Islands Business - AUSTRALIA-FIJI BUSINESS COUNCIL

Remarks by Prime Minister Laisenia Qarase at the 19th Australia Fiji Business Forum at Sunshine Coast, Queensland.

Prime Minister Laisenia Qarase.

Let me begin by wishing you all a happy Fiji Day! It was 36 years ago that we ceased to be a colony of the United Kingdom and took our place in the family of nations. That defining moment in our history is now marked by four days of celebrations.

I launched the programme of activities at a media function in Suva and took part in the official opening ceremony. On Saturday I was honoured to be chief guest at an Independence Day function in Brisbane, hosted by Fiji people living in Queensland.

Today I, and the Ministers here with me, mark our anniversary of nationhood by taking part in a forum that is directly associated with our plans, our hopes and dreams for the future.

The agenda of this meeting is absolutely crucial for creating further momentum for our new campaign to boost the economy of Fiji, to raise incomes and lift standards of living. This campaign was inaugurated successfully at a recent National Economic Summit in Suva, which has set a clear course for our progress in the next five years.
Society leaders, including a large number from the private sector, joined with Ministers and senior officials in finalising a detailed Strategic Development Plan.

It is an outstanding example of the Government-community partnership principle which defines our approach to leadership.

The Plan is the culmination of several months of effort by nine working groups. It is to be submitted to Parliament in November.

A notable, and indeed historic, feature of the Plan is that it reflects the joint ideas and thinking of the members of our new Multi-Party Cabinet. This has Ministers from the ruling SDL party and the Fiji Labour Party, which was previously in Opposition.

It is the focal point of a new method of Government which brings together elected leaders of our different communities to direct the affairs of the country. This is what Fiji has been waiting for. It gives us an opportunity we have never had before to overcome our differences and go forward with united purpose.

The Cabinet and the Government are guided by a common vision of peace, prosperity, unity and stability. The Strategic Development Plan contains the many parts of that vision.

Cabinet Members used the manifestos of the SDL and the Labour Party for their reference points. We found that on most subjects our positions were similar. We discussed areas of difference; the draft plan is the result of the consensus reached by the Ministers.

Ladies and gentlemen, much of the plan will concentrate on our push to achieve consistent economic growth of at least five per cent of gross domestic product, through increased private investment and exports.

The Economic Summit stressed that political stability is essential for orderly advancement in accordance with democratic principles and constitutional law.

It saw the Cabinet, with its wide popular support, as a cornerstone of this.

I repeat to you the assurance I have given to the country on a number of occasions.

My commitment to the success of the Cabinet is absolute. I am pleased by the spirit of co-operation among Ministers and their dedication to the common interests of the nation.

Political issues have naturally arisen about the operations of Cabinet, the convention of collective responsibility and Parliamentary voting.

I am in regular liaison with Mr Chaudhry, the Labour leader, to reach agreement on ground rules for both Cabinet and Parliament. He has received a draft of my initial thinking and I have a paper from Mr Chaudhry. We met again last Thursday and look forward to continuing our dialogue.

Ladies and gentlemen, the Strategic Development Plan covers our aspirations and goals in virtually all facets of national life.

It will give Government the policies, the guidance and the benchmarks for taking Fiji through to 2011.

Australia is Fiji's biggest single source of trade, foreign capital and visitors for our tourism industry. It will, therefore, be a central player in the drive to reach economic targets set by the Plan.

The roles of the Fiji-Australia/Australia Fiji Business Councils are critical in providing and strengthening the vital private sector links between our countries.

I will touch now on some of the issues connected with the economy and growth. These are of special interest to me, as the Minister directly responsible for investment.

The Governor of the Reserve Bank of Fiji will shortly offer a broad overview of our economic status and the challenges that face us.

My summary is that we have made good progress in national reconstruction in the last six years. I have given updates on this regularly to your councils.

You will know that we have recorded five consecutive years of growth. We actually surpassed five per cent in 2004. We must now avoid fluctuations and accomplish this consistently.

For many years the Fiji economy suffered from chronically low or declining investment. We have finally reversed this cycle.

The investment rate has risen progressively in recent years, from below 11 per cent of GDP.

The Economic Summit heard that it has climbed to a new level of 18 per cent. The contribution of private capital to this continues to grow. It is up from three per cent to eight per cent.

We must ensure, however, that private investment comprises the bulk of our target of 25 per cent.

Based on the number of projects under way and those at an advanced stage of planning, we have excellent prospects of meeting that objective. Australian companies are expected to be at the forefront of investment growth.

In our fiscal management, we are reducing the deficits we deliberately incurred in the period after 2000 as part of an expansionary initiative to generate new and expanded economic activities.

We are determined that the deficit will not significantly exceed two per cent of GDP in any year of the Strategic Plan period.

Government's operating expenditure is to be substantially reduced. The recommendation from the Summit is for the cost of the Civil Service to be lowered from 11 per cent to seven per cent of GDP.

The Multi-Party Cabinet has already approved a schedule of corporatisation and privatisation programmes which will cut the size of the Civil Service by around 5,000 positions. Savings resulting from this will be re-deployed to increase Government's investment budget in infrastructure.

Our public debt, which is classified in the medium category, will be cut back. Inflation is low and under control.
Although employment figures are expanding steadily, we have not yet reached the point where all school leavers can find wage-paying work.

High local confidence has created a degree of consumer demand which is producing an increase in imports.

Simultaneously, the exports we need to underpin sustainable growth, have been falling, due in part to the destructive effects of globalisation generally on small developing countries.

This situation represents a test of our ability to bring about a complete rebirth of Fiji's export business. We will accomplish this by carefully selecting and selling to markets in which we can compete effectively.

One of the Economic Summit's most important decisions was its endorsement of Fiji's first comprehensive export strategy. This, too, was the product of close consultation between private business and the Government. We have had valuable support from the Commonwealth Secretariat and the International Trade Centre.

The strategy concentrates initially on 13 areas as the foundation for producing new foreign exchange earnings. These include tourism, which is experiencing the biggest boom in its history, marine products, sugarcane and sugar, forestry, garments, information technology and agriculture.

There is an action plan for each of these, with clear objectives and key performance indicators. Progress will be measured eventually by a National Export Council.

We will continue to streamline and improve investment approval procedures and cut back on red tape.

A newly-appointed Prime Minister's Think Tank of top business people is engaging on this and addressing other issues. They will add to the valuable work done by the first Think Tank in the term of our last Government.

Although there are still some investment impediments in the bureaucracy, the reforms we have made to this point are making a difference.

They have won international recognition by the World Bank. It recently ranked Fiji at 31st position, out of 175 countries, in a survey on ease of doing business. This was an improvement on our 2005 rating.

Encouraging as this is, we should set our sights on getting into the top 10.

When I mentioned this at the Summit, a delegate suggested that this should become a key performance indicator for the Prime Minister! But I noticed the idea didn't make it into the communiqué!

I can confirm that many investors are confused by inconsistencies in the interpretation and application of investment incentives. This also came out at the Summit and is no doubt echoed by members of your joint councils.

I have, therefore, asked the Hon. Minister for Commerce and Industry to establish a small and knowledgeable group of people from the private sector and relevant Government agencies, to consider this issue.

The group's terms of reference include recommending specific investment incentives for agricultural exports and how these can operate efficiently.

This is consistent with a new focus on large scale agriculture. Local equity requirements for projects in this category have already been eased.

The new advisory group will also make proposals to encourage purchase of local goods and services for investment projects.

I would like the group to complete its work within six months, so that the Minister can make a submission for action by the Cabinet Sub-Committee on Investment, which I chair.

A host of possibilities in Fiji are opening up for Australian firms and entrepreneurs. Many have entered our tourism industry, which continues to expand.

Some very large schemes have been completed and planning for others is well advanced.

I anticipate announcements soon about a resort which envisages development on a scale at least equivalent to Denarau Island, our most successful single centre for foreign investment. The backing for this major project is from New Zealand. It will involve expenditure of more than $2 billion.

There is, however, a broader horizon to explore.

We have, for instance, approved incentives for the establishment of retirement villages. The first of these is moving ahead after overcoming some initial difficulties.

I understand there is a substantial market to provide residential and leisure amenities for Australian retirees.

There is obvious scope here for Australian companies to take advantage of what we offer.

Australian capital has been attracted to our nascent ICT sector, which is projected to become a large provider of employment in call centres and business process outsourcing. Again, we have a range of good incentives and there are numerous business opportunities.

An Australian company is a partner in a new hydroponics farm to tap the lucrative and increasing market for vegetables. The farm expects to deliver its first harvest this month.

Ladies and gentlemen, I can tell you that I am confident about the future of our sugar industry.

With the support of India, the European Union, the Asian Development Bank, and Australia, improvements are being made to the mills and there is an on-going programme to lift farm productivity. A co-generation energy project will create new income for the industry while contributing to the reduction in Fiji's dependence on imported fossil fuel.

We are seeking Australia's assistance in the provision of technical and scientific expertise in the industry's Research Institute.

I would like to comment now on the forum's theme of Closer Fiji- Australia Economic Relations. This has great relevance in the context of the discussions I had with Australia Government leaders during my official visit to Australia last month.

Without question, the most successful outcome of that visit and my discussions with Prime Minister John Howard and his Ministers, was an agreement by both sides to start negotiations on a new comprehensive economic partnership agreement between Australia and Fiji. This is to replace existing arrangements which are largely piecemeal and unstructured. We also need to take into account the loss of the competitive export advantage which earlier arrangements had given Fiji.

The result of the reduction in preferential access is reflected in the huge growth in the trade gap between our countries, in Australia's favour.

Fiji would like to see a stronger bilateral framework covering trade, investment, tourism, development co-operation, and other areas of our bilateral relations. We want a new agreement that is equitable and fair to both countries.

We cannot rely on a regional agreement between Pacific Island nations and Australia to adequately meet Fiji's interests. We must negotiate bilaterally.

A regional pact can complement a bilateral accord, but it cannot be a substitute for what we are seeking.

We agreed in Canberra that the next step would be for officials to begin consultations and to identify the main components of an agreement.

However, I stress here that these discussions cannot be restricted to Ministers and Government officials. They require the full participation of professional business people like yourselves to provide an essential commercial perspective.

I shall leave this conference with a sense of satisfaction if the two Councils commit themselves strongly to this initiative for a new and comprehensive partnership agreement.

When an agreement is concluded it will become another landmark in a long and close association between our countries.

I look forward to listening to the rest of the speakers, to contributing to the discussions and to meeting with prospective investors.

Thank you.