Banking On Tourism

You wouldn't know it walking on the streets of the capital Suva, but just six years ago, the economy had plummeted across the board from the effects of George Speight's violent putsch.

Stakeholders agree--and the economic indicators suggest--that the future is bright for Fiji if there are no repeats of political instability.

Fiji’s sugar industry is no longer the mainstay of the economy it once was, but the tourism industry continues to expand. (Photo: Bruce Southwick/ZoomFiji)

"Against global growth, Fiji's 1.7 percent growth in 2005 is quite competitive to say Japan (2 percent), Australia (2.2 percent) and New Zealand (2.5 percent)," says President of the Fiji Chamber of Commerce Taito Waradi.

"Our growth is about right." Waradi says the Laisenia Qarase-led government's expansionist budget programs have laid a solid platform for economic growth.

"We have doubled private sector investment from an all-time low in 2000 of 3.1 percent to 6 percent in 2005."

And since 2000, the Reserve Bank of Fiji's (RBF) accommodative monetary policy has contributed to the turnaround of the economy.

"The economy has done well, principally on the back of tourism and overseas remittances," says Executive director of the Australia Fiji Business Council Frank Yourn.

The sugar industry, once the backbone of Fiji's economy, is undergoing a US$50m restructure and is no longer as viable with the loss of preferential access to the European markets.

But other economic drivers have taken its place.

Fiji's second largest source of foreign exchange-and its newest-is remittances from abroad. A considerable number of Fiji nationals are serving with the British Army and thousands more are scattered across the globe, most sending money home to Fiji, amounting in 2004 to F$300 million (US$174 million) according to the Reserve Bank.

And tourism, despite the upheavals, remains a major driver of the economy and is the country's main source of foreign exchange, says the Ministry of Finance and National Planning, with restaurant and hotels activity anticipated to grow by 4.7 per cent in 2006. The construction of new hotels and the entry of new air-carriers support the positive outlook for 2007 and 2008 at 4.6 per cent and 2.0 per cent respectively. And new markets such as the People's Republic of China and India are expected to boost visitor arrivals to around 658,000 by 2008.

Bill Gavoka, the chief executive officer of the Fiji Visitors Bureau, has the task of keeping tourism rolling and Fiji on travel agents' listings. Momentary setbacks, like that in January when an internal military dispute spilled over into the news and international reports suggested a coup was about to take place, pose challenges for him. But Gavoka is upbeat saying there is a "high level of goodwill for Fiji out there in the overseas market."

"Overcoming the negatives and reassuring the markets are not easy but we are determined to continue building on the momentum of tourism and setting another record level of business for 2006," Gavoka told Pacific Magazine.

The RBF predicts growth of 2 percent for 2006 and 2.4 percent for 2007, an upward revision from the previous projections of 0.8 percent and 1.8 percent respectively but says consumer spending must be curbed, reforms accelerated and exports boosted.

And while the overall economic picture looks promising, Yourn and Waradi point out issues that could undermine the recovery.

Yourn says the government needs to look at developing "new economies" and capitalize on the "benefits of clustering". Yourn runs Yaqara Group, the company that is developing a studio city on former pastoral land in northern Viti Levu.

He also highlights the "brain drain" of professional people as "one of the worst things happening to Fiji" and a "burden on the economy".

Waradi worries that World Trade Organization rules will make it harder for Fiji's agricultural products to compete in the international market and that other international standards will curb foreign investment.

"I'm very wary of the imposition of WTO trade rules on the economy and our ability to trade with our partners. For one thing there is no such thing as a level playing field when comparing our resources to larger countries. There's no comparison.

"The situation is made worse when our agricultural products cannot compete with highly subsidized products from other countries. In some cases, a farmer in the US is paid US$40,000 just for being a farmer even before he puts his fork into the ground."

That aside, Yourn says big businesses who've been in Fiji long know the peculiarities of the country's politics and its resilience even in times of turmoil and points to the large-scale construction of hotels, shopping centers and other investments by large companies.

"Why else do businesses invest more money in an economy if they think it's going to fall apart?"