Fiji WT/TPR/S/24
Page 43
IV. TRADE POLICIES AND PRACTICES BYSECTOR
(1) Overview
1. Fiji'seconomy, especially intheexport sector, isdominated bysugar farming, clothing
production andtourism; gold, fisheries andforestry alsocontribute toexports. Theoverall pattern
ofproduction changed littleduring thefirsthalfofthe1990s. Themaingovernment support measure
forboththeprimary andmanufacturing sector isnowthetariff. Neither domestic norexport subsidies
arewidespread, except forcertain taxincentives granted tofirms satisfying specified export performance
requirements. These incentives, granted since thelate1980s, haveencouraged thedevelopment of
theclothing industry.
2. FijiSugar Corporation (FSC) isthesolebuyer ofsugar caneandmanufacturer ofrawsugar
andislegally responsible forthemarketing ofsugar. Most ofFiji'smainmerchandise exports benefit
frompreferential trade agreements suchasLomé Convention andtheSPARTECA. Export taxes are
imposed onsugar andgoldforrevenue purposes. Price controls remain applicable toanumber of
sectors andaprice stabilization fundexists forcopra.
3. Theservices sector, especially tourism, contributes significantly toemployment andexport
earnings. Airtransportation isofimportance toFiji,withmost tourists arriving byair.However,
Fijibound onlyafewactivities oftourism-related services initsSpecific Commitments intheGeneral
Agreement onTrade inServices (GATS).
(2) Agriculture, Fisheries andForestry
4. Theagriculture, fisheries andforestry sectors together accounted forsome 20percentofGDP
in1995, butmore thanhalfofthevalue ofexports, withsugar andmolasses alone contributing
approximately 40percent. Sugar production onacommercial scale, andsubsistence agriculture are
thedominantactivitiesoftheagriculturalsector;despitegovernmenteffortstoencouragediversification,
theoverall pattern ofagricultural production hashardly changed. According totheauthorities, Fiji's
agriculture, including fisheries andforestry, holds ashare inpaidemployees ofslightly more than
2.3percent, though itsshare intotalemployment ismuch higher ifsubsistence/self employment is
included (Table IV.1).
5. Themaingovernment support measure foragriculture istariff protection. Current tariffs for
agriculture, fisheries andforestry range fromzeroto60percent,withasimple average (notincluding
theeffects ofspecific tariffs) ofabout 15percent. Specific andalternative tariffs account forabout
6percentoftariff linesinthesector, contrasted withabout 3percentoflines forindustry. All
agricultural tariffs arebound, following theUruguay Round.WT/TPR/S/24
Page 44Trade Policy Review
Table IV.1
Distribution ofpaidemployees, bysector, 1990-95
(Percent)
1990 1991a1992a1993a1994a1995a
Agriculture, fisheries andforestry 2.6 2.8 2.4 2.1 2.4 2.3
Mining andquarrying 1.6 1.2 1.5 2.0 2.0 2.0
Manufacturing 23.7 25.6 22.9 24.9 24.8 26.0
Electricity, gasandwater 2.9 3.0 2.9 2.8 2.3 2.6
Construction 6.4 7.7 9.2 7.3 7.8 7.3
Wholesale andretail trade,
restaurants andhotels16.7 15.9 14.7 14.5 14.8 14.3
Transport, storage and
communications10.7 9.8 10.5 10.8 10.4 10.4
Finance, insurance, realestate and
business services6.3 6.4 6.3 6.3 6.3 6.2
Community, social andpersonal
services29.1 27.7 29.5 29.3 29.1 28.9
Total paidemployees 88,952 91,538 92,480 94,295 95,345 98,686
a Denotes predicted values.
Source: FijiBureau ofStatistics, Current Economic Statistics, October 1995, andStatistical News, 12April 1996.
6. Exports offruitandvegetables, including rootcrops, aresubject toannual licensing bythe
Ministry ofAgriculture, Fisheries andForests (MAFF) under theFruit Exports andMarketing Act.
Licensing isforquarantine purposes and,according totheauthorities isnotmeant tobetradebarrier;
123licences were issued in1995, following 114in1994.1TheState owns, wholly orinmajority
shareholdings, several agricultural trading companies. Those fullyowned bytheGovernment are:
FijiSugar Marketing Company Ltd.,National Trading Corporation Ltd., Rewa RiceLtd., andYaqara
Pastoral Company Ltd. Those partially owned bytheGovernment are:FijiPineLtd.(almost 100
percentheldbytheGovernment), FSC(68percentheldbytheGovernment), andPacific Fishing
Company (98percentheldbytheGovernment). TheFSCislegally responsible formarketing sugar.
TheInterimDairyIndustryCouncil(IDIC)oversees,monitorsandhelpstorestructurethedairyindustry,
inthelightofinternational tradeagreements, andtheGinger Industry Council (GIC) performs asimilar
rôlefortheginger industry. Neither Council hasexclusive rights intheirindustry.
7. TheGovernment actively encourages andpromotes thefurther processing ofrawmaterials
intheagricultural, fisheries andforestry sectors. Individuals andcompanies engaged indesignated
agricultural enterprises areexempted from taxforfiveyears, mayoffset losses against other profits
andcarry forward thelosses indefinitely untilcompletely set-off against future profits. Expenditure
onlandimprovement maybefullywritten offintheyearinwhich expenditure wasincurred, orover
1Thelicences issued in1994 were for:fruitandvegetables, 20;yaqona, 66;ginger, 7;coffee, 1;cocoa, 3;
daloandcassava, 17.(MAFF (1995), p.87.)Fiji WT/TPR/S/24
Page 45
aperiod offiveyears.2There isaprice stabilization scheme forthecopra industry. TheFiji
Development Bank(FDB) lends farmers andplantation developers funds atpreferential ratesofinterest
(Chapter III(4)(vi)). There areatpresent noprogrammes ofdirect income support forFiji'sfarmers
orfoodsubsidies toconsumers.
8. Though production insome sectors ofagriculture hasfallen recently (Table IV.2), the
Government seestheoutlook forthesector asgenerally favourable. Profitable opportunities havebeen
identified forFijiinexporting certain high-value niche products based onFiji'sclimatic andlocational
advantages. These include fresh fruit(pineapple, papaya, andmango), processed fruit(pineapple,
papaya, mango, banana, andguava), rootcrops (fresh orprocessed ginger, taro,yams), spices, kava,
flori-culture (anthuriums andorchids), coconut products, cocoa, coffee, vegetables (watermelon,
rockmelon,zucchini,eggplant),tunaandotherfisheryproduce,pine,hardwood,handicraftrawmaterials
andcertified organic products.
Table IV.2
Basic statistics foragricultural production, 1990-95
('000tonnes)
Sugar cane Copra Rice Cocoa Ginger
1990 4,016 19.0 26.5 0.4 5.5
1991 3,380 15.2 29.0 0.4 6.5
1992 3,533 16.0 22.5 0.3 4.6
1993 3,704 10.7 22.3 0.2 4.1
1994 4,064 8.4 18.0 0.2 4.6
1995a4,110 8.8 18.5 0.1 4.7
a Denotes predicted values.
Source: FijiBureau ofStatistics, Current Economic Statistics, October 1995 andStatistical News, 12April 1996.
(i) Sugar
9. Thesugar industry inFijiisgoverned bytheSugar Industry Actof1984. TheSugar
Commission ofFiji,astatutory body setupunder theAct,co-ordinates activity inthesugar sector;
ithasrepresentatives fromgrowers, millers, landowners, tradeunions andtheGovernment. TheFiji
Sugar Cane Growers 'Association represents growers supplying sugar caneonacontract basis tothe
FijiSugar Corporation (FSC), which isthesolebuyer ofsugar caneandmanufacturer ofrawsugar.
Operating profits oftheFSC declined from F$29.7 million in1989 toF$9.3 million in1993;
F$18.1 million andF$13 million wereprovided in1994and1995, respectively. Asthelargest public
enterprise, itemploys over3,500 personnel attheheight ofthecrushing season. Itsfoursugar mills
havethecapacity toproduce 500,000 tonnes ofsugar ayear. TheFSCisalsoresponsible forthe
storage, marketing, delivery andsaleofrawsugar; theFijiSugar Marketing Company actsasFSC's
marketing agent.3
2FTIB (1995/96a), p.30.
3TheFijiSugar Corporation Ltd.(1995), p.1.WT/TPR/S/24
Page 46Trade Policy Review
10. Thesugar industry accounts forabout 40percentoftotalmerchandise exports andabout 12per
centofGDPinFiji.Theareaunder sugar expanded from71,000 hectares in1985to74,000 hectares
in1994 (Table IV.3). Annual sugar production varies between 450-500,000 tonnes, depending on
climatic conditions suchasdroughts andhurricanes. TheGovernment andindustry hope toboost
production, mainly withimprovements inproductivity, toconsistently achieve anannual production,
from thepresent areaunder cultivation, ofhalfamillion tonnes ayear. TheSugar Commission of
Fijiisexamining possible changes, including inthecanepayment system, toachieve higher yields.
Table IV.3
Basic statistics forsugar industry, 1980, 1985 and1990-95
Sugar cane
Number of
contracts/growersArea harvested
('000hectares)Average production
perhectare
(tonnes/hectares)Sugar
production
('000tonnes)Exports ofsugar
(f.o.b.)
(F$million)
1980 19,567 66 50.9 396 174.2
1985 22,154 71 43.4 341 111.8
1990 21,334 70 57.6 408 223.7
1991 22,479 72 46.5 389 220.4
1992 23,334 73 48.6 426 221.3
1993 23,454 74 50.1 442 230.7
1994 22,808 74 53.4 517 252.2
1995a22,414 74 55.1 454 276.1
a Denotes predicted values.
Source: FijiBureau ofStatistics, Current Economic Statistics, January 1996.
11. Thecanegrowers 'share oftheproceeds ofthesaleofcaneisdetermined bytheSugar Industry
Master Award. Itisthenetproceeds thatareshared between thegrowers andthemillers aftercertified
deductions havebeenmade from therevenues received. Upto325,000 tonnes, thegrowers 'share
is70percent; between 325,000 and350,000, thegrowers 'share is72.5percent; andforevery
tonne thereafter itis75percent. Thebalance accrues totheFSC.
12. About 90percentofFiji'srawsugar isexported. A3percenttaxisimposed onsugar exports.
Sugar exports benefit from preferential access intothemarket oftheEuropean Union (EU), where
Fijisellsbetween 45-50 percentofitstotalsugar exports (Table IV.4). Under theSugar Protocol,
annexed totheLomé Convention, Fijiisallocated afixed quota of165,348.3 tonnes ayearofwhite
sugar equivalent (about 172,000 tonnes telquel). Anadditional average annual quota ofapproximately
25,000 tonnes ofwhite sugar equivalent wasgranted bytheEUforasixyearperiod starting 1July1995
under theSpecial Preferential Sugar Agreement. TheSugar Protocol guarantees apurchase price for
bulkrawsugar based ontheEUintervention price, which isnowabout twoandahalftimes theworld
price. Thesecond preferential market forFijisugar exports istheUnited States, where Fijihasaquota
of0.9percentofU.S.annual global import requirements. Thesugar isshipped totheUnited States
atprices ruling intheU.S.market. Fijihasabilateral agreement withMalaysia fortheshipment of
90,000 tonnes ayear,through theendof1997. Fiji'straditional freemarket salesaretoCanada, China,
Japan, theRepublic ofKorea andSingapore.Fiji WT/TPR/S/24
Page 47
Table IV.4
Exports ofsugar byFiji
(Metric tonnes)
Year Destination Atpreferential price Atmarket price Total
1993 United Kingdom
Malaysia
United States
Japan
Canada
Republic ofKorea172,000
-
8,453
-
-
--
93,886
-
62,250
38,000
20,422172,000
93,886
8,453
62,250
38,000
20,422
Sub-total 180,453 214,858 395,011
1994 United Kingdom
Malaysia
United States
Japan
Canada
Republic ofKorea175,752
-
11,200
-
-
--
112,167
-
93,000
36,000
18,900175,752
112,167
11,200
93,000
36,000
18,900
Sub-total 186,952 260,067 447,019
1995 United Kingdom
Malaysia
Portugal
Finland
United States
Japan
Canada
Republic ofKorea
China181,780
-
18,000
21,200
10,200
-
-
-
--
104,200
-
-
-
31,500
18,000
31,180
15,750181,780
104,200
18,000
21,200
10,200
31,500
18,000
31,180
15,750
Sub-total 231,180 200,630 431,810
Source: Government ofFiji.
13. Fiji'sdomestic consumption ofsugar isataround 43,000 tonnes ayear,including about 10,000
tonnes soldtoother Pacific Island nations.
14. Uncertainty about landtenure continues toaffect theindustry, since many leases aredueto
expire between 1997and2005. Afuture problem mayalsostemfromchanging preference arrangements
ininternational trade, since sugar prices mayfallasaresult ofchanges intheCommon Agricultural
Policy oftheEU.
(ii) Rice
15. Before 1992, ricewaspromoted andprotected fromcheaper imports withanarray ofquotas,
tariffs andsubsidies; quotas andsubsidies havebeenabolished.4Riceproduction hasbeenona
downward trend since 1991; Fijiproduced 18,500 tonnes ofpaddy ricein1995. Themajor factors
contributing tothistrend aretheimportation ofcheaper brown riceasaresult ofderegulation and
themove from ricetoother more profitable cropping alternatives suchasrootcrops. Fiji'simports
4Reserve Bank ofFiji(1995), p.13.WT/TPR/S/24
Page 48Trade Policy Review
ofricereached F$12.8 million in1995; thisisalsoreflected inadecline inself-sufficiency from54per
centin1990 toabout 45percentin1995 (Table IV.5).
Table IV.5
Basic statistics forrice, 1990, 1992 and1994
1990 1992 1994
Production area(hectares) 12,112 10,441 7,865
Paddy output (tonnes) 26,477 22,479 18,019
Value ofoutput (F$million) 8.6 7.3 5.9
Number offarmers ('000) ... 12.3 11.3
Riceimports (F$million) 11.8 10.6 11.4
Selfsufficiency (percent) 54.0 45.8 43.0
... Notavailable.
Source: Ministry ofAgriculture, Fisheries andForests, Annual Report 1994, p.9.
16. Rewa RiceLtd.provides service tothericegrowers inFijibyoperating mills. Imports of
white andbrown ricearesubject to40and10percenttariffs, respectively. Thetariff onwhite rice
istobereduced to22.5percentin1997; thetariff onriceisbound ataceiling rateof46percent
under Fiji'sUruguay Round commitments. According totheauthorities, tariffs onriceareunder review
andfurther cutsinratesmaybeputonhold.
(iii) Other agricultural products
17. ThecopraindustryhasbeenoneofthemainstaysofFiji'sruraleconomyformostofthiscentury.
Itseconomic viability isconstrained bytheadvanced ageofcoconut treesandthelowworld market
prices forcoconut oilcompared withhightransaction cost. Although copra remains among Fiji'smost
important agricultural export commodities, thequantity produced hasdeclined sharply (Tables IV.2
andIV.6).
Table IV.6
Basic statistics forcopra, 1990, 1992 and1994
1990 1992 1994
Production area(hectares) ... 64,953 64,450
Production (tonnes) 19,005 16,047 8,407
Value ofproduction (F$million) 5.7 4.8 2.5
Coconut oilexport (F$million) 4.9 3.9 3.8
... Notavailable.
Source: Ministry ofAgriculture, Fisheries andForests, Annual Report 1994, p.13.Fiji WT/TPR/S/24
Page 49
18. TheGovernment supports thecopra industry through aCopra Price Stabilisation Fund,
administered bytheMOFED, which provides minimum prices tobothproducers andmillers.5Using
apricing formula based uponforward prices quoted ontheRotterdam tropical oilmarket, theCoconut
Board 'sindependent accountant calculates amonthly localcopra price. Thisisdivided between the
millers andproducers according toaformula which isreviewed periodically. Since January 1991the
percentage hasbeenasfollows: forthefirstF$400 pertonne, 70percentfortheproducers and30
percentforthemillers; foranyamount overF$400, 75and25percent. Thefundisactivated ifthe
monthly pricefallsbelow aspecified level(currently setatF$400 pertonne). When thepriceisabove
thesupport price, 25percentoftheamount above thesupport levelispaidbacktothefund.
19. Ginger hasbeenoneofFiji'smostsuccessful diversification crops todate. Bythelate1980s
ginger hadbecome animportant export commodity, earning uptoF$6million ayear. However,
production ofginger hasdeclined since1992; processed ginger exports alsodecreased from581tonnes
in1993 to409tonnes in1994, withacommensurate fallinvalue fromF$2.1 toF$1.8 million6,due
totheadverse impact ofdiseases suchasrhizome rotandnematodes, andcompetition overseas. Ginger
output wasalsoaffected byaswitch todalo(taro). Asaresult ofstrong overseas demand andhigher
prices, production ofdalorosefrom8,810 tonnes in1994to12,973 tonnes in1995andexport ofdalo
increased from F$5.5 million in1994 toF$7.7 million in1995.
20. The1996applied tariffs onimports ofcoconut andginger are20and10percent,respectively.
Except forrice,applied tariffs onagricultural products arewellbelow the40percentceiling binding
level. Most beverages, spirits, tobacco andmanufactured tobacco products areunder specific duties
oralternative duties. Most beverages andspirits arelevied at60percentadvalorem ratesorspecific
duties ranging from F$1.55 toF$45.08 perlitre, though theyarebound at70percentadvalorem
ratesorspecific duties ofF$15 or25perlitre(ofalcohol) asaresult ofFiji'sundertakings inthe
Uruguay Round. Tobacco andmanufactured tobacco products, aregenerally taxed atspecific rates
ranging from F$39.65 toF$70.21 perkg.;bindings aremostly atF$30 toF$40/kg. orper1,135
cigarettes whichever isthegreater.
(iv) Livestock anddairy farming
21. Themajor constraints facing thelivestock anddairy industries inFijirelate tothepoorquality
ofgrazing pastures, thehighcostoffeedconcentrates, theunavailability ofgoodquality breeding stock
andhighcalfmortality rates.7Domestic production andtradeindairyproducts havenotbeensignificant.
Until 1993, theindustry wasprotected frominternational competition byimport licences, under which
theexclusive rights toimport milkpowders were given totheRewa Co-operative Dairy Company
(Rewa Dairy) andLodhias (RedCow). InNovember 1993 these licences werereplaced bya35per
centimport tariff. Thecompanies wereinitially granted atemporary exemption frompaying thetariff.
5SupportpaymentsareforwardedbymillerstotheCoconutBoard,whichchecksthem,basedoncoprareceipts,
andpassesthemontotheMOFEDforpayment.PaymentismadedirectlybytheMOFEDtothemillersfollowing
theMAFF 'sendorsement.
6MAFF (1994), p.1.
7Government ofFiji(1993), p.86.WT/TPR/S/24
Page 50Trade Policy Review
Thedutyconcession expired inNovember 1996. Since theremoval ofimport licences, twonew
competing companies haveentered themarket.8
22. Beefproduction hasprogressively fallen since 1990 duetocompetition withother imported
meats, suchaslambandchicken, andinferior pasture quality, while imports haveincreased. Production
hasaveraged about 2,500 tonnes ayearrecently. Porkproduction totalled 755tonnes in1995(Table
IV.7). Porkimports totalled 75tonnes in1994and31tonnes in1995. Although mostpoultry, meat
andeggsconsumed inFijiareproduced domestically, theindustry continues torelyheavily onimported
inputs, particularly thegrain usedinfeedmixes. There isoneenterprise producing chicken; andthree
quarters oflocal demand issupplied byimports. Specific import licences arerequired forchicken
meatimported fromtheUnited States, duetothesizeofitsindustry; thisrequirement isunder review.
Imports from other sources, require onlyaquarantine certificate.
Table IV.7
Basic statistics fortheproduction oflivestock andfisheries, 1990-95
('000tonnes)
Beef Pork Goat Chicken Eggs Fish
1990 2.9 0.6 0.7 5.5 2.1 13.4
1991 2.8 0.7 0.7 5.9 2.2 13.8
1992 2.6 0.7 0.7 6.1 2.6 13.5
1993 2.4 0.8 0.6 5.7 2.7 14.0
1994 2.3 0.8 0.7 8.1 2.3 15.7
1995 2.2 0.8 ... 8.8 ... ...
... Notavailable.
Source: Government ofFiji.
23. 1996 tariffs onimports oflivestock anddairy products ranged fromzeroto35percent,with
asimple average of16percent. Most tariffs arebound at40percentunder theUruguay Round,
except formilkpowder, which isbound at46percent.
(v) Fishery products
24. Fiji'sfisheries sector contributes about 1percentofGDP, dominated bysubsistence fishing.
Theoutput ofcommercial fishing increased from8,500 tonnes in1994to11,000 tonnes in1995, with
theaddition ofvessels totheexisting tunafleet. Production ofcanned fishincreased three-fold between
1986and1995. Export earnings fromfisheries totalled F$68 million in1995. Themajor export items
arecanned tunaandchilled fresh fish(sashimi anddeepwater snapper). Canned tunaisprocessed
8FTIB (1995/96a), p.52.Fiji WT/TPR/S/24
Page 51
bythe98percentgovernment-owned Pacific Fishing Company (PAFCO).9Themajor destinations
forFiji'sfishexports areCanada, theUnited Kingdom, theUnited States andJapan.
25. TheFisheries Actgoverns thefisheries sector; theFisheries Division oftheMAFF isincharge
ofregulating thesector. Under itsmission topromote sustainable development ofFiji'sfishery, the
Division 'sprimary objectives are:further development offisheries regarding theExclusive Economic
Zone andterritorial waters; regulating andcontrolling fisheries ontheprinciples ofoptimum utilization
andlong-term sustainability; andencouraging private sector development.
26. Acompany engaging indeepseafishing generally qualifies forthefollowing taxconcessions:
exemption fromtariffs onimport ofspecialized fishing equipment andgear, subject tovetting bythe
Customs andExcise Department (CED); exemption fromfiscal dutyonbait;5percenttariffonimport
offishing vessels; 5percenttariff onfittings, fixtures andaccessories imported forpurposes of
renovating avessel, subject tovetting bytheCED; tariffconcessions onfuelandpackaging materials,
subject tovetting bytheCED; export incentives, subject tothefulfilment ofrequirements under the
5thSchedule oftheIncome TaxAct(applying tocompanies involved inprocessing operations and
exporting atleast30percentoftheiroutput); andaccelerated depreciation allowance onplant and
machinery (Chapter III(3)(vi) andTable AIII.3).10Fiji'sfishery exports totheEUwerecovered by
aderogation fortheperiod 1992-1996, under Protocol 1oftheLomé Convention; thatis,theywere
exempt from duties onthequalifying fishexports.11
27. Allexports offisheries products require export permits, issued bytheFisheries Department.
Exports oflivefish,turtle shells andunprocessed trochus shells areprohibited except bypermission
oftheMinister ofAgriculture, Fisheries andForests. 1996tariffs onimport offishandfishproducts
were at22.5percent; notariff linesinthesector arebound.
(vi) Forestry
28. TheForestry Department intheMAFF isincharge oftheforestry sector inFiji,including
theestablishment ofhardwood plantations. FijiPineLtd., 99.9percentheldbytheGovernment, is
incharge ofplanting andprotecting Fiji'ssoftwood plantations. Tropik Wood Industries Ltd., a
70percentsubsidiary ofFijiPineLtd.,isresponsible forlogging, processing andmarketing operations.
FijiForestIndustriesandValebasogaTropicboardsaremanufacturersofveneer,plywoodandblockboard
inFiji. Inaddition totheincentives generally given, sawmilling andlogging machinery aregranted
freedom fromtariff, subject tovetting bytheCED. Inanattempt toincrease efficiency, theCabinet
in1995 approved theimplementation ofanewSawmilling Policy, effective from April 1997. This
requires allsawmills toinstall more efficient bandsaws, andalsoencourages thedevelopment offurther
processing industries, producing value-added products.
9TheGovernment'smaininvolvementinthesectoristhroughitsownershipofPAFCO.In1988,thecannery,
whichemploys800workersandhandlesamaximumof15,000tonsoftunaperyear,became exemptfromincome
taxfor13years. (World Bank (1995), p.49andFTIB (1995/96a), p.165.)
10FTIB (1995/96b), pp.26-27.
11FTIB (1993), p.46.WT/TPR/S/24
Page 52Trade Policy Review
29. Currently theforestry sector accounts forabout 1percentofFiji'sGDP. Three quarters of
theannual timber harvest comes fromplantations. Export earnings fromtimber andtimber products
totalled F$53.0 million in1995(Table IV.8). Thelocaltimber industry isbased onsawmilling, with
littlebywayoffurther processing industries. Logging requires licences issued onanannual basis
bytheForestry Department. Royalties paidtotheForestry Department totalled F$1.8 million in1994
andF$1.1 million in1995. AsofMay1996, therewere46licensed sawmills operating inthecountry.
Anyperson intending toinstall oroperate asawmill istoapply totheConservator foralicence, attaching
aplanandlocation oftheproposed mill. Onceendorsed, provisional approval isgiven forconstruction,
subject totherequirements oftheTown andCounty Planning, Department oftheEnvironment, and
thelocalauthorities. Upon completion, theDepartments ofLabour andForestry jointly inspect the
millandrecommend, ifsatisfied, theissuance ofalicence bytheConservator, which isfreeofcharge
andtakes oneortwodays. Licences arefor12months andapplications forrenewal mustbelodged
notlessthanthree months prior totheirexpiry. Seventeen treatment plants havealsobeenlicensed
tooperate.
Table IV.8
Sawn logproduction andexport earnings from timber andtimber products, 1985-95
Year Indigenous timber (m3) Pine(m3)aTotal export earningsb
(F$million)
1985 192,398 10,912 7.4
1986 183,508 8,086 7.8
1987 225,721 22,966 16.7
1988 205,936 83,874 26.3
1989 162,162 102,315 32.1
1990 153,831 100,803 35.4
1991 122,819 126,075 31.2
1992 108,559 102,129 35.7
1993 129,674 114,393 30.7
1994 137,808 121,093 35.7
1995 129,506 123,783 53.0
a Pinevolume doesnotinclude pulpwood.
b Export earnings donotinclude proceeds from furniture exports.
Source: Government ofFiji.
30. Exports aremainly ofsawn timber (Table IV.9).12Theexport oflogsisbanned, providing
additional protection tothesawmilling sector. Forest product exports areexpected toriseto
F$100 million when commercial exploitation ofthehardwood plantation forests begins around 2010.13
12FTIB (1995/96a), p.133.
13World Bank (1995), pp.48-49.Fiji WT/TPR/S/24
Page 53
31. 1996tariffs onwood andarticles ofwood range from10to22.5percent,withasimple average
ofabout 15percent. There arenotariff bindings inthesector.
Table IV.9
Timber trade, 1985 and1990-94
Sawn timber
(cubic metres)Wood veneer sheets
(square metres)Plywood
(square metres)
Exports Imports ExportsaImports ExportsaImports
1985 12,756 21 4,009,014 876 347,834 14,844
1990 35,110 5 3,825,472 - 414,345 -
1991 20,847 7 3,437 - 2,548 280
1992 24,671 28 3,732 1,371 1,230 53
1993 135,581 118 3,655 1,420 3,248 30,752
1994 39,704 24 4,895 2,311 1,519 460
a Quantities given incubic metres from 1991.
Source: FijiBureau ofStatistics. Current Economic Statistics, October 1995.
(3) Mineral Products
32. Rights formineral exploration andextraction arevested intheStatebytheMining Act,which
alsogoverns theproduction andexport ofmineral resources. TheDirector ofMines attheMineral
Resources Department (MRD) under theMinistry ofLands, Mining andEnergy grants Prospector
Rights,ProspectingLicencesandSpecialProspectingLicencesformineralexplorationaswellasPermits
toMine, Mining Leases andSpecial Mining Leases formineral extraction. Fiji'spolicies andobjectives
inthemining sector focus onattracting newinvestment, equitable sharing ofthebenefits ofmineral
resource development through appropriate taxation androyalties policies, ensuring asafeandhealthy
workplace andsound environmental practices, andincreasing knowledge ofmineral resources through
geo-scientific datacollection. According totheauthorities, theGovernment doesnotinterfere in
production orpricing. Exports andimports aresubject tocustoms duties, butareotherwise not
controlled. There arenospecific policies andinstruments topromote thefurther processing ofmineral
products inFiji,e.g.goldproduced isnotrefined inFiji.
33. Thecontribution ofthemining sector totheeconomy inthelastfiveyears hasbeenataround
2to3percentofGDP and10percentofexports. Themining sector employs around 2,000 people.
Thetotalareaunder licence attheendof1995was279,529 hectares.14TheMRD receives allroyalty
payments from themining leases granted before 1990; royalties onleases granted subsequently are
paidtothelandowners. Royalties aregenerally calculated at2.5percentofnetprofit, upon which
corporate income taxislevied.
34. Inthepast,theGovernment hastreated mining ventures onacase-by-case basis butisnow
moving toward auniform approach. Until thenewpolicy isimplemented, where amining venture
isconsidered tobeexpedient fortheeconomic development ofFiji,theincome derived from such
14World Bank (1995), p.50.WT/TPR/S/24
Page 54Trade Policy Review
activity maybeexempt from taxortaxed atareduced rateforaspecified period. When ataxpayer
hasavalid Prospecting Licence, anyprospecting expenses considered allowable bytheIncome Tax
Department maybededucted from totalincome fortaxpurposes. Asanalternative tonormal
depreciation, ataxpayer engaged inmining, whohasincurred capital expenditure intheacquisition
ofamining lease orinthedevelopment ofmines andtheextraction, treatment, refinement andsale
ofminerals, maywrite off20percentofsuchexpenditure against totalincome, inanyfiveoutof
eight years (Table AIII.3).15
35. Imports ofores, slag,ashandprecious metal aredutyfree; notariff linesinthesector are
bound.
(i) Gold
36. Productionofmineralshasbeendominatedbygoldproduction,mainlybyEmperorGoldMining
Company inVatukoula.16Thecompany extracts andexports golddirectly; theMRD grants export
permits totheEmperor Gold Mining Company fourtimes ayear. Export permits arenotautomatic
andcanbedenied inthenational interest ofFiji,according totheauthorities. Production ofgoldpeaked
at4.3tonnes in1988, thendecreased somewhat to3.4tonnes in1995, withthemining oflower grade
ores. Exports ofgoldamounted toF$86.1 million in1988, thendecreased toF$58.6 million in1995
(TableIV.10).Inlate1994theEmperorGoldMiningCompanyinitiatedacapitalinvestmentprogramme
toimprove extraction rates.
37. TheGovernment levies a3percentexport taxonthef.o.b. value ofgoldforrevenue purposes.
However, theexport ofgoldisfreeofexport taxwhere thegoldispresent inoreororeconcentrate
orasinorganic compounds. Ifthegoldisworked intogoldcoins orgoldjewellery, thenexports are
alsofreeofexport tax.17
(ii) Petroleum andpetroleum-related products
38. Imports oflubricating oilaresubject tolicensing; licences arefreely granted, according to
theauthorities, toallapplicants. About 80percentofmineral fuelsaresubject totariffs andonethird
oftariff linesinmineral fuelsaresubject tospecific duties; noratesarebound.
15FTIB (1995/96a), p.30.
16Asmall amount ofsilver isproduced andthere ispotential forcopper attheNamosi Copper Project, though
notyetdeveloped.
17MRD (1995), p.3.Fiji WT/TPR/S/24
Page 55
Table IV.10
Production ofgoldandsilver attheEmperor Gold Mining Company, 1932-95
Year Gold Silver
Production
(kg.)Value
(F$)Production
(kg.)Value
(F$)
1932-79 111,646.80 130,759,428 38,894.20 1,384,487
1980 744.60 12,410,041 210.50 127,733
1981 951.10 11,873,193 250.60 69,260
1982 1,456.30 15,578,602 594.30 132,289
1983 1,246.20 17,005,538 411.60 145,957
1984 1,675.50 20,703,669 519.70 138,256
1985 1,888.20 22,052,797 441.60 89,498
1986 2,951.80 38,522,041 530.70 95,089
1987 2,868.20 51,336,086 814.20 186,633
1988 4,302.90 86,126,174 994.90 289,829
1989 4,212.60 75,601,594 1,046.20 265,663
1990 4,115.10 74,213,722 774.60 174,237
1991 2,810.10 47,710,080 484.60 92,642
1992 3,105.73 50,971,311 877.00 166,193
1993 3,712.75 65,813,275 1,080.58 224,152
1994 4,111.30 62,607,263 1,405.80 339,842
1995 3,410.94 58,593,408 1,552.85 363,457
Total 155,210.62 842,878,222 50,883.93 4,285,217
Source: Government ofFiji.
(4) Manufacturing
39. Manufacturing accounts forapproximately 12percentofGDP andabout aquarter offormal
paidemployment inFiji. Besides sugar milling, foodprocessing, beverage andtobacco production,
textiles andclothing dominate manufacturing inFiji. Themanufacturing sector ishandicapped bya
small domestic market, theneedtoimport mostrawmaterials andcapital goods, andtheabsence of
adiversified industrial base. Excluding sugar milling, about halfofmanufacturing output isforthe
domestic market andabout halfforexport.18
40. Themain government protection measure formanufacturing isthetariff. Current tariffs for
themanufacturing sector range fromzeroto80percent,withasimple average (notincluding theeffects
ofspecific tariffs) ofabout 13percent(Table III.2). Specific andalternative tariffs account forabout
3percentoftariff linesinthemanufacturing sector. Approximately 43percentoftariff linesinthe
18World Bank (1995), p.39.WT/TPR/S/24
Page 56Trade Policy Review
manufacturing sector arebound asaresult ofFiji'sundertakings intheUruguay Round, allat40per
centandmainly in:medical andpharmaceutical products; fertilizers; essential oils;textiles, yarn,
andfabrics; articles ofapparel andclothing; ironandsteel; metal manufactures; specialized machinery
forparticular industries; andgeneral machinery andequipment.
41. Governmental support isalsothrough taxexemptions forTaxFreeFactories (TFF) satisfying
export requirements, which donotpayanytaxes (Table AIII.3). TheTFFscheme hasencouraged
employment generation andexport earnings, especially inthegarments industry. Tariff orany
value-added taxpaidisrefundable fortheimportation ofequipment orintermediate products.
42. Duetoanabundance oflabour, Fijiisnotyetready totakeupcapital intensive projects,
according totheauthorities. They consider, however, thatlightmanufacturing industries aretoplay
amajor roleinbroadening Fiji'smanufacturing baseforawhile. Theauthorities areoftheviewthat
garments, footwear, food, leather, andnon-metallic minerals havepotential forfurther development.
(i) Garments
43. Garments aretheleading manufacturing industry inFiji,withapproximately 60firms in
operation. Some twothirds ofemployment comes fromforeign firms. Garment production increased
five-fold between 1986and1995, assisted bytheintroduction oftheTFFScheme (Chapter III(3)(v)).
Thegarments sector accounts formorethan80percentofTFFemployment andinvestment. Reflecting
thisrapid growth ofproduction, garment exports rosefrom lessthan3percentofexports in1987
to24percentin1995. Australia, NewZealand andtheUnited States arethethree maindestinations
forFiji'sexports ofgarments (Table IV.11); Australia, withalmost halfoftotalgarment exports,
remains Fiji'skeyexport market. Fiji'sgarment industry alsorelies heavily onfabric imports from
Australia, which increased from F$6million in1990 toF$64 million in1995.
Table IV.11
Main destinations forFiji'sgarment exports, 1989-95
(F$million)
Country 1989 1990 1991 1992 1993 1994 1995
Australia 31.0 23.0 31.8 26.5 55.7 65.0 93.7
NewZealand 53.8 50.1 37.6 21.2 11.2 11.5 12.1
United States 10.4 33.6 52.9 60.9 52.6 60.4 75.8
Total 97.3 113.7 131.1 116.8 128.8 141.0 185.0
Source: Government ofFiji.
44. Garment exports satisfying certain rulesoforigin havebeenencouraged bypreferential access
toAustralia andNewZealand under theSPARTECA (Chapter II(5)(ii)(b)). Many ofthecompanies
investing intheFijigarment industry arefromthesecountries andbetween 70to80percentofgarment
exports havebeensoldtoAustralia andNewZealand overthepastseveral years. However, Fiji's
competitiveadvantagehasbeensteadilyerodinginthefaceofexternaltariffreductionsbybothcountries.
45. TheEuropean Union (EU) granted Fijiexporters aderogation under Protocol 1oftheLomé
Convention inrespect ofcertain garment categories manufactured forexport totheEU,fromFiji WT/TPR/S/24
Page 57
January 1991toDecember 1993. Thefollowing products wereexported under derogation: men's/boys '
overcoats, suitsandjackets; men's/boys 'andwomen 's/girls 'trousers andshorts; women 's/girls '
jackets;men's/boys'shirtsandwomen's/girls'blouses.Thetotalquantityallowableunderthederogation
was956,000 units.19
46. Certain types ofgarments exported totheUnited States20aresubject toquota under abilateral
agreement withtheUnited States, covering theperiod from1January 1996through 31December 1997
(Table IV.12). Fijihasfulfilled about 70to80percentofitsquota allocation. TheMCITPE allocates
quotas according tothepastperformance ofcompanies.
Table IV.12
Quantitative limits onFiji'sgarment exports totheUnited States, January 1996 toDecember 1997
CategoryaDescription Period Quantity limit (monthly)
338/339/638/639 Cotton andman-made fibreknit
tops1/1/96-31/12/96
1/1/97-31/12/971,071,914 dozen
1,136,229 dozen
338-s/339-s/638-s/639-s Cotton andman-made fibreknit
tops, nottanktopsortees1/1/96-31/12/96
1/1/97-31/12/97893,262 dozen
946,858 dozen
a Denotes theUScoding system.
Source: Government ofFiji.
47. In1996, thetariff onimports oftextiles andclothing intoFijiaveraged about 15percent,
withmostratesbetween 10and22.5percent. Approximately 88percentofFiji'stariff linesinthe
textiles andclothing sector arebound under itsUruguay Round commitments.
48. According totheauthorities, Fijian labour productivity intextiles andclothing isregarded as
relatively lowbecause ofhighturnover andabsenteeism, limited utilization ofcomputerized design
andcutting equipment, andthelackofspecialized workers indesign, pattern-cutting, andmarketing.
Other factors thathinder productivity include thehighcostandlimited availability ofairfreight services
andinfrequent seacargo services between FijiandtheUnited States.21Additional impediments to
thefuture development ofthegarment industry aredifficulties incompeting withlower wagenewcomers
andtheerosion ofpreferential access offered under SPARTECA asbothNewZealand andAustralia
havereduced theirm.f.n. tariff rates.
(ii) Other manufactured articles
49. In1994 and1995 Fiji'sfootwear industry exported shoes tothevalue ofF$11.4 million and
F$9.6 million toNew Zealand.22TheGovernment considers thattheleather industry canexploit
19FTIB (1990/91), p.38.
20Ladies ',men's,girls',andboys'tops.
21World Bank (1995), p.42.
22FTIB (1995/96a), p.72.WT/TPR/S/24
Page 58Trade Policy Review
opportunities available under SPARTECA. Fiji'sexports ofironandsteelandportland cement totalled
F$2.3 million andF$1.3 million in1995.
(5) Services
50. Services, (including construction) account forabout 60percentofFiji'sGDP andaccounted
for67percentofpaidemployees in1995. Services trade, especially tourism, hasanimportant rôle
inFiji'sexternal accounts; in1995, thesurplus ontheservices account inthebalance ofpayments
wasUS$153 million.
51. Fiji'sSchedule ofSpecific Commitments under theGeneral Agreement onTrade inServices
(GATS) covers onlytourism. Asofearly October 1996, Fijiwasnotparticipating intheWTO
negotiations onbasic telecommunications ormaritime transport.
(i) Tourism
52. Tourism isofgreat importance toFiji; nearly 320,000 visitors wererecorded in1995. The
tourism industry employs directly andindirectly some 40,000 people. Thetourism sector, together
withdistribution, transport andcommunications, contributes approximately 20percentofGDP. In
1995, travel receipts amounted toF$420 million, about aquarter ofexternal current account receipts.
53. Thetopfoursources ofvisitors toFijiduring the1990s wereAustralia, NewZealand, Japan
andtheUnited States. Theshare ofAustralia inthetourist totaldecreased from37percentin1990
to25percentin1995; however, those ofNewZealand andJapan haveincreased significantly for
thepastseveral years (Table IV.13). Visitors stayed anaverage of8.5daysin1995. Theaverage
hotel occupancy ratewaslessthan60percentduring the1990s (Table AIV.1). However, forfour-
tofive-star hotels, theaverage annual occupancy rateisaround 80percent, putting some pressure
onupmarket hotels, particularly during thesecond halfoftheyear.
Table IV.13
Visitor arrivals bycountry, 1990-95
(Percent)
1990 1991 1992 1993 1994 1995
Australia 37.1 33.4 31.4 27.0 26.8 24.6
NewZealand 10.5 11.8 13.4 14.2 16.8 18.5
Japan 7.7 10.7 12.9 13.3 12.5 14.2
United States 13.2 12.3 12.5 14.8 14.2 12.5
Continental Europe 9.8 10.1 10.6 10.4 9.7 9.7
United Kingdom 6.0 6.4 6.0 7.0 7.5 7.7
Canada 6.6 5.9 0.5 4.3 3.8 3.3
Others 9.1 9.4 12.7 9.0 8.7 9.5
Number ofpersons
Total 278,996 259,350 278,534 287,462 318,874 318,495
Source: FijiBureau ofStatistics, Current Economic Statistics, October 1995.Fiji WT/TPR/S/24
Page 59
54. Thefollowing regulations andlawsgovern thetourism sector inFiji:theHotels AidAct
(Cap. 215); theHotels Aid(Amendment) Decree 1991; andtheFiveStarHotel Incentives legislation.
TheMinistry ofTourism andCivilAviation isresponsible fortheformulation ofallaspects oftourism
development, including infrastructure, basic amenities andlegislation regulating taxincentives. Fiji
hasamarketing armfortourism, theFijiVisitors Bureau (FVB), which promotes andmarkets tourism
abroad. Itisdependent ongovernment support foritsoperation; thegovernment grant totheFVB
increased steadily from F$4.0 million in1991 toF$6.6 million in1996. Tourism inFijiislargely
dominated byprivate sector activity.
55. Projects forapproved hotel buildings orexpansion maybeentitled under theHotels AidAct
toreceive aninvestment allowance, from theMinistry ofTourism andCivil Aviation. Inaddition
tonormal depreciation, 55percentofapproved capital expenditure (excluding costofland) maybe
set-off against thehotel owners 'taxable income. Acostwrite-off of55percentmaybeallowed by
theMinister ofTourism andCivil Aviation toataxpayer forsupport-projects inthetourism sector
suchastourist vessels. Allcontributions topromotion andmarketing activities thatareorganized and/or
approved bytheFVB aregiven a150percenttaxallowance. Ifapproved bytheFijiTrade and
Investment Board andtheMinistry ofTourism andCivil Aviation, theFijiDevelopment Bank may
grant preferential rateloans uptoF$200,000 toindigenous Fijians inthetourism sector. TheFive
StarHotel Incentives, forwhich ahotel musthaveatleast200rooms andaminimum investment of
F$40 million, include thefollowing: a20-year taxholiday period; losses tobecarried forward to
sixyears; duty-free entry ofallcapital equipment, plantandmachinery; anda100percentwrite-off
onallcapital expenditure inanyoneyearduring aperiod ofeight years.
56. IntheUruguay Round, Fijiundertook certain specific commitments regarding tourism and
travel-related services under theGATS, covering hotels, motels, other tourist accommodation and
restaurants.23Under itsGATS Schedule, intourism andtravel-related services, Fijidoesnotlimit
marketaccessornationaltreatmentforthreemodesofsupply:cross-bordersupply;consumptionabroad;
andcommercial presence, except forlimitations oncommercial presence inmarket access. Inthese
sectors, too,normal government approval andregistration arerequired forallforeign investors inthe
aspectofcommercialpresence.Intermsofthepresenceofnaturalpersons,normalgovernmentapproval
isrequired forforeign investors andentry islimited tokeyposts inmanagement andskilled employees
where these areunavailable locally. Appointments forskilled employees arelimited tothree years
initially, withextension subject toImmigration Department requirements. Foreign managers/skilled
employees arerequired toprovide locals withon-the-job training.
(ii) Transportation
57. Asanisland nation, Fijiisheavily dependent ontransportation services. Employing about
10percentofthepaidlabour force inFiji,thesector accounts foraround 10percentofGDP. The
transport sector issubject toahighdegree ofregulation; inaddition totechnical andsafety issues,
prices areregulated inthebus,taxi,domestic aviation andinter-island freight industries. Route licensing
applies indomestic aviation andthebusservices.24
23WTO document GATS/SC/32, 15April 1994.
24Government ofFiji(1993), pp.111-112.WT/TPR/S/24
Page 60Trade Policy Review
(a) Inland transport
58. ThenumberofvehiclesregisteredinFijiwas94,136in1994,risingto97,203in1995.Railways
belong totheFijiSugar Corporation. TheDepartment ofRoad Transport intheMinistry of
Communications, Works andTransport isresponsible fortheregulation ofroadtransport andvehicle
licensing.
59. Themainobjectives ofFiji'sroadtransport policies areto:continue funding theconstruction,
maintenance andupgrading ofthenational roadnetwork; continue therural roading programme;
promote roadsafety through measures suchaspublic education, datacollection andanalysis, improved
driver education andvehicle testing; protect thenational roadnetwork through effective controls on
vehicle overloading; andtorationalize theadministration ofroadtransport.
60. Fijischeduled nocommitments under GATS ontransport services.
(b) Maritime transport andother maritime services
61. Fijiisregularly serviced byshipping linesfrommostpartsoftheworld through itsfourports
ofentry, namely, Suva, Lautoka, Levuka andSavusavu. Three ports, Suva, Lautoka andLevuka offer
facilities capable ofhandling container andbulkcargoes. In1994, thesethreeportshandled 2.3million
tonnes ofinternational cargo. SuvaPorthandles about 40percentofthetotaltonnage.25Most sugar
exports areshipped fromLautoka. Levuka Portserves asabaseforFiji'stunafishcanning industry.
62. Themain objectives ofFiji'smarine transport policies are:topromote private sector efforts
ininter-island shipping services; torequire thePorts Authority ofFiji(PAF), tooperate onafully
commercial basis; tofundtheconstruction andmaintenance ofjetties andnavigational aids; andto
rationalize theoperations oftheGovernment Shipyard andPublic Slipways.26Alllocally owned vessels
must beregistered withtheMarine Department. Theports ofFijiareadministered bythePAF.
Shipping agents arerequired tosubmit tothePAFshipping information suchasvessels, gross registered
tonnage, cargo forloading orunloading andnumber ofworkers needed.
63. SinceJanuary1996,theGovernmenthasprovidedconcessionaryfiscaldutiestoassistinter-island
shipping, fishing andtourist vessels asfollows: (a)marine spare parts forusesolely, ormainly, on
aship,marine equipment forinstallation inaship,andmooring ropes -imports, dutyfree; and(b)fuel
(automotive diesel oil)imports, tariffof9centsperlitre. Toobtain these concessions, aformal initial
application mustbelodged withCustoms atSuva; thevessel should beforcommercial useandmust
bemore than10tonnes ingross weight; andthevessel mustberegistered withtheFijiMarine Board.
Inaddition, there isafive-week freestorage concession fortransshipment cargo.27
25Ports Authority ofFiji(1994), p.7.
26Government ofFiji(1993), p.113.
27Government ofFiji(1996), pp.34-35.Fiji WT/TPR/S/24
Page 61
(c) Airtransport
64. Airtransport isofimportance toFiji,since more than98percentofvisitors arrive inFiji
byair.TheCivil Aviation Department intheMinistry ofTourism andCivil Aviation isresponsible
forformulating airtransportation policy inFiji,administering theCivil Aviation Act(Cap. 174); the
CivilAviation Authority ofFijiAct(Cap. 174A);theCivilAviation Security Act;theCivilAviation
Security Regulations andthePassenger Services Charges Act. TheCivil Aviation Authority ofFiji
(CAAF), asanoperational armoftheMinistry, isresponsible forproviding airnavigation services
within andaround Fiji. Italsooperates Fiji's16government-owned airport facilities.28TheAir
Transport Licensing Board (ATLB) isresponsible fortheeconomic regulation andcommercial activities
ofairtransportation. Twoairports, atNadiandNausori, handle international flights. International
passenger arrivals atthese twoairports increased fromsome 320,000 in1991toover382,000 in1995
(Table IV.14).
Table IV.14
Basic statistics forinternational airtraffic, 1991-95
(Numbers)
Arrivals Departures
Aircraft Passengers Aircraft Passengers
1991 3,578 320,349 3,614 312,130
1992 3,707 338,922 3,764 338,863
1993 3,872 340,258 3,825 330,160
1994 3,930 375,964 3,893 382,893
1995 4,242 382,114 4,197 380,418
Source: FijiBureau ofStatistics, Current Economic Statistics, January 1996.
65. Themain objectives ofairtransport policies inFijiare:topromote thedevelopment of
international airservices toFijiinsupport bothofthetourism industry andofnewandexpanding
industries relying onairfreight; andtoreview institutional andfinancial arrangements forthe
management ofdomestic airports, including consideration ofpolicy relating totheconstruction ofnew
airstrips.29
66. AirPacific isFiji'snational airline30,providing onlyinternational transportation. Ithasyielded
netprofit onoperations since1986/1987. In1994/1995 thenetprofit wasF$12.2 million. FijiAirLtd.,
inwhich theGovernment hasan11.5percentstake, isthedomestic airline, competing withother
airlines, andincharge oftheinternational service toTuvalu.
28TheCAAF hasrecorded positive operating profits forthepastseveral years; e.g.inthefiscal yearending
June 1995, itrecorded profits ofF$4.2 million, arecord.
29Government ofFiji(1993), p.114.
30TheGovernment isthemajority shareholder with79.5percentoftheoutstanding equity; Qantas holds
17percent; Kiribati, Nauru, theSolomon Islands, Tonga andWestern Samoa aretheremaining shareholders.WT/TPR/S/24
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67. Licensed domestic carriers oroperators areatliberty toemploy aircraft oftheirchoice. Fares
developed bydomestic operators require priorapproval oftheATLB. Since 1993domestic operators
donotneedtofilewiththeATLB anyreduction inairfaresorcargo rates; however, anyfareincrease
proposal byairlines must befiledwiththeATLB, together withallrelevant data, including airline
costs. Allinternational faresmustbefiledwiththePermanent Secretary fortheMinistry ofTourism
andCivil Aviation sixty daysbefore theproposed dateoftheirintroduction.
68. There arenorestrictions toforeign investment incivilaviation inFiji,according tothe
authorities. AirPacific hasinplace commercial arrangements withanumber ofinternational airlines,
including Qantas andRoyal Tonga Air,inregard tocodesharing, capacity androute planning. Fiji
hasbilateral agreements with20countries intheareaofairtransportation services andisaparty to
17aviation conventions.
(iii) Postal, telecommunications andaudiovisual services
69. TheTelecommunications Division, intheMinistry ofInformation, Broadcasting, Television
andTelecommunications, isresponsible forformulating telecommunications policy inFiji,and
administering thePostandTelecom Decree 1989. Itisalsoresponsible forissuing telecommunications
andradiocommunications licences, enforcing telecommunications regulations andensuring thatthere
isefficient delivery ofquality services toconsumers. Themainobjectives oftelecommunications policy
inFijiare:tofacilitate theprovision ofdomestic andinternational telecommunications services by
public enterprises andtheprivate sector; andtopromote greater penetration andimprovement of
telecommunications services inruralareaswithservice delivery provided bytheprivate sector. Targets
forthesector bytheyear2000 arefourtelephone linesper100population forruralareas and20per
100population forFiji.
70. Theprovision ofdomestic telecommunications andpostal services hasbeentheresponsibility
ofFijiPosts andTelecommunications Limited (FPTL), which wascorporatized in1990 andwhich
is100percentgovernment owned. InJune1996, FTPL wassplitintoTelecom FijiLimited (TFL)
andPost FijiLimited, both wholly owned bytheGovernment, andwhich provide domestic
telecommunications andpostal services, respectively. FINTEL, whose shares are51percentand49per
centheldbytheGovernment andCable andWireless Plc.,hasbeenlicensed exclusively toprovide
international telecommunications services. In1990, bothFPTL andFINTEL wereissued a25-year
telecommunication licence tooperate asmonopolies. Vodafone, asubsidiary ofTFL, which is51
and49percentheldbyTFLandVodafone (U.K.), provides mobile GSM cellular phone services.
Vodafone doesnothaveanindependent licence butoperates bypermission ofTFL, asprovided for
inthelatter'slicence. Therespective aftertaxprofits ofFINTEL andFPTL in1995 were F$13.2
million andF$11.3 million.
71. Thelicences ofFPTL prescribe that,without theMinister ofTelecommunications 'approval,
anyincrease inthecharges forregulated tariffs mustbesoarranged thattheweighted average ofthe
increase inthecompany 'scharges doesnotexceed therateofinflation inthe12months immediately
preceding thesubmission oftheproposed increase totheMinister. InthecaseofFINTEL, asthe
international gateway, itslicence stipulates thatthecompany maynotincrease theratesofcharge for
thetransmission ofmessages ortheprovision ofleased circuits overitssystem without priorapproval
oftheMinister. Theamount ofthecharge is,however, dependent onthedomestic callratesandthe
agreed international ratesbetween Fijiandother countries.Fiji WT/TPR/S/24
Page 63
72. Other services, suchassupply, installation andmaintenance oftelecommunications equipment
andproducts arederegulated, andopentotheprivate sector. FijiTelevision Limited hasbeenissued
aneight-year exclusive licence until2002, extendable to2006.
73. Fijiisamember oftheInternational Telecommunications Union (ITU) andtheInternational
Telecommunications Satellite Organisation (INTELSAT). Fijidoesnothavebilateral agreements in
telecommunication services withanyother country.
74. Fijihasnocommitments inthetelecommunications sector under theGATS.
(iv) Banking, insurance, finance andother financial services
75. Employing slightly more than6percentofthepaidworkforce31,thefinancial services sector
accounts foraround 13percentofGDP. Assets ofthefinancial system (including insurance companies)
totalled F$4.0 billion atend-1994. Thebanking andfinancial sector iscontrolled bytheReserve Bank
ofFiji(RBF), which regulates themonetary andbanking system, manages theissue ofnotes, and
administers exchange control. Thepolicy objective oftheRBFistoimprove efficiency ofthefinancial
sector, toattract increased volume ofmedium tolongtermsavings, andtoimprove theeffectiveness
ofmonetary policy.32Thefollowing Actsgovern thefinancial services sector inFiji;theReserve Bank
ofFijiAct;theBanking Act;theInsurance Act;theExchange Control Act;theFijiDevelopment Bank
Act;theNational Bank ofFijiRestructuring Act;andtheFijiNational Provident Fund Act.
76. FinancialinstitutionsinFijicanbebroadlycategorizedintolicensedandnon-licensedinstitutions.
InFiji,onlylicensed financial institutions, comprising commercial banks andcredit institutions, may
engage inbanking business. Onlylicensed financial institutions mayadvertise theacceptance ofdeposits
from thepublic. Foreign insurance companies arenotpermitted toadvertise orselltheiractivities
inFiji. There isbasically nolimittoforeign ownership offinancial services inFiji. However, the
RBF'sguidelines encourage localparticipation inmoney andforeign exchange dealing, fortravel-related
purpose; nevertheless, therearetwooperating exchange dealers andnumerous tourist operators dealing
inmoney exchange which areforeign controlled. Tofacilitate itsprudential supervision offinancial
institutions inFiji,theRBFisestablishing revised prudential policies, standards andguidelines.
77. Fijihasnotmade anoffer intheGATS Financial Services negotiations.
(a) Banking
78. Fiji'sbanking system iscontrolled bytheRBF, which actsasagent oftheGovernment. Any
company carrying onbanking business inFijimust apply totheRBFforalicence.33There aresix
commercial banks inFiji,ofwhich fiveareforeign, providing bothnational andinternational banking
facilities. TheFijiDevelopment Bank provides credit foragricultural, industrial andcommercial
ventures. Banks inFijimayengage instockbroking, withprior approval oftheRBF.
31Thismeasure includes those employed inrealestate andbusiness services.
32Government ofFiji(1993), p.123andFTIB (1995/96), p.109.
33TheBanking Act1995, p.6.WT/TPR/S/24
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79. Theminimum paiduporassigned capital andunimpaired reserves forabanktobelicensed
isF$2million, tobeheldinFiji. Foracredit institution, theminimum isF$0.5 million. Higher
minimums maybeimposed bytheRBF. TheRBFmay, withorwithout conditions, grant alicence
orinform theapplicant ofitsrefusal, furnishing thegrounds forrefusal.
80. Anindividual mayownorcontrol upto15percentofthevoting shares ofalicensed financial
institution. Acompany mayownorcontrol upto30percentofthevoting shares, which maybe
increased to50percentwiththeapproval oftheMinister ofFinance andEconomic Development.34
Banksarerequiredtohold16percentoftheirdepositsandsimilarliabilitiesasstatutoryreservedeposits,
and16percentofthesame baseinunimpaired liquid assets. Credit institutions arerequired tohold
10percentoftheirdeposits andsimilar liabilities inunimpaired liquid assets. Banks willberequired
tomaintain aminimum capital toriskweighted assets ratioof8percent, along Bank Supervisory
Standards, from end-1997. Credit institutions nowcomply withaminimum capital adequacy ratio
of10percent. AsofJanuary 1997, banks arerequired tolimittheirsingle currency overnight net
openposition tonomorethan12.5percentoftheircapital inFijiorF$0.4 million, whichever isgreater.
Overall overnight foreign currency netopenpositions arelimited to25percentofabank'scapital
inFijiorF$0.8 million, whichever isgreater.
81. Effective from1January 1997, authorized dealers (including commercial bankandnon-bank
financial institutions liketheFijiDevelopment Bank) canlenduptoF$200,000 toanyneworexisting
non-resident-controlledbusinessentityregisteredoroperatinginFiji.Anon-residentcontrolledbusiness
entity canborrow locally upto100percentofitsworking capital requirements andselect anetfunding
provided itsdebttoequity ratioiswithin theguidelines (Chapter III,Annex III.1). TheRBFexercises
flexibility onthispolicy forprojects thatitdeems toaccrue major benefits toFijiinterms ofemployment
orforeign exchange. Authorized dealers mayalsolenduptoF$30,000 tonon-resident individuals
working inFiji.
82. There arenomonopoly banking activities provided forunder Fijilawandnoobligations on
domestic economic operators toemploy specified banking institutions forspecified operations and
transactions. There arenomandatory requirements forlocal ownership ofbanking institutions.
According totheauthorities, toensure thatbanking andmanagement skills ofFijicitizens aredeveloped,
foreign banks andcredit institutions arerequired toestablish training programmes fortheirstaff, to
takeupmanagement positions; however, topmanagement positions maybereserved forexpatriates
withspecialized skills.
(b) Insurance
83. AsofJune1996, therewereteninsurance companies inFiji;sixingeneral insurance business;
twoinlifeinsurance business; andtwoinmedical/health insurance. Thegross premium income of
theinsurance market inFijiapproximately doubled overthetenyears to1994 (Table IV.15). The
Office oftheCommissioner ofInsurance (COI) intheRBF, established under theInsurance Act1976,
supervises theactivities oftheinsurance industry. Theobjectives ofinsurance supervision inFijiare
topromote public confidence ininsurance andtoensure thatinsurance isconducted inamanner
34Thisdoesnotpreclude theestablishment ofbranches or100percentowned subsidiaries offoreign banks.Fiji WT/TPR/S/24
Page 65
consistent withnational goals.35There arenospecific provisions intheInsurance Actthatrestrict
foreign persons from applying forregistration tooperate inFijiasinsurer.
Table IV.15
Keystatistics oftheinsurance market inFiji,1986 and1990-94
(F$million)
1986 1990 1991 1992 1993 1994
Gross premium income
Life 21.9 24.7 27.2 31.7 38.5 45.3
Non-life 22.4 28.6 31.8 36.1 41.7 45.0
Total 44.3 53.4 59.0 67.8 80.3 90.3
Assets inFiji
Life 136.8 168.3 192.1 211.9 233.8 257.8
Non-life 29.3 37.3 44.1 49.7 50.8 61.1
Total 166.2 205.6 236.2 261.5 284.6 318.9
Source: FijiBureau ofStatistics, Current Economic Statistics, January 1996.
84. TheInsurance Actrequires thatallsupervised entities, namely insurers, lifeinsurers, brokers
andagents, belicensed. Licences, which costF$450, must berenewed annually, andexpire on
31December oftheyearofissue. Where theCommissioner issatisfied that:(a)thevolume ofbusiness
available toandtheearning prospects ofanapplicant areadequate; (b)theclassofinsurance business
willbeconducted inaccordance withsound business principles; (c)thefinancial standing36andthe
general character ofmanagement oftheapplicant aresound37;(d)themargin ofsolvency isadequate38;
(e)thereinsurance arrangements oftheapplicants areadequate andsatisfactory; and(f)itisotherwise
inthepublic interest thattheapplicant should beregistered inrespect oftheinsurance business specified
intheapplication, hemayregister theapplicant ininsurance business. Aninsurance entity applying
forregistration shalldeposit withthePermanent Secretary oftheMinistry ofFinance andEconomic
35Reserve Bank ofFiji(1994), p.30.
36Thepresent minimum legal capital requirements are:(a)foramutual association -assets inFijiofatleast
F$750,000; andnetassets inFijiequivalent toF$500,000 or40percentofnetpremiums, whichever ishigher,
provided thatthehigher amount isnotrequired toexceed F$1.0 million; (b)forastock company -minimum
paidupcapital ofF$200,000 incaseofthose incorporated inFiji,andF$750,000 incaseofthose incorporated
abroad.
37Thecurrent limits require thatmanagement expenses should notexceed anamount equivalent to40per
centofthenetpremium income, provided thathead office expenses arenotpermitted toexceed 7.5percent
ofthegross premium andinvestment income.
38Theregistration ofaninsurer issubject totheinsurer satisfying theInsurance Act'ssolvency requirement.
Therequirement foranon-life insurer isthatitmust, atalltimes, have assets inFijiwhich exceed itsliabilities
byatleast F$200,000 or10percentofnetpremium income, whichever ishigher.WT/TPR/S/24
Page 66Trade Policy Review
Development theprescribed suminrespect ofeachclassofinsurance business.39Aperson aggrieved
byadecision oftheCommissioner mayappeal totheMinister ofFinance andEconomic Development.
(c) Securities trading
85. SecuritiestradinginFijiisembryonic.StocktransactionstakeplaceattheSuvaStockExchange.
Exchange andcurrent trading isthrough anopenoutcry system. There arecurrently nospecialized
securities firms inFiji. TheGovernment expects thatstock brokers anddealers willsoonbesetup.
Some taxincentives havebeenputinplace. Inthe1995 Budget Address, theMinister ofFinance
andEconomic Development announced thefullexemption fromtaxondividends paidonshares listed
ontheExchange. With effect from January 1996, alltransactions ontheexchange were exempted
from stamp duties.
86. Todevelop theFijicapital market, theGovernment approved thesetting upofaCapital Markets
Development Authority, andtherelevant legislation waspassed inAugust 1996. TheAuthority shall
havethefollowingfunctions:toadvisetheMinisterofFinanceandEconomicDevelopmentonallmatters
relating tothedevelopment andoperation ofcapital markets andthesecurities industry; toformulate
andimplement policies andprogrammes inconsultation withtheGovernment withrespect tothe
development ofcapital markets; togrant alicence tooperate asabroker, dealer, investment adviser,
unittrust, ormutual fund; andtoactasanappellate bodyforappeals fromsecurities exchange actions
byaggrieved parties. Anyperson aggrieved byanydecision oftheAuthority mayappeal totheCourt.
39Inthecaseofcompanies incorporated inFiji,F$50,000 fornon-life insurer andF$100,000 forlifeinsurer;
forthose incorporated abroad, F$75,000 fornon-life insurer andF$250,000 forlifeinsurer.Fiji WT/TPR/S/24
Page 67
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