Fiji

Politics:

• Analysis

  Fiji politics: Government changes tack on constitutional reform

  Government changes tack on constitutional reform

  The government has issued another abrupt change to its plans for constitutional reform ahead of the next legislative election, planned for September 2014. Several recommendations from an independent constitutional commission have been rejected and new provisions inserted that would seem to favour the existing government, led by the prime minister, Commodore Voreqe "Frank" Bainimarama, who took power in a military coup in 2006. The government's latest deviation from its own constitutional reform process will further undermine its credibility and add weight to the view that it is only interested in keeping itself in power.

  In the latest change to the constitutional reform process that he himself decreed, Commodore Bainimarama has announced that the draft constitution will no longer be debated by a Constituent Assembly appointed by the government. The proposed new constitution will instead be opened up to feedback directly from ordinary Fijians. This decision is another volte-face from Commodore Bainimarama, who earlier this year announced that the draft constitution drawn up in 2012 by an independent commission chaired by a renowned constitutional expert, Yash Ghai, would be re-drafted by his government. The decision was criticised by Australia and New Zealand, who had provided financial assistance to help fund the constitution-building process and the public consultations led by Mr Ghai, and left the international community sceptical about the government's commitment to an open and transparent process of constitutional reform.

  In a televised speech to the nation, Commodore Bainimarama claimed that the decision to scrap the assembly was forced upon him by as yet unsubstantiated allegations of fraud and misrepresentation, stemming from the re-registration of political parties under draconian new rules in February. He argued that, against this backdrop, the political atmosphere was not conducive to holding the Constituent Assembly, but that finalising the constitution could not be delayed further, given the need to prepare for the long-awaited general election scheduled for September 2014. There is speculation that the government may have struggled to come up with a list of Constituent Assembly candidates that it considered acceptable.

  Limited feedback

  Fijians have been given until April 5th to provide feedback to the government on the draft constitution, which was finally released on March 21st. This is an extremely short time-frame in which to digest the implications of the modified document, especially given the upcoming Easter break (an important holiday in Fiji). The prospect of widespread and meaningful debate appears slight. In any case, opposition politicians have warned that the government is unlikely to take much heed of public feedback. Supporting this view, the government has confirmed that the final version of the constitution will be ready on April 12th, which allows little time for public feedback to be incorporated, even if it were so inclined.

  The final constitution is therefore likely to be fundamentally unchanged from the current version. According to Commodore Bainimarama, the new document includes many of the best aspects of the draft constitution developed by Mr Ghai's commission, but is "more succinct and leaves decisions to the discretion of an elected parliament". The draft constitution, which is half the length of the commission's draft, provides for a single-chamber parliament of 45 members (MPs), elected for a period of four years using a multi-member open-list system of proportional representation (PR).This compared with the closed-list PR system (with gender-equity provisions) recommended by Mr Ghai.

  Existing restrictions to remain

  Elsewhere in the draft constitution, the provision for a People's Assembly, a body of 144 unelected Fijians, has been scrapped, the powers of the president have been hollowed out and the prime minister becomes the commander-in-chief of the armed forces. There are provisions restricting who can contest an election, for example those who have been in prison (such as Laisenia Qarase, the former prime minister ousted during the 2006 coup) are not allowed to run. The decrees made by the government since 2006 will remain in place. The provision in the commission's draft constitution for a caretaker government to be installed six months ahead of the 2014 election (in an effort to boost confidence that the contest will be free and fair) has been removed and a provision granting broad immunity from prosecution to those involved in the 2006 coup and the subsequent administration has been inserted.

  The new proposed constitution preserves most of the bill of rights from the commission's draft, but it goes beyond the usual civil and political rights, including, for the first time, a comprehensive range of socio-economic rights, such as the right to housing and sanitation and adequate food and water. It also grants rights to the disabled and to children. This extended bill of rights is likely to prove popular with many poorer and disadvantaged Fijians. The new proposed constitution also introduces provisions to change the constitution, although the bar for doing so has been set high. A constitutional amendment bill will be subject to three readings in parliament, with at least three-quarters of MPs required to vote in favour of the bill. This would be followed by a referendum on the constitutional change, which must be supported by at least three-quarters of registered voters.

  Bainimarama on the ballot

  Commodore Bainimarama has announced that he will form a political party and will stand for election in 2014. The shape of the political opposition he will face in the election remains unclear. The two main Indo-Fijian parties, the Fijian Labour Party (FLP) and the National Federation Party (NFP, the country's oldest political grouping), were the only parties to meet the February registration deadline applied to existing political parties. The mainly indigenous-Fijian Soqosoqo Duavata ni Lewenivanua Party (SDL), which was in power before the 2006 coup, applied for registration under its new name, the Social Democratic Liberal Party (SDL), in late February (as there is no deadline for the registration of new parties). The parties have yet to have their registrations confirmed, and, given that they are officially unable to operate until this is complete, this has prompted speculation that the government is deliberately stalling the confirmation process.

  March 26, 2013

• Background

  Fiji: Key figures

  Voreqe (Frank) Bainimarama

  Interim prime minister and commander of the military, who led the December 2006 coup.

  Laisenia Qarase

  The leader of the Soqosoqo Duavata ni Lewenivanua (United Fiji Party). A former prime minister who was deposed in the 2006 coup.

  Mahendra Chaudhry

  Leader of the Fiji Labour Party. Prime minister from May 1999 until May 2000, when he was deposed in a coup.

  August 27, 2008

• Structure

  Fiji: Political structure

  Official name

  Republic of Fiji Islands

  Form of state

  Parliamentary democracy. However, the constitution was abrogated in April 2009

  The executive

  The president appoints the prime minister, who selects the cabinet

  Head of state

  The president, Ratu Epeli Nailatikau

  National legislature

  Under the 1997 constitution (currently abrogated), a bicameral parliament comprising an appointed upper house, the Senate (with 32 members), and an elected lower house, the House of Representatives (with 71 members). Under the constitution, the majority of seats were allocated on the basis of ethnicity. There was universal suffrage for citizens aged over 21

  Regional government

  A total of 14 provincial administrations for indigenous Fijians are overseen by the Fijian Affairs Board. The island of Rotuma also has its own council. Until 2008 cities and towns were run by municipal councils, which were open to members of all races and were overseen by the Ministry of Labour, Industrial Relations, Employment, Local Government, Urban Development and Housing. All councils were dissolved in December 2008, and at present municipalities are run by administrators

  Legal system

  Magistrates courts, High Court and Court of Appeal, presided over by the Supreme Court

  National elections

  Last held in 2006. The current government was appointed in January 2007, following a military coup. The next general election is due to be held in September 2014

  Main political parties

  Soqosoqo Duavata ni Lewenivanua/United Fiji Party (SDL); Fiji Labour Party (FLP); National Federation Party (NFP); National Alliance Party of Fiji (NAPF); United People's Party (UPP); Party of National Unity (PANU); Nationalist Vanua Tako Lavo Party (NVTLP)

  National government

  Interim government headed by the prime minister, Voreqe (Frank) Bainimarama. In December 2006 Commodore Bainimarama deposed the government of Laisenia Qarase, which had been elected in May of that year

  Key ministers

  Prime minister, minister for finance & national planning, sugar, public service, charter change, information, provincial affairs, indigenous & multi-ethnic affairs, lands & mineral resources: Voreqe (Frank) Bainimarama

  Attorney-general, minister for justice, electoral reform, public enterprises & anti-corruption, industry, tourism, trade & communications: Aiyaz Sayed-Khaiyum

  Foreign affairs, civil aviation, international co-operation: Inoke Kubuabola

  Primary industries, defence (acting), national security (acting), immigration (acting): Joketani Cokanasiga

  Central bank governor

  Barry Whiteside

  January 09, 2013

Economy:

• Background

  Fiji: Economic background

  Gross domestic product by sector
  (F$ m; current prices)
  	2002	2003	2004	2005	2006
  Agriculture, forestry & fishing	533.7	545.8	579.6	615.9	615.7
  Mining & quarrying	32.3	35.8	46.3	35.1	24.1
  Manufacturing	519.2	511.3	598.7	563.0	656.1
  Electricity & water	102.1	106.2	111.6	113.1	122.3
  Construction	144.3	160.3	170.9	228.6	265.4
  Wholesale & retail trade, restaurants & hotels	590.2	639.3	788.5	846.7	926.9
  Transport & communications	574.4	639.7	625.4	742.3	729.8
  Finance & insurance	443.2	429.6	443.7	461.8	670.7
  Community, social & personal services	661.0	738.3	754.1	820.0	926.7
  Imputed bank service charges	-116.3	-109.4	-129.3	-188.6	-289.8
  Total	3,485.0	3,696.9	3,989.5	4,237.9	4,647.7
  Source: Fiji Islands Bureau of Statistics.

  Download text file (csv format)

  The tourism industry has declined substantially since the 2006 coup. The political repercussions of the coup and associated warnings issued by foreign governments concerning travel to Fiji continue to affect tourist arrivals, and post-coup discounting has meant that recovery in the numbers visiting Fiji's shores does not translate into greatly improved earnings. The garment industry has suffered from the declining value of concessional arrangements. As a result, many foreign-owned garment factories have closed in recent years, and employment in the industry has dropped.

  August 27, 2008

• Structure

  Fiji: Economic structure

  Economic structure: Annual indicators

  	2008a	2009a	2010a	2011b	2012b
  GDP at market prices (F$ bn)	5.7	5.6	6.1	6.8	8.1
  GDP (US$ bn)	3.6	2.9	3.2	3.8	4.5
  Real GDP growth (%)	1.2	-1.3	-0.2	2.0	2.3
  Consumer price inflation (av; %)	7.7	3.7	5.5	8.5a	4.7
  Population (m)	0.8	0.9	0.9	0.9	0.9
  Exports of goods fob (US$ m)	871.9	625.9	819.5	901.5	991.6
  Imports of goods fob (US$ m)	-2,056.2	-1,300.9	-1,601.5	-1,761.7	-1,937.8
  Current-account balance (US$ m)	-652.8	-238.2	-416.0	-428.8	-493.4
  Foreign-exchange reserves excl gold (US$ m)	321.5	569.1	719.4	832.2a	1,005.8
  Total external debt (US$ m)	379.5	236.9b	251.1b	259.1	268.1
  Debt-service ratio, paid (%)	14.5	322.0b	8.2b	11.1	12.2
  Exchange rate (av) F$:US$	1.59	1.96	1.92	1.79a	1.79
  a Actual. b Economist Intelligence Unit estimates.

  Download the numbers in Excel

  Origins of gross domestic product 2010	% of total	Components of gross domestic product 2009	% of total
  Finance, real estate & business services	19.3	Private consumption	73.9
  Public Administration	17.1	Government consumption	17.8
  Transport & communications	15.4	Fixed investment	19.2
  Manufacturing	14.0	Stockbuilding	2.5
  Agriculture, forestry & fishing	12.1	Exports of goods & services	48.3
  Wholesale & retail	11.1	Imports of goods & services	61.7
  Principal exports 2011	F$ m	Principal imports 2011	F$ m
  Fish	139.9	Food	372.5
  Gold	139.1	Machines	310.6
  Sugar	78.5	Chemicals	141.2
  Timber	50.1	Transport	127.0
  Textiles	23.4	Textiles	81.9
  Main destinations of exports 2011	% of total	Main origins of imports 2011	% of total
  US	23.4	Singapore	28.4
  Australia	21.7	Australia	17.4
  Japan	9.0	New Zealand	13.8
  Samoa	8.5	China	7.8
  Tonga	7.5	Thailand	3.2

  Download the numbers in Excel

  Download text file (csv format)

  January 09, 2013

• Outlook

  Fiji: Country outlook

  Fiji: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  OVERVIEW: Fiji's military commander and prime minister, Commodore Voreqe (Frank) Bainimarama, who deposed the elected prime minister, Laisenia Qarase, in a coup in 2006, appears determined to hold on to power. The Economist Intelligence Unit expects Commodore Bainimarama to fulfil his pledge to hold long-delayed parliamentary elections in September 2014. However, there are doubts about whether the poll will be free and fair. Australia and New Zealand will continue to encourage a return to democracy using the carrot of institutional support rather than the stick of international isolation. Economic growth will remain steady in the 2013-14 forecast period, at an average of 2.2% a year. However, although this will be a stronger rate of growth than in some recent years, it is still weak given the country's level of development. The Reserve Bank of Fiji (RBF, the central bank) will keep monetary policy loose, with interest rates unlikely to rise until mid-2013 at the earliest. In 2013-14 we expect consumer price inflation to remain at a similar level to its estimated average in 2012 of 4.7%. Future rounds of public-sector pay rises will generate inflationary pressures.

  DOMESTIC POLITICS: After the abrogation of the democratic constitution in 2009, emergency regulations were imposed in the country, restricting civil liberties and giving extensive powers to the security forces. These were lifted in early 2012 but were replaced by an updated version of the Public Order Act 1969, which has in effect enshrined the emergency regulations in law. The bureaucracy has been purged of anti-coup figures, and supporters of the prime minister have been appointed as replacements. Commodore Bainimarama has also been successful in taming Fiji's powerful Methodist church and, more recently, the country's trade unions. The reinstatement in June 2012 of the right of civil-society groups to hold public meetings is likely to prove little more than a token gesture, as the security forces' control over political activity will remain extensive. In November 2012 Ratu Epeli Nailatikau was sworn in for a second three-year term as interim president. His tenure will extend beyond the 2014 parliamentary poll. More than 80% of eligible voters are believed to have registered with the Elections Office for the parliamentary elections that are expected to be held in September 2014. But the process of constitutional reform has been marked by bitter disputes between Commodore Bainimarama and Yash Ghai, the chairman of the Constitution Commission, which was charged by the prime minister with the task of reforming Fiji's charter. Copies of the draft constitution submitted to the interim president by Mr Ghai have been seized by the police. The draft constitution will be debated by a government-appointed Constituent Assembly, and it seems likely that some of the most controversial provisions-such as that calling for a caretaker government to be installed six months ahead of parliamentary elections-will be amended or dropped. However, the legitimacy of the new constitution may be compromised in the eyes of Fijians if the final charter differs significantly from the draft text drawn up under Mr Ghai. Despite the appearance of political stability (owing to the fact that few people are prepared to challenge the prime minister publicly), tensions persist, but opposition figures in Fiji will struggle to make an impression in 2013-14. Fiji's previous prime minister, Mr Qarase, was jailed for a year in August 2012 for corruption, after protests by his supporters that his conviction was politically motivated proved ineffective. Commodore Bainimarama's intransigence will remain a feature of Fiji's political scene in the run-up to the planned election in 2014, but outbreaks of serious unrest are unlikely.

  INTERNATIONAL RELATIONS: Fiji's relations with its main trading partners and its regional neighbours will be testy in 2013-14. Australia and New Zealand, which have spent years unsuccessfully attempting to put economic and diplomatic pressure on Fiji's government, changed tack in mid-2012 and announced the resumption of full diplomatic relations. The two countries hope to influence Fiji's return to democracy through institutional support rather than international isolation. However, Fiji will remain suspended from the 16-member Pacific Islands Forum (the region's main political grouping) until democratic elections are held. Fiji will also remain outside the Commonwealth, which has withheld aid and imposed travel bans on Fijian military personnel and others appointed by the current regime. The EU has kept back most of the funds intended to facilitate the restructuring of Fiji's sugar industry as it adjusts to the ending of European price subsidies. A deal was signed in 2012 between the EU and the Secretariat of the Pacific Community (of which Fiji is a member) to disburse assistance to the country, but the funds released do not compare to those lost in recent years. Moreover, Fiji's inclusion in the US government's Generalised System of Preferences programme, which provides preferential, duty-free access to the American market for some of the country's exports, is under review by the US in response to claims that the rights of Fijian workers and unions are being abused.

  POLICY TRENDS: The government has ambitious goals for economic reform, including boosting GDP and foreign investment and implementing land reform. However, economic policy may be deprioritised relative to political and constitutional reforms in 2013-14 as the planned election approaches. The high level of public debt means that the government is under pressure to reduce the size of the public sector, although the projected increase in government borrowing unveiled in the 2013 budget will add to public debt. Fiji remains a highly unpredictable destination for foreign investment. Legislation passed in 2010 outlawed ownership of media organisations by foreigners, and a large US-owned producer of mineral water, Fiji Water, was hit by a huge rise in the water resource rent tax in the 2011 budget. The 2013 budget was more conciliatory, scrapping the minimum investment required for foreign investors and reducing to 17% the corporate tax rate payable by foreign companies setting up headquarters in Fiji. The government's record on economic management is patchy. We estimate that the fiscal deficit narrowed from a hefty 3.5% of GDP in 2011 to 3% of GDP in 2012, but the improvement is expected to be only temporary. In an extension of the income tax reforms initiated in the 2012 budget, the 2013 budget raises the tax-free threshold from F$15,600 (US$8,750) to F$16,000. Personal income tax rates will be unchanged in 2013, having been slashed in last year's budget. The 2013 budget also includes a substantial boost to capital expenditure (much of which will go on upgrading roads and bridges, which are in a poor state) and an expansion of welfare assistance to the poorest Fijians. As a result, the government projects that the budget deficit will widen significantly in 2013, to the equivalent of 2.8% of GDP (the official budget deficit figures are not directly comparable to our own). Given the government's ambitious economic growth forecast of 2.7% for 2013, it could be forced to post an even larger budgetary shortfall if it wishes to implement its spending plans fully. We forecast that the budget deficit will remain fairly large in 2013-14, at an average of 3.9% of GDP. The RBF will keep monetary policy loose in the short term. The bank reduced its main benchmark interest rate, the overnight policy rate, by 100 basis points to 0.5% in October 2011 and has held it steady since then. The RBF has noted that the stimulatory monetary environment has supported economic growth in the face of weak demand from Fiji's main trading partners. Given the myriad downside risks to global growth, the central bank has not seen the need to moderate its stance. The timing of the start of a phase of monetary tightening will depend on the performance of the world economy, but the RBF is unlikely to start raising interest rates until mid-2013 at the earliest.

  ECONOMIC GROWTH: We estimate that real GDP grew by 2% in 2011 and 2.3% in 2012. If these growth rates are confirmed, they will represent the Fijian economy's strongest performance since 2006. The economy showed impressive resilience in 2012: faster growth in private consumption (driven by tax cuts and low interest rates) and in government spending (owing in part to post-flood reconstruction) helped to offset the economic impact on agriculture and tourism of severe flooding earlier in the year. We forecast that real GDP growth will average 2.2% a year in 2013-14, supported by the continued development of the tourism sector and the mining industry, as well as by infrastructure projects such as roadbuilding. However, the sugar industry will remain in the doldrums. The prices paid for sugar by the EU under its Cotonou Agreement with African, Caribbean and Pacific countries will continue to decline rapidly, and almost all aid that would otherwise have been provided to Fiji by the EU to smooth the transition to lower prices will be withheld until democratic elections are held. The outlook for the country's tourism industry is more encouraging, as air services have become more frequent. But competition for tourists among Pacific island nations is intensifying, and the local industry is vulnerable to travel warnings from the Australian and New Zealand governments whenever political instability in Fiji increases. Continued growth in tourist arrivals is nevertheless likely, provided that the political situation remains calm.

  EXTERNAL ACCOUNT: Despite the government's attempts to eliminate the shortfall on the current account, Fiji will continue to run a large deficit in 2013-14, owing to the substantial deficit on the merchandise trade account. In the first nine months of 2011 (latest available data) the trade deficit narrowed slightly year on year, to F$867.3m or US$486.5m (on an accruals basis), as export growth outpaced expansion in imports. High gold prices will continue to lend support to the trade balance, with the price of gold forecast to average US$1,798/troy oz in 2013 and US$1,703.3/troy oz in 2014. However, a deterioration in Fiji's overall terms of trade, reflecting lower EU prices for the country's sugar, will continue to weigh on the foreign-payments position. External financing difficulties will remain a risk.

  January 11, 2013

View detailed map

Country Briefing

Land area

18,333 sq km

Population

860,623 (2010 World Bank estimate)

Major islands

Viti Levu (10,429 sq km), Vanua Levu (5,556 sq km)

Capital

Suva (population, including Nasinu: 172,948 at 2007 census)

Climate

Tropical

Weather in Suva (altitude 6 metres)

Hottest months January-March, 23-30°C (average daily minimum and maximum); coldest months July-August, 20-26°C; driest month July, 124 mm average rainfall; wettest month March, 368 mm average rainfall

Languages

English, Fijian and Hindi

Measures

Metric

Currency

Fiji dollar (F$); F$1 = 100 cents. Average exchange rate in 2012: F$1.79:US$1

Fiscal year

Calendar year

Time

12 hours ahead of GMT

Public holidays

January 1st (New Year's Day holiday); January 28th (Prophet Mohammed's Birthday); March 29th (Good Friday); March 30th (Easter Saturday); April 1st (Easter Monday); October 10th (Fiji Day); November 4th (Diwali); December 25th (Christmas Day); December 26th (Boxing Day)

January 09, 2013