Cover Story
Fiji
A country with great potential?
Most inhabitants of the Fiji Islands, permanent and temporary, agree on onepoint: It is definitely a country with great potential.
Fiji could and should be booming. Casual visitors see a surface veneer ofprosperity and believe that to be the case. With a well-established position as the South Pacific's business, communications, transport, education and political crossroads, a highly literate population, well-developed infrastructure and a useful spread of resources, Fiji has the makings for serious prosperity, and with it social and political stability.
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Its 840,000 people should be high up in the ranks of successful third-world economies. So they are, in some ways. Compared with its mostly smaller and poorer regional island neighbours, Fiji presents an impression of being way ahead. Tourism, gold mining, fishing, garment manufacturing, and a wide range of other manufacturing and service industries are humming.
True, there's a serious problem with sugar, the core of the economy for a century. But economic diversification since independence from Britain in 1970, with prospects for much more to come, should bring the amelioration of that difficulty. However, there's no need to scratch very deeply beneath Fiji's surface to discover that the country has a precarious, yet also still hopeful outlook.
The root cause of Fiji¹s troubles is too well known. Political conflict between indigenous Fijians and the descendants of plantation labourers and storekeepers from India caused two coups in 1987, and a third in May 2000. The termination of democracy by the almost entirely indigenous Fijian manned army in 1987, and briefly by militant civilians in 2000, was fomented by the election of what the indigenous Fijians perceived as Indian-dominated governments.
Threat: Already alarmed by Indian economic, and at one point numerical dominance of the country, Fijian nationalists interpreted the arrival of Indian political supremacy as an unacceptable threat to their position as owners of 83 percent of the country¹s 18,272 square kilometres of land and their culture.
The coup of May 2000 had other roots as well. These stemmed from a threat to certain business interests and exposure of corruption presented by a newly elected government headed by the country¹s first Indian prime minister, Mahendra Chaudhry, head of the somewhat socialist-minded Fiji Labour Party.
Protection enshrined in all Fiji's constitutions since 1970 makes it clear that there is no way the country's indigenous people can legally be stripped of their land and customary rights. By the end of 1994 accelerating emigration by Indians, plus natural demographic factors, had restored the indigenous Fijians to a position of numerical if not assured political dominance.
The overthrow in May 2000 of the year-old Chaudhry government and political events since, encouraged analysts of the country's politics to proclaim that polarisation of the indigenous Fijians, now about 51 percent of the population, and Indians, now down to 42 percent and still dwindling, is greater than ever before. But polarisation is perhaps too harsh a description of the reality of the relations between indigenous Fijians and Indians.
Bursts of vitriol between Prime Minister Laisenia Qarase and his chief political opponent, Chaudhry, and Indian bitterness over land tenancy issues supports polarisation theories. Not enough is made of the fact that although they don't mix much, indigenous Fijians and Indians are in fact generally daily more amicable and easy-going in their relations than they, let alone critical outside onlookers, give themselves credit for.
The bad political record since 1987 has stunted the development and growth of a country that likes to picture itself as being potentially the Singapore of the South Pacific¹.
Political future: What had retarded growth is doubt and insecurity about the country¹s political future. This shakes confidence of investors, local and foreign.
Since 1987, emigration, overwhelmingly by Indians, but also by Chinese, European and part-European citizens, and now even by an increasing number of Fijians, has jumped by an average of 2000 people a year to 4000. More than 70,000 citizens, about 90 percent of them Indians have departed for Australia, New Zealand and North America. According to immigration department statistics, 5275 left in 2000 and 6316 last year. An alarming number were business, professionally and technically skilled people. This has had disastrous consequences for the efficiency of the sugar industry and numerous other skills-dependent businesses.
Emigration continues at a sorry rate. "There is a massive loss of human capital," Dr Wadan Narsey, of the University of the South Pacific (USP), told a recent seminar on Fiji¹s condition. "This country has no capacity whatsoever to invest in long-term growth if we continue on this path."
Lift economic performance: Fiji is far from matching Singapore's record of economic success. There is another country, much smaller than itself, Fiji often compares itself; Mauritius, in the Indian Ocean, another former colony with a past rooted in sugar, mixed European and Indian settlement and entrepreneurship, and heavily dependent on tourism.
Reserve Bank of Fiji Governor, Savenaca Narube told the same seminar: "Mauritius started below us (per capita income). But it is three times more at $7000 now. Some countries are passing us by. The message is clear; we must lift our economic performance."
USP's deputy Vice Chancellor, Professor Rajesh Chandra, asked: "Why is it that a country like Fiji, with one-ninth of Fiji's area, a very similar historical experience and less per capita aid than Fiji, has a per capita income about twice that of Fiji, three times more GDP, and has grown almost six times faster than Fiji in the past 25 years?"
A recitation of the litany of Fiji's woes runs typically like this: poor economic policies, political instability, lack of property rights, declining standards of law and order, corruption, lack of investment confidence, general lack of confidence in the economy, industrial disputes, lack of international competitiveness, declining civil service standards, government waste.
This recital is borne out by some unpalatable economic facts and figures. From 1970 to 2000, the economy grew by 124 percent, a mere annual 2.6 percent. This is very low by international standards. Growth was naturally hit by the 1987 coups and again by the 2000 event.
Investment is down disastrously to only about 10 percent of GDP, way below the 20 to 25 percent levels of other developing economies.
Unemployment is running at 7 to 12 percent, or much higher, about 30 to 35 percent according to other yardsticks. Currently, there are only about 2000 new jobs a year for the 17,000 annual school leavers.
About 30 to 35 percent of the population is now considered to be below the poverty line, according to the United Nations and other measures. There are now 18,416 people dependent on government destitution payments of between $30 to $110 a month, 5000 more than in 1999 and growing at a rate of 200 people a month. In the past few years the country has plunged by more than 20 places, to 89, on a United Nations rating of national prosperity and condition.
A business risk assessment agency recently rated Fiji as being more risky than Papua New Guinea. This startled Fiji Islanders who regard Papua New Guinea as a country where violence, law and order, corruption and governance complications far outweigh any of their domestic worries. Yet to the casual visitor venturing into Fiji from Nadi International Airport, Fiji is invariably encountered and enjoyed as a casual, easy-going, safe, busy, reasonably efficient and go-ahead place that justifiably promotes itself to tourists as the "one truly tropical relaxing destiny".
It's not all bad news: Not all Fiji facts and figures are bad. Some are rather good. Nearly all Fiji Islanders can read and write. Life expectancy is in the seventies; most people have good access to reliable supplies of food, good water, electricity, hospitals, telephones and television.
Fiji's currency is stable, thanks to the stringent Reserve Bank policies. It has been so for years apart from a post-1987 coup devaluation. Some people reckon it is too strong and for the sake of greater competitiveness should be devalued again. Inflation is low at two to three percent and is expected to remain so. Foreign reserves are steady at four to five months of import cover and are also expected to keep that way.
Foreign debt is low, but the overall government debt, due to heavy local borrowings, exceeds the international safety line of 40 percent of GDP by two or three percent. Reserve Bank governor Narube admits it needs to be watched closely since it rises to 60 percent when contingent liabilities are put in the picture. The remedy, agrees Narube and his fellow economic scientists, is growth, and reliable steady annual growth of at least five percent. Without firm, effective action now, the Fiji Institute of Accountants declared at its annual convention in May, the country will sink into third-world poverty.
"The writing is clearly on the wall," the accountants warned.
Resilience: The record since the political upsets of 1987 hasn't been entirely dismal. The country has always exhibited resilience. Except for sugar, its main industries have recovered to grow, although less strongly than they would have otherwise done so.
After the May 2000 coup, the Reserve Bank predicted the economy would shrink by 15-17 percent. In the event that figure was trimmed to 7-8 percent. Since a late 2001 forecast of 1.5 percent growth for 2002, the Reserve Bank is now forecasting 4.4 percent and even 5 percent for this year, based on the performance of tourism, gold mining, timber, fishing, garments and some other industries, but not sugar. Numerous local economists, including Savenaca Siwatibau, a former Reserve Bank governor, and now Vice Chancellor of the University of the South Pacific, are frankly skeptical.
With the rate of investment as dismally low as it is, it is impossible to see how such growth can materialise, Sitwatibau says. But Narube stands stoutly by his contention. Simply, more efficient management of the country's resources can generate take-off and, he says, the government is determined to achieve that.
But ultimately growth, and with it hope of effectively combating such pressing social challenges as unemployment, poverty and inevitably accompanying crime, depends on investment. For investment, Fiji's political leaders need to capture a firm spirit of multiracial trust and national unity that had eluded the country since independence for it arrived in 1970. At this point in time, what is the outlook for that?
