Quarantine free trouble has begun between Palau and Taiwan with the arrival of Palau’s first inbound tourism flight since March last year.
Palau's President, Surangel Whipps, Jr. returned to Palau from Taiwan on the flight, marking the event with the ceremonial signing of the Palau Pledge: the country's official passport stamp that all visitors must sign on arrival, promising to preserve Palau's environment and respect its culture for the sake of the next generation.
"I'm very happy this day has finally come,” President Whipps said on arriving home. “This is the first sterile travel corridor in the world between two COVID-free / COVID-safe countries, and I'm very proud of the work Palau and Taiwan have done to get us here. Taiwan is the perfect partner for this safe travel corridor. Not only because of their success in combating COVID-19, but also because Taiwanese travellers treat Palau's people, environment, and culture with respect when they visit. Our two nations trust each other – hence why we are able to have zero-quarantine at both borders."
Palau has recorded no cases of COVID-19, and over 65% of Palau's adult population is now vaccinated against COVID-19.
Meanwhile Cook Islands Prime Minister Mark Brown says they are ready to welcome New Zealand visitors from May 1st.
He was in New Zealand last week to meet his counterpart Jacinda Ardern and other key people critical to the travel plan.
“Facilitating travel of New Zealanders to the Cook Islands will be the difference to arresting an exodus of working-age Cook Islanders and their families to New Zealand," Brown said.
PM Brown also said access to grant aid, lower-interest funding and added capital loan funding, "will help to keep Cook Islanders in the Cook Islands rather than adding to the NZ-Cook Islands diaspora."
Meanwhile New Zealand Prime Minister Jacinda Ardern will announce when quarantine-free travel can resume with Australia this afternoon.
When 116 farmers in Fiji’s western division received 'Cash for Cultivation' from the government, Agriculture Minister Dr Mahendra Reddy told them: "We want the demand for vegetables, fresh produce, or root crops that comes from the local sector, whether it is from the tourism or the service industry, it should be fulfilled by us."
The Pacific Islands Farmers Organisation Network (PIFON)—which has members in Fiji, Tonga, Samoa, Vanuatu, Solomon Islands, Papua New Guinea and Timor-Leste— has suggested resort chefs and procurement officers could be using this time (of border closures) to visit farmers and talk about what they need to in order to use more local produce in their restaurants. “There is an opportunity for farmers and hotels to enter into contract farming agreements that will encourage farmers to plant longer-term crops, including fruit and nut trees, now in readiness for when tourism begins to recover,” PIFON says.
More than half of the fresh produce served in hotels and resorts in Fiji’s main tourism areas in 2017 was imported, representing an import bill of more than F$38.5 million (US$18.8 million) reports the International Finance Corporation (IFC).
Some of this produce was crops that grow well, and year-round in Fiji. Tropical fruit juice alone accounted for F$1,566,750 of the import bill.
Hotel purchasing managers, chefs and general managers told the IFC researchers that seasonality and inconsistent supply of local produce were the most common reasons they did not buy local fruit and vegetables. Quality was also an issue.
That has been the experience of Yemi Lee, the Area Director of Finance & Business Support South Pacific at the Intercontinental Fiji Golf Resort and Spa.
“Farmers here, they don’t really have enough production,” he says.
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Bank of South Pacific (BSP) plans to list on the Australian Securities Exchange (ASX). BSP has given notice of its intention to change its constitution to allow for dual listing in Australia as well as its current listing in Papua New Guinea.
The Fiji Hotel and Tourism Association says the effective rollout of vaccines will be critical for everyone’s health and safety, the revival of the tourism industry and thousands of people getting their jobs back. FHTA Chief Executive Officer, Fantasha Lockington has reiterated the offer of industry support to the Ministry of Health and Medical Services with the logistics of rolling out the vaccines.
Water bottler and distributor, Pleass Global Limited says revenue in 2020 was F$10.99million or 20% lower than the previous year. However it recorded net profit of $1.06million for the year, 58% higher than the previous year. Chairman Warwick Pleass said “2020 was a turbulent year in Fiji, as it was globally, due to the SARS-CoV-2 or COVID pandemic. This caused the company great disruption and disappointment but in the end I am pleased with the result and outcomes. This satisfaction arises only relative to where we might have been had the company not reacted quickly and throughout the year, and if not for the immense sacrifices made by the employees and more specifically the management.
Shipping Services has marked its 29th birthday by rebranding. It has also introduced new door to door logistics services —including packing, shipping, storing, and chilling services—alongside port-to-port container transportation.
The Reserve Bank of Fiji has two new board members, Vinod Patel and Company Group GM Finance, Nikita Patel, and Energy Fiji Chief Financial Officer, Bobby Naimawi.
Tourism Fiji has handed over burgee flags, which yachts can fly from their masts, to signify they are ‘Blue Lane approved’. The flags indicate a vessel and its crew have completed quarantine, mandatory protocols and do not pose any COVID-related threat to the community.
Fijian Holdings has welcomed its new Group Chief Executive, Jaoji Koroi, who has started work after transitioning from his role at the Fiji National Provident Fund.
The Fiji National Provident Fund and Vinod Patel & Company have signed a lease agreement establishing its Home & Living Division as one of the anchor tenants for the myFNPF Centre, Nadi.
A step up in engagement by the Australian and New Zealand governments, combined with regional and international economic support over the past year, has cushioned the initial blow of Covid-19.
Moving forward, labour mobility, a fast vaccine rollout and safe travel corridors in the region, combined with the faster release of infrastructure support will be critical to its ongoing recovery.
Closed borders have hit the Pacific island economies hard. The idyllic, Covid-free beaches of the Pacific islands are empty of visitors, and the countries that rely on tourism are experiencing a disproportionate impact of the pandemic on their economies, despite not having a health emergency.
While overseas economic conditions are set to improve this year, the Pacific will require international support to see an uplift in economic conditions. Unlike many of the developed Western countries, the relatively poor Pacific island countries were not able to put a floor under demand and shelter their economies from a more severe recession.
A more severe economic downturn, pressures on payments and elevated currency and country risks are probable in 2021.
Fortunately, the Pacific has long benefitted from support provided by some of its nearest neighbours. Australia and New Zealand have been the region’s key development partners, and more recently, their step up has been encouraging when combined with international donor assistance.
In the last year alone, the World Bank and IFC announced AU$1bn investment into Fiji and the AU$2bn Australian Infrastructure Financing Facility for the Pacific (AIFFP) has become operational. Recent Australian and New Zealand government assistance to the islands in the wake of Tropical Cyclone Yasa has been welcomed.
In the wake of COVID-19, the Pacific will continue to require international support. The most beneficial types if support are likely to include:
Steps to ensure a:
Tourism key to a jobs recovery
Prior to the pandemic, the Pacific’s inbound tourism was strong, helped by solid economic conditions, particularly income growth in key source markets including Australia and New Zealand. Growth in overseas arrivals averaged about 5% a year. So much so, that that in the past decade tourism became the main driver of growth for many of the Pacific island economies including Fiji, Vanuatu, Samoa, Cook Islands and Tonga.
Tourism revenue flowed directly into sectors such as accommodation and food services, retail and transport, but then also fed through to other supporting industries yielding secondary benefits to the economy.
Once you add the stimulus from employment and taxes collected, the tourism sector’s total contribution to GDP is several multiples of its direct contribution to GDP and equates to about 40 - to 60% of the region’s output. For the Cook Islands, the contribution to GDP is closer to 80%.
However, since the Covid-induced border shutdown, visitor arrivals have collapsed to virtually zero since April 2020.
Tourism-dependent businesses are experiencing negative cash flows and are struggling to meet commitments. This has resulted in the loss of many thousands of jobs. Fiji lost nearly 70,000 formal sector jobs in 2020 (21% of total employment) which saw the unemployment rate shoot up to 27% from 7% in 2019. Taking into account the informal sector of the economy, which comprise the majority of total employment in the Pacific islands, then the jobs impact is a lot higher.
The solution: A tourism-led jobs recovery.
Many Pacific island countries have not had any community transmission of the virus with some countries having gone several hundred days without a local case. In the absence of international tourism, the economic hardships will get worse.
Recreating the strong growth in inbound tourism seen in the period leading up to the pandemic will be a challenge but it is through the support of its international allies where we might see a turnaround.
GDP and jobs is not the only problem – national debt is mounting
Most Pacific island countries experienced solid growth before the pandemic. But the flipside of this is a rising trade deficit, fuelled by imports of both consumer and capital goods. Over-consumption and narrow growth raises the risk of a return to larger deficits if tourism does not recover.
The need to finance the current account deficit requires a continued inflow of funds, either debt or equity. With the latter requiring favourable economic conditions, debt is the only viable alternative for now.
However, debt has limited wriggle room given the substantial uplift in government borrowings to finance budget deficits in 2020. If the current account deficit comes to a head, then pressures on foreign reserves will emerge and currency risks could rise.
Yes, migrant remittances are holding but that is not enough because consumption does not provide for a jobs recovery.
More budget support can contain credit and country risks
Pacific island governments had to take out large loans and issue debt to offset the decline in revenues brought about by a collapse of the tourism industry. Larger budget deficits have pushed debt higher and has left limited room to borrow more.
Further, Pacific island countries are B-rated credit nations and this prevents them from accessing cheap funds from the international capital markets. The need to fund budget deficits with more expensive domestic debt will heighten credit and country risks. To contain these risks, other countries may consider providing cheaper budget support loans while the Pacific awaits a recovery in tourism and jobs.
Ramping up Pacific labour schemes can help
The Australian Government has restarted its Seasonal Worker Program (SWP) to help fill acute labour shortages in rural and regional Australia. New Zealand has also received seasonal workers. In the 2018-19 financial year, 12,200 Pacific people worked in Australia under the SWP and remitted an aggregate nearly AUD110m back to Pacific. There are further opportunities here due to the current pool of displaced Pacific workers.
Agriculture technical expertise can reduce imports and help in economic diversification
No doubt after the pandemic we will see a shift away from the Pacific islands being so heavily dependent on tourism as a source of growth. The Pacific has great potential in agriculture with kava exports coming in leaps in bounds in recent years.
Despite this potential, the Pacific remains a net importer of fruits and vegetables when it comes to meeting tourism demand. With abundant land, the Pacific should be looking to reduce these imports and become an exporter of fruit and vegetables. There is also great potential in other areas such as fisheries and niche products like coffee, cocoa and turmeric.
The region would benefit from help with training, technical support and equipment, which could see the Pacific islands, produce high-quality produce at a scale to feed themselves and for the export market.
Release infrastructure funding quickly and get work started
Inadequate infrastructure remains a key constraint to Pacific prosperity. Without question, the Pacific needs better roads and ports to get produce to market, electricity to drive rural development and industry and more reliable and sophisticated telecommunications. It also needs to safeguard against climate risks by reducing reliance on fossil fuels. The Asia Development Bank estimates that over US$30bn needs to be invested in Pacific infrastructure by 2030.
But the Pacific islands alone lack the resources to meet the ADB’s targets. The narrow-based economies provide limited resources for governments who have to juggle competing priorities, and infrastructure investment is often the casualty. Donor funding is critical.
The AU$2bn Australian Infrastructure Financing Facility for the Pacific (AIFFP) has built a project pipeline of about AU$300m for year ending 30 June 2021. This is exactly what the region needs, more urgently than ever. Fast roll out of this funding, along with the release of fast disbursing funds for infrastructure maintenance works, would mean projects can begin immediately, creating much-needed jobs.
Tessa Price is ANZ's Regional Executive Pacific. Kishti Sen is ANZ's Pacific Economist
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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