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To contact the authors of this blog, please call telephones (679) 3342719, (679) 3544897 or e-mail

Saturday, March 31, 2007

Department of Cooperative and Small Business Training

The Department of Cooperative and Small Business is organising the following training courses/seminars over the period from April to June 2007 :
  • Flower Arrangements, 3 to 4 April 2007, at Cooperative and Small Business Training Institute, Draunibota, Lami, Fee is F$45.00 for day scholars and F$60.00 for boarders;
  • Start Your Business, 16 to 20 April 2007, at Cooperative and Small Business Training Institute, Draunibota, Lami, Fee is F$40.00;
  • Bread Making, 18 and 19 April 2007, at Cooperative and Small Business Training Institute, Draunibota, Lami, Fee is F$45.00 for day scholars and F$60.00 for boarders;
  • Bee keeping, 8 to 10 May 2007, at Cooperative and Small Business Training Institute, Draunibota, Lami, Fee is F$45.00 for day scholars and F$60.00 for boarders;
  • Start Your Business, 14 to 18 May 2007, at Cooperative and Small Business Training Institute, Draunibota, Lami, Fee is F$40.00;
  • Bee Hives Case Making, 14 to 18 May 2007, at Cooperative and Small Business Training Institute, Draunibota, Lami, Fee to be confirmed;
  • Start Your Business, 11 to 13 June 2007, at Cooperative and Small Business Training Institute, Draunibota, Lami, Fee is F$40.00;
  • Store Management, 18 to 20 June 2007, Fee is F$45.00 for day scholars and F$60.00 for boarders.

For more information or to reserve a place, pls contact Naibuka Seruvatu or Neil Druavesi on telephone numbers (679) 3361552 or (679) 3362479. You can also e-mail

Note : For short stay accommodation in a two bedroom rental home with sea views in Suva that is cheaper and more spacious than our Suva hotels, pls check out the appropriate links at the right hand side of this blog. To contact us for a booking, you can e-mail or call telephones (679) 3396427 or (679) 9921427.

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Training on Business Diagnostic Tools

A training on Business Diagnostic Toolkit will be held in Suva from 23 to 27 April 2007 . The training will attendees :
  • measure the growth capabilities of local businesses;
  • identify risks and areas of opportunities;
  • identify areas of risk within the business that need to be addressed in order to increase growth potential;
  • implement a growth capability system into an economic development unit for long-term performance improvement;
  • look at methodologies and underpinnings of the business fitness criteria through the use of the Measurement System; and more.

Target group are professional business assessors, trainers and analysts, bank assessors, government and NGO planners and other interested professionals in the public and private sectors.

Fee is F$300.00 per person and will cover :

  • all cover materials;
  • copy of the Qfitness (shorter version) and Business Ready diagnostic tools;
  • software licence and support for 1 year (retail at N$3,000.00);
  • assessment of one's business;
  • national views of business readiness and SME business fitness.

For workshop is a collaboration between the Private Sector Development Unit of the Pacific Islands Forum Secretariat and the Graduate School of Business, University of the South Pacific with funding from the European Union.

For further information and registration, pls contact Ravi Chand, National Centre for Small and Micro Enterprise Development (NCSMED) on e-mail or telephone (679) 3312991.

Note : For (short stay) accommodation in a two bedroom rental home with sea views in Suva that is cheaper and more spacious than our Suva hotels, check out links at the right hand side of this blog.


Friday, March 30, 2007

Financing rules for Foreign Investors

Foreign investors will now have to seek financing for their capital investment projects in Fiji from overseas, rather than in Fiji, according to new rules set by the Reserve Bank of Fiji. The Reserve Bank of Fiji has, however, announced that foreign investors can seek financing in Fiji for the working capital component of their projects.

More on the Reserve Bank of Fiji's new rules later.

Note : Foreign investors that require assistance on setting up business or investing in Fiji or for assistance with seeking domestic financing for their projects, can use our company, Gilbert & Samuels Limited. Our contacts are : e-mail or telephones (679) 3396427 or (679) 9921427.

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Thursday, March 29, 2007

Kava exports doing well

The kava industry is doing very well with F$3.6 million worth of it exported last year. This compares with F$2.5 million exported in 2005.

The industry is looking forward to exports being better in 2007 compared to 2006. There is also a high demand for Fiji kava on overseas markets given its taste and quality.

Kava is being bought from suppliers locally at between F$25.00 to F$27.00 a kilogram for 'lewena' (the stem portion of a kava plant) and between F$25.00 to F$30.00 a kilogram for 'waka' (the root portion of a kava plant).

Suppliers are being asked to ensure that kava is clean and thoroughly dried before they sell it to buyers.

Kava exports are made to the USA, New Zealand, Australia, Japan, Kiribati, Marshall Islands, Tuvalu, Wallis and Futuna, and Samoa.

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Wednesday, March 28, 2007

Recent investment trends in Fiji's capital markets

Investment with companies listed on the South Pacific Stock Exchange (SPSE) in Suva, Fiji, has gone down over the past month. Market capitalisation on the SPSE fell from the F$1 billion mark at mid February 2007 as investors sought investment in other instruments that were paying well or better than what they held.

Over recent months, investment in short term deposits (up to 2 year terms) were paying well while others may have opted for longer term Government securities that were also paying high returns.

As expectations of a reduction in interest rates arise, particularly in light of the announcements in the revised Budget 2007 a result of which may see more liquidity pumped into the financial system and thus create downward pressure on interest rates, educated investors would have sought instruments with the longest terms at which they could secure the best possible high interest rates at the time.

Given that interest rates will fall (some already have fallen e.g. ANZ's term deposit rates which was posted earlier on this blog), investors will now be looking for other investment instruments apart from term deposits. This could mean another redirection of interest to companies listed on the stock exchange, to unit trusts, etc. Bonds which have already been sold in the primary market at a higher interest rate, may become an attractive alternative investment, on the secondary markets.

Perhaps, buying some of these bonds on the secondary market is a vehicle for the Reserve Bank of Fiji to add liquidity into the financial system.

If you are an individual or represent a group that needs investment advice, you can contact our company, Gilbert & Samuels Company Limited, for assistance. Our principal, Gilbert Veisamasama Jr, is an investment advisor licensed by the Capital Markets Development Authority (of Fiji). To contact us, you can e-mail or call telephone (679) 3396427.

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Asian Development Bank projects in Fiji on hold

The Asian Development Bank (ADB) has put on hold F$212 million worth of its capital projects in Fiji. The ADB said that the interim Government must provide assurance that it would resume its international responsibilities before the bank will resume funding projects in Fiji.

The assurance sought included a commitment to provide an environment that would ensure the successful completion of the four major development projects the bank has invested in.

These projects include :
  • the third road upgrading project of about F$65 million of which F$56 million has already been spent;
  • the ports development project of around F$28 million, all of which have been spent;
  • the Suva-Nausori water supply upgrade project of F$77 million of which F$30 million has been spent; and
  • the alternative livelihoods project of around F$41 million of which a few thousands of dollars has been used.

The ADB said that the cost of doing business in Fiji also needed to be improved to promote an investment climate where access to capital was enabled. (I had made a comment on the high costs of doing business in Fiji in an entry on this blog earlier.)

However, on a good note, the ADB said that Fiji was among two Pacific Island countries whose economy grew by 3.1% and enjoyed a faster expansion while the other countries in the region did not.

With Fiji's strategic location in the Pacific, its qualified workforce and its well established infrastructure, the country still remains a suitable destination for investors.

Note : Foreign investors that require advice and assistance on setting up business or investing in Fiji can use our company, Gilbert & Samuels Company Limited. To contact us, you can e-mail or call telephone (679) 3396427.

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Dalo farmers have hope

Dalo farmers in the Northern Division now have hopes after the Agricultural Marketing Authority offered to buy their produce for export. The arrangement will alleviate anxiety among Northern farmers who have difficulty finding buyers and shipping for their produce.

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Tough year ahead for Fiji : ANZ Economist

An interesting analysis was put forth by a visiting ANZ senior economist for Fiji.

Ms Jasmine Robinson said that "Investment prospects are likely to remain uncertain until the interim Government provides greater clarity over macroeconomic policy and investment directions". She estimated that the Fiji economy would undergo a recession this year with the economy contracting by 2%.

Ms Robinson was speaking at a function at the Holiday Inn in Suva yesterday. Read more of her analysis in the Fiji Times article here.

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Monday, March 26, 2007

Government Programs for Vanua Levu

The Interim Government has announced in its National Budget for 2007 that was released earlier this month that it is committed to development of Vanua Levu, the second biggest island in Fiji, under its Northern Division Development Program.

Government's allocation will see the completion of a port at Wairiki, Bua, on Vanua Levu to facilitate the processing of pine plantations in the Northern Division.

Government is in the process of preparing an integrated regional development program for the Northern Division which will form the basis of disbursement of funds allocated for the region.

Under the plan, Seaqaqa, a little township close to Labasa, will be a focal centre that will be revived to boost the economy in the Northern Division.

We will post Government's plans on the north once that is released.

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Wednesday, March 21, 2007

New crisis at Home Finance Company Limited?

The Deputy Governor was seen leading an inspection team from the Reserve Bank of Fiji into Home Finance Company Limited early this week. Home Finance (also known as HFC Finance) is a subsidiary of the Fiji National Provident Fund. Given that it is a deposit taking institution under the Banking Act 1995, it is supervised by the Reserve Bank of Fiji.

During my time at the Reserve Bank of Fiji, never once did the Deputy Governor lead an on-site examination/inspection team that had gone into one of the banks or other deposit taking institutions supervised by the Reserve Bank of Fiji. The teams would go with someone designated as "examiner-in-charge" to lead the team. Rarely would the head of the financial system supervision department even go.

So does the appearance of the Deputy Governor leading the team, a signal of a crisis at that institution? The other signal that things are serious is that he was at Home Finance for the better part of the day.

The other question that arises is : "Has complaints about the Reserve Bank's failure in its supervisory role and its monetary policy settings (which were raised earlier in this blog and covered well locally by Fiji Television) now woken them up?"

More on this should definitely come out over the next few days.

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Movement in Bank Advertised Interest Rates

It is interesting to see that ANZ, in its latest release, has reduced its term deposit rates while maintaining lending rates at the same level they were last month (see blog entry before this). Here are the reductions noted:
  • Retail Term Deposits 9 months to 1 year - from 6.00% to 5.00%;
  • Retail Term Deposits 1 to 1.5 Years - from 8.00% to 6.00%;
  • Retail Term Deposits 1.5 to 2 Years - from 6.25% to 5.75%; and
  • Retail Term Deposits 2 Years to 3 Years - from 6.25% to 4.50%.

This would mean another widening of the interest margins/spreads that I talked about earlier - again to the detriment of customers.

One just wonders what the Reserve Bank of Fiji's position on this is. Anyway, it had somewhat "rejoiced" when this happened last September when commenting on the movement in interest spreads in its December 2006 Quarterly Review. (See page 25 of the writeup titled "Quarterly Review of the Economy & Financial Conditions").

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ANZ Interest Rates (Updated 21.3.07)

Schedule of interest rates released by ANZ Fiji are as follows :
  • Business Index Rate - 12.75%;
  • Residential Property Loan : Standard Variable Rate - 12.25%, 1 Year Fixed Rate - 10.25%;
  • Investment Loan : Standard Variable Rate - 12.25%, 1 Year Fixed Rate - 10.25%;
  • Personal Loans : Secured - 12.95%, Unsecured - 14.95%;
  • Small Loans : Unsecured - 19.00%;
  • Retail Term Deposits : 9 months to 1 year - 5.00%, 1 to 1.5 Years - 6.00%, 1.5 to 2 Years - 5.75%, 2 Years to 3 Years - 4.50%.
Interest rates are on a per annum basis and may be varied by ANZ without prior notice.

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Fiji Islands Trade and Investment Bureau Trade and Investment Missions to the North

The Fiji Islands Trade and Investment Bureau (FTIB) is organising a few trade and investment missions overseas. The intentions of the missions include :
  • to attract strategic joint venture partners in agriculture (agri-processing), marine (processing), forestry (value adding/manufacturing), ICT, tourism and other manufacturing sectors;
  • to explore export opportunities;
  • to source machinery, raw materials, packaging material, building material, consumer products, etc to improve business efficiency and competitiveness for exports.

Foreign investors that wish to intend to invest or set up business in Fiji can mark the following months when the missions will be visiting their countries:

  • China - May 2007;
  • Malaysia and Indonesia - June/July 2007;
  • India - October/November 2007.

Trade missions are also being scheduled for Samoa & American Samoa in May 2007 and to Papua New Guinea in July 2007.

Note : Foreign investors that need assistance and advice on setting up business or investing in Fiji can contact us on e-mail or telephone (679) 3396427.

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Tuesday, March 20, 2007

Remittances to Fiji up?

David Evans, the outgoing Chief Manager for Westpac in Fiji, says that remittances to Fiji from former residents living overseas or Fiji residents working abroad has gone up over the last few months.

He has put a figure of F$400 million on the amount of remittances coming in. However, with no concrete method of ascertaining the real figure, we do not really know what it is.

With current pressures on liquidity in the financial system, if the magnitude of funds proposed had really come in, one would not be experiencing very low liquidity in the financial system as we have at present.

Generally, one would wish that such funds are being put to efficient and effective economic purposes rather than being spent on consumption.

The Reserve Bank of Fiji had, last year, said that it was conducting a study to analyse the growth in remittances to Fiji and to see how these funds are being utilised.

I am looking forward to the study by the Reserve Bank of Fiji (if it has been done?).

Read the article from today on the observation by David Evans below.

"Remittances to Fiji up: Westpac boss

Outgoing Westpac Fiji chief manager David Evans says remittances to the country are increasing with the bank seeing an upsurge in this area in the last three months.

And while he says it is hard to get exact figures of remittances to Fiji, he puts current estimates to be about $400 million a year.

According to him, in the last three months Westpac has seen a significant increase in inward remittances. He believes that people are supporting families here and sending more money back.

"If people have lost their job for whatever reason they are sending more money back into the country. "So there certainly has been a lift in the last few months of money coming back in," he said. "It is good. It is coming in and is helping the economy. It's keeping things going so we want to keep it going."

However, he says the challenge with remittances is "how to get that money to stick as far as people saving it or investing it wisely and not running out and buying a big TV or whatever."

Evans says he sees it in the bank that money comes in through the Moneygram (Westpac's money exchange facility) and goes straight out through the door and to the retail outlets.

He says the bank is working very hard with various products to try and get people to save for the future.

"We are currently running a campaign around a bonus saver product to try and encourage people to save their money and think of the future.

"For the whole community one of our challenges is to get people to save. It is a cultural thing and it is an education thing and it takes a while," Evans said."

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Invitation to Parties Wishing to Operate Free-to-Air Television Broadcast Services in Fiji

In line with Government's commitment towards promoting market competition that realises benefits, in particular, in terms of choice of free-to-air television broadcast channels that are available for viewing by the public, and the decision made by the Cabinet on 13 March 2007, Government is extending a general invitation to interested parties wishing to operate free-to-air television broadcast services in Fiji to submit their expressions of interest.

In addition to their written expressions of interest, interested parties are required to also include in their submissions justifications as to why Government should choose to invite them to submit their full tender for final assessment.

All submissions should be addressed to :

Mr Taito Waradi
Interim Minister for Commerce, Industry, Investment & Communications
PO Box 2118
Government Buildings

Submissions close at 3.30pm, Monday, 16 April 2007.

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Saturday, March 17, 2007

Australian company to develop two 200-room hotels at Yaqara

An Australian company, Resorts and Property International Limited (RPI), has been given the go ahead to develop two 200-room hotels at Yaqara.

In the arrangement, RPI would secure a 25% interest in Yaqara Group Limited and sublease two waterfront sites for development of the two hotels at Yaqara Studio City.

The company intends to build a 5-star Ivana Souht Pacific resort and a 3- or 4-star Ivana brand resort.

RPI's stake in the Yaqara Group would total F$6.76 million, made up of F$4.05 million cash and F$2.71 million shares.

The construction of the two hotels will commence in 2009.

Yaqara is located at the Ra Province on Viti Levu, near Rakiraki.

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Friday, March 16, 2007

Procedures for checking the background of foreign investors

Just to add on to the reports on today's Fiji Times, One National News and Fijilive posted earlier about who is responsible for checking the background of foreign investors, let me describe below my understanding of the investment approvals process.

When a new foreign investor first applies to the Fiji Islands Trade & Investment Bureau (FTIB) indicating its intention to invest in Fiji, the FTIB would grant a Foreign Investment Registration Certificate (FIRC) to the foreign investor, within a two to five-day period. The FIRC is a sort of "passport" document allowing the holder (i.e. the foreign investor applicant) to then go and obtain all the necessary approvals, licences and permits that would be required before it sets up business in Fiji.

The FIRC is, therefore, an approval, given by the FTIB which is CONDITIONAL on the holder getting all the necessary permits, licences and approvals from other government and semi-government agencies.

Once all other permits, licences and approvals are in place then the holder of the FIRC (i.e the foreign investor) can then commence business in Fiji.

With regard to checking the background of foreign investor companies and its directors, this task would normally be referred to the Reserve Bank of Fiji's money laundering section (now called the Financial Intelligence Unit) who would then use its established contacts to check the background of the company and its directors. [The Financial Intelligence Unit is under the Reserve Bank of Fiji.]

This was particularly important to ensure and to "sieve out" companies and individuals who have been involved in money laundering and criminal activities.

In the case of the management company of the FNPF's Natadola development project, what would have to be determined was whether the company was actually a foreign investor or simply a project management company.

If the company was an investor (i.e. a foreign investor) then the procedures I referred to above would have had been followed.

On the other hand, if the company was merely a project manager, then assuming that personnel at the local authorities knew the work they had to do as well as what assistance other institutions could offer, the FNPF would have approached RBF, again to use its "established contacts" to check the background of the company and its principals/directors.

So, was the company a foreign investor or simply a project manager?

The answer to that question would then determine who is at fault for not doing what was supposed to have been done.

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Fiji National Provident Fund saga : Who is responsible for checking the background of foreign investors?

The Reserve Bank of Fiji and the Fiji Islands Trade and Investment Bureau have been blamed by the Fiji National Provident Fund (FNPF) for not checking the background of the management company and directors of FNPF's Natadola hotel/resort development project.

Reproduced below are reports contained in today's Fiji Times, Fijilive and One National News.

"Natadola shock Fiji Times, Friday, March 16, 2007

A DIRECTOR of the company developing the $140million Natadola resort project has quit after his criminal past was revealed.

Two project management companies involved in the project, which will ultimately see a world-class integrated tourism resort and golf course built on 638 hectares of beachfront land, have also been replaced.

Louis Gerard Saliot, French-born chief executive officer of Asia Pacific Resort International (APRIL), the Natadola project managers, quit when confronted with details of his previous conviction, said Natadola Bay Resort Limited chairman, Felix Anthony yesterday.

Mr Anthony said the 60-year-old Saliot had been jailed in Monaco in 1992 for two years for breach of trust and had faced the courts again in 1993 when he was given a three-year term for complicity of bankruptcy, breach of trust, forgery and use of forgeries.

Mr Anthony would not reveal yesterday how the details of Mr Saliot's criminal past had come to light, but revealed Interpol had been used to trace Mr Saliot's history.

A copy of an Interpol document, addressed to FNPF manager Viliame Vodonaivalu and countersigned by Senior Superintendent of Police, Ravi Narayan, was made public at a press conference held by Mr Anthony yesterday.

Mr Anthony said Mr Saliot admitted the convictions when confronted by them.

He said the project managers, APRIL, which was hired as project manager in April 2004, and European project management group COTEBA, have been replaced by HLK Jacobs as interim project managers.

The Natadola Resort project is backed by the Fiji National Provident Fund, which has so far invested $60million into it. Natadola Bay Resort Limited is a subsidiary of FNPF.

Mr Anthony said Mr Saliot had not disclosed his criminal background when applying for his foreign investor's licence, a breach of Fiji's investment laws.

"Both the licence and work permit have been obtained by falsifying documents," Mr Anthony said.

"One of the concerns we have is the role of the FTIB (Fiji Trades and Investment Board) and the RBF (Reserve Bank of Fiji), as they are the people who grant licences without a proper scrutiny of people who want to do business."

Mr Anthony said APRIL had been paid $8million in management fees in three years.

APRIL project manager Keni Dakuidreketi said it would be premature to comment as they were still holding talks with the FNPF.

"We will comment at an appropriate time," he said last night.

Mr Anthony said two of the major concerns raised about the project was it was late by 24 weeks
and the lack of accountability.

He said only 10 per cent of the resort construction has been completed so far.

However, Mr Anthony assured FNPF members that their funds were secured.

"The FNFP Board is fully committed to ensuring that members' funds are secured and protected and to see the completion of the project.

"Given this commitment, we will carefully scrutinise all funds that are utilised for investment purposes,'' he said.

Mr Anthony said investigations into the resort project were continuing with Australian chartered accountant firm of Ernst and Young contracted to carry out an audit. "

"It's Reserve Bank, FTIB fault: Anthony Fijilive, Friday March 16, 2007

The Reserve Bank of Fiji and the Fiji Islands Trade and Investment Board have been blamed for failing to properly investigate the people involved in the multi-million dollar Natadola Bay Resort Limited (NBRL) project in Sigatoka, one of whom is alleged to have a criminal record.

NBRL board chairman Felix Anthony claims that Interpol reports show that one of the NBRL directors Louis Gerard Saliot has a criminal record; that he has been jailed for two years for breach of trust, that he was declared bankrupt, and that his bankruptcy proceedings are still continuing before the courts in Monaco.

"And knowing this, we have come to discover that in applying for his foreign investor licence, he (Saliot) did not disclose as is required, his offence or convictions in that and as such obtained his licence without making a full declaration which itself is unlawful.

"We have also come to discover that in also applying for his work permit he did not disclose his convictions and his bankrupt status and again we believe that his work permits were obtained without full disclosure. As such this causes us great concern."

No comments could be obtained from Saliot but another partner Keni Dakuidreketi said they would comment later.

The NBRL is owned 100 per cent by the Fiji National Provident Fund.

In recent weeks, the new NBRL board (appointed in December last year by the new military regime) has been reviewing the Natadola project with two major concerns.

The main concern has been that the project was late by 24 weeks and the lack of accountability in the project.

"As chairman and board of the NBRL, we have has been very concerned with the progress of that project itself. It is a huge project, probably the biggest the FNPF has ever undertaken," Anthony says.

"The total project when completed would be in excess of $340 million but the hotel project itself is worth $140m of which up to date FNPF has already invested about $60m of the workers' money.

"As the board of NBRL we have been very concerned at how the project has progressed so far. There has been a delay of currently the project running 24 weeks late. And when we talk about delays it means costing FNPF much more money."

He said that apart from that the supervision of the project has been of major concern to them.

Anthony says the NBRL in 2004 hired APRIL (Asia Pacific Resort International Ltd) to be project managers for this development while COTEBA was hired as construction managers.

Since then, APRIL was paid $8m in management fees. APRIL's principals are Saliot and Dakuidreketi.

Anthony says that NBRL is not satisfied with the performance of APRIL and COTEBA and as a result have been replaced with HLK Jacobs appointed interim project managers and a quantity surveyor has also been appointed to work on the project.

Anthony said that in issuing the licence, the FTIB has a role to investigate the background of people it issues licences to. "They failed."

He said that the RBF also has a responsibility to do background searches on people before they allow people to come in and do business. "They failed and this is simply not on."

"This only exposes the laxity in our system." No comments could be obtained immediately from the RBF or the FTIB.

Anthony says it is FNPF's own initiative that they have come up with these findings.

"I think both these organizations have a lot to be desired in this area and not only that but because of their laxity organization's like us suffer.

"And it is not cheap, it costs us a lot of money when we have to restructure a project that is already in progress and this causes delays and all sorts of problem. And we are talking about workers' money," he said.

He says Saliot has tendered his resignation as a director with immediate effect. "

"Reserve Bank not to be blamed over Natadola project One National News 16 Mar 2007

The Reserve Bank of Fiji says it shouldn't be blamed for what has transpired in the deal between April Development and Natadola Bay Resorts Limited.

In a statement the bank says it's not the role of the Reserve Bank to check the backgrounds of foreigners who wish to undertake business in Fiji.

The bank says it was never asked by FNPF to undertake a background check on Gerard Saliot (Selio) or his company, adding this responsibility cannot be abdicated to the agencies of Government or the Reserve Bank.

In this case, the bank says this responsibility rests squarely on the FNPF Board.

And the Fiji Islands Trade and Investment Bureau says given the latest findings, they will now go through the process of reviewing the registrations granted to the Natadola Marine Resort Limited and APRIL Development.

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Wednesday, March 14, 2007

Reserve Bank of Fiji's failed monetary policy : Fiji TV takes up story

I have blogged earlier about the Reserve Bank of Fiji's (RBF) current monetary policy settings over the last two years which has seen banks having a good time making astronomical profits.

Another trend observed was that during the interest rates hikes by the RBF, banks used the opportunity to widen interest spreads further. Refer to latest Quarterly Review issued by the RBF for December 2007, page 25. As I said earlier, it is little wonder then that banks have recorded dramatic increases in profits for their most recent financial year.

Businesses, foreign investors and individuals have been complaining of high interest rates, in addition to the complaints they already have about high banks' fees and charges.

The environment of high interest rates will contribute to an increased number of failures of small businesses as they face pressures of the rising costs of meeting repayments of business loans.

It will also see Fiji as a less attractive destination for foreign investors who are turned away by the high costs of borrowing and for doing business. Foreign investors are really people that the country needs with their expertise and technology transfer abilities and experience.

These are sectors that the Interim Government has clearly stated in the Revised National Budget 2007 that it wishes to encourage.

Read here (note registration on the website is required) the story being taken up by Fiji TV in its One National News tonight.

I again reiterate a call that I earlier made that there needs to be an independent analysis of the profitability of banks, their components of income, how these have fared over the period 2005 and 2006 (during RBF's interest rates) and particularly how interest margins and spreads have moved. A study of individual banks' figures should be done and submitted to Government's Ministry of Finance for the necessary policy decisions to be taken.

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Savusavu Freehold Beachfront Land for Sale

A large freehold beach-front land is available for sale at Savusavu, Vanua Levu. The land is on the west coast of Savusavu Bay and runs inland right from the white sandy beach. It is accessible from the Wailevu West Coast Road. The area is not as developed as the east coast from Savusavu town where foreign investors have already bought properties.

Other current developments at Savusavu include Koro Sun Resort.

Owner's plans, Land details, Price

The owner wishes to either develop a resort on the land or to sell it off if the purchase offer is good. Details of this land are as follows :

Title : CT No. 3631
Land : "Natoavou" (part of)
Area : 181.3 acres
Price : US$5 million (negotiable)

Some photos of the land are posted here.

Similar freehold land in the Savusavu area are currently selling at between US$100,000.00 and US$125,000.00 per quarter acre lot.

For enquiries, pls e-mail or call telephones (679) 3396427 or (679) 9921427.

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Revised National Budget : Priority Sectors and Incentives

In the Revised National Budget 2007 that was delivered by the Interim Government two weeks ago, Government has identified priority sectors as including :
  • Forestry;
  • Agro-business;
  • Marine products;
  • Audio Visual;
  • Information and Communications Technology; and
  • Mineral Water.

Plans are also underway to create economic zones where small and medium enterprises can be established. Part of this plan has seen to the development of the Kalabu Tax Free Zone and the upcoming Vatuwaqa Industrial Zone in Suva.

Government also announced plans to reduce the cost of doing business in Fiji by deregulating and opening up the telecommunications sector to allow more companies into that sector and thus promoting competition, and also to review all concessions to place everyone on a level playing field.

It says that it will continue to support businesses and investment and ensure that "the climate is conducive, the policies are consistent, everyone is treated uniformly and that incentives .... are effective".

In an upcoming post, we will put up incentives that are being offered specifically for promoting development and business at Vanua Levu, Fiji's second largest island.

Note : Those that need advice or assistance on setting up business or investing in Fiji can contact our company, Gilbert & Samuels Company Limited, by e-mail on or by telephone on (679) 3396427.

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Upcoming 5-star resort on Viti Levu's east coast

A resort at Natalaira, Dawasamu, on the east coast of Viti Levu, is expanding its facilities with the aim of achieving 5-star status. The resort development will be on 85-acres of freehold land on Takalana Bay between Natalaira and Silana Villages.

The development will cost F$400 million and will feature an international standard spa, fitness centre, a putting green and a yacht club.

Also part of the development is a 3.85 acre commercial centre just next to the resort.

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Vatukoula Gold Mine to be sold to an Australian company

The Vatukoula Gold Mine will be sold by Emperor Gold Mining Company Limited to an Australian company, Westac. Government and the two companies are in the process of finalising an agreement for the sale. It was reported earlier that the mine will be sold for a sum between F$16 million and F$20 million.

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Tuesday, March 13, 2007

Fiji National Provident Fund saga continues

The saga at the Fiji National Provident Fund (FNPF) continues with calls for an investigation into FNPF's staff loans.

While the saga continued, the banks continue with their praises for Reserve Bank of Fiji's (RBF) regulatory abilities and activities.

However, as I have said earlier, the stories/reports that continue to come out of the FNPF provide little assurance as to the RBF's abilities as well as those other "checks and balances" mechanisms that we relied upon such as the Board of Directors of the FNPF and its external auditors.

It is evident that the banks will praise the RBF because it is really RBF's monetary policy settings over the last two years that has contributed to the very high profits being recorded by banks in the same period.

The RBF on the other hand seems to be very happy about the increasing "interest spreads" recorded by the banking system. Here is a quote from the RBF's Quarterly Review for December 2006, page 25,

"After decreasing in the June [2006] quarter, the interest spread appears to be on the recovery path, with the recording of an improved spread of 5.1 percent in September (4.8 % in June)."

Interest spread is the difference between the return on banks' earning assets (including their loans) and their cost of funds (which includes their deposits). As evident from the commentary, in the midst of the interest rates hikes by the RBF, banks have had a good time increasing their interest spreads .... little wonder then that their profits increased astronomically.

It is high time now that the RBF come out and say what actions they have been taking with regard to the FNPF as its prudential supervisor. Was it aware that such things were happening? When was the last time, it had a good look at FNPF's investment portfolio and quality of assets? Has it reviewed the Fund's staff loan portfolio as it does with banks during an on-site inspection?

There is no time for them to hide themselves like an ostrich while members are getting irate about the investment of their retirement dollars.

In the meantime, here are the articles from yesterday's Fiji Sun calling for a probe into FNPF's staff loans followed by one in today's Fiji Times with the outgoing Westpac Chief Manager Fiji, David Evans, praising the Reserve Bank of Fiji's regulatory abilities.

"Call to probe FNPF staff loans

Investigations should be carried out on Fiji National Provident Fund staff who loaned to buy houses and have utilised it for commercial purposes, which is a breach of policy.

Former Fiji Labour Party head of security Posiano Nauku told the Fiji Sun yesterday while investigations are carried out on suspended general manager Olota Rokovunisei and deputy Foana Nemani, other staff that has taken housing loans should also be monitored.

“From the Fiji Sun’s revelations, it seems there is more to it,” he said. “The FNPF has been a closely-knitted unit for years where they keep and bury their dirt together. It is a welcome that such reports have come out publicly for the people to know the truth.”

Mr Nauku also questioned the intergity of the FNPF auditors and its former board members on why they had been quiet over the matter. “It’s like I scratch your back and you scratch mine kind of business.

The assurance by the FNPF management that our money is safe is not enough,” he said."

"Banker sees strength in sector

FIJI'S commercial banking services have become stronger in the last 20 years and are now of international standard, says an industry player.

Westpac Banking Corporation's outgoing general manager Fiji, David Evans guided the Australian giant's local operations for the last four-and-a-half-years.

He said Fiji was fortunate to have a good regulator in the Reserve Bank of Fiji.

Mr Evans, who came to Fiji in 2002, returns to Australia on Friday at the end of his contract.
"I think we are very fortunate in having a very strong banking system here," he said. "You have got banks here that are operating to international standards,"

Mr Evans said the country's central bank, "works continually in improving the process around the regulatory environment which we work in," he said.

"From an economic point of view, Fiji is very fortunate in having a very strong banking sector."
Having spent a quarter of a century in the money world, Mr Evans described his time as general manager Fiji "as very exciting".

"There weren't any surprises as such. There were a team of people who were very focused and committed in working for the business."

Mr Evans said the announcement by the Interim Government to have a local bank was welcome but warned it involved a long process.

"The only thing I say is that any new bank that comes into the banking arena must be able to operate to the same international standards as all the other banks.

"So firstly, it's a level playing field but the new competitor does not dilute the strength that we already have in the banking system.""

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Saturday, March 10, 2007

Debate continues on FNPF : The Role of the Board in alleged abuse

The debate continued today with Sir James Ah Koy, former Minister for Finance and businessman, questioning the role played by the Board of Directors when the alleged loans were granted to a former senior manager at the Fiji National Provident Fund (FNPF).

In addition to the Board of Directors, I had suggested earlier that the Reserve Bank of Fiji as prudential supervisor of the FNPF should be asked as well as to what they did, to protect the interests of pension fund members for which it is entasked, in the whole affair. Fiji TV, had picked up the story that I blogged three days ago that Reserve Bank may have been "sleeping on its watch" when supervising the FNPF. Below is the coverage of it in last night's Fiji TV's One National News.

"Reserve Bank accused of sleeping on its watch
9 Mar 2007 17:42:21

The country's central bank, Reserve Bank of Fiji has been accused of sleeping on its watch.

Former advisor to the R-B-F - Gilbert Veisamasama claims the bank has failed to detect early warning signals of alleged mismanagement at Fiji National Provident Fund.

Gilbert Veisamasama runs a consultancy business in banking, finance and related legal issues.
He has worked at the Reserve Bank as a manager and advisor...

And today he questions the in-action of the cental bank for not keeping close tabs on the Fiji National Provident Fund.

The FNPF is now being investigated for alledged mismanagement..

He says the RBF recieves periodical returns from financial institutes like the FNPF - on how its functioning and whether there are any early warning signs on mis-management.

He questions why the bank failed to act.

We have sought comments from the Reserve Bank."

Let me add that the Reserve Bank of Fiji's responsibilities also extends to the Home Finance Company Limited, indirectly through the FNPF as it has an interest to ascertain the extent of and quality and safety of intra group exposures between a supervised entity (FNPF) and its subsidiaries (Home Finance).

I had covered the role played by the Board of Directors and external auditors with regard to the large loans being granted/approved in my blog entry yesterday.

You can read the story from today's Fiji Sun on questions being posed by Sir James Ah Koy, a former Minister for Finance and businessman.

"FNPF directors under fire

The Fiji National Provident Fund Investments Limited was an initiative to circumvent initial investment conditions outlined in the FNPF Act and theTrustee Act, says former Finance Minister, Sir James Ah Koy.

Mr Ah Koy said the investment requirements under the Trustee Act were quite strict and among other things required was the trust fund to invest in companies with a record of five-year profits and return at lest five per cent on the investment.

“The FIL was declared a trustee investment, which received funds from the FNPF and was able to invest in high-risk projects whereas the FNPF was prevented from doing so directly. Natadola and Momi fall into this category,” he said.

Sir James questioned the directors and auditors at the time several loans were requested and approved to suspended deputy general manager Foana Nemani.

“I am wondering with all these transactions how do they approve the loans themselves?” said Sir James. “Does it go before the board? These are huge sums of money.

Where were the external auditors and internal auditors of the FNPF fund? What were they doing?

“They can’t do all this in isolation, with nobody knowing what is going on. And how is it that there were no whistle blowers inside the FNPF? The directors of the FNPF at the time should be investigated.”

Sir James said if a change in government did not take place, funds that belonged to the people of Fiji would continue to be abused. “How can these people get away with this without anybody knowing?” he said.

“And if there were no change in government, this could have continued, they could have hidden all this. So this change brought about by Frank Bainimarama is a blessing, especially for young working people, this is their money.

“If there wasn’t a change of directors, this could have continued. The rot could have continued. I understand that Natadola will be investigated but all this corruption has come to the fore.

“It’s a good move that new directors are there like Felix Anthony and Daniel Urai because they are like bloodhounds and will look after the workers’ money.

The internal audit would have made this surface. Who clamped that down? This thing did not just happen this year, this type of thing was happening over a period of time and this should have surfaced.”

Former FNPF chairman Anare Jale said the board dealt with the governance of the fund. “Its daily affairs rest with the chief executive officer,” said Mr Jale. “It is the CEO that implements the policies put together by the board. “I understand that the 14 days given to the two have not expired and it is most unfair when investigations are still ongoing and the audit is printed in the media.”

He said it would be improper to make comments when an audit was still under way."

There will be more on this definitely over the next few days.

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Friday, March 09, 2007

Debate about loans taken by FNPF manager : What did the auditors and the Board members do?

The Fiji National Provident Fund (FNPF) saga continues today with a story in the Fiji Sun about the loans taken by former Deputy General Manager of FNPF from Home Finance Company Limited (HFC) - a subsidiary of FNPF. The loans were supposedly provided without due consideration given to repayment ability and were made at very low interest rates (interest rates that might have been much lower than what they were borrowed at by the lending institution).

The point that I wanted to make is that the former manager of FNPF was not the only one that participated in this particular transaction. For such high loans to be granted, the Board of Directors of the lending institution would have had to be involved. The auditors also should have gone through the documentation/loan when making an assessment about the "going concern"/viability of the lending institution.

So what were they doing? The following questions need to be answered :
  • who made the credit analysis of the loan applications and what did he/she recommend;
  • who gave the approval for the loans to be granted?
  • what was the role of the Board of Directors in this approval?
  • what did the external auditors come up with when making their annual audits to be able to attest to the "going concern" or viability of the lending institution?
Another separate issue to look at would be the relationship between FNPF and Home Finance Company Limited. To protect the interests of members of FNPF, were funds lent to HFC at arm's length or were they another sub-optimal allocation? What is the extent of the exposure of FNPF to HFC? What is the status of that exposure? Are they current i.e. being repaid? At what rates were they offered?

There definitely is more to this.

In the meantime, here is the story that was in today's Fiji Sun.

"$1.2m loans for fund exec : Your money is secure, FNPF chief assures

The suspended deputy general manager of the Fiji National Provident Fund obtained loans totaling $1.2 million from a financial institution in which the fund is a major shareholder and financier.

Home Finance Limited had approved separate loans for different properties for Fotino Investments Limited, a company owned by Foana Nemani and her spouse.

Mrs Nemani holds a majority of the shares in the company. Fotino Investments Ltd was formed in 2003 and had obtained loans of $242,500 for less than 35.4 perches, $242,500 for 33.2 perches, $120,000 for 35.4 perches, $120,000 for 33.2 perches and $649,000 for 1 rood: 6.1 perches. By September 2003, advance payments made to the company had totalled $362,500.

Fotino Investments was charged a rate of 5.75 per cent interest. Transactions spanned a period of two years from 2003 to 2005.

The FNPF owns 75 per cent of shares in HFC and is the sole lender of money for loan distribution by the company. HFC chief executive officer Freddie Keshwan said because of confidentiality of customer information he was in not a position to comment.I regret to advise that I am unable to provide you with any responses to the questions you have raised without a formal and specific written consent of the customer concerned," said Mr Keshwan.

Mrs Nemani had obtained a $576,736 housing loan from the FNPF when the valuation of the property was $430,000. Annually since 2003 Mrs Nemani continued to take additional loans for the upgrading of her property.

Documents of an internal audit allege that she abused her position and authority to take loans when the value on the property was lower than the loan amount. It said that if there is a demand on mortgage, the fund would not be able to fully recover the balance of her loan. Mrs Nemani was charged at a rate of 3.625 per cent, the rate applicable to FNPF staff who take loans for residential purposes. The repayment term of the loan was increased to a period of 15 years (balance of her retirement age) when she took the initial loan in 2000.

The additional five loans were approved on the remaining balance of the repayment period, however she requested an additional loan of $105,000 in March last year and requested that all her loans for the property be recalculated over 15 years.

By requesting that her repayment is spread over a period of 15 years, Mrs Nemani failed to act in the best interest of the fund, the report alleges. Mrs Nemani, says the report, used $41,194 of the $110,000 approved for the upgrade of this property in May 2005 to clear her loan at Merchant Finance.

The fund had approved the additional loan, under the condition that the money was to be used to add value to the house.

Meanwhile, in a statement issued yesterday, acting CEO Parmod Achary assured FNPF members that their funds were secure. He said the FNPF had served members for 40 years and would ensure their financial security during their working lives and on retirement.

"Nothing has changed," said Mr Achary. "Members' funds continue to be safe and secure. The FNPF is committed to providing efficient and effective service to its members and will continue to ensure that members receive their pensions, their benefits, and services to which they are entitled.

"As a good corporate citizen, the fund has always acted in the best interest of Fiji as its total assets make up 60 per cent of the country's Gross Domestic Product.

Most importantly, the FNPF continues to be a responsible steward of the funds with which we are entrusted." The FNPF board meeting will meet today or next Tuesday depending on the availability of members."

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Wednesday, March 07, 2007

Reserve Bank of Fiji : Sleeping on its watch?

More and more is coming out now with regard to alleged scams and mismanagement at the Fiji National Provident Fund (FNPF), members' funds invested at sub-optimal projects by the FNPF, high banks' profits resulting out of Reserve Bank of Fiji's monetary policy settings, complaints about high interest rates and fees charged by banks, but who shall we say is responsible for all this? Yes, the Reserve Bank of Fiji!

The Reserve Bank of Fiji is tasked among other things to "promote a sound financial structure". In carrying out that role, it has prudential oversight of the banking system, the insurance industry, foreign exchange dealers and money changers and the superannuation industry. Whilst conducting its function, the Reserve Bank of Fiji receives and analyses returns submitted periodically by these institutions and using an "early warning signal" system, conducts detailed on-site examinations of institutions under its supervision.

With all that is now being reported in the press, everyone is quick to point at the perpetrators of these alleged abuses. What everyone should really be doing is to point to the supervisor - the Reserve Bank of Fiji and ask the Bank what it has been doing, was it aware of what has been happening and what actions did it take to mitigate any damage to the "interests of depositors, insureds and pension fund members" which is its function.

In my opinion, the Reserve Bank of Fiji has failed to live up to its responsibilities. Its monetary policy has failed (now having Government to tell it how to do that by injecting much needed funds into the financial system) and its prudential supervisory policy and activities have also failed. What next?

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Revised National Budget 2007 : Banks say no need for Ombudsman

Banks continue ranting about there not being a need for a Banking Ombudsman in Fiji. They appear to have all come out in full force on this together with its Association confirming the position. However, members of the public and the Consumer Council of Fiji appear to have the opposite view with more people now questioning the high fees and charges and interest rates levied and the resulting high profits recorded by banks.

Here is a story on

"We don't need ombudsman, say banks

Interim Finance Minister Mahendra ChaudharyFinancial institutions in Fiji have rejected Minister of Finance Mahendra Chaudhary's concerns about the high "fees and charges of financial institutions and talks about regulating the increase in these fees and charges and their rationale.

Chaudhary in his revised 2007 National Budget speech last week said there have been considerable complaints received by customers of financial institutions of high fees and charges and has talked about establishing a financial ombudsman.

But banks don't agree. The Association of Banks in Fiji (ABIF) secretary Rasiklal Jogia said there was a very competitive banking market within Fiji and normal market pressures were a well established mechanism for controlling pricing of products and services within any market. He believes direct regulation of prices was most appropriate for markets where there was no effective competition.

For his part, Colonial managing director Laurie Mellsop maintains the bank does not believe there is an absolute need for a Banking Ombudsman in Fiji. Colonial, he says has well established internal processes for managing customer complaints and customers have access to other bodies such as the Consumer Council, Reserve Bank of Fiji, the Fair Trading Act to name a few if their complaint is not handled properly. "Typically, Banking Ombudsmen in overseas jurisdictions handle customer complaints where there is a difference in the interpretation of bank policies and the application of fees and charges rather than the levels of fees and charges themselves," says Mellsop.

Westpac chief manager Fiji Islands David Evans says that banks today provide a wide variety of products and services which includes low cost banking options. Globally, the banking industry is moving to a "user pay" philosophy which is fairer for the consumer, he added. "In the past, bank services were cross subsidized through higher interest margins and charges so I don't believe this comment is correct and is misleading." He believes the appointment of a separate ombudsman will add additional costs to banking services in Fiji which in the end will mean the cost of banking services increases for consumers. On Chaudhary's comments regarding "high fees and charges" Evans says the majority of Westpac's profits come from interest earned on loans and not from fees and charges. Mellsop for his part, believes that the current levels of fees and charges are appropriate for the services that are provided here in Fiji.

The summary key disclosure statement of Westpac for the financial year ended September 30, 2006 reveals that the bank's net profit before tax was $42.5 million, up from $33.2m from the previous year. The bank's fees and commission revenue for 2006 was $15.4m, up from $12.1m over the previous year.

For ANZ, net profit before tax for the financial year ended 30 September 2006, was $61.8m, up from $42m for the same period the previous year. The bank's fees and commission revenue was $30.6m for the 2006 financial year, down from $32m the previous year.

Colonial's key disclosure statement for the financial year ended 30 June 2006 shows that the company's net profit before tax was $11.6m. Its fees and commission revenue was $8.8m up from $10m the previous year, an increase of 3.3 per cent over the prior year, Mellsop said. But he says it is inappropriate to measure the level of fees and charges against the levels of profits. According to him, there are many components to a bank's net profit and those components vary from bank to bank depending on the mix of business they have.

Evans says the bank has worked hard to minimize any increase in fees and charges and over the past year, increases have been minimal. Jogia says the association would work closely with the interim administration to address their concerns in this matter."

Read a letter today to the Editor, Fiji Times, from a member of the public regarding the high interest rates.

"Interest rates

I agree with Inoke Marama (FT 5/3) regarding banks' profits. The Reserve Bank of Fiji needs to answer some questions. According to the banks, the interest rate increase was advised by the RBF to control spending in the economy.

I am wondering if this was so. Why were the interest rates for old loans increased? I ask the RBF to clarify this point as the commercial banks maybe hiding behind the curtains of RBF.

Johnny Singh, Nadi"

And here is the article in today's Fiji Times about Consumer Council of Fiji's position on the subject.

"Council for bank bodies

THE Consumer Council of Fiji has welcomed Interim Finance Minister Mahendra Chaudhry's announcement to establish a financial commission and a financial ombudsman.

The council said the appointment of a financial ombudsman would ultimately benefit both the customer and the financial institutions.

The council's chief executive officer Premila Kumar said the establishment of a commission should be given a chance so that the grievances of the public could be heard and were not silenced.

"This is a pragmatic solution to the many consumer complaints regarding banking and financial institutions," Ms Kumar said. "To say that there is no need for such an establishment is an ill-disposed thought," she said.

Ms Kumar said although the Reserve Bank of Fiji regulated the Banking Act 1995, it was not mandated to regulate the fees and charges of the banks and financial institutions.

"High levels of fees and charges, which are imposed by the banks and financial institutions, is overwhelmingly the most singled out complaint by consumers.""

Government's position has been delivered and we hope that it will stick to it. As evident from all data/statistics that one looks at, banks seem to have had a good joy ride in such desperate times to the disadvantage of consumers. Those days now appear to be seeing their end.

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Monday, March 05, 2007

Revised National Budget 2007 : More debate on banks

Refer to more stories below on the need for a local bank, what the Reserve Bank of Fiji has said and what expectations are there for system liquidity and interest rates. The stories were taken from the Fiji Sun website,

"Academic welcomes local bank concept

The idea of having a locally owned bank has been praised by an academic. University of the South Pacific's Dr Mahendra Reddy said the inclusion of a local bank was excellent. However, he said it would not be easy. Dr Reddy said the country had lost their chance when the Laisenia Qarase- led government sold it shares from the Colonial Bank. "We have lost a golden opportunity by losing our state bank and we can't re-invent the wheel," he said. Interim Finance Minister Mahendra Chaudhary challenged the large local companies to open a locally owned commercial bank. Going by the level of profits of commercial banks, he said it was a lucrative venture. "For a locally owned bank, at least the profit gets to stay in Fiji," he said. Fiji's state- owned bank National Bank of Fiji ceased operations in 1990s after events of corruption.

RBF accepts Minister’s call

The challenges outlined by the interim Finance Minister Mahendra Chaudhary at the 2007 revised national budget announcement has been accepted by the Reserve Bank of Fiji. The RBF Governor Savenaca Narube said the challenges outlined were clear. He supported the actions for improving the balance of payments. "It is important to narrow the widening of trade deficits," Mr Narube said. He further agreed on the need to have growth projection of 4per cent. He however outlined that a large portion of economic growth depended on tourism. "The 4per cent growth is agreed on. It all hinges on the tourism growth," Mr Narube said. He said the Reserve Bank was not allocated a budget. Mr Chaudhary said a major challenge was to reverse the widening trade deficits and stabilise Fiji's foreign reserves position.

Chaudhry wants measures implemented

The 2007 national revised budget maintains the broad thrust of policies, which have been put forward by governments in the last 10 years, an economist said yesterday. University of the South Pacific's Dr Biman Prasad said the budget involved public sector reforms, developing an export strategy for growth and containing the debt levels and excessive borrowing to reduce the deficit. "In terms of sectoral emphasis, like the previous SDL budgets, it lays emphasis on tourism, agricultural and light manufacturing," he said. He however said the difference with the revised budget was that the interim finance minister Mahendra Chaudhray emphasised the urgency of implementing some of the measures. In his keynote address on Friday Mr Chaudhary said he planned to bring the level of Government debt down and the revised budget restricted the Government deficit to 2per cent of the Gross Domestic Product in 2007. He did not agree with the idea of spending more and letting the deficit rise to pump the economy. Dr Prasad also agreed that Fiji could not have had a larger deficit to encourage economic activities. "The increase in deficit could have been effectively used to improve infrastructure such as ports, airports, roads, many of which are in a dilapidated conditions around the country," he said. "Another 1per cent or 2per cent deficit would have allowed the Government to engage in more productive expenditures, which would have allowed it create employment in the short-term as well as improve the prospects of long-term growth." Mr Chaudhary gave a signal to the Reserve Bank of Fiji to change its tight monetary policy and help increase liquidity into the system and bring the interest rate down. Dr Prasad said it is not prudent to have tight fiscal and monetary policy in a period of economic decline."

After reading all that if one asks whether the Government can "enforce" compliance by the Reserve Bank of Fiji in this day when central bank independence is promoted and sought. The answer is a resounding YES! There is a provision under the Reserve Bank of Fiji Act which requires the Reserve Bank of Fiji to implement policy directions of the Government of the day. So, we are definitely looking forward to reduced lending rates again after more liquidity is pumped into the financial system.

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VB Holdings Limited record a profit

VB Holdings Limited, a company listed on the South Pacific Stock Exchange, has recorded a profit of F$418,223.00 for its 2006 financial year compared to F$332,243.00 recorded for 2005.

The company said the improved performance in 2006 was due to outstanding performance of its fleet management division which it said was due to its "ability to respond quickly to customer choices and requirements".

Its property management division also registered a normal growth of 7% of total revenue.

The company said that despite the current political situation in Fiji, it could already see new business opportunities in 2007.

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Revised National Budget 2007 : Debate about need for a local bank and a Financial Ombudsman

There has been some debate going on in the press about the need for a local bank in Fiji. The two larger banks, ANZ and Westpac, have both said that they will welcome the establishment of another bank with ANZ saying that there was a lot of competition with the main banks and also that the playing field must be level to be fair to companies who invested millions in Fiji. Westpac, on the other hand, said they welcomed competition in the market.

Other members of the public have welcomed the establishment of a local bank, some though clearly wary that they did not want to see it follow the path of the government-owned National Bank of Fiji a few years ago.

With lending margins (i.e. the difference between average lending rates and average deposit rates) about 7.7% in September 2006, this shows that there is capacity for more competition and therefore more players in the market.

If a new players is given the same 10 year tax free status that is given those companies wishing to set up in the tax free zone at Kalabu to help it with its initial establishment costs and the bank focuses on shaving these margins, then there is definitely a place for it in Fiji's financial system.

Interestingly, when one analyses Table 8, Commercial Banks' Lending and Deposit Rates, of the Reserve Bank of Fiji's Quarterly Review for September 2006, one can find that while banks average lending rates fell initially over 2004 and 2005, it has started to rise from 2006, during the height of the interest rate hikes by the Reserve Bank of Fiji.

It is little wonder that the two larger banks, ANZ and Westpac, recorded dramatic increases in their net profits for their 1996 financial year.

Government should commission an independent study to look more into this.

While we are on this subject, I can say that the figures themselves indicate that there is also scope for a Financial Ombudsman as I think there will definitely be a good number of people out there who will have issues with interest rates, fees, level of services and other complaints about financial service providers in Fiji.

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Friday, March 02, 2007

Revised National Budget 2007 : Get your copy

A copy of the revised National Budget 2007 that was delivered by the Interim Minister for Finance has been loaded on our Yahoo Group, 'fijisale'. Subscribe to our Yahoo Group by filling in your e-mail address and clicking the "Join now" button at the top of this blog.

The revised budget is very pro-business and pro-investors. Get a copy by subscribing to our Yahoo Group, 'fijisale', now!

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Revised National Budget 2007 : Need for a local bank

The Interim Minister for Finance has made reference to the need now to have a local bank up and running in Fiji. He made reference to this in announcing Government's Revised National Budget for 2007 in a move to see that profits are retained in Fiji, among other reasons.

ANZ and Westpac had announced last January their profits totalling over F$77 million for their financial years ending 30 September 2006, which I had analysed in this blog in an entry on 30 January 2007.

As I mentioned, it is usual practice that banks remit their entire profits to their head offices abroad having met the 8% capital adequacy ratio requirement set by the Reserve Bank of Fiji.

The set up of a Fiji bank would do well for the country's financial reputation and standing and help in moves to promote a more dynamic regional financial powerhouse in Fiji.

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Revised National Budget 2007 : Interest rates to fall

The Interim Minister for Finance has announced Government's Revised National Budget for 2007. As part of measures to boost the economy and ensure that there is sufficient funds for investment, Government has announced that the Reserve Bank of Fiji will now be looking at injecting liquidity into the financial system.

Such a move will result in downward pressure on interest rates to boost economic development as well as to ensure that there the financial system has sufficient funds to put into investment projects. We will, therefore, expect banks' interest rates to fall over the immediate term.

I had, in earlier posts, mentioned that Reserve Bank of Fiji's monetary policy stance was not doing the economy much benefit with its interest rates hikes over the last two years. This has lead to hardships for ordinary citizens through higher lending rates, lack of funds for investment projects for both domestic and foreign investors, with banks the only ones gaining as evidenced by their high profits over the last financial year.

Such a move will definitely help kick-start the economy and would be a good sign to individuals, businesses and investors alike.

More on the Government Revised National Budget 2007 later.

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Fiji TV records lower profits for half year

Fiji TV, a company listed on the South Pacific Stock Exchange, has reported a fall in profits for the first half of its current financial year. Profits are tax fell to F$1.5 million for the half year ended 31 December 2006. This compares with a profit after tax of F$2.3 million recorded in the same period the previous year.

The company gave the reason for its lower performance as "due to the downturn in overall business [a result of] the political instability and the events of December 5, 2006 .......". The company said as a result the company expects its revenue for the next six months is to fall by 8.5%.

Note : Fiji residents that require investment advice can use our company, Gilbert & Samuels Company Limited. Our principal, Gilbert Veisamasama Jr, is licensed as an Investment Advisor by the Capital Markets Development Authority (of Fiji). Our contacts are : e-mail and telephone (679) 3396427.

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Investor wishes to set up F$42 million paper factory

Another Australian based investor has indicated that it wishes to set up a F$42 million paper manufacturing business in Fiji. The investor is to use baggase and wood chips (two waste products) to manufacture paper.

The business is to be set up in the North (Vanua Levu) over the next two years and has been discussing sourcing baggase from Fiji Sugar Corporation and wood chips from Fiji Pine, Fiji Hardwood Corporation and Tropic Woods.

The company is also exploring the possibility of making mahogany furniture for exports.

Vanua Levu is being considered as the ideal location after the Interim Government offered the investor certain concessions to set up there.

The investor said the first year would be spent on doing a feasibility study for the project and if things proceeded as planned, the set up of the factory would start from the second year.

Note : Foreign investors that need assistance for setting up business in Fiji can use our company, Gilbert & Samuels Company Limited. We can help with all facets of work, including applying for all necessary permits/approvals and seeking domestic financing for part of the project. Our contacts are : e-mail and telephone (679) 3396427.

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Thursday, March 01, 2007

More complaints about banks high profits

Fiji Live continues with a report by economist, Paresh Narayan, about how banks are making substantial profits in Fiji at the expense of the businesses and the household sector. Again, I had raised this in my analysis of the profits reported by ANZ and Westpac for their financial year ended 30 September 2006 which was posted on my blog on 30 January 2007.

Now read on below the article from Fiji Live.

"Australian academic Paresh Narayan believes the concerns of retailers regarding the cost of doing business in Fiji are legitimate.

He claims the commercial banks are making substantial profits at the expense of the businesses and the household sector. And he suggested that banking regulations need to be reviewed in light of the "supernormal" profits made by the commercial banks.

Yesterday, Fiji Retailers Association president Himmat Lodhia urged the Government to come up with a budget or ideas to stop the declining trend of the economy. He said the retailing trend was changing for the worse with retail trade declining and business costs rising.

And he claimed 'a collapse in the economy is now more noticeable then ever'. Lodhia said there will be quite a few businesses in the small to medium enterprises which could collapse 'owing to the increasing costs of doing business and a relative decline in the sales trend'.

Last month, Fiji's two main banks ANZ and Westpac announced strong profits for the 2006 financial year. ANZ's net profit after tax was $42.9million (up by $13.6m over the previous year) while Westpac's was $30.1m (up by $5.8m over the previous year).

Narayan also says that the building investor confidence is crucial, and in this light tackling the issue of cost of doing business in Fiji is imperative. 'The sound law and order situation and absence of threat to both businesses and households (currently) have helped the retail sector. 'It is essential that this security situation continue,' Narayan says."

I still attribute the high profits recorded by banks in Fiji in the last financial year a direct result of interest rates hikes by the Reserve Bank of Fiji. Have they conducted a study on interest margins? I can only expect margins to have remained the same as in previous years or has widened as a result of the Reserve Bank of Fiji's interest rate policy. A good independent study is required of banks interest margins and spreads.

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Consumer Council of Fiji takes up call for a Banking Ombudsman

The Consumer Council has taken up an earlier call made in this blog for a Banking Ombudsman. I had made the call after analysing the rise in profits recorded by the two largest banks in Fiji in my post of 30 January 2007.

In today's Daily Post, the Consumer Council is calling for an immediate appointment of a bank ombudsman following complaints by customers of overcharged bank fees. Reproduced below is the story in the Daily Post.

"THE Consumer Council of Fiji is calling for an immediate appointment of a bank ombudsman following complaints by customers of overcharged bank fees. Council Chairman, Swani Maharaj, yesterday said the council will undertake a research to examine the bank fees, countrywide and how its customers are affected by these levies.

Maharaj said he has received a complaint from a businessman after he was charged $700 in bank fees to release a duplicate bank draft. 'This businessman drew up the bank draft and paid the bank charges, however he lost it and went back to the bank for a duplicate copy and was charged $700 for it,' he revealed.

'In past years businesses were complaining about the high electricity and water bills adding to the cost of business however at present they are complaining about the high bank charges. The Consumer Council is very concerned with this issue especially when we consider the poor people who have smaller accounts at banks.'

He added that people depositing less than $50 were being charged about $2 for the deposit, which was unnecessary and expensive for people in low income brackets. Maharaj added that banks should facilitate banking for poor people so that they are able to save money rather than losing what little they have on bank charges.

'It is high time a banking ombudsman was appointed to look after the interest of the people and monitor the bank fees and levies charged by banks in the country,' he stressed.

Recently, he said, banking corporations declared huge profits in the Pacific region however this margin was not achieved in their own countries. Maharaj stressed that the huge profits made by banks in the Pacific region should not be used to subsidise the branches in their parent countries adding that with such large profits the bank fees should be reduced.

He added that there should be no fees charged to the people keeping small accounts at the banks stressing that the Consumer Council will be looking into this matter."

Read here another complaint against banks that is raging in the United Kingdom.

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Looking for property owners who want to dispose off their properties

Fiji has seen a number of senior executives being terminated as a result of investigations being carried out by the Interim Government. These senior executives, who usually own more than one property, will find it hard to meet their loan repayments. With the need to protect their reputation and avoid public embarrassment, they will want to hold back on these properties for as long as possible. However, it may be good to sell off the property for a reasonable price before the bank moves in to foreclose. If you are in such a situation, I can assist you with finding a buyer for your property. I am looking at properties that are being sold at a discount (i.e. less than valuation to meet loan debt and for a quick sale). If you fall in this category and want to talk, e-mail me on or call telephone (679) 3396427 or (679) 9921427. If you know of a friend or family member who might need this service, pls forward our contacts to them.

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Production Studio for Yaqara

An Australian company, Beach Hut Media, says that a F$450 million movie production studio could begin operations in Fiji as early as April 2007. The studio will be located at Yaqara Studio City.

The company said that while it will be not as big as something like Warner Brothers Studio, it will contribute to Fiji's economy by bringing it much needed investment and employment. Registered in Fiji as Beach Hut Media Fiji, the company said it will attempt to employ as much local talent as possible. The company has been impressed with the talent shown by students of the FIT School of Art, Culture & Design.

Beach Hut Media Fiji will look at introducing producers from overseas markets to invest in Fiji and get films produced here. The first part of the project will see about 25 feature films produced in Fiji.

The company will be bringing in US-based script writers into the country this month.

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Westpac Interest Rates (Updated 1.3.07)

Schedule of interest rates released by Westpac Fiji are as follows :

  • Business Lending Rate - 12.49%;
  • Residential Property Loan : Variable Rate - 12.25%;
  • Investment Loan : Variable Rate - 12.25%;
  • Retail Term Deposits : 6 to less than 9 months - 4.60%, 9 months to less than 1 year - 4.25%, 1 year to less than 1.5 Years - 5.45%, 1.5 years to less than 2 Years - 6.00%, 2 years to less than 3 Years - 4.50%.

Interest rates are on a per annum basis and may be varied by the bank without prior notice.

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Colonial National Bank Interest Rates (Updated 1.3.07)

Schedule of interest rates released by Colonial National Bank are as follows :
  • Business Banking Base Rate - 11.95%;
  • Residential Property Loan : Variable Rate - 12.25%, 1 Year Fixed Rate - 10.40%, 1.5 Years Fixed Interest Rate - 11.00%;
  • Investment Loan : Variable Rate - 12.25%, 1 Year Fixed Rate - 10.40%, 1.5 Years Fixed Interest Rate - 11.00%;
  • Retail Term Deposits : 9 months - 6.00%, 1 year - 7.00%, 1.5 Years - 6.00%, 2 Years - 4.50%, 3 Years - 4.50%.

Interest rates are on a per annum basis and may be varied by the bank without prior notice.

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