Vested interests must not dictate govt. policies: Labour

  • 21st February 2009
  • 2009
  • // Display comment count + link

The Fiji Labour Party has cautioned the interim government against letting vested interests dictate its economic policies.

The statement issued after FLP’s National Council Meeting in Nadi today was in response to concerns expressed by the Governor of the Reserve Bank, Mr Savenaca Narube, about the rapidly declining Foreign Reserve levels, falling exports, tight liquidity and escalating interest rates.

The latest RBF review of the economy revealed that our Foreign Reserves are down to $767m, liquidity is tight, interest rates are rising, the business sector is in deep recession, tourism is facing a severe downturn, and exports are expected to further decline as a result of flood damage to sugar cane and other crops.

This is the complete opposite of what the situation was six months ago when Foreign Reserves stood at $910m, liquidity was flush, interest rates were low, investment levels were rising, exports were up 33% compared to 2006 and the debt level was brought down to 49% of GDP from a high of 53% under the Qarase government.

FLP believes the RBF must take a large measure of the blame for the current situation. It relaxed monetary controls too soon triggering rapid outflow of local funds. It also relaxed exchange controls on importation of capital goods, permitting payment in Fiji dollars.

RBF has also failed to closely monitor export revenues to ensure that receipts from tourism and major exports such as bottled water, garments and fish products are brought back into the country.

The Party has warned that Fiji will need to exercise greater financial and fiscal discipline and belt tightening to come out of this crisis. Government will need, in the medium and long term, to invest heavily in the natural resources sector to boost exports, and create much needed employment.

The Party is concerned at the effect on the poor of the worsening economic situation aggravated by the recent flood damage. Job losses and loss of incomes will bring about increased social hardship and escalate poverty levels.

FLP urges the Interim Government to review its economic policies to ensure better controls. It must itself initiate and encourage more investment in the rural sector and adopt policies that will provide relief to the poor and needy.

2. Liquidity Situation

The Fiji Labour Party has suggested that urgent steps be taken by the government to address the tight liquidity situation in the finance sector.

The Party has noted suggestions by the Reserve Bank that commercial banks can borrow cheap from the RBF and on-lend at lower rates to businesses.

This in itself may not be sufficient remedy for the many businesses which may not be able to obtain loan funds on account of being unable to satisfy security arrangements demanded by Banks in a situation of tight liquidity.

Government needs, therefore, to make specific provision for such businesses to prevent their collapse with consequential loss of jobs and incomes.

3. Primary Resources Sector

Fiji Labour Party has called on the interim government to ensure that adequate attention is given to the development of the primary resources sector.

This includes the sugar industry and other agricultural products as well as the fisheries and forestry sectors.

The Party believes that Fiji’s future economic well being lies to a great extent on the primary resources sector which has enormous potential to provide jobs and incomes to thousands who are currently unemployed or underemployed.


FLP urges the government to prioritise the processing of Fiji’s multi- million dollar mahogany resource for the benefit of its owners. It is noted that not much progress has been made in organizing the down -stream processing of this valuable resource. Meanwhile, mahogany forests are being harvested and logs sold with minimal benefits to the owners of these valuable forests.


FLP has also reiterated its call for government to provide adequate support and funds for the timely implementation and completion of the sugar industry reform and restructure programme.

The incomes of cane growers must be maintained and protected in the face of declining export prices for sugar.

The importance of this industry cannot be overemphasized. It sustains the livelihood of some 20% of Fiji’s population – landowners, cane farmers, mill and farm workers and cane cutters, aside from a large number of ancillary undertakings.

The Party has taken note of the reform of industry institutions proposed by government but advises against the dissolution of the Sugar Commission of Fiji, the Sugar Research Institute of Fiji (SRIF) and the Sugar Marketing Company.

The Party cautions against the dissolution of these institutions as it will result in the Fiji Sugar Corporation playing the dominant role with the consequential marginalization of the cane growers – as was the case in the colonial era.

The marketing of sugar should not be the sole responsibility of the FSC as is proposed by government. It is to be noted that 70% of sugar proceeds belong to the growers. As such, the Sugar Cane Growers Council (SCGC) should play the leading role in the marketing of sugar to ensure that the best deal is secured for their produce. The retention of joint marketing set up under the Fiji Sugar Marketing Company is therefore necessary.

While the field extension and farm advisory services can be provided jointly by the FSC and the SCGC, the research and mill efficiency audit functions should continue to be the responsibility of SRIF which must be retained.

As an incentive to boost agricultural production and exports, government should provide support to farmers to enable them to buy fertilizers, weedicides, pesticides, seeds and seedlings and other farm inputs at affordable prices.

4. Road User Levy

FLP will make submissions to the interim government to revoke the Road User Levy imposed on vehicle owners from this year.

This levy will pose a huge financial burden on the farming community and those who reside in remote rural areas. It is an unfair imposition on these people who use their vehicles largely for agricultural purposes and are people with small incomes.

The fixed annual levy is calculated on the engine capacity without any regard for the frequency of road usage by a vehicle.

FLP believes that motor vehicle owners are already heavily taxed through high Customs Duty, annual licence fee and heavy fuel tax etc.