Attorney-General Sayed-Khaiyum’s Speech at FNU Trade and Finance Conference

Bula Vinaka and Good Morning.

 

I think it is very fitting for the FNU Conference to coincide with the G77 meeting, because it does place prominence to the fact that Fiji does play a pivotal role within the region, as this Conference is not just for Fiji but also for the Pacific.

 

Many of the things I wanted to say the Vice Chancellor has already said. They say great minds think alike, but fools seldom differ.

 

But, ladies and gentlemen, just picking up on the point the Vice Chancellor said, I think it is critically important to highlight the fact that there has not been collaboration between the academic field in Fiji and the private sector to the extent to which it should have happened. I think that is very critical. I see some business people here and we need to encourage them. Of course, they also need to see the benefits of ensuring that with their participation in the academic field – that it also has some very practical and tangible impact in the investment sector, and indeed, in businesses.

 

By way of introduction, in particular for those who are our overseas visitors, and also to the locals, I want to highlight to you some of the key features regarding investment in Fiji.

 

I know the Conference is about investment and finance and the reason why I am highlighting this is to put on the floor for discussions and at least some food for thought in respect of the discussions you will be having.

 

Let me start off by saying that the Bainimarama Government has put investment as one of its key priorities-because it does create jobs; it does lead to growth in the economy.

 

We’ve lowered the corporate tax rate to 20 per cent. Only a few years ago it used to be 31 per cent. 18.5 per cent for companies that are listed on the South Pacific Stock Exchange. 17 per cent for companies that step up regional or global head offices in Fiji. Already one company has done that – which is ANZ. ANZ is moving its regional head office from Melbourne to Suva very soon.

 

Now we’ve also created tax free zones, for example, in Vanua Levu, Lomaiviti, Kadavu, Lau and Rotuma. We have set up also, as announced by the Prime Minister, a 20- year corporate tax holiday from Korovou all the way to Tavua-in respect- if you step up a dairy farm. And if you get into agriculture, there is a 13-year corporate tax holiday.

 

We’ve abolished duty for imported planting machinery if you want to set up a manufacturing plant or if you want to for example import equipment for renewable energy.

 

Now these are all very targeted and concerted efforts towards addressing – not just in terms of encouraging investment –but also in terms of addressing some specific structural issues or balance of payment issues that we have had.

 

We’ve emphasized the importance of value adding. Many of you may not know, but Fiji has had the largest planted Mahogany forest in the world.

 

This was started back in the fifties by the British government  and now it is all maturing. The Fiji Hardwood Corporation (FHCL) was set up in 1998, but it did not make a single dollar of profit until 2007. It was given a 25 million dollar grant. There is a debt stock of $19 million and yet you have the largest planted Mahogany forest in the world. You had landowners who were paid 2 or 5 shillings for leasing of their land. The question that needs to be asked is why did they go and make profits only in 2007?

 

Today, through the Mahogany Industry Development Decree, we have now licensed Mahogany harvesters on the condition that they now have to have value adding. We now have an American company that makes guitar necks and bodies – women are being paid $5 an hour for that. The emphasis has now been on value adding; the emphasis is on land owners getting a bigger and better sustained stake in this particular industry. We have now registered the pure Fiji Mahogany brand in about 25 different countries. This was an enormous cost, but what it will mean is that the value of the Fijian Mahogany will increase substantially.

 

We have obviously embarked on a number of reforms as far as investment is concerned. With foreign investment the rules have been relaxed.

 

 

We’ve  revolutionised the telecommunications industry. It has been liberalized. We had only one provider of mobile phones, only one provider of landlines. We had only one provider of international calls being made out of Fiji or into Fiji. Now competition has been introduced, obviously with numerous repercussions ratifications I should say. Now, how do we manage that competition, how we ensure that there is no anti-competition?  That’s where the Commerce Commission comes in.

 

We’ve reorganized spectrum or frequency allocation. A lot of people do not know this, but spectrum is like limited real estate. Before, when somebody wanted to set up a local community radio station, the Ministry of Communications would just pick up the national spectrum and give it to them. They don’t need that; they only need a very narrow band. So we have had an entire reorganization of that.

 

I found it really funny when Australian and New Zealand journalists rang me up and said you are limiting media freedom. In fact we are not, it is the reverse. By ensuring that you allocate spectrum in a managed fashion, you actually allow more entrance into the market. Fiji within two years can go digital. You have digital television- you allow more television stations to come in, you allow more channels to be shown on your TV screen.

 

We will also be, in the next month or so, be auctioning 4G spectrum. So your internet speed becomes faster.

 

We have recently advertised, as you may have seen in the papers, the identification of areas in Fiji where there is no network coverage or very limited network coverage. So government is now going to subsidize telecommunications companies to go on to those areas. If they have only twenty families living in that area obviously it is not investment friendly for a telecommunications company to put up a $300,000-$400,000 tower and expect to get a return on their investment. They need a bit of a boost. So that is where government comes in and subsidizes to ensure that there is network coverage. By ensuring that you have a hundred per cent network coverage throughout Fiji  it also means access to education.

 

Smart phones. Duty on smart phones have gone. So hopefully we won’t just use our mobile phones for voice. but use it for data. This is the quickest way of ensuring access to broadband.

 

And, of course, we’ve altered many of our policy settings across the board to ensure that investment and business becomes easier.

 

It also includes the removal of red tape, adopting international “best practice” and also ensuring that there is a lot more stakeholder participation in the decision making process.

 

Now what do all these changes mean? These changes obviously have numerous repercussions as I highlighted.

There is a need to develop clear and transparent rules. There is a need to develop clear regulations pertaining to licensing, for example to consumer protection, new areas of consumer rights need to be developed, and indeed, need to be addressed.  And of course, as I have alluded to before, we have to ensure that there is true competition and we have to prevent anti-competitive behavior.

 

One of the principle tenets of the Bainimarama Government of course has been that such policies need to be consistent. There’s nothing like chopping and changing taxes, rules and regulations to send investors packing back home or wherever they come from, or back to their drawing boards.

 

Another of our tenets is that effective government can only come through an effective partnership between the public and private sectors.

 

This is more than just an ideal. Such partnerships now exist in some of our most important areas of infrastructure, such as our roads, which has been outsourced, and our ports.

 

As you saw last week, the government signed a partnership agreement with Aitken Spence, one of the oldest companies in the world, to manage our ports. They manage ports in Asia, in the Middle East and in Africa. It has enormous ramifications. At the moment, shipping companies actually charge a levy on containers that come to Fiji or leave Fiji because our ports are so inefficient. So the sitting amount of time at the dock is too expense for them. Now they charge a levy on the container, eventually you and I pay for. Because obviously the supplier will pass the cost on to the consumer.

 

So we have tried to change the investment climate by bringing about a number of fundamental changes in the economy. We take a holistic view and also take a long-term view. In other words, policies are put in place not just for today or tomorrow or for short term political gain. They’re designed for the long haul and our goal of stimulating economic growth to create jobs and opportunities for Fiji is first and foremost.

 

Of course, we’ve also made it a priority because these areas also need to be addressed to finally lay to rest the social and political anomalies that have hampered our growth in the years since Independence and have deprived us of the chance to achieve our true potential.

 

Common and equal citizenry, the de-politicisation of land and the protection of personal property, whether is it communally held or individually held, is critical to ensuring investor confidence and growth, and of course loyalty to the country and the economy. This is very important and people need to understand this. If you do not have fundamental rights, a common and equal citizenry, then the sense of loyalty both for the investor and also the individual is minimized.

 

People essentially will then see this university, a job in Fiji as a means of stepping stone to leave for greener and better pastures. We have to address the brain drain. In order to address the brain drain, in order to arrest the situation of investment outflows or people cooking the books so they don’t pay the right taxes, we need to ensure that they feel they are very much part and parcel, not just of the economy, but the country itself.

 

We also now have a draft constitution that specifically includes – for the first time – socio economic rights for all Fijians.

 

This includes the right to economic participation, the right to work and the right to a just minimum wage, as well as to such other things as adequate food and water, sanitation and housing.

 

As the Bainimarama Government keeps saying, these are important initiatives that we believe can help end the coup culture in Fiji and the uncertainty that has posed over the years for potential investors.

 

There’s no doubt in our minds that self-serving politicians have been able to exploit a sense of injustice among ordinary people to foment unrest.

 

We have been going out during the Consultations – been to the North, South, Kadavu, Yasawas, to Taveuni and other parts of Fiji. We have been very frank and open in our discussions. If you look at the events of 2000, many people who rushed across to the arrest of the then government by a group of armed men who were held hostage for 56 days, which would be highly inconceivable in any modern country. But many people who were rushed there were told by many politicians that everything will be hunkey-dory if they got rid of this government. And if we look at the background of these people, many of these people did not have access to clean water, many did not have good housing, they did not have access to good transportation, and they were not part of any social welfare scheme.

 

So obviously they were marginalized economically. They weren’t part of the society. So it is very easy to exploit them. It is very easy to say to them, “come let’s get rid of these people and everything will be fine.”

 

So this is why it is critical to ensure that any future plan or any road map of any country, which includes the Constitution, must address the social and economic rights of people. Because it becomes an imperative not just for the government that gets elected in 2014, 2018 or 2022 or 2026. It becomes an imperative on every single government because it will be your right and those rights are enforceable.

 

Many of you may not know, but for the first time in the Constitution, you will have those rights applied, what you call as horizontally, also.  In other words, those rights will also now be enforceable, of course with a few exceptions, in the private sector. Previously it was applied only vertically – as in your rights as a citizen against the State. This will be applied across the board in the private sector also. So, for example, the women who gets discriminated against because she is pregnant or because she is married – or you get discriminated against because your culture –  you can also have those rights enforced in the private sector. That is very important. It is also very critical that the private sector needs to understand what is enclosed in the Constitution.

 

So we have written certain socio-economic rights into the Draft Constitution and to add to those Fijians will now for the  first time enjoy – an electoral system that removes the legal enforcement of ethnic voting, enshrines one person, one vote, one value and helps voters focus on the merits of the policies the respective parties are offering.

 

So you should be able to now ask political parties, “what is your policy on education?” “What is your policy on investment?” “What is your policy on sanitation?” Whatever the case may be.

 

So you help political parties now focus on national issues and how you could be able to be satisfied.

 

For the first time – talking about education – it is not just the right to basic education as it was in the 1997 Constitution. But now you have right to early childhood, primary, secondary and further education. There is also a further obligation in place for the State to progressively provide free education all the way up to tertiary education.  That is very important and critical.

 

So we need to take a holistic approach to achieve a new Fiji, a more modern Fiji. And it goes without saying, given the Conference we are at, a Fiji more attractive for even the most cautious of investors.

 

As I have said earlier on, from your seminar that you have got today and tomorrow –you have a broad range of topics that are being covered, all of them are very very important.

 

I would personally find and I want to comment on this is: that sometimes we tend to focus more on form rather than substance. And indeed many people, if you look at Enron, and what have you with all the  collapses of those companies notwithstanding the fact that there were certain legal obligations in terms of complying with various forms  - there was no actual – they missed the point-they did not focus on the substance.

 

So you can just tick the box, but you need to look at what is the purpose behind ticking the box. Why is that rule made in the first place? So we can keep talking on about rules, but we need to look at the intended outcomes. There are accountants who are speaking here today and they can tell you more about that. Obviously the question that needs to be asked is “why?” “Why do we have these rules?” “What is the intended objective of that?”

 

If we don’t question the outcome of a particular rule or a particular law, if we don’t for example have an economic model in our mind, our analysis is bound to be subjective and not objective.

 

And subjectivity undermines the credibility of academia as was alluded too by the Vice Chancellor (VC).

 

It always strikes me that sometimes we tend to focus on conventional theories too often, to take preference over practical application and common sense. And I’m afraid to say that some of our academics are the worst offenders in Fiji.

 

I will give you an example. I was struck a few days back to see a newspaper interview, I think it was yesterday or day before yesterday, given by one academic economist.

 

While he praised the fact that the three old political parties had now been registered to contest next year’s election, he bemoaned the fact that the Government had abandoned the Constituent Assembly.

 

The fact is that had we gone ahead with the Constituent Assembly, if we had gone ahead in the manner in which was originally set out, we were in grave danger of not meeting our promised deadline of September 2014, to hold our first parliamentary elections under a new system.

 

And had THAT happened, if we had missed the deadline, there is no doubt in my mind that this person would have been among the very first to complain about that also.

 

Had the long-promised election been delayed, there’s also no doubt that investor confidence would have been also affected quite significantly.

 

So we decided to take the practical route – to take the Draft Constitution directly to the people in a series of public consultations, through radio talkback show etc., and that was undoubtedly a huge success.

 

The people – rather than their ostensible representatives – became the Constituent Assembly. In their thousands, they gave us their views and they are still responding. We are altering the draft to – among other things – strengthen the protection of land rights and in particular the I’Taukei land rights and of course Freehold land rights.

 

This was genuine grassroots participation, not a gabfest of the elite.

 

But to return to the article in question, this economics professor argued– quite remarkably – that holding the Constituent Assembly, as was originally designed, would have spurred economic growth and inspired investor confidence. Now how do we analyze this? On what academic basis was this statement made?  What facts and figures did the professor put forward to substantiate his claim?

 

Surely economic analysis must always be impartial and unbiased. But in this case, it’s hard not to detect a political agenda. So the credibility of the person actually putting forward a theory is substantially undermined.

 

There is no doubt that we need to have frank and open discussions about Fiji’s economy and the investment climate. But we need this discussion to be based on demonstrable fact, not on personal opinion.

 

So I urge all of you here today – economists, other academics and those of tomorrow, our students – to always examine the facts and always be critical of the analytical tools you are using itself. Indeed, question whether the very tools you are using are appropriate or not.

 

Don’t be like some of our journalists who never let the facts get in the way of a good story. Or journalists who merely indulge in the toing and froing exercise that we so often see in Fiji: “He said this what do you have to say?” then they go back to the other guy and say, “He said this what do you have to say.” There is no critical analysis, no input of the individual to analyze the facts and the figures, or of what did this person say two years ago.

 

So, ladies and gentlemen, what I would like to say just essentially highlighting the point that the VC made, was that it is critical to have these sorts of seminars and conferences where you have very critical issues being discussed in a very  deep fashion not just one paper being delivered by one person.

I understand you will have various panel discussions – you have people I know presenting papers who have never presented papers before. The idea is to give them the opportunity to do so to get them here on the platform.

 

We need to encourage academic thinking, free thinking, and critical analysis. Because if you look at all great societies and if you look at all modern societies, that is how they are strong. That is how they become great.

 

Because if you allow people to participate in a manner that is critical – not critical for the sake of being critical –  but have in-depth discussions, have a long term view. I was having a discussion with academics, not from this university, and they were saying there was actually no economic model that was created within Fiji in terms of  how, for example, the RBF or Ministry of Finance can weigh in and look at it from a long term perspective.

 

Maybe FNU is now developing it. But it has not been done for a long period of time. And it goes to the point about how there needs to be an interface between academia, between institutions such as RBF, ministries, and the private sector.

 

I urge all of you to please give your views critically. The government is very much committed and we hope to receive the papers from this seminar – because we ourselves need to not just know what is happening but also learn from the discussions that are taking place and the words of wisdom that will come across during the discussions that we should take on board.

 

So, ladies and gentlemen, I think the theme should be there should be more collaboration between all of us to ensure with the long term view that Fiji becomes a much stronger economy, it attracts investors for the long term, not just investors that come by the night, and encourage people and free thinking in academia to be able to have positive input into the growth and development of our country, and also for all Fijians.

 

With those few words gives me much pleasure to open this wonderful conference: FNU Conference on Finance and Investment.

 

Vinaka.

Print Friendly