Governor Reserve Bank of Fiji, Mr. Barry Whiteside’s presentation at the Fiji Institute of Accountants Congress on Friday 10 June 2011 at the Shangri-La Fijian Resort

8/3/2019 Governor Reserve Bank of Fiji, Mr. Barry Whiteside’s presentation at the Fiji Institute of Accountants Congress on Friday 10 June 2011 at the Shangri-La Fijian Resort

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Reserve Bank of Fiji

Presentation to the

Fiji Institute of Accountants

FUTURE INVESTMENT ANDGROWTH IN FIJI

Governor, Reserve Bank of FijiGovernor, Reserve Bank of FijiGovernor, Reserve Bank of FijiGovernor, Reserve Bank of Fiji10 June 201110 June 201110 June 201110 June 2011

Barry Whiteside Barry Whiteside Barry Whiteside Barry Whiteside



PRESENTATION OUTLINE

• World economic outlook

• The Domestic economy

• Future Investment & Growth

• Way forward?



WORLD ECONOMIC

OUTLOOK




2.8

-0.5

5.0

4.4 4.54.9

4.6

5.2 5.3

3.0

-0.6

4.2 4.3

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2004 2005 2006 2007 2008 2009 2010 2011(f) 2012(f)

Forecast @ Apr 11

Forecast @ Apr 10

2011201120112011 World World World World Growth Growth Growth Growth R RR Revised Upwards evised Upwards evised Upwards evised Upwards %

WORLD GDP GROWTH

Source: IMF World Economic Outlook –April 2011



Emerging Economies Underpin Global Growth Emerging Economies Underpin Global Growth Emerging Economies Underpin Global Growth Emerging Economies Underpin Global Growth

2 22 2- -- -Speed Growth Speed Growth Speed Growth Speed Growth

5.0

3.0

7.3

4.4

2.4

6.5

4.5

2.6

6.5

0

2

4

6

8

World output Advanced Economies Emerging and Developing

Economies

2010(e) 2011(f) 2012(f)

%

WORLD GDP GROWTH




2.8 2.7

1.5

3.9

1.7

2.83.0

0.9

1.41.6

2.9

3.5

4.1

2.1 1.8

0.0

2.0

4.0

6.0

United States Australia New Zealand Japan Eurozone

2010(f) 2011(f) 2012(f)

%

TRADING PARTNERS’ OUTLOOK


Positive Outturn in Trading Partner Countries Positive Outturn in Trading Partner Countries Positive Outturn in Trading Partner Countries Positive Outturn in Trading Partner Countries

- -- - Despite Natural Disasters still Positives for Fiji in Trade, Tourism Despite Natural Disasters still Positives for Fiji in Trade, Tourism Despite Natural Disasters still Positives for Fiji in Trade, Tourism Despite Natural Disasters still Positives for Fiji in Trade, Tourism 3.5

3.21.6

10.3 10.4

7.87.2

6.16.8

14.5

9.68.2

4.0

5.54.5

5.4 5.2

9.5

7.8

4.5 5.24.2 4.2 4.4

0

5

10

15

China India Thailand Malaysia Korea Hong Kong Singapore

Favorable Performances and Outlook in Asia Favorable Performances and Outlook in Asia Favorable Performances and Outlook in Asia Favorable Performances and Outlook in Asia %

ASIA’S ECONOMIC OUTLOOK



InternationalInternationalInternationalInternational price price price price

movementsmovementsmovementsmovements




0

40

80

120

160

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Highest price ever $146

Currently ($116.73)

HIGH CRUDE OIL PRICESUS$/barrel (Brent)

Futures

Downside - Oil Prices Expected to Remain around US$100

RISING GLOBAL FOOD PRICES

Food Prices have Increased Markedly

0

50

100

150

200

250

Apr-95 Apr-97 Apr-99 Apr-01 Apr-03 Apr-05 Apr-07 Apr-09 Apr-11

Index

FAO Food Price Index

232

37%



0

500

1,000

1,500

2,000

2,500

3,000

3,500

1/01/2008 1/09/2008 1/05/2009 1/01/2010 1/09/2010 20/05/2011

COPPER PRICES


GOLD PRICES

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

US $/ozFutures

25/5 $US1528

Upside for minerals - Gold Prices Expected to Remain above US$1,500

ALUMINIUM PRICES

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2006 2007 2008 2009 2010 2011

US$/Tonne US$/Tonne

6/06 – US $2664 6/06 – US $9135

Source: Bloomberg



18

22

26

30

34

38

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

US cents/1bUS cents/1b

30/05 – US 21.78cents/pound

EU Sugar Prices World Market Sugar Prices

0

5

10

15

20

25

30

35

40

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2013

US cents/1bUS cents/1b

Source: Fiji Sugar Corporation Source: Bloomberg

Source: Bloomberg

A record

increase insupply from

Thailand.

30/05- US

27.57 cents/

pound

F

u

t

u

r

es

FISH PRICES

0

400

800

1,200

1,600

2,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

US $/tonne

LUMBER PRICES

100

200

300

400

500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

US $/’000 board feet

01/06 – US$ 1,693

30/05 – US $232



0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

1.10

Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11

EXCHANGE RATES - against FJDagainst FJDagainst FJDagainst FJD

NZD/AUD/USD

NZD -10.2%

AUD -15.2%

USD +25.4%

Stronger AUD & NZD Stronger AUD & NZD Stronger AUD & NZD Stronger AUD & NZD - -- - Improved Export & Tourism Competitiveness Improved Export & Tourism Competitiveness Improved Export & Tourism Competitiveness Improved Export & Tourism Competitiveness

Weaker USD Weaker USD Weaker USD Weaker USD – –– – positive impact on fuel import bill positive impact on fuel import bill positive impact on fuel import bill positive impact on fuel import bill



In Summary

Positives

• Global recovery continuing –. Positives for our trade, tourism, remittances.

• Strong emerging economies growth – More spending power opens us up for

tourists from China, India etc.

• Higher export prices – assist our trade balance

• Favorable exchange rate movements – more competitive market for our exports

and tourism especially from Aus and NZ

Negatives

• High crude oil and food prices - Higher import bill and accompanying inflation




DOMESTICDOMESTICDOMESTICDOMESTICECONOMICECONOMICECONOMICECONOMIC

OUTLOOKOUTLOOKOUTLOOKOUTLOOK



0.6

2.72.1

-8

-6

-4

-2

0

2

4

6

8

10

12

14

1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009(p) 2012(f)

Actuals Average 5 Years Average 10 YearsPercentage point

Average 10 Years = 0.9%

Average 5 Years = -0.2%

Sources: The Fiji Island Bureau of Statistics and Macroeconomic Committee

DOMESTIC GDP GROWTH

Volatile & Low Economic Performance Volatile & Low Economic Performance Volatile & Low Economic Performance Volatile & Low Economic Performance



SECTORAL CONTRIBUTIONS TO

GROWTH - 2011

1.23

0.52

0.24

0.190.14 0.13

0.07 0.070.05 0.03 0.03 0.02 0.01

-0.02

-0.2

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

Agri Manuf Fish Htl Rl Est Fin Mining Trans Edu Elect Othr Pub Whlsale Cons

↑ 2.7%

% Growth will be Broad Based Growth will be Broad Based Growth will be Broad Based Growth will be Broad Based



‘000s

TOURISM

Sources: Fiji Bureau of Statistics and Macroeconomic CommitteeReserve Bank of Fiji

$MVisitor Arrivals Earnings

Arrivals & Earnings at Record Levels Arrivals & Earnings at Record Levels Arrivals & Earnings at Record Levels Arrivals & Earnings at Record Levels

980

1,030

0

200

400

600

800

1,000

1,200

2002 2004 2006 2008 2010

Forecasts as @ April 2011

Annual632

663

0

100

200

300

400

500

600

700

800

2002 2004 2006 2008 2010

Forecast as @ Apr 2011 Annual



157

186

205

0

50

100

150

200

250

2002 2004 2006 2008 2010 (e)

Annual

Forecasts as @ Aprl 2011

14

0

5

10

15

20

25

30

35

2002 2004 2006 2008 2010(e)

Annual

Forecast as at Apr 2011

Source: Fiji Bureau of Statistics

FISH

‘000 tonnes


$MProduction Exports

Production erratic but Earnings on the rise Production erratic but Earnings on the rise Production erratic but Earnings on the rise Production erratic but Earnings on the rise

30



88

148

181

0

40

80

120

160

200

2002 2004 2006 2008 2010(e)

Annual


150

35

62

70

0

20

40

60

80

100

120

140

160

1997 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011(f)

Annual Forecast as @ April

GOLD PRODUCTION

‘000 ounces

Sources: Vatukoula Gold Mines Limited and Macroeconomic Committee

GOLD



Production & Earnings on the rise Production & Earnings on the rise Production & Earnings on the rise Production & Earnings on the rise



29

4652

68

87

105110

80

126

156

0

20

40

60

80

100

120

140

160

180

2002 2003 2004 2005 2006 2007 2008 2009 2010(e) 2011(f)

Annual Forecasts as @ April 2011

$M

MINERAL WATER EXPORTS

Sources: Fiji Islands Bureau of Statistics and Macroeconomic Policy Committee

25%

-27%

56%

MINERAL WATER (EXPORTS)

Exports to Rise Further Exports to Rise Further Exports to Rise Further Exports to Rise Further



302

185 187

104

0

40

80

120

160

200

240

280

320

1996 2002 2003 2004 2005 2006 2007 2008 2009 2010(e) 2011(f)

Annual


79

517

158

0

50

100

150

200

250

300

350

400

450

500

550

1994 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011(f)

Annual

Forecast as @ Apr 2011

132

Production

Sources: Fiji Bureau of Statistics Fiji Sugar Corporation Limited and Macroeconomic Committee

SUGAR


‘000 tonnesExports

$M

Has sugar bottomed out? Has sugar bottomed out? Has sugar bottomed out? Has sugar bottomed out?



189

58

0

20

40

60

80

100

120

140

160

180

200

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010(e)2011(f)

Forecast as @ Apr 2011 Annual

Source: Fiji Bureau of Statistics

GARMENTS

F$M

64



322

101 98

0

40

80

120

160

200

240

280

320

360

2000 2002 2003 2004 2005 2006 2007 2008 2009 2010(e) 2011(f)

Annual


Production up but Export earnings flat Production up but Export earnings flat Production up but Export earnings flat Production up but Export earnings flat



TIMBER

602

385

578

721

0

100

200

300

400

500

600

700

800

900

1995 2003 2005 2007 2009(e) 2011(f)

000 m3

Forecast As @ Apr 2011Annual

Source: Fiji Bureau of Statistics and Macroeconomic CommitteeReserve Bank of Fiji


59

72

83

0

10

20

30

40

50

60

70

80

90

2002 2004 2006 2008 2010 (e)


Production & Exports upProduction & Exports upProduction & Exports upProduction & Exports up– –– –see huge potential in Forestry see huge potential in Forestry see huge potential in Forestry see huge potential in Forestry



1,1291,183 1,206 1,193 1,202 1,210

1,471

1,230

1,489

1,643

0

500

1,000

1,500

2,000

2002 2003 2004 2005 2006 2007 2008 2009 2010(e) 2011(f)

Annual

Forecasts as @ Apr 2011

$M

Sources: Fiji Bureau of Statistics and Macroeconomic Policy Committee

10.3%

21%

TOTAL EXPORTS*

* Accrual data excluding aircraft

Exports on the increase ! Exports on the increase ! Exports on the increase ! Exports on the increase !



1,9692,083

2,502

2,723

3,096

2,875

3,535

2,808 2,897

3,227

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2002 2003 2004 2005 2006 2007 2008 2009 2010(e) 2011(f)

Annual Forecasts as @ Apr 2011

$M

Sources: Fiji Islands Bureau of Statistics and Macroeconomic Policy Committee

11.4%

3%

* Accrual data excluding aircraft

TOTAL IMPORTS*

Imports also on the rise Imports also on the rise Imports also on the rise Imports also on the rise



1.9

0.60.2 0.2

0

2

4

6

8

10

Mineral Fuels Food Mach&Tran Equp Miscel Manuf Gds Chemicals

Mineral fuel and food imports account for Mineral fuel and food imports account for Mineral fuel and food imports account for Mineral fuel and food imports account for around 47% of total imports around 47% of total imports around 47% of total imports around 47% of total imports

Percentage points

↑↑↑↑11.4%$1,040M

o/w $333M

for re-

exports

$531M

$587M$269M$282M

IMPORTS - 2011Contributions to Growth

8.3

* Contribution of mineral fuel re-exports to imports growth



Sources: Fiji Island Bureau of Statistics and Macroeconomic Committee

213

232

297311

322

256

188

294 295 287

0

100

200

300

400

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011(p)


$M

PERSONAL REMITTANCES

Remittance inflows Remittance inflows Remittance inflows Remittance inflows stabilise stabilise stabilise stabilise but industry more bullish! but industry more bullish! but industry more bullish! but industry more bullish!



-1,118-1,233 -1,204

1,087

922978

-31

-311 -226

-2,000

-1,500

-1,000

-500

0

500

1,000

1,500

2002(r) 2003(r) 2004(r) 2005(r) 2006(r) 2007(r) 2008(r) 2009(r) 2010(e) 2011(f) 2012(f)

$M

Services, Income & Transfers Net

Current Account Deficit

Trade Deficit

CURRENT ACCOUNT

Forecasts as

@ Apr 2011

Source: Fiji Islands Bureau of Statistics and Macroeconomic Committee

Current Account Deficit now Current Account Deficit now Current Account Deficit now Current Account Deficit now manageble manageble manageble manageble

-19.3% of GDP -18.2% of GDP

-4.7% of GDP-3.2% of GDP



FOREIGN RESERVES

846741 729

786

549 515

805

559

1,096

1,303

1,470

0

2

4

6

8

0

200

400

600

800

1,000

1,200

1,400

1,600

2001 2003 2005 2007 2009 31/05/2011

$ Millions Months

Foreign Reserves at Comfortable Levels Foreign Reserves at Comfortable Levels Foreign Reserves at Comfortable Levels Foreign Reserves at Comfortable Levels

FOREIGN RESERVES



BANKS LIQUIDITY

15

404

0

50

100

150

200

250

300

350

400

450

500

550

Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11

F$ M Devaluation Date

15-Apr-09

As @ 1st Jun

559

With the foreign exchange inflows there is ample Liquidity in the System.With the foreign exchange inflows there is ample Liquidity in the System.With the foreign exchange inflows there is ample Liquidity in the System.With the foreign exchange inflows there is ample Liquidity in the System.

- -- -RBF maintaining accommodative policy RBF maintaining accommodative policy RBF maintaining accommodative policy RBF maintaining accommodative policy

OUTSTANDING BANK LENDING



0

2

4

6

8

10

12

Apr-06 Aug-06 Dec-06 Apr-07 Aug-07 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11

OUTSTANDING BANK LENDINGAND DEPOSIT RATES

Percentage

Lending rate 7.44%

Time Deposit Rate 4.29%

Savings Deposit Rate 1.17%

Interest Rates have trended down, though lending rates more gradual Interest Rates have trended down, though lending rates more gradual Interest Rates have trended down, though lending rates more gradual Interest Rates have trended down, though lending rates more gradual

- -- -RBF Policy rate biased downwards RBF Policy rate biased downwards RBF Policy rate biased downwards RBF Policy rate biased downwards



PRIVATE SECTOR CREDIT

-15

-10

-5

0

5

10

15

20

25

30

35

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

2,600

2,800

3,000

Jan-06 Aug-06 Mar-07 Oct-07 May-08 Dec-08 Jul-09 Feb-10 Sep-10 Apr-11

Value Annual Percent Change

3.3%

$M Percentage

$2,867

Bank Credit Trending Upwards Bank Credit Trending Upwards Bank Credit Trending Upwards Bank Credit Trending Upwards – –– – but very slowly but very slowly but very slowly but very slowly

- -- -highlights the weak private sector activity highlights the weak private sector activity highlights the weak private sector activity highlights the weak private sector activity



2.7

-2

0

2

4

6

8

10

12

J F M A M J J A S O N D J F M A M J J A S O N D J F M A

Y-on-Y

Excluding Food & Energy


INFLATION

201120102009

Percentage

2011 Year 2011 Year 2011 Year 2011 Year- -- -End End End End I II Inflation nflation nflation nflation F FF Forecast orecast orecast orecast at at at at 7.0 7.0 7.0 7.0 P PP Percent ercent ercent ercent

10.5%

8.1%

(VAT+FEA

Tariff +OIL/Food)

Devaluation



DOMESTIC ECONOMY SUMMARY

• Domestic growth erratic over the years

• GDP outlook is looking more promising

• Trade & Current account deficits improved

• Foreign reserves comfortable

• But Private Sector activity is weak

• Inflation is a concern but expected to ease




FUTUREINVESTMENT

AND GROWTH



Recent Trendsand Indicators

of INVESTMENT


FOREIGN DIRECT INVESTMENT



67 76

433

263

714

542

499

111

229

1.7 1.7

9.2

5.2

13.3

9.9

8.8

2.0

3.9

0

4

8

12

16

20

0

100

200

300

400

500

600

700

800

2002 2003 2004 2005 2006 2007 2008 2009 2010

Annual 9 Year Average FDI in Fiji % of GDP

$M

FOREIGN DIRECT INVESTMENT

Inconsistent and minimal as a percent of GDP Inconsistent and minimal as a percent of GDP Inconsistent and minimal as a percent of GDP Inconsistent and minimal as a percent of GDP


% of GDP

INVESTMENT IN FIJI



INVESTMENT IN FIJI

0

5

10

15

20

25

30

35

1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007(e) 2010(f)

Government

Private

Statutory Bodies & Public Enterprises

% of GDP

Government Target: 25%

Sources: Fiji Bureau of Statistics & Reserve Bank of Fiji

$651m/11%


Total Investment levels have been low for some time! Total Investment levels have been low for some time! Total Investment levels have been low for some time! Total Investment levels have been low for some time! Our economic performance is clearly reflective of this! Our economic performance is clearly reflective of this! Our economic performance is clearly reflective of this! Our economic performance is clearly reflective of this!

5.0 %

3.5 %

5.5 %




10

15

20

25

30

35

40

45

50

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

China

India

Mauritius

Fiji

PNG

% of GDP

INVESTMENT

Low in comparison to others Low in comparison to others Low in comparison to others Low in comparison to others

NZ

Aus

EASE OF DOING BUSINESS

EASE OF DOING BUSINESS



Source: Doing Business 2011, The World

Bank

EASE OF DOING BUSINESS---- We just make the top 33%!We just make the top 33%!We just make the top 33%!We just make the top 33%!

EASE OF DOING BUSINESS---- We just make the top 33%!We just make the top 33%!We just make the top 33%!We just make the top 33%!


Ease of Doing Business 2011 rank 2010 rank Change in rank

Singapore 1 1 -

New Zealand 3 3 -United States 5 5 -

Australia 10 10 -

Samoa 61 67 6

Fiji 62 61 -1

Tonga 71 66 -5

China 79 78 -1

Kiribati 93 91 -2

Papua New Guinea 103 108 3

India 134 135 1

Total Number of Countries - 183

DOING BUSINESS IN FIJI



Source: Doing Business 2010 Fiji, The World Bank

DOING BUSINESS IN FIJITop quartile for getting credit and protecting investors!Top quartile for getting credit and protecting investors!Top quartile for getting credit and protecting investors!Top quartile for getting credit and protecting investors!


Ease of... 2011 rank 2010 rank Change in

rank

Doing Business 62 61 -1

Starting a Business 104 107 3

Dealing with Construction

Permits58 58 -

Employing Workers 31 -

Registering Property 50 44 -6

Getting Credit 46 44 -2

Protecting Investors 44 41 -3

Paying Taxes 77 76 -1Trading Across Borders 103 108 5

Enforcing Contracts 63 65 2

Closing a Business 117 120 3



What have been some

Impediments toInvestment in Fiji?


IMPEDIMENTS TO INVESTMENT



IMPEDIMENTS TO INVESTMENTRBF Survey 1999


Major Impediments found: in no particular order of priority

Government policy uncertainty

Red tape and bureaucracy

General economic climate

Finding skilled labour

Political situation

Law and order issues

Lack of infrastructure

High Utility costs (eg. water and electricity)

Land tenure instability




IMPEDIMENTS TO INVESTMENTHave we addressed the issues from 1999?


Impediments: Actions Feedback obtained by RBF

Government policy

uncertainty

Govt Investment Packages and policies

introduced over the years• Need proper follow through eg. Develop the

North policy–no markets, infrastructure

problems• No about-turns/ transparency critical

• Transparency of tender processes for Govt

funded projects• Ensure proper regulation/licensing of

builders to maintain construction industry

standards

• Treat local and foreign investors the same




IMPEDIMENTS TO INVESTMENTHave we addressed the issues from 1999?



Red tape and

bureaucracy

PM’s Office & Commerce Ministry working

to improve investment approvals process

• Proposal for an EDB

• “Take investors by the hand” approvals

process• Approval process must be investor friendly

with quick turnaround time

• Numerous approvals required across manyagencies

•Where is the “one stop shop?”

• Approving Agencies “protecting their turf”

PROPOSED VS. ACTUAL INVESTMENT



PROPOSED VS. ACTUAL INVESTMENTGreat potential but low implementation rate Great potential but low implementation rate Great potential but low implementation rate Great potential but low implementation rate


– –– – Is this Red Tape holding us back? Is this Red Tape holding us back? Is this Red Tape holding us back? Is this Red Tape holding us back?

- -- - better implementation would take us closer to the 25% Investment/GDP ratio! better implementation would take us closer to the 25% Investment/GDP ratio! better implementation would take us closer to the 25% Investment/GDP ratio! better implementation would take us closer to the 25% Investment/GDP ratio!

Source: Investment Fiji

1,846

1,044

687591

223

639

9417

0

400

800

1200

1600

2000

2007 2008 2009 2010

Proposed Implemented

$M




Have we addressed the issues from 1999?



General economic

climate

Annual growth target of 5 percent

• Expansionary fiscal policy• Reforms target land availability (land bank), sugar

industry, agriculture (import substitution)

• Mining licences issued

• Mahogany legislation and licences

• Lowered tariffs on selected Agricultural equipment

• Accommodative monetary policy (RBF)

• Sound and modern financial system (RBF)

• GFC had negative impact for many businesses

• Still high tariffs on imported farm inputs (barbed wire)

• Hotels need to adapt to preferences of emerging market

tourists (from China & India)

•Uncertainty about taking out profits and capital

THERE IS NO UNCERTAINTY ON



OUTWARD REMITTANCES!RBF is responsive to requests for capital & profit repatriation


Withdrawal of

Investment , $245

Other, $7

Profit & Dividend;

$849

$1.1 BILLION IN WITHDRAWAL OF CAPITAL

FUNDS SINCE 2005







Finding skilled

labour

Govt set up National Employment Centre

to facilitate training to up skill workers

•15,000 NEC registrations with training

started

• Initial NEC placements underway•We have an educated, English-speaking

workforce (positive for call-centers)

• FNU should stick to teaching relevant Tradesto cater to demand in these areas







Political situation Govt committed to elections in 2014under the Electoral Reforms

• Assistance on electoral reforms from

Indonesia

• Continuing “wait and see” attitude by

local investors

Law and order issues Reforms in the Judiciary

• Visible progress in policing

• Judiciary operating smoothly

• Case backlog still an issue







Lack of infrastructure Major road/bridge/jetties upgrading projects in

progress• $192m earmarked in 2011 ($156m 2010)

• Poor state of existing roads

• Low utilization rate of capital budget

• Delays in tender processes

• Difficulty of access to markets (eg.Dalo)

High Utility costs (eg. water

and electricity) andinconsistent supply.

• Promotion of renewable energy projects to

keep down costs (FEA Nadarivatu HydroProject, etc.)

• Corporatization of Water Authority to

improve consistency of supply (ADB Funded

Suva – Nausori water project)







Land tenure

uncertainty

Accessibility to land

New Land Use Decree (Land Bank)

• Around 1,115 hectares committed to theland bank by landowners o/w 226 hectares

already leased for periods up to 20 to 30

years• Win-win situation for landowners and

tenants

• Equitable distribution of rental to

landowners



Where does the

Potential forINVESTMENT

and GROWTHlie?


INFRASTRUCTURE PROJECTSof Government



of Government

$15.0 $13.3

$3.1

$3.0

$116.0

$42.2

2011

New Roads & Bridges Maintenance of Roads & Bridges Maintenance of Public Buildings

Outer Island Jetties Fiji Road Upgrading Project Others


$192 m

TOURISM



Source: Media, Industry liaison, company websites

Project Location Value of investment Progress to date

SSS

International

Hotel (Fiji)

Ltd

Nasau, Nadi • $40 million

• Stage 1 - Completed

• Stage 2 - Construction to start

later this year

• Target completion - 2012

Warwick

InternationalHotels

Tabua Sands • $4 million - renovations

• Work has not started yet Naviti Resort• $14 million - additional

rooms

Warwick Fiji

Resort

• $2.5 million - furniture

upgrade

Westin

DenarauDenarau

• $5 million - for next 3 yrs • Work has started

Naisoso Island Nadi

• Total value - $230 million

• Full project to be completed

by 2017

• Bridge/Marina/Sandworks -

Completed

• Peppars Naisoso Island Resort

- Civil & Earthworks

underway


TOURISM continued



TOURISM continued

Source: Media, Industry liaison, company websites

Project Location Value of Investment Progress to date

Fun World

Center Ltd

Nadi• $15 million

• Stage 1 – Completed

• Stage 2 – Construction

underway

Grand Pacific

Hotel (GPH)Suva • No details available

• At designing stage

• Construction expected

to start in July

FNPF’s Momi

Bay Project Nadi

• Revalued at $55 million against

Fund exposure of $61 million

• FNPF to either sell

property outright or opt

for joint venture

• EOI on joint venture

called last year


TOURISM - CASINO PLAN



• The Government has called for Expressions of Interest from

internationally successful casino developers and operators

• Local casinos are expected to attract more visitors and increase visitorlength of stay, particularly from new emerging markets China, Europe

and India

• Advantages:o Create a new segment for Fiji’s tourism sector

o Flow on effect to satellite industries and the public

o Create employment

o Increase Government revenue

• Drawback:

o Possible social implications for locals if not controlledSource: Ministry of TourismReserve Bank of Fiji

MINING



Project Developer Location

Potential

Production

&

Employment

Progress to-date

WainivesiGold

Asia PacificResources Ltd

(APRL)

WainivesiTailevu

250,000 tonnesof ore every

year for five

years.

20-25 workersemployed

• Currently in small-scale production• Royalty payment made to Govt. and

land-owners on first shipment of

ores

• Paid for surface lease 50 years in

advance

Mt Kasi

Gold

Newcrest

Mining Ltd

(NML)

Wailevu,

Vanua Levu

240,000 ounces

gold reserves

• NML seeking mining license

TuvatuGold

Lion One Ltd SabetoLautoka

Company iscurrently in

exploration

phase

• Phase 1 exploration works• Presence of high quality gold

deposits confirmed via surface

sampling

Source: Industry liaison, company websitesReserve Bank of Fiji

MINING continued



Project Developer Location Potential

Production &

Employment

Progress to-date

Bauxite Xinfa Aurum

Exploration Fiji

Ltd

Nawailevu, Bua 1 million tonnes of

Bauxite Ore

Export Value –

$56 million.

Life of Nawailevu

Mine – 2 years

• Mining lease issued in May 2011

• Major export destination – China

• A $4 million jetty expected to built inBua

Copper Newcrest,

Mitsubishi &

Nittetsu

(‘Namosi JV’).

Namosi Employment -100

workers

Amount of ore

reserves not fully

determined at thisstage.

• Drilling works continuing

• Feasibility studies underway at the

Waiyaka and Waisoi corridors

Manganese Viti Mining Ltd Between Nadi -

Sigatoka

Ore reserve - 0.13

million tonnes

• Awaiting surface lease from NLTB.

• Mining lease to be issued after the

issue of surface lease

Source: Media, Industry liaison, company websitesReserve Bank of Fiji

FORESTRY




Company Location Potential Value Progress to-date

Pine/ Chips Tropik Woods

Limited/

Fiji Pine

Limited

Viti & Vanua

Levu

&13,000 ha

of

plantations

across the

Maritime

zone

59,000

hectares

Current Price

- $US 155.50

per tonne

equivalent to

around

FJ$273 per

tonne.

• Harvesting in Vanua

Levu deferred due to

delay in construction

of the loading tower

• First shipment of pine

chips to Japan delayed

to Q4

Mahogany Fiji

Hardwood

Corporation

Ltd

Viti Levu 41,000

hectares

Over a billion

dollars

• Local value-adding

will fetch higher

returns for Fiji

Teak Future Forest

Fiji Ltd

(FFF)

Ra Province 1 million

trees by

2015 (20-

25 years to

mature)

Teak price is

three times

higher than

Mahogany

• FFF also received lease

to plant teak in

Nadroga

• Listing on the South

Pacific Stock

Exchange

Source: Fiji Future Forest & Tropik Wood Limited

FISHING



ACCESS TO EU MARKET

Progress to Date

• Only 1 fish processing company (Golden Ocean) , out of 6, is currently EU

compliant

• 7 fishing vessels (out of the 60) are now EU compliant

• Entry into the EU market will attract investment into the fishing industry ,

especially in processing

• Benchmarking against high EU standards - will assist Fiji to export more

fish to any destination overseas

Source: Industry LiaisonReserve Bank of Fiji

RENEWABLE ENERGY



Project Developer Location Capacity Invest.

Value

Progress to-date

Nadarivatu

Hydro

FEA Nadarivatu 41.7MwH $300

million

• 55% complete – Jan. 2011

• Start generation - Q4 2011

Biomass Pacific

Renewable

Energy Ltd

Vuda 17.4MwH $65 million • Project construction to employ 200

workers

• Plantation will employ 215 workers

• 20-25 will be employed at the Plant

• Save $40 million in foreign reserves

Somosomo

Hydro

Department

of Energy

Taveuni 700KwH $20 million • Roads connecting to site completed

• Chinese engineers finalising designs

• Fully funded by the Chinese Govt

Cogeneration

Plant

Bagasse

FSC

Rarawai

BA 30MwH • Expressions of Interest - called Jan.

2011

Namosi

Hydro

Hydro Fiji

Ltd

Namosi 25 MwH $100

million

• Preliminary geological studies –

completed

• Preliminary agreement with FEA to

purchase productionReserve Bank of Fiji Source: Media, Industry liaison, company websites

To sum up FIJI’S RECENT



INVESTMENT EXPERIENCE


• Investment levels are well below 25% target

• Private sector investment clearly below par with

reliance on public sector to drive growth

• World Bank suggests we have lost some ground in

terms of ease of doing business (but still in top third)• Are we doing enough to address the impediments to

investment?

• Still large investment interest in Fiji; but we need tonurture this to implementation!

• Excellent opportunities for investment in a number of

key sectors

THE WAY FORWARD




THE WAY FORWARD

It is crucial that we MAINTAIN

MACROECONOMIC &

POLITICAL STABILITY toprovide the foundation for

INVESTORS

TO DO THIS…



We must:

Grow the Economy


Speed Up Structural Reforms

Create an environment conducive to Investment

Maintain Law and Order

Continue to Promote a Sound Financial System

THE WAY FORWARD




W O W

Only if we do thesethings will we realise

our potential forInvestment and Growth!



VINAKA VINAKA VINAKA VINAKA


Documents

Governor Reserve Bank of Fiji, Mr. Barry Whiteside’s presentation at the Fiji Institute of Accountants Congress on Friday 10 June 2011 at the Shangri-La Fijian Resort