Sep 18, 2020 Last Updated 5:56 AM, Sep 18, 2020

Responses to the Fiji budget have been mixed. A summary follows.

The Fiji Hotel and Tourism Association has welcomed the budget and its move to reduce overheads, calling it “bold and innovative.”  

“We are confident that our members will support the initiatives to ensure that the savings are passed on to the customers and know they are keen to provide value for money packages to rekindle the tourism industry. Government has taken a critical enabling step towards this goal.

The Association says it is optimistic that quarantine-free travel will start soon with New Zealand, and shortly thereafter with Australia. Many Fiji tourism operators are currently participating in the “Love our Locals” campaign. The FHTA says while domestic consumption is “highly appreciated”, its not sufficient for the industry’s long term sustainability.

The Unity Fiji party headed by former Reserve Bank of Fiji Governor Savenaca Narube has dubbed the budget “a road to nowhere” rather than a road to recovery.

“Those who have lost their incomes saw only more depletion of their retirement funds. The unemployed did not see any help for them. The self-employed who are not members of the FNPF now realise that they have to fend for themselves. This is tragic.”

Narube says the budget favours the rich.

“Are buying vehicles to clog our already congested roads, getting drunk to drown the social impact of the crisis, and living beyond our means through hire purchases of white goods, priorities for us? This is unbelievable.”

Narube also asked for protections on debt for 2021-22 and how fiscal stability will be restored in the medium term. He believes the allocation for health is insufficient to prepare in case of a second round of the coronavirus and that the budget hasn’t addressed the need for economic diversification.

The Fiji Labour Party takes issue with the “blanket reduction or removal of Customs duties on a host of imported goods and luxury items” in the budget.

“The cheaper imports do little to alleviate the suffering of the thousands of our workers who have lost their jobs or have been put on highly reduced pays or working hours due to the impact of COVID-19.  Indeed, there is very little provision in the Budget to assist the thousands in the informal sector who are not members of the FNPF,” FLP leader Mahendra Chaudhry said.

“It would have been a lot more helpful if the Minister had removed the 9% VAT from staple food items which he imposed in the 2016 Budget,” Chaudhry said.

Chaudhry is also General Secretary of the National Farmers Union and says the reduction in the government-guaranteed cane price, from $85 a tonne to $70 is a “gross breach of trust.”

He says at $15 a tonne less, “growers are being short-changed by as much as $28 million based on the forecast of 1.8  million tonnes of cane for the 2020 season.”

Fiji Budget wrap

Fiji’s 2020-21 National Budget will see the Government attempt to spend its way out of the COVID-19 induced recession.

“Barring drastic intervention, our economy may never fully recover; not this year, not next year, not decades on from now. That’s what is at stake; not only our economy, but our children’s economy,” Minister for Economy Aiyaz Sayed-Khaiyum said in his Budget address on Friday night.

Sayed-Khaiyum said the budget has been guided by the need to: bring back jobs (especially in the tourism sector) by bringing down taxes, retain a safety net for the unemployed and workers who have had their hours and salaries cut, and to “get Fiji working again”.

The $3.67 billion budget will see Fiji’s deficit drop to 20.2%, pushing the debt-to-GDP ration to 83.4%.

Sayed-Khaiyum says borrowing at this point is an “investment in our future” not a debt-trap.

“Borrowing now to build for tomorrow means future generations can borrow less. And a growing economy with a skilled and educated workforce generates more than enough national wealth and tax revenue to repay debt and invest in the future,” he says.  

Khaiyum says Fiji cannot rely solely on domestic consumption, and that economy's recovery hinges on holding its place in the global economy. The government is providing for a wide range of tax breaks, aimed at stimulating business and consumer spending.

The government has also tabled reforms to improve the ease of doing business.

Sayed-Khaiyum says budget will be funded through external financing from multilateral partners such as the Asian Development Bank (which has approved a US$200 million loan to boost private sector investment in Fiji), Asian Infrastructure Investment Bank, World Bank and bilateral partners.

A  third phase of COVID-relief payments has also been funded to the tune of $20 million. The Fiji National Provident Fund will again distribute this payment “because it’s fast, familiar and accessible, and its database is amongst the most reliable.”

The Minister has told Fijians that the pandemic and its impact is a test of character, and:” the single most patriotic thing you can do in this defining moment is place your belief in our people’s potential. If you are running a cashed-up business, invest now and build for the future. If you see new business, support it. If you see a new Fijian-made product, buy it. If you know a hard-working person out of work, hire them. And do so knowing that this government shares that commitment: We won’t allow our people to fall into an abyss. We believe in the great power of positivity; a positive outlook fosters not only a friendlier Fiji, but a more active economy.” 

Other key points from the 2020-21 Budget:

Social protection

  • People fully unemployed due to COVID-19 will continue to receive $220 per fortnight
  • People working reduced hours will receive $44 per fortnight for every 2 days they are not working
  • People whose salaries have been more than halved can access a one-off payment of $1100 from their FNPF General Account. The government will top up those without sufficient funds in their FNPF account
  • People who have been unemployed for more than six months will now be able to access funds
  • Free education and free textbooks will continue, school transport will continue to be subsidiesd, health care remains free, NGOs that work with government will continue to be funded

Debt management

  • Refinancing of concessional finance with multilateral and bilateral partners is underway
  • The government says it has been parking money in a sinking fund, and the $450m saved will be enough to cover the principal and interest rate on the US$200million global bonds which mature on 2 October 2020.

Government spending:

  • No pay adjustments for the civil service, except for all Permanent Secretaries, CEOs and Heads of Commissions and Independent Bodies who will see a 10% reduction in salaries
  • MPs will continue to have a 20% paycut through 2021
  • Spending on civil service overtime, meal claims and other allowances wil be reviewed and curtailed
  • Funding has been allocated for “shovel ready” sites including the new maternity wing at CWM, construction of the new Prime Minister’s Office complex, completion of new and refurbished police statons, new sporting facilities, hospital upgrades and agro projects
  • With the IFC, the government is finalising a PPP financing model to allow for construction of multi-story housing projects across Viti Levu
  • However the PPP agreement with Aspen Medical to revamp the Ba and Lautoka hospitals has been delayed for one year
  • Education sector spending- especially the Tertiary Education Loans Scheme (TELS)and National Toppers Scheme will be reviewed and tightened
  • Government missions in Washington DC, Seoul, Port Moresby, Brussels and Kuala Lumpur will be closed
  • The third cane payment of this season will drop from $85 to $70 per tonne
  • Parenthood Assistance Payments announced last year will be suspended
  • Funds have been allocated for new police stations, promotion of officers to senior positions and for expanded police recruitment
  • As has hiring of 223 intern nurses, 40 midwifes and advancement of 105 medical interns. Moving forward, inernships for doctors will be two years.

Tax reform

“In this year’s budget, sweeping tax reform is front and centre. To call it “reform” in itself is an understatement; this year represents an overhaul –– one that will be vital to driving new economic activity…we’re announcing Fiji’s biggest ever tax cut.” 

To businesses who will benefit from custom duty cuts, the Minister said, “the nation needs your generosity not your greed.”

  • Abolition of all stamp duties
  • VMS introduction will be further deferred to 1 January 2022
  • Removal of VAT reserve charge
  • Supply of residential accommodation to be VAT exempt
  • Fringe Benefits Tax deductible for tax
  • Reduction in certain tax penalties
  • Import excise has been reduced to 0%
  • Customs duty has been reduced or cut entirely for 1600 items in what the Minister calls “the duty-discount of the decade”
  • Removal of business licenses from 1 August 2020
  • Reduction in duty on hybrid and non-hybrid vehicles

Incentives

  • New incentives for medical investments including income tax exemptions for new private hospitals of between $2.5 and $10 million, investment allowance for the refurbishment , renovation and extension of hospitals and income tax exemptions for establishment of ancillary medical service centres.
  • Reduction in fees for former Fijian citizens wishing to reclaim their citizenship, plus new categories of permanent residency to encourage investment and business
  • 150% tax deduction for companies listing with the South Pacfic Stock Exchange
  • 150% tax deduction on interest paid on corporate bonds
  • New income tax and import duty deductions for investment in the business of sub-division of lots for residential or commercial purposes
  • 100% write off for the construction of new commercial and industrial buildings as long as building approval is obtained before the end of this year
  • Mandatory employer and employee FNPF contributions will remain at 5% until the end of next year. Employers who chose to pay above this will get a 150% tax deduction
  • $30m has been set aside to support micro, small and medium enterprises through highly-concessionary loan packages
  • The telecommunications servicing license fee and the data levy introduced last year will be replaced by a flat 2% revenue based telecommunications license fee.

Tourism

  • Reduction of ECAL from 10 to 5%, and raising of the threshold from $1.25 million to $3 million
  • Removal of Service Turnover Tax on all prescribed services (it was previously 6%)
  • Halving of departure tax to $100
  • 150% tax deduction for hotels and resorts that hire local artists (craftsmen, dancers, musicians etc)
  • The first 150K visitors to Fiji arriving on the national carrier will receive a travel stipend of $400

Other

  • The First Home Buyers scheme will extended
  • $200K to small municipal councils to make up for lost revenue
  • The ban on Styrofoam will go ahead
  • The Blue Town Model in Savusavu is to be launched

Government allocations (in descending order)

  • Education $450.6 m
  • Health $394.3 m
  • Fiji Roads Authority $348.9m
  • Police $200.6m
  • Water Authority of Fiji $195.4m
  • Women, children and poverty alleviation $159m
  • Commerce, trade and tourism $87.1m
  • Higher education $81.4m
  • Military $81m
  • Agriculture $65m
  • Sugar $53.6m
  • Infrastructure and Meteorology Services $30.6m
  • Waterways and Environment $15.9m

 

The Vanuatu Electoral Commission has hit its worst nightmare as the official results continue to be delayed due to the COVID-19 situation and sadly, the passing of its Electoral Chairman Martin Tete in the early hours today at the Vila Central hospital (VCH).

Tete was reportedly admitted to VCH over the weekend after feeling unwell.

He served the Vanuatu Electoral Office for over a decade. Tete is well-respected for his unimpeachable integrity and is being mourned as died before the official declaration of wining candidates could be made.

He has been an integral part of Vanuatu’s electoral process and his passing will leave a big gap and loss for the country.

The Electoral Office today announced that their office will close until Thursday following the passing of Tete.

Caretaker Minister of Internal Affairs Andrew Napuat said it is a very challenging time for the government and the Ministry he leads: “The global threat in COVID-19 is being managed by the task-force set up by the government.

“Our role regarding elections and the loss of our chairman is to consult the State Law Office to advise us on the legal provisions that we should follow in such situations to ensure we publish the results as required by law.”

Meanwhile, as Vanuatu remains alert over the COVID-19 situation the transportation of ballot boxes from outer islands coming into Port Vila were monitored strictly over COVID-19 fears.

A patrol boat from the Solomon Islands that was in Vanuatu to help with the election has reportedly been isolated with all its crews and force members quarantined after returning from Aneiytum island.

They were quarantined including ballot boxes after reports emerged that a tourist who visited the island tested positive on arrival in Australia after visiting the island on Voyager of the Seas cruise ship this month.

Caretaker Minister Napuat urged the people of Vanuatu to remain calm and assured them that his office is doing everything under the law to ensure the results are published as required.

With the unofficial results now up and the advice from the Ministry of Health and Task force team to avoid social gatherings and maintain social distancing, political lobbying might take a new form where political parties and candidates do away with the traditional way of camping to maintain numbers, and instead ‘camp’ electronically through the use of social media.  

To date, caretaker PM Charlot Salwai and Foreign Minister Ralph Regenvanu appear to have held their seats. Regenvanu's Graon Mo Jastis Party has nine seats, the Reunification Movement for Change has eight, the Leaders Party of Vanuatu also has eight seats, and the  Vanua'aku Party has six according to the unofficial count.

 

President of French Polynesia Edouard Fritch has announced the first case of Covid-19 in Tahiti - the first confirmed case of the coronavirus across the Pacific Islands.

President Fritch said that Maina Sage, French Polynesia’s representative in the French National Assembly, had been confirmed with the virus after returning from Paris on 7 March. Ms. Sage is resting at home in self-isolation in Papeete.

Maina Sage recently served on a National Assembly commission with France’s Culture Minister Franck Riester, who has also been confined in France after contracting Covid-19.

Announcing the first confirmed case of the coronavirus in Tahiti, President Fritch reassured people about government plans for monitoring, testing and isolation. He stated, however: “I invite the population to avoid travel outside the country.”

Last month, French President Emmanuel Macron postponed a long-scheduled visit to French Polynesia because of the international health crisis. Macron was due to visit between 16-18 April for a summit with Island leaders, but his trip has been delayed until later this year.

Regional organisations and Pacific governments are preparing for more cases of Covid-19 in the islands region, as the World Health Organisation declares a global pandemic. But many citizens in small island developing states are fearful of the potential stress on medical services. An epidemic of measles across the Pacific last year highlighted the potential for transmission of infectious diseases, adding to existing burdens on public health systems from non-communicable diseases.

The international spread of the virus is starting to affect tourism in the islands – a vital source of revenue and employment. Many island nations have restricted visits by cruise ships and changed air schedules for their national airlines: Air Calédonie International has announced it will reduce the number of scheduled flights to Melbourne and Osaka from May, while Air Tahiti Nui has reduced flights to Japan. In an unprecedented step, the Republic of the Marshall Islands restricted all airline travel into the country for two weeks, until 22 March.

Fijian soldiers returning from peacekeeping duties in Iraq tonight will not be able to meet their relatives immediately after arrival. This is a precaution against the corona Virus, COVID-19.

Iraq has 54 reported COVID-19 cases and four deaths, according to the World Health Organization. All 54 cases entered Iraq from other countries.

A directive from the Republic of Fiji Military Forces has warned relatives that they must report to the army’s camp within the Civil Aviation Authority of Fiji compound. “Here they will be briefed on all processes and procedures regarding the arrival of the troops and follow on measures that should be followed after service personnel and their family members are home,” said Colonel Pacolo Luveni , Director Peace Support Operations, in a media  release.

“This measure is being taken to minimise disruptions to Nadi Airport operations and to ensure the safety, security and wellbeing of all during the planned arrival of the troops.’’

It is unclear at this stage whether the troops will undergo a 14-day quarantine period before being allowed to return to their homes. The troops will arrive at 6pm after a 12-month tour of duty with the United Nations Assistance Mission in Iraq.

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