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This blog is brought to you by Gilbert & Samuels Company Limited, a financial advisory services and consulting company based in Suva, Fiji.
To contact the authors of this blog, please call telephones (679) 3342719, (679) 3544897 or e-mail info@gilbert.com.fj.


Wednesday, January 31, 2007

Cement prices up

For investors considering investing into property, please note that cement prices are up 3% after an approval by the Commerce Commission last December. The increase sees the price of bagged cement rise from F$198 to F$203.94 per tonne. Fiji Industries, a subsidiary of the Fijian Holdings Limited group of companies, is the major producer of cement in Fiji.

For information on prices in general, refer to the Reserve Bank of Fiji website, www.rbf.gov.fj, for commentary on the Consumer Price Index (CPI). The Bureau of Statistics would also have data on the CPI.

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Tuesday, January 30, 2007

Conclusions/lessons from ANZ and Westpac's financial results

In our earlier post, we analysed the financial results that were reported in the last few days by ANZ Banking Group Limited and Westpac Banking Corporation for their financial year ended 30 September 2006.

In this post, we outline the conclusions/lessons that can be drawn including a few things that can be pursued by the authorities :
  1. RBF's monetary policy to be revisited. Its interest rate hikes has resulted directly in the banks gaining, albeit at the cost of consumers who pay higher interest rates for basic necessities including a roof over their heads. The RBF's reasons for its hikes were to contain consumption and to protect foreign reserves. As one plainly understands, it has contributed more to financial hardships for ordinary citizens under current economic conditions. The same foreign reserves it wishes to protect will be further depleted when these two banks remit their entire profits of over F$73 million to their head offices abroad as is their usual practice being branch banks.
  2. There should be scope either for reduction of lending rates by banks or for raising deposit rates further. On both accounts, the economy stands to gain as a reduction in interest rates will help individuals who are facing financial difficulties as well as investors who wish to get domestic financing for some of their projects . An increase in deposit rates would help promote savings and investment and encourage investors from offshore to come in - boosting foreign reserves.
  3. The Reserve Bank of Fiji to conduct and publish a study of interest rate margins and spreads to see whether these should be regulated. From the two banks financial results, one can only deduce that these margins are widening, which is something that consumers do not benefit from.
  4. In an interest rate rising environment, there might be scope for banks to come down on its fees and charges as it makes more of its profits from the rise in interest rates.
  5. There might be an urgent need for a banking ombudsman to attend to complaints and observations about the banking industry.
  6. The Commerce Commission and the Consumer Council may need to come in and review whether consumers are really being disadvantaged under the current monetary policy settings and economic conditions.

We hope that the authorities will look into these.

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ANZ and Westpac make huge profits under Reserve Bank's monetary policy

In light of continued interest rate rises by the Reserve Bank of Fiji in the last two years, the two largest banks in Fiji, ANZ Banking Group Limited and Westpac Banking Corporation, have made record profits for their financial years ending 30 September 2006.

In a disclosure statement published a few days ago, ANZ Bank reported net profit after tax of F$42.9 million while Westpac reported net profit after tax at F$30.2 million, a total of F$73.1 million for the two banks.

Whilst interest rates on deposit and deposit products have been on the rise in line with the Reserve Bank's monetary policy settings, the banks appear to have made the bulk of their income from substantial increases in interest received on loans they have made. ANZ recorded a F$25.7 million or 49.8% increase in interest income to F$77.3 million in 1996, from F$51.6 million a year earlier. This, when interest paid on deposits rose by F$10.2 million. Westpac, on the other hand, reported a F$10.5 million or 23.8% increase in interest income to F$54.8 million in 1996, from $44.2 million a year earlier. Westpac's interest paid on deposits rose by F$7 million in 1996.

On fee income, ANZ registered a reduction of F$1.4 million while Westpac recorded an increase of F$3.2 million for 1996.

Check out our next post for what lessons/conclusions we can draw from the banks' financial results.

[Another two banks to publish their results next will be Colonial National Bank and the former Habib Bank. This will be around April. Let's keep a lookout for those disclosure statements when they come out.]

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Sunday, January 28, 2007

Calling Fijians working abroad and former Fiji citizens living overseas - an opportunity to invest in Fiji

Fijians working abroad and former Fiji residents living overseas, may wish to consider reinvesting in Fiji. Interest rates (for savings/deposits) are high and there are countless other opportunities to invest in Fiji. The real estate market is at the stage where there will be a number of properties on the market soon on mortgagee sale as property owners default resulting from the events of December 2006.

Pls e-mail us on gilbert@connect.com.fj to get a brochure outlining some of the forms of investment available and how we can assist you.

To contact us by telephone, you can call telephones +679 3396427 or send a text message to +679 9921427.

Let us help you find a niche for your investment in Fiji.

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Friday, January 26, 2007

FNPF to be reviewed

The Fiji National Provident Fund (FNPF) is to undergo a review by the Interim Government. This has been announced after the Fund's Chief Executive Officer and his deputy were both sent on leave with immediate effect late afternoon, Thursday, 25 January 2007.

The review will cover, among others, concerns about the capabilities of management, their salaries and overheads and the viability of some of the Fund's investments.

FNPF is the sole pension fund provider in Fiji and has been in operation since the mid 1960s. After the failure of some of its counterparts in other Pacific Island countries, e.g. Vanuatu, there have been rising concerns about the continued viability of the FNPF and some criticisms about the investments that it got into.

Some of the difficulties faced by the FNPF includes its restrictions in investing freely offshore with Exchange Control regulations in place by the Reserve Bank of Fiji. This tends to limit its investments to those that are available domestically, which in some cases are not entirely optimal for members' interests.

An assessment done by the ILO of the Fund's pension reserves states that it would run out of Funds in the late 2010s or early 2020s. Extending that timeframe is a challenge for the Fund's own management and for Government and the country as a whole.

We hope that the review by the Interim Government will be able to steer the Fund in a clear direction in future with the ultimate objective of providing for its members in their twilight years.

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Exporting to Canada Seminar

The Fiji Islands Trade and Investment Bureau (FTIB) together with the visiting Fiji Consul Designate in Canada, Ashwant Dwivedi, will be conducting two seminars on the export opportunities for Fiji products and commodities to meet the growing demand of the Canadian market.

These seminars will cover the following issues relating to the Canadian market :
  • general packaging and labelling requirements for fresh fruit and vegetables;
  • fresh fruits and vegetables residue program and how Fiji exporters can participate in this program;
  • Canadian export requirements for fresh fruit and vegetables;
  • sharing of market information with respect to importers of fresh fruit and vegetables and other products;
  • Canadian export requirement guideline and how to use this guideline;
  • labelling requirement of fresh goods and processed goods;
  • requirements for exporting fish and fish products to Canada.

Exporters, potential exporters and interested stakeholders are invited to attend these presentations which are scheduled as follows :

  • Friday, 2 February 2007, 8.30am to 10am, FTIB Boardroom, Level 6, Civic Tower, Suva;
  • Thursday, 8 February 2007, 2.30pm to 4pm, Waterfront Hotel, Lautoka.

Registration is required and is free of charge. Space is limited therefore attendance will be on a first come-first serve basis.

For registration, pls contact Ms Sonal Singh at FTIB on telephone +679 3315988 or e-mail sonal@ftib.org.fj.

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Thursday, January 25, 2007

Fiji Tourism Industry might just reach F$1 billion target

The Fiji Visitors Bureau has today said that the tourism industry might just reach its F$1 billion target this year. This is after it announced that tourist numbers will rise again to 30,000 in February as a result of discounted travel packages being aggressively promoted overseas by Fiji travel operators.

The Bureau said that if an average of 50,000 tourists per month visited Fiji from June to December 2007, then the industry would meet its ambition of being a billion dollar industry in Fiji this year.

However, foreign investors might wish to note that aside from tourism there are countless other areas in which they could invest in Fiji.

It will be interesting to see what comes out of the revised National Budget which is being developed by the Interim Government. The Finance Ministry says will have an unenviable task of developing a good package of incentives that will be able to attract and retain foreign investment and also promote local industry.

To discuss potential areas of investment and your plans for Fiji, you can contact our company, Gilbert & Samuels Company Limited, on telephone +679 3396427 or e-mail gilbert@connect.com.fj.

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Monday, January 22, 2007

Landmark court ruling for Fijian landowners

A landmark court ruling now allows Fijian landowners to log or harvest trees that is on their land. The ruling referred to mahogany trees that were on land owned by the Mataqali Naua of Serua which the landowners were not permitted by the Native Land Trust Board to harvest with the trees to be kept for the Fiji Hardwood Corporation.

The ruling has resulted in more calls for a review of the Native Land Trust Board and its purposes. Most Fijian land and resource owners in recent years have been complaining about the restrictions placed by the Native Land Trust Board which inhibit them from developing their own land and resources. There have also been criticisms about the Board taking out 15% of proceeds received from developing native resources with the actual land/resource owner only receiving 55% of proceeds at the end, after all other distributions.

This has been said to be a major stumbling block to Fijian land and resource owners in developing and benefiting from their own resources.

It is expected that a review of the Native Land Trust Board will be carried out soon.

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Thursday, January 18, 2007

Fiji telephone rates on par with other developed countries?

Telecom Fiji Limited says that its telephone rates are on par with other developed countries and are much cheaper than those of island neighbours including Vanuatu, Papua New Guinea and the Cook Islands. The company was responding to a report titled, 2007 Telecoms, Mobile and Broadband in the South Pacific Islands, which said that penetration rates of telecom services in the South Pacific remained comparatively low and that basic telecom services remained relatively expensive.

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Tuesday, January 16, 2007

Petrol prices drop today

Petrol prices will drop from today after an announcement by the Prices and Incomes Board (PIB). The reduction in retail prices of petroleum products is reflective of the October/November 2005 world product market conditions, according to the PIB.

The reductions are as follows :
  • Motor Spirit falls from F$1.83 per litre to F$1.65;
  • Kerosene from F$1.65 per litre to F$1.18;
  • Diesel from F$1.60 per litre to F$1.42;
  • Premix Outboard fuel from F$1.78 per litre to F$1.58.

The Fiji Chamber of Commerce has welcomed the reductions which he said would ease business costs.

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Sunday, January 14, 2007

Budget 2007 under consideration

The Interim Minister for Finance has announced that the Government National Budget 2007 is under consideration. He announced that there were two options in that regard : to continue to use the Budget as tabled by the deposed Qarase Government or to put in a new Budget altogether. His recommendations will be considered in the Cabinet meeting held early next week.

In the meantime, the President has sworn in early this week a line-up of cabinet ministers who will form government under Interim Prime Minister and Army Commander, Frank Bainimarama.

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