Asia-Pacific Network: 14 September 2000
FIJI: RIOT-HIT BUSINESSES PUSH FOR PAY-OUTS
Fiji businesses ruined by looting and arson in the May insurrection are keeping a hopeful eye on a new test insurance case as they push for assistance in rebuilding a shattered economy. Two lawsuits involving F$2 million have been filed over the May 19 riot as Indo-Fijian leaders have defiantly rejected any review of the 1997 multiracial constitution.
By DAVID ROBIE in Suva
FIJI BUSINESSES ruined by looting and arson in the May insurrection are keeping a hopeful eye on a new test insurance case as they push for assistance in rebuilding a shattered economy.
Two lawsuits involving F$2 million have been filed over the May 19 riot as Indo-Fijian leaders at the weekend defiantly rejected any review of the 1997 multiracial constitution.
The leaders called for a "government of national unity" formed from among elected members of the deposed Parliament.
Their move comes amid a growing consensus that the country's gutted economy needs a return to principles of transparency and good governance to rebuild international investor confidence.
New Zealand Foreign Affairs Minister Phil Goff, on a brief visit to Fiji en route to the Commonwealth Ministerial Action Group meeting in New York, also slated the military-installed interim administration of Prime Minister Laisenia Qarase over its plan to change the widely accepted 1997 constitution, saying the regime had no mandate.
"Currently the interim civilian government has had no opportunity to gain a democratic mandate - and has none," he said.
While there have been promising signs of some restored confidence in Fiji's economy - particularly in the tourism industry and with a go-ahead for a major new hotel development - there have also been many negative factors.
Between 7000 (official) and 11,000 (claimed by the ousted government) people have lost their jobs because of the political crisis, with 90 gold miners being among the latest to be laid off, the government has responded sluggishly to the plight of Suva's businesses ruined by the rioting, and concerns about the "handout" strategy being adopted by the interim authorities have marred progress.
Business leaders are anxious for a return to stability in their bid to restore confidence in the economy but are also keen to see good governance.
"The business community is clearly concerned over the manner of allegations over the interim government, that certain members in the administration are alleged to be behind the May 19 events," says Joe Singh, past president of the Fiji Chamber of Commerce and Industry.
"We are concerned that the integrity of government, good governance and that law and order are restored. When we get the fundamentals right, investor confidence will return.
"At the moment, the country's image is fairly tarnished."
The Qarase administration has faced scrutiny over its blueprint for enhancing Fijian business and community development.
"The blueprint looks good on paper. But there are aspects in it that are of concern because at the end of the day who will benefit?," said Singh.
"There have been failures in the past with this sort of thing.
"There is a fundamental lack of understanding of business and what produces commercial success. Discipline, knowhow, commitment and plain hard work are what is needed to succeed."
Singh believes education and training is a key to the future. The Mahendra Chaudhry government had established an Education Review Commission earlier this year which canvassed wide-ranging public submissions.
The report of the commission - which included Dr Evelyn Coxon of New Zealand, and Australian and Canadian professors - is due next month. It is understood to have proposed radical reforms to modernise Fiji's education and training structure.
However, the interim administration has already embarked on another ad hoc plan to improve Fijian education without any reference to the commission's report.
There are also serious questions about how the administration plans to finance its policies. Last week (EDS: Sept 14), as the military launched a recruitment drive for 200 more soldiers, cabinet approved additional loans of $43 million to cover the shortfall caused by the crisis.
The new budget ceiling is now $234.7 million. Last month's mini-budget targets a net deficit of 3.5 per cent of the gdp.
Cabinet has also approved Finance Minister Ratu Jone Kubuabola's three-year strategic development plan aimed at restoring investor confidence and stability.
The economy at a glance:
INSURANCE:
Eight stores in downtown Suva were firebombed and 164 shops were looted with an estimated damage bill of $25 million. Two businesses were uninsured.
Although insurance companies have stonewalled claims with managers pointing to the civil disorder loophole clauses in policies, the interim administration pledged to bail out businesses with a $9 million "disaster fund".
But no shop or business has seen any compensation as authorities have become bogged down over the payout formula details.
Business sources believe the problem is that the administration is too strapped for cash.
Many of the business which have lodged claims are watching a case filed in the High Court earlier this month by a company which owned a shopping arcade destroyed in the rioting and also by a Suva businessman.
The Sun Insurance Co Ltd is being sued for a total of $2 million over the damage, and many regard this as a test case for how other claims against international insurance underwriters may go.
Yatu Lau Company Ltd, owners of the Yatu Lau shopping arcade opposite Suva's downtown bus station, and businessman Suresh Singh, who owns the Union Plaza Building, want the court to rule the insurance company liable for damages.
Fiji Retailers Association president Himmat Lodhia says his members are unhappy about insurance brokers who refuse to pay compensation for the damage.
"If businesses don't get compensation, everybody is the loser," said Singh. Many of the small businesses ruined by the rioting and looting had "no leeway" over funds and are unable to get back into business without help.
"Banks will be unable to get their money for mortgages, suppliers will not be able to recover their payments, and the government would lose in tax revenue."
The chamber had suggested payments be made through the Fiji Development Bank rather than set up another "bureaucratic quagmire".
MINING:
According to Fiji Trades Union Congress general secretary Felix Anthony: "The mine is taking advantage of the situation and taking another bite at the ripe cherry."
However, EGM's general manager, Martin Jacobsen, points out that while Vatukoula may not have been directly hit by the political crisis, the depressed gold prices and the spin-off problems from the finance sector have affected the company.
"Our problems are related to financial difficulties caused by the political situation, the continuing low gold price and recent shortfalls in production," he said.
Within a week, it was announced that the interim administration had agreed to a six-month rescue package involving $4.4 million worth of concessions for the beleagured company.
"Government responded quickly when we outlined the difficulties which led to a loss of $6.1 million in the final quarter of the year to June 30," explained Jacobsen.
The government package includes removal of a three percent export tax, a 10cent reduction in fuel costs on a par with concessions to the bus industry, and rationalisation of duties on machinery, equipment and raw materials to three percent.
GARMENT INDUSTRY:
The crisis has simply added pressures on the industry which is already under threat from competition from countries with economy of scale, such as deregulated India and Vietnam.
SUGAR:
But the company's general manager operations, Josaia Osborne, said cane burning had increased with drier conditions. The weekly percentage of burnt cane had risen from 15 percent to 28 percent.
He appealed for a steady supply of green cane. Fearing the impact on the European Union market, growers' representatives have begun an education campaign in a bid to reduce the level of burnt cane.
TOURISM:
But the timing has been wrong - delays in getting the campaign under way mean that Fiji missed out on both the school holidays market, and Australians seeking to "escape" the bustle of the Sydney Olympics.
Enticing specials to Brisbane at $33 and Melbourne at $44 and other appealing destinations have made it difficult for Fiji to compete.
"I passed through Sydney just last week on my way back from a Transparency International meeting in Vanuatu and it was clear that many people had already made plans ‹ Fiji's timing was a little late," says Singh. "And once we lose the market to other destinations, it is hard to win tourists back."
The low airfares, matched by Air New Zealand and Ansett, are available until September 30, but travel most be completed by December 15.
Phase one of the launch campaign, at a cost of $2 million, includes a boost in public relations and hosting selected journalists from target countries in a bid to gain a positive spin on tourism in Fiji. The campaign followed Australia and New Zealand joining Britain and the United States in downgrading their travel warning advisories.
According to the Fiji Visitors Bureau's tourism action group, more than 10,000 New Zealanders had spent close to $5 million on the discount air fares in the first week of the marketing campaign alone.
Bill Whiting, a group member, said the New Zealand campaign ‹ featuring television adverts showing Fiji as "unchanged" in spite of the political turmoil ‹ had "exceeded all expectations".
A $3 million booster campaign will follow until the end of the year.
DEVELOPMENT:
Ratu Napalioni Naturaga claimed the land on which the resort was to be built belonged to two local clans. He questioned why the Native Land Trust Board had not returned the schedule A crown land to the clans.
The controversy highlighted the thorny issue of land claims for any investers planning development projects in Fiji.
"Much needs to be addressed over the land ownership issues if Fiji is to progress," says Singh. This issue is particularly close to Singh's heart as his own business is a property consultancy. He is also a director of Fiji Hardwood Corporation Ltd, the state-owned interest in the lucrative mahogany forests.
For many, a tug-of-war between the Chaudhry government and opposition politicians defeated at the last election over the mahogany exploitation issue, was a catalyst for the coup.
A $52 million compensation pay-out agreement under duress for landowners of the Monasavu hydro-electric power dam in the rugged highlands of Viti Levu has "opened a can of worms", says the leading daily newspaper Fiji Times.
"Since approval [to that payout] to the highland tribes was announced, other clans have staked similar claims," the paper said in an editorial.
"And you can bet your bottom dollar the taxpayers won't see an end to it. Claims for fishing grounds and rivers polluted by developers, water catchment land and public accessway not leased will soon emerge from all corners of the land."
In the northern Cakaudrove province, villagers from three landowner clans (mataqali) are demanding a $7.3 million "goodwill" payment from the Fiji Electricity Authority for the use of their land as a water catchment around Wainique hydro power plant.
Hundreds of hectares have been acquired by previous administrations for public use. Encouraged by the Monasavu success, there will now be many claims in future and guidelines are needed urgently.
Many businesses hit by the orgy of looting and arson on May 19, the day rebel George Speight and six gunmen seized Parliament, are frustrated with the slowness of the authorities to respond.
Emperor Gold Mining Ltd, the country's largest single private employer with more than 2000 workers, is under fire from trade unions over a decision this month to lay off 90 staff, including six expatriates. Others could follow if the economy does not pick up.
Businessmen such as Joe Singh believe that Fiji now needs to concentrate on developing a niche market for higher priced and speciality garments.
Although sugar production has picked up again, there are concerns over the quality ‹ the proportion of burnt cane has been rising. Figures released from the Fiji Sugar Corporation Ltd indicated that the country's four mills had crushed 1,472,856 tonnes of cane and produced 144,859 tonnes of sugar this season by last week.
A first-in-first-served $499 and $599 package campaign in Australia and New Zealand is believed to have boosted average tourist occupancy levels by 12 to 15 percent after they had plunged to 22 per cent during the height of the crisis.
Construction of a $170 million five star resort at Lomolomo Beach is due to start in two months. But barely had the agreement been signed between the Australian-based Trevor Main and Associates Ltd and the 300-room hotel and condominium development this month than landowners were threatening to disrupt the project.