Inia Naiyaga: Increasing activity in the capital markets
Opening address by Mr Inia Naiyaga, Acting Deputy Governor of the Reserve Bank of Fiji, at
the Capital Markets & Listing Seminar, Nadi, 3 September 2010.
* * *
Ladies and Gentlemen, Ni sa Bula Vinaka and a very warm welcome to this afternoon's
Capital Markets & Listing Seminar. This is the second of a series of seminars that will be
organised as part of our efforts to increase activity in the capital markets. The first one was
held in Suva on 18 August, 2010.
Let me thank you all for accepting the invitation by the Reserve Bank of Fiji (RBF) and the
"Grow your
South Pacific Stock Exchange (SPSE) to be part of today's seminar on the topic
company, grow the economy: have you considered the capital markets?" Like most of you
and your businesses, we want to see the economy grow. As the economy grows, so does
the size of the pie that can be shared by all.
Your businesses are critical players in this growth objective. The economy will be as strong
as your active investment and expansion. And the capital markets can help facilitate this.
Before I proceed further, let me say that developments in the capital markets have come a
long way but there is still a lot of ground to be covered in order to fully develop this market.
Most of you may be aware that on 19 August, 2009, the administration of the Capital Markets
Development Authority (CMDA) was transferred to the RBF under the Capital Markets
Decree 2009. The Capital Markets Unit has successfully integrated into Team Reserve Bank
and has added a different dimension and skills-set to the Bank.
Having said this, I wish to emphasise here that the work on capital markets is nothing new for
the RBF since the initial planning, legislative and policy development of the capital markets in
Fiji was birthed and housed in the RBF before it was decided to establish a separate
institution to carry on the task once it took shape. This led to the establishment of the CMDA.
Ironically, work in this area has now taken a full circle and returned to the RBF again. We can
expect some major activities and events for the capital markets in the future. Since being
given this added responsibility, the RBF is determined to developing the capital markets
further and in partnership with relevant stakeholders such as the SPSE.
Now very briefly, let me discuss with you some recent updates on Fiji's economy.
The global economy is recovering markedly and this should augur well for our exports and
tourism industries, which are supporting the domestic economic recovery. On the sectoral
performance, aside from the sugar industry, which continues to show low performance,
recent data indicate continued strong growth in visitor arrivals and improvements for the gold
and fish sectors. There is also some indication of modest increases in consumption activity
with consumer spending aided by improvements in the labour market, increased lending and
higher inward personal remittances.
Inflation declined further to 5.4 percent in July from 5.5 percent in June and is expected to
further decrease to around 5.0 percent by the end of the year. On the external sector, the
trade deficit narrowed in the first five months of this year, thus keeping the foreign reserves
at adequate levels. Consequently, bank liquidity remains at high levels.
Overall, the domestic economy is showing sign of improvements however, the speed of
recovery is slow. Given the need to support economic activity and kickstart the economy, the
Reserve Bank decided to maintain the Overnight Policy Rate (OPR) at 3.00 percent during
the August Board meeting.
Capital markets in Fiji
Ladies and Gentlemen, let me brief you on some of the work that we are doing to develop
the capital markets to another level. At the outset, I wish to state that a partnership approach
will help progress this faster.
As I mentioned earlier, two weeks ago we had a similar seminar in Suva and I am happy to
say that it was a great success. The RBF had also organised 2 Microfinance Expos - one in
Ba and the recent one last week during the Hibiscus Festival. Financial literacy sessions by
financial institutions, SPSE and some players in the capital markets were also carried out
during these events. It was encouraging to see the general public at these two venues
expressing interest and wanting to know more about the capital markets. In March this year,
the Reserve Bank formed the Capital Markets Development Taskforce. The membership of
the Taskforce is mainly from the private sector with Governor Sada Reddy as the Chair. It
was the RBF's intention that the private sector involvement in the development of the capital
market, similar to the CMDA days, continued hence the formation of the Taskforce.
The Taskforce will assist the RBF in strategising on how to tackle some of the longstanding
challenges that have hindered the development of capital markets in Fiji.
"Grow your company, grow the economy: have you considered the Capital Markets?" -
What can be done?
Our role is to see that we create the regulatory and business environment in the capital
market that is conducive and supportive of private sector development such that they
become the engine of growth in the economy. We hope that by having this seminar in the
West and inviting some prominent companies listed on the SPSE to share their experiences,
businesses in the community will be better informed and encouraged to use the capital
market given its associated benefits.
I assure you that the Reserve Bank will do whatever it can to ensure the development of the
capital markets, and will play a pivotal role in public education and investor awareness
programs to foster confidence in the markets. We will also spearhead initiatives in
partnership with other agencies including Government to develop the capital market.
Similarly, we will dialogue with fellow regulators and find amicable solutions to areas that are
deemed restrictive to the capital markets realising its full potential.
Our commitment to creating an enabling environment for businesses in the capital markets is
evident in the reduced corporate tax of 20% incentive for companies that list on SPSE and
with minimum 40 percent local equity shareholding.
I wish to mention that following Cabinet approval, reviews are currently underway to amend
the Capital Markets and Unit Trust legislations. This we hope will facilitate economic
development and improve the governance structures of companies.
Ladies and gentlemen, today we are fortunate that we have with us those that have
experienced what it is like to be listed on the SPSE. They will share with us their experiences
pre and post listing. It is my sincere hope that this seminar will demystify some of the
concerns that surround this industry and that in the process we would see more activities in
the SPSE and capital markets going forward.
I urge you all to make best use of this opportunity to hear from them and also network with
our licensed intermediaries who can assist and answer questions that you may have relating
to capital raising in the capital markets and listing on the stock exchange.
Thank you again for your time and I wish you all a very good evening.
VINAKA.