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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.


Monday, March 30, 2009

Reserve Bank of Fiji reduces overseas travel allowance

In its latest press release (27/3/09), the Reserve Bank of Fiji has put further restrictions on the amount of money that can be taken out of the country. With immediate effect, overseas travel allowances have been reduced to FJD 5,000 per traveler and a FJD 5,000 limit per month on credit and debit card payments.
These monetary policy measures have been necessary in light of the worsening global economy and its impact on our trading partners and ultimately our foreign reserves.
Furthermore, RBF will be reviewing Fiji’s growth downwards given the current global economic condition.
On a positive note, however, inflation for the month of February was 1.9 percent compared with 6.6 in January. RBF year-end projections still remain at 4.5 percent.

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Friday, March 27, 2009

ANZ Interest Rates (updated 27.3.08)

Schedule of interest rates released by ANZ Fiji are as follows:
  • Business Index Rate - 11.25%;
  • Residential Property Loan : Standard Variable Rate - 10.50%, 1 Year Fixed Rate - 9.00%;
  • Investment Loan : Standard Variable Rate - 10.50%, 1 Year Fixed Rate - 9.00%;
  • Personal Loans : Secured - 12.50%, Unsecured - 15.20%;
  • Small Loans : Unsecured - 20.00%;
  • Retail Term Deposits: 9 months to 1 year - 2.25%, 1 to 1.5 Years - 3.50%, 1.5 to 2 Years - 3.75%, 2 Years to 3 Years - 4.00%.

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

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Thursday, March 26, 2009

Free Investment Seminar

The South Pacific Stock Exchange (SPSE) is organising a free investment seminar on Friday, 27 March 2009, at the SPSE Boardroom, Level 2, Provident Plaza 1, FNPF Downtown Boulevard, Ellery Street, Suva, Fiji.

Participants will receive a free educational package. Light lunch will be served.

For information or to register you interest, pls call telephone (679) 3304130 or email info@spse.com.fj.

For advice on investment in Fiji or for portfolio management, pls email our company on info@gilbert.com.fj or call telephone (679) 3342719.

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Wednesday, March 25, 2009

Economics Association of Fiji Seminar - 24 Mar 09

Reasons for the global financial crisis

Dr. Jerry Jordan, president of the Pacific Academy of Advanced Studies in Los Angeles, told participants at a seminar organized by the Economics Association of Fiji on the global financial crisis which was held at the Holiday Inn on Tuesday night, that in his view the housing bubble in the US was due to two major reasons. The first was the monetary policies of the US Government in 2001. This was a time of uncertainty for the US economy especially with the attacks on the World Trade Center and the bursting of the dot-com bubble. To generate economic activity, the US Federal Reserve reduced interest rates and the ultimate effect was that more of lenders money were directed towards the housing industry. The second reason was the politicization of the housing industry, whereby some of the major lenders were pressured by policy makers to have a major part of their mortgage portfolios invested with low income earners.

The situation was made even worse by the following factors:
  • Americans penchant for consumption spending – in fact many mortgage holders took out second mortgages (mortgage equity withdrawal) not to consolidate debt but to buy cars and go for holidays.
  • Failure of the corporate governance of many financial institutions. Dr. Jordan highlighted the importance of having a competent board who understood its role well and understood the core business of the entity. Dr. Jordan suggested that directors who were lacking in these areas should either hire consultants to help them understand their responsibilities or step down. In addition, he said that internal audit should be owned by the entity, totally independent of management and robust. Of course, now days entities are outsourcing this crucial function because it is a lot cheaper.
  • Failure of supervision by oversight agencies/ authorities.
  • Failure of rating agencies – securities that came into prominence (e.g. collateralized debt obligation) from this housing boom were given very good ratings even when financial conditions demanded that these ratings be reviewed. Investors who bought these securities based on their good ratings were caught off guard when within a short time frame their investments were worth nothing.

Impact of global financial crisis on Fiji

Dr. Jordan said that the impact will not be as dramatic as what is happening in the US, with business closures and high unemployment but it is coming nonetheless via our trading partners New Zealand and Australia.

On how Fiji can grow its economy given the current global financial situation, Dr. Jordan suggested increasing foreign investment. Again, how this can be achieved, especially with developed countries and many international corporations still licking their wounds from this global financial crisis, may prove a very challenging proposition. The Fiji Trade and Investment Board is tasked with this enormous responsibility and as such should be supported. Dr. Jordan hinted at four countries to look out for as things normalize, namely China, India,Mexico and Brazil. Perhaps FTIB may have some of its work done already.

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Saturday, March 14, 2009

Our blog makes it onto Alexa's top sites from Fiji

Our blog, http://investinfiji.blogspot.com/, made it to Number 11 on Alexa's top Business and Economy sites from Fiji and the Oceania region. The category we came under was Regional > Oceania > Fiji > Business and Economy.

Our site ranked higher than other sites such as Vinod Patel Company Limited, Howards Law, Naisoso Island, Mark One Apparel, Denarau Real Estate, Webmasters, Pacific Financial Technical Assistance Centre, Europa - Development EU Relations in Fiji, UN Sustainable Development - Fiji, IMF - Fiji and the IMF, Capital Markets Development Authority, Colonial Fiji, Datec (Fiji) Limited, Fijian Holdings Limited, Housing Authority, and many others.

Other sites that ranked higher than ours were as follows, according to their ranking :
  1. Fiji Web Design;
  2. Vodafone Fiji;
  3. Standss (South Pacific) Limited;
  4. Connect Internet Services;
  5. Business Software Solutions;
  6. Reserve Bank of Fiji;
  7. Internet Fiji;
  8. Taunovo Bay;
  9. GMR Mohammed & Sons (Pty) Limited; and
  10. Harbour Propriety Services Limited.

Get more information on this link.

In the sub-category Regional > Oceania > Fiji > Business and Economy > Financial Services, our site was ranked No. 2 behind the Reserve Bank of Fiji. The top 10 rankings for this subcategory were as follows :

  1. Reserve Bank of Fiji;
  2. Invest in Fiji (our site);
  3. Pacific Financial Technical Assistance Centre;
  4. Capital Markets Development Authority;
  5. Colonial Fiji;
  6. Fijian Holdings Limited;
  7. Housing Authority;
  8. South Pacific Stock Exchange;
  9. Sun Insurance Company Limited; and
  10. Tower Insurance Fiji Limited.

Check out more information on this subcategory on this link.

Alexa has lists of Top Sites available by country, language or in a category.

If you wish to take advantage of our high rankings, send an email to info@gilbert.com.fj or call us on (679) 3342719.

Currently, we offer consultancy services in the following areas :

  • Strategic and Corporate Planning;
  • Business Continuity Planning;
  • Capacity Assessments and Institutional Strengthening;
  • Issues relating to the financial sector; and
  • Investment Advice.

Our principal also offers portfolio management services for clients. To contact us on any of the above services, pls email info@gilbert.com.fj or call telephone (679) 3342719.

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Wednesday, March 04, 2009

State Owned Enterprises (SOE) Workshop - Reform Opportunities in the Capital Market - 19 Feb 2009

The capital market can help Government in improving efficiency and performance of state owned entities (SOEs). Some of these opportunities include enforcing financial and corporate discipline, as well as having better access to relatively cheap capital both locally and abroad. The recent successful capital raising cases of Pleass Beverages and Yatu Lau are good examples.

However, before any of this is possible, Government needs to get its house in order by imposing a performance-based framework for SOEs. The dismal performance of SOEs (see below) is not a new thing in Fiji, and this is due largely to a lack of clear goals, political interference, lax financial discipline and the question of competency of those on SOE boards.


The following are areas the government needs to work on, before SOEs could seriously look at accessing the capital markets:

  • The government of the day needs to seriously assess its policies and reconcile it with its portfolio of SOEs and see which ones are key components in its strategic plan. Any non-strategic SOEs will need to be divested from to save government from wasteful spending.

  • Policies and regulatory frame-works need to be in place and current to address the issue of investment in/divestment from these SOEs.

  • And reformation of SOEs will need political will to implement.

Contingent upon government’s strategic goals, SOEs can be commercialized, form partnerships with the private sector, have competitors injected into the industry if it is operating under a monopolistic framework, or have the SOE fully privatized (divestment). The idea behind SOE commercialization, minus government subsidies (usually SOEs operated like a business but were at the same time heavily subsidized by government which gave them an unfair advantage over the private sector. This promoted gross inefficiency and a resultant high percentage of non-performing SOEs) is to promote efficiency, profitability and a performance based culture.

Valuable lessons can be learned from New Zealand’s SOE reform success in 1987. Between 1987 and 1990, Telecom New Zealand reduced staffing levels by 47% while at the same time increasing productivity by 85% and profitability by 300%. New Zealand Post reduced its workforce by 30% while increasing the rate of next-day delivery within the country from 80%-98%. At home, Amalgamated Telecom Holdings Ltd, an ex-SOE (formerly known as Post & Telecom) is proof that restructuring and ultimately privatization does improve performance. In fact ATH commands 49% of market cap and has the second most traded stock on the South Pacific Stock Exchange. It is also the 1st listed company to adopt the Code of Corporate Governance and ATH recorded the highest total return of 60.67% in 2008.

The following are key areas that SOEs will need to prepare themselves before access into the capital markets is possible:

  • Strengthening of corporate governance
    To avoid conflicts of interest, government as the owner of SOE should not allow its representatives to be sitting on the board. Ideally, the board should be made up of independent directors who have commercial skills and experience. Secondly, there should be performance-based contracts for management and lastly eliminating payments to directors on the board who are there by virtue of holding another office (ex officio).

  • Clarifying mandates
    SOEs must operate with a consistent commercial mandate, free from political interference. Both government and the SOE must be clear on their respective roles and their obligations. This should also be supported by a statement of corporate intent (SCI) to support these arms-length relationships and provide performance monitoring and accountability tools.

  • Implementing robust frameworks for community service obligations (CSO)
    CSO (this generally refers to the provision of essential services, like electricity, water, infrastructure development etc) should be delivered on a full cost-recovery basis. This means that CSOs will need to be rigorously identified, costed, contracted, and monitored for delivery. This is probably one of the most “touchy” areas in SOE reformation and will need all the political will the Government can muster to fully implement the necessary changes.

  • Imposing financial discipline
    Commercialized SOEs should operate under the same hard budget constraints as private sector firms. This ensures prudent spending, better accountability & transparency and ultimately better efficiency for the SOEs core operations. This is where the SOEs business plan (statement of corporate intent and corporate plan) come in handy.

Types of SOEs that may be considered for privatization

Once SOEs have been reformed it is important that Government have a clear understanding of which SOEs are strategic components of its long-run policies and which are not. For non-strategic SOEs, these should be put through the final step of reformation, which is to become privatized (divestment).

A look at privatization of SOEs globally reveals that that these SOEs deal largely in:

  • Basic utilities (e.g. electricity, water, gas etc).
  • Information Technology & Communication.
  • Major capital infrastructure (e.g. airports, ports, roads, rail-railroads).

This is also the growing trend locally, which started with the privatization of P&T to ATH. In fact, at a workshop on SOE reformation that was held at the Holiday Inn on the 19th of Feb 2009, the Ministry of Public Enterprises revealed their plan of having 5 SOEs taken to privatization by next year. Even though the Ministry of Public Enterprises did not reveal any specific names, it is instructive to note two SOEs that attended, Post Fiji Ltd and Airports Fiji Ltd.

Year end earnings of selected state owned entitities in Fiji ('99-'04)
State Owned Entities2004 ($)2003 ($)2002 ($)2001 ($)2000 ($)1999 ($)
Fiji Shipbuilding Corporation Ltd(183,155)(269,235)(304,495)(145,399)N/AN/A
Viti Corps LtdFS not submittedFS not submitted(249,539)(643,545)(581,273)(645,641)
National Trading Corporation LtdN/AN/A(9,000)(2,000)(344,000)(692,000)
Fiji Hardwood Corporation Ltd (FHCL)(2,354,370)(3,668,944)(1,841,914)(2,972,423)(2,938,350)(3,981,910)
Rewa Rice LtdFS not submittedFS not submitted(241,550)121,399(328,039)2,412,967

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Tuesday, March 03, 2009

Reserve Bank of Fiji Economic Review Vol. 26, No. 2, month ended February 2009

In an RBF Economic Review Vol.26, No.2 dated February 2009, the bank says that as a result of the global financial crisis, the International Monetary Fund has been forced to revise its global growth estimate of 2.2% down to 0.5%. Many of Fijis’s trading partner economies are expected to contract this year. Only Australia has been forecasted to record a growth, albeit one of the lowest in recent years.
On the domestic front, growth in the Fiji economy for 2008 was estimated by RBF to be about 1.2%. Listed below are some of the prominent highlights:
  • Annual decline of 6.9% in money supply (broad money) on account of low demand deposits which had declined by 25.6%.
  • Domestic credit growth slowed, led by less government borrowing (4.8% in Dec from 6.9% in Nov).
  • Worsening of trade imbalance (i.e. more imports over exports) by $1.9b in November. In fact, imports increased by 24.2 %.
  • Annual decline of remittances by 26.7%.
  • Low cane & sugar output.
  • Tightening of liquidity with both lending and time deposit rates increasing.

On a positive note however:

  • Although exports levels were lower than imports, exports nonetheless had increased by 16.7%, mainly through re-exports of mineral fuels, and higher earnings from sugar, gold and fish.
  • Raising the tax threshold to $15,000 in June of 2008.
  • Improved performance of tourism, copra, electricity, gold and construction & building activities.
  • Decline in inflation from 7.4% in Jan to 6.6% in Dec.
  • Increase in capital spending and investment lending.

Growth in 2009 is estimated to be around 2.4% by RBF. However, this is all contingent upon both global influences and how well the country handles itself coming out from the recent flood crisis, and during the current tight liquidity situation.

The RBF revealed that inflation stood at 6.1% in January but forecasted a drop to 4.5% by the end of the year. This inflation estimate may be largely due to a drop in global oil price which has seen the benefits flow to the local transport, heating and lighting industries. However, because of Fiji’s high dependence on oil and wheat, the price stability of these commodities will have a huge bearing on this year end estimate.

The RBF has also revealed that the Fiji dollar has declined in value (i.e. the Nominal effective exchange rate of Fiji Dollar had an annual drop of 0.3% in January 2009) but hopefully through RBF’s current monetary policy mix, Fiji’s financial situation will continue to be stable. In addition, the RBF says that official foreign reserves are at a provisional level of $672.2m, sufficient to cover 2.7 months of imports.

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Colonial National Bank Interest Rates (Updated 2.3.09)

Schedule of interest rates released by Colonial National Bank are as follows:
  • Business Banking Base Rate – 9.20%;
  • Residential Property Loan : Variable Rate – 9.50%, 1 Year Fixed Rate – 7.50%;
  • Investment Loan : Variable Rate – 9.50%, 1 Year Fixed Rate – 7.50%;
  • Retail Term Deposits: 9 months - 3.00%, 1 year - 3.50%, 1.5 Years - 3.75%, 2 Years - 4.00%, 3 Years - 4.50%.

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

Individuals and groups that need investment advice, or advice with regard to capital markets issues, can use our company, Gilbert & Samuels Company Limited. We also do strategic planning, business continuity planning and capacity assessment consultancies. Our contacts are: telephones (679) 3342719, (679) 3544897 or e-mail: info@gilbert.com.fj.

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Westpac Interest Rates (updated 2.3.09)

Schedule of interest rates released by Westpac Fiji are as follows:
  • Business Lending Rate - 10.24%;
  • 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 - 1.75%, 9 months to less than 1 year - 2.25%, 1 year to less than 1.5 Years - 2.50%, 1.5 years to less than 2 Years - 2.50%, 2 years to less than 3 Years - 3.50%.

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

Individuals and groups that need investment advice, or advice with regard to capital markets issues, can use our company, Gilbert & Samuels Company Limited. We also do strategic planning, business continuity planning and capacity assessment consultancies. Our contacts are: telephones (679) 3342719, (679) 3544897 or e-mail: info@gilbert.com.fj.

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Sunday, March 01, 2009

RBF’s Tight Monetary Policy Will Remain Unchanged

Mr. Savenaca Narube, the Governor and Chairman of RBF announced in a RBF press release dated 27/02/09 that RBF’s tight monetary policy would remain unchanged.

In making this decision RBF took into account the deepening global financial crisis which has negatively affected Fiji’s trading partner economies. The International Monetary Fund has in fact downgraded global growth to 0.5%.

Leading from this, Fiji’s growth prospects for 2009 do not look too good, with tourism, exports and remittances likely to be the worst hit. This will not help the state of our foreign reserves which currently stands at over $700m.

In addition, the RBF board also recognized that the recent flooding has necessitated Government expenditure in humanitarian and rehabilitation support at a time when there is less money available to finance loans, and interest rates already trending upwards. With these considered, RBF had to maintain its current stance.

However all is not doom and gloom. Mr. Narube advises that Government has the capacity to loan from abroad to finance its expenditure and in the process prop up our foreign reserves. The RBF revealed that Government’s external debt is only 7% of GDP and our external debt servicing is as low as 3% of our export earnings.

In addition, the governor said the bank will continue to maintain the right policy mix to ensure monetary and financial stability. The following are facilities that the bank has put in place to ease the burden on the economy.
  • Halved its minimum lending rate (MLR) from 6% to 3% (i.e. interest charged on loans taken by banks from the Reserve Bank of Fiji)
  • Introduced an Export Finance Facility (EFF) whereby banks can borrow cheaply from RBF (max. 2%) and must lend cheaply to exporters.
  • Introduced a Flood Rehabilitation Facility (FRF) which is similar to EFF.

Furthermore, Mr. Narube said RBF could also use the Statutory Reserve Deposits (SRD) policy tool to stabilize liquidity. All banks in Fiji are required by law to keep (deposit) a specified percentage of their funds with the RBF. RBF sets this SRD percentage and by manipulating it can withdraw funds (tighten liquidity) or inject funds (improve liquidity) into the economy.

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