Economy of Fiji

Endowed with forest, mineral, and fish resources, Fiji is one of the most developed of the Pacific island economies, though it remains a developing country with a large subsistence agriculture sector.[3] Agriculture accounts for 18% of gross domestic product, although it employed some 70% of the workforce as of 2001. Sugar exports and the growing tourist industry are the major sources of foreign exchange. Sugar cane processing makes up one-third of industrial activity. Coconuts, ginger, and copra are also significant.

Fiji Village quoted Energy Minister Lekh Ram Vayeshnoi on 22 September 2006, who confirmed that the Southern Cross Management Company Limited had applied for a license to drill for petroleum in Fiji's waters. The application was later revoked after exploratory reports indicated that Fijian oil reserves were severely overstated. Accepted estimates now range between 500 - 600 million barrels of Brent crude oil, with a total market value of approximately $4.7 billion over 20 years.

Fiji has a population of 905,949 people. The country's tallest building is the 14-story Reserve Bank of Fiji Building in Suva. Fiji is a member of the WTO.

Economy of Fiji
Statistics
GDP$8.37 billion(2016)
GDP growth
3.6% (2015), 0.4% (2016),
3.8% (2017e), 3.5% (2018f) [1]
97th (2017)[2]

All values, unless otherwise stated, are in US dollars.

Development plan

In September 2002, the government announced a 20-year development plan. Among other things, it aimed to give indigenous Fijians a greater stake in the economy. The plan envisages tax-relief to businesses owned or managed by ethnic Fijians, along with greater protection for indigenous land and fishery rights.

A major aim of the Fijian government is to achieve self-sufficiency in rice production. Cattle farming, fishing, and forestry (especially pine trees) are being encouraged to diversify the economy; the leading manufacturing industries involve the processing of primary products. On 14 April 2005, the Cabinet approved Prime Minister Laisenia Qarase's proposal to develop a biofuels industry. Under the plan, ethanol is to be developed as a complement to the sugar industry, with the hope of alleviating Fiji's dependence on imported fossil fuel such as petrol.

On 15 August, Qarase said that the United Nations Development Programme (UNDP) had granted assistance to Fiji to develop its biofuels project. Transformation of the Fiji Sugar Corporation into an energy and sugar company would result in a turnover of F$1 billion by 2025, he said, and would cut imports of crude oil, generate export earnings, and provide a source of electricity. Energy could be produced from copra, forest, and agricultural products, as well as sugar. He touted the scheme as necessary for diversifying and strengthening the sugar industry for its own survival, as well as for the national economy. He said that the government of India had loaned F$86 million for upgrading of Fiji's sugar mills, which would be completed in time for the 2007-2008 crushing season.

On 28 December 2005, John Teiwa of the Coconut Industry Development Authority announced that a 20-year plan for the coconut industry would be launched in 2006. Financing from international investors, including the government of India, would be sought to develop processing of virgin and extra virgin coconut oil, with a view to venturing into foreign health markets. The government expected an annual profit of F$120 million from the venture, Fiji Village reported. Trials for the generation of fuel from coconut oil were also in progress, Teiwa said.

Tourism

Tourism has expanded rapidly since the early 1980s and is the leading economic activity in the islands. More than 409,000 people visited Fiji in 1999, excluding cruise ship passengers. About a quarter came from Australia, with large contingents also coming from New Zealand, Japan, the United States and United Kingdom. Over 62,000 of the tourists were American, a number that had steadily increased since the start of regularly scheduled non-stop air service from Los Angeles. Tourism earned more than $300 million in foreign exchange for Fiji in 1998, an amount exceeding the revenue from its two largest goods exports (sugar and garments).

The effects of the Asian financial crisis led to a sharp drop in the number of Asian tourists visiting Fiji in 1997 and 1998, which contributed to a substantial drop in gross domestic product. Positive growth returned in 1999, however, aided by a 20% devaluation of the Fijian dollar. 2005 was a record year for the tourism sector, with 9% growth according to Viliame Gavoka, Chief Executive of the Fiji Visitors Bureau.

Trade

Fiji Exports Treemap (2009).
Fiji Exports Treemap (2009)

Fiji runs a persistently large trade deficit. Imports in 1998 accounted for US$721 million, and exports for US$510 million, resulting in a US$116 million deficit. Tourism revenue yields services surplus, however, which keeps the current account of its balance of payments roughly in balance ($13 million in 1998). Australia accounts for between 35% and 45% of Fiji's trade, with New Zealand, the United States, the United Kingdom, and Japan varying year-by-year between 5% and 15% each.

Foodstuffs, machinery, mineral fuels, beverages, tobacco, and manufactured goods are the principal imports. The two largest exports are sugar and garments, which each accounted for approximately one-quarter of export revenue in 1998 (roughly $122 million each). The sugar industry suffered in 1997 due to low world prices and rent disputes between farmers and landowners, and again in 1998 from drought, but recovered in 1999.

The Fijian garment industry has developed rapidly since the introduction of tax exemptions in 1988. The industry's output has increased nearly tenfold since that time. Fish, lumber, molasses, coconut oil and ginger are also important exports, although the last two are in decline. Forestry became important as an export trade in the mid-1980s, when the pine plantations planted in the 1950s and 1960s began to mature. They sell lots of fish.

Australia's Trade Commissioner Ross Bray revealed on 26 January 2006 that Fiji's exports to Australia are achieving an annual growth rate of 5%. More than 31,000 Australian companies were trading in the Pacific, half of them in Fiji, Bray said. Fiji is progressing very rapidly.

Investment

The government's policy of awarding tax concessions to large multinational companies investing in Fiji has not proved universally popular. The Asian Development Bank (ADB) has criticized it, saying that the concessions have been abused and have not generated long-term investment. An ADB report in 2005 accused foreign entrepreneurs of leaving as soon as their concessions expired, and alleged that administration of the concessions encouraged corruption and bribery.

The leader of the Fiji Labour Party Mahendra Chaudhry echoed the view of the ADB on 31 December 2005, saying that foreign companies repatriated much of the profit made in Fiji, rather than investing it locally, while taking advantage of the infrastructure funded by Fijian taxpayers without paying any taxes themselves. Such policy discriminated against local businesses, he claimed.

Economic problems

Fiji's economic difficulties have been compounded by the effects of three coups over the last two decades.

Emigration

Since 1987, when the country was destabilized by two military coups, Fiji has suffered a very high rate of emigration, particularly of skilled and professional personnel. More than 70,000 people left the country in the aftermath of the coups, some 90% of whom were Indo-Fijians. With the continuing expiration of land leases and ongoing instability in the aftermath of another coup in 2000, a further outflow of skilled workers has taken place.

A report in 2004 of the Organisation for Economic Co-operation and Development, published on 29 June 2005, found that 61% of Fiji's skilled workers have either emigrated or gone abroad as guestworkers. Fiji's loss of skilled workers was the world's fourth highest, behind Guyana, Jamaica, Haiti, and Trinidad and Tobago. Fiji's Bureau of Statistics recorded 3595 workers as having left the country between January and August 2004. Of these, 414 held professional or technical jobs, 263 were in administrative or managerial positions, and were clerks, supervisors, or related workers, and 118 were sales workers. Indo-Fijians comprised more than 90% of those leaving.

Fiji's economy is increasingly reliant on remittances from citizens working overseas. Personal remittances now run to more than F$200 million a year, earning more than traditional sectors like sugar and garment manufacturing. Recruitment of Fijians by foreign private military companies is a growing source of revenue. By mid-2005, there were over 1,000 Fijians working in Iraq and Kuwait as soldiers, security guards, drivers and labourers. In addition in 2006 there were more than 2,000 Fijian soldiers in the British Army, and in 2004 the British defence ministry even sent recruiting teams to Fiji to do initial fitness and aptitude tests, cutting the costs of selection for poor Fijian villagers who could not afford to fly to London to sign up.[4]

Property laws and investment problems

Low investment has been a long term problem in Fiji, and property rights are sometimes thought to be part of this problem because, by law, five sixths of the land is owned communally by indigenous Fijians and may only be leased, not purchased outright. However, the leasehold system is often misunderstood.

Leasehold tenure has not been a problem for the property sector. Houses all over Fiji on communally owned land are on 99-year leases, which have proved satisfactory as a basis for house ownership. Hotels also enjoy 99-year leases. The prestigious Denarau development involving major hotels and resorts and luxury properties is situated on communally owned land. It delivers significant income to native owners and secure title to developers and their customers.[5]

In agricultural sector, there have been problems even though agricultural leases are mandated at 30 years, following the extension by legislation (the Agricultural Landlord and Tenant Act or ALTA) of all ten-year leases to thirty years in 1977. The problem experienced in agriculture is the non-renewal leases as landowners have been unhappy with the provisions in the ALTA for indexing of rents to cope with inflation. That is an ongoing problem which calls for urgent attention.[6]

Natural disasters

Drought in 1998 further damaged the sugar industry, but its recovery in 1999 contributed to robust GDP growth. Further damage to the economy (estimated at US$30 million) was wrought by a cyclone that hit the northern island of Vanua Levu in January 2003. Apart from the economic devastation, there were food shortages and outbreaks of disease due to the pollution of the water supply.

Tourism woes

The aftermath of the political turmoil in 2000 resulted in a 10-percent shrinkage in the economy, as investor confidence plummeted and tourist numbers dropped sharply. An estimated 7500 jobs were lost. There has been a gradual recovery since 2001, when the 1997 constitution was restored and free elections held. The possibility of a return to a racially discriminatory constitution led to fears that Fiji might forfeit its preferential arrangements with the European Union for its sugar exports, and with Australia for its clothing industry, but those fears have largely (but not entirely) subsided.

Homelessness

In June 2003, a survey revealed a disturbingly high percentage of squatters, about a tenth of Fijian citizens. 82,350 individuals in 13,725 households were estimated to live in 182 squatter settlements, with Suva and Nausori being the worst-affected areas. The number of squatter settlements had increased 14% since January 2001, and 73% since 1996. Urban migration, unemployment, the expiry of land leases, and the breakdown of nuclear and extended families were among the factors blamed for the trend. The report projected the population of squatters to grow to 90,000 in the Suva-Nausori corridor by 2006, putting increasing strain on supplies of water, electricity, sewage, and road services. On 14 September, Prime Minister Qarase said that the squatter problem had become so serious that the government was looking abroad for funding.

Human Development Index

On 11 September 2005, the publication of the United Nations Human Development Index downgraded Fiji from 81st in 2004 to 92nd in 2005, behind Pacific neighbours Tonga and Samoa. Incomes had improved, the report said, with gross domestic product rising from F$5440 to F$5880, but other aspects of the quality of life enjoyed by Fiji Islanders had deteriorated. Life expectancy had declined from 72.9 in 2000 to 69.6 in 2004 and 67.8 in 2005, while literacy remained unchanged at 93%.

Joji Kotobalavu, the chief executive of the Prime Minister's Office, branded the report "a joke." His dismissal drew strong reaction from Opposition Leader Mahendra Chaudhry, who said that whereas Kotobalavu was paid to be the Prime Minister's spin doctor, the HDI report was put together by professionals who had no hidden agendas, and should therefore be taken very seriously.

Economic statistics

Income

Gross national product (GNP): US$101.48 billion; US$1820 per capita (2000)

Gross domestic product (GDP): US$1.64 billion; US$2031 per capita (2000)

purchasing power parity - US$5.9 billion; US$7300 per capita (1999 estimate)

GDP – real growth rate: -6.6% (2008 est.)

GDP – composition by sector:
agriculture: 8.9%
industry: 13.5%
services: 77.6% (2006 est.) [7]

Population below poverty line: 25.5% [8]

Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%

Inflation rate (consumer prices)

1.6% (2002 est.)

Workforce

Labor force: 335,000

Labor force – by occupation: subsistence agriculture 67%, wage earners 18%, salary earners 15% (1987)

Unemployment rate: 6% (1997 est.)

Budget

revenues: $540.65 million
expenditures: $742.65 million, including capital expenditures of $NA (1997 est.)

Industries

tourism, sugar, clothing, copra, gold, silver, lumber, small cottage industries

Industrial production growth rate: 2.9% (1995)

Electricity

Electricity – production: 550 GWh (1998)

Electricity – production by source:
fossil fuel: 20%
hydro: 80%
nuclear: 0%
other: 0% (1998)

Electricity – consumption: 512 GWh (1998)

Electricity – exports: 0 kWh (1998)

Electricity – imports: 0 kWh (1998)

Rural electrification

The Fiji Rural Electrification Policy 1993 has been used by the Fiji Department of Energy in the implementation of rural electrification projects which includes diesel schemes for villages, micro hydro projects, house wiring, biofuel projects, solar home systems and grid extension. Villages and communities have been paying 10% of the total project costs and government pays 90%. In 2010, government reduced the contribution from communities to 5% and this has increased the number of applicants.[9]

Agriculture

Agriculture – products: sugar cane, coconuts, cassava (tapioca), rice, sweet potatoes, bananas, ginger, taro, kava; livestock: cattle, pigs, shrimp, pickles, goats; fish. Island economies are at a disadvantage for harnessing export opportunities due to the costs of transport. The Fijian island of Cicia has set the goal of achieving 100% organic farming which can bring with it economic and environmental benefits.[10]

Imports

US$921 million (1998)

Imports – commodities: machinery and transport equipment, petroleum products, food, chemicals.

One in every seven dollars of Fiji’s national income is spent on oil according to the World Bank. [11]

Imports – partners: Australia 35%, Japan 4.8%, Singapore 19.2%, New Zealand 17.1% (2003).

Debt and aid

Debt – external: US$136 million (2000)

Economic aid – recipient: $40.3 million (1995)

Currency

1 Fijian dollar (F$) = 48 cents

Exchange rates: Fijian dollars (F$) per US$1 – 1.83 (November 2013), 1.72565 (August 2006), 1.9654 (January 2000), 1.9696 (1999), 1.9868 (1998), 1.4437 (1997), 1.4033 (1996), 1.4063 (1995)

References

  1. ^ "World Bank forecast for Fiji, June 2018 (p. 151)" (PDF). World Bank. Retrieved 11 September 2018.
  2. ^ "Ease of Doing Business in Fiji". Doingbusiness.org. Retrieved 2017-01-23.
  3. ^ https://www.cia.gov/library/publications/the-world-factbook/geos/fj.html |reason=Jan 2010|datevyfvfbvy=January 2010|date=March 2012
  4. ^ "Fiji, the war in Iraq, and the privatisation of Pacific island security" by Nic Maclellan Archived 2011-08-26 at the Wayback Machine
  5. ^ http://www.nltb.com.fj/truth_fiction.html
  6. ^ Reforming the leasing and the use of agricultural land in Fiji <http://maorinews.com/karere/leases/cover.htm>. Padma Lal and Mahendra Reddy: Old Wine in new Bottle? Proposed Sugar Industry Restructure and Land Conflict <"Archived copy". Archived from the original on 2011-03-17. Retrieved 2008-12-02.CS1 maint: Archived copy as title (link)>
  7. ^ "The World Factbook". Cia.gov. Retrieved 2015-12-24.
  8. ^ "Fiji Population below poverty line - Economy". Indexmundi.com. 2015-06-30. Retrieved 2015-12-24.
  9. ^ Fiji Rural Electrification Policy, cited by International Energy Agency, 2013, IEA/IRENA Database of Policies and Measures, at http://www.iea.org/policiesandmeasures/pams/fiji
  10. ^ Paull, John (2017) "Four New Strategies to Grow the Organic Agriculture Sector", Agrofor International Journal, 2(3):61-70.
  11. ^ http://www.worldbank.org/en/news/feature/2016/05/24/fiji-growing-a-renewable-energy-industry-while-expanding-electricity-access
Aquaculture in Fiji

Aquaculture in Fiji has not been developed on a large scale, the milkfish being the only species cultured widely. A Fijian prawn farm aimed to produce 25 tonnes of Penaeidae in 1990, but did not even make it to the halfway mark in their goal. Most aquacultural attempts in Fiji have aimed to cultivate high-value species for commercial exportation, however the country has not been able to compete with the aquaculture industry already developed in the rest of Southeast Asia.

Fiji Commerce Commission

The Fiji Commerce Commission is a statutory organisation responsible for fair trade, competition (economics) and consumer protection regulation in the Fiji Islands. It was initially established in 1998 under the Commerce Act 1998 [Fiji]. The Commission is an independent statutory body that seeks to protect consumers and businesses from restrictive and unfair trade practices. When it was established, the Commission was principally responsible for enforcing Fiji's competition policies and laws. It was modelled on the Australian Competition and Consumer Commission. In 2010 the Fiji government passed the Commerce Commission Act 2010 which saw the Commission taken on extra responsibilities that notably included price control. Two of Fiji's regulatory agencies, the Department of Fair Trading & Consumer Affairs and the Prices & Incomes Board ceased to exist as separate entities following this new law. The functions, operations and staff of the two agencies are now merged into the Commerce Commission.

Fiji Water

Fiji Water is a brand of bottled water derived, bottled, and shipped from Fiji. It is available in 330 ml, 500 ml, 700 ml, 1 litre (0.22 imp gal; 0.26 US gal), and 1.5 litre bottles. According to marketing materials, the water comes from an artesian aquifer in Viti Levu. Fiji Water is headquartered in Los Angeles, California.

Fijian dollar

The Fijian dollar (currency sign: FJ$, $; currency code: FJD) has been the currency of Fiji since 1969 and was also the currency between 1867 and 1873. It is normally abbreviated with the dollar sign $, or alternatively FJ$ to distinguish it from other dollar-denominated currencies. It is divided into 100 cents.

Harold Brookfield

Harold Chillingworth Brookfield (born 1926 in England) is a British and Australian geographer specialising in the analysis of rural development, small-scale societies, family farming, and the relationship between land use and society in developing countries. He retired from the Australian National University in 1991.

Housing Authority of Fiji

The Housing Authority of Fiji is in the business of providing homes to the people of Fiji. The authority sells fully serviced residential lots and offers residential mortgage loans for residential purposes.

Outline of Fiji

The following outline is provided as an overview of and topical guide to Fiji:

Republic of Fiji – sovereign island nation located in the South Pacific Ocean east of Vanuatu, west of Tonga and south of Tuvalu. The country occupies an archipelago of about 322 islands, of which 106 are permanently inhabited, and 522 islets. The two major islands, Viti Levu and Vanua Levu, account for 87% of the population.

Outline of Oceania

The following outline is provided as an overview and topical guide to Oceania.

Oceania is a geographical, and geopolitical, region consisting of numerous lands—mostly islands in the Pacific Ocean and vicinity. The term is also sometimes used to denote a continent comprising Australia and proximate Pacific islands.The boundaries of Oceania are defined in a number of ways. Most definitions include parts of Australasia such as Australia, New Zealand, and New Guinea, and parts of Maritime Southeast Asia. Ethnologically, the islands of Oceania are divided into the subregions of Melanesia, Micronesia, and Polynesia.

Revenue stamps of Fiji

Revenue stamps of Fiji were first issued in 1871, when the Fiji islands were an independent kingdom. The first revenue stamps consisted of postage stamps overprinted with the letter D.After Fiji became a British crown colony in 1874, postage stamps began to be used for fiscal purposes. A new design depicting Queen Victoria and inscribed FIJI STAMP DUTY was prepared in 1880, and it was coarsely printed by the Government Printer in Sydney. The issue consists of ten stamps with values ranging from 1d to £1, and it was issued on Fiji sometime in 1883. Some stamps are known postally used, although this was contrary to regulations. This issue remained in use until 1896, when postage stamps became valid for fiscal use once again. All remaining stocks were destroyed in 1903.From 1910 onwards, postage stamps were once again overprinted for fiscal use, this time with the letter R and with a vertical bar cancelling the original inscription POSTAGE. The first stamps to be overprinted were those depicting King Edward VII, while in 1914 the new stamps depicting King George V were also overprinted. Both sets exist with two different types of watermark each. In both the Edward VII and George V sets, high values were created by overprinting £1 postage stamps (the highest value available) with new values of £3, £5 or £10. The last set of overprints was issued in around 1922.The first plans to introduce impressed duty stamps were made in late 1876, but it is unclear what became of the order. Impressed stamps were in use during the 20th century.

South Pacific Stock Exchange

The South Pacific Stock Exchange (SPSE) is a stock exchange based in Suva, Fiji.

On 1 July 2010, the SPSE launched an electronic trading platform (ETP). The exchange now has market phases which allow the brokers to perform tasks throughout a business day. With the electronic system of trading, the price time priority is maintained, but there are two sessions of normal trading hours. The first one is from 10.30am to 11.30am and the second normal session of trading happens from 2.30pm to 3.30pm. This is when the orders may be entered, amended or withdrawn and are matched on entry. There are “pre-open” sessions where brokers can enter, amend or withdraw orders for their clients. The platform goes into enquiry mode after 3.30pm and is only accessible for viewing purposes. Unmatched orders at the end of the day that remain unexecuted are reloaded in the trading platform for the next day.

Transactions are immediate and transparent and results of each session are reported widely to the media, regulators, members, market participants, institutional investors and other interested parties. All the trading reports are automatically generated and updates in real-time.

The SPSE maintains the SPSE total return index (STRI) which is an aggregate market capitalization index which reflects the aggregate market value of all its components relative to their aggregate value on the base day. The index is constructed on a base of 1000 set at 4 January 2000. Components of this index include shares all of SPSE listed securities. STRI is an accumulation index which reflects the total return from the stock market including the price and dividend returns.

Trading was paper-based before the launch of ETP, conducted by a "call market" on a physical trading floor at 10:30am each weekday. Each listed company name was called out by the "market caller" and orders were submitted by brokers and dealers and recorded by the "chalker" and the "recorders". The market caller then matched orders on a price and time priority basis. A "chief arbitor" supervised the trading. Unmatched orders at the end of the session were carried forward to the next day.

Suva

Suva (Fijian pronunciation: [ˈsuβa]) is the capital and largest metropolitan city in Fiji. It is located on the southeast coast of the island of Viti Levu, in the Rewa Province, Central Division.

In 1877, it was decided to make Suva the capital of Fiji, as the geography of former main European settlement at Levuka on the island of Ovalau, Lomaiviti province proved too restrictive. The administration of the colony was moved from Levuka to Suva in 1882.

At the 2007 census, the city of Suva had a population of 85,691. Including independent suburbs, the population of the Greater Suva urban area was 172,399 at the 2007 census. Suva, along with the bordering towns of Lami, Nasinu, and Nausori have a total urban population of around 330,000, over a third of the nation's population. This urban complex (not including Lami) is known also as the Suva-Nausori corridor.

Suva is the political, economic, and cultural centre of Fiji. It is also the economic and cultural capital of the South Pacific, hosting the majority of regional headquarters of major corporations, as well as international agencies and diplomatic missions in the region. The city also has a thriving arts and performance scene, with a growing reputation as the region’s fashion capital.

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