fiji - iuj.ac.jp · pdf filecountry profile 2004 fiji this country profile is a reference...

Country Profile 2004

FijiThis Country Profile is a reference work, analysing thecountry’s history, politics, infrastructure and economy. It isrevised and updated annually. The Economist IntelligenceUnit’s Country Reports analyse current trends and provide atwo-year forecast.

The full publishing schedule for Country Profiles is nowavailable on our website at http://www.eiu.com/schedule

The Economist Intelligence Unit15 Regent St, London SW1Y 4LRUnited Kingdom

The Economist Intelligence Unit

The Economist Intelligence Unit is a specialist publisher serving companies establishing and managingoperations across national borders. For over 50 years it has been a source of information on businessdevelopments, economic and political trends, government regulations and corporate practice worldwide.

The Economist Intelligence Unit delivers its information in four ways: through its digital portfolio, where itslatest analysis is updated daily; through printed subscription products ranging from newsletters to annualreference works; through research reports; and by organising seminars and presentations. The firm is amember of The Economist Group.

LondonThe Economist Intelligence Unit15 Regent StLondonSW1Y 4LRUnited KingdomTel: (44.20) 7830 1007Fax: (44.20) 7830 1023E-mail: [email protected]

New YorkThe Economist Intelligence UnitThe Economist Building111 West 57th StreetNew YorkNY 10019, USTel: (1.212) 554 0600Fax: (1.212) 586 0248E-mail: [email protected]

Hong KongThe Economist Intelligence Unit60/F, Central Plaza18 Harbour RoadWanchaiHong KongTel: (852) 2585 3888Fax: (852) 2802 7638E-mail: [email protected]

Website: www.eiu.com

Electronic deliveryThis publication can be viewed by subscribing online at www.store.eiu.com

Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, on-line databasesand as direct feeds to corporate intranets. For further information, please contact your nearest EconomistIntelligence Unit office

Copyright© 2004 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication norany part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means,electronic, mechanical, photocopying, recording or otherwise, without the prior permissionof The Economist Intelligence Unit Limited.

All information in this report is verified to the best of the author's and the publisher's ability. However, theEconomist Intelligence Unit does not accept responsibility for any loss arising from reliance on it.

ISSN 1460-7093

Symbols for tables“n/a” means not available; “–” means not applicable

Printed and distributed by Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK.

Country Profile 2004 www.eiu.com © The Economist Intelligence Unit Limited 2004

Comparative economic indicators, 2003

Gross domestic productUS$ bn

(a) 2001. (b) 2002.Sources: Economist Intelligence Unit estimates; national sources.

Sources: Economist Intelligence Unit estimates; national sources.

0 1 2 3 4 5

Tonga(b)

Vanuatu(b)

Samoa(b)

Solomon Islands(a)

Fiji(b)

Papua New Guinea

New Zealand

Australia

0.0 0.5 1.0 1.5 2.0

Solomon Islands(a)

Papua New Guinea

Vanuatu(b)

Tonga(b)

Samoa(b)

Fiji(b)

New Zealand

Australia

-6 -3 0 3 6 9 12 15

Fiji

Samoa

New Zealand

Australia

Vanuatu

Solomon Islands

Tonga

Papua New Guinea

-6 -4 -2 0 2 4 6

Vanuatu

Tonga

Papua New Guinea

Australia

New Zealand

Samoa

Fiji

Solomon Islands

Gross domestic product% change, year on year

Consumer prices% change, year on year

Gross domestic product per headUS$ ’000

(a) 2001. (b) 2002.Sources: Economist Intelligence Unit estimates; national sources.

Sources: Economist Intelligence Unit estimates; national sources.

506.8

78.2

25.5

19.5

Fiji 1

© The Economist Intelligence Unit Limited 2004 www.eiu.com Country Profile 2004

Contents

3 Regional overview3 Membership of organisations5 The regional economy

8 Basic data

9 Politics9 Political background10 Recent political developments13 Constitution, institutions and administration13 Political forces14 International relations and defence

14 Resources and infrastructure14 Population15 Education15 Health16 Natural resources and the environment16 Transport, communications and the Internet17 Energy provision

17 The economy17 Economic structure18 Economic policy18 Economic performance

19 Economic sectors19 Agriculture20 Mining and semi-processing20 Manufacturing21 Financial services21 Other services

21 The external sector21 Trade in goods22 Invisibles and the current account22 Capital flows and foreign debt22 Foreign reserves and the exchange rate

24 Appendices24 Sources of information24 Reference tables24 Estimated population25 Gross domestic product by sector25 Government finances25 Gross domestic product26 Gross domestic product by expenditure26 Inflation26 Money and credit26 Production of selected products27 Visitor arrivals

2 Fiji

Country Profile 2004 www.eiu.com © The Economist Intelligence Unit Limited 2004

27 Main domestic exports27 Main imports28 Main trading partners28 Balance of payments, national series29 Balance of payments, IMF series29 External debt30 Net official development assistance30 Foreign reserves30 Exchange rates

Fiji 3


Fiji

Basic data

18,333 sq km

772,655 (1996 census); 825,800 (official mid-2002 estimate)

Viti Levu (10,429 sq km), Vanua Levu (5,556 sq km)

Suva (population: 176,000)

Tropical

Hottest months, January-March, 23-30°C (average daily minimum andmaximum); coldest months, July-August, 20-26°C; driest month, July, 124 mmaverage rainfall; wettest month, March, 368 mm average rainfall

English, Fijian and Hindi

Metric

Fiji dollar (F$)=100 cents. Average exchange rate in 2003: F$1.896:US$1. Exchangerate on September 6th 2004: F$1.791:US$1

12 hours ahead of GMT

January 3rd (New Year s Day); March 25th (Good Friday); March 26th-28th(Easter); April 25th (the prophet Mohammed s birthday); May 6th (NationalYouth Day); May 30th (Ratu Sir Lala Sukuna Day); June, exact date to beannounced (the Queen s official birthday); October 10th (Fiji Day);November 1st (Diwali); December 25th (Christmas Day); December 26th(Boxing Day)

Land area

Population

Time

Major islands

Capital

Climate

Weather in Suva (altitude6 metres)

Languages

Measures

Currency

Public holidays, 2005

4 Fiji


Politics

Fijian politics remain characterised by highly charged divisions between theindigenous Fijian population and the Indo-Fijians who make up around 40% ofthe population. Following the toppling of Fiji s first Indian-led governmentunder Mahendra Chaudhry s Fijian Labour Party (FLP) in a "civilian coup" in2000, an interim government under Laisenia Qarase was appointed by themilitary. The courts declared the interim government illegitimate, butMr Qarase won the ensuing general election in August 2001 and formed amajority government with the support of minor parties and independents. Theelection failed to restore political stability, and the ethnically chargedconstitutional crisis has rumbled on with no end currently in sight.

The High Court ruled in 2002 that the new government was unconstitutional,because it did not include members of the opposition FLP, who wereconstitutionally entitled to representation in the cabinet in proportion to theirstrength in parliament. The government s appeal, which argued that theinclusion of political opponents in the cabinet would be unworkable, wasfinally thrown out by the seldom-used Supreme Court on July 18th 2003.Mr Qarase responded to the ruling by offering the FLP trivial posts withnugatory budgets in an expanded cabinet, a move rejected by the FLP leader,Mr Chaudhry. The Supreme Court ruled on July 9th 2004 that it was theresponsibility of the two leaders, not the court, to decide how the cabinetshould be structured. As a result, Mr Qarase announced that he would ask thepresident, Ratu Josefa Iloilo, to appoint a cabinet of 16 ministers of Mr Qarase schoice and 14 FLP ministers. However, Mr Chaudhry complained that a 30-member cabinet would be too unwieldy and costly and he is expected toappeal again in court.

Political background

Fiji became a British colony on October 10th 1874 and remained under colonialrule until independence on October 10th 1970. From April 1972 until 1987 Fijiwas governed by the Alliance Party (AP), composed of organisations that weremainly indigenous Fijian. In April 1987 the AP lost office to a coalition of theFLP and the National Federation Party (NFP), the main political vehicles forIndo-Fijians. Although the FLP leader, Timoci Bavadra, was an ethnic Fijian, thecoalition s support came mainly from Indo-Fijians.

Dr Bavadra s victory created tensions between the two ethnic groups, which,despite a century of co-existence, had never integrated. This culminated in amilitary coup on May 14th 1987, led by Lieutenant-Colonel (later Brigadier andthen Major-General) Sitiveni Rabuka. Racial violence escalated as calls forDr Bavadra s reinstatement intensified. On September 23rd 1987 the governor-general, Ratu Sir Penaia Ganilau, the defeated prime minister, Ratu Sir KamiseseMara, and Dr Bavadra signed an agreement giving equal representation inparliament to the AP and the FLP-NFP coalition. However, the recentlypromoted Brigadier Rabuka saw this as compromising the main aim of the

Two coups in 1987

Independence in 1970

Fiji 5


coup, which was to ensure continued political domination of Fiji by ethnicFijians. Two days later he mounted a second coup, and on October 7th 1987 herevoked the 1970 constitution and declared Fiji a republic.

Civilian government was reinstated in December 1987. Ratu Ganilau wasappointed president of the new republic, and Ratu Mara was reappointed asprime minister with a governing council of 21 ministers, including four militaryrepresentatives, but no members of the FLP-NFP coalition. At the first electionheld under a new constitution in May 1992 the Soqosoqo ni Vakavulewa niTaukei (SVT) also known as the Fijian Political Party, formed by the GreatCouncil of Chiefs (the Bose Levu Vakaturaga, comprising 70 hereditary chiefs,or ratus, of Fiji s traditional clans) to represent indigenous Fijians won 30 of the37 seats reserved for ethnic Fijians. Major-General Rabuka, who became leaderof the SVT in the run-up to the election, emerged as prime minister, leading acoalition with the General Voters Party (GVP), which mainly represents citizensfrom neither of the two major ethnic backgrounds (indigenous Fijian or FijianIndian), chiefly Europeans, Polynesians and Asians.

During its first 18 months in office, Major-General Rabuka s government wasrocked by crises; to avoid a vote of no confidence, the prime minister resignedand a new election was held in February 1994. The SVT was returned to powerwith Major-General Rabuka as prime minister and a cabinet composed solelyof indigenous Fijians. The Fijian Association (which subsequently became theFijian Association Party, or FAP), established before the election by disaffectedSVT members, won only five of the 37 seats allocated to indigenous Fijians.

After the election, constitutional change dominated politics (see Constitution,institutions and administration). Both houses of parliament adopted a newconstitution in June 1997 and the prime minister announced plans to form amultiparty government. Major-General Rabuka reshuffled his cabinet onAugust 7th 1997, admitting two members of parliament (MPs) from the FAP.

Recent political developments

The government did not work well and became increasingly unpopular, andthere were concerns that Major-General Rabuka might indefinitely delay thegeneral election, due by February 1999. In the event, the election was held inMay, and the predominantly Indo-Fijian FLP, led by Mr Chaudhry, the head ofthe trade union movement, secured 37 of the 71 seats in parliament and formedwhat it called the People s Coalition, which took office with a total of 50 seats.The coalition comprised the FLP, the FAP, the Party of National Unity (Panu)and Veitokani ni Lewenivanua Vakarisito Party (VLVP, or the ChristianFellowship Party).

The FLP s victory was just as much a rejection of the political and economicstagnation and corruption associated with the SVT administration as ademonstration of support for the FLP itself. However, indigenous Fijians, bothwithin the SVT and outside it, would not accept Mr Chaudhry s decision totake the post of prime minister himself, despite the fact that two experiencedindigenous Fijians were appointed as deputy prime ministers. Claims that the

A broad coalition takes officein 1999

Sitiveni Rabuka becomesprime minister

An exclusively ethnic Fijiancabinet is formed

6 Fiji


"Indian" government was threatening indigenous rights, especially thoseconnected with land, spread throughout the indigenous Fijian community. InMarch 2000 agitation against the government began, with the avowed aim ofbringing down the government.

Others planned more direct action to mark the government s first anniversary.The change of government had deprived many of the indigenous ruling classof their access to power, perks and money. Armed gunmen, ostensibly led byGeorge Speight, a failed businessman fighting for the indigenous cause, invadeda session of parliament and took the prime minister prisoner, along with mostof his cabinet and other MPs. The majority of the parliamentarians were heldhostage for close to two months, during which time their captors succeeded inhaving the Chaudhry government dismissed and the president removed fromoffice by the military. After a period of martial law, the Great Council of Chiefselected a new president and a civilian government chosen by the military wasinstalled. Led by Laisenia Qarase, the interim government struggled to establishcredibility domestically and internationally. In November 2000 the High Courtruled that the 1997 constitution had not been overturned by the coup, that theappointment of the interim government was unlawful and unconstitutional,and that both houses of the elected parliament remained intact. Fiji s Court ofAppeal upheld that judgement on March 1st 2001.

The decision forced the government to call a general election in August 2001.Mr Qarase turned his cabinet and supporters into a new party, SoqosoqoDuavata ni Lewenivanua (SDL, or the People s Unity Party), which won 31 seats.The FLP won 27 seats, which entitled it to a place in the government under aconstitutional provision that applies when an opposition party wins more than10% of the seats in the lower house, the House of Representatives. Mr Qarasewas sworn in as prime minister on September 10th 2001, but later announced agovernment of 20 ministers and seven assistant ministers all but one of themindigenous Fijians. Mr Qarase said that if the FLP joined the government, itwould create an unworkable situation. In response, the FLP took legal actionchallenging the validity of the government. The FLP won the case in the HighCourt and the Court of Appeal, and in July 2003 also in the Supreme Court.

Mr Qarase had said that he would abide by the Supreme Court s decision andinclude FLP ministers in his cabinet if the judgement went against him,although there was much speculation that he would call an early election,which was not due until 2006. However, Mr Qarase ruled this out shortly afterthe judgement was announced, arguing that the election outcome would mostlikely be the same as in 2001, thereby perpetuating the stalemate. He alsorefused to offer the FLP any existing cabinet seats, which he argued wouldanger the MV, on which the government relies for its parliamentary majority.Instead, he asked Mr Chaudhry to accept one of two options: become theofficial opposition, a role he had rejected after the election in protest at hisparty s exclusion from the cabinet; or take up his offer of 14 new positions in anexpanded cabinet of 36 (more than half the total number of seats inparliament). However, only ten of the proposed new ministries would have apermanent staff. Moreover, the new cabinet ministers would be in charge of

A “civil coup” takes place inMay 2000

Constitutional issues threatenthe new government

The political stalematehas continued

Fiji 7


marginal portfolios such as the overseeing of pension payments to warveterans and the management of state properties, and would have no say inthe policy direction of the government as the SDL and its allies do not rely onFLP support in parliament.

Mr Chaudhry has, unsurprisingly, rejected both options, not only because theygo against the spirit of the 1997 constitution, which envisages a multiracialgovernment inclusive of the larger opposition parties, but also on the groundsof the additional costs involved in running 14 extra ministries. There is littlesign of an early end to the political stalemate, which, it seems, will be draggedout by the two leaders until the next general election, due by September 2006.

Mr Speight, in prison awaiting trial for treason, was elected to parliament forthe MV in the 2001 poll. He was refused bail to attend the swearing-in of thenew House of Representatives on October 1st and was automaticallydisqualified from membership of the House. At the resulting by-election inMarch 2002, his younger brother Samisoni Speight Tikoinasau, generallyknown as "George junior", easily won the seat for the MV. Shortly afterwards,Mr Speight pleaded guilty to the treason charge and was given a deathsentence, commuted within hours to life imprisonment (the death penalty wasabolished 24 hours after his sentence to prevent him from being executed). Acampaign to have him pardoned began almost immediately, but he remains injail. He has some support from the indigenous community in his home locality.

There have also been calls for the release of the vice-president, Ratu JopeSeniloli, the deputy parliamentary speaker, Ratu Raquita Vakalalabure (of theright-wing, nationalist Conservative Alliance Party), and three others, who wereconvicted in August 2004 of illegally swearing oaths and agreeing to beministers in a government that rebels holding Mr Chaudhry s governmenthostage in parliament were attempting to put together. The sports minister,Isireli Leweniqila, was acquitted. The vice-president received a four-year jailsentence, while Ratu Raquita was sentenced to a six-year jail term.

The land lease issue

Of all the decisions taken during the colonial period, the one to bring in indenturedlabour from India to work in the sugar industry has had the most enduringrepercussions. Between 1879 and 1916 around 2,000 Indian immigrants a yeararrived in Fiji. To prevent the indigenous Fijians from becoming alienated from theirland, the colonial government adopted a system of parallel governments, creatingprovincial governments for the Fijian population in addition to the colonialgovernment. Perhaps more importantly, the land ownership pattern was frozen in1909, with sales of land prohibited after this time. This created the current situationwhere around 90% of the land is owned by indigenous Fijian communities, but over70% of the sugar crop is produced by Indians, usually on land leased from Fijians.

George Speight is in prison fortreason

The vice-president is convictedof coup-related offences

8 Fiji


About 18,000 of Fiji s sugar leases are on land owned by native Fijians.Approximately 4,000 of these leases, covered by the Agricultural Landlord andTenant Act (ALTA), have expired, of which only 60% have been renewed. This hasled to many people being displaced and prevented many others from entering theindustry. However, the government-owned Fiji Sugar Corporation has identified newareas of land it hopes will be cultivated by Indian and Fijian tenants, with the aim ofincreasing the annual sugarcane harvest to 5m tonnes.

Constitution, institutions and administration

On May 14th 1997, the tenth anniversary of his first coup, Major-GeneralRabuka tabled the Constitution (Amendment) Bill. It was passed unanimouslyby both houses of parliament and signed into law by the president onJuly 4th 1999. The new constitution reduced the number of seats in parliamentreserved for indigenous Fijians from 37 to 23 and the number reserved for FijianIndians from 27 to 19. The number for other ethnic groups was cut from five tothree, with the Rotuma (Polynesian) ethnic group retaining its one seat. Theremainder of the 71 seats became "open". All parties receiving over 10% of thevote in a general election were entitled to cabinet appointments in proportionto their seats in parliament. The president had to be an indigenous Fijian, butthere were no restrictions on other positions, including that of prime minister.

After the May 2000 "civil coup", the interim civilian government appointed aconstitutional review commission and talked of a three-year timeframe inwhich to draft a new constitution with elections to follow. However, thecommission s work was halted by the decisions of the Supreme Court, whicheventually forced the August 2001 election. Despite the election some wouldargue because of it the institutional situation is more fragile than it has beensince the 1987 coups, and there is little indication of how this might be changed.

Political forces

Fiji has a bicameral parliament comprising an appointed upper house, orSenate (32 members), and an elected lower house, the House of Representatives(71 members). There is universal suffrage for all citizens aged over 21; voting iscompulsory and preferential. The president, currently Ratu Josefa Iloilo, isappointed by the Great Council of Chiefs (Bose Levu Vakaturaga), comprising70 hereditary chiefs, or ratus, of Fiji s traditional clans. The president appointsthe prime minister, who selects the cabinet. Local administration is on adivisional basis, with separate councils for urban areas. There is a separate localgovernment system for the indigenous Fijian population. The overall politicalsystem is highly unstable.

The ruling Soqosoqo Duavata ni Lewenivanua (SDL, or People s Unity Party),led by the prime minister, Mr Qarase, has become the main advocate ofindigenous supremacy since the Soqosoqo ni Vakavulewa ni Taukei (SVT,formed by the Great Council of Chiefs to represent indigenous Fijians) wasalmost wiped out in the 2001 election. Matanitu Vanua (MV, the ConservativeAlliance) is a more extreme supporter of indigenous rights. The Fiji LabourParty (FLP) is a predominantly Indo-Fijian party, led by Mr Chaudhry, the

The 1997 constitution

Fiji 9


prime minister ousted in the 2000 coup. Elements of the FLP dissatisfied withhis leadership style broke away before the 2001 election to form the NewLabour Unity Party under the leadership of the former deputy prime minister,Tupeni Baba, but it had little impact at the polls. The other main parties arethe National Federation Party (NFP) and the United General Party (UGP).

International relations and defence

Many regional institutions are based in the capital, Suva, including the PacificIslands Forum (PIF) Secretariat, the UN Development Programme, the maincampus of the University of the South Pacific and the South Pacific AppliedGeoscience Commission (SOPAC). The Asian Development Bank (ADB)opened an office in Suva in 2004. Fiji joined the Melanesian Spearhead Group(MSG) in 1996, ten years after its inception.

Beyond regional affairs, Fiji has played a major role in successive tradenegotiations between countries of the African, Caribbean and Pacific (ACP)group under the Lomé Convention. The successor agreement to the LoméConvention was to have been signed in Fiji in mid-2000 and be known as theSuva Agreement, but because of political violence the event was moved to thecapital of Benin in West Africa and the agreement is called the CotonouAgreement. The various coups strained Fiji s relations with many countries itsmembership of the Commonwealth was suspended for several years althoughthe 2001 election led to a general normalisation of international relations.

Fiji s military is structured principally to maintain about 1,000 soldiers servingin UN peacekeeping missions overseas, mostly in the Middle East. This is animportant source of revenue. According to the International Institute forStrategic Studies, there are 3,200 personnel in the army and 300 in the navy,supported by 6,000 reservists. The defence budget for 2003 was F$50.8m(US$26.8m). The navy operates Pacific-class patrol boats supplied by Australia.Australian and New Zealand warships visit Fiji regularly, and ships from the UKand the US visit occasionally. These ties were cut between May 2000 and the2001 election, although the Australian and New Zealand air forces maintainedsurveillance patrols of Fiji s exclusive economic zone. Full ties have since beenresumed. Fiji is participating in the Australian-led intervention in the SolomonIslands. The Fijian police force has requested funds to maintain a 100-man unittrained for international peacekeeping missions. The government has also beennegotiating with the UN over the employment of 60 Fijian troops asbodyguards for UN staff working in high-risk locations.

Resources and infrastructure

Population

According to the last official census in 1996, the population stood at 772,655, upfrom 715,375 a decade earlier. More recent figures from the Reserve Bank of Fiji(RBF, the central bank) estimate the population at 810,400 in mid-2000, rising to

Emigration weighs onpopulation growth

International relations

Defence

10 Fiji


825,800 in mid-2002. Indigenous Fijians made up an estimated 52.6% of thepopulation in 2001, with Indo-Fijians accounting for 40.6% of the population.The 1996 census showed that 53.6% of the population lived in rural areas and46.4% were urban dwellers; of the urban population, 46.7% lived in the greaterSuva area and 12.8% in the greater Lautoka area. Population growth has beenseverely curtailed by emigration, mainly of Indo-Fijians, following the 1987coups and again since the coup of May 2000. The government estimates that1,000 people left the country each month in the 18-month period following theoverthrow of the government of Mahendra Chaudhry in 2000, most of themprofessionals, small-business owners and their families. The rate of emigrationfell by more than 13% in 2002 but, according to the Fiji Bureau of Statistics,annual emigration was still running at around 4,000 to 5,000 in mid-2004,with Indo-Fijians accounting for more than 80% of the departures.

Education

Education is not compulsory in Fiji, but the government provides freeeducation for the first eight years of schooling. Most schools are operated bylocal committees. Although there is no formalised racial segregation, schoolshave traditionally been attended by pupils of a single race. However,increasingly Fijian parents are placing their children in Indian, committee-managed, schools thought to offer far higher education standards. Adultilliteracy is low, at 6.8% in 2001, according to the UN Development Programme(UNDP). The University of the South Pacific, funded by regional governmentsand aid donors, is based in Suva. Australia s University of Central Queenslandhas a Suva campus for fee-paying students.

Health

Healthcare standards in Fiji are high compared with those in most developingcountries. In 2001, according to the UNDP, life expectancy at birth was69.3 years and the infant mortality rate in 2001 was about 18 per 1,000(compared with 50 per 1,000 in 1970). Most medical facilities are provided bythe government, and specialist medical services are available in Suva andLautoka. In 2000 public health expenditure was equivalent to 2.6% of GDP,with a further 1.4% of GDP funded privately. Owing to their relative isolation,the Pacific island nations have experienced a much lower incidence of AIDSinfection than most other areas of the world. But there is widespread ignoranceabout the way in which the virus is transmitted and concern is growing aboutaccelerating infection rates and the impact of a spreading epidemic onpopulation numbers. In Fiji, 156 cases of HIV/AIDS had been reported bymid-2004. There is also concern about the impact of the shift from traditionaldiets of fish and fruit to imported, processed foods high in fat and sugar.Obesity levels have risen dramatically in the Pacific island nations in recentdecades. Diabetes and other obesity-related diseases are becoming increasinglyprevalent (diabetes is the main cause of death in 11 island states).

Literacy rates are high

Healthcare standards high bydeveloping-country standards

Fiji 11


Natural resources and the environment

Fiji is an archipelago of 332 islands, about one-third of which are inhabitedpermanently. The total land area is 18,333 sq km, with the island of Viti Levuaccounting for 10,429 sq km (57%) and Vanua Levu 5,556 sq km (30%). Accordingto the Native Land Trust Board, in 2000 most of the land, 1,487,581 ha, was heldunder "native title" (collectively owned by the traditional clans). Of this area,387,075 ha was leased, largely for agricultural purposes. Legislation enacted in2004 reserving certain classes of land (mainly that once occupied by extincttribes) for allocation to landless indigenous Fijians raised the total area of landowned or reserved for Fijians from 83% to just over 90%. The Crown (meaningthe government this phrase is still used, even though the British monarch is nolonger head of state) held title to 141,502 ha and freehold title covered only142,090 ha. According to the UN Food and Agriculture Organisation (FAO),forests covered 815,000 ha of Fiji (44.6% of the total) in 2000. FAO figures for1995 show that a further 8.4% was accounted for by woodland. Forest cover fellby an average of 2.1% a year in 1990-2000.

Transport, communications and the Internet

About a dozen international shipping lines serve Fiji. The main ports of entryare Suva, Lautoka, Levuka and Savusavu. The Ports Authority of Fiji isresponsible for all ports and wharves. Fiji s international airports are Nadi andNausori, which are about 200 km and 20 km from Suva respectively. Nadiairport was upgraded in time for the South Pacific Games, which were held inFiji in June-July 2003, and there are also plans to upgrade Nausori airport. Incontrast to most other airlines in the region, which are struggling to survive,profits at Fiji s national carrier, Air Pacific, have jumped sharply as theinternational airline expands its services. However, competition has increasedsince mid-2004 following the launch of "no frills" services by competitors fromNew Zealand and Australia.

There are telephone or radio telephone links to almost all inhabited islands. Anetwork to deliver satellite and television services to all inhabited islands wasdue to open in September 2004. Most towns and large villages have automatictelephone exchanges and direct dialling. In 1994 Vodafone linked up with Fiji sPost and Telecommunications Company to establish a mobile-phone networkin the country. It was estimated in 2004 that 90,000 land telephone lines werein use, along with more than 100,000 mobile phones. Internet use has risensharply in recent years, especially in Suva, Lautoka and the main tourist resorts.Dial-up rates are expensive in Fiji. In July 2004 the part- government-ownedAmalgamated Telecom Holdings Ltd (which owns Telecom Fiji, the maintelecoms operator) announced plans to reduce the cost of some overseas callsby up to 68%, as well as to lower some domestic charges.

Most land is held under“native title”

12 Fiji


Energy provision

Fiji s governments have invested heavily in hydroelectricity, which is now a keysource of power. The Monasavu project near Suva was completed in 1983 at acost of F$233m (US$167m). In the early 1990s hydroelectricity accounted foraround 80% of Fiji s total electricity generation. The Fiji Electricity Authority isplanning to set up several smaller hydroelectric schemes and a wind farm,although Fiji will continue to import significant amounts of mineral fuels.

The economy

Economic structure

Main economic indicators, 2003Real GDP growth (%)a 5.0Consumer price inflation (av; %) 4.2

Current-account balance (F$ m)b -145.0Exchange rate (av; F$:US$) 1.90

a Asian Development Bank estimate. b 2002.

Sources: Reserve Bank of Fiji, Quarterly Review; June 2004; Asian Development Bank.

Fiji has the largest and most developed economy of the Pacific island nations,but in global terms it is small and vulnerable to external shocks. After theelected government was toppled in May 2000 the economy appeared to slump,with the Reserve Bank of Fiji (RBF, the central bank) initially reporting acontraction of 9.3% in real GDP for the year. However, revised figures show acontraction in GDP (at factor cost) of just 3.2% in 2000, followed by anexpansion of 3% in 2001 and 4.1% in 2002. GDP growth in 2002 was supportedby an increase of 14% in visitor arrivals to nearly 398,000. Continued growth intourism, strong private consumption growth and robust construction activityunderpinned estimated growth of 5% in 2003. Services accounted for 64% ofGDP in 2002 (latest available figures); wholesale, retail trade, restaurants andhotels contributed 19% of GDP.

Agriculture (sugarcane, livestock, forestry and subsistence) and fishing remainimportant, accounting for around 20% of GDP for much of the 1990s, althoughthis figure had declined to 15.4% by 2002. Sugar remains the most importantcrop, although the proportion of agricultural GDP attributable to sugar fell from46% in 1994 to 29.8% in 2001, reflecting land lease problems (see Politics: Recentpolitical developments), outdated technology and a lack of much-neededcapital investment. Sugar processing accounted for 12.8% of manufacturing GDPin 2001, compared with 26.4% in 1994.

A sizeable garment industry built on concessional marketing arrangements withAustralia suffered from the social and political unrest of 2000 and the decliningvalue of the concessional arrangements as overall tariff levels were reduced. Asa result, many garment factories have closed in recent years and employmentin the industry had dropped to around 15,000 by mid-2004. Australia hasextended by seven years (from 2005), its preferential trade agreement with Fiji

Heavy investment is made inhydroelectricity

The economy recovers afterthe civil coup

Fiji 13


relating to Fijian exports of garments and shoes, although the garment industryhas warned that several thousand jobs will be lost if a three-year tradeagreement with the US is not renewed on its expiry in 2005.

Economic policy

The government consistently ran a budget deficit throughout the 1990s. One ofthe reasons for this was the loan repayments and interest payments needed onthe government s sizeable accumulated debt, which peaked at 11.2% of GDP in1998 (in 2001 these payments amounted to F$208.8m (US$91.9m), or 6.3% ofGDP). Successive governments failed to make good on promises to reduce thebudget deficit, which, having fallen from a peak of 9.1% of GDP in 1997 to 2.7%of GDP in 1998, rebounded to 9.3% of GDP in 2001, reflecting in part the impact(both direct and indirect) of the political crisis. However, in 2002 the budgetdeficit was once again reduced to an estimated 7% of GDP. The government hadhoped to reduce the budget deficit further to 4% in 2003, by means of anincrease in the rate of value-added tax (VAT) from 10% to 12.5%. But a cyclone inJanuary 2003, which caused an estimated F$50m of damage to the island ofVanua Levu, necessitated unplanned spending and resulted in a budget deficitof 6% of GDP in 2003. Damage from flooding on the island of Viti Levu inJune 2004, estimated at F$25m, may once again put the government s deficittarget for the year (3.5%) beyond reach.

The other main policy issue to plague successive governments is how to reversethe slump in investment, caused by the political instability emanating from thecoups of 1987 and 2000, ongoing constitutional uncertainty and the non-resolution of the land lease issue (see Politics: Recent political developments).These factors caused gross fixed capital formation to sink from around 20% ofGDP in the 1970s to 11.5% in 2000. Investment has since picked up, but remainsbelow its previous peak.

The government has been keen to diversify the economy, to decrease relianceon the sugar crop within the agricultural sector, and, more generally, reduce theeconomy s dependence on agriculture. Within the agricultural sector, thegovernment has encouraged the development of the timber industry. Earningsfrom exports of timber and timber products have increased substantially since1986 as plantations run by Fiji Pine, the country s main operator in the sector,have come on stream. A significant resource is available in the form of maturemahogany plantations in several parts of the country, but is locked up byongoing disputes between the government and traditional landholders.

Economic performance

Economic growth has fluctuated widely since the mid-1990s, owing to climaticfactors and the impact of domestic and foreign political events. The worstdrought in recorded history in late 1998 was followed by widespread, cyclone-induced flooding, and in 2000 the overthrow of the elected governmentbrought tourism to a halt. As a result, the economy contracted by 3.2% in 2000,but saw a recovery in 2001-02, when annual growth averaged 3.6%. The

The government attempts todiversify the economy

The growth rate is relativelylow for a developing country

The budget deficit persists

14 Fiji


economy is estimated to have expanded by a further 5% in 2003. Highdependence on imports means that the rate of consumer price inflation islargely determined by trends in import prices and by the movement of the Fijidollar against the currencies of the country s major trading partners. However,wage pressures and the effect of drought on food prices also helped to drive upinflation to 8.1% in 1998. Consumer price inflation fell back sharply in 1999 tojust 0.2%, only to rebound to 3% owing to the political turmoil of 2000.Inflation thereafter moderated to 2.3% in 2001 and 1.6% in 2002, but picked upagain to 4.2% in 2003, owing mainly to the increase in VAT, which pushed upthe prices of food, household durables, alcoholic beverages and tobacco. Theannual rate of inflation had eased to 2.7% by June 2004.

Economic sectors

Agriculture

The economy has traditionally relied heavily on agriculture, with sugar beingby far the most important crop. Sugar has also been an important source offoreign exchange. Industrial action and severe weather conditions saw sugarproduction fall sharply in 1998, and although production recovered strongly in1999 and 2000, the industry s prospects are poor. Many of the indigenous Fijianlandowners are taking back their land on the expiry of leases, despite their lackof experience in sugarcane production. This has caused the cane crop, whichused to yield around 4m tonnes each year, to fall by about 25%. Theproductivity of the industry already lags far behind international standards andfalling investment levels point to further slippage without extensive reforms.Other problems include deteriorating cane quality and adverse trends in worldmarkets. The 2003/04 sugar crushing season was affected by lower quality andquantity of cane (the latter partly the result of damage to crops from CycloneAmi in January 2003), a late start to the season and ongoing problems in thecrushing mills. However, the 2004/05 crushing season, which got under way inmid-2004, began under more positive circumstances, following theappointment of a dynamic new board for the government-owned Fiji SugarCorporation (FSC) and plans to implement long-delayed reforms.

The government had planned for some time to restructure the sugar industry. Itincreased the sugar export tax from 3% to 10% in January 2003 to help fund therestructuring and wrote off its F$34m (US$18m) loan to Fiji Sugar, a state-runcompany that by March 2004 had accumulated losses exceeding F$40m. TheFSC s new board hopes to put the reform plan, devised with the assistance ofconsultants supplied by the Indian government and funded by a loan of aboutF$58m from India, into action by the end of 2004.

Uncertainty about the future of the EU s sugar protocol with the sugar-exporting ACP (African, Caribbean, Pacific) countries remains the main threat tothe sugar industry. Under this agreement, Fiji exports around 165,000 tonnes ofsugar per year (around half its normal output) to the EU at well above worldprices. These subsidies will be scaled back sharply from 2007. The FSC is alsoalarmed at the possible ramifications of a World Trade Organisation (WTO)

The sugar industry is in crisis

Fiji 15


ruling in August 2004 on the preferential treatment given by the EU to Fiji andthe other ACP sugar exporters. The EU has been ordered to end what thegovernments of Australia, Thailand and Brazil claim is discrimination againsttheir sugar industries. According to the EU, the ruling will not removepreferential access rights enjoyed by Fiji, although the FSC is bracing itself foranother reduction in subsidised prices.

Timber and fish mainly tuna have become increasingly important in recentyears. Copra, ginger and coconut oil are also produced for export. Other cropsproduced in Fiji include bananas, rice and various other cereals, vegetables, andpineapples and other tropical fruits. Dairy products, beef, poultry and pork arealso produced for the home market.

Mining and semi-processing

Mining and quarrying contributed 2.3% of total GDP in 2002. The onlysignificant mining activity is the production of gold, which in 2003 accountedfor F$76.5m (US$40.3m) of exports, or 8.1% of domestic export earnings. Goldproduction capacity has increased in recent years, although weak gold prices in1997-2000 and the unfavourable investment climate caused problems. InSeptember 2000 the threat to jobs in the industry persuaded the government togive tax breaks worth F$4.4m to Emperor Gold Mines (the country s largestprivate-sector employer), which had lost more than F$6m in the first threemonths of that year because of low prices, unexpected production difficultiesand financial problems stemming from political upheaval. Despite a sharp risein gold prices, total gold production fell by 6% in 2003 to 113,140 oz, owing tothe lower quality of ore extracted.

Manufacturing

The proportion of GDP accounted for by manufacturing rose gradually, with theexception of a dip in 2000, from 13.4% in 1992 to 15.8% in 2001, but fell to 14.6%in 2002. For many years, the sector was dominated by the processing ofsugarcane and other agricultural products, notably copra, coconut oil andtimber. But from 1985 manufacturing became more diversified with thedevelopment of a garment export industry based on tax breaks and concessionalaccess to the Australian market. However, the garment industry (which accountedfor around 27% of domestic export earnings in 2002), has been adversely affectedby the political and social unrest in 2000 and the gradual erosion of Australianconcessions. Construction contributed 4.4% of GDP in 2002, up from 4.2% in 2001,reflecting in part projects such as the upgrading of Nadi international airport inpreparation for the holding of the South Pacific Games in Fiji in mid-2003.Construction activity remained strong in 2003 and the first half of 2004,supported mainly by infrastructure and tourism-related projects. Localconstruction companies have warned that they do not have enough skilledworkers to proceed with all the resort projects waiting to be started.

The government grants taxbreaks to gold producers

There are hard times ahead forthe garment industry

Timber and fishing arebecoming important

16 Fiji


Financial services

Fiji s monetary policy is controlled by the Reserve Bank of Fiji (RBF, the centralbank), which also has wide regulatory powers over financial servicesproviders. The government effectively withdrew from the commercial bankingsector after bailing out the state-owned National Bank of Fiji in 1998. AnAustralian financial services group, Colonial Ltd, acquired 51% of the bank in1999. It is now known as Colonial National Bank and is the largest network inthe country, with a majority holding in one of the two merchant banks in Fiji.The government is also reviewing the future of its Fiji Development Bank,which is a modest lender for business development, especially in agricultureand tourism. Five foreign-owned commercial banks operate in Fiji and there isa small but developing South Pacific Stock Exchange located in Suva.

Other services

Tourism is a mainstay of the economy and has reduced the country s previousheavy dependence on sugar for foreign-exchange earnings. Visitor numberscollapsed after the political upheaval in May 2000 and some of the biggestresort hotels closed for a time. When relative calm was restored, the industryembarked on a heavy promotional campaign in its main markets, Australia,New Zealand and the US (which together account for two-thirds of tourists),with some success. Visitor arrivals in 2001 were only 348,014, down from arecord 409,955 in 1999, but recovered to 397,859 in 2002, partly helped by theperceived relative safety of Fiji compared with other travel destinations. Despitea poor start to 2003, as the US-led war in Iraq and the spread of Severe AcuteRespiratory Syndrome (SARS) in Asia deterred people from travelling, visitorarrivals for the year reached a record 430,800. The medium-term outlook forthe tourism sector is bright, thanks to the launch of "no-frills" flights from NewZealand and Australia. Substantial investment in at least five new large resortswas under way in mid-2004 to help alleviate a growing shortage of first-classhotel rooms.

The external sector

Trade in goods

Because of severe drought, sugar accounted for only 28% of Fiji s domesticexports in 1998, well below the average of around 35% for the preceding fouryears. Even without drought, that share declined further to 22% in 2001. Therewas an improvement to 24.9% in 2002, but garments have overtaken sugar asthe biggest export earner, accounting for 26% of domestic exports in 2002 and27% in 2003. Re-exports of F$251.7m (US$122m) in 2002 (latest available figures)accounted for 21% of the total figure of F$1.19bn. Machinery and transportequipment accounted for 30% of imports in 2003, followed by importedmanufactured goods (19.9%), food (the share of which surged from 10.6% in 1999to 15% in 2003) and fuels (14.7%). Fiji runs a persistent trade deficit, the value of

Tourism is a mainstay of theeconomy

Stability is restored in thebanking sector

Garments are the largestexport category

Fiji 17


which has climbed gradually over the last five years to reach F$941.5m in 2003(on a customs basis).

Australia is Fiji s most important trading partner, buying 26.5% of its totalexports in 2003, and supplying 34.6% of its imports. The US is also animportant export market, taking 18.1% of Fiji s total exports in 2003, up from10.7% in 1999. Fiji also has important trading relations with the UK (largely as anexport market), New Zealand (largely as a source of imports) and Japan.

Invisibles and the current account

Fiji s healthy surplus on the services account is mainly the result of tourismrevenue. In 1996 the services surplus was (according to national sources)sufficiently large to offset the deficits on merchandise trade and income,resulting in a current-account surplus equivalent to 3% of GDP (the first surplussince 1992), although the current account has been in deficit since 1998. Theimportance of tourism revenue to the balance of payments was made clear in2000, when the slump in tourist numbers following the civil coup helped topush the current-account deficit to F$203.2m (equivalent to 5.8% of GDP),though the deficit declined to F$125.5m (or 3.3% of GDP) in 2001 as the tourismindustry began to recover. Figures for 2002 show a higher current-accountdeficit of F$145m (3.7% of GDP), owing to a increase in the trade deficit toF$593.2m from F$410.4m in 2001. (These figures are not comparable with IMFbalance-of-payments numbers, for which there are no data beyond 1999.)

Capital flows and foreign debt

Australia was traditionally the most important bilateral aid donor to Fiji, buthas been overtaken in recent years by Japan. New Zealand also givessubstantial amounts. The EU and various UN agencies are the most importantmultilateral donors. After increasing in the 1980s, external debt was broughtunder control during the 1990s, with total foreign debt falling each yearbetween 1990 to 1996, when it stood at US$218.1m (World Bank figures). Thedecline in external debt stalled in 1997, reflecting an increase in privately heldshort-term debt. Fiji s total external debt fell to US$188.5m by end-2001, but roseagain to US$209.6m at end-2002 (although it remained stable as a proportion ofGNP at 11.4%). The debt-service ratio rose from 3.5% in 1999 to 6.3% in 2000, buteased back to 5.5% in 2001 before rising again to 5.9% in 2002.

Foreign reserves and the exchange rate

Foreign-exchange reserves rose between 1993 and 1999, and by acting swiftly toprotect the reserves after the coup in May 2000, the Reserve Bank of Fiji (thecentral bank) succeeded in preventing any dramatic fallout. At the end of 2000total foreign reserves excluding gold stood at US$411.8m (IMF figures), but bythe end of 2002 they had drifted down to US$358.8m. Rising tourism revenuehelped foreign reserves recover to US$423.6m at end-2003. National figures

Tourism underpins the surpluson services

Australia and Japan are themain bilateral donors

18 Fiji


show that foreign reserves stood at F$732m (US$407m) at end-June 2004,equivalent to 4.8 months of import cover.

In response to the competitive pressures placed on Fiji by the Asian financialcrises of 1997-98, and more specifically as a result of significant depreciations inthe region s currencies, the Fijian government announced a 20% depreciation ofthe Fiji dollar in January 1998. At first, the currency weathered the politicalcrisis of mid-2000 reasonably well, with the Fiji dollar standing at F$2.078:US$1at end-June. But by the end of June 2001 the currency had fallen toF$2.309:US$1. It recovered ground slowly, ending 2002 at F$2.066:US$1, beforeappreciating strongly during 2003, to end the year at F$1.721:US$1, reflecting theweakness of the US dollar.

The currency has firmedsince 2002

Fiji 19


Regional overview

Membership of organisations

The Pacific Islands Forum (PIF) is the most important regional organisation. Itwas formerly known as the South Pacific Forum, which in turn developed fromthe South Pacific Bureau for Economic Co-operation, established more than 40years ago. The Forum officially adopted its new name at its annual meeting in2000, recognising that not all of its members are in the "South" Pacific since theadmission of former US trust territories north of the equator. The Forum wascreated in 1971 in response to the spread of self-government in the region andthe need of the new states to have a political forum. The current members areAustralia, the Cook Islands, the Federated States of Micronesia, Fiji, Kiribati,Nauru, New Zealand, Niue, Palau, Papua New Guinea (PNG), the MarshallIslands, Samoa, the Solomon Islands, Tonga, Tuvalu and Vanuatu. The Forummeets each year at head of state/government level, and immediately after themeeting ministers spend two days in consultation with the Forum dialoguepartners Canada, China, the EU, France, Indonesia, Japan, Malaysia, thePhilippines, South Korea, Thailand, the UK and the US. A separate dialoguesession is held with Taiwan by the Forum members that have diplomaticrelations with it.

The Forum Secretariat (based in Suva, the capital of Fiji, with a staff of about70), administers a series of programmes aimed at promoting regional co-operation among member states through trade, investment, economic develop-ment, and political and international co-operation. It has also developed agrowing portfolio of technical training programmes as part of broader initia-tives for institutional strengthening, good governance and accountability.Operations are funded by contributions from member governments anddonors. Current donors are the dialogue partners, together with Australia, NewZealand, the Commonwealth Secretariat and Germany. Since October 1994 theForum has had observer status at the UN General Assembly. Island govern-ments have used the PIF and other regional forums to make their voices heardon other issues, such as climate change and the impact of rising sea levels, andshipments through the Pacific of radioactive materials, notably by the UK-basedcompany, British Nuclear Fuels (BNF). An extensive sea-level monitoringnetwork has been established by Flinders University in Australia, and the PIFsecretariat has, for several years, been negotiating with BNF and the otherparties involved in nuclear shipments and reprocessing, over an agreement tocover possible mishaps.

In a surprise development and a break with tradition, Greg Urwin, anAustralian and a former high commissioner to Fiji, Samoa and Vanuatu, wasappointed secretary-general-designate of the PIF at the organisation s annualsummit in August 2003. Mr Urwin replaced Noel Levi, from PNG. The post ofsecretary-general, the senior regional position, had previously always beenfilled by a Pacific islander, and the leaders of some PIF member states wereunhappy at the aggressiveness of Australian lobbying and suspicious of

The new PIF secretary-generalis an Australian

The PIF is the leading regionalorganisation

20 Fiji


Australia s motives in seeking the top position in the organisation. Nevertheless,Mr Urwin, who is married to a Samoan, was finally appointed in a secretballot, and he took office in January 2004.

The issues agreed at the 2003 and 2004 annual summits give an indication ofthe future direction of debate. Central to the agenda are issues such as pooledregional governance, greater co-operation on regional air transport, security andcrossborder crime, and the role of foreign aid, as well as the perennial issues ofclimate change and the impact of globalisation and trade liberalisation on smallisland economies. A specially convened meeting of the PIF s 16 governmentleaders in Auckland, New Zealand in April 2004 agreed on a "Pacific Plan" toachieve closer political and economic co-operation between PIF members andto intensify the efforts of the Fiji-based PIF secretariat in implementing leaderswishes. For the first time the PIF secretary-general has the authority, inconsultation with the incumbent PIF chair, to call meetings of leaders or foreignministers for speedy action in dealing with a crisis. Some regional officials hadhinted before the meeting that the PIF could be turned into an EU-styleinstitution, although the idea was quickly dismissed by several island leaders aspremature and probably unworkable given the region s huge geographic spread,the small size and weakness of most of the island economies, scant resources,and barriers such as high transport and energy costs and cultural differences.

Apart from a mandate empowering the secretary-general to initiate a speedyresponse to a crisis a move influenced by the near-collapse last year of theSolomon Islands the Pacific Plan does little more than reaffirm existing PIFpriorities and instruct the secretariat to become more active in executing them.Key goals are as before: to promote economic growth, sustainable development,good governance and security. However, Mr Urwin s arrival does seem to havebreathed some fresh air into an organisation rendered somewhat stagnantunder the former leadership. Details of the grand vision floated by the leadersin April, and confirmed by the PIF annual summit in Apia, Samoa in August,will be devised in the coming months by a task-force.

A second regional organisation is the Pacific Community (formerly the SouthPacific Commission), formed in 1947 by Australia, France, the Netherlands, NewZealand, the UK and the US. They were then the colonial powers in the regionand insisted that the organisation be non-political, dealing only with technicalissues and matters of practical co-operation. It now has 26 members andcontinues as a non-political body, offering technical advice, assistance, trainingand research. Its headquarters are in Nouméa, New Caledonia, with asubstantial presence in Suva. It is a bilingual organisation (English and French),with a staff of around 175 and a limited budget, augmented by special fundingfor particular projects. It has an integrated work programme based around thedevelopment of the region s land-based, marine-based and human resources.

The secretary-general of the Forum Secretariat chairs the Council of RegionalOrganisations of the Pacific (CROP), which brings together the Forum and thePacific Community, as well as six other regional organisations: the ForumFisheries Agency (based in Honiara, Solomon Islands); the Pacific IslandsDevelopment Programme (based in Hawaii); the South Pacific Regional

The Pacific Community

Other regional organisations

Fiji 21


Environment Programme (based in Apia); the South Pacific Applied GeoscienceCommission (based in Suva); the South Pacific Tourism Organisation (alsobased in Suva); and the University of the South Pacific (based in Suva, but withcampuses and centres throughout the region).

A further regional organisation, although narrower in membership than eitherthe PIF or the Pacific Community, is the Melanesian Spearhead Group (MSG),which brings together the Solomon Islands, Papua New Guinea, Vanuatu, Fijiand the New Caledonia independence coalition, the Front de LibérationNationale Kanak Socialiste (FLNKS). The MSG aims to promote co-operationbetween members in economic, political and cultural matters, and isimplementing a free-trade agreement (FTA) between its members.

The 14 island members of the PIF are also members of the 78-state ACP (Africa,Caribbean and Pacific) group within the Cotonou Agreement. This agreement,which was ratified in February 2003, is the successor to the Lomé Conventionand gives the ACP nations preferential trading access to the EU market and ashare in EU aid programmes and other assistance. The secretariat of the PIFprepared a joint position for negotiations between the PIF members and the EUprovided for under the agreement. Negotiations opened in September 2004 andare scheduled for completion before the end of 2007.

The Cotonou Agreement, which is to last 20 years, has a strong politicaldimension. As well as respect for human rights, democratic principles and therule of law, which were all essential components of the Lomé Convention, theACP countries have also agreed reluctantly to promote good governance andto combat corruption and illegal immigration into the EU.

Under previous conventions, ACP products, whether agricultural or industrial,entered the EU duty-free, but four agricultural products beef, sugar, bananasand rum were subject to a more restrictive system of tariff quotas. The newagreement offers a negotiating framework for tailor-made regional free-tradeagreements (RFTAs), under which ACP countries, preferably within existingeconomic groupings, will gradually open their domestic markets to Europeanproducts. Given the adjustment costs involved, a preparatory period of eightyears has been agreed, during which the old system of preferences will con-tinue to apply.

In any event, Kiribati, Samoa, the Solomon Islands, Tuvalu and Vanuatu, whichare classified as least developed countries (LDCs), will still be given the optionof entering the EU generalised system of preferences (GSP). Unlike the LoméConvention, the GSP, which benefits all developing countries, complies withthe rules of the World Trade Organisation (WTO), because it is based on thedual principles of non-reciprocity and non-discrimination.

The regional economy

The 22 island countries of the Pacific region are spread across more than 30msq km, but occupy less than 2% of that area. Although almost all of thecountries are politically independent and have their own governments and

The region is diverse

The EU-ACP Convention

22 Fiji


heads of state, aid from the former colonial powers, and from other bilateraland multilateral donors, remains important.

The importance of aid reflects the relative weakness of most of the economiesin the region, as well as problems of poverty, law and order, and poorgovernance. Agriculture, in particular the export of agricultural commodities, iscentral to the economies of many of the Pacific islands. Other importantindustries are fishing and tourism. Fiji, PNG and New Caledonia haveimportant mining industries, but none of the other small island communitieshas significant natural resources. The high degree of dependence on suchsectors renders the islands vulnerable to external shocks, the weather (mostisland countries are vulnerable to cyclones, among other things) and thevagaries of commodity markets.

The economic performance of trading partners also has a direct and usuallyrapid impact on the island economies. Tourist arrivals fell in the wake of theterrorist attacks on the US on September 11th 2001, although not to the extentinitially feared. Inbound tourism rose once again in 2002, partly as a result ofthe October bombings in Bali, Indonesia, which had the effect of divertingsome tourists to the Pacific. Tourist arrivals rebounded in 2003 and in the firsthalf of 2004, with Fiji benefiting most from the recovery, and the pick up intourism is expected to continue, thanks to perceptions of the region as beingsafe and peaceful, the increase in air capacity and the expansion of low-costairline services. The recent recovery in world gold and nickel prices has alsobenefited Fiji s small gold production industry and New Caledonia s nickelindustry, which is attracting a high level of new investment. However, politicalinstability within the region, and in some cases the difficulties in obtainingsecure titles to land, are serious obstacles to investment and growth.

Regional governments, including those of Australia and New Zealand, have forsome time been intensifying their efforts to deal co-operatively with a range ofnew problems arising from organised crime and the impact of globalisation,but the smaller states lack the ability and resources to deal effectively withissues such as the smuggling of drugs, arms and people through and into theregion, overpopulation, environmental degradation, money-laundering andcorruption. The governments of Australia and New Zealand have beenreluctant to be seen to be intervening in their neighbours affairs in a "neo-colonialist" fashion. Although some in the region view greater intervention byAustralia in the region with suspicion, most island leaders are now moreaccepting of the country s higher profile in the region. This is largely thanks tothe successful intervention in July 2003 of an Australian-led force in thetroubled Solomon Islands and the tact with which the new head of the PIF,Mr Urwin, has so far handled the key issues of reform, improved governanceand co-operation since his controversial appointment. Island governments arenow largely resigned to the fact that flows of aid are conditional on theimplementation of reforms to their government and economic systems.

The island states generally depend on patrol and surveillance operationscarried out by Australia, New Zealand and France (from New Caledonia).Regular meetings are held between law enforcement, customs, immigration and

Islands struggle with problemssuch as crossborder trade

Economies dependent on aidand external conditions

Fiji 23


legal officials to review developments and exchange information. However, thejoint implementation of a modernised legislative framework and co-ordinatedborder control systems has been slow. Six island jurisdictions have offshorefinancial centres (tax havens) to augment their meagre revenue. Most of thesehave implemented new laws following the threat of sanctions, made in 2000by the Paris-based Financial Action Task-Force (FATF), which operates underOECD auspices, unless regulatory regimes were strengthened to minimiseopportunities for money-laundering and other criminal activities.

The Pacific Island Countries Trade Agreement (PICTA), first envisaged at theinaugural meeting of the Pacific Islands Forum in 1971, came into force on April13th 2003. The FTA, which will be phased in over the next ten years, aims toremove gradually trade barriers such as import duties, quotas and tariffsbetween the 14 PIF island nations, to help to boost trade, promote regionalintegration and improve the economic efficiency of the island economies.There are, however, some concerns about the benefits of a free-trade arearelative to the costs, especially given the low level of intra-island trade (whichaccounts for just 3% of total trade within the region) and the impact ongovernment revenue of lower export taxes and import duties, which representthe main source of income for most island governments. The main beneficiaryof the FTA is likely to be Fiji, which has the most developed economy and isthe biggest trader with the other islands.

Closely connected with PICTA is the Pacific Agreement on Closer EconomicRelations (PACER), which provides a framework for the future development oftrade relations between the 16 PIF countries. Under this agreement, the twodeveloped PIF members, Australia and New Zealand, have agreed to providetechnical assistance to and preferential market access for products from thedeveloping PIF members, which in return have assured Australia and NewZealand that they will not be disadvantaged by any trade arrangements thedeveloping PIF members may enter into with other developed countries.

A Pacific free-trade area hasbeen established

24 Fiji


Appendices

Sources of information

Bureau of Statistics, Current Economic Statistics (quarterly), Suva

Ministry of Finance, Budget Speech (annual), Suva

Reserve Bank of Fiji, Annual Report, Suva

Reserve Bank of Fiji, Quarterly Review, Suva

Asian Development Bank, Key Indicators of Developing Asian and PacificCountries (annual)

The Economy of Fiji, Performance Management and Prospects, AustralianGovernment Publishing Service, Dwyer Leslie Pty Ltd

Foreign and Commonwealth Office, Fiji Annual Report, HMSO, London

IMF, International Financial Statistics (monthly)

OECD, Geographical Distribution of Financial Flows to Aid Recipients (annual)

World Bank, Global Development Finance (annual)

Fiji government online, http://www.fiji.gov.fj/

Fiji Islands Statistical Bureau, http://www.statsfiji.gov.fj/

Fijilive.com, news magazine, http://www.fijilive.com

Pacific Beat, Radio Australia s Pacific Islands website, http://www.abc.net.au/ra/pacbeat/

Reserve Bank of Fiji, http://www.reservebank.gov.fj/

Reference tables

These reference tables provide the most up-to-date statistics available at the date ofpublication.

Estimated population(mid-year; ‘000)

1998 1999 2000 2001 2002Total 796.7 806.3 810.4 814.7 825.8

Source: Reserve Bank of Fiji.

National statistical sources

International statistical sources

Internet sites

Fiji 25


Gross domestic product by sector(F$ m; constant 1989 prices)

1998 1999 2000 2001 2002Agriculture, forestry & fishing 298.9 346.7 343.7 326.9 334.0

Mining & quarrying 50.2 59.5 51.1 52.0 50.1Manufacturing 287.9 315.5 295.9 330.1 316.9

Electricity & water 81.7 89.8 87.6 93.1 100.8Construction 94.7 99.9 88.4 87.9 95.1Wholesale & retail trade, restaurants & hotels 335.6 368.9 382.0 395.5 414.3

Transport & communications 261.6 303.0 261.8 279.1 314.0Finance & insurance 236.3 253.6 248.5 237.7 248.8

Community, social & personal services 363.5 367.2 373.9 382.4 401.9Others 15.3 16.8 16.2 16.9 17.4Imputed bank service charge -118.4 -131.4 -125.8 -116.8 -123.4

Total 1,907.3 2,089.4 2,023.1 2,084.7 2,170.1

Source: Reserve Bank of Fiji, Quarterly Review.

Government finances(F$ m unless otherwise indicated)

1997 1998 1999 2000 2001a

Total revenue & grants 803.5 1,142.2 1,004.5 911.0 900.5 Indirect taxes 423.8 452.8 518.5 420.0 456.1 Direct taxes 241.0 271.0 270.0 293.5 284.4 Non-tax revenue 129.3 124.8 170.8 180.7 155.5 Capital revenue 4.4 289.9 43.6 15.8 4.1 Grants 4.9 2.6 1.7 1.1 0.5

Total expenditure 1,082.0 1,230.3 1,204.1 1,141.6 1,257.0 Wages & salaries 354.9 382.8 403.2 429.1 440.7 Charges on public debt 180.2 368.5 287.8 214.0 208.8 Capital expenditure 262.4 142.6 159.9 146.2 186.7Budget balance -278.6 -89.1 -199.6 -230.6 -356.5 % of GDP -9.1 -2.7 -5.4 -6.6 -9.3

a Provisional.


Gross domestic product(factor cost)

1998 1999 2000 2001 2002Total (F$ m)At current prices 2,807.2 3,136.8 3,070.9 3,300.3 3,462.9At constant (1989) prices 1,907.3 2,089.4 2,023.1 2,084.7 2,170.1 % change, year on year 1.5 9.6 -3.2 3.0 4.1Per head (F$)At current prices 3,523.4 3,890.5 3,789.6 4,050.9 4,193.3At constant (1989) prices 2,394.0 2,591.3 2,496.4 2,558.9 2,627.9 % change, year on year 0.3 8.2 -3.7 2.5 2.7


26 Fiji


Gross domestic product by expenditure(F$ m; current market prices)

1999 2000 2001 2002 2003 a

Private consumption 1,976.2 2,069.0 2,188.0 n/a n/aGovernment consumption 607.7 633.7 655.4 n/a n/a

Gross fixed investment 507.2 403.1 516.8 n/a n/aStockbuilding 40.0 40.0 40.0 n/a n/a

Exports of goods & non-factor services 2,210.3 2,092.2 2,136.0 n/a n/aImports of goods & non-factor services 2,349.5 2,355.0 2,327.0 n/a n/a

Statistical discrepancy 670.4 621.8 554.7 n/a n/aGDP 3,662.3 3,504.8 3,763.9 3,969.3 4,396.3

a Provisional.

Source: Asian Development Bank, Key Indicators of Developing Asian and Pacific Countries.

Inflation(year-end)

1999 2000 2001 2002 2003Consumer price index (1993=100) 118.6 122.2 125.0 127.0 132.3 % change, year on year 0.2 3.0 2.3 1.6 4.2


Money and credit(F$ m unless otherwise indicated; end-period)

1999 2000 2001 2002 2003Money (M1) incl others 694.5 593.7 620.9 712.0 900.6 % change, year on year 40.6 -14.5 4.6 14.7 26.5

Quasi-money 851.6 920.1 846.2 870.6 1,080.5Money (M2) 1,546.1 1,513.8 1,467.1 1,582.6 1,981.1 % change, year on year 14.2 -2.1 -3.1 7.9 25.2Domestic credit 1,137.5 1,358.8 1,324.6 1,391.7 1,662.9 Claims on central government 3.3 74.2 122.8 158.0 236.4 Claims on public sector 137.1 138.7 120.0 97.7 100.1 Claims on private sector 997.0 1,145.9 1,081.8 1,136.1 1,326.4Net foreign assets 922.5 827.9 761.8 628.0 671.0

Source: IMF, International Financial Statistics.

Production of selected products('000 tonnes unless otherwise indicated; calendar years)

1999 2000 2001 2002 2003Sugarcane 3,747 3,598 3,077 3,216 2,817Paddy rice 17 13 15 13 15

Fish 21 21 19 23 n/aCopra 16 13 17 14 9

Gold (kg) 4,429 3,794 3,865 3,726 3,517Silver (kg) 2,125 1,462 1,934 1,903 1,247

Cement 99 87 98 102 100Flour 51 55 60 59 64

Source: Asian Development Bank, Key Indicators of Developing Asian and Pacific Countries.

Fiji 27


Visitor arrivals1999 2000 2001 2002 2003

Visitor arrivals 409,955 294,070 348,014 397,859 430,800 Australia 118,272 76,883 98,213 123,606 141,873 US 62,131 52,534 57,711 58,815 58,323 New Zealand 72,156 49,470 66,472 68,293 75,016 UK 40,316 29,215 30,508 43,393 49,794 Japan 37,930 19,674 20,411 26,382 23,464


Main domestic exports(F$ m; fob)

1999 2000 2001 2002 2003Sugar 263.2 237.5 222.0 235.0 230.7

Garments 322.1 332.9 313.9 245.4 252.7Gold 76.4 75.7 85.4 78.1 76.5

Fish 57.5 88.8 98.4 89.9 85.0Lumber 35.6 44.9 41.3 41.5 33.2

Molasses 12.4 9.7 9.5 12.4 10.4Coconut oil 9.7 3.6 2.4 5.9 4.0Others 170.7 232.4 234.8 234.9 250.3

Total 947.6 1,025.5 1,007.8 943.1 942.6


Main imports(F$ m; cif)

1999 2000 2001 2002 2003Manufactured goods 431.5 486.4 417.4 409.2 440.8

Machinery & transport equipment 483.8 345.5 413.2 451.1 664.4Food 189.3 220.7 310.8 337.6 332.5

Mineral fuels 273.0 298.1 271.7 330.3 325.0Chemicals 110.2 117.4 143.3 157.7 162.0

Oils & fats 16.1 13.9 16.1 16.3 20.8Beverages & tobacco 14.2 10.2 13.7 16.0 16.9Crude materials 9.6 15.9 13.5 14.4 16.2

Miscellaneous manufactured articles 234.7 239.2 200.2 213.8 228.6Miscellaneous transactions 16.3 9.1 7.2 6.7 7.2

Total 1,778.7 1,756.4 1,807.9 1,953.3 2,214.6


28 Fiji


Main trading partners(% of total)

1999 2000 2001 2002 2003Exports to (re-exports & domestic exports):Australia 43.4 27.8 25.6 23.3 26.5US 10.7 17.1 22.5 19.5 18.1UK 11.3 15.9 15.1 15.3 14.6Pacific Islands 8.0 8.7 11.2 8.2 10.0New Zealand 4.0 4.2 4.2 4.8 4.5Japan 3.1 3.7 5.0 5.7 3.4

Imports from:Australia 41.1 46.7 39.8 42.3 34.6New Zealand 13.3 16.2 18.7 19.2 17.3Singapore 4.4 5.7 5.5 5.4 10.7Japan 6.4 4.5 4.7 4.7 4.9US 12.4 4.5 5.0 6.6 3.6


Balance of payments, national series(F$ m unless otherwise indicated; accruals basis)

1998 1999 2000 2001 2002Goods: exports fob 839.5 1,047.0 1,129.2 1,101.5 1,065.7Goods: imports fob -1,221.1 -1,540.4 -1,518.8 -1,511.9 -1,658.9

Trade balance -381.6 -493.4 -389.6 -410.4 -593.2Services balance 351.9 400.5 167.7 232.6 351.2

Income balance -161.9 -173.3 -68.9 -169.6 -170.3Transfers balance 174.6 125.3 87.6 221.9 267.3

Current-account balance -17.0 -140.9 -203.2 -125.5 -145.0Current-account balance (% of GDP) -0.5 -3.8 -5.8 -3.3 -3.7


Fiji 29


Balance of payments, IMF series(US$ m)

1995 1996 1997 1998 1999Goods: exports fob 519.6 672.2 535.6 428.9 537.7

Goods: imports fob -761.4 -839.9 -818.9 -614.6 -653.3Trade balance -241.8 -167.7 -283.2 -185.6 -115.6Services: credit 564.1 612.6 667.9 503.2 525.1Services: debit -398.6 -412.9 -405.6 -352.0 -389.8Income: credit 55.4 63.6 61.7 54.6 47.3

Income: debit -94.6 -91.6 -99.2 -110.6 -82.8Transfers: credit 36.0 44.1 54.6 45.3 42.7

Transfers: debit -33.1 -34.6 -30.3 -14.7 -14.2Current-account balance -112.7 13.5 -34.1 -59.9 12.7Direct investment abroad 2.8 -9.8 -30.0 -62.6 -53.0

Direct investment in Fiji 69.5 2.4 15.6 107.0 -33.2Other investment assets 12.0 -25.9 -21.1 -66.6 -62.2

Other investment liabilities 3.9 36.8 20.4 51.0 44.4Financial-account balance 88.3 3.6 -15.1 28.7 -104.0Capital account credit 120.1 114.5 88.9 100.6 59.3Capital account debit -33.1 -43.8 -40.5 -40.0 -45.3Capital-account balance 87.0 70.8 48.5 60.6 14.0Net errors & omissions 30.4 -9.7 -24.3 -24.6 32.5Overall balance (incl errors & omissions) 93.0 78.1 -25.1 4.9 -44.9


External debt(US$ m unless otherwise indicated; debt stocks as at year-end)

1998 1999 2000 2001 2002Total external debt 192.9 236.2 209.1 188.5 209.6 Long-term debt 172.3 218.8 193.5 172.6 172.9 Short-term debt 20.7 17.4 15.6 15.9 36.7 Use of IMF credit 0.0 0.0 0.0 0.0 0.0Public & publicly guaranteed long-term debt 140.1 194.1 174.4 159.6 165.4 Official creditors 140.0 169.4 155.3 146.6 157.9 Private creditors 0.1 24.7 19.1 13.0 7.5Total debt service 32.8 38.2 31.6 25.3 27.3 Principal 23.9 29.6 22.9 17.8 20.1 Interest 8.9 8.7 8.7 7.5 7.2Ratios (%)Total external debt/GNP 12.3 13.4 13.0 11.4 11.4Debt-service ratioa 3.5 3.5 6.3 5.5 5.9Short-term debt/total external debt 10.7 7.4 7.5 8.4 17.5Concessional debt/total external debt 12.6 8.5 9.0 9.2 12.5

Note. Long-term debt is defined as having original maturity of over one year.

a Debt service as a percentage of goods and services exports earnings.

Source: World Bank, Global Development Finance.

30 Fiji


Net official development assistance(US$ m)

1998 1999 2000 2001 2002Bilateral 35.8 38.0 28.7 24.0 31.3 Japan 19.2 20.9 15.1 12.7 18.7 Australia 11.2 11.0 10.7 8.5 8.6 New Zealand 4.4 4.8 2.1 1.8 2.8 France 0.6 1.2 0.7 0.6 0.8 Germany 0.1 0.2 0.1 0.2 0.0Multilateral 0.6 -3.6 0.2 1.8 2.5 EU -0.9 -7.2 -2.8 -1.3 -0.8 UN Technical Assistance 1.2 1.9 1.7 0.9 1.2 UN Development Programme 0.4 0.3 0.2 0.1 0.1 Other donor countries 0.4 0.4 0.3 0.2 0.3Total 36.8 34.9 29.1 26.0 34.1

Source: OECD, Geographical Distribution of Financial Flows to Aid Recipients.

Foreign reserves(US$ m; end-period)

1999 2000 2001 2002 2003Foreign exchange 402.55 386.45 341.50 331.50 393.35SDRs 5.63 5.82 6.04 6.83 7.70

Reserve position in the IMF 20.50 19.52 18.85 20.49 22.57Total reserves excl gold 428.69 411.79 366.39 358.82 423.62Gold (national valuation) 0.24 0.23 0.23 0.29 0.35

Total reserves incl gold 428.93 412.02 366.62 359.11 423.97


Exchange rates(currency unit per F$; end-period)

1999 2000 2001 2002 2003US$ 0.509 0.458 0.433 0.484 0.581A$ 0.781 0.826 0.847 0.858 0.775NZ$ 0.975 1.038 1.042 0.922 0.888

¥ 52.03 52.32 56.79 57.42 62.18


Editors: Kate Allard (editor); Graham Richardson (consulting editor)Editorial closing date: September 8th 2004

All queries: Tel: (44.20) 7830 1007 E-mail: [email protected]

fiji - iuj.ac.jp · pdf filecountry profile 2004 fiji this country profile is a reference...

Documents