Economy

Fiji signs two private sector investment deals in Washington

The Fijian Government has signed two major financial agreements with the Multilateral Investment Guarantee Agency (MIGA) to encourage and facilitate foreign direct investment into the country. The agreements, the Use of Local Currency Agreement and the Legal Protection for Guaranteed Foreign Investment Agreement, were endorsed by Cabinet before being signed by Attorney-General and Minister for […]

DEPTFO

April 19, 2016 8:00 am

The Fijian Government has signed two major financial agreements with the Multilateral Investment Guarantee Agency (MIGA) to encourage and facilitate foreign direct investment into the country.

The agreements, the Use of Local Currency Agreement and the Legal Protection for Guaranteed Foreign Investment Agreement, were endorsed by Cabinet before being signed by Attorney-General and Minister for Finance Aiyaz Sayed-Khaiyum at a meeting in Washington D.C.

The agreements will enable MIGA to provide insurance facilities and security solutions for investments in large-scale Fijian projects. These new guarantees are designed to attract private sector investment by giving investors a range of options to protect their investments into the country.

These two landmark deals will boost investor confidence in Fiji, bringing more money and opportunity into our growing economy. A wide-range of sectors are going to benefit from these new investment protections, such as energy, housing, healthcare, agriculture, infrastructure development, and mineral extraction, to name a few.

The AG said these agreements were made possible because of increased international confidence in Fiji’s economic stability and are a credit to Fiji’s progress and sustainable development.

MIGA is an international financial institution and member of the World Bank Group that specialises in offering risk insurance and credit enhancements on foreign direct investments in developing countries.

Fiji has formally signed the US$50million (FJD$103,842,500) loan facility approved by the World Bank 16 months ago for improvements to the nation’s transport and infrastructure.

Signing with World Bank. (DEPTFO)
Attorney General and Minister for Finance, Aiyaz Sayed-Khaiyum during the signing with World Bank. (DEPTFO)

The signing ceremony took place in Washington during the current visit to the US by the Attorney General and Minister for Finance, Aiyaz Sayed-Khaiyum, who is attending the 2016 Spring Meeting of the World Bank and International Monetary Fund. The facility which was approved in December 2014 is Fiji’s first from the World Bank for 23 years.

This is a very significant day for Fiji, not only do we enjoy the confidence of the World Bank and IMF for our prudent economic management but with this facility, we now have more than $102 million Fijian at the current exchange rate to dedicate to improving Fiji’s infrastructure and the performance of our economy as a whole.

At a meeting with the AG after the signing ceremony, Fiji was praised by the new World Bank Vice President for the East Asia Pacific Region, Ms Victoria Kwakwa, for what she described as the innovative rehabilitation measures being implemented in the wake of Tropical Cyclone Winston.

She emphasises the importance of Fiji strengthening its resilience against climate change as part of its long-term growth strategy, as well as pursuing appropriate macroeconomic and social policies.

Vice President Kwakwa welcomed the World Bank’s reengagement with Fiji and expressed its willingness to support Fiji’s effort to strengthen its position as a Pacific hub for the economic benefit of the region as a whole.

She said the World Bank was committed to having a strong presence in Fiji and providing it with technical assistance, advisory support, and, if necessary, the provision of further facilities for social protection and development purposes.

For his part, the AG thanked the World Bank on behalf of the Fijian Government for its assistance and support. He went on to provide a detailed briefing on areas of potential engagement, including disaster rehabilitation, strengthening climate change adaptation measures, building a resilient economy, improving the effectiveness of social protection programs, assisting in the divestment of state-owned enterprises and developing fibre optic capability in Vanua Levu.

The AG updated Vice President Kwaka and her executive team on the rehabilitation and rebuilding effort in the wake of Cyclone Winston and outlined Fiji’s long-term strategy to strengthen its resilience to the impact of climate change.

He also repeated his call for changes to the present arrangements for funding climate change adaptation, which he said were impeding the ability of small and island states to gain access to concessional financing.

Fiji has called for new global arrangements to make it easier for vulnerable countries like Fiji to obtain funding to adapt to the extreme weather events such as Tropical Cyclone Winston that are being caused by climate change.

The Attorney General Aiyaz Sayed-Khaiyum with Fiji's High Commissioner to USA Solo Mara in Washington. (Solo Mara)
The Attorney General and Minister for Finance Hon. Aiyaz Sayed-Khaiyum with Fiji’s High Ambassador to USA Mr. Naivakarurubalavu Solo Mara with members of Fiji’s delegation to the World Bank/IMF Spring Session in Washington. (Solo Mara)

The call was made by the Attorney General and Minister for Finance, Hon. Aiyaz Sayed-Khaiyum, at the second ministerial dialogue of the V20 Group of Finance Ministers in Washington DC.

The ‘V20’ or ‘Vulnerable 20’ – which was founded last year – is made up of the top 20 countries who have been designated by the World Bank and International Monetary Fund as being at most risk to climate change.

Fiji was confirmed as a new member of the group at the Washington meeting and the AG took the floor to explain the special challenges Fiji is facing in the wake of the devastation caused by Cyclone Winston.

The AG said Winston was a clear demonstration of the vulnerability of small and island developing states to extreme climatic conditions and natural disasters, which were now occurring with increasing frequency and intensity. And urgent action was required from the international community to enable countries such as Fiji to gain proper access to adequate levels of funding to enable them to build their resilience to climate change.

There are certain anomalies that exist in accessing the present arrangements for concessional financing. In the case of Fiji, we are precluded from accessing concessional financing because we have been designated as a middle income nation. So in a sense, we are being punished for doing well.

But this needs to change because small and island states are extremely vulnerable. The impact of a single natural disaster can be a significant setback for the economies of these nations and it can take years to re-build and recover. So clearly, these nations need access to concessional funds and they should be made available as a matter of urgency.

The AG stressed – as he has at other recent international gatherings – that small and vulnerable states need to focus on adapting to climate change, such as strengthening infrastructure to survive extreme weather events, as opposed to adopting mitigation measures, such as reducing carbon emissions, which in Fiji’s case are negligible.

The small developing states are having great difficulty putting together bankable projects to build our resilience to climate change. While we recognise the important role that the private sector can play, we need a new emphasis on bankable project to overcome our challenges with economies of scale.

Fiji is suggesting that this could be addressed by exploring a regional approach to bankable projects. But climate change finance should also now be mainstreamed into development finance for small developing states.

The V20 gathering which took place during the 2016 Spring Meeting of the World Bank and IMF in the American capital ended with Ministers agreeing to translate their commitment into action and to continue to pursue transformative solutions to build climate change resilience for all affected nations.

They recognised the important role that Ministers of Finance play in addressing this agenda by mainstreaming climate change adaptation into national planning and budgets.

Fiji has shared its experience of confronting the challenges of development across a broad front at a gathering in Washington of Small to Middle-Income Countries in Africa.

Attorney-General and Minister for Finance, Mr. Aiyaz Sayed-Khaiyum, speaks at a seminar organised by the IMF and World Bank on development challenges in Africa, including adaptation to climate change. (DEPTFO)
Attorney-General and Minister for Finance, Mr. Aiyaz Sayed-Khaiyum, speaks at a seminar organised by the IMF and World Bank on development challenges in Africa, including adaptation to climate change. (DEPTFO)

The Attorney-General and Minister for Finance, Mr. Aiyaz Sayed-Khaiyum, was invited to speak at a seminar organised by the International Monetary Fund and World Bank on development challenges in Africa, including adaptation to climate change.

The AG ranged across the many challenges that Fiji had dealt with effectively, ranging from its climate change policies and Green Growth Framework to the reforms that had ensured the success of the national airline, Fiji Airways.

It was a great honour for Fiji to be invited to address this gathering of Small to Middle Income countries in Africa, who share many of our challenges but who are sometimes struggling to deal with them. This seminar was a platform for these nations to be able to swap experiences and learn from the experiences of outsiders.

Our invitation was a great vote of confidence in Fiji, which is seen as a progressive Small Island Developing State that is dealing effectively with its challenges and at the same time, making a disproportionate contribution to the global community.

The AG said he had ranged across the many ways in which Fiji had made the most of its potential and that African nations could learn from and perhaps emulate.

These include our civil service reforms, our partnerships with the private sector, the effective development of service industries like tourism, the proper management of a small national airline like Fiji Airways and even the changes we have made to our tax system and our fiscal year to maximise our revenue opportunities and the efficient running of our economy.

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