, a long standing impasse between Indo-Fijians &

Indigenous Fijians categorized the country’s economic problems.

• Disagreements over long-term extensions of the land leases have

led to a lack of investments in the sugar industry, which urgently

requires modernization.

• Rapid economic growth can lead to a curb in the ethnic clashes.

However, that can only be brought about by effective Leadership,

Acquiring the consensus of the people and taking small steps as opposed to big bang changes.

Phase III: 2000-PresentRESOURCES

In 2001, Fiji’s fisheries sector

was impacted by the terrorist

attacks, which brought about

a decline in 2002 and 2003.

However, this sector has

displayed steady growth

since Fiji’s independence

Tourism is Fiji’s largest foreign

exchange earner and a

major source of employment

for Fijians.

Phase III: 2000-PresentRESOURCES

• Australia & New Zealand continue to be main market sources with

regards to tourism• India & China however are emerging markets in this regard. India

especially has been noticed as a “low-income, high-yield”

market. • Unlike other sectors in the country, the tourism sector has seen

some amount development.

• The Tourism Emergency Management and Communication

Taskforce was formed in January 2012 during a tropical depression

that affected the western region of Fiji. It acts as a channel for

information between the tourism industry and Government

emergency and other services.

Phase III: 2000-PresentPOLICIES

Military coup in 2000 – Got garment industry in turmoil as investor

lost confidence and faced market difficulties

Sep 2002: 20-Year Development Plan – aimed to give indigenous

Fijians a great stake in the economy:

- Tax-relief to businesses owned or managed by ethnic Fijians

- Greater protection for indigenous land and fishery rights

The judiciary which had a tradition of being unbiased and strong

was a positive sign for investors. However, post-coup, the

independence of the judiciary had been called into question.

Various forex controls were relaxed. Foreign investors bringing in

funds or equipment to invest in Fiji are guaranteed repatriation of their investment profits and capital provided regulations are

adhered to.

Phase III: 2000-PresentPOLICIES

Three types of land – iTaukei land, Crown land & Freehold land

iTaukei land is the close to 88% of the land held by indigenous fijians

and is administered by Lands Trust Board (TLTB). It cannot be sold

and can only be leased.

Crown land refers to around 4% of the land owned by the

government. Here again, land cannot be sold.

Freehold land accounts for about 8% of the land. Investors may

lease land, though different leases have different terms &

conditions. Leases may be sold, transferred and amended, subject

to approvals from TLTB & Land departments.

Land ownership & usage is a highly complex and sensitive issue that has hampered growth of business. In 2006, the government

dismissed several TLTB officials during an anti-corruption drive and

initiated reforms on land regulations.

Recent Happenings

4.6% growth in 2013 (Revised estimates)

Broad-based growth:

1. Led by service sectors - finance, insurance, and transport

and storage

2. Supported by greater construction and manufacturing

activity

3. Doubled lending for investment, as construction picked up,

mainly on tourism and infrastructure projects

Recent Happenings

Jan – May 2014: Imports of consumption goods, mainly

vehicles, rose by 15.6%

Personal remittances increased by 13.2% year on year in the

second quarter, boosting consumption expenditure

Tourism Sector – continued strong performance

Visitor arrival increased 4% year-on-year

First 6 weeks of the annual sugar-crushing season - 48.8% increase in output due to government investment in

technology in 2013

Current account deficit widened in the second quarter as

imports rose and exports were flat however, it is expected to narrow due to remittances and tourism receipts in the

second half.

Looking Ahead Growth is expected to remain robust, but is seen to ease slightly

as sharp increases in consumption and investment expenditures

in 2013 are likely to moderate.

The 2015 growth projection is maintained at 3.0% subject to

upside and downside risks:-

Upsides

• Greater investment and tourism due to reduced uncertainty following the September 2014 elections

• Reintegration and renewed engagement with development partners

Downsides

• Ongoing dry weather conditions that are expected to persist into next year and lower output of agricultural goods besides sugar

• Possible fiscal tightening after recent expansions in public expenditure

Looking Ahead

International Monetary Fund assessed Fiji’s “potential GDP

growth rate” to be only about 2.5%.

The assessment suggests that, despite the positive growth outlook in the near term, investment and policy reforms

are needed to address supply-side capacity constraints

and improve productivity.

Institute further structural reforms to improve the country’s

growth potential.

Thank you

Q & A

References Fiji: Economy, http://www.adb.org/countries/fiji/economy

Institutions, Economic Performance and Sustainable Development: A

Case Study of the Fiji Islands, By Biman C. Prasad, Clement Allan Tisdell

TheGlobalEconomy.Com,

http://www.theglobaleconomy.com/Fiji/Economic_growth/

Parliament of Australia, Constitutional and Political Change in Fiji,

http://www.aph.gov.au/About_Parliament/Parliamentary_Department

s/Parliamentary_Library/pubs/rp/RP9798/98RP07

Fiji’s economy: a view over 25 years, http://devpolicy.org/fijis-

economy-a-view-over-25-years/