Jan 26, 2021 Last Updated 3:51 PM, Jan 25, 2021

Pacific island countries should not expect international travel to resume in earnest until late 2021, travel and aviation experts have warned.

‘You should forget the US market for 2021, as well as Europe and the United Kingdom,” Peter Harbison told a recent meeting of Pacific airline executives.

“Nearly 550,000 Americans are projected to have died by 1 April 2021 (from COVID-19), which is more than double the mid-November 2020 level.

“The vaccine rollout is projected to have little impact by April 2021.

“For Europe, over a million Europeans are projected to die by 1 April 2021, representing a trebling of mid-November 2020 numbers.

“For the United Kingdom, nearly 120,000 residents are projected to die by April 2021, doubling its mid-November 2020 level.”

Harbison is the chairman emeritus of CAPA – Centre for Aviation, an Australian based aviation and travel market intelligence firm.

He was among a number of experts invited to address a virtual seminar for members of ASPA – the Association of South Pacific Airlines recently.

With the exception of Fiji Airways, all Pacific airlines, including Air New Zealand and QANTAS, are Association members.

Even the performance in 2021 of the region’s largest tourist source market, Australia, is in doubt, Harbison told the ASPA seminar.

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Fiji’s central bank is projecting the country’s economic growth to climb back into positive territory next year, after revising this year’s historic contraction to negative 19 percent from an earlier estimate of negative 21.5 percent. 

“Domestically, the magnitude of this year’s economic contraction is expected to be smaller than initially anticipated, whereas next year’s projected recovery largely hinges on the opening of international borders and the resumption of travel,” the Reserve Bank of Fiji said in its November Economic Review released this week.

“In 2021, economic growth is expected to range between 1.6 percent and 8.0 percent given the substantial uncertainties around the reopening of borders for quarantine-free travel and appetite for tourism activity.”

Performances across major sectors of the economy – some already poor before global lockdown early this year – have plunged further and remain dismal as the coronavirus pandemic enters its ninth consecutive month since it was declared a pandemic by the World Health Organisation in March this year. 

“Sectoral performances continued to be well below 2019 levels in the first ten months of the year,” RBF noted.

Partial indicators for consumption, a major economic driver, returned gloomy signals.

Net VAT collections, new consumption lending, new vehicle registration, second hand vehicle registration and electricity consumption were all significantly reduced over most of the year, indicating a prevailing weakness in consumer spending.

Tourism, another major GDP component and still in hiatus internationally, declined by 80.7 percent cumulative to October.

In the investment area, two major indicators – domestic cement sales and new investment lending – both declined by 11.6 percent and 16.6 percent respectively in October, compared to the previous month. 

“Cumulative to October, commercial banks’ new lending for building & construction purposes declined by 24.9 percent. In the same period, domestic cement sales declined (-11.6%), mainly underpinned by weak demand,” RBF said.

Increased caution by the banks and other credit institutions, who now prefer less risky lending, has not only led to a general reduction in lending to both private business entities and individuals, it has also created a liquidity glut in the market.

In August and September, excess liquidity as denoted by the banks’ demand deposits (BDD) stood at over F$1billion (US$0.48b) each month, gradually easing in October to $912.9m (US$440m) and $860.5m (US$414m) at the end of November, mostly attributed to money moving out of the country.

Interest rates, according to RBF, were generally lower compared to 2019.

“However, risks to the financial sector remain as the ending of moratoriums offered by financial institutions to COVID-19 affected customers could raise the existing levels of non-performing loans,” it warned.

In the job market, supply remained weak and according to the RBF Job Advertisement Survey, there was a 64.3 percent decline in vacancies in the year to October, compared to a decline of 1.4 percent in the same period in 2019.

“This was underpinned by reduced recruitment intentions across all major sectors of the economy,” it said.

Amid the bleak scenario, personal remittances have been pivotal in buoying both the deflating economy and consumer confidence.

“Personal remittances rose by 7.3 percent to F$521.0 million (US$251m) in the first ten months of the year. For the month of October alone, personal remittances totalled a record F$69.0 million (US$33.2m), an increase of 29.5 percent over the previous month and an increase of 58.7 percent over October last year. Overall, remittances have performed well above expectations and contributed positively to foreign reserves,” RBF said.

While the numbers look good in terms of the central bank’s two key roles of keeping foreign reserves adequate and inflation low, it has been on the back of lower exports and lower imports, reflecting lower production and consumption demand from within a weak domestic economy. 

Foreign reserves stood at F$2.2 billion (US$1.06b), sufficient for 7.7 months of retained imports, while annual inflation rate was at -2.9 percent in October.   

When World's Toughest Race: Eco-Challenge Fiji first screened earlier this year, international audiences vicariously took a road less travelled. The competition, which pitted 66 teams across 671 kilometres, saw participants use a compass and map to sail, hike, climb, paddleboard and bike through Fiji’s interior and maritime regions.

Amazon Prime, which aired the series, has approximately 150 million viewers in 200 countries and Fiji’s Minister for Industry, Trade and Tourism, Faiyaz Koya, said the production injected F$30.6 million (US$14.4 million) into the country. More than 200 locals were directly employed, with many others also involved.

The event saw participating villages and communities paid filming levies. Supplies and equipment such as water tanks and water purification technology, plus books for students, were also passed on to communities.

Fiji offers massive rebates to international companies that film in the country. Production companies are eligible for a 75% tax rebate calculated on total Fiji expenditure. The rebate is capped at F$15 (US$7) million. The sector generated  F$134.1 million (US$63million) from 84 productions in 2019. The generous financial incentives are the reason the US Survivor franchise returns year after year.  

But there are concerns that the Eco Challenge Fiji opportunity has not been leveraged as much as it could have. Timing and the pandemic has played a part; while the series was filmed in September 2019 it was aired almost a year later, as Fiji’s borders remain closed and international tourism ground to a complete standstill. However there also appears to have been a lack of coordination and strategic thinking about how to market the opportunity across a range of sectors.

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Jobless numbers soar in Fiji

  • Jan 27, 2021
  • Published in August

Unscripted and unplanned, Fijians have returned quietly to the land and the sea over the past months as the impacts of job losses brought about by the COVID19 pandemic began to bite.

In the tourism belts of Nadi and nearby Sigatoka, former hotel and resort workers – in their hundreds – are turning to farming and fishing virtually overnight.

Necessity is driving them, and no one knows when, how, or indeed if, this quiet revolution will end.
“With many in the village losing their work, we no longer have a steady income to buy food so we’re planting our own,” says Epeli Ganilau.
He is Turaganikoro, village administrator of Sanasana, the traditional owners of the land which hosts the multi-million dollar InterContinental Fiji Golf Resort & Spa and the Natadola Bay Championship Golf Course.

With almost all the men and women in the village laid off work from the resort and its neighbouring golf course, Sanasana has revived their youth and women clubs to spearhead the return to subsistence farming and fishing.

Other villages in Fiji’s tourism belt on Viti Levu’s west coast and Vanua Levu’s south coast around Savusavu town have done the same; closure of hotels and supporting businesses has driven jobless men, women and youths back to subsistence farming, or fishing.

Figures are daunting, and likely to worsen

A survey of tourism businesses by the International Finance Corporation and Fiji’s Ministry of Commerce, Trade, Tourism and Transport found that if the current situation doesn’t change by this November (a likely scenario given recent increases in COVID diagnoses in the Australian and New Zealand source markets), over 500 of the 3,569 businesses surveyed anticipate bankruptcy. If international travel does not resume within six months, 60.5% of those surveyed will close or move away from the tourism sector.

The study further found that 20% of tourism businesses are currently unable to service their debt, and a further 16% expect to default on their debt within one to four months, and have called for loan repayment moratoria, further tax reductions/holidays, and financial support for recovery and rent deferral.

Meanwhile a study by the International Labour Organisation on the impact of COVID-19 on employment also released at the end of last month found half of the workers surveyed had lost their jobs, and most of those still in employment were on reduced hours. More than half of redundant workers said they could not find jobs and needed financial support, and 46% had ventured into subsistence living and operating a microbusiness. Almost all (99%) said the government should do more to protect their jobs and rights, “instead of depleting their retirement fund.”

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As Fiji’s largest foreign exchange earner pre-COVID-19, the tourism and hospitality sectors went into free fall when international borders closed due to the spread of the pandemic, and the nation entered into lock down mode.

Up to 112,000 workers were out of work almost overnight, most of whom worked in Fiji’s hotels and resorts. Most of them are now surviving by drawing on their life savings at Fiji’s National Provident Fund.

As workers adjust to the new normal, Fantasha Lockington and her team at the Fiji Hotel and Tourism Association have been busy helping members to prepare for the wholesale operational and indeed, cultural changes, the industry requires.

She explains some of these changes in an interview with Islands Business publisher, Samisoni Pareti:

Fantasha Lockington: We’ve worked with the Ministry of Health and the Ministry of Tourism for COVID safe guidelines to be put in place. The Association is using those guidelines as a baseline for what we do in the tourism industry.

Obviously the larger branding properties would defer to their overseas brands or their sister hotels overseas to incorporate the requirements that get rolled out throughout the hotels. But we want to make sure that our medium and small size operators that don’t have those linkages can also do best practice themselves. So, we’ve used the government’s COVID-safe guidelines and we are putting more details into it that identify with the different tourism segments.

The idea is that we ensure that we provide the confidence level that potential visitors would need for them to actually book. Fiji will need to have every single business buy into this COVID-safe guideline. It can’t be just tourism businesses that need to do it. If you’re a bank and your clients are tourism businesses, you must be implementing these things too. If you’re a supplier of some sort, and you’re going to have to drop off some supplies at a hotel you need to do this as well.

That includes downloading the Fiji Care app, and already at the hotels if you check in now, they will be scanning you at the entrance of the door, they will be taking your name, they will be reminding you to download the app. Fiji Airways is making it compulsory to download the app to make sure they can do contact tracing. We’re just putting together the last part of the plan which will determine the training section of what the Ministry of Health would also need in terms of the special medical practices.

If somebody is sick what do you do, what are the processes, how do you isolate them, who do you call, and then what is the process that works from there.  Every possible scenario or question has to be responded to.

I will be working with TLTB (iTaukei Land Trust Board), FITBA (the backpacker’s association), SOFTA, the transfer vessels and companies that take tourists out to the outer islands. They are not all our members out in the islands, so we want to be able to touch base with them and I’m hoping that TLTB can assist us do that, and we’re signing an MOU with them very soon to promote a closer working relationship with locally owned businesses that they work with.

Read the full interview at https://emag.islandsbusiness.com/

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