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DE RUEHSV #0026/01 0220507
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P 220507Z JAN 09
FM AMEMBASSY SUVA
TO RUEHC/SECSTATE WASHDC PRIORITY 0965
INFO RUCPDC/USDOC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC 0171
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UNCLAS SUVA 000026 
 
STATE FOR EB/IFD/OIA AND EAP/ANP 
PLEASE PASS TO USTR 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EINV KTBD OPIC USTR FJ
SUBJECT: Fiji Investment Climate Statement 2009 
 
REF: SECSTATE 123907 
 
¶1. Paragraph 2 contains the text of the 2009 Investment Climate 
Statement for Fiji, per reftel. 
 
¶2. Begin text: 
Openness to Foreign Investment 
 
In light of political events in Fiji and concerns about the 
treatment of some established foreign investors by Fiji authorities, 
potential investors should exercise considerable caution.  In 
December 2006, the Republic of Fiji Military Forces overthrew the 
democratically elected government and replaced it with an interim 
government chosen by the military and headed by the military 
commander, serving as interim prime minister.  The military 
dismissed parliament and declared a state of emergency.  Interim 
government interference appears to have impaired the independence of 
Fiji's judiciary.  The military repeatedly assured local and foreign 
investors that Fiji remains a safe place to invest and do business. 
However, in 2007, the long-term investment tax concession for one 
major U.S. investor was unilaterally and abruptly withdrawn. Fiji's 
tax authority also blocked exports of a renowned mineral water in a 
dispute with the bottler over transfer pricing. 
 
Interim Government interference with business affairs has generally 
decreased since the months following the December 2006 coup. 
However, the validity of contracts or other agreements entered into 
with the current interim government may be subject to later 
interpretation by a court of law. 
 
This report reflects the longer-term investment climate and notes 
where the coup has impacted it. 
 
Generally, government restrictions and conditions are designed to 
ensure that investment is desirable for Fiji's development and the 
use of its resources. Fiji has a tradition of a strong judiciary 
where contractual rights are generally upheld.  However, post-coup, 
the independence of the judiciary has come into question, raising 
concerns about due process of law. 
 
Fiji's economy is shifting from a reliance on sugar and textiles to 
a focus on tourism and related industries.  The once large textile 
industry now comprises a small but stable component of Fiji's 
exports.  The sugar industry is dependent upon inflated prices paid 
by the European Union, but these prices are being phased out and 
sugar production is in decline. 
 
Following a 6.6 percent contraction in 2007, Fiji's economy 
experienced a modest 1.2 percent growth in 2008.  Forecasters 
predict low but positive economic growth of 2.4 percent in 2009. 
 
The Fiji Trade and Investment Bureau (FTIB) is responsible for the 
promotion, regulation and control of foreign investment in the 
interest of national development.  FTIB pursues this task in 
conjunction with relevant government ministries.  Government 
approval is required for all foreign investment in Fiji. 
 
All businesses or enterprises with a foreign-investment component in 
their ownership are required to apply to the Chief Executive, Fiji 
Islands Trade and Investment Bureau, for the issuance of a Foreign 
Investment Registration Certificate (FIRC) and also pay a requisite 
application fee of F$2,812.50. Applications for a FIRC are available 
on-line and the following documents must accompany the application: 
 
¶1. A copy of the Shareholders Agreement and a copy of the 
Declaration of Shareholders, witnessed or certified by a justice of 
the peace, lawyer and/or chartered accountant, are to be submitted 
if local equity contribution is required; 
¶2. A certified copy of the passport bio-data page, together with a 
recent colored passport size photo of all those associated with the 
business; 
¶3. A police clearance report from the country of residence in the 
last 12 months or more; and 
¶4. Proof of company registration abroad (if applicable). 
 
Contact: The Chief Executive, Fiji Islands Trade & Investment 
Bureau, P.O. Box 2303, Government Buildings, Suva; Telephone: (679) 
3315-988; Fax:(679) 3301-783; email: ftibinfo@ftib.org.fj; website: 
www.ftib.org.fj 
 
The Foreign Investment Act stipulates that the approval process for 
investment applications should take no longer than 5 working days. 
Depending on the nature of  the business, however, investors may 
also be required to obtain permits and licenses from other relevant 
authorities and should be prepared for delays. 
 
Foreign investors are required a minimum equity level of investment 
of F$250,000 (about US $140,000) in cash to be brought in from 
offshore on or before the operational date of the business. 
Furthermore, certain types of investment are subject to additional 
restrictions. Investment areas that have been reserved for Fiji 
Island nationals include small scale businesses such as cafeterias, 
taxis/buses, handicrafts, tailoring, shoe repair, 
plumbing/electrical, plant nurseries, day-care, bakeries, backpacker 
and liquor bar operations.  With the exception of fishing 
enterprises, which must have at least 30% local equity, investors 
must meet certain minimum investment thresholds prior to investment 
in restricted industries.  Full listings of reserved and restricted 
areas can be found at: www.ftib.org.fj/invest-fiji-foreign-act.cfm. 
 
 
Foreign investors can acquire real estate. However, the land 
situation in Fiji is complex and only a small percentage of land is 
available for purchase. If the property is larger than one acre, the 
Minister of Lands must approve the purchase.  There are 
industry-specific incentives for tourism, mining, filmmaking and 
audio-visual activities, boat building, fishing, logging and saw 
milling operations, and bus building. 
 
Conversion and Transfer Policies 
 
Following the December 2006 coup, the Reserve Bank of Fiji (RBF) 
introduced enhanced foreign exchange controls aimed at curbing 
credit growth, relieving pressure on Fiji's foreign reserves and 
avoiding a devaluation of the Fiji dollar. Previously, foreign 
investors bringing in funds or equipment to invest in Fiji and who 
fulfilled all regulatory requirements were guaranteed repatriation 
of their investment profits and capital.  The new controls impose 
new regulatory requirements and limit the amount of investment 
profit and capital that may be repatriated.  Some of the controls 
were relaxed in 2008, including those on advance payments for 
imports and local borrowing by foreign-owned companies, but the 
majority are expected to remain in place through 2009. 
 
Although the Fiji dollar remains fully convertible, the Reserve Bank 
has temporarily suspended offshore investments by non-bank financial 
institutions, companies and individuals.  It has rescinded 
commercial banks' delegated authority to process a number of 
typically larger types of transactions such as profit remittances 
and has reduced the limits on a number of transactions over which 
the banks retain authority. Transactions above these require express 
Reserve Bank permission.  The Reserve Bank has also introduced a 
credit ceiling on lending by individual commercial banks, although 
no limits were placed on individual customers.  The Reserve Bank has 
said it will consider individual lending requests above the new 
limits on a case-by-case basis. 
 
Prior to the post-coup restrictions, the processing time for 
remittance applications was approximately three working days, 
provided all required documentation was provided.  Transactions 
within the newly reduced limits of the commercial banks' delegated 
authority still process within this general timeframe.  Remittance 
through parallel markets continues to require prior approval by the 
Reserve Bank. 
 
Expropriation and Compensation 
 
Under Section 40 of the Constitution and the Foreign Investment Act, 
a foreign investor has the same protection against compulsory 
acquisition of property as any other person.  The foreign investor 
has the same right as a national enterprise of recourse to the 
courts and other tribunals of the Fiji Islands in respect of the 
settlement of disputes. 
 
Expropriation has not historically been a common phenomenon in 
Fiji. 
 
Dispute Settlement 
 
The legal system in Fiji developed from British law.  Under Fiji's 
Constitution, the Fiji Islands Supreme Court is the final court of 
appeal.  Both companies and individuals have recourse to legal 
treatment through the system of local and superior courts.  Laws 
govern all aspects of commercial transactions, including bankruptcy 
law, and the courts have generally enforced these laws in a 
transparent and consistent manner.  A foreign investor has the right 
of recourse to the courts and other tribunals of Fiji with respect 
to the settlement of disputes. 
 
Following the December 2006 coup, however, the military appeared to 
intercede in a dispute over the closure by a foreign investor of a 
major Fiji gold mining operation.  The mine's workforce appealed to 
the military commander, calling on the interim government to 
investigate the foreign owners' claims the mine was no longer 
viable.  Army troops occupied the mining company property for 
several days, and the interim government established a committee to 
investigate the company's closure decision and recommend response 
options for the government.  Also, in January 2007 it was reported 
that the military had taken files from the Fiji company registry 
without warrants as part of its self-initiated investigation into 
possible corruption. 
 
Past investment disputes have often focused on land issues, 
particularly in the logging and tourism sectors.  Such disputes have 
been resolved through labor-management dialogue, government 
intervention, referral to compulsory arbitration, or through the 
courts. 
 
Fiji is a party to the Convention on the Settlement of Investment 
Disputes Between States and Nationals of Other States. 
 
Performance Requirements and Incentives 
 
To support the implementation of newly approved investments, the 
FTIB's Investment Division - Facilitation Unit has established a 
 
monitoring system to assist companies in obtaining necessary 
approvals to commence operations.  The investing firm must ensure 
that commercial production begins within 12 months of the date of 
approval of the project. 
 
Foreign investors can apply for incentives following registration 
with the FTIB (www.ftib.org.fj). 
Information on incentive packages for investors can be obtained from 
FTIB. Incentives offered include preferential tax treatment and duty 
free or low duty treatment of imported materials and equipment.  The 
incentives reflect the Fiji Government's long-term concerted efforts 
to encourage exports and develop priority sectors, including 
tourism, commercial agriculture, fisheries, forestry, the filmmaking 
and audio visual industry, and the information technology industry. 
Fiji's 2009 budget also includes incentives to encourage bio-fuel 
and renewable energy initiatives and the establishment of a tax free 
region in the northern and maritime island regions of the country 
for investments above F$2 million. 
 
Tourism incentives include tax-related investment allowances on 
approved expenditures on tourist boats/ships and approved building 
and expansion projects. The  2009 tourism incentive package provides 
for 55 percent investment allowance on total expenditure and a hotel 
incentive package, whereby large tourism development projects with 
capital investments of more than F$7 million may qualify for a 
10-year tax holiday. Filmmaking and audio-visual incentives include 
an increase in the film tax rebate from 15 percent to 35 percent. 
 
The Ministry for Industry, Tourism, Trade and Communication and the 
Ministry for Foreign Affairs, International Cooperation and Civil 
Aviation control import and export policy.  Commercial import policy 
includes consideration of tariff measures, import restrictions, 
quota arrangements and other policies designed to assist development 
of local industries. 
 
Most imports are subject to import duty, which is levied at various 
rates in accordance with the Customs Tariff Act of 1986.  Such 
duties may be waived or reduced upon eligibility for investment 
incentives.  Most goods may be imported without an import license. 
However, there are restrictions on the import of a number of 
products to protect local industries or for the purposes of 
quarantine.  The restrictions are absolute for some products, while 
others may be imported subject to conditions imposed by statute or 
under license from the Ministry of Industry, Ministry of Primary 
Industries, or other relevant ministries or departments.  Quotas may 
be placed on imports of particular products, such as motor 
vehicles. 
 
Right to Private Ownership and Establishment 
 
Foreign investors are discouraged from acquiring controlling 
interest in, or taking over established, locally owned enterprises 
in Fiji.  Permission may be given, however, if such an acquisition 
or takeover is deemed to be in the national interest.  Foreign 
investors typically operate through a branch or a local subsidiary 
in Fiji.  Formation of both public and private companies is 
possible, the process taking about two weeks. Registration costs are 
nominal.  The South Pacific Stock Exchange and 
authorized banks in Fiji are allowed to approve investments by 
non-resident individuals and businesses in publicly listed companies 
and in fixed deposit accounts for amounts up to F$5 million (US$2.9 
million) per investor, per annum. Investments above F$5 million must 
be approved by the Reserve Bank of Fiji.  A public company must have 
a minimum of seven shareholders, with no maximum; a private company 
must have a minimum of two shareholders and a maximum of 50.  There 
are no nationality or residence restrictions on shareholders, but 
applications for the issue of new or additional shares for increased 
capitalization should be submitted to the Reserve Bank of Fiji for 
processing before share certificates may be issued to nonresidents. 
 
 
Protection of Property Rights 
 
Intellectual Property 
 
Fiji's Copyright Laws are in conformity with World Trade 
Organization (WTO) Trade Related Aspects of Intellectual Property 
(TRIPS) provisions.  However, while copyright laws adhere to 
international laws, and provisions are available for companies to 
register a trademark or petition for a patent in Fiji through the 
Office of the Administrator General of Trademark, Patents, Designs 
and Copyrights, the enforcement of these laws remains inadequate. 
Illegal materials, and illegal reproductions of films, sound 
recordings and computer programs are widely available throughout 
Fiji. 
 
Contact: Administrator General, Trademarks, Patents, Designs, 
Copyrights P.O. Box 2226, Government Buildings, Suva; Telephone: 
(679) 3312-798; Fax: (679) 3300662; and 
Fiji Audio Visual Industry Association, G.P.O. Box 16353, Suva; 
Telephone: (679) 3318912; Fax: (679) 3318910; Email: 
favia@iFiji.com 
 
Land Rights 
 
Land ownership and usage is a highly complex and sensitive issue in 
Fiji society.  In late December 2006, the post-coup interim 
government imposed a temporary ban on all land sales after receiving 
reports of alleged irregularities in the development and sale of 
land to foreigners.  The ban was partially lifted in January 2007. 
Leases of so-called native title land, which constitutes 87.75% of 
Fiji land, to non-Fiji residents and foreign nationals remain 
restricted, but the government has said it hopes to lift this 
restriction at a later date. 
 
Land in Fiji falls into three categories: Native land, Crown land, 
and Freehold land.  Native Land refers to the 87.75% of the land 
held by indigenous Fijians under communal tenure relationships. 
This land, which is reserved for the special use of its owners, may 
not be sold, only leased.  The Native Lands Trust Board (NTLB) is 
the statutory body responsible for managing native land, including 
leases.  In its post-coup anti-corruption drive, the interim 
government dismissed several NTLB officials and undertook a major 
investigation of the board's past practices.  Government plans a 
major reform of the NTLB and the regulation of land usage, which 
could affect investors. 
 
Crown Land refers to the 3.95% of the land in Fiji owned by the 
government.  Like NLTB land, Government (Crown) land may not be 
sold.  The availability of crown land for leasing is usually 
advertised.  This does not, however, preclude consideration being 
given to individual applications in cases where land is required for 
special purposes. 
 
Freehold, private land accounts for 8.06% of total land area. 
 
Investors may lease land, though each lease category has different 
conditions and terms.  Leases may be sold, transferred and amended, 
but such dealings are subject to the consent of the NLTB and Lands 
Department. 
 
Government leases for industrial purposes can be up to 99 years with 
rents reassessed every 10 years.  NLTB leases for land nearer to 
urban locations are normally for 50-75 years.  Annual rent is 
reassessed every 5 years.  The maximum rent that can be levied in 
both cases is 6% of unimproved capital value.  Leases also usually 
carry development conditions that require lessees to effect 
improvements within a specified time.  Investors need to be mindful 
of the interim government's investigations into the NLTB for fraud, 
mismanagement and corruption, as these may affect future dealings 
and the lease of native title land. 
 
Apart from the requirements of the NLTB and Lands Department, town 
planning, conservation and other requirements specified by central 
and local government authorities affect the use of land.  Investors 
are urged to seek local legal advice in all transactions involving 
land. 
 
Contacts: Permanent Secretary, Ministry of Lands and Mineral 
Resources, P.O. Box 2222, Government Buildings Suva; Telephone: 
(679) 3211-556; Fax: (679) 3302-730 
 
General Manager, Native Land Trust Board, P.O. Box 116, Suva; 
Telephone: (679) 3312-733; Fax: (679) 3229-696 
 
Transparency of Regulatory System 
 
Although the government has made some positive efforts, there is a 
perception among foreign investors of a lack of transparency in 
government procurement and approval processes.  Some foreign 
investors considering investment in Fiji have encountered lengthy 
and costly bureaucratic delays.  Investment disputes involving the 
government in 2007 and 2008 have raised serious transparency 
concerns. 
 
Prior to the coup, proposed laws frequently were not submitted for 
public comment.  However, a parliamentary committee process was in 
the process of development.  Since the coup, legislation has been by 
presidential decree. 
 
Efficient Capital Markets and Portfolio Investment 
 
Fiji has a well-developed banking system supervised by the Reserve 
Bank of Fiji.  The RBF regulates the Fiji monetary and banking 
systems, manages the issuance of currency notes, administers 
exchange controls, and provides banking and other services to 
government.  In addition, it provides lender-of-last-resort 
facilities and regulates trading bank liquidity. 
 
There are five trading banks with established operations in Fiji: 
ANZ Bank, Bank of Baroda, Colonial National Bank, Bank South 
Pacific, and Westpac Banking Corporation.  In addition, non-banking 
financial institutions provide financial assistance and borrowing 
facilities to the commercial community and to consumers.  These 
institutions include the Fiji Development Bank, Fiji National 
Provident Fund, Housing Authority, Credit Corporation, Merchant 
Finance, and insurance companies.  As of September 2008, total 
assets of commercial banks amounted to US$2.4 billion (F$3.97 
billion). 
 
The Capital Markets Development Authority (CMDA), formed in 1998, is 
responsible for the development of capital markets and regulation of 
market participants.  As a result, a capital market is slowly 
emerging, with 16 companies listed on the Suva-based South Pacific 
Stock Exchange. The Regulation and Compliance Division of the CMDA 
is responsible for the regulation and supervision of the market. 
 
Political Violence 
 
Fiji has suffered four coups d'etat in its history: two in 1987, one 
in 2000 and one in December 2006.  There was, in addition, a mutiny 
within the Fiji military in November 2000.  In May 2000, then Prime 
Minister Mahendra Chaudhry and members of his government were held 
hostage by a group of Fijian nationalists.  In the end, Fiji's 
military intervened, removed the coup leaders, and installed an 
interim government that remained in power after 2001 general 
elections.  Largely the same government was again returned to office 
following elections in May 2006. 
 
Fiji remained relatively stable from 2000 to 2006.  Mounting 
tensions between the government and the military peaked in December 
2006 when the military staged a repressive but relatively bloodless 
coup.  Parliament was dissolved, the prime minister deposed and 
effectively exiled to an outer island, and the vice president, 
government ministers and senior bureaucrats removed from office.  In 
January 2007, the military named an interim government to govern 
until national elections can be held, with the military commander as 
prime minister.  The military committed numerous human rights 
violations in attempting to silence critics of the overthrow.  It 
declared a state of emergency and eliminated or restricted many 
civil rights.  In May 2007, the formal state of emergency was 
lifted, though it was reimposed for 30 days in early September 
¶2007. 
 
The interim government initially promised to hold elections in March 
¶2009.  It has subsequently refuted this commitment and refuses to 
commit to a timetable for elections. 
 
Corruption 
 
Credible allegations regarding misuse of government funds or abuse 
of public office have been raised repeatedly over recent years, 
especially in the annual Auditor General's reports.  The limited 
accountability for corruption, inefficient government systems and 
lack of effective disciplinary processes pose major challenges to 
Fiji's fight against corruption.  Fiji's relatively small population 
and limited circles of power often lead to personal relationships 
playing a major role in business and government decisions. 
 
Alleged corruption in government and the civil service was cited by 
the military as a major justification for its overthrow of Fiji's 
democratically elected government in 2006.  The military itself, 
however, has suffered from a lack of a transparent budgetary process 
and has itself evaded the Auditor General's investigations. 
Although the previous government had announced anti-corruption 
initiatives, including the establishment of an anti-corruption 
commission and the legislating of a Freedom of Information Bill, 
progress was slow in implementing these initiatives.  The interim 
government has established an independent commission against 
corruption, with broad powers of investigation.  However, 
implementing rules for the Fiji Independent Commission Against 
Corruption (FICAC) were established by proclamation and may be 
challenged at a later date in court. 
 
Fiji has yet to sign the UN Convention Against Corruption, and there 
is little evidence to suggest that it will do so in the near 
future. 
 
At present, the media, Transparency International Fiji, and the 
non-governmental Pacific Center for Public Integrity (PCPI) play 
important roles in raising anti-corruption issues. 
 
Bilateral Investment Agreements 
 
Fiji has negotiated double taxation agreements with the United 
Kingdom, New Zealand, Australia, Korea, Malaysia, Singapore, Vanuatu 
and Papua New Guinea. Fiji has not entered into a bilateral 
investment agreement with the United States or any other country. 
 
Fiji is party to a number of regional and international trade 
arrangements, including the South Pacific Regional Trade and 
Economic Cooperation Agreement (SPARTECA), an Economic Partnership 
Agreement (EPA) with the EU, and the Generalized System of 
Preferences.  Under SPARTECA, Fiji has broad, duty-free access to 
the markets of Australia and New Zealand for its exports, subject to 
certain exceptions and limitations.  In November 2007, Fiji signed 
an interim EPA on trade in goods, replacing the trading section of 
the Cotonou Agreement, which secures preferential access to the EU 
market for some Fiji exports (notable exceptions being sugar and 
rice).  Fiji is also party to regional trade agreements PICTA, 
PACER, and the Melanesian Spearhead Group. 
 
OPIC and Other Investment Insurance Programs 
 
The U.S. Overseas Private Investment Corporation (OPIC) provides 
investment insurance in Fiji for qualified applicants.  The risks of 
currency convertibility and expropriation are safeguarded under 
Fiji's foreign-exchange regulations.  OPIC provides political risk 
insurance and loans for qualified projects.  Fiji is not a member of 
the Multilateral Investment Guarantee Agency. 
 
The Fiji dollar is pegged to a basket of currencies of Fiji's 
principal trading partners, chiefly Australia, New Zealand, the 
United States, the European Union and Japan. 
 
Labor 
 
The workforce in 2006 was estimated at 369,300, of which about 34 
percent are in formal, paid employment.  Nearly 80 percent of the 
workforce has been educated to a secondary school level, and four 
percent have received a university-level education or post-secondary 
school technical training. 
 
Fiji continues to face a "brain drain", with many skilled and 
professional workers migrating overseas for better working and 
living conditions.  Acute shortages are found in the medical field, 
with half the annual nursing graduates migrating each year. 
 
The Ministry of Employment and Industrial Relations has 
responsibility for the administration of labor laws and the 
encouragement of good labor relations. 
 
A new Employment Relations Act was promulgated by decree in April 
¶2008.  This legislation consolidates and updates Fiji's labor and 
employment laws.  The new legislation mandates that labor disputes 
be resolved through soon-to-be-established mediation courts and 
tribunals. 
 
Fiji has been a member of the International Labor Organization since 
1974 and has ratified 25 ILO conventions. 
 
Foreign-Trade Zones/Free Ports 
 
To encourage development in the northern and maritime regions of 
Fiji, each has been declared a Tax Free Region (TFR). Businesses 
that are established in such a region and meet the prescribed 
requirements will enjoy a 13-year corporate tax holiday and import 
duty exemption on raw materials, machinery and equipment. 
 
Foreign Direct Investment Statistics 
 
According to data provided by the Fiji Islands Trade and Investment 
Bureau, total foreign investment proposals approved in 2006 and 2007 
amounted to US$630.5 million and US$327.1 million respectively.  In 
the same period, U.S.-based investments approved in 2006 and 2007 
totaled US$122.5 million and US$31.3 million.  Approval is a 
precondition but does not necessarily mean that an actual investment 
will be made.  The Reserve Bank of Fiji estimates that in 2007 
foreign direct investment was the equivalent of 15% of GDP. 
 
Web Resources 
 
Fiji Islands Trade and Investment Bureau (FTIB), www.ftib.org.fj 
Fiji Government, www.fiji.gov.fj 
Fiji Government - Ministry of Foreign Affairs, International 
Co-operation & Civil Aviation, www.foreignaffairs.gov.fj 
Fiji Government - Ministry of Lands, Mineral Resources & 
Environment, www.lands.gov.fj 
Reserve Bank of Fiji, www.rbf.gov.fj 
Capital Markets Authority of Fiji, www.cmda.com.fj 
Native Land Trust Board (NLTB), www.nltb.com.fj 
Mineral Resources Department, www.mrd.gov.fj/qfiji/ 
Fiji Islands Customs & Revenue Authority, www.frca.org.fj 
Secretariat of the Pacific Community (SPC), www.spc.org.nc 
Pacific Islands Forum Secretariat, www.forumsec.org.fj 
OPIC, www.opic.gov 
ILO, www.ilo.org/public/english/region/asro 
Bureau of Statistics, www.statsfiji.gov.fj 
Asian Development Bank - South Pacific Subregional Office, 
www.adb.org/SPSO/ 
 
MCGANN