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Fiji flagRepublic of the Fiji Islands Country Brief - April 2008

Current Political Situation

On 5 December 2006, Republic of Fiji Military Forces (RFMF) Commander, Commodore Frank Bainimarama, announced that he had assumed executive power, that he had dismissed the duly elected government of Fiji and declared a state of emergency. Subsequently (4 January 2007), Bainimarama claimed to have returned executive authority to the President, who then appointed Bainimarama ‘interim Prime Minister’. Other members of this ‘interim Government’ have been sworn in since.

The Australian Government strongly condemned the Fiji military’s unconstitutional removal of Fiji’s elected government. Despite claims to the contrary by the military regime, Bainimarama’s take-over is illegal and cannot be justified.

Australia responded firmly by imposing travel restrictions on Bainimarama, his supporters and their families. These restrictions also apply to members of the unconstitutionally-appointed ‘interim government’ and their families. Defence cooperation has been suspended.

Australia also suspended parts of its aid program to Fiji. This includes support for public sector reform and assistance to some law and justice sector agencies, in particular, police and prisons. Australia has only suspended assistance where the actions of the military have rendered our programs ineffective or have compromised their integrity. As far as possible, Australia has not taken any actions that would hurt ordinary people in Fiji. Trade and sporting sanctions have not been imposed. Most of the aid program continues.

Forum Foreign Ministers met in Port Vila, Vanuatu, on 16 March 2007 and affirmed that the take-over of Government by the RFMF was unconstitutional and unacceptable. Ministers endorsed the recommendations of the report by the Forum Eminent Persons Group (EPG), including: a timetable for national elections of between 18 months and two years, if not sooner; the immediate cessation of human rights abuses; and the appointment of a civilian interim Prime Minister.

Forum Leaders endorsed the findings of the EPG Report and the outcomes of the Forum Foreign Ministers’ Meeting at the Forum Leaders’ Meeting in Tonga on 17 October 2007. At this meeting, Bainimarama undertook to hold a parliamentary election in Fiji in the first quarter of 2009 and to accept the outcome of the election. Leaders welcomed Bainimarama’s undertaking and called on the official-level Forum Joint Working Group with Fiji to produce a roadmap to an election according to the Constitution and laws of Fiji.

Forum Foreign Ministers met again in Auckland on 26 March 2008 to review progress towards an election. Ministers reinforced the importance of the Fiji interim government honouring its undertaking to hold an election in March 2009 and expressed concern about the slow progress of election preparations. Ministers called on Fiji to intensify its efforts in preparing for an election and established a Ministerial Contact Group, consisting of Foreign Ministers from Australia, New Zealand, Papua New Guinea, Samoa, Tonga and Tuvalu, to closely monitor progress and report to Forum Leaders at their meeting in Niue in August.

Australia has already provided funding to assist in the completion of the census, which will provide essential information for the reform of constituency boundaries. Australia is also providing support for the appointment of an Election Supervisor.

The Fiji interim government launched the “People’s Charter” process in October 2007. The process involves a 46-member ‘National Council for Building a Better Fiji’ (NCBBF), which is chaired by Bainimarama and Archbishop Petero Mataca, head of the Catholic Church in Fiji. However, the People’s Charter does not enjoy wide support – the deposed Soqosoqo Duavata ni Lewenivanua (SDL) Party, the Methodist Church and a number of provincial councils have expressed opposition to the initiative. The NCBBF held its first meeting on January 16, 2008.

Political Background

On independence in 1970, Fiji adopted a constitutional democratic form of government based on the Westminster model. Fiji has a bicameral parliament consisting of a nominated Senate, an elected House of Representatives and a Cabinet presided over by a Prime Minister.

Indigenous Fijian concerns are taken account of through the Bose Levu Vakaturaga (Great Council of Chiefs). This is the highest assembly of traditional chiefs of Fiji and meets at least once a year to discuss matters of concern to the Fijian people. The Council appoints the President of Fiji, a power embodied in the 1997 constitution.

In 1987 the democratic rule of Fiji was interrupted by a military coup led by then Lieutenant Colonel Sitiveni Rabuka. A four month period of interim rule by the Governor General ended with a second coup by Rabuka on 25 September 1987. Rabuka abrogated the 1970 Constitution and declared Fiji a republic. A short period of military government and two subsequent interim administrations followed and a new constitution was promulgated on 25 July 1990, with elections held in May 1992. Subsequently, after extensive consultations, a new Constitution was adopted in 1997.

Fiji suffered another period of political, social and economic instability beginning on 19 May 2000, when a group led by George Speight seized control of the Parliament and took hostage then Prime Minister Mahendra Chaudhry and members of his government, holding them for 56 days. The hostage-taking was followed by the purported abrogation of the 1997 Constitution; the departure of then President Mara; and the installation of three successive unelected interim administrations. Rulings by the Fiji High Court and Court of Appeal that the 1997 Constitution remained the supreme law of the land led to the general elections of 25 August -1 September 2001 and Fiji's subsequent return to parliamentary democracy under the Prime Ministership of Laisenia Qarase, who had led the caretaker and interim governments.

The general elections of 2001 were won by the Soqosoqo Duavata ni Lewenivanua (SDL) Party, headed by interim Prime Minister Qarase. Following these elections, and in accordance with a Constitutional provision for multi-party representation in Cabinet, Prime Minister Qarase invited members of the Fiji Labour Party (FLP) to join Cabinet. Qarase refused, however, to include FLP leader Chaudhry in the Cabinet lineup. In November 2004, the FLP announced that they were no longer interested in participating in the Qarase-led government.

Prime Minister Qarase’s SDL Government was returned to office with a narrow majority at the elections held in May 2006. A multi-Party Cabinet, including members of the FLP, was then formed. Prime Minister Qarase, FLP Leader Chaudhry and Opposition Leader Beddoes extended an end of September deadline to agree on rules for the operation of the multi-party Cabinet but had not reached agreement by 5 December 2006, when the latest coup took place.

Foreign Policy

Fiji is a member of the United Nations, the Commonwealth, the Pacific Community, and the Pacific Islands Forum. It also has trade and political links with Papua New Guinea, Solomon Islands and Vanuatu through the Melanesian Spearhead Group (MSG), and is a member of the African-Caribbean-Pacific Group associated with the EU. Fiji became a member of the General Agreement on Tariffs and Trade (GATT) in 1993 and is an active member of its successor organisation, the World Trade Organization (WTO). Following the removal of the democratically elected government, Fiji was suspended from the Councils of the Commonwealth.

Because of its central location in the South Pacific and relatively well-developed economy and infrastructure, Fiji is host to many regional organisations. These include the Pacific Islands Forum Secretariat, the University of the South Pacific, the South Pacific Applied Geoscience Commission and part of the Secretariat of the Pacific Community.

Economic Overview

The 2006 coup, like its predecessors, has had significant economic consequences for Fiji, and the living standards of every Fijian. The coup and the subsequent actions of the military regime have engendered a lack of confidence in Fiji as a country in which to do business. Fiji’s strained economic circumstances have led to cuts in public service pay and conditions, increasing the possibility of industrial action.

The political crisis of 2000 saw the Fiji economy decline by 2.8 per cent in that year. This contraction was accompanied by substantial job losses and increased emigration of skilled and professional workers, the latter trend declining but persisting to the present. Business confidence and private investment subsequently picked up, but not to a point sufficient to drive sustained growth. Skills shortages affect most sectors of the economy, notably the construction industry. The economy recorded reasonable growth in the period 2001-04, driven by a resurgent tourism industry. Growth in 2005 was however only 0.7 per cent. This decline from the high growth of 5.4 per cent in 2004 was due principally to the termination of preferential trading arrangements for garments, Fiji's major manufactured export. Growth in 2006 was 3.6 per cent.

In November 2006, the Qarase Government announced its 2007 budget, which was to be the first part of a new 5-year Strategic Development Plan. The central objective of the Plan was to reach a target of 5 per cent economic growth per year. Government foreign reserves were estimated to be 3.3 months of imports for 2006, with government debt at 50 per cent of GDP. Remittances totalled FJD 311 million for 2005. The 2006 budget deficit was estimated to be 3.2 per cent of GDP, with a deficit of 2 per cent of GDP budgeted for 2007.

Following the coup in December 2006, on 2 March 2007, interim Finance Minister, Mahendra Chaudhry, delivered an ‘interim budget’ aimed at slashing A$245 million in order to keep the budget deficit at 2 per cent of GDP despite lower revenue projections. On 23 November 2007, Chaudhry delivered a second budget aimed at maintaining a 2 per cent deficit in 2008. Fiji economy’s contracted by at least 3.9 per cent in 2007. Remittances fell by as much as thirty per cent. Government foreign reserves stabilised towards the end of 2007, with reserves at the end of October 2007 at FJD 931 million, equivalent to 4.3 months of goods imports. The Reserve Bank of Fiji projects that Fiji’s economy will contact by -2.2 per cent in 2008. Both the sugar and tourism industries performed poorly in 2007, and prospects for improvement in 2008 are poor.

The European Union has suspended about A$256 million in aid for economic restructuring, and will not release it until Fiji returns to constitutional rule via a democratic election. The Asian Development Bank had identified substantial funds for urgently-needed capital projects in Fiji - but because of the coup, these funds have been put on hold.

Bilateral Economic and Trade Relationship

Statistical Data

Australia is by far the largest foreign investor in Fiji, and two-way trade is worth nearly $1.4 billion annually. In 2006 Australian was Fiji’s biggest export destination and second largest source of imports. Two-way trade has, however, steadily declined since 2000, largely due to a reduction in Australian exports of refined petroleum and falling textiles, clothing and footwear (TCF) trade. Two-way trade in goods in 2006-07 amounted to $531 million (Australian exports to Fiji $383 million; Fiji exports to Australia $148 million). Two-way trade in services was valued at $855 million in 2006-07, with Australia's imports of services from Fiji valued at $709 million. Fiji is an important market for Australian value added products and for small to medium enterprises. Australia's share of the Fiji import market is around 22.4 per cent.

Major Australian exports to Fiji in 2006-07 were woven cotton fabrics (A$13 million), woven synthetic fabrics (A$11 million), computer parts (A$10 million) and milk and cream (A$13 million). Major Fijian exports to Australia in 2006-07 were clothing (A$77 million), non-monetary gold (A$22 million), cereal preparations (A$14 million) and fresh vegetables (A$7 million).

Australian Trade and Investment Strategies

The TCF industry has been declining in Fiji over recent years and concessional market access arrangements under SPARTECA and the SPARTECA (TCF Provisions) Scheme (S-TCF) play a major role in the industry. SPARTECA is a non-reciprocal trade agreement between Australia and New Zealand and Forum Island Countries (FICs), one of the objectives of which is to achieve progressively, in favour of FICs, duty free and unrestricted access to the markets of Australia and New Zealand for as wide a range of products as possible. The S-TCF scheme, which facilitates duty free access to Australia for textiles, clothing and footwear products manufactured in Forum island countries, was due to expire on 31 December 2004. It has been extended until 31 December 2011.

TCF is the second largest industry in Fiji, employing some 8,000 people, many of them women. The extension of the scheme will provide some assurance to those workers and companies as they adjust to the competitive international trade environment.

Export Opportunities

Business and Financial Services

Processed Food

Australia is well placed to enhance its position as tastes in Fiji and eating habits are changing and becoming more ‘westernised’. The majority of processed foods are imported. Australia is already a major supplier contributing around 46 per cent of imports in this sector. There is increasing scope for convenience foods like noodles, TV dinners and dehydrated meals. Cereal consumption is also on the rise and there are opportunities for new products.

There are specific opportunities for Australian exporters in the following product areas:

Sugar

The Fiji sugar industry needs to be modernised and reformed. Substantial opportunities may be available for Australian industry to assist in this program. Opportunities cover areas such as harvesting, transport and milling.

Building and Construction, including Infrastructure

The Asian Development Bank (ADB) has approved a finance package for the redevelopment of the ports in Fiji. A technical assistance program for management of the ports was also approved. The ADB is also looking to finance major upgrading work required in the water and sewer systems of Suva.

Dairy Products

There are opportunities for Australian products in:

Education and Training

Australian institutions contribute substantially to this sector in Fiji.

Energy and Utilities

Consultants, contractors and equipment suppliers have delivered services and equipment to the Fiji market over many years. Power line equipment and generators are supplied on a regular basis.

Information and Communication Technology

There are opportunities in Fiji for products and services that enhance the efficiency and reach of the telephone system. The introduction of the Southern Cross Cable has increased the need for sophisticated equipment and services. Improvements are being sought for the remote area communication systems which use satellite technology.

Substantial opportunities are present in the information technology sector as Fiji endeavours to develop its capabilities in the field

Meat

The best opportunities for meat in Fiji are:

Mining and Minerals

Fiji is not a big market for Australian mining equipment suppliers as there is only one large mine in operation in Fiji, but almost all mining systems and equipment is imported.

Textiles Clothing and footwear

Opportunities exist to supply textiles to the garment industry in Fiji, which specialises in cut, make and trim of garments for re-export. Major Australian textile exports to Fiji include:

Synthetic woven fabrics - unbleached or bleached
Much of this material will be re-exported to Australia as made up garments, under Cut, Make and Trim (CMT) arrangements. Textiles not imported under CMT arrangements are normally priced on metre lengths

Visitors to Fiji

Australians wishing to visit Fiji should consult the DFAT travel advice at www.smartraveller.gov.au or contact the Fiji High Commission in Canberra on (02) 6260 5115 to check entry requirements.