The Reserve Bank of Fiji says recent locally transmitted cases and containment measures will prolong already subdued economic activity in the country.
The RBF's April statement reports that visitor arrivals were down of course, as was electricity (-13.4%) and mahogany. There was a big boost in pine log production, woodchips and sawn timber as a result of increased demand. Gold production also increased 17.5% due to higher quality ore being minded.
There were declines in net VAT collections (down 27.8%), consumer credit (down 24.1%), new vehicle sales (-17.8%) and registrations, reflecting weak consumption activity. However there was strong growth in second-hand vehicle registrations (up 122%), “driven in part by the budgetary changes around vehicle imports.”
The job market is very subdued; job adverisements declined by 75.8% for the year to March. Compulsory Fiji National Provident Fund membership dropped 64% for the same period.
Private sector credit fell 3.7% in March for the ninth consecutive month.
“In terms of the Bank’s twin objectives, inflation remains low and foreign reserves are ample” the statement says. It says inflation slipped to -1.2% due to lower prices for local food, alcohol and yaqona.
The Pacific Islands News Association has paid tribute to media workers covering the COVID-19 pandemic, recognising their commitment and the “great sacrifice” they have made.
In a statement made to mark 2021 World Press Freedom Day today, PINA notes that while “our health workers have been rightfully recognised as ‘frontliners’ in the fight against COVID19, the critical frontline efforts of our media workers in bringing much-needed information and news to our people has been largely forgotten.”
“Much like our health sector colleagues, our media workers go about their daily work, also at high personal risk and exposure to this virus, but with the unwavering desire to inform and educate our people,” PINA says.
PINA President Kora Nou urges governments to vaccinate journalists “to ensure they can continue to work without having to fear for their health and their lives.”
Meanwhile, the Pacific Anti-Corruption Journalists Network (PACJN) has called for a regional Pacific commitment to boost media freedom.
"Pacific journalists need stronger Right to Information legislation and whistleblower protection so their daily work can better target the diversion of state and private sector funds into corrupt hands," said PACJN Coordinator (and Islands Business Publisher), Samisoni Pareti.
"Our journalists have worked hard to get governments to host more regular media conferences during the onset of COVID so not only misinformation, but real procurement problems can be addressed quickly.
"But journalists need to be able to rely on their own independent reporting, without fear or favour, not just media conferences," Pareti says.
In Fiji, National Federation Party General Secretary Seni Nabou said: “Fiji owes those who promote independent and impartial news, our immense thanks. They are doing a remarkable job given that Fiji has only selective media freedom.”
“While the Government may have concerns about Covid rumours slowing down its vaccination rollout plans, as a matter of principle, we must all uphold the freedom to "to seek, receive and impart information, knowledge and ideas", as well as the freedom from "scientific or medical treatment or procedures without an order of the court or without his or her informed consent", as promoted in their 2013 Constitution,” Nabou said.
“Fiji will only enjoy absolute media freedom with the repeal of the draconian Media Industry Development Act, first legislated as a Decree in 2010,” Nabou says, pledging to repeal the Act. “This will have to be done as a matter of priority by the next government. And we will do it.”
Press Freedom Index raises concerns over Pacific developments
The 2021 World Press Freedom Index compiled by Reporters Without Borders (RSF) shows that “journalism, the main vaccine against disinformation, is completely or partly blocked in 73% of the 180 countries ranked by the organisation.” The Index rates New Zealand as the 8th most free nation in (Norway is in first place). Samoa is ranked at 21, Australia at 25, Tonga at 46, Papua New Guinea at 47, Fiji at 55 and Timor Leste at 71. Other Pacific Island nations are not ranked.
Reporting on Samoa, RSF says: “In a sign of further decline in the situation in 2020, the prime minister threatened to ban Facebook and personally brought a defamation suit against a blogger whose comments he did not like.”
On Tonga, RSF noted years of tension between government and media and stated: “Pohiva Tu’i’onetoa, who became prime minister in October 2019, must put a stop to the pressure and meddling and ensure that journalists enjoy full editorial independence.
RSF says in Papua New Guinea: “The installation of… James Marape, as prime minister in May 2019 was seen as an encouraging development for the prospects of greater media independence. Journalists were disillusioned in April 2020 when the police minister called for two reporters to be fired for their “misleading” coverage of the Covid-19 crisis. In addition to political pressure, journalists continue to be dependent on the concerns of those who own their media. This is particularly so at the two main dailies, The Post Courier, owned by Australian media tycoon Rupert Murdoch’s News Corp, which is above all focused on commercial and financial concerns, and The National, owned by the Malaysian logging multinational Rimbunan Hijau, which doesn’t want its journalists to take too much interest in environmental issues. As a rule, the lack of funding and material resources for proper investigative journalism and reporting in the field has tended to encourage “copy-and-paste” journalism. So the efforts undertaken by the commercial TV channel EMTV News to practice and promote investigative reporting are encouraging. Social media are meanwhile developing rapidly but the advent of Facebook has led to the creation of many politically-affiliated accounts that focus on spreading disinformation and attacking independent journalists. Reporters continue to be prevented from covering the fate of asylum-seekers held in Australia’s migrant detention centres on Papua New Guinea’s Manus Island and in the capital, Port Moresby.”
RSF says in Fiji: “The sedition laws, with penalties of up to seven years in prison, are also used to foster a climate of fear and self-censorship. Sedition charges poisoned the lives of three journalists with the Fiji Times, the leading daily, until they were finally acquitted in 2018. It was the price the newspaper paid for its independence, many observers thought. The newspaper’s distribution was banned in several parts of the archipelago at the start of the Covid-19 pandemic in March 2020 because – the government said – the press was not an essential service. The pro-government Fiji Sun was nonetheless distributed with complete normality in the same areas.”
Remembering Pacific journalists
PINA has also used the day to salute five media workers for their “tireless and immense contribution to the Pacific media fraternity.”
The Asian Development Bank expects Pacific Island economies to return to positive growth this year, although at different rates, and with a great deal riding on successful vaccine roll-outs.
Pacific economies contracted by an estimated 5.8% last year due to the effect of the coronavirus pandemic on tourism and trade flows, and construction activity. The region's economies are forecast to recovery to 1.4% this year, and 3.8% in 2022, although this is “contingent on improvements in tourism numbers, commencement of delayed construction projects, and resumption of labor mobility and cross-border trade,” according to the ADB.
ADB Director General for the Pacific, Leah Gutierrez says the start of vaccine rollout in many Pacific Island nations bodes well for a level of economic recovery. “However, risks to the recovery remain, particularly in tourism-oriented economies that are feeling the heaviest impacts of the pandemic crisis,” Gutierrez says.
Specific forecasts for Pacific Island nations as per the ADB’s latest outlook report are as follows:
Cook Islands: GDP is expected to fall by more than a quarter (26%) in 2021, before recovering to growth of 6% in 2022.
Federated States of Micronesia: GDP contraction of 1.8% in 2021, 2% growth in 2022.
Fiji: 2% growth in 2021, 7.3% growth in 2022 following an “unprecedented 19% contraction last year”. The ADB says it make take some years for the economy to return to its pre-pandemic levels.
Kiribati: Small contraction of 0.2% this year, 2.3% growth next year.
Marshall Islands: Negative growth of 1.4% in 2021, 2.5% growth in 2022.
Nauru: GDP growth of 1.5%, 1% in 2022 with the impending closure of the Regional Processing Centre.
Palau: Decline of 7.8% this year, growth of 10.4% next year.
Papua New Guinea: Moderate 2.5% growth in 2021, 3% in 2022, although the recent surge in cases threatens prospects for economic recovery.
Samoa: GDP down 9.2% in 2021, recovering to 3.1% in 2022 once full vaccine coverage is achieved.
Solomon Islands: 1% growth this year, 4.5% in 2022 as fishing and construction rebound.
Tonga: a 5.3% contraction exacerbated by Tropical Cyclone Harold in 2021, 1.8% growth in 2022.
Tuvalu: 2.5% growth in 2021, 2% next year.
Vanuatu: 2% growth in 2021 and 4% in 2022, but this is dependent on a successful vaccination rollout and establishment of travel bubbles.
It is well understood that the Pacific Islands is one of the least insured regions in the world, with some estimates putting the penetration rate at just 3.6%.
These figures are particularly sobering given our collective vulnerability to climate change impacts. The cost of damage from cyclones to governments can be debilitating, particularly if they come on top of another pressure, such as the coronavirus pandemic. Cyclone Winston in 2016 cost Fiji an estimated US$470 million. Cyclone Pam a year earlier cost Vanuatu in the region of US$450 million. Tonga, Vanuatu and Fiji suffered significant financial tolls as a result of Cyclone Harold last year.
However, there has been some incremental progress in the climate change financing space in recent times.
Last December, the Governor of the Reserve Bank of Fiji, Ariff Ali, launched the Pacific Insurance and Climate Adaptation Programme. The initiative is designed to provide “agile and immediate post-disaster financing through market led disaster risk financing instruments,” he said. The development, piloting and scaling of market-based parametric insurance solutions will be part of the Programme’s work.
It is a project of the UN Capital Development Fund, United Nations University, and United Nations Development Program, and will be focused on women, youth and medium and small enterprises, who are disproportionately affected by natural disasters, as well as vulnerable sectors such as agriculture, fisheries, retail and tourism.
Reports produced by the Program looked at the situation in several island nations, finding that in Tonga, “most people and businesses have no insurance protection, coverage against natural hazards is difficult to obtain and expensive, and the national regulatory framework is inadequate.”
The Programme reports that non-life insurance penetration in Tonga was only 0.9%, well below the average for the Pacific region. Only 13% of adults report having any form of insurance (mostly life and health cover), while 22% report that they are unfamiliar with what insurance is, according to the National Reserve Bank of Tonga.
Similarly in Vanuatu after Tropical Cyclone Pam in 2015, “many business owners who had not procured cyclone insurance folded in the aftermath of the storm, unable to reinvest sufficient savings in their businesses or to tap sources of credit” according to the World Trade Organisation.
Back in 2013, the Pacific Catastrophe Risk Insurance Company (PCRIC) launched a pilot parametric insurance product to provide short term liquidity to governments in the immediate aftermath of disasters caused by cyclones, earthquakes and tsunamis. Last year, under this arrangement, Tonga received US$4.5 million from PCRIC following Tropical Cyclone Harold.
PCRIC is a captive insurance company, allowing members to efficiently transfer excess risk to international markets. In a recent webinar, PCRIC Chief Executive Officer Aholotu Palu described PCRIC as a regional risk pool, “a sovereign instrument facility, aiming to serve the immediate financial needs of the participating countries” after a disaster.
“The reality is that insurance does not solve all the disaster risk management finance needs and really is only sensible financially for low frequency, high impact events,” he said. “Disaster risk finance requires a layered and coordinated approach starting with a country’s contingency savings, the use of concessional loan facilities [such as those made available through international financial institutions] and also national disaster insurance.”
John Plevin, a Financial Sector Specialist working with the Crisis and Disaster Risk Finance global team at the World Bank said: “With the right partnerships you can develop insurance markets that allow households, that allow businesses, to become resilient financially to natural disasters.” He said while support and facilities are in place, Pacific Island governments need to articulate what they need. “Is it coverage for new risks from insurance, new products entirely, or is it just greater technical support and information,” he asked.
Daniel Lund, Special Advisor on Climate Change with the Ministry of Economy in Fiji said while Pacific countries have been setting up forms of national reserve funds to respond to disasters, “these reserve funds have had different challenges. In some cases, funds are set up, but they’re not necessarily topped up consistently, meaning that there’s not necessarily enough liquidity for national reserve funds to always be a legitimate way to respond to events.”
He stresses the need for disaster and climate risk finance to deliver social benefits and safety nets for the Pacific’s most vulnerable through, for example, micro-insurance, while “really capitalising on the agency of people to deliver and support themselves when disasters strike” by giving them a measure of control such as cash transfers.
Lund suggests a mix of micro-insurance and sovereign government-level insurance is the most strategic approach for Pacific nations. But he says the region should also be looking at questions such as what are the barriers to insurance, why can’t the Pacific access the right types of reinsurance, can we start looking at larger insurance pools across similar communities, and is it possible to start highlighting specific demographics that should have subsidised insurance?
In Samoa, Lilomaiava Samuel Ieremia the Assistant CEO Economic Policy and Planning at the Ministry of Finance, told the webinar participants that a Disaster Risk Financing Strategy is being developed which draws on the lessons of the measles epidemic and COVID-19 pandemic, such as the ability to relax procurement processes in times of great need. Lilomaiava says further work is needed to determine relevant insurance products with insurance companies nationally or regionally.
At a regional level, the Pacific Islands Private Sector Organisation (PIPSO) told the Forum Economic Ministers that insurance for asset protection and business interruption to the private sector in response to the climate crisis can be expensive and inaccessible. “As climatic event severity increases as forecast, we will face significant issues in the insurance sector, which may require Government intervention to resolve,” PIFON’s submission to the Ministers states.
Just before the pandemic and writing for the Center for Global Development, Vijaya Ramachandran and Junaid Sadiq Masood asked, “Are the Pacific Islands Insurable?” They raised the need for transparency about the cost of insurance contracts and related exposure to disasters, anticipate that donors would need to subsidise premium payments in the same way they currently subsidise payouts post disaster, and suggest consideration be given to “linking premiums to the degree of resilience preparedness.”
Finally, they believe an overarching body, such as the Pacific Islands Forum, should “keep track of overall levels of indebtedness and encourage all actors to minimize duplication and administrative costs.”
“There may be political economy considerations for both PICs and donors to go the private insurance route (rather than the direct payout route) but these need to be explicit and carefully costed. This is especially the case if public funds are being directed to private companies and/or used to subsidise private insurers or their clients,” they write.
Managing the level of indebtedness, when COVID-19 has exacerbated concerns over the debt burden, remains one of the biggest issues in planning for climate finance, and insurance responses for our governments, and the longer the coronavirus crisis continues, the more intractable those challenges will become.
The travel bubble between Taiwan and Palau is in danger of popping following low interest from Taiwanese tourists to take a holiday from a year of COVID-19 border restrictions.
In an effort to revitalise Palau’s economy which was devastated by COVID-19 in 2020 (with GDP down by 9.5% according to the Asian Development Bank), Palau and Taiwan announced the launching of a travel bubble last month.
President Surangel Whipps Jr. said after months of discussions, the bubble could finally happen. He flew to Taiwan for an official visit, returning to Palau days later with 100 tourists.
Amongst them was Hung Tzu-jen, who is the deputy superintendent at the Shin Kong Wu Ho Su Memorial Hospital. Speaking through a translator, he lauded Palau's efforts to ensure that the bubble was safe. Hung said it was his first holiday outside Taiwan since the declaration of the COVID-19 pandemic.
Flights between Taiwan and Palau were planned twice a week under the travel bubble or "sterile corridor".
While the inaugural flight on April 1 was much celebrated by both countries—with tourists excited and energised by the trip—the interest in flights subsequently dwindled.
Just 63 tourists have arrived since then. By April 14, China Airlines had cancelled the flight, saying only two tourists were interested.
To read on visit emag.islandsbusiness.com