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Thursday, May 21, 2009

Impact of recent policy decisions in Fiji

Recent policy decisions taken in Fiji have had implications which have taken place in a very short time.

A decision to retire civil servants at 55 years of age has resulted in a severe shortage of school teachers in Fiji schools as Term 2 of the school year began on Tuesday, 19 May 2009. Read here a story by Elenoa Baselala.

Earlier this week, it was reported that of the government personnel sent home upon reaching 55 years of age, about 200 are to be recruited again into the civil service as reported in the Fiji Times on Tuesday, 19 May 2009. This re-engagement of retired civil servants will add onto government costs as they will have to be insured at higher premiums, might have to be paid at a higher salary than what they were receiving when they were retired, and all this after they would have taken their funds from Fiji National Provident Fund. Most workers who continue working after 55 years of age, often choose to leave their funds there until such time they are effectively retired from employment.

After doctors and nurses have been sent home early on reaching 55 years, Government is now looking at recruiting doctors from India. The move will contribute to increased costs to Government as it pays high salaries and benefits package, in addition to relocation costs as it attempts to attract those doctors.

Last week, I had analysed that the Reserve Bank of Fiji's recent policy decisions will presumably see banks and financial institutions working to raise their non-interest income streams which would ultimately mean that banks will be paying more and higher bank charges. This is because the recent policy announcement by the Reserve Bank has only concentrated on containing interest rates and spreads. Banks and financial institutions might therefore not lose out at all as they make their money/profits from non-interest income streams. Read my posts on this blog last week.

The recent devaluation has not had a desired effect on the tourism industry in Fiji. Tourism Fiji, the former Fiji Visitors Bureau has reportedly said that they have not seen an increase in numbers of tourists as had been expected after Fiji devalued its dollar by 20% a month ago. There are, therefore, other factors that come into play. Are they linked to the political environment or are they more linked to the effect of the global crisis on people's purses as they suffer the fallout from global recession and higher costs of living?

Over recent weeks, most merchants in Fiji have some way or another benefited from the devaluation. Some have used the opportunity to raise their prices of goods at ridiculous levels. For instance, a Gillett Mach 3 Turbo 4-blade pack, which I would buy at around F$17.00, had risen to almost $25.00 with the reason given by the cashier, and with a smile, as "it's the devaluation". The Consumer Council of Fiji would really need to do a survey of some of these shops soon.

As Fiji works on attracting more foreign investment, one of the things that will need to be worked on is to ensure at all times that investors interests are adequately protected as they participate in commerce. If there are some issues with laws on a broader scale, research has shown that at an entity level, companies should at least attempt and put in place adequate safeguards to protect their interests of shareholders and owners. This serves as an attraction before an investor would decide to invest in business in a particular country.

Almost all our efforts in recent years and months have been focused on promoting more sports without much emphasis on other areas where our children could be exposed to help build their future. Read an earlier post I did on this on my other blog here.

In the meantime, Government has reduced the age where people are allowed to drink liquor from 21 to 18. In this environment, when things are looked at in totality, what are we promoting? Is it alcoholism at an early age? Read here.

When one analyses some of these policy decisions, it is difficult to see any coherent flow of policy ideology in some of these decisions. Policy makers will stand back and review some of these policies again or those that are still in the works before they introduce them to ensure coherence.

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