Travel

Republic of the Fiji Islands Country Brief

Political Situation

On 10 April 2009, the President of Fiji, Ratu Josefa Iloilo, announced that he had abrogated Fiji's 1997 Constitution and declared himself Head of State. He said Fiji would be ruled under a New Legal Order. Under the order, all judicial appointments were revoked pending new appointments for all judges, magistrates and other judicial officers. President Iloilo subsequently reappointed Interim Prime Minister Commodore Bainimarama and all nine members of the previous Interim Cabinet. The Interim Government has since confirmed the President's declaration that elections may not be held until 2014.

The abrogation of the Constitution followed a decision by Fiji's Court of Appeal that the dismissal of former Prime Minister Qarase in December 2006 had been unlawful and therefore invalid. On 5 December 2006 Commodore Bainimarama had assumed executive power in a military coup. Following the coup, Bainimarama dismissed the duly elected government of Fiji and declared a state of emergency. He subsequently claimed to have returned executive authority to the President, who then appointed Bainimarama 'Interim Prime Minister'. On 9 April 2009, the judges found that the dismissal and appointment was illegal. The court made the decision on the basis that if the President's powers of prerogative to appoint Bainimarama Prime Minister did exist after Fiji became independent, they did not exist after the 1997 Constitution came into effect. The issue of the President's powers of prerogative, through which the interim administration was appointed, was the crux of the appeal brought by Qarase.

The Australian Government strongly condemns both the most recent abrogation of Fiji's Constitution and the military's unconstitutional removal of Fiji's elected government in 2006. Despite claims to the contrary by the military regime, Bainimarama's take-over is illegal and cannot be justified. The international community has joined Australia in its condemnation of the regime. The United Nations Security Council, the Commonwealth Secretary General and the United Nations Secretary General have all called for a prompt return to constitutional democracy in Fiji and a respect for the values of free speech, human rights and the rule of law which underpin it.

The impact of the abrogation on the Fijian people's political rights has been profound. On 10 April, the President implemented a set of Public Emergency Regulations that limit freedom of speech, expand police powers and curb media freedom. Critics of the regime have been threatened, harassed, detained, questioned and/or assaulted. Journalists continue to be harassed, censored and in some cases deported. The Permanent Secretary for Information has been given the power to control broadcasts and publications. Interim administration personnel accompanied by police have been placed in all major news outlets, which may be shut down if they publish stories deemed 'negative'. The independence of the judiciary has been undermined and judges who are considered unsympathetic to the regime have been removed. Military personnel have the power to use arms to break up gatherings and have detained individuals without charge.

In response to the 2006 coup, Australia imposed travel restrictions on Bainimarama, his supporters and their families. These restrictions also apply to members of the unconstitutionally-appointed Interim Government, military officers and their families. The bans also apply to rank and file members of the Fiji military forces, but not their families. Defence cooperation and ministerial-level contact with the Interim Government have been suspended. However, contact at officials-level continues to take place in order to pursue key interests.

Australian aid sets out to support the people of Fiji, but does not support activities which have rendered our programs ineffective or have compromised their integrity.  Australia has not withdrawn significant portions of its aid program in response to either the 2006 coup or the abrogation of the Constitution in April 2009.  Although some existing and planned programs were suspended immediately following the December 2006 coup, assistance has not been removed where removal would harm the people of Fiji.  Australia’s aid program has, however, been reoriented to help mitigate the impact of the global economic crisis and ongoing political instability

The aid program aims to ensure essential services are maintained, particularly in health and education, enterprise development and financial inclusion programs, and to assist vulnerable groups.  Australia continues to provide scholarships for study in Australia and the region.

On 27 January 2009, the Pacific Islands Forum (PIF) Leaders and Commonwealth Ministerial Action Group (CMAG) met in early 2009 to consider whether Fiji had met its obligations to make progress toward holding elections in 2009. [CMAG decided that Fiji would be fully suspended from the Commonwealth at the next CMAG meeting in September 2009 if Fiji did not meet its undertakings]. Forum Leaders announced that the Interim Government had until 1 May 2009 to begin serious preparations for elections by the end of 2009, including the announcement of a firm election date. These steps were not taken and Fiji was suspended from the meetings and events of the Forum from 2 May. The 2 May announcement means that the Leader, ministers and officials of the Interim Government are suspended from all PIF meetings and events. The Interim Government is now ineligible to benefit from PIF regional cooperation initiatives, and new financial and technical assistance, other than assistance toward the restoration of democracy.

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.

 

updated 13 May 2009