Q&A
FHL GROUP CEO NOUZAB FAREED NAZHAT SHAMEEM ON CORPORATE GOVERNANCE
ISSUE 02 • FEBRUARY 2014
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Business Melanesia February 2014
content
46
10 MSG economic integration on track investors enjoy 12 SPSE strong performance in 2013
14 Fulfilling Fiji’s Pacific hub ambitions 16 Pursuing Fiji-PNG opportunities Games: 42 Pacific Banuve
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Tabakaucoro
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Investing & forming strategic alliances
Understanding Corporate governance
a new business in 35 Starting Vanuatu
36 Managing the relationship 38 When women mean business
in Fiji and Vanuatu 48 Pride partnership AID work for Pacific 56 Making development
ISSUE 02
26
34 Putting Fijian Made on Facebook
Airways strengthens 24 Fiji Pacific network
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Growing with sustainable forestry solutions
business through 59 Improving technology
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The treasurer and the chairman
Business Melanesia February 2014
editorial
from the
editor Stanley Simpson
I know it is now February, but let’s raise our glasses again to 2014.
quicker to adapt to technological and other changes than its neighbours.
A year that holds so much promise for growth, business opportunities and expansion – and hopefully usher in an era of stability and development throughout Melanesia.
The Solomon Islands will also head to the polls around the same time as Fiji aiming to solidify the stability they have experienced following the intervention of the Regional Assistance Mission to the Solomon Islands.
If I am hoping for too much or being over-optimistic, time will tell. But for many in Melanesia 2014 is being seen as a watershed year. In PNG, the giant LNG project is expected to export its first shipment, while one, or even two other LNG projects could commence by the end of the year.
We should see a very modern looking PNG taking form – and it looks like it could be one free from betel nut. Fiji is set for a defining year. Elections will be held by September and some bold decisions and investments have been made in infrastructure, education and reforms. Fiji is setting itself apart by being innovative and strategic and being
Publisher Dixie Pombe Business Melanesia Ltd, PNG Editorial and Creative Design Business Media Fiji Ltd Managing Editor Stanley Simpson
Marketing Manager Tomasi Raikivi
Australia with a new government now established and the Foreign Affairs minister Julie Bishop seemingly ushering in a fresh approach, 2014 could be a year where we all decide, like all good friends do, to forget the squabbles of the past and look to the future. Like all friendships, it will involve some give and take from both sides. It is evident, in Fiji’s case that an attempt is being made to take things that way.
Writer Matilda Simmons Photography and Distribution Savenaca Viriviri Atonio Qumi Business Melanesia Magazine is published monthly by: Business Melanesia Ltd, PNG. PO Box 299 Boroko, NCD Section 29, Lot 19 Wards Road Hohola, Port Moresby, PNG Phone: (675) 7056 5593
Oh, and let’s not forget China. The Vice Minister of the International Department of the Central Committee of the Communist Party of China (CPC), Mr Yu Hongjun, led a friendship delegation on a three day visit to Fiji, and commended Fiji for finding its own pathway to the future. Old friends are renewing acquaintance and new friends are also coming. The United Arab Emirates signed off an agreement with Fiji in January that will see the UAE fund a renewable energy project in Fiji. All these happening in Fiji in January is a microcosm of what will take place across Melanesia in 2014. Melanesia will be a meeting place and a melting pot of opportunities. It will be the place to be.
Email info@businessmelanesia.com Advertising: traikivi@businessmelanesia.com For Editorial and Creative: Business Media Fiji Ltd Level 1, Garden City, Suva Phone: (679) 7070 545 Editorial: ssimpson@businessmelanesia.com Creative: creative@businessmelanesia.com
Copyright 2013 Business Melanesia Ltd All rights reserved. No part of this publication may be reproduced without the written permission of the publisher. Printed by: Quality Print Ltd. (Fiji)
ISSUE 02
Creative Director Germaine Lee
The MSG has described 2014 as its year of take off, and will see the beginning of the implementation of the MSG 2038 – “Prosperity for All” plan. There is much anticipation for their two major events of the year – the 5th Melanesian Arts and Culture Festival in PNG and the inaugural Melanesian Games in Kanaky New Caledonia.
New Zealand then hosted Fiji’s Special Envoy Brigadier-General Iowane Naivalurua, who was accompanied by Ambassador Isikeli Mataitoga, for a study visit on public service reform.
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The country’s infrastructure should also get a shake up with the allocations set aside in the 2014 budget, and the other constructions and facelifts being undertaken for the 2015 Pacific Games.
Vanuatu, on the other hand could mark a milestone this year if they don’t change their Government through a noconfidence motion.
Fiji Prime Minister Commodore Voreqe Bainimarama sent a congratulatory message to his Australian counterpart on Australia Day, and the Australians invited Bainimarama to Australia Day celebrations at the High Commissioner’s residence in Fiji.
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Business Melanesia February 2014
leaderboard
email board Include some job adverts Bula Stanley, Congratulations on the release of BM’s first issue. I bought mine early this month! I enjoyed the issue particularly the message by the MSG Secretariat and the key highlights for it’s future direction. The stories of our very own local businesses and business men and women striving to make it big in business despite the challenges was definitely inspiring. I didn’t know we had a millionaire in Ovalau ! :)
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If my humble feedback can be considered, perhaps include adverts for job openings from around the Pacific.
Picked up my first issue (Business Melanesia Magazine) yesterday. An easy read. I love its content of articles - economic development related for all Melanesians. I found the article on ‘The Billion Dollar Pacific Games’ very interesting. In this day and age, reporting on the business of sports is a need for sports administrators in the Pacific. I hope your team will continue to write more articles into this subject area. Already looking forward to the next issue.
APNGBC Breakfast with Australian Foreign Thurs Minister Julie Bishop – Contact APNGBC for bookings .
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Membership Fees are due – please contribute Fri and pay the BACA invoice. If you have not yet received your 2014 invoice please call Rachael Cook on Tel : 7200 0000 Ext 110 or Email : membership@pomcci.com
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Tomi Finau General Manager Fiji National Rugby League
L Qaqanilawa Operations Executive
A great start
POMCCI Executive Meeting – please forward any agenda items to Secretary Rio on rfiocco09@gmail.com
A great magazine and congratulations to you and your team. It’s nimble and focused which makes it interesting and alive - avoids the long and boring narratives. Excellent start.
Breakfast with Police Commissioner, Toami Kulunga and Australian Federal Police, RPYC, 0700hrs
Avenue to promote business Stan
Given the complex nature of our neighbourhood, I think the team have done a good job in tackling some of the issues and events in the region. I think your magazine can grow to become an important avenue in promoting business within Melanesia. I look forward to your next issue.
ISSUE 02
Bula Tomasi,
Port Moresby Chamber of Commerce & Industry
Keep up the good work and congratulations again to you and the team at Business Melanesia for this initiative.
Congratulations on your first issue of Business Melanesia.
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The Business of Sports
EVENTS
Regards Wah Sing Marco Polo Holdings Ltd
12 Weds
Best regards Peter Forau Director General Melanesian Spearhead Group
13 Thurs
18 Tues
25 Tues
Breakfast with Concept on Remuneration Survey Crowne Plaza, 0700hrs Breakfast with Dr Paul Holden, Asian Development Bank on latest Private Sector Assessment, RPYC, at the usual 0700hrs.
POMCCI SECRETARIAT
Business Melanesia February 2014
ANZ Pacific Monthly
News flow over the holiday period was unsurprisingly light. However, one story was noteworthy, confirming China’s commitment to the development of Pacific nations. The People’s Republic of China has reaffirmed they would provide USD1bn in soft loans and an additional USD1bn in special loans for infrastructure construction to help the development of the island nations, the Pacific Island Forum Secretariat reported.
Data releases were also light. Trade figures for reporting economies continued to show annual growth contractions, while inflation prints signal a relatively benign price environment. Credit and monetary aggregate growth remains on an upward trend. Reserves remain adequate across the Pacific.
AUD moves over the past few months have been rather sharp and Pacific currencies have been caught in the crosswinds. Through 16 January 2014, the AUD has fallen 12.0% from its recent peak on 23 October 2013. In the Pacific, volatility has also been a common theme during this time. From trough to peak,
Commodity prices have generally maintained their 2013 trends into year-end, with notable gains in the copra market. Gold prices continue to tread water with physical demand prior to Chinese New Year buoyant.
Pacific currencies have appreciated from 6.2% to 11.6% against the AUD. Even the basket currencies like the FJD (6.7%) and SBD (9.3%) have swung harshly during this period. As the market continues to reassess economic prospects in Australia, it’s difficult to time when markets will calm.
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CHART OF THE MONTH BUCKLE UP! PACIFIC CURRENCIES WHIPSAW AGAINST AUD
Although Pacific currency moves have been rather volatile over the past quarters (below) these moves have become less extreme over the past 30 days – in itself unusual, given less liquid conditions over the holiday period. That said, our house view remains for general USD strength over 2014.
Sources: Bloomberg, ANZ
ISSUE 02
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Business Melanesia February 2014
message
MSG forging towards economic integration by Mr Peter Forau, Director General, MSG Secretariat
The Melanesian Spearhead Group (MSG) economic integration is getting established and is progressing reasonably well. However it all started from a humble beginning in 1993 when the four members at the time (PNG, Solomon Islands, Vanuatu and FLNKS, excluding Fiji) established the MSG Trade Agreement (MSGTA).
ISSUE 02
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The Group was only 5 years old at the time.
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The Members identified three products (tea, canned tuna and beef ) to start trading amongst themselves. Despite pessimism expressed from many quarters regarding its viability, the Agreement survived and more products were added onto the list of tradables – the so-called positive list approach. In 1998, Group members were trading 180 products. Fiji joined the Agreement after it became a member of the Group in 1996. It was found that operating the positive list approach was a first step in MSG’s trade liberalisation efforts. Later the members agreed to graduate to the negative list approach, which essentially meant having to trade with everything except those goods on the list. Goods on the list would then be subject to tariff reduction over specific time-lines until zero tariffs are reached. The timelines varied for each member country depending on the status of its economic development and integration into the global economy. Opening of the markets has progressed considerably. To date, Fiji and Vanuatu have no goods on their negative list. PNG has only three goods (mackerel fish, salt and sugar) remaining on its list. Solomon Islands, being a least developed country (LDC), is still undergoing its tariff reduction up to 2017.
However, trade has increased. An estimate that was published in the recently commissioned MSG Secretariat report titled “The Study on the Implementation of the MSG Trade Agreement and Roadmap for Future Integration” revealed that intra-MSG trade has increased by at least 300%. This however represented an increase from a relatively small base. Recently, it was reported that the Pacific Island Countries, including the MSG member countries, have become a substantial market for Fiji’s exports. The extent of intra-MSG trade today is equivalent to trading under 90 chapters of the Customs Harmonization System and over 2,000 products. Apart from trade in goods, investment in MSG countries is on the rise. Investors are obviously taking advantage of the trade preferences that exist under the
Ministers and officials at the first MSG Trade Ministers Meeting in Fiji in 2013. From left – Mr. Patterson Oti, Solomon Islands High Commissioner to Fiji, Hon. (MP) Marcellino Pipite, Minister of Tourism, Industries, Trade & Commerce and Ni-Vanuatu Development, Mr. Aiyaz Sayed-Khaiyum, Fiji Attorney General and Minister of Trade, Hon. Richard Maru, PNG Minister for Trade, Commerce and Industry, Mr. Shaheen Ali, Fiji Permanent Secretary for Industry and Trade, and Mr. Moses Maladina, Trade Commissioner for PNG.
Business Melanesia February 2014
message
Intra-MSG trade has increased by at least
300%
It is evident that capital and labour is moving within the MSG. There is a need to free up such movement and remove impediments and barriers. Current rules of origin will need review as well. Even the flow of development capital has started. PNG is taking the lead. Congratulations to the PNG Government. Movement of labour is being assisted by the MSG-owned Skills Movement Scheme and by Fiji’s Volunteer Scheme. This is happening even before a Trade in Services (TIS) is negotiated under the MSGTA. It is possible that once a TIS is in place, a formal and binding agreement on semiskilled and unskilled labour for the Group could be negotiated.
These are intended to deepen and widen sub-regional and economic integration and to form a solid and stable foundation for economic integration to grow and prosper. When this happens, the MSG will be in a firm position to consider advanced economic integration mechanisms such as customs union, common market and monetary union. However, it should be noted that the MSG will learn from the experiences of other Regional Economic Communities around the globe and will devise its own deepened regional economic integration that will not only maximize benefits to its
members, but also optimize the Group’s effective integration into the wider Pacific region and to the global economy at large. In its integration into the Pacific region, the Group will be guided by its various pillars under the Plan, particularly Pillars 8 – 12. These will ensure proper and effective interaction and integration of the integration mechanisms of the MSG and those of Pacific regionalism, e.g. the MSGTA with that of PICTA. To enable all these, the MSG is establishing suitable and relevant governance structures. MSG Trade Ministers now report directly to MSG Leaders. The Ministers of Finance and Governors of the Central Banks of the MSG members had their inaugural meeting in 2013 and they will also report to the Leaders. Already, documents of their first meeting were being directed to looking ahead and preparing for the leap forward. The group is most fortunate to have Business Melanesia as a partner in this exciting endeavour.
ISSUE 02
The recently-approved MSG ‘2038 Prosperity For All” Plan lays the foundation and the pathways to future economic integration for the Group. The current text of the MSGTA (MSGTA3) provides for incorporation of a TIS, investment, trade facilitation and government procurement.
The MSG Eminent Persons Group (EPG) and officials meeting with the PNG Prime Minister Peter O’Neill in 2013. Sitting in front from left to right – Powes Parkop, Governor of Port Moresby and National Capital District, Prime Minister O’Neill, and the EPG chairperson Kaliopate Tavola.
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MSGTA and the potential that the MSG markets represent. The exciting aspect of this development is that MSG investors are taking the lead here.
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Business Melanesia February 2014
stock market
South Pacific Stock Exchange (SPSE) market indicators & activities
by Jinita Prasad CEO South Pacific Stock Exchange
ISSUE 02
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The stock market reflected a good year overall in 2013 with an average return of 9% from the market. Investor confidence boosted as a number of listed companies delivered positive performances in their latest financial reporting. That, alongside a strong dividend yield maintained by majority of the listed companies led to an influx of buyers in to the market during the year.
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The SPSE electronic trading platform facilitated trades of a total volume of 8.2 million shares and notes with an aggregate consideration of $12.7 million in 2013. Similar to the previous year, volume and value traded was boosted by one-off corporate actions such as takeover and mergers. Excluding one-off corporate actions and special crossings, 2013 recorded a total value of $4.3 million in trades compared to 2012 which stood at $3.2 million. Another major positive indicator for the year was the significant increase in the number of trades at a record 1,206 transactions during the year. This was an increase of 35.4% over the previous year. Number of trades helps assess investing at the retail level where small investors consider and invest in the stock market for their future financial plans. It also indicates the effectiveness of our investment seminars and various other educational programs
SPSE investors enjoy strong performance in 2013 carried out to promote the culture of saving and investing in securing one’s financial future. The number of trades was also boosted by the increase in manual reinvestments carried out onmarket.
Market Return The average total market return of 9% encompasses an average capital growth of 4.6% and an average current yield of 4.4%. Media companies led the key performers for 2013 as the radio conglomerate, Communications (Fiji) Limited (CFM) yielded a total market return of 40.5% followed by Fiji Television Limited (FTV) with a total market return of 25.4%. CFM also ranked as the top price gainer with 33.0% capital growth during 2013 while FTV was the highest dividend yielding security in 2013 with a dividend yield of 11.5%. The supermarket chain, RB Patel Group Limited (RBG), BSP Convertible Notes Limited (BCN), the restricted security, Fijian Holdings Limited (FHL) and FMF Foods Limited (FMF) yielded total market returns of 19.2%, 18.3%, 17.3%, and 12.3% respectively. While 14 out of the 18 listed securities witnessed positive market returns, there were a few disappointments during the year amongst which was Amalgamated Telecom Holdings
(ATH) which fell 17.1% in share price over the 12 months and had a negative total return of 10.9% in 2013. Paradise Beverages Fiji (PBF) and Future Forest Fiji (FFF) also had negative capital yields and no dividends paid out during the year. Kontiki Growth Fund’s (KGF) share price remained unchanged and having declared and paid no dividends during 2013, it had a zero return to investors. The Current Yields, Capital growths and the total Market Returns from the individual SPSE listed stocks is portrayed below: Security
Current Yield (Dividend/ Interest)
Capital Growth
Total Market Return
APP
5.0%
-1.4%
3.6%
ATH
6.2%
-17.0%
-10.9%
CFM
7.5%
33.0%
40.5%
FFF
0.0%
-1.3%
-1.3%
FIL
0.0%
7.5%
7.5%
FMF
2.3%
10.0%
12.3%
FTV
11.5%
13.9%
25.4%
KGF
0.0%
0.0%
0.0%
PBF
0.0%
-9.1%
-9.1%
PBP
2.2%
4.7%
7.0%
PGI
3.0%
0.0%
3.0%
RBG
5.7%
13.5%
19.2%
RCF
8.7%
0.0%
8.7% 5.0%
TTS
5.0%
0.0%
VBH
4.5%
2.7%
7.2%
FHL
6.2%
11.0%
17.2%
BCN
3.5%
14.8%
18.3%
FFFN
7.4%
1.0%
8.3%
Average :
4.4%
4.6%
9.0%
Business Melanesia February 2014
stock market Liquidity in the banking system remained fairly high keeping the time deposit rates low resulting in more investors looking for alternative investments with higher rates of return. Looking at some of the returns that the stock market has generated, investors are now seriously considering this as a medium to long term investment option especially in light of tax-free dividends for residents and no capital gains tax being applicable to gains made in trading of listed securities.
Market Indicators The total market capitalisation fell by 5.9% to close the year at $768.1 million following the fall in share prices of the two largest companies, ATH and PBF. The SPSE Total Return Index also dropped 1.5% during the period under review and concluded the year 2013 at a value of 1865.52. STRI Graph Equal Weighted Total Return Index Over 12 Months 31st December 2013 = 2652.01; +9.6%
Equal Weighted Total Return Index Graph
2700 2650
Market Capitalisation
2600
In terms of market capitalisation by security, ATH remained heavyweight encompassing 40.1% of the entire market as at the end of 2013. The five largest companies represented 78.8% of the market as at end of 2013.
2500
STRI Over 12 Months 31st December 2013 = 1865.52; -1.5%
2550
The pie-chart below depicts the contribution of each listed security towards the overall market capitalisation.
1950
2450
1900
2400
Jan-13
Mar-13
May-13
Jul-13
Sep-13
Nov-13 1850 1800 1750 1700
Jan-13
Summary of Security Trading
-5.9
SPSE Total Return Index (STRI)
1893.30
1865.52
-1.5
Equal Weighted Total Return Index
2420.21
2652.01
+9.6
891
1,206
+35.4
Volume of Securities Traded
19,864,444
8,153,923
-59.0
Value of Securities Traded ($)
118,997,018
12,740,088
-89.3
89.6% shareholding in PBF from Foster’s
ATH 40.1
PGI
2.0
Australia Limited (FAL).
PBF 16.2
RCF
1.8
RBG 9.5
CFM 1.4
FMF 8.6
APP 0.7
FHL 4.4
VBH 0.7
This trade in PBF was the largest trade executed on SPSE since its inception. Adjusting for this one-off corporate action, overall value traded in 2013 was higher than 2012.
FTV 4.1
PBP 0.7
Order Flow
KGF 0.1
For any further information, please contact South Pacific Stock Exchange on +679 3304130 or visit our website www. spse.com.fj.
ISSUE 02
FFF 2.2
New Order flow into the market had been buoyant with a weekly average consideration of $166,915 recorded, much of which has been buying
interest, as on average 56.2% of these new order flows was represented by an interest to purchase securities on SPSE. The upbeat in the new order flow combined with healthy trading statistics reduced the average buy to sell ratio to 1:2 in comparison to the buy and sell ratio of 1:9 at the end of 2012. This active order flow also indicates that a company with attractive prospects willing to float its shares may find a ready base of investors willing to take up the share offer.
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768,055,080
Cola Amatil (Fiji) Limited acquiring
FFFN 0.2
Nov-13
816,249,812
Market Capitalisation ($)
of $108.6 million resulting from Coca
BCN 2.8
Sep-13
% Change
(Fiji) Limited (PBF) with a consideration
0.5
Jul-13
2013
million shares in Paradise Beverages
FIL
May-13
2012
N.B - 2012 includes the exchange of 9.3
4.0
Mar-13
Key market indicators in comparison to last year are illustrated in the table below.
Number of Trades
TTS
However, the overall market movement was better depicted in the Equal Weighted Total Return Index that rose to 2652.01, an increase of 9.6% during the year. An equal weighted index weighs all the listed stocks equally without being skewed by companies with bigger market capitalisation to fairly reflect the direction in which the majority of companies have moved, regardless of their size.
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Business Melanesia February 2014
fiji export
Fulfilling Fiji’s Pacific hub ambitions by the Fiji Export Council The concept of hubbing may sound complicated and technical but in reality it is simply about putting convenient services in one nation and making it the centre of activity from which other nations will benefit. For instance, nations such as Kiribati or the Solomon Islands are still importing products from as far as Australia when Fiji is just around the corner. This would be a thing of the past if Fiji grasped and ran with the hub concept.
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Take for instance Singapore where they amended their education system and adopted a model that would create the ultimate national servant and modify their systems as they went along. They marketed their human resource as the driver of their economy and from there grew from strength to strength. Today after bearing the fruits of their wisdom, Singapore is an Asian giant and threatening other international financial and exporting hubs in the world as the latest economic raves reveal. However no one believed that one day the minnows would overcome the greatest of odds as Singapore did. Many would think the same way about Fiji. But we have a number of similarities.
ISSUE 02
Our education system has evolved over the decades and we are becoming well recognised in the region as a good pool of skilled and educated leaders.
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In the Solomon Islands, Papua New Guinea and Vanuatu many Fijians hold good posts in important sectors including government, finance, aviation and regional organisations. This is why the Fiji Export Council has been floating the idea of exporting a
Fiji can learn a lot from the Singapore experience but we have the advantage now of already being a technological hub of sorts in the Pacific skilled workforce or regarding our people as an asset, thanks to our competitive educational system that churns out thousands of qualified graduates each year.
Companies such as FMF Foods Limited and CJ Patel are already showing glimpses of what they can do if we have hub facilities in place, particularly with our port facilities.
Fiji can learn a lot from the Singapore experience but we have the advantage now of already being a technological hub of sorts in the Pacific, and can use this to place our own workforce in a similar position in a much shorter time.
The Fiji Ports Corporation Limited would gain more revenue from increased volume of container activity and use of its ports services, and more jobs would also be generated at the wharf area alone.
Fiji can benefit from hubbing for small island states and our neighbours who may not have the infrastructure and capability to export large volumes as Fiji does.
International banks such as the ANZ bank have relocated their main operations to Fiji, which is sending the right signals to potential and existing exporters.
If we had more bulk purchasing or repackaging for distribution, or centralise procurement where pharmaceutical supplies, milk rice, flour, cooking oil and edible biscuits are all bought and distributed from Fiji, we would be expanding business to meet the demand.
However at the same time we need to take stock of what we have and what we don’t have before we move forward.
Our shipping costs compared to the major metropolitan ports like Sydney, Brisbane and Auckland would be less as our location to destinations such as Tonga, Solomon Islands, Vanuatu and Samoa are much closer. This would mean higher volumes and better frequency. Companies such as Williams and Gosling are already warming towards such a hubbing centre, building a container yard city on the outskirts of Suva.
This means reducing the cost of doing business, which is a major constraint faced by our manufacturers. Costs including transaction fees, utility, minimum wages, transportation, telecommunications, rent and port costs to name a few are areas that the Council believes need to be addressed to make the export business more attractive. Increasing external costs has in turn increased the cost of production and final products and this in turn has reduced profit margins. There is also a need to look at how accessible financial services are and whether banks could be a bit more accommodating to our struggling exporters.
Business Melanesia February 2014
www.moresbyapartments.com
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P.O.Box 30 Waigani, Lagatoi Place, Port Moresby, NCD, PNG Ph +675 323 4561 Fax +675 3234579 Mobile +675 70706545 Email info@moresbyapartments.com
ISSUE 02
Stay rewarded at an affordable & quality accomodation in your own privacy.
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Business Melanesia February 2014
trade talk
Pursuing Fiji-PNG Opportunities The Fiji PNG Business Council was revived after a number of years of inactivity in May, 2012. This revival was led by Investment Fiji who called the first meeting and formed a committee to revive the Council. The first meeting of this committee was held in late 2011, leading to our first annual general meeting in May, 2012.
By Kevin McCarthy President, Fiji-PNG Business Council
The Fiji – PNG Business Council was formed to promote trade, commerce and investment between Fiji and Papua New Guinea. The Council is an independent association of businesses based in Fiji who have a common interest in fostering business relations between the two countries
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The objectives for which the Council is established are: To represent members of Fiji and Papua New Guinea community engaged in business or commerce. To promote, encourage and provide for joint consultation between members of the Council on all matters of national and global interest. To protect and advance the interests of the Fiji and Papua New Guinea community in matters dealing with the economy, government and international organizations. To promote and encourage ideals on honesty, fair-dealing and integrity within the Fiji and Papua New Guinea business community.
ISSUE 02
To secure to the members of the community all the advantages of unity of action.
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To promote and encourage investments in Fiji and Papua New Guinea so as to stimulate and encourage employment opportunities for Fijians and Papua New Guineans.
To act as a non-political lobby group for the purposes of ensuring that the interests of Fijian and Papua New Guinea entrepreneurs are protected, safeguarded and provided for within policy framework and development plans formulated by the government of the Republic of Fiji. To negotiate and secure Government commitment to provide proper and meaningful support for the purposes of enhancing Fijian and Papua New Guinean participation in all aspects of commerce and trade. To liaise, consult with and advice Government in regard to development and formulation of policies and plans designed to secure the advancement of Fijian and Papua New Guinean participation in commerce, and trade and private enterprise. To advice and persuade statutory bodies and private enterprise to support encourage and use the services of Fijian and Papua New
Guinean enterprise and commercial organizations and support the development thereof. To develop communication and contact networks between members so as to enhance and further the commercial prospects of the Fiji and Papua New Guinea business community. To provide a forum whereby members get to know one another and share business ideas and experiences. To advice, create awareness and encourage members of Fiji and Papua New Guinea community to actively participate and contribute to the cultivation and encouragement of Fijian and Papua New Guinean entrepreneurship and participation in business. To help and contribute to the development and integration of a harmonious and peaceful multiracial society within Fiji and Papua New Guinea.
Business Melanesia February 2014
trade talk
In our second year of operation, we now have over 80 members to the PNG market for Fiji businesses and opens great opportunities. The opportunities in 2014 for Fiji businesses remain very strong. While there has been some slow down in the PNG economy as the construction phase of the first LNG project completes, we hear great news about a second LNG project in the Gulf Province which could be as large as the first project.
We were very proud to work with the Ministry of Industry and Trade and Investment Fiji to bring about a successful Trade Mission to PNG in April last year. This gave our members a great opportunity to showcase their products and make valuable contacts for future business opportunities. In our second year of operation, we now have over 80 members. Also last year, we received the great news that the MSG trade agreement had been formalised with only 3 items on the negative list. This gives duty free access
A significant challenge for businesses trading with PNG is shipping, customs and quarantine. Frankly, the current volumes of trade cannot justify a stand alone direct shipping service. We therefore need to think of innovative solutions to capitalise on shipping traffic out of Asia to achieve this and ensure there are viable volumes.
In terms of activities for 2014, we are hoping to have another trade mission. This could hopefully coincide with the appointment of our new Trade Commissioner. We will also look to hold more frequent networking events in Fiji with interesting speakers that can talk authoritatively about doing business in PNG. For those wishing to join the Council, they can contact the Secretariat at Investment Fiji for a membership form. We also have a web site on www.fijipng. org. This is a work in progress at the moment, but we hope to have it fully up to date and functional over the coming months.
www.businessmelanesia.com
Kevin McCarthy
The appointment of a Fiji Trade Commissioner to PNG is a very important step in the process to building trade and investment opportunities. A Trade Commissioner will be able to facilitate visits by Fiji businesses and ensure that they meet the right businesses and people to make a successful deal. This can be very challenging in PNG with logistics around arranging appointments being very challenging. We applaud Government’s initiative to appoint this position and have offered to help in any way with the appointment process to ensure we get the best candidate.
Customs and quarantine remain a challenge and we will work with the relevant authorities to streamline and clarify the correct procedures.
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Business Melanesia February 2014
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cover story
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Business Melanesia February 2014
cover story
a treasurer and a chairman Don Polye’s journey from the Highlands to become his country’s Minister for Treasury and World Bank and IMF Chairman by Stanley Simpson
The K15.1 billion 2014 national budget he delivered last November is the biggest ever in PNG’s history. He is a prime political player in the byzantine and often murky world of PNG politics – leader of the Triumph Heritage Empowerment Rural Party (THE) that won the second highest amount of seats in the 2012 elections, and a man who can swing the balance of power or turn the status quo on its head. A survivor that emerged with his hand strengthened after the political brawling that accompanied the removal of Sir Michael Somare as PNG Prime Minister in 2011.
but also very scary too. In those days corporal punishment was around, and if you did not behave in class, you received the cane.”
PNG Prime Minister Peter O’Neill noted that Polye’s appointment was recognition of his leadership and talent by his peers, as well as PNG’s increasing role as a major player in the region.
(Polye acknowledging that he did receive the cane a lot.)
Business Melanesia could not get a time with Polye when we were in PNG in November last year as he was preparing to present the national budget – however by a stroke of luck we walked in on an IMF meeting in Vanuatu a few days later and who was there representing PNG and presiding over the gathering but the chairman himself. There – in the lobby of the Vanuatu hotel Polye was cornered to tell Business Melanesia of his journey from Enga in the highlands of PNG to be in charge of the nation’s purse strings and ultimately chair of the World Bank and IMF. “I grew up in the village, life was tough, we didn’t have the modern things in life,” Polye says of his early years. “As a young boy I had to fetch water from the creek, dig for taro in the garden, carry firewood from the bush into the house for our mothers to cook.” “We faced many challenges.” “School was a very new thing for me. I started school in 1975 and did my first year as a small boy in Avi Community School, Mt Hagen in the Western Highlands. School was very interesting
“I then went on to secondary education at Mt Hagen High School in the Western Highlands. To be honest, I went to school for the sake of going to school. There were not many inspirational things to look forward to at the time. There were not even many vehicles around - maybe one or two in a day so there was nothing really there to inspire you, there was no major focus then.” However things started to change in the later years of high school as Polye began to develop a sense of the world around him. It was construction and engineering – not the world of economics and finance he is in now that first fascinated him. “I did not really pursue economics as a major area to study, I chose to become a Civil Engineer,” says Polye who has a Bachelor’s Degree in Civil Engineering from the PNG University of Technology, and a Masters of Business Administration (MBA) from the Southern Cross University in Sydney, Australia.
He built a career as a successful engineer – starting off as a project engineer for the Department of Works, Project Manager for construction company Curtain Brothers on a number of major projects, before becoming a successful private 19
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In October last year he was sworn in as chairman of the International Monetary Fund (IMF) and World Bank at a ceremony in Washington, primarily to preside over its annual general meetings.
The chairmanship is selected by fellow Governors of the IMF and World Bank who are essentially the Finance Ministers of member countries.
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As someone who manages the budget of the Pacific’s biggest economy, PNG Treasurer Don Polye is constantly in the spotlight. He has delivered three national budgets under two Prime Ministers – and as Minister for Treasuries currently directs where the money goes and when, not always without controversy. Other portfolios he has held at some stage of his political life include Foreign Affairs, Immigration, Transport, Civil Aviation, Finance, as well as a brief stint as Deputy Prime Minister.
Business Melanesia February 2014
cover story
consultant for the Department of Works and other contractors. Ultimately however - politics beckoned. “I saw my country, and the district where I came from, the place where I was living in the Western Highlands and also my province and I did see that there was a lot of developments that needed to be done,” he says.
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“There were a lot of leaders at the time and I pay respect to them. They were honest and upstanding, doing their best to drive things but I saw that leadership had to be developed, we needed in PNG a different type of leadership to adapt to modern conditions.” “When my people asked me to stand for elections, I reluctantly agreed because I didn’t want to lose my profession as a civil engineer at the time. However my people told me – ‘look you’re the only person man enough to bring development into our electorate and make a contribution to our national politics and the development of PNG’.” There is no question that Polye has the support of his people. In electorates that have always been competitive – the proof of his popularity is in the fact that he has won the three elections he has stood in on the first count. “I won in 2002, 2007 and in the recent election in 2012 – all won by Primary Votes,” says Polye.
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“In PNG the election is done through Limited Provincial Voting (LPV)– I’m the only one in PNG who has won three times through Primary Votes. So it’s an honor to have people have that much faith me.”
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One thing Polye has done successfully is mobilise his network with development agencies and partners to further development – a skill those around him say he is quite adapt at.
Polye acknowledges that support. “I thank those that have worked with me, development partners such as the World Bank, Asian Development Bank, AusAid, EU, and JICA. I have worked with these people to put Programs together to help my electorate and the nation as a whole.” “I have been Treasurer almost three years. I was first appointed as Treasurer in 2011. I’ve delivered the PNG budget about three times now. The 2014 budget that was delivered on the 27th November 2013 – that was my 3rd budget. Polye acknowledges that he is handling the national budget at a time PNG is experiencing an economic boom – but says a lot of challenges and discipline is required in the years ahead to ensure the nation’s wealth is not squandered and lasting development projects are implemented for sustained economic growth. “I have handled the budget under two different Prime Ministers,” says Polye. “When Prime Minister Somare came into power in 2002, the PNG economy was in shambles.” “We were in recession, there was no micro economic stability, inflation was high, hitting the roof, the interest rates of the bank was also very high and business was not improving in the country. It was so very hard to encourage investor confidence to invest and grow the economy.” “We had to put in very stringent micro economic stability policies in place and at the same time drew an aggressive exit proven strategy and business investment strategies.” “The last 10-12 years hasn’t been easy but we’ve earned our micro-economic stability. I came in at that time, at the turning point when we started to
introduce some interventions. What was happening in the world at that time also helped, there was huge demand in the world for PNG commodities and so forth.” “So PNG’s economy improved through the demand coming from outside PNG and PNG’s own strategic interventions. Debt has gone down 35% of GDP, inflation is down to below 4%, and our employment is up, business confidence has grown and foreign reserves has amounted up to 8 billion kina.” Towards the end of 2013, the value of the sliding kina spooked many business and analysts across PNG however Polye confidently predicts that will be a temporary blip. “You would expect those kind of happenings toward the end of the year and also at the end of the construction cycle of a major capital project like the LNG project. Now when it’s winding down you find the businesses will have to do imports to provide some of the needs within the country and businesses will have to pay dividends in foreign currencies to investors and so forth.” “There are some other businesses and investors that are expanding from PNG to other places as well, so you find the demand for foreign currency coming up because of the import demand, therefore that will put some pressure on the kina.” “What we have done is, we have had very close dialogue and consultation with our Bank of PNG, which is an independent entity, about putting a billion dollars worth of foreign currency into the economy to stablise the kina. When the first shipment of the LNG project comes out in 2014 you will find the demand for PNG kina will be up and therefore should be good.”
Business Melanesia February 2014
cover story
Another issue that has to be decided on in the next few weeks, if it has not been decided by the time this magazine goes to print is whether PNG will buy back its shares in the Abu Dhabi based Oil Search that was used as an ‘exchangeable bond’ to fund the PNG Government’s shares in the LNG project. Polye says the PNG Government is weighing its options. “There are so many ideas and notions floating around, at the moment we have not firmed up on Government’s decisions here. The question is do we buy back the shares from Abu Dhabi? Is it cost effective and is it the best business practice and best alternative for PNG, or should we invest in other areas?” he contends.
“So in essence we are assessing it, the decision should be made very soon.” “The main issue we are considering is – do we buy back our shares from Abu Dhabi? 15% shares – worth US$1.96 billion or so. Or do we not do that and invest in some other areas?” “However let me just say one more thing, we have other major investors coming up in the resources sector. We would like to see a second LNG project, another big copper mine, other pockets of gas we are seeing in the Western Province and the Gulf project, which are coming up in the pipeline.”
“Also what worries me are the structural reforms that we need to do including the modernization of the public service sector. If those internal issues are not sorted out then we’ll see a misalignment of government delivery, to grow the economy.” “If there’s no fiscal discipline, you’ll find money spent all over the place, blowups in the debt level and we could go into micro-economic instability, and the beginning of recession. However I’m happy that we’ve put in place stringent policies and guidelines that ensure that such is not the case. “I’m happy so far but I’m always vigilant in my mind that there’s no complacency on this, that it’s got to be soundly managed.” Polye is proud of his tenure as IMF and World Bank chairman.
What makes me worry is the loss of fiscal discipline and loss of microeconomic stability
“It’s a humbling thing and an honorable thing to be appointed as Chairman especially for PNG and to the Pacific island region as it is the first time that the World Bank and IMF has recognized a Melanesian person to hold such a position. It’s an honor for us,” he says. “I will do my determined best to serve in the position aiming at two things; first is how we as Pacific island nations can contribute in a small way to the global economy by the kind leadership we provide in the region, and secondly by leveraging this position which I occupy, what I can do for the Pacific Island community and PNG.”
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“As Treasurer of PNG I’m making sure that these projects come on board.”
“What makes me worry is the loss of fiscal discipline and loss of microeconomic stability,” says Polye.
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“At the moment what my Department is doing is looking at the papers and various options we have available and we can then come up with the best possible recommendation to the Government, whatever we believe is the best business proposal for PNG.”
While the economic forecast looks bright and exciting Business Melanesia asked Polye what continues to concern him the most?
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Business Melanesia February 2014
message
Supporting growth and reforms
Interview with Min Zhu, IMF Deputy Managing Director wikimedia
How involved is the IMF in the Pacific? The IMF is greatly involved in the Pacific particularly in the areas of policy or financial programs. We provide macro policy consultations and macro policy assessments to help countries in the region form their own policy because macro stability is the most important thing for a country. We also provide technical assistance. We have had a technical assistance centre in the Pacific for 20 years now, as capacity building is important for the small countries in the region. So gradually we help Governments in building their capacity in areas such as tax, administration, revenue process, expenditure, financial regulation and such.
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We do a lot of training for the region. We also do multinational surveillance, so we bring in the international picture to the region which is important as the region is part of the whole world. Last
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but not least of these important issues is that if the members are in need, we provide financial support. You mentioned the importance of macro polices for the region can you give us some specific examples? Take for example tax policy – How do you set the proper tax rates? How do you class tax, how do you tax income tax or VAT? You make sure the tax collected is enough revenue to support the Government, to support the country, but you don’t want to over tax anyone. You may want the burden of tax to be evenly shared among the rich and poor. You don’t want it to be shared only among the poor people or only among the rich. Those are very important issues. The tax policy is a very important issue for a country. What do you see as priority areas for the region? It’s growth. Let me emphasize sustainable economic inclusive growth.
There are two sides of policy. The first priority is still maintaining macro stability, if you have macro instability where inflation is high, you would not be able to do it. The second issue is - you need structural reform, you need investments in infrastructure, investments in education, investments in capacity building, you need to improve the business environment to bring in more private sector to do that. Those are the two major priorities that can be addressed for 2014 by the region. How would you describe the IMF’s relationship with Pacific island countries? We have a very good relationship with the region. We are committed to the region. We have a new agenda which is based on cooperation between the IMF and the region. We aim to lift the profile of the region.
Business Melanesia February 2014
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FOR MORE INFO CALL: FOR MORE INFO CALL:
Arveen Anand 9922101 or Edwin Sharma 9929101
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Arveen Anand 9922101 or Edwin Sharma 9929101
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Business Melanesia February 2014
cover story
Fiji Airways strengthens Pacific Network New services to enhance regional connectivity Fiji Airways has announced further strengthening of its regional network with two more additions to its South Pacific schedule. The Fijian National Carrier will introduce a new direct weekly service between Nadi and Honiara as well as a third weekly service between Suva and Funafuti.
Stefan Pichler
Starting June 21st, Fiji Airways will operate a third weekly flight on Saturdays between Suva and the Tuvaluan capital to complement its Tuesday and Thursday services. The flight will be operated by subsidiary Pacific Sun (soon to be ‘Fiji Link’) using its ATR 42-500 aircraft.
“We revealed during our Five-Year Masterplan announcement recently that the South Pacific region is a key growth target for Fiji Airways, and we will increase capacity to the region by almost 90%,” says Fiji Airways Managing Director and CEO Stefan Pichler. “These two additions to the schedule are part of that plan. The direct Honiara service and an additional Funafuti service will strengthen our already comprehensive regional network.” The airline also announced that it will have six flights a week between Fiji Samoa and Fiji – Tonga, and five flights between Fiji and Vanuatu by mid-2014.
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On Saturdays starting July 5, the airline will operate a direct service between Nadi and Honiara, departing in the afternoon and returning the same evening using its B737-700. This is in addition to the Fiji Airways continuation service (Nadi
– Port Vila – Honiara) on Tuesdays, and the Saturday direct Nadi-Port Vila services.
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“We now connect the Pacific Islands to key long haul markets like United States and Hong Kong on our own network like no other airline does.
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“We now connect the Pacific Islands to key long haul markets like United States and Hong Kong on our own network like no other airline does. This presents people of the Pacific increased opportunities for business and leisure travel beyond the region, as well as connect visitors from the United States, Hong Kong, Australia and New Zealand to these countries,” says Pichler. “It provides added impetus for business and trade to our friends in the region through our Nadi hub. We strongly believe in the growth potential in the South Pacific. Our Five Year Masterplan highlights our commitment and underscores our desire to remain the leading network airline in the region.”
Business Melanesia February 2014
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profile
Business Melanesia February 2014
Investing and forming strategic local alliances Fijian Holdings Ltd (FHL) Group CEO Nouzab Fareed has presided over a big investment year in 2013. He talks to Business Melanesia about FHL’s strategies for growth across the region in 2014.
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Please outline the state of affairs at Fijian Holdings Limited and what we should expect in 2014? 2013 was a very big year in terms of our investments. We invested close to $87m. We acquired South Sea Cruises, we acquired Fiji TV, and as a result of that we also got Media New Guinea from PNG (operators of EMTV). We made a lot of investments but at the same time we needed to clean a few other portfolios that were inefficient investments or non-performing investments. A key one was FHL Logistics, we had to close it off or sell it off. I can tell you now that it is absolutely closed, the day before Christmas, we closed FHL Logistics.
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There was no sale there. From its assets we gained the value of just less than a million. I think that is a blessing in disguise for us. We need to contain our profitability. Our challenges are in PNG. We are expanding in PNG, we are investing a lot in PNG. Within the next 6-12 months, our plans are also to go to Solomon Islands and Samoa in terms of media.
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We will undertake both Pay TV and free TV in the Solomon Islands - which is almost 50 percent done but for Samoa we’re still waiting for the license. Both will be joint ventures with local parties.
Business Melanesia February 2014
profile We’ve always believed in strategic alliances. We’ll go with the partners in that country. We strongly believe its better to partner with a local corporate entity. That is where we are now. We are also looking at replicating some of our success in Fiji in other Pacific countries in terms of finance companies, media companies, retailing companies and such, so we are looking at ways and means of doing it. We export a lot of building and construction materials such as cement and concrete products. We have always believed that our success in Fiji can be replicated. For instance in PNG we have restructured the organisation in such a way that there’s a holding company, and there are small subsidiaries so maybe in the years to come the holding companies in PNG can be shared with the locals.
You are looking to find a local partner for Media New Guinea? Yes. There’s room for joint partners with PNG. We are doing the same with TV New Guinea. I was in PNG in early December and there’s a lot of room to improve there. We have seen the media quoting that what is happening in PNG is government related but it is not really government driven. FHL is a large investment company. We are law-abiding citizens so we follow all the rules. If the law changes, then we will abide by it. In these joint ventures and partnerships – does FHL insist on being the manager?
We’ve been looking at that but looking at PNG, it’s a different model. The model in Fiji does not work in PNG. It’s a totally different business. Therefore we need to reengineer that model to suit PNG. The same concept may not work in PNG. In PNG, there are a few like that but security is a big concern. It is different in the way it is structured. You can’t have up to 5 supermarkets. Only in Port Moresby you can have one or two like that, but in other areas it is basically wholesale. This model won’t work and the cost of living is exorbitant. So we may not replicate the same thing. There’s a cost of doing business in PNG. It’s very high there. Within Fiji we are looking at establishing a cinema, in Nadi on one of our own properties. RB Patel is carrying this out. It’s a small investment that will start in the next 4-5 months. It should start before June at this stage. The Nadi Jet Point is a place on its own. It has a supermarket, building complex, two bars and other auxiliary businesses. We need to have a crowd coming in. So we want to have a cinema to pull the crowd in. Is there enough income, buying power in Fiji when there are similar services around such as the new Damodar cinema? The disposable income in Fiji is high now compared to 5 years ago. We have become a consumption driven economy. Investment is yet to pick up. The propensity to save is less in Fiji. If you got $100,000 and you save, next year how much you will get? Do you know that you won’t get $4000? So it’s much better to consume.
People are keenly watching your acquisition of Fiji TV. You have undertaken some key restructuring of the company? It is the norm of any industry. Any acquisition requires change, so we change. If the change is not accepted by the customers and public in general, then we change. For instance we realised the Sky (bill) was too expensive so we reduced the monthly bill and increased our subscription base overnight. We still believe there’s room to reduce further, it is a place where you can reduce and give more. So we’ve reduced the subscription per month but we’ve increased the number of channels. We still believe in increasing the number of channels. In PNG for 100 kina you can get 100 channels. So there is a possibility to do that in Fiji as well. We strongly believe that media not only entertains but it should be info entertainment, so I’m sure that’ll be a positive impact. Hanging over FHL right now is the perception that the Fiji Government is driving and controlling everything, dictating everything with regards to FHL. What would be your response to that? It is not true. FHL is a public listed company owned by 1310 shareholders. 66 percent is owned by two statutory bodies - Indigenous Affairs Board and Indigenous Trust Fund. There is no Government influence as such but if you do a mistake, of course you are answerable to shareholders. It has happened in the past, so they keep an eye on you. It doesn’t mean they keep telling you what you can and cannot do.
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It depends. For instance even in Fiji our expertise lies in finance, properties, stock broking, unit trust and things like that, all the other entities are joint ventures. Our cement company is a joint venture, our retail company is a joint venture, so the success of Fijian Holdings is largely attributed to finding the right partner.
You mentioned replicating your success here in other Pacific countries – are you considering replicating your retail outlets such as RB Patel? Is there room at looking at something along those lines?
Government is encouraging a consumption driven economy. That is why things have changed.
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That is the way to earn success. It’s not nice to go there and take all the profits. It’s important to work with the locals. We are basically replicating the model of FHL.
It’s always better to go with someone who knows the business very well, who has the local knowledge and the industry expertise.
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Business Melanesia February 2014
profile FHL investments in the Fiji economy
of the road materials used in Fiji are supplied by FHL. We see the road development as a great benefit to all our people. A road can do much wonders for future investment. That is where every country’s focus should be – it’s infrastructure development. I think Government is doing the right thing. What keeps you awake at night? One of the attributes or traits of our company is that we’re a very large company. We have investments in 19 companies, so there is constantly a problem in every company. If the problem is solved in one company, another one springs up.
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So your decisions are driven specifically by business considerations? This company is driven by business decisions. If an investment has growth potential, we go for it. If the business is non performing, we’ll divest it. I’m answerable to my shareholders whoever they may be. I get paid by them to run it with the board of directors in such a way to make money. This company started with something like $22-$24m thirty years ago. Today we have total assets worth around $100m. So it’s growing, which it has to. The day that growth stops, that’s the time that they should say that the CEO should go. Simple as that. So the relationship with Government is very positive, but positive relationship does not mean influence. We always respect the Government of the day. It’s the law.
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Have you responded when Government has asked that you invest in certain sectors?
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The Government may look at the investment needs for the whole
country. They are looking at tourism and agriculture. For us to invest in agriculture, we need to have a good partner. We have not found a right partner. We have looked to China, Malaysia, Taiwan and other countries for some large scale commercial farming entity to partner with us, as FHL do not have expertise in agriculture. For instance if you’ve got a good pineapple farm or potato farm that can do commercial fruit farming, or vegetable farming or someone with 100 acres of broccoli farming, yes we can go with that. In PNG too if you go to Mt Hagen, you can see the quality of the strawberry and broccoli. Their issue though is logistics, how to bring it down. But in Fiji with Government’s investments in infrastructure, we see a lot of potential. Do you provide advice to Government on policies they can implement? As a listed company, yes. Basically during budget times we make submissions. If we are having difficulties, definitely we give them information. We’re also a big player in road development. Most
It’s normal. I don’t think it gives me any sleepless nights. That is what I think I’ve learnt through my time here. This is my 10th year at FHL, so I’ve learnt enough. Having a problem is normal for us. You’ve been at FHL for 10 years, started as Chief Financial Controller to now be CEO…what have been some of the chief lessons you’ve learnt? Very simple – If you do the right thing, you will stay longer. Your integrity should not be questionable. Be honest and hardworking and listen to your shareholders. If I can’t make them happy, I can’t be here. For the last 3
Invested close to
87M
$
Shareholders
1310 66%
owned by 2 statutory bodies
Business Melanesia February 2014
profile years since I took over, there has been a lot of developments in the business. I’m not scared to say that I’m totally indigenous focused. It has to be because that is my shareholders wish. The purpose of FHL was to facilitate commercial participation of indigenous people.
We were going for the giant leap rather than just a simple jump. We were looking at too fast a growth. It was too big for us at the time. I don’t think we’ll make another mistake like that again. What has been done to bring about the stability you have now?
A cloud hanging over FHL is the failed attempt to purchase BP South West Pacific – what happened there?
What we have learnt in the past 30 years or so is that FHL has a unique organisation culture. We recruit people at a low level position, and those people will work their way up. That is the way forward at FHL. If you bring somebody from outside it won’t work well. For example within the period 2008 to 2011 at least 6 or 7 general managers had to leave FHL for the simple reason that they were recruited directly. Direct recruitment has failed, because you can’t work with this culture.
It was a bad timing. The deal was a really good opportunity, however it was too big for FHL to absorb at the time. We took that as a good lesson though.
I strongly believe at creating jobs at low level ranks and then train them. Some of my staff have gone to Harvard and Kellogg School of Management. We
So I’ve been increasing the capacity of the staff. We employ 1350 staff. More than half is indigenous and we are increasing that capacity. I believe in gender equality as well. But I’m not afraid to say that we are biased towards the indigenous people when we employ people. As this company is geared towards that.
This company is driven by business decisions. If an investment has growth potential, we go for it. If the business is non performing, we’ll divest it. have about 15 staff doing their MBA, another 8 or so doing their CPA. They are all being sponsored by the company. So I think we are doing what is right, we are creating a talent pool within us. We carve out top business people for the years to come. We spend a lot of money on training, we have sent hundreds of staff for training, including my cleaners. People who clean the garden, the property managers, the receptionist, they have all gone for training. We continue to invest in them.
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Some of Major Project in PNG in 2013 include the ● ● ● ●
Jackson Airport Domestic Aircraft Pads New CPL Ware house floor and columns at Gerehou NCD Kerb works around POM Pactrade building Hohola
Ph: (675) 342 6016 office, (675) 7390 8482 sales Email sales and queries: mdogo@ gmail.com
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PO Box 445 Waigani NCD Sect 34 Lot 35 hohola
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Business Melanesia February 2014
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Business Melanesia February 2014
Understanding Corporate Governance and Corruption
Former and
Fiji
former
High
Court
Director
of
Judge Public
Prosecutions (DPP) Madam Nazhat Shameem left the bench in 2005 to start her private practice with a focus on legal training and strengthening institutions. Madam Shameem who was Fiji’s first female judge and first female DPP has conducted training on enhancing legal advocacy skills for lawyers, and enhancing the commitment of both private and public institutions to the principles of the rule of law.
What do you see as the major corporate governance issues facing businesses in Melanesian countries? Nazhat Shameem: In terms of corporate governance, one of the biggest mistakes made by businesses and corporate bodies is that they do not proceed on a risk-based analysis of their businesses. They know the problems that they have in governing their corporate organisation, yet they don’t factor them in when they are planning. For instance we all know what a family funeral means in Fiji. We know that people need to go away and attend to their cultural responsibilities and all of that and yet there are very few corporate organisations that have a policy on funerals. Employees are caught between their cultural responsibilities and employment responsibilities. A lot of employees end up
I think a major mistake made by corporate bodies in Melanesia is that they don’t factor in all of the risks in conducting business in Melanesia with our cultural obligations and the kind of people that we are. Another challenge is our attitude towards corruption. Many people don’t really understand what corruption is. There are many businesses that think corruption is only about taking bribes or giving bribes. But corruption is much broader than that. It encompasses things like corporate hospitality, by giving free Hong Kong 7s tickets to Permanent Secretaries, and free hotel accommodation, it encompasses things like when you are tendering for a government contract and you take the person who’s on the tender committee out for a drink - there are a lot of people who don’t think that is corrupt. The third problem is the lack of legal compliance. There are many bureaucratic rules to do with businesses such as business licenses for extension of buildings, permits and such.
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Business Melanesia sat down with Nazhat Shameem and posed a few questions on corporate governance and accountability in Melanesia.
lying so that they can attend to their cultural responsibilities. They shouldn’t have to be lying about it because our cultures form a part of our lives.
Now it is generally known what the law is, but there’s also a really scary perception that you can get around the law by being very nice to particular people in the bureaucracy or by taking people out for dinner. Another really frightening aspect of businesses in Fiji is that of the business community identifying people they think are influential and then currying favour with them.
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Now all of those are governance risks. Because they destruct us from doing business according to the law and in accordance with rules and regulations
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There has to be a demarcation between the role of the CEO and the role of the Board and that has caused a lot of governance problems in Fiji and PNG and other Melanesian countries
Another example is if you become Permanent Secretary for Works, and all your relatives think that you can get them a job there because that’s your cultural responsibility. Well that’s bad governance because there’s rules about recruiting people and nepotism – this is a big danger for Fiji and for other Melanesian countries. What have been the major factors that defines corporate culture or corporate governance in Fiji and PNG. What do you think has led to the kind of culture of governance that we have?
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The first is the bureaucratic structure we have which is intended to police companies and police both corporate behaviour and government behaviour. Those procedures have not always worked well. For instance some companies don’t really have defined responsibilities for their Directors or Board members.
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We’ve got a lot of Directors that go to meetings, they eat the lunch, we may see them twice a year, they don’t bother to read the Board papers, they are just there to collect the allowances. Well that kind of leadership in a company is very destructive because what happens when you have a weak Board is that the CEO becomes too powerful and
whatever the CEO says the Board will accept because the Board doesn’t know any better. You look at cases where a company comes before the Courts, and what we are looking at are patterns in the company’s behaviour. What has led this company into the courtroom? When you look at it – you will see either the Board has become too powerful not allowing the CEO to develop some kind of entrepreneurial initiative - or the CEO is so powerful that the Board is just sitting there nodding, listening to the CEO and not making proper decisions about how the company should be governed. There has to be a demarcation between the role of the CEO and the role of the Board and that has caused a lot of governance problems in Fiji and PNG and other Melanesian countries. Another difficulty that arises is when you are so much under the influence of one such strong person. Often in the Melanesian community, the person that talks the most in the room, nobody else will contradict them, there’s no dissent. Everyone says yes and you accept it. Then it is that strongest person in the room that gets to do whatever they want.
That is another governance risk when they want no dissent - which really takes me to what a Board should look like. A proper Board will encourage dissent. How do you test the quality of a decision unless there is some argument? So dissent is good but how do you get dissent in a place like Fiji or PNG where dissent is culturally unacceptable? It is seen as disrespectful. It is important to have the right structure for the Board. Half of the board should be very knowledgeable about the core business of the company. For instance if this is a fishing company – half of the board should know quite a lot about the fishing business but the other half should be chosen for things like financial investment knowledge, accounting skills, legal skills and other general skills that are required for the proper conduct of business. A good Board is a marriage between these two. Dissent in Melanesia is particularly important as you don’t want an old boys network on a Board. You don’t want a whole lot of cronies on the Board who have already decided what the decisions are going to be and the Board is just going through the motions.
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Which is why there is a very good argument for women to be involved in the Board activities. Not because they are women but because they think differently and they come from a different perspective, and different perspectives are good. They may not always be right but at least they’ll test the decision and they’ll force the mover of the decision to justify it. I don’t think there’s enough right mixture of people on Boards. Generally speaking we get decisions that are not thought out properly. We don’t value dissent enough in Fiji and in PNG. We think people who dissent are trouble makers. Are you seeing a corporate culture develop among corporate companies in Melanesian countries?
Of course the policy itself is not enough. They have got to implement. For instance if someone is found guilty of sexual harassment, that person should be terminated because it is a lesson to everybody.
The current company laws are not clear on the duties of Directors, and when Directors are liable for negligent acts of the Board. The new Fiji Companies Crimes Decree which we’ve now seen in the fourth and fifth draft form, (they’re on the final drafts now) will be very closely modelled on the Australian Corporations Act with one big exception, there is no ASIC. The enforcement of the decree in Fiji will be done by the Reserve Bank of Fiji, and by the Registrar of companies, and partially also by the Director of Public Prosecution’s Office in relation to criminal offences. So the big difference in the Companies Crimes Decree, is that it is going to create two types of liability, civil liability where you can be sued, and criminal liability where you can be prosecuted. The shield the Director’s will have is that they have acted in good faith, and in the best interest of the company. That they have read all the materials, and acted in a way in which a reasonable director would have acted in a business judgement. As long as they’ve done that, they are protected from prosecution as well as from being sued. But if they haven’t done that then they are open to being sued. That’s going to be the huge difference. PNG at the moment does have a legislation. It is not based on the Australian model but on the New Zealand and England model.
It’s interesting that PNG did not go the Australian way but the NZ way and the same for Fiji for going the Australian way. I think that the Australian model is a very good model and its possible that even in England, there will be amendments to the English law which will move it closer to the Australian one. Are there companies here that are on the right track, doing what they are supposed to be doing? When they know about the Crimes Decree being changed and that the Company Crimes Decree is about to change, and they ask for relevant training, that is a positive sign that they are on the right track. Then when they come back and say that they have reviewed their HR policy, and reviewed their board manuals - that is a good sign, that they are not only being trained, but they are able to change their practices. What I would like to see now is that when there are prosecutions of some companies, I would like to see these companies present their company minutes, manuals and HR policies and say look this is all that we have done to prevent this from happening and that despite all we have done it has still happened. Of course you are still going to have rogue employees, but you can prevent your company from slipping through the cracks because you have all the processes in place. I would like to see the third step – of companies coming forward saying we did everything we could to be legally compliant and trained our staff accordingly, and the fact that they have done this is not a reflection of our company. ISSUE 02
They have to ensure they do not tolerate that kind of behaviour in their company. I think Fiji is doing really well and going in the right direction because they’ve had the training, they’ve changed their corporate culture and moving towards implementation. The Fiji example is one that could very well be implemented in other Melanesian countries and I think that’s one of the reasons why I’ve been asked to speak in PNG. They are considering changing their laws and adopting that kind of provision in the PNG laws.
What needs to be done to strengthen accountable corporate mechanisms in Fiji and PNG?
Whether or not it works for PNG was the subject of a paper I delivered there where I assessed some of the gaps in the PNG model and the Company Crimes Decree here in Fiji.
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I see it in Fiji because the Crimes Decree developed that idea of creating a corporate culture that is legally compliant. Since 2010 almost every company has undergone training on being Crimes Decree compliant. What they have done after the training is they have gone back to their corporate manual, they have gone back to their HR policies and made sure that their HR policies reflect a good corporate culture.
In Australia they’ve got a very good Corporations Act which created the ASIC and that prosecutes companies much more than the DPP has done but the model in Fiji has forced companies to become more legally compliant and become much more enlightened about the way it enforces things like bribery provisions. I think that needs to be better understood in the Melanesian countries.
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Putting ‘Fijian Made’ on facebook By Shaheen Ali, Fiji Permanent Secretary for Industry and Trade
Fijian Made Facebook PAGE Competition The competition will run through a “tab” that will appear on the Fijian Made Facebook page. How the Competition works To participate in this competition, one has to LIKE the Fijian Made Facebook page first. Submission Phase (Three weeks) In order to be eligible to submit a photo to the contest, you must be a resident of Fiji. After that, it’s only takes 3 simple steps to participate:
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Step 1 Buy any product licensed under the Fijian Made-Buy Fijian Campaign and snap a photo of yourself with the product, making sure any one of the eight Fijian Made-Buy Fijian Campaign logos is visible. Social media is becoming an increasingly important tool for information and communication. Through the initiatives of the Fijian Government, ushering in 4G broadband connection and establishing 16 tele-centres around the country to name a few, more Fijians have now access to the internet and social media platforms like Facebook. The Fijian Government and the Ministry is also using this avenue (internet) to take the “Fijian Made” campaign to all parts of Fiji – and also beyond our borders – giving the Fijian Made brand a ‘national’, as well as, an ‘international’ profile. Since its beginning in November 2011, the Fijian Made Facebook page has reached almost 49,000 “likes” or friends – making it the most popular local Facebook page in Fiji.
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The friends of Fijian Made are not only local, but hail from Australia and New Zealand, PNG, and Solomon Islands in region, and also from the UK, India, USA, Canada, and even from Africa. (Countries where former nationals reside.)
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The Campaign has reached the Fijian diaspora far and wide and we are confident that this trend will continue. We have given former Fijians a means
of connecting with Fiji – giving them a home away from home. Our overseas Fijians also are fond of locally made and grown products and would like to see them available in their countries Whilst the Facebook competition that we are about to launch is for Fiji nationals only, overall the Fijian Government will continue (in its 2014 work program), to market Fijian Made as a reliable and a value-formoney brand in the local, regional and international markets. Fijian made brand for example is gaining in-roads in the Melanesian and regional markets. Importers from Pacific Island countries take a certain degree of comfort from the Fijian Made logos and in some cases are demanding it. Therefore, I urge our licensed companies to proudly display the Fijian Made logo whether you are selling to the local market or for exports. Since the launch of the campaign, over 151 companies and 766 products have been licensed. It is worth noting that during this period, the Government waived all fees for joining the Fijian Made Brand.
(Excerpt from speech at the launch of Fijian Made Facebook Competition)
Step 2 Upload your photo through the submission form on Fijian Made Photo Contest tab (the submission period will run from 24 January to 16 February). Step 3 – Share your photo with your friends to get as many votes as possible. Voting Phase 1 (Two Weeks) After 16 February, participants will no longer be able to upload photos and the voting phase will commence. In the first phase of voting, beginning 17 February, visitors to the Fijian Made Facebook page will be able to vote once per day on all valid entries. The first phase of voting will end on 2 March. From this phase, the 30 photos with the most votes will move on to the second and final phase of voting. . Voting Phase 2 (Two Weeks) During the second and final phase of voting, visitors will be able to vote on the finalists from the previous round. Two weeks (3 March – 16 March) will be allocated for the second and final phase of voting Competition Prizes The photo with the most votes after the second phase of voting (including only votes from the second phase) will receive a grand prize of FJD$1,000. The 10 runners-up will each receive a Tablet worth $300, a Fijian Made Gift Hamper worth $30 and a Fijian Crafted Handicraft.
Business Melanesia February 2014
Starting a new business in Vanuatu The Vanuatu Chamber of Commerce and Industry (VCCI) says it is pleased to assist investors start up their business in Vanuatu by providing advice and connecting them with the resources and assistance that are available. “We encourage you to submit your project to a professional business advisor, such as a lawyer, chartered accountant or business consultant in Vanuatu. For matters of commerce and industry, please contact us,” the VCCI informs.
“If you haven’t already decided, get some good advice from your professional business advisor setting up the legal structure of your business so that you understand the different rights and responsibilities that each type of structure creates.”
Cost to complete
1. Check availability of business name with the Vanuatu Financial Services Commission (VFSC) This service is not automated and cannot be completed on the spot. A form must be completed and faxed to the VFSC – this form is usually available at the lawyer’s office or can be downloaded from the website).In addition to checking the name, it is possible to reserve the name, which costs VUV 2,000. This is required by foreign investments before applying for a Foreign Investment Application Certificate (required in step 2).See our Useful Links for the VFSC website.
1 day
No charge (VT 2,000 to reserve the business name)
2. (Foreign Investors Only) Foreign Investment Approval with the Vanuatu Investment Promotion Authority Foreign Investors must obtain a Foreign Investment Application Certificate from VIPA before starting a business in Vanuatu. VIPA authorises all new investment into Vanuatu and checks that your business fits within Vanuatu’s investment guidelines. Once VIPA approval is granted, business license, residency permit and work permit approvals become largely automatic.See Investing in Vanuatu for more information on residency and work permits.See our Useful Links for the VIPA website.
15 business days to process application
VT 25,000
3. (Companies Only) Application for a Permit to Form an Incorporated Company with or without Limited Liability in Vanuatu with the Vanuatu Financial Services Commission (VFSC) Pursuant to the Companies Act [CAP. 191], an application for a company incorporation permit must be filed with the minister of Finance via the VFSC.The steps for company formation depend on whether the company is a local, overseas or international company. The VFSC website outlines these steps in more detail.See our Useful Links for the VFSC website.
10 business days
Incorporation Fees of VT 30,000 -250,000 is payable
4. Register your business name with the Vanuatu Financial Services Commission (VFSC) An individual must register every business name that is in any way different to his/her own surname, with or without his/her forenames or initials.A partnership or group of persons must register every business name that does not consist of the names of the persons in the partnership or group.A company registered under the Companies Act [CAP 191] must register any business name that differs from its full company name. See our Useful Links for the VFSC website.
Same day if paid with cash
VT 10,000
5. Apply for a business license with the Rates & Taxes Office, Department of Customs and Inland Revenue It is not necessary to have a business license unless your turnover is or anticipated to be more than VT4 million.Under the Act, business licenses are valid for one year and are subject to renewal on or before 31 January of the new licensing year.The Rates and Taxes Office of Customs Department issues the business licenses which are required for the commercial activity in the municipalities of Port Vila and Luganville. Provincial Councils of six provinces that are Shefa, Sanma, Malampa, Penama, Tafea, and Torba are responsible for issuing business licenses to businesses operating in these provinces. See our Useful Links for the Department of Customs and Inland Revenue website.
5 business days
VT20,000 – VT 1,000,000 dependant on business activity and annual turnover
6. Register with the VAT Office, Department of Customs and Inland Revenue A company must register with the value added tax (VAT) office if it anticipates turnover of at least VUV 4 million per year.See our Useful Links for the Department of Customs and Inland Revenue website.
3 business days
No charge
1 week
No charge
7. Register as an employer with the Vanuatu National Provident Fund (VNPF) It is compulsory for an employer to be registered at VNPF and to pay its contributions. Under the law, an employer must register with this fund 7 days after incorporation of the business (or 7 days as soon as the first employee is recruited). Payment of contribution is made directly at the National Provident Fund.See our Useful Links for the VNPF website.
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According to the Chamber’s website www.vcci.com.vu businesses in Vanuatu can operate as the following legal entities: Sole Trader, Partnership, Trust, Company (local or overseas companies registered in Vanuatu).
Time to complete
Procedure
Source: Vanuatu Chamber of Commerce and Industry
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The VCCI advises that there are annual renewal fees for many of the above procedures after successfully starting up a business. Penalty fees will be required by the body responsible for the non-payment of the annual renewal of licenses, patents, permits fees of issued registration or certificates. The non-payment may cause the total cessation of the company as well as prosecution. “Please note also that each project is specific and it is recommended to have it assessed by a professionals business advisor such as a lawyer, chartered accountant or business consultant in Vanuatu,” the VCCI advises.
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Business Melanesia February 2014
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Managing the relationship
Policeman turned diplomat, Fiji’s High Commissioner to PNG Romanu Tikotikoca outlines the growing links and challenges of doing business between the two countries For someone who is not a career diplomat, policeman Romanu Tikotikoca certainly had his work cut out when he took on the appointment as Fiji’s High Commissioner to PNG in 2012.
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He had to adapt and adjust to the new environment – a challenge that has seen his police experience come to good use.
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“I’ve realized that the work and experience I gained through policing has assisted me greatly in my role as a diplomat, especially in interacting and connecting with the various sectors of society here in PNG and the MSG region,” says Tikotikoca who also served as Fiji Contingent Police Commander to the Regional Assistance Mission to the Solomon Islands (RAMSI).
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His arrival to Port Moresby coincided with increased activity between Fiji and PNG as the respective Prime Ministers paid courtesy visits and led trade delegations to each other’s country.
PNG has since committed to assist Fiji with a 50 million kina grant – with K25 million in 2014, and K25 million in 2015
which ultimately fell apart after negotiations collapsed.
O’Neill further visited other PNG business endeavors in Fiji, and also visited the piece of land that was donated by the Fiji Government to each of the MSG countries.
With all that in the backdrop Business Melanesia asked Tikotikoca how Fiji is doing in PNG?
Later in November of 2012, the Fiji Prime Minister Commodore Voreqe Bainimarama came across to PNG for the Pacific ACP meeting. It is understood that at that meeting it was agreed that PNG would host the secretariat of the Pacific ACP, and Fiji would take up the position of Secretary General, with his Deputy to be from the Solomon Islands. However that has not happened to date. “It is something that is still within the political circles,” says Tikotikoca when queried by Business Melanesia. Bainimarama made a further state visit to PNG in April 2013, together with an 80 member trade delegation, the biggest Fiji trade delegation to ever visit PNG.
“Fiji is doing well,” says the High Commissioner. “Being here for the last 15 months I realize there are many Fijian companies established in PNG. Not only in Port Moresby but in Lae.” “There is also a growing number of Fijians that are coming to work here – the great number of Fijians that are here are with the aviation sectors, banking, construction, and other private sectors as well as aid agencies.” While investing in PNG can be very rewarding, Tikotikoca advises that investors and entrepreneurs need to be aware of the challenges. “There are numerous challenges you need to prepare yourself with when you come here – you have to establish a good network before you start a business, and do your own assessment and analysis of the operations that are done here,” he says.
“There is an economic boom here in PNG at the moment, and as the Fiji Prime Minister has rightly stated – we need to get into the boom. Quite a lot of our people are taking advantage of that to come to establish themselves, while others are probably assessing – conducting their own assessment and analysis.” A positive development for both countries is that the Fiji – PNG Business Council has been revived after a lapse of five years, and will assist in coordinating activities and information. Another initiative that the High Commissioner has pursued with some success is the province to province sister program between Fiji and PNG provinces. The effort has seen the PNG’s Gulf province establish a relationship with Fiji’s Ba province. Tikotikoca believes this will open up opportunities for people from both countries.
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The two countries had a trade forum as well as a trade show, and signed the Bemobile and Vodafone deal
However PNG has since committed to assist Fiji with a 50 million kina grant – with K25 million in 2014, and K25 million in 2015.
The High Commissioner adds that investors need to factor in that the cost of travel and cost of living, including rentals is pretty high in PNG, and also consider an adequate budget for security.
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In October 2012 PNG Prime Minister Peter O’Neill made a state visit to Fiji, leading a large delegation where they had the annual Prime Ministers golf tournament and at the same time launched the multimillion dollar expansion of the Pearl Resort by PNG’s Minerals Resources Development Corporation (MRDC).
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women in business
WHEN WOMEN
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mean business
Directors and shareholders of Upstream Hela Women Ltd
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How women of Hela in the Southern Highlands are going into business to manage their future and the future of their daughters
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Through time we have read and heard fascinating stories of women who have led pioneering endeavours, and who have had a vision that advanced the course of other women and their communities for generations. The women of Upstream Hela Women Limited (UHW) fall in this category. UHW is a wholly owned PNG company with its Board of Directors consisting only of women, and women and girls making up the majority of its shareholders. Men and boys can only
hold shareholding in the company through entities and community bodies that buy into the company. Under the company constitution only women are eligible for election as Directors to form the board. Women from the Komo, Magarima, Tari, Pori, Koroba and Lake Kopiago areas of the Hela province (which hosts the PNG LNG project) are given priority to company shares before opportunities are opened for women and girls in the neighbouring provinces.
Business Melanesia February 2014
A request to interview the Managing Director was met with a counter offer to have a meal and meet some of the Board of Directors and their children who are shareholders. An illustration perhaps of how things are done differently when women run the company. “We wanted to start a business that would have a strong social connection, not just for money,” says UHW Managing Director Rebecca Payawi. As the excitement and opportunities associated with the giant LNG project in their province swirled around – the founders of UHW noticed that women were being left out and not participating in the major developments going on around them. They saw that it was mainly men, and male dominated companies and community enterprises that were gaining the contracts. “Women were lost in all the hype,” says Payawi.
Utilising the advocacy skills and management training some of the women had received from NGO and business groups such as the Global Women in Management (GWIM) program supported by Exxon Mobil – the women started fundraising. Grants and support from groups and companies such as Exxon Mobil, Global Fund for Women, Oxfam Highlands, NZ Aid, and Barrick Tari among others enabled them to set up a training centre and fund a poultry project. “We were fortunate because we had the training so with the management and advocacy skills we learnt we came back and applied it to the business,” says Payawi.
The women met all the requirements and got the sub contract but did not
Rebecca Payawi
“We didn’t have the set capital as we did not win the LNG capital grant. However we had the opportunity as the contract was still there, and we did not want to let it go, so we fundraised.”
year in partnership with established pork supplier Hilans Pik Ltd.
“Women leaders came together and decided to contribute. We started going out to fundraise and get the funds from the women themselves to secure this contract.”
“We hired a poultry scientist for K$20,000 to do a feasible study and write a proposal for us. We’re still selling the proposal for our poultry business,” says Payawi.
Throughout this time – there were many challenges that tested the women’s will to form the company. There were gains and losses, diversions, differences and setbacks but they held together for 10 months until they secured their target.
“So we’re trying to reinvest money made from the trucking business into the poultry and piggery business.”
“We started fundraising in May 2011 and by 20th January 2012 – we launched,” Payawi recalls.
It goes without saying that the project’s potential is enriched by the market presented by the number of employees, contractors and people engaging in the LNG project.
“We were all so excited at the time. All the women danced at the launch. On the 20th of January 2012 we paid the management fee to Trans Wonderland. “They manage the fleet, we make our own investment and financial decisions.” Upstream Hela Women Ltd now has over 207 individual shareholders, and five groups that have more than 10,000 members. The company is led by a Board of Directors made up of around 10 women, each representing an individual or entity. “Women who have 10,000 shares automatically become a Director,” says Payawi. “Our youngest shareholder when we started was an 8 month old baby girl.” “Women make the best managers. They share the wealth. If you give empowerment to women, they will look after the community. What little they have, they’ll think of their family, children and their community,” says Payawi. With a big contract in the bag, the women aimed for further expansion, now venturing into piggery and poultry. Phase one of the piggery started last
The poultry project is progressing.
“We chose poultry and piggery because the money can be closer to the women. They can actively participate in it.”
Payawi says a challenge is in the management of the company, and the perception people have that they have a lot of money from the LNG project. “For the little things they do they overcharge us. They think we have money. They don’t know that we are just trying to be in the race.” “We have a triple bottom line business model, we want to stay in business, at the same time we want our shareholders to benefit, and improve their living standards.” “We have the poultry business there but we want to take it to the next level. If we have the money, we can have right people on the job.” “When we hired the poultry scientist, I thought it was easy, but it was too expensive.” “However we are really focussed and want to continue with the piggery and poultry business, because even after the LNG Gas is gone, we will still have our land, so we start our business where we still have our land.” “We are looking beyond the LNG project.”
by Stanley Simpson
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With the start, the women set their sights higher with the goal to secure a major contract, and eventually managed to get a sub contract from Trans Wonderland, one of the major companies contracted to Exxon Mobil, the operators of the LNG project.
“Our contract was still there for us to raise 400,000 kina to get the two semi trailer trucks,” says Payawi.
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“We had to organise and mobilise ourselves to ensure women and daughters had a share and gained from the opportunities available from this major project, but no one was really focussed on what to achieve.”
have the funds and failed to secure a grant for seed funding to buy the necessary trucks.
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Business Melanesia February 2014
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Basking at the Beachside Brasserie Keeping the Melanesian blend at Graham Osborne’s renowned Ela Beach Hotel establishment
Like the famous establishments of the past – it is not just the restaurant that is well known, but the owner as well. He may protest this, but such is the case for Graham Osborne and his Beachside Brasserie located at the Ela Beach Hotel in Port Moresby. Osborne has been in PNG for about 20 odd years – arriving from New Zealand and Fiji before that. He worked for the Steamships company before deciding to head out on his own with a restaurant at the Shady Rest Hotel.
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When the Ela Beach Hotel was refurbished – Osborne took the opportunity to move his establishment and has been serving from there for almost a decade. “This is the town,” Osborne says of Port Moresby. “This is where people with all the money are, and the right place to be.” However Osborne is determined that his Beachside Brasserie keeps its friendly PNG touch. Even though the restaurant is connected to a hotel, it is able to welcome anyone walking in from the street. “A lot of PNG people just walk in from the street because we want to turn this place into a meeting place also,” says Osborne. “ It’s a multicultural hotel and more importantly for me that Papua New Guineans can feel at home here.” “It’s a central point for everybody, everybody is friendly. We’ve gone out of our way to make our establishment homely.”
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Osborne describes the food at his restaurant as ‘middle of the road’ not high class.
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“Our menu is diverse,” he says. Among the items on the menu was ‘Osborne’s rump’ described as the ‘biggest in town’.
Graham Osborne “We have pizzas, curry, European food, Filipino food. The most important thing is I have my chefs from Fiji and Philippines here to teach my PNG chefs how to cook. For seven years here, this kitchen is staffed totally by PNG nationals,” says Osborne. “When we decided to expand our meals, obviously we brought in the right people to teach my PNG staff how to cook.” “We’d like to think we’ve got the best staff, that we train ourselves. I’ve just recruited a Fijian lady who used to work in a five star hotel and she’s now taken over the training of our people and that’s mainly because it is widely known that Fijians are very good in hospitality.” “So we’re using connection.”
the
Melanesian
Apart from his restaurant business, Osborne’s other passion is sports. He is the chairman of the Sports Foundation in PNG, a topic we easily diverted to. Business Melanesia asked Osborne if PNG had the capacity to cater for the increased number of visitors that will turn up for the Pacific Games. “Oh absolutely, we’ll do it well,” he responds. “There are enough caterers, restaurants and people here to do the job. I’m already hoping that the people making the decision about the catering don’t go overseas but give it to the local people and give them a fair go. I would be very disappointed if overseas companies were given the inside running to some of these major things.” “Over the 20 years I’ve been here, food has actually improved in PNG especially in Port Moresby.”
Business Melanesia February 2014
women in business
Styling for success
customers are waiting to have their hair done. Venina strikes you for her forthrightness. “When I first started out doing this business, people said that it would not amount to much. Even my parents were critical of it. But look where I am now. I’ve been operating my hair salon business for seven years. It was my grandfather who provided support and encouragement,” she says. Venina left high school when she was just 15. She shared that she wasn’t good in school academically. “But I’ve always been into styling hair,” she tells Business Melanesia. “I took courses at the school for hairdressing in Suva, and worked my way up, straight after leaving high school. I knew where my talent lay.” The now married mother of five adds she worked for four years for a hairdresser, gaining necessary experience before deciding to venture out on her own. “I was 24 years old at the time and I
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For Venina Tukana, handling business transactions started at the age of eight. She remembers picking tomatoes, vegetables and fruits from her grandfather’s farm and selling it at the market. “My grandfather was a great influence while growing up,” Venina tells Business Melanesia. “He had a big farm and all the grandkids were expected to work for his or her feed,” she says with a smile. Venina looks back with fondness at those memories. “It helped me a great deal in handling my business, the discipline and determination that I gained from those childhood days,” the hair stylist shares. Venina Tukana owns a hair salon in the outer town of Nausori, a half hour drive out of Fiji’s capital. Entering her hair salon, the 31-yearold could be seen going through the motions of styling her customer’s hair. It is early in the morning, and already
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by Matilda Simmons
was determined to start something on my own. There was criticism and talk that I was too young to manage such a business, but I didn’t care.” The first hair salon building Venina rented was a small space in a corner of a building in Nausori Town. The space did not even have a room. She and her only employee at the time had to partition the small space. Soon word of mouth spread about their service and they found themselves styling hairs of lawyers and magistrates in the town area. “The main thing about my work is that I engage with my customers, and I make sure to give it their money’s worth when styling their hair. I think that is partly why my business has grown so fast in just six years.” Venina’s client base grew and soon they found themselves moving twice to accommodate their growing clientele. “Nausori Town is known as the town of the people from nearby villagers and the highland people,” says Venina. “I decided to set up business here because I want to provide a market for the rural women. I wanted to make the women feel beautiful about themselves and at the same time make it affordable.” Venina is a success story for the South Pacific Business Development (SPBD) organisation, a micro finance institution which provides women in rural villages the opportunity to grow and maintain sustainable incomegenerating micro-enterprises. Three years into her business, she was supported by SPBD with a range of training, financial services and ongoing motivation to help her grow her venture. Already she is looking to grow. “My future plan is to open another hair salon in another rural town outside Nausori or in the Western towns. That’s where I’m looking at,” she says with determination.
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Business Melanesia February 2014
Pacific Games Feature
2015 Pacific Games Taurama Complex on track
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Construction of the Taurama Aquatic Centre and Indoor Sports Complex that will host the swimming competition and indoor sports at the 2015 Pacific Games in PNG is on track.
Artist Impression
Construction of the Aquatic Centre underway
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ABOUT THIS PROJECT The Taurama Complex has been designed to provide sporting facilities to international competition standards for swimming, volleyball, basketball and a variety of other indoor sports. The facilities include a stainless steel Olympic standard 50m competition pool which has a movable bulkhead to shorten the pool to 25m for international standard short course competition and there is also a separate 25m pool required for use as a warm up pool during competition. This pool has been designed with a wheelchair ramp access so the pool can be used as a ‘learn to swim’ pool for young children as well as a hydrotherapy pool for people with disability outside of competition time. Both of these pools are outdoors and set into a family oriented landscape which will have a ‘splash and play’ area for very young children as well as shaded ‘haus win’ structures and grassed play areas for family activities. Inside the building, there are competition timing and control rooms that are designed to international standard, as well as athlete and swimming coaching facilities. Overlooking the competition pool will be a large electronic scoreboard.
Artist impression of the Taurama pool
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The Centre is being described as one of a kind in the Pacific as the concept designs shown here highlight. Business Melanesia took the photographs of the construction underway from an elevated position overlooking the Centre.
Artist impression of the Indoor Sports Complex
The main indoor sports hall will provide 6 courts to Olympic volleyball standards that can be used for a large variety of indoor sports after the Pacific Games. Also, there will be two separate group exercise spaces and additional facilities include a seminar lounge that can be used for hospitality events The facility has been designed to meet the high international standards required to provide the 2015 Pacific Games competition and organisation spaces, but with the future use and the community in mind. Source: www.peddlethorp.co.nz
Business Melanesia February 2014
Pacific Sprint King
Pacific SPG report Games Feature
Banuve Tabakaucoro
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on what it takes to become a winning brand
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Business Melanesia February 2014
Pacific Games Feature
The Pacific Model Athlete by Matilda Simmons
To bring down a tenth of a second, it takes a year’s training. From the starting block, the way you move your arms and legs its very technical now
His management hail him as the model athlete for Fiji and the Pacific, and why not?
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Banuve Tabakaucoro has smashed records from high school level to national and regional athletic meets. Since he started competing at age 17, he has bagged over 13 gold medals at regional meets such as the Pacific Games, Pacific Mini Games and the Oceania Championships. He showed his potential when he won silver with a time of 10.9 seconds at the Australian Youth Olympic Festival in 2009, when he was just 16 years old. Yet what you get in front of you is a soft spoken and humble young man. Banuve shrugs off the fame attached to his name. He is more focussed on bettering himself. “It’s been very exciting, I’ve been to a lot of big world meets, and I’ve really learnt a lot. A lot of the athletes I competed against have been in the sport 10-15 years, so it’s great learning from them. Things have changed, I’ve matured a lot over the years, so I’m taking each stage as it comes.”
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Banuve is currently the Pacific Mini Games 100 metres and 200 metres record holder. He is the fastest man in the Pacific at the moment with a time of 10.33 seconds.
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“I want to compete in more major competitions, to keep running faster. I mean that’s basically what I’ve been doing for the past few years now, competing as much as I can, not only in Fiji but abroad as well. I aim to really drop those times.”
“My major aim is recording under nine seconds in the 100m”
realise the effort he puts in, it’s all about that 10 seconds.”
“My major aim is recording under nine seconds (in the 100m),” he confidently tells Business Melanesia.
“To bring down a tenth of a second, it takes a year’s training. From the starting block, the way you move your arms and legs its very technical now, Banuve practices several times to get it right,” says Hazelman.
It hasn’t been smooth running though. Banuve has had his share of injuries which has forced him to pull out of his 100m and 200m events in recent times.
As the Pacific Games approaches in 2015, Banuve is taking it all in his stride. Right now the 21-year-old is intent on training as much as he can.
Looking back to when he was a 17 year old athlete who mesmerised fans and local media on the secondary schools athletics track, Banuve says it hasn’t been easy, though he is proud of the hard work he has put in to succeed.
“If I’m building up for a competition, two to five months before that is taken up by training. The first half of that you’re doing strength training, it takes three to four hours a day. Sometimes you get drenched,” adds Banuve reflectively.
“As athletes – we train long hours, and the biggest disappointment is when you get sick or injured when you get close to a competition. This makes you miss out. It can make or break an athlete. We spend so much time training and when those things happen, it can be so disappointing,” Banuve shares. Seated beside Banuve is his manager, Nesbitt Hazelman who gave an insight into Banuve’s training. “To put it into perspective, when everybody is sleeping – Banuve is on the track at 4am. At 10am he is at the gym doing weights. The public don’t
Sporting success has also led to commercial success for Banuve. He has been a brand ambassador for Digicel Fiji since 2010 - engaging in their promotional and community activities. “We’ve had an association with him since he was 18 and it’s been fantastic. The TV appearances he’s done for us, the store appearances and the community work such as the flood relief work that Banuve took the time out to do is a testament of the fine young person he is,” said Digicel Fiji’s Head of Marketing Sheryl Singh.
Business Melanesia February 2014
The importance of Sports Management “There have been business houses willing to use Banuve as their brand ambassador,” says Banuve’s manager Nesbitt Hazelman who is also the CEO of the Fiji Commerce and Employers Federation. “They will of course be part and parcel of making the Pacific Games happen. From a business perspective – we take it to the sponsors and say look here we have a fully fledged, well oiled athlete, who’s willing to stand there and make your brand proud. It’s a holistic approach that we need to look at,” adds Hazelman. “Management need to be more proactive in assisting athletes secure international contracts and international endorsements. We’ve got a plan for Banuve. We are looking at this time period where he’ll be doing this and he has to improve by this time.” “This is what we bring to the sport, we bring a strategic outlook in planning it out for the athletes. Most important of all, we take into consideration the life of our athletes after they retire from the sport. There’s too many of our athletes that come and disappear, where are they now?” www.businessmelanesia.com
“They are lucky if they’re working at all. This is what we’re trying to break. So with Banuve we’re looking at life after athletics. We make sure that he receives some allowances from his brand sponsor and so on.” “National sporting boards need to come on board and assist our local professionals in getting international endorsements, they need to assist local managers in helping negotiate for international endorsements.” Business management aside, a bigger, stronger, and more technically sound Banuve Tabakaucoro is ready to take on whatever challenges ahead. “I don’t want people to see the name Banuve and just stand there and admire it. I want them to go out there and be better than Banuve. That’s the only way to move forward. To be better than the person that was there before. That’s something I really want for the younger generation,” Banuve says.
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“A lot of people have been wanting me to make the switch from athletics to rugby and I tell them- any Fijian boy knows how to play rugby, but not every Fijian knows how to run fast, and that’s something that I’m stuck with.” Photo: Pedro Virgil
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Business Melanesia February 2014
forestry
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Growing with sustainable forestry solutions
Fred Kowas
You get the impression as soon as you walk into the sawmill and timber yard of Cloudybay Sustainable Forestry Ltd (CBSFL) at 9 mile, Port Moresby that this is a dynamic forestry and timber operator. A modern office to your left as you enter, and a large impressive timber yard structure, sawmill and processing centre assembled together by massive logs signal the image of a solid and resourceful establishment.
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“Our purpose is to provide our customers with a sustainable supply of high quality products and be a leader in the responsible management of the environment under our control,” says Cloudybay managing director Fred Kowas.
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Kowas presides over a company that has a history going back over 40 years. However the real turning point for the company came in 2006 when PNG Sustainable Development Programme
Ltd (PNGSDP) bought the company from the former owners. Before PNGSDP took over, the company was a small sawmill tugged away at 9 mile, referred to then as Northern District Sawmill concentrating mainly on joinery products and a small amount of sawn timber. The new owners completely revamped the company including installing new management, plant, machinery and giving a completely new look. “The objective was to build a model socially responsible and environmentally sustainable forestry company in PNG which was clearly lacking then,” says Kowas. This goal was achieved when the company was awarded internationally recognised certification as a sustainable forestry operator in 2013 with the Forestry Stewardship Council (FSC) certification.
Cloudybay FastFacts Their Forest Management Agreement area covers over 94,000 hectares of land area. There are over 25 species of mixed hardwood in the FMA and an estimated 2.5Million cubic meters of timber for harvest. Their FMA is for 35 years and they are into the 6th year. They employ over 400 employees with 70% of these from the project area and the rest from Central Province and Papua New Guinea.
Business Melanesia February 2014
forestry The FSC is an international multistakeholder organization that promotes responsible management of the world’s forests. Its main tools for achieving this are standard setting, certification and labeling of forest products. Cloudybay is the only FSC certified Forestry and Timber Operator in Papua New Guinea. “What sets us apart from rest of the forestry industry in PNG is that we are an international certified socially and environmental sustainable forestry licence owner and operator with FSC branding,” says Kowas. “One of the benefits of this is that we can export logs and timbers to a lot more markets in Australia, Europe and Asia which our competitors are not able to do.” “In a span of 5 years, we have spent a significant amount of money and resources into building infrastructure projects with the Forest Management Area (FMA) licence area.”
According to Kowas another trait that sets Cloudybay apart from other forestry operators in the country is that more than 99 percent of their employees are PNG nationals of which 70 percent come from the FMA area. Having established their mark as a sustainable and internationally recognized operator Business Melanesia asked Kowas what products they are focusing on and what was their strategy for future growth. “There are three main products that we sell to our customers,” says Kowas.
He adds the PNG government has also recognised this important need and announced a massive plan to develop affordable housing in the country starting with an allocation of K150 million in the 2014 budget. Kowas also sees agencies such as Ausaid refocusing their aid strategy to infrastructure projects such as school buildings. “So as a company, we see a significant opportunity for growth in low cost housing,” he says. In this regard CBSFL entered into an agreement to work with a New Zealand company, Timber Constructions Solutions Ltd, who have solid experience in delivering large kit homes in the Pacific with well set up factories, timber supply and systems in place. Other partnerships have also been developed. “One of our biggest challenges, and a challenge we believe all forestry operators in PNG face is to remain commercially sustainable,” says Kowas. “One of the things we have done at the project site is to outsource the harvesting and sawmilling of timber to a Korean operator that we believe has the same values and interest we have but can operate efficiently and maximise production. This will also
enable us to effectively control our costs.” Like other resource projects in PNG, landowner issues are also one of the biggest challenges they face. “There are 62 land groups in the FMA that we operate in so it is always a challenge to deal with these different groups,” says Kowas.“The important thing is to be open, continuously communicate with them and ensure benefits that have been agreed in the project agreement are delivered.” “Being a sustainable forestry operator is really about complying with the spirit and letter of the PNG Forest Act and other related laws and regulations such as the labour laws, environmental laws, the PNG Forestry Code of Conduct and so on.” “The Forestry Management in PNG has improved alot over the last 10 years than it has been in the 1970s through to 1980s and 1990s where there was hardly any control over the industry and a lot of corrupt practices were involved,” Kowas says. However Kowas believes there is still alot of work to be done. “The government needs to provide incentives to encourage companies like ourselves who are into 100% downstream processing,” he says. “They are preaching about Small to Medium Enterprises (SMEs) but we are a perfect example of an SME operating in very difficult circumstances providing employment to over 400 employees and benefits to thousands of landowners.” 47
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“These products are dimension timber which is our traditional business. More recently we are starting to focus on joinery products of which we are seeing significant growth due to the building boom in Port Moresby, and the other product we are concentrating heavily on is Kit Home buildings.”
“There is a significant demand at the moment for affordable housing in PNG with the growth in the economy buoyed by the massive LNG project due to commence production later this year,” says Kowas.
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“The feedback we have received from the industry regulator, PNG Forest Authority is that we are one of the best if not the best FMAs in the country in terms of delivering quality infrastructure projects such as schools, roads, bridges and hospitals to the project area and we are proud of this achievement.”
Kowas (right) receiving the Forestry Stewardship Council (FCS) certificate for Cloudybay
Business Melanesia February 2014
trade talk
Pride in Fiji and Vanuatu partnership
By Ratu Epeli Nailatikau President of Fiji the Ni-Vanuatu to be independent. To stand tall in our region and in the world.
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As you are all aware, we share a common heritage in having been colonized by the British, though in your case, you also had the French resulting in the Anglo-French condominium which created certain and at times novel – complications of diplomacy. But, Of course, the AngloFrench condominium did have certain advantages which we missed out on in Fiji – notably French Cuisine. Today we are both sovereign nations, both determined to assert our own independence and equally determined to work hand in hand to advance the cause of all Melanesians.
Fiji’s President Ratu Epeli Nailatikau presenting a gift to the Vanuatu Acting President Phillip Boedoro
Fiji’s President Ratu Epeli Nailatikau made a recent State Visit to Vanuatu. This is an excerpt of the speech he made at the State Dinner
We have a cause that is inclusive because Melanesia encompasses citizens from various ethnic backgrounds and with a range of religious and political persuasions. Photo: Ministry of Information
It is a great honour for me to convey the greetings of my fellow Fijians to you our fellow Melanesians, the Ni-Vanuatu, and to reinforce and celebrate what has become a very special and meaningful relationship between our two Nations.
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The name Vanuatu is made up of two words we both share in our respective Indigenous languages and which are very specific in Fijian.
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The first word “vanua” meaning the land or home. That alone is an indication of the close ties we have with the land and the strong bonds we share as neighbours and as Melanesian brothers and sisters. The addition of the word “tu” meaning to stand erect completes the name Vanuatu. A name that encapsulates the desire of
But there is strength in our diversity and a unity of purpose. We share a vision of a stronger, more prosperous Melanesia increasingly working together as one, whilst making our presence felt in the world, by having our voice heard and thereby creating fresh opportunities both for ourselves now and for our succeeding generations. Individually, we have had our achievements as well as our challenges. But by working together, we can accomplish further and greater achievements and to effectively tackle and overcome those challenges. Indeed, our resolve to work closer together is already yielding great results. Fiji and Vanuatu have stood shoulder to shoulder to assert Melanesian interests in a world that has become more
Business Melanesia February 2014
trade talk
We are enthusiastic about what a Melanesian common market can mean for all of us—a larger market, economies of scale, greater opportunities to create employment, and the added collective weight at the negotiating table rather than just as individual nations
competitive economically, and more dangerous, but a world that also presents more opportunities for advancement than ever before. We can seize those opportunities if we have the wisdom to understand our interests, the foresight to prepare our societies to take advantage of those opportunities, the firmness to establish the right priorities, and the courage to stand together as Melanesians and demand our rightful place—in world commerce, in global debates, and in guiding the future of our region.
We want to give our people dignity, opportunity, and good government. We want to be secure from terrorism, environmental degradation and coercion. We have learned that we can solve many of these problems ourselves if we maintain a spirit of sharing and cooperation, and if we always remember that we are bound together. However let us never forget that we are bound more than just oceanically, with the great peoples of Micronesia and Polynesia. Vanuatu and Fiji have led the way with our close cooperation on development. We are helping each other on trade and investment, labour mobility, immigration, commerce, taxation, fisheries, transportation, health, environment, security and energy. Trade between our two countries is brisk and growing, and that is good news for everyone.
However the terms of that assistance must not be dictated. They must come as collaboration, in which we set the priorities, define the agenda, channel assistance through our institutions and participate as equals every step of the way. We are already exposing the myth that the best solutions to our problems must come from external sources. In fact, we increase the value of external assistance by assuming control of our own affairs as much as we can and creating the most favorable climate possible for external assistance to produce tangible results. Working together, we can increase trade among Melanesian nations and raise the living standards of all our peoples. Working together, we can share our experiences not only to solve common problems but to help each nation solve our own unique problems.
A common market will lift all our economies, spur improvements and encourage sharing in our most important industries. Fiji quietly hopes to be a hub for the development of a broadband system that eventually will bring the benefits of the digital age to every Melanesian in every village. Fiji stands ready – whenever we can – to assist our Pacific neighbours, based on the experiences we have had over the past 43 years since independence. Like any country, we have made mistakes along the way but the important thing is that we have learnt from those mistakes and we can perhaps help others avoid them. I thank Vanuatu for standing by us, encouraging us and giving us the confidence to steer the course and achieve our new Constitution which will pave the way for election before October 2014. Fijians believe in our great friends, our brothers and sisters, the ni-Vanuatu. We are proud to be your fellow Melanesians. To the people of Vanuatu I propose a toast to a strong and growing partnership between Vanuatu and Fiji, and to the future health and prosperity of all Melanesian people.
Working together, we can preserve our Melanesian culture, educate our people, and strengthen our economies. Of course, we have great challenges before us, but we Fijians are optimistic. We are enthusiastic about what a Melanesian common market can mean
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Fiji has greatly appreciated the strong role Vanuatu has taken in the Melanesian Spearhead Group and other regional institutions.
Certainly, we need and greatly appreciate the assistance from the more developed countries. Their assistance can help us make up for the years of underdevelopment and struggle.
for us all — a larger market, economies of scale, greater opportunities to create employment, and more weight at the negotiating table collectively - more than we can ever have as individual nations.
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We Melanesians may be dispersed among several nations, but we are one people. We face the same challenges. We live in the midst of an ocean whose rising sea level threatens to engulf our shores.
You gave critical support that helped to establish the Pacific Islands Development Forum, through which we have been able to assert our own Melanesian interests, insist on our own priorities and defend our own sovereignty — undiluted by the interests of other regional states that sometimes appear to have trouble understanding our history, politics and culture.
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Business Melanesia February 2014
message
Setting priorities for the Solomon Islands in 2014 by Solomon Islands PM Gordon Darcy Lilo
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I would like to acknowledge and honour all leaders across our nation for their contributions last year. I must say your leadership in your respective fields kept our country ticking in 2013. The nation will need you to lead strong this year. Let us all take Solomon Islands one step further in 2014. Let us go higher. What has 2013 been like? Now that 2014 has arrived, all of us can look back and assess 2013. What have we achieved in 2013? As a nation, have we moved forward from where we were in 2012? Have the lives of ordinary people improved in the course of the last 12 months? Have we improved the prospects for Solomon Islands families? Have we created platforms Solomon Islanders can use to build their futures? Have we lifted our people up? Or, have we served ourselves, our immediate families and our wantoks? Have we created platforms and contacts for our own progress and prospects? Have we through our actions or inactions, deliberately or unknowingly undermined other people and other citizens? Have we created dependencies instead of strengthening our people to be active and productive members of society?
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These are hard questions. All of us sitting here this morning must ask ourselves these questions. We must ask this about our offices, our organisations and about us as individuals.
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In March last year, the NCRA Government announced eleven priorities for 2013. As a government, I will say that we have made some progress, but much
remains to be done in our nation. In parts of our country that relationships had been severed from the ethnic tension, we have tried to bridge communities. The NCRA government has established the Solomon Islands National University (SINU), supported the USP campus, UPNG and other educational institutions. We have built airport infrastructure around the country. We have made attempts to improve political stability through the Political Parties Integrity Bill and good governance. We have also attempted to improve business climate for the productive sector and controlled government spending. Despite what had been done, more needed to be done. That is the hard reality of government and leadership as we all know. The Solomon Islands context Like 2013, 2014 will be another busy year for all of us. We face the challenges often faced by small, dispersed island nations. We must continue to work and bring all Solomon Islanders together, despite the cultural and linguistic differences. We must also work on bringing resources like customary land and other resources to productive use that benefits the nation. We must also continue to work on improving the business climate and expanding the economic base. Further, we must continue to work on connecting people and goods through shipping and telecommunications. What can we look forward to in 2014? So what are the big developments or events we will look forward to this year? We will continue to pursue
Excerpt of speech by Prime Minister Gordon Darcy Lilo, at Leaders Prayer Breakfast, 21 January 2014
Photo: 350.org
implementation of our current developments and programs. These are provided in our recurrent expenditures in the 2014 Budget. But in addition, and in light of our current national needs, we will place emphasis on the following areas. These are what I have identified as the 2014 priorities. The first and most obvious is our national general elections. This year the nation gets to vote their new members of Parliament. We want to have a clean and effective election. The Government has already begun the registration process which will make it easier for honest citizens to vote, but harder for dishonest people to cheat. In the past we have seen double voting; voting using other people’s names, vote buying and other dishonest practices. That will have to stop. This year will be the year we have clean, effective, responsible and systematised voting. We look forward to having our new Members of Parliament by December this year. This year we also we look forward to improving the processes for Governance in our country. Political instability had undermined our development a great
Business Melanesia February 2014
message
deal in the past. This is the change of political government without any apparent agenda and without improving the situation for the majority. This is often termed “grass-hopper� behaviour. We want to reintroduce the Political Parties Integrity Bill to achieve that. In addition, we must continue to keep leaders in check. The NCRA Government will also bring to Parliament the new Leadership Code Act which will keep the leaders in constant check.
To make that work, we will also keep close look at how national resources are used. The Public Finance Management Act has been passed by Parliament. This will provide a good management mechanism for public finances and public resources. This will apply to monies disbursed under the Constituency Development Fund Act and others. We will ensure the full implementation of the new charter of account under the new public finance management act to be fully implemented by the end of May. This is to allow the new Government to have better access to information on public finance management to making sound decisions on spending.
Finally, I would like to see the Honiara Boundary issue resolved so that sensible discussions can begin to occur about developments outside the original Honiara Boundary. NCRA is also confident that an autonomous national hospital of SoIomon Islands will be established and the legal framework to establishing this must be done by May 2014. On communication, NCRA is optimistic that the country’s first fibre optic (the fastest internet connection) will be established before the end of the year. Diplomatically, we will continue to engage with our multi-lateral and bilateral partners. We hope for the first time that a high-level meeting, at the ministerial level, between Solomon
A young boy paddles his canoe past container ships and cargo at the Solomon Islands port in Honiara
Islands and Australia will also take place this year. The government remains committed to the broader development and on-going development agenda. These however, are priority areas I would push progress in. To conclude I wish to remind all of us that this year will be another important year for building strong foundations. Every year is significant because what we do this year will affect what happens next year and the years to come. 2014 is an important year for all of us. Once again I appeal to all the leaders in the country to hold and advance your positions. I appeal to Solomon Islanders everywhere to make your contribution to nation building. Solomon Islands belongs to all of us, men, women and children. To our distinguished development partners and stakeholders, I acknowledge your continuous support to our development. Please continue to work with us to to progress the national agenda.
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Fifth, we will also continue to pursue developments to improve the SINU and other education institutions. Education
Seven, we will also continue to pursue customary land mobilisation and reform. We will continue to look at ways to bring customary land into productive usage. This remains fundamental in our country.
Like 2013, 2014 will be another busy year for all of us. We face the challenges often faced by small, dispersed island nations. We must continue to work and bring all Solomon Islanders together, despite the cultural and linguistic differences
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Third, as we all know, the majority of our peoples live in the rural areas. Last year Parliament passed the Constituency Development Fund Act which required regulations to regulate and operationalize it. This year, we will bring the regulations and manage the resources according to the Regulations. We look forward to communities rising because of availability of public goods at the village and community level. These are funds which can develop public goods. Leading up to the implementation of the CDF Act well will now require that all constituencies must have a profile and a constituency development plan. There will be no payment until a constituency has a complement profile and a development plan under the CDF Act.
remains a key platform for the next generation of workers and leaders. On that note, the Government is serious about reviewing the Education Act to separate basic education and TVET from the higher education with the view to establishing an independent higher education commission with the long-term plan to making the Solomon Islands as the higher education hub of the Pacific.
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Business Melanesia February 2014
fisheries
dark prospects
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for tuna fishery in the Pacific Islands
Intensive catches together with subsidised vessels have led to the current dark scenario the Pacific albacore industry is going through according to the Pacific Islands Tuna industry Association (PITIA). PITIA, the organization that represents the tuna industry of the 14 nations that make up the Pacific Islands Forum, emphasized that the decline in the southern longline albacore fishery is verified not only in catch per unit effort (CPUE), but also in the fish size. The facts show that there has been a fast local depletion, irrespective of the status of the general population. Some islands, with the support of
powerful nations, such as American Samoa aided by the US, were able to put their fleet on the market. However, others lacking of foreign help see their longline fisheries decline to unprecedented levels. That is the case of Fiji, Tonga and Western Samoa. The organization states that, to worsen the prospect, China announced at the Western and Central Pacific Fisheries Commission (WCPFC) meeting last December its intention to launch some 140 highly efficient and heavily subsidised vessels into a fishery, which has its vessels with domestic flags tied up and crew sent home. The release points out that although some governments have reacted in an
effort to protect future investments, it is too late for current players. “PITIA has always advocated managing the fishery at MEY [Maximum Economic Yield]. The reality is, the subsidised Chinese vessel, is the only party operating at MEY in this fishery. Not the licensing authority and definitely not the unsubsidised domestic vessel nor the fisherman that is now seeking employment,� the organisation said. The organization wonders about the fact that before the establishment of the WCPC, domestic fisheries enjoyed far better conditions than now, when conservation and management measures, which are aimed at increasing the activity, are in force.
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Source: FIS/PACNEWS
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Business Melanesia February 2014
Civil PNG Ltd (CPNG) was established in February 2012, though its sister company which shares the same management. It has operated in Papua New Guinea since 2009. CPNG also draws on its management’s significant PNG experience with some of its senior managers having over 20 years’ experience in PNG. CPNG recently completed a one year long project on Lihir Island for Newcrest Mining; this project involved significant piling, earthworks, and concrete works. More recently the company has been involved in several projects involving complex specialist works which CPNG has successful completed. CPNG with its dynamic experienced team and own resources specializes in multidiscipline engineering and civil construction, offering specialised subsurface construction services for infrastructure development, heavy construction, mining, and marine construction.
Below is a list of just some of the services that our company can offer to projects: Sheet Piling design
Mine exploration,
Aggregate supply
and construction
early works and
Concrete supply
Steel supply and
infrastructure
Concrete pre cast
Importation
development
manufacturing
Piling design and
Shaft construction for
Bridge Construction
construction
access chambers and
Road Construction,
Ground Improvements
pump stations
Paving, Sealing,
design and
Marine Piling, Wharf,
Bitumen
construction
Port, and Jetty
Demolition
General earthworks
construction
Building construction
Large Scale
Heavy Haulage and
Basement design and
Earthmoving
Truck rental
construction
Machinery Rental
CPNG also has extensive experience in working in remote locations throughout Australia, Pacific Islands including PNG and Fiji, and New Zealand, often in locations where communications and logistics are difficult. CPNG utilises its own fleet of state of the art piling, heavy construction, and earthmoving machinery to provide a cost effective service which is backed by extensive experience and a dedicated workforce. The group has an extensive track record with piling and earthworks capabilities in a range of differing ground conditions.
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Quarrying and
CPNG has recently diversified into full development packages for entire groundworks disciplines. This gives builders and developers the opportunity to deal with one specialist contractor for all critical path works beneath the ground.
Our success is based on good client relationships and the delivery of top quality outcomes for our clients. At CPNG we identify that our strong relationships with customers can be attributed to the company’s quality and workmanship coupled with business integrity.
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CPNG has recently diversified into full development packages for entire groundworks disciplines
For further information please contact: Trevor Rintoul Projects Director +675 717 33 525 +64 212 590 459 Email trevor@civilpng.com
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Business Melanesia February 2014
cover story
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FIJI INDUSTRIES LTD IS THE PREMIER SUPPLIER OF CEMENT AND RELATED PRODUCTS IN AND AROUND FIJI AND THE PACIFIC ISLAND COUNTRIES WITH A DIVERSE PORTFOLIO OF CUSTOMERS
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DWELLINGS & COMMERCIAL BUILDINGS • READY MIX CONCRETE • CONCRETE PRODUCT SUCH AS PIPES & CULVERTS • POWER POLES & CONCRETE BLOCKS • CONSTRUCTION OF BRIDGES, WHARVES & DAMS
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Qoya Forest Reserve, Lami G.P.O. Box 1165, Suva, Fiji Tel: (679) 336 1133 Fax:(679) 336 1036 Website: www.fijicement.com
Build Stronger with Pacific Cement
Fiji Industries Limited cement works is accredited by TELARC to the standards of ISO 9001:2008
Business Melanesia February 2014
agriculture
Construction company taps into agriculture
by Matilda Simmons
most farmers have yet to know about its availability, and affordability,” Mr Tokalau tells Business Melanesia.
Basic Industries Ltd is undertaking a campaign to see more farmers utilise their Aglime product in Fiji and across Melanesia.
Much of Fiji’s soils are naturally acidic or have become acidic due to continuous farming. The heavy cost of imported lime has been seen as a hindrance to crop productivity.
Aglime is manufactured by the company’s construction division Standard Concrete Industries (SCI) in collaboration with the AusAid Market Development Facility. It is developed by crushing limestone to granular powder and used by most farmers to improve crop yields and increase profits by removing acidity from the soil. Basic Industries head of Sales and Marketing Sai Tokalau says a lot of Fiji farmers remain unaware of the locally made product which they could get at relatively lower price than the imported ones. “We have roughly 30,000 – 40,000 farmers around the country, which we are targeting at the moment. The product called Aglime is new in the market, but
Tokalau says they undertook a 6-month awareness campaign but it seems more work needs to be done. “We’ve extended our marketing for another three months. There’s a plan to move aggressively in the market in terms of planning and promotion, then we will assess the market and supply of the product. At this stage we really need to make more farmers aware of this product.” The introduction of the Aglime product is just one of the ventures the Fijian company is hoping to tap into. Standard Concrete Industries use existing resources to manufacture Aglime, which is similar to quarry
products produced for the building and construction industry. Majority of the Fijian Holdings shareholders are engaged in the agriculture sector. 67 per cent of Fijian Holdings shares are owned by the 14 provinces in the country, held in trust by the Fijian Affairs Board while the remaining 33 per cent shares are held by private I Taukei entities and individuals. Collectively, these 14 provinces own 87 per cent of all land in Fiji. The Aglime product is being seen by some in the agriculture sector as the catalyst to improve farming efficiency. At present the company’s main market is in the Micronesian group. The company is involved in the construction industry as a manufacturer and supplier of construction material, namely readymix concrete, quarry aggregates and concrete products. Expansion and growth plans are being aimed at Melanesian countries.
MORE THAN SALES... At UMW, we understand that business is all about people not only meeting, butbut exceeding expectations. That’s why we provide: • Trained and qualified fitters specialising in Komatsu, Stihl, FG Wilson & Bomag products. • Service contracts and 24hrs call service on heavy machinery. • Range of parts and products for Forestry, Mining and Construction industries. • Genuine manufacturers oils and lubricants. • Perkins Genuine Parts for Agricultural, Industrial, Marine and Power Generation applications.
UMW NIUGINI LIMITED PO BOX 5243, Boroko National Capital District E-mail: enquiries@umw.com.pg
Port Moresby ph: (675) 325 5766 Kokopo ph: (675) 982 9799 Lae ph: (675) 472 2444
AUTOMOTIVE • EQUIPMENT • MANUFACTURING & ENGINEERING • OIL & GAS
Business Melanesia February 2014
Making aid work for Pacific development Long-term dependence on development aid in Pacific Island nations, many of which have been independent for 30-40 years, continues to cause concern.
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The World Bank reports that overseas development assistance (ODA) to the region amounts to 469 dollars per capita, compared to 64 dollars in Caribbean small states and 54 dollars in Sub-Saharan Africa. Pacific development experts are calling for greater political will for locally driven self-sustaining economic growth and development. International development cooperation requires a facelift that begs support from traditional and non-traditional donors whose record of increasing support, even to the detriment of recipient nations, continues, a spokesperson for the Vanuatu-based think-tank, the Pacific Institute of Public Policy (PIPP), told IPS.
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Equally, unwillingness or incapacity of our own Pacific Island leaders to halt the debilitating political mentality of aid dependence must be updated with our own understanding of the political, economic and socio-cultural motivations of donor states that are not always altruistic.
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Major donors to the region include Australia, New Zealand, the European Union, United States, France and Japan with the growing presence of China. Aid supports governments, community projects, local and regional organisations, such as the Secretariat of
the Pacific Community, and the intergovernmental organisation, the Pacific Islands Forum (PIF).
of Micronesia (FSM), Marshall Islands and Tonga are not on track to overcome poverty (MDG1) by 2015.
Emele Duituturaga, executive director of the Pacific Islands Association of Non-Governmental Organisations (PIANGO) in Suva, Fiji, believes the need for foreign aid will continue due to island states small isolated economies.
A 2009 community “aid listening” project in the Solomon Islands revealed issues such as misuse of aid funds, donor-led projects unaligned to local priorities, and “boomerang aid” characterised by large numbers of highly paid expatriate advisors and corporate contractors.
If foreign aid was seriously reduced, health and education standards would drastically reduce - with shortage of technical staff, lack of medicines and infrastructural challenges, she declared. Papua New Guinea, which has natural resource wealth, including oil, copper,
In 2013/14, PNG will receive 462 million dollars, but isnt expected to achieve any of the MDGs gold and natural gas, has so far failed to translate an economic growth rate of 6-11 percent since 2007 into development progress. In 2013/14, it will receive 462 million dollars, but isnt expected to achieve any of the Millennium Development Goals (MDGs). A core action by Pacific states to reduce aid reliance must be to better govern our own budgets and machinery of government to make the most of our own resources and any foreign inputs, PIPP said. Aid effectiveness is a key issue. Development assistance to Oceania from the Organisation for Economic Co-operation and Development (OECD) has increased from 1.2 billion dollars to 1.7 billion dollars since 2000. Currently aid dependent Pacific nations, including the Solomon Islands, Tuvalu, the Federated States
According to PIPP, the impact of corruption on aid and development in the Pacific Islands are staggering, and many in power have had an overwhelming tendency to personalise economic opportunities, public funds and resources. Duituturaga said that donors often attribute greater fiduciary risk in giving funds to small community groups and instead direct aid to governments and large NGOs that then misappropriate funds. Governments receive about 73 percent of aid to the region, according to PIF. Local communities need to be involved from the start to articulate an expressed need for donor funding and develop ownership and accountability for development assistance, she said. For PIPP, quantity risks outdoing quality of some aid programmes. The Tongan government aid management division, for example, is significantly challenged with managing 200 different donor projects in a small island state of 104,941 people. Lack of consistent monitoring also means that credible data simply does not exist to meaningfully measure progress against quantitative goals. Donor practices often serve foreign policy, rather than recipient development priorities. In 2002-03 Australia, the largest aid donor to the Pacific Islands, awarded aid contracts
Business Melanesia February 2014
worth 58.3 million dollars, of which 47.8 million dollars went to Australian companies. Duituturaga said donors have a tendency to bring readymade solutions for the Pacific, instead of investing in Pacific people coming up with our own solutions guided by Pacific expertise. A 2011 independent Australian aid effectiveness review reported that use of Australian contractors had halved in the previous five years. However, questions surrounding Australia’s aid programme and political objectives continue, most recently in relation to its controversial offshore asylum seeker detention centres that have been established in Pacific Islands such as Papua New Guinea.
The United States strategic foreign policy “pivot” in Asia parallels increasing aid to the Pacific region, in addition to its Compact of Free Association funding to the FSM, Marshall Islands and Palau. Motivations of China and Taiwan, both of which have massive resource extraction stakes in countries such as Papua New Guinea and the Solomon Islands to increase aid and concessional loans to the region invite closer scrutiny. With foreign aid amounting to more than 50 percent of government development
For PIPP, Pacific Islands living in debt often dance to the tune of those who provide much needed resources. Even when Pacific Islands are out of debt, they remain indebted in principle for the generosity provided to them in the past. The PIF-led 2007 Pacific Aid Effectiveness Principles and 2009 Cairns Compact on strengthening development co-ordination aim to increase Pacific ownership of regional development, donor and recipient accountability and aid alignment to national priorities.
to go before foreign aid is seen as consolidating, rather than impeding, self-determination. PIPP believes better poverty alleviation outcomes and addressing development barriers such as climate change demand less political interference in aid decision-making, while Pacific states need at the same time to boost local economic development through greater regional co-operation. Foreign aid should be complimentary to locally driven development which is flourishing in the informal, small and medium enterprise sectors, Duituturaga said.
SOURCE: IPS/PACNEWS
Since 2010 a peer review process among Pacific Island countries is supporting improved governance, public finance and aid management and national planning. But there is still a long way
Donor practices often serve foreign policy, rather than recipient development priorities. In 2002-03 Australia, the largest aid donor to the Pacific Islands, awarded aid contracts worth 58.3 million dollars, of which 47.8 million dollars went to Australian companies.
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Asking a developing nation that happens to be a resource rich neighbour suffering from internal and political woes to support a refugee policy that includes a dwindling development budget component equates to poor policy design and the worst diplomacy, the PIPP spokesperson said.
budgets in Tonga, Marshall Islands, FSM and Solomon Islands, there are potential repercussions for political and economic independence.
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Business Melanesia February 2014
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technology
58 Our Company, Your Company. TFL - 100% Fiji Owned
Business Melanesia February 2014
technology
Improving Business through technology Think back to how business was done a few decades ago. There was no email, internet, mobile marketing, telecommuting or smartphones. Now communication is instantaneous, huge amounts of information move through email and the internet and powerful tools are in the hands of owners and employees. Innovations in technology has improved operations at companies of all sizes and has helped turn small local businesses into global businesses. With easy access to information, work days are more productive and interacting has never been simpler. Create your Virtual Office because it doesn’t
matter if you’re at the local coffee shop or on the other side of the world, if you have your mobile device, work can be done! Take time to make sure everything works in/ outside the office. Personally, between iphone and ipad, I prefer iphone as it’s easy to carry, capable of checking and sending emails, takes great pictures, has a GPS navigation and social networking such as Skype, Whatsap and Viber to name a few. Here’s a handful of apps that can help you enhance your business. They are also my personal favourites.
by Raymond Lui Director Mactronics Ltd.
Polaris Office
Rockmelt Rockmelt began life as a Mac browser a few years back but newly released on the iPad. Its aim is to deliver an all in one web browsing, news reading and social discovery service. Resume Designer
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An all in one solution for viewing and editing Microsoft Word, Excel, and Powerpoint documents on the go. Compatible with both iPhones and iPad.
Getting a job these days isn't easy. And its practically impossible if you can't construct a decent resume. With Resume Designer, it offers job seekers the fundamental building blocks they need to attract an employer's eye. Box for iPhone and iPad Similar to dropbox but Box makes it easy to store, manage and work with all your files and documents whenever you are. Find My iPhone Track your missing iPhone, iPad or iPod Touch on a map.
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Hodava Avenue, Taurama, Port Moresby NCD T +675 3238377 F +675 323 7707
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social scene
Business Melanesia February 2014
Ratu Inoke Kubuabola presenting Dr Rodgers with his farewell gift
Lieutenant Colonel Ifereimi Vasu, Sharon SmithJohns and Christopher Pryde.
Ratu Inoke Kubuabola (center), Dr Colin Tukuitonga (left) and Dr Jimmie Rodgers
Fiji farewells SPC Director General
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The Secretariat of the Pacific Community Director General Dr Jimmy Rodgers and his wife Elizabeth were officially farewelled by the Fijian Government in Suva recently. At his farewell at Borron House, Fiji’s Minister for Foreign Affairs and International Cooperation Ratu Inoke Kubuabola, highlighted Dr Rodger’s outstanding contribution as the head of one of the region’s largest and oldest regional organisation. The Minister congratulated and commended Dr Rodgers for his leadership and his contribution to the region over the past eight years. His Excellency the President, Ratu Epeli Nailatikau was among senior Government Officials, Ministers, Members of the Diplomatic Corp and those from Regional Organizations at the farewell.
Mr. Robin Yarrow, Pio Tikoisuva and a guest at the farewell reception
Having a cocktail, event or product launch? Send us 4-5 of your pics with captions to appear in our social page. Email: msimmons@businessmelanesia.com
Luncheon hosted for former Miss South Pacific The Solomon Islands Chamber of Commerce and Industry hosted a business luncheon for the Miss South Pacific contestants in December. The lunch was held at the Heritage Park Hotel’s Renaissance Restaurant.
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Miss South Pacific contestants with members of the Solomon Islands Chamber of Commerce
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Business Melanesia February 2014
social scene
Left to Right: Inspector Gideon Kauke, Chief Inspector Kwago Like, Superintendent Brad Morgan ( AFP), Superintendent Andy Bawa, Met. Supt. NCD, Chief Inspector N’dranou Perou
Left to Right. Jim Andrews – Police Commander NCD and Central, Powes Parkop - Governor of National Capital District, Tom Kulunga - Police Commissioner, Michael Waipo- Deputy Commissioner Operations - Correctional Service
Australian and PNG Police officers at the function
Joseph Sale (Boroko Police), Kola Geri (SP Breweries), Snr. Inspector Gideon Ikumu (Police HQ) and Chief Inspector Steven Kaspou (Correctional Services HQ).
PNG Police function
Top & bottom: Invited guests at the event
Fiji President Ratu Epeli Nailatikau & Acting Australian High Commissioner to Fiji Glenn Miles cutting the Australia Day cake
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PNG Police Commissioner Tom Kulunga hosted a function for his officers, the diplomatic corp and the business community in January at Port Moresby’s Nature Park to thank National Capital District (NCD) Police officers for their effort in maintaining a peaceful Christmas and New Year.
Australia High Commission in Fiji hosts Australia day The Australian High Commission in Suva marked Australia Day on January 29. In what is being described as a sign of thawing relations between Fiji and Australia, Ratu Epeli Nailatikau, Fiji’s president was invited to mark the day.
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Acting Australian high Commissioner Glenn Miles confirmed to local media that Canberra is restoring full diplomatic ties with Fiji. The gathering at the High Commission is the first public engagement between the Australian diplomatic corp, Fiji’s Head of State and cabinet ministers since 2006.
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