Learning To Walk, Again

Prime Minister Laisenia Qarase said he could "think of no better role models for Fijian businessmen and women that the members of the sevens team," saying like the rugby players, indigenous business success depends on strong leadership, knowledge, training, study of the competition, the ability to score profits, winning strategies, planning, teamwork, a clear mission and a vision, sacrifice and effort, and a belief in God.

The victory came as Fiji experiences continued economic recovery, driven by construction, wholesale and retail trade and manufacturing, and most dramatically, tourism. The Fiji Bureau of Statistics says hotels and other tourist accommodation earned F$396.1million (US$237.7 million) last year, a F$85.6million (US$51.38 million) or 24.8 percent jump over 2003. When the Fiji Visitors Bureau holds its annual forum next month, the theme will be "The Billion Dollar Industry." The tourism industry is being further fuelled by new Hilton, Sofitel and Four Seasons hotel developments due to come on line this year and next, and increased low-cost airline capacity to New Zealand and Australia.

However the Asian Development Bank has warned that the economy is expected to slow down substantially, due mainly to a decline in the manufacturing sector, in particular the sugar and garment industries.

There were many questions raised about the role of Fiji police in response to the coup of 2000. Fiji's police commissioner, Andrew Hughes, is an Australian citizen who has been in the job since July 2003. While many locals say his leadership has made a difference, there are still real concerns amongst the business community about lawlessness, particularly in Suva, and the impact this is having on current and potential investors.

Guests pack the Outrigger on the Lagoon Fiji resort on Viti Levu. Photo: Samantha Magick

Hughes sees challenges for his force with Fiji's rapid economic growth.

"As the economy grows the infrastructure needs to grow with it, and that includes the police. New crime types are coming on board, we are seeing a greater sophistication in fraud and corruption and transnational organized crime. We had a major illicit drug laboratory bust last year…we have an obligation as responsible members of the global community to ensure that we are not a weak link in the chain."

The Suva-based Capital Markets Development Authority reported a successful year in 2004, with F$12.7 million (US$7.62 million) worth of shares traded on the South Pacific Stock Exchange. The most recent company to list is Yaqara Studio City, which plans to construct and run a film studio and hotel development in the west of Viti Levu.

But Suren Kumar, the relatively new CMDA chief executive officer, says the capital market still has a ways to go yet.

"We're kind of a toddler stage right now, and when you start walking, I would say that's a developed market. We are no longer embryonic, we've got the legal framework, we've got the stock exchange listings, we've got the intermediary, we've got the education levels and financial literacy programs out there, so all in all that has built a platform now where the toddler is just about to stand up. That's what I'm waiting for and the more companies we have, the faster we will start walking."

Kumar believes there is great room for growth in the agricultural sector, particularly for niche products such as chillies, daruka, breadfruit and jackfruit.

And he's keen to see the thriving tourism industry become involved in the capital market, saying it would give locals the opportunity to get involved in the industry.

"There's a lot of indigenous people who would be more than happy to be part of the shareholding or be on the shareholder register rather than just being on the payroll register," Kumar says. "The shareholder register creates the long-term benefits."

Among the most visible evidence of economic recovery are the blue "Harcourts" real estate agency signs that seem to dot so many Fiji properties these days. Property prices and rent, particularly in Suva, have risen dramatically in the last two years.

Shivas Singh is the director of Harcourts in Fiji, which is franchise of a New Zealand real estate company. Harcourts is looking at opening 10 more offices in Fiji this year and another international company, LJ Hooker, has just set up there.

But Singh doesn't believe Fiji's real estate sector is experiencing a bubble.

Shivas Singh, Director of Harcourts in Fiji. Photo: Samantha Magick

"(We've) brought about effective marketing of properties and we brought about a lot of professionalism, we started doing open homes and we had for sale signs, we had structured marketing plans and the buyers loved it. That combined with the fact that interest rates were already very low, the banks had way too much money, that Fiji's got this marvelous thing called FNPF (Fiji National Provident Fund) where everybody's got a huge deposit sitting there, and a bit of buyer education and all of a sudden, everybody could afford a house and that's been the story of our success really."

Nevertheless there remain some substantial questions around the sustainability of Fiji's economic growth. Westpac Bank has warned that Fiji faces a tough year ahead with low economic growth and inflationary pressures from higher oil prices. The Reserve Bank of Fiji has indicated the 2005 inflation rate will be revised upwards from 3.8 percent to 4.5 percent if the authorities grant a mooted increase in bus and taxi fares.

There is real trouble in the garment sector, which employs some 15,000 people. Garment sales to Australia have been hit by erosion of margin of preference levels, and the lapsing of a quota agreement with the U.S.

Unemployment remains high. While the rate is believed to have come down from the 9.4 percent recorded in 2000, the number of school leavers still outstrips by far the number of new jobs created each year.

And of course there is the 2006 election, and the inevitable campaigning that has already begun.

In the buzzing Harcourts office, Shivas Singh is pragmatic about his industry at least.

"As long as there is stability and people can go home without being robbed, I think we are sort of coup-proof, it won't matter who is in government."

Whether that optimism is warranted, and indeed shared by the investors who will keep the wheels of the Fiji economy turning, will be tested as Fiji moves closer to the polls.