- This is part 1 of the paper GRAHAM LEUNG was to have delivered at the annual Fiji Institute of Accountants Congress convention to be held at the Sheraton Fiji on Friday. As a result of instruction by the police on Monday that the permit to hold the convention would be revoked unless Professor Brij Lal, Richard Naidu and he were dropped from the speakers’ list, this paper is now being circulated to stimulate discussions on the “way forward”.
WE have had five coups in 22 years. Dictatorship and arbitrariness has replaced the rule of law, democracy and human rights. We have a regime whose authority is based on force rather than the consent of the people. That is our reality. Who can say with certainty that this scenario will not continue beyond September 2014?
The prospect is depressing. How do we climb out of this quicksand into which we are fast sinking?
Fiji is not just in a political, but a deep financial crisis. The root of that crisis stems from the underlying political instability and coups which have ravaged the country over the last two decades.
This crisis cannot be solved merely by getting the economic fundamentals right, because its origins lie in systemic political and governance issues. This crisis will not solve itself if we just ignore it.
No matter how attractive the fiscal and policy incentives cobbled together by the regime, there will be few takers given the present political instability and uncertainty. And the confidence needed to restore the economy will only come if we make the right decisions going forward.
The world has changed since 1987. Human rights concerns do matter. And in the world of real politick, we are vulnerable and small enough to be held accountable.
Call it double standards, call it what you will. That is how international relations work. The regime may well think it can defy external pressures. But it will come at the expense of further decline in social services, our standard of living, decay in infrastructure, increased poverty, crime and other social ills.
Why Should We Despair?
The Reserve Bank of Fiji has forecast a contraction of the economy by 0.3 per cent in 2009. This follows very low growth of just 0.2 per cent in 2008 and a contraction of 6.6 per cent in 2007.
Exports are projected to decline by 12.2 per cent in 2009. Investment in 2009 is estimated to fall to about 13 per cent of GDP, down from an estimated 15 per cent of GDP in 2008.
In early March 2009 official foreign reserves stood at $674 million, equivalent to around 2.7 months of goods imports. The abrogation of the Constitution is likely to worsen the liquidity situation. The RBF’s introduction of measures to tighten exchange controls on 14 April in order to protect foreign reserves underscores the fragility of our economy.
In April 2009, Standard and Poor’s Rating Services announced that it had revised its outlook on the long-term sovereign credit rating on Fiji to negative from stable. Standard and Poor’s affirmed its ‘B/B’ foreign currency credit ratings on Fiji.
The outlook revision reflects Fiji’s declining international reserves and weak growth prospects. It also reflects a likely rise in external borrowings this year and into the future at a time when the Government’s fiscal flexibility and economic options are diminishing.
The RBF reports that reserves have fallen to US$431 million (7.2 per cent of GDP) in December 2008 from US$618 million at the end of 2007 (or 10.3 per cent of GDP).
They have come under pressure from recent floods that have damaged Fiji’s key earners of foreign exchange: Tourism and sugar. Recessionary conditions in key export markets have also weighed on merchandise exports and remittance flows. These factors may also impair short term. Growth will also be depressed by an uncertain business environment with lower levels of investment.
Recent figures by the International Monetary Fund show that Fiji’s GDP ranking is in the same league as Eritrea, Bhutan and the Central African Republic. We were ranked 150 of the 192 countries listed by the IMF. Zimbabwe was ranked 159, nine places behind Fiji. Not exactly comforting statistics.
You don’t have to be a genius to work out that we are in the bottom 20 per cent of the class – the dunce in the class.
Savenaca Narube until recently the Governor of the Reserve Bank was appointed by the Constitutional Offices Commission. But he was sacked by the army-backed regime.
There is no evidence that the board of the RBF protested against his summary removal. For that matter, there is no evidence that anyone did.
What does it say about us as a nation when senior constitutional office holders can be swept away without not so much as a murmur from the business and financial community? Did anyone stand up and say “No you can’t do this. This man has done nothing wrong? What is his crime?”
Sadly, courage and truth have become rare commodities in this country.
In a report published in April, the Sydney based Lowy Institute for International Policy said “the removal of the respected Reserve Bank Governor will destroy what is left of business confidence and deter potential foreign investors. Fiji faced a serious liquidity crisis even before 10 April; the negative outlook for the economy will be dramatically worse as a result of the actions of President Iloilo and Commodore Bainimarama.”
Fiji has been suspended from the Pacific Islands Forum. The Commonwealth is likely to take a similar decision later in the year. EU aid funds have dried up. Even the normally conservative Japanese Government declined to invite the current regime and its leader to an annual summit with Pacific Island leaders that was held in Hokkaido last month. Our international standing has never been any lower.
The situation has been made worse by the dismissal of the judges and a judiciary which is now even more dysfunctional.
More recently, the regime took over the licensing of lawyers, removing the power to grant licenses to practice from the law society to the Registrar of the High Court, an army-appointed major.
Frank Yourn executive director of the Australia Fiji Business Council said “Both existing business operating in Fiji and prospective investors would be very concerned by this radical development”.
Reacting to the unilateral changes to the Legal Practitioners Act, the president of the Law Council of Australia John Corcoran expressed concern that the changes could be the first step to the “government’s” attempts to control the country’s legal profession by not allowing lawyers who oppose the regime to practice law. He said that “an independent Judiciary and legal profession are vital to the stability of a nation.
“Without an independent legal profession, a crucial ingredient in upholding the rule of law in Fiji would be missing.”
Investors will get no relief from doing business in Fiji without the safeguards of an independent and competent judiciary to adjudicate over commercial disputes, including where government is a party. The level of distrust within and between communities is unprecedented in our history. The rivers of political enmity and suspicion between our leaders run deeper than ever before.
The news is not good. In fact it is positively depressing. And it will get worse. The spin doctors cannot fool us. The facts and figures do not lie. Fiji is falling apart. If we do not stem the tide, Fiji will be a failed state. – fiji uncensored