How financial sector development helps in aiding growth and development in Fiji?
Matanitu Tu-Vaka-iKoya Ko Viti or the Republic of the Fiji Islands, located in the southwest Pacific, is also known as the “Crossroads of the Pacific”. It comprises an archipelago of some 332 islands, 100 of which are inhabited. The total land area is circa 18,300 square kilometers (7,100 sq mi). The two major islands are Viti Levu and Vanua Levu. Suva, the capital and the largest city, is found on Viti Levu. 87% of the 850,000 population reside on the two major islands. Most of the inhabitants live on the coastal area of Veti Levu. The interior of the island is inhabitable due to its terrain.
Fiji is one of the leaders in the Pacific Island economies. The currency is the Fijian Dollar. The island is richly endowed with forest, mineral, and fish resources but still relies on subsistence agriculture. Their natural resources include timber, fish, gold, copper, offshore oil potential, hydropower. Sugar cane processing makes up one-third of the industrial activity, followed by coconuts, ginger, and copra. On 22 September 2006, the Southern Cross Management Company Limited applied for a license to drill for petroleum in Fiji’s waters. Today, the main sources of foreign exchange are its tourism industry and sugar exports (“Fiji”. http://en.wikipedia.org/wiki/Fiji, retrieved 1 April, 2011).
From 1960 to 1970, a period of rapid economical growth was experienced by Fiji. They experienced a slowdown in the 1980’s. The coup of 1987 added to the contraction of the economic growth. Post coup, there was an economic liberalization in the following years which created a boom in the garment industry and in the sugar industry. Agriculture accounts for 18 % of Gross Domestic Product, although it employs some 70 % of the workforce as of 2001(“Economy of Fiji. http://en.wikipedia.org/wiki/Economy_of_Fiji, retrieved 1 April 2011). Subsidies for sugar have been provided by the European Union and Fiji has been the second largest beneficiary after Mauritius (“Fiji, economy”. http://en.wikipedia.org/wiki/Fiji, retrieved 1 April, 2011).
Tourism expanded rapidly since the early 1980’s. “More than 409,000 people visited Fiji in 1999 (excluding cruise ship passengers). Tourism earned more than 0 million in foreign exchange for Fiji in 1998, an amount exceeding the revenue from its two largest goods exports (sugar and garments). The effects of the Asian financial crisis led to a sharp drop in the number of Asian tourists visiting Fiji in 1997 and 1998, which contributed to a substantial drop in gross domestic product. Positive growth returned in 1999, however, aided by a 20% devaluation of the Fijian dollar. 2005 was a record year for the tourism sector, with 9% growth according to Viliame Gavoka, Chief Executive of the Fiji Visitors Bureau. (“Economy of Fiji.” http://en.wikipedia.org/wiki/Economy_of_Fiji, retrieved, 1 April 2011.)”
According to the Strategic Development Plan (SDP) 2007-2011 for Fiji, in order to stimulate growth through increased investment and exports, the government has reviewed and amended the Foreign Investment Act, to accelerate the approval of Foreign Investment Certificates. In addition, the FTIB approval process has also been streamlined and a Commerce Commission has been established, together with a competition policy guide to operations (“Strategic Development Plan 2007-2011. “ https://docs.google.com/viewer?url=http%3A%2F%2Fwww.uncsd2012.org%2Frio20%2Fcontent%2Fdocuments%2FFiji%2520Draft%2520Strategic%2520Development%2520Plan%25202007-2011.pdf, retrieved 3 April, 2011. 60.)
The Fijian government is also keeping itself benchmarked with the UN Millennium Development Goals. The goal of this objective is to eradicate poverty, promote gender equality, empower women, and contribute to a global partnership for development. By putting emphasis on the small and medium enterprises, people would have employment opportunities, hence alleviating poverty. These entrepreneurs will have the potential to expand and will be assisted via initiatives for potential exporters which will result in growth.
“Development growth in the tourism sector is focused on the local community, especially to the indigenous people. Tourism growth places considerable demands on the infrastructure and is often located in areas which lack infrastructure. Attempts to provide such new infrastructure have tended to direct funds away from maintenance of existing infrastructure, leading to disbenefits outside the tourism areas. Clearer definition of public and private infrastructure will allow a focus of Government spending on public infrastructure and for that an increased use of PPP modalities. (Strategic Development Plan 2007-2011. https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=1XFaJKouLHHmbjljXARuXzln4R_DFFStWcIiPZRh0GgN03d2TCm5BIo5YUvq7&hl=en, retrieved 3 April, 2011. 123.)
The Financial services sector is essential to creating a conducive environment for private sector investment and economic growth. A well managed financial service contributes to maintaining macroeconomic stability, restructuring to promote competition and efficiency, raising export earnings and raising investment levels for jobs and growth. All other sectors are also provided with an outline on how to improve productivity in the Fijian Strategic Development Plan.
“The Strategic Development Plan was created to set out how progress will be made towards the Fijian Government’s vision of a peaceful and prosperous Fiji. It is not a detailed operational plan, but guides the setting of operational plans by the Government and, through setting out broad strategies and key performance indicators, invites the private sector and civil society to join with the Government in meeting those objectives which the Government cannot achieve alone. The Government will implement its part in the achievement of the SDP objectives through the annual plans and budget allocations of the ministries and Departments. The SDP is implemented through all Government agencies. (Strategic Development Plan 2007-2011. https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=1XFaJKouLHHmbjljXARuXzln4R_DFFStWcIiPZRh0GgN03d2TCm5BIo5YUvq7&hl=en , retrieved 3 April, 2011. 132.)”
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