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Tuesday, January 22, 2008

Does yachting have a future in Fiji?

Yachting can provide a lucrative foreign exchange earner to Fiji if the proper policies and regulations are put in place by Government and interested stakeholders. Owners of yachts are people of wealth who, apart from providing tax and other revenues to Fiji when they berth at one of our marinas, can also attract other wealthy acquaintances to visit the country by word-of-mouth advertising.

It is therefore essential that the right infrastructure and policies are in place to attract this target market.

Read related articles below taken from the Fiji Times.

"Marina planned for Mamanuca, Tuesday, January 22, 2008

An Australian investor plans to construct a multi-million dollar yachting facility to further develop the fastest growing segment of Fiji tourism.

Bill Bennett, the director of Amanuca Resort on Tokoriki Island believes Fiji has the potential to become one of the world's leading yachting destinations.

Mr Bennett, who has already constructed a 300 room four-star resort on the island believes the yachting facility could become the Mamanuca group's newest "craze."

"I have very big plans for Amanuca Island Resort and this includes a yachting facility. The deep-water marina that I plan to build on the island would be able to cater for 150 crafts and will also have a bunkering facility."

"During the construction phase of the resort, I spent more than $1.3 million on local labour and I plan to spend more while constructing the yachting facility," he said.

Mr Bennett said he "fell in love" with Fiji and completely confident of its potential when he first visited in 2003.

Mr Bennett and his family returned a year later, secured the property on Tokoriki Island and began construction of the resort. The resort opened for business early last year.

But while Mr Bennett plans to pump millions of dollars into the local economy, he is wary of new regulations reducing the length of stay for yachties from six months to three.

Mr Bennett said the reduced period compared to the six months offered by previous governments would see yacht owners travelling to neighbouring countries like Samoa, Tonga, Vanuatu, New Zealand and Australia.

He said such decisions would make it very hard for Fiji's yachting industry to grow."

"State firm on yacht policy, Tuesday, January 22, 2008

The interim Government remains firm in its stand to restrict yachts from staying longer than three to six months in the country as it continues to investigate drug smuggling and prostitution allegations.

In a statement yesterday interim Finance Minister Mahendra Chaudhry said the Fiji Islands Revenue and Customs Authority was forced to revise its policy on visiting yachts because the system was being grossly abused by people who were not genuine tourists.

Mr Chaudhry said Fiji was losing millions of dollars in duty from people who were abusing the system for their own interests.

Savusavu Yacht Club director Geoff Taylor earlier lashed out at the interim Government for restricting yachters from staying more than three months and according to Mr Taylor this had greatly affected tourism and Savusavu.

Mr Chaudhry said duty- free entry of yachts only applied to those bona fide tourists who were allowed a three-month permit which could also be extended to another three months.

"A total of six months in the country is more than sufficient," said Mr ChaudhryPeople come and park their yachts here for months at a time, they do business in Fiji, own residences and use Fiji as a duty-free base to fly out and do business elsewhere," he said.

Mr Chaudhry said yachts were becoming a highly suspected source for drug peddling, smuggling of contraband goods and even endangered species of flora and fauna, and prostitution.

"I expect marina owners here to understand why policy changes are being initiated," he said.

Meanwhile the Fiji Tourism Resource Owners Association feels the longer the yachties stay in the country, the better it will be for everyone especially those whose livelihood depended on yachts.

The association is concerned with the new policy directive issued by the interim Government to restrict yachties to only three months stay in the country, saying it was detrimental to the people there.

Association secretary Meli Bogileka said the livelihood of most islanders especially those in the Yasawa Group would be affected.

Several marina developers have expressed disappointment at the reduced stay, saying it would affect the viability of their ventures.

Vuda Marina in Nadi has confirmed putting on hold a multi-million project after the announcement of the reduced length of stay."

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Thursday, January 17, 2008

Fiji Development Bank to concentrate on its developmental function

Fiji Development Bank has been asked by the Minister for Finance to focus on its initial developmental function and that is to concentrate on lending in the agricultural and small business sectors.

In recent years, the Fiji Development Bank has boosted its commercial lending area and is somehow a direct competitor to banks.

While it still does offer lending in the agriculture and small business sectors, lending in these areas may have been crowded out in the development bank's bid to increase its commercial loan portfolio.

One of the reasons that the development bank has gone into commercial lending was to contain the rise in losses from its agriculture lending portfolio.

On the whole, a good review of the function of each financial intermediary would be necessary to ensure that they are all contributing to development in Fiji. Over the years, as new entities has sprung up, a dilution of the distinct role of each entity may have resulted.

It would be good therefore that Government does a review of the entire financial sector to ascertain and clarify what role each intermediary or sub-sector of that sector should play.

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More on reduction in remittances to Fiji

There is more in the Fiji Times today on the possible reasons for the reduction in remittances to Fiji in 2007. Copied below is the article from the Fiji Times.

"Employers speculate on remittances drop, Thursday, January 17, 2008

A drop in remittances could be attributed to Fijians employed overseas investing there instead of sending money to Fiji, says Fiji Employers Federation chief executive officer, Ken Roberts.

Mr Roberts was commenting on figures released by the Reserve Bank of Fiji this week which showed money remitted by Fijians working overseas hit $183.7million in September last year a drop of almost 30 per cent when compared to the $260.7million for the same period in 2006.

Reserve Bank of Fiji acting deputy Governor Barry Whiteside said reasons for the decline could not be ascertained by the central bank.

Mr Roberts said it was strange that remittances were declining.

"I could not suggest the reasons either but maybe they are investing money overseas," he said.
The University of the South Pacific's associate professor in economics, Doctor Mahendra Reddy said there could be three reasons for the decline.

Firstly, Fijians working outside Fiji in the past two years had sponsored their loved ones overseas so they did not send money home, Dr Reddy said.

He said secondly, Fijians working overseas might be holding on to the money as a result of the law and order situation in the country.

The third possibility was that given the economic instability of the past two years, many people anticipated a devaluation of the Fiji dollar. Dr Reddy said Fijians might have stopped sending money home as a result of the rumours about a devaluation.

Colonial Bank's general manager John Harper said they were doing research with groups working overseas to find out the reasons behind the decline.

Mr Harper said he could not give details of inflow of remittances and outflow through Colonial as this was commercially sensitive information.

Capital outflows had also dropped, Mr Harper said."

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Tuesday, January 15, 2008

Remittances to Fiji fall in 2007

The Reserve Bank of Fiji has announced that remittances to Fiji fell by almost 30% to F$183.7 million in September 2007, from F$260.7 million in the same period the previous year. This was after remittances had grown dramatically from F$50 million in 1999 to F$320 million in 2006.

The Reserve Bank has not been able to "explicitly ascertain" the reasons for the fall. One of the reasons given is that more remittances could now be coming in through informal channels than the formal ones.

It is interesting to note that the Reserve Bank has not done a bit more to analyse the real causes for the fall in remittances.

Some of the ones I can think of include :
  1. Due to the events of December 2006, more prudent people would be opting to keep their hard-earned funds offshore rather than bringing them into Fiji;
  2. If most Fiji citizens working abroad are being paid in USD which is the most usual currency of payment that people prefer, then given that the USD has been relatively weak, this may have resulted in the reduction in conversion of earnings to Fiji Dollars;
  3. Insufficient data has been collected from all points where remittances could be coming into the country to enable comprehensive analyses;
  4. In the second half of the year when interest rates in Fiji has fallen sharply, again more prudent people would have preferred to keep their funds offshore in countries where interest rates have been higher e.g. Australia, New Zealand;
  5. Rather than send hard cash into the country, people are probably buying items from abroad and sending those to Fiji as the purchase prices offshore maybe more cheaper.

These are just some reasons that can be looked at in more detail.

It would be interesting to look at the actual figures and trends for further analysis.

NB : We provide consulting services in the areas of unit trusts, banking, capital markets and financial sector development. Check our profile at the right hand side of this blog to review the clients that we have done work for. To contact us, you can e-mail or call telephones (679) 3396427 or (679) 9921427.

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Saturday, January 05, 2008

Another new client : Amalgamated Telecom Holdings

We have just begun work with a new client, Amalgamated Telecom Holdings Limited (ATH). ATH has 100% ownership of other telecommunications companies in Fiji including Telecom Fiji Limited and ATH Technology Park Limited. ATH also owns 90% of Fiji Directories Limited.

Telecom Fiji, on the other hand, has 100% shares with Internet Services Fiji, Transtel Limited and Xceed Pasifika Limited. Telecom Fiji also owns 51% shares with Vodafone Fiji Limited.

For ATH, we are facilitating workshops for management and the Board and will help put together a new Strategic Plan for financial years ending March 2009, 2010 and 2011.

We are again using a Strategic Planning model that we have developed ourselves. Mr Nacanieli Rika, lecturer in Accounting and Finance, University of the South Pacific, will again be assisting us with this project.

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Colonial National Bank Interest Rates (Updated 2.1.08)

Schedule of interest rates released by Colonial National Bank are as follows :
  • Business Banking Base Rate - 10.20%;
  • Residential Property Loan : Variable Rate - 10.50%, 1 Year Fixed Rate - 8.00%;
  • Investment Loan : Variable Rate - 10.50%, 1 Year Fixed Rate - 8.00%;
  • Retail Term Deposits : 9 months - 2.00%, 1 year - 2.00%, 1.5 Years - 2.00%, 2 Years - 2.00%, 3 Years - 2.00%.
Interest rates are on a per annum basis and may be varied by the bank without prior notice.

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Westpac Interest Rates (Updated 2.1.08)

Schedule of interest rates released by Westpac Fiji are as follows :
  • Business Lending Rate - 9.99%;
  • Residential Property Loan : Variable Rate - 9.75%, 1 year Fixed Rate - 8.00%;
  • Investment Loan : Variable Rate - 9.75%, , 1 year Fixed Rate - 8.00%;
  • Retail Term Deposits : 6 to less than 9 months - 1.25%, 9 months to less than 1 year - 1.75%, 1 year to less than 1.5 Years - 1.75%, 1.5 years to less than 2 Years - 1.75%, 2 years to less than 3 Years - 1.75%.
Interest rates are on a per annum basis and may be varied by the bank without prior notice.

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