Manufacturing in Fiji

Presentation to the NZFBC/FNZBC Annual Conference12th June 2015, Auckland

Ram Bajekal, Managing Director, FMF Foods Ltd Group

= Companies listed on SPSE

Hari Punja & Sons Ltd(Holding Company)

Subsidiaries Major Investments

Flour Mills of Fiji LtdPetroleum & Gas

Company (Fiji) Limited

Biscuit Company of (Fiji) Limited

Atlantic & Pacific

Packaging Co Ltd

The Rice Company of Fiji

Limited

Pea Industries Limited

DHF Limited

FMF Investment Limited

Dominion Finance Limited

231 Waimanu Holdings Ltd

Fiji Television Limited

FMF Snax Limited

Benatil Limited(Land Development)

Denarau Enclave Ltd/ Denarau Peninsula Ltd

Denarau Tourist Apartments Ltd

The Biodiesel Group (Fiji) Limited

Kavika Investments

Limited(Korolevu Project)

Bakery Co of Fiji Ltd

Hari Punja & Sons Group

One of Fiji’s premier business entities

Turnover: ~ $ 302 million

Exports: $ 80 million

Employees: 1088

Fiji based but present in markets of Pacific Island Nations, Aus, NZ, USA & Canada

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FMF Foods Limited

• Formerly Flour Mills of Fiji Ltd

• Listed on South Pacific Stock Exchange

• Part of Hari Punja & Sons Group of Companies

• Largest food manufacturing conglomerate in Fiji (3 Listed & 5 unlisted companies)

• Flour, Rice, Peas, Biscuits, Noodles, Chips, Trading, Properties

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19-Mar-2013 7

FMF’s Product Portfolio

19-Mar-2013 Presentation to the New Zealand Trade & Investment Mission 8

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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$ M

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FMF Group Exports

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2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$ M

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nFMF Group Sales

2011 2012 2013 2014

Aus Exports 37 36 24 17

Other Exports 34 40 44 45

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$ M

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FMF Exports

The Shifting Focus

38%

62%

2012

= 21%, or $ 58 m

PM’s Exporter of the Year2011 & 2012

Our Export Markets

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Top Class Facilities

Certified for Quality

Well trained Staff

Continuous training of Factory Staff on the job and in classrooms

What helps and makes “Brand Fiji”

• Manufacturing Hub of PIC

• Quality perceived in this region as ahead of many Asian products

• Markets / people culturally closer to Fiji

• Fiji can customize offer:

– able to sense implied needs on things like price– accommodating last minute orders– smaller batch sizes compared to large manufacturers of A&NZ or

Asia

• Price cheaper than A&NZ (currency impact on value added element)

• Adopt A&NZ standards – therefore, A&NZ quality products at Pacific Island prices. Also, a lot of A&NZ companies operating in Fiji

Where we have a natural advantage

• Raw Material proximity:

– Timber / wood (furniture)

– Agri processing (sugarcane, pawpaw, pineapple, dalo, cassava, coconut, ginger, tobacco, herbals)

– Processed Marine based (e.g., Starkist, TriPacific Marine)

– Mining & minerals (incl cement?)

– Water

– ‘Natural / Eco’ (organic, bio-tech)

– Dairy, meat & poultry processing

Other things going for Fiji Manufacture

• Non-price competition:

– ‘Fiji’ – perception of pure & unspoiled (water, herbal - medicinal & aromatics, cosmetics)

– Consumer culture similar to PICs and A&NZ (comfort in dealing, quality and disclosure standards)

• Strategic:

– Food security (Oxfam prediction)

– Trade Balance & forex imperatives

– Employment & income generation

• Based on EPAs, RTAs:– MSG– SPARTECA– PICTA

Some Enablers• Proximity (and therefore better serviced)

• Freight (to most islands) relative to A&NZ

• Relative size of market and therefore willingness to service

• Ready Availability

• Availability of Sky Pacific to advertise

• University of South Pacific exposure

• Same banks operating across the region

• Weighted Deduction on Marketing Expenses

• Growing markets as more interaction & exposure

More Enablers• Tariff protection

• Educated, Trained, English-speaking workforce at an affordable cost

• Infrastructure

– Utilities, Ports, Shipping links

• Tax rate & Tax Incentives

– Corporate, Individual, Export, Mach imports, Tax Free Zone

• Liquidity

• South Pacific Stock Exchange

• Currency & Macro-economic indicators - favorable

• Livability - Law & Order, Education & Healthcare

• A Government that has shown it listens to Industry

What detracts• Size of domestic market

• Economies of scale

• Productivity

• Inadequate supply of skilled tradespeople

• Access to R&D / Technology

• Geographic / Logistic inconvenience

• Wage determination

• Utilities cost

• Pacific market

• Advantage on small orders

• Initiating

• Govt investment in training

• Budget 2016? Overseas?

• Planning / Holding cost

• Better enforcement & linkage to productivity

• Still lower than region

What can comfort

Large opportunities exist for those that are innovative

enough to overcome these challenges!

Chart Source: Prof Ross Guest, Griffith University, Australia. Presentation at the Pacific Conference on Finance and Investment,

May 8-10, FNU Nasinu campus

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Fiji Melanesia Micronesia Polynesia New Zealand

Median age (yrs) of total population, 2010

Poised to reap Demographic Dividend

…the bottom line

Fiji and Pacific Island countries need not fear the ageing

population facing advanced economies.

The PICs can look forward to demographic dividends that

will boost growth and living standards for the next few

decades

Rising support ratios will boost GDP per capita and living

standards by several percent over the next few decades

Source: Prof Ross Guest, Griffith University, Australia. Presentation at the Pacific Conference on Finance and Investment,

May 8-10, FNU Nasinu campus

Investments by the Hari Punja & Sons Ltd Group of Companies between 2004 and 2015

Fin Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Completed 2004-13

Main Items under FMF Group of Companies

New Biscuit Factory Building, AtPack Building upgrade, Biscuit Line-1, New Silos

Biscuit Line-2

Biscuit Line-3, Chips Plant

Noodles Plant, New Distribution Warehouse, Tunnel Conveyor from Factory to Warehouse

Biscuit Line-4 and New Creamer Line

8,000 ton Wheat Silo

$ Million 15 10 14 16 2 2 11 1 1 5 77 (A)

And in 2014: Completion in 2014

Under FMF Group: Six Silos for 24,000 Tons wheat, Bakery Co, Pkg Machines, Wheat Conveyors, IT Upgrades 21

Under Hari Punja & Sons Ltd (Direct Investment by Holding Co)- Residential Land development - Denarau 9- "The Palms" Apartments - Denarau 21- TP Villa - Denarau 3- 3 Villas in Denarau 6

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60 (B)

Completion in 2015

Under Hari Punja & Sons Ltd: Nasese Waters Residential Sub-division (Anticipated completion June’15: 10

Under Petroleum & Gas Co (Fiji) Ltd: Bluegas New Depot (Anticipated completion: June 2015) 6

16 (C)

Total Investments by Hari Punja & Sons Ltd Group between 2004 & 2013 (10 years) $ 77 million (A)

Work started; and completion by December 2014 $ 60 million (B)

Work started; and completion by June 2015 $ 16 million (C)

TOTAL $ 153 m

And just approved yesterday…..

$ 40 m New Biscuit Factory!

25-Jul-12 34

Your Resources

• People

• Agriculture

• Dairy

• Oil & Gas

• Minerals

• Geo thermal

• Biodiscovery

• Manufacture

• Landscape

• Etc, etc, etc

We have ours too….

And at least one New Zealander has shown what he can do with Fijian Resources….

Resources

Ram BajekalManaging Director

FMF Group of Companies

ramb@fmf.com.fj

Ph: (+679) 3301188 / 9906815

So come on over…..

Thank you very much…….

Vinaka vakalevu