Non-Resident Borrowings Relaxed

The RBF has announced the relaxation of the local borrowing by non-resident companies.
The non-resident controlled companies can now have access to more borrowing from commercial banks and other lending institutions. The relaxation of this policy means that non-resident companies can now borrow up to a certain percent locally based on the debt-to-equity ratio. The guideline to this ratio is 3:1. This ratio is subject to verification by a chartered accountant.

The conditions for the borrowing are as follows:
§ for 51% - 70% non-resident ownership – can borrow up to 85% local financing;
§ for 71% - 90% non-resident ownership – can borrow up to 75% local financing; and
§ for 91% - 100% non-resident ownership – can borrow up to 60% local financing.

The policy is effective immediately.

Ethanol Project to cost Government F$50 million

The ethanol project should cost the Fiji Government about F$50million, however, regardless of the costs today, it is expected to have good long-term benefits in the days to come.

Ethanol is an alternative fuel which burns more cleaner than normal fuel. Although it may be a new topic of discussion in Fiji, it is not a new thing globally.

It has already been used in States such as Iowa and Minnesota in the U.S.A.

It is also cheaper. Producing ethanol here, could assist with reducing some of our dependence on the rest of the world to meet our fuel and energy needs.

A deal is currently being made between the commercial arm of the NLTB, the Vanua Development Corporation, and the Chinese Government to produce ethanol in Fiji.

The ethanol that is expected to be produced in Fiji will be made from cassava. A massive 500,000 tonnes of cassava is required on a yearly basis to produce 50,000 tonnes of ethanol per year and this equates to about 1,500 tonnes of cassava on a daily basis.

The site of the production plant is still undecided. However, Government’s Department of Energy is looking potential sites at Naitasiri Province on Viti Levu, Fiji.

Another alternative fuel that has not had much development or research in Fiji is solar energy. Wind energy is being developed with the Fiji Electricity Authority opening a wind farm at Butoni, Sigatoka, over the past year.

The Fiji Government provides incentives for businesses that wish to produce alternative forms of energy.

For further information on Government incentives that are in place, please refer to the website of the Fiji Islands Trade and Investment Bureau, www.ftib.org.fj.

The New Food Unit

Fiji is one of the three Pacific Island Countries who can export fish to the EU. This fish stock includes Tuna.
Fiji’s temporary arrangement with the EU on fish export expired on 31 October, 2007 based on the assessment of legislative requirements by EU’s Food and Veterinary Office (FVO).
In order to help Fiji start fish exports to the EU again, a Food Unit has been set-up by the cabinet that will be coined with the responsibility to facilitate compliance of the fish and the fisheries product ready for export with EU’s regulations.
The Food Unit will be established under the Ministry of Health’s Environmental section.

China's aid in Pacific Islands Countries

China has increased its aid the Pacific countries significantly over the past three years. Research has concluded that China aid increased from $US33 million in 2005 to $US 293 million in 2007.
Most of these funds have been promised to large infrastructure projects which will be built by Chinese companies, using Chinese sourced materials.

Pacific Island Governments will also receive some aid. The aid they will receive can however be used at will to finance any expenses or projects that they think are necessary.

Chinese into the Pacific Islands region has increased substantially in recent years. Such aid has been received with open arms by most Pacific Island countries who are much dependent on aid money. For some island countries, a dependency attitude has evolved over the years making them ever dependent on aid funds.

Some recent analysis showed that an increase in aid funds do not lead to a corresponding increase in economic growth. Please refer to the Forum Secretariat website for some recent analysis done by economists.

Contact Details for Gilbert & Samuels Company Limited

For those that wish to contact us, our office is located at 19 Rosi Street, Off Nasinu Road, Suva.

Telephone contacts are : (679) 3342719 or (679) 9921427.

Our e-mail address is : info@gilbert.com.fj. Pls do not use investinfiji@gilbert.com.fj. That e-mail address is no longer available.

Fiji and Tonga sign a new air agreement

The Fiji Government and Tonga signed a new Memorandum of Understanding regarding air services between the two countries.

The agreement allows the national carriers of the two countries to operate air services with maximum capacity of 1,000 seats per week with no restrictions on aircraft types and frequency of flights.

The agreement would help assist with tourism and tourist movement between the two countries and also with movement of cargo for imports and exports.

Fiji's carriers are Air Pacific, Pacific Sun and Air Fiji.

Government reduces tax threshold and removes duty on certain items

To help Fiji residents counter the rising cost of food prices (which is also being experienced internationally), Government has put in place some tax measures. These include :

• increasing the income tax threshold for workers to F$15,000.00 from the current F$9,000.00; and
• removed duty on basic food items including white and brown rice, tinned fish and cooking oil.

The Government has said that the moves are temporary measures only.

Read the related article in the Fiji Times which is reproduced below.

"Duty slashed, by Amelia Vunileba, Thursday, May 08, 2008

The interim Government has slashed duty on basic food items to fight rising prices.

In addition, the regime announced from June 1, the income tax threshold will rise from $9000 to $15,000.

This means 20,000 more people will be exempt from paying income tax.

It means the State will lose $20-million in tax revenue.

Duty on basic food items will be slashed to zero per cent in an attempt to arrest the rising cost of food and make it affordable for low income earners.

From June 1, there will be no fiscal duty on white and brown rice, tinned fish, including sardines, tuna and mackerel, other canned fish and cooking oil.

The removal of duty will cost the interim Government a further $1m.

The interim Government has resolved to remove VAT from all locally produced eggs for local consumption. But these policy changes are only a temporary measure.

Acting interim Finance Minister Filipe Bole said the changes were part of the interim Government's efforts to help low income earners in the face of rising food prices.

"This decision is the interim Government's response to the concerns raised by workers' representatives and civil society leaders and those representing the farming communities," he said.

Fiji Islands Revenue and Customs Authority CEO Jitoko Tikolevu said these changes would cost government $21m $20m from raising the tax threshold and $1m from zero fiscal duty.

He said they would have to work harder at collecting taxes. He confirmed that 19,000 to 20,000 people would now be exempted from tax following the rise in tax threshold to $15,000. Mr Tikolevu said 34,000 people would now be exempt from paying tax following the last tax threshold increase from $8840 to $9000 announced at the 2008 Budget in November last year by the interim Finance Minister, Mahendra Chaudhry.

The policy changes have been endorsed by Cabinet based on a submission Mr Bole made on Tuesday. Mr Bole said Mr Chaudhry, who is away overseas, was fully aware of this decision.

"This latest decision ... would mean a direct positive impact on low income earners who have been adversely affected with the rise in food prices," he said.

"Government will remove VAT from locally produced eggs for local consumption in an effort to ensure that people in the lower income bracket and those living at subsistence level have access to protein in their diet at affordable prices."

He said the average annual rate of inflation for the 12 months ending March stood at 5.8 per cent compared to 7.5 per cent for March 2007."