Report
THE BILLION DOLLAR PACIFIC GAMES
THE PACIFIC SPYING GAMES
ISSUE 01 • JANUARY 2014
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spearheads the
HOW SAFE IS PORT MORESBY?
BSP Pursues Credit Corp
VANUATU’S $350M AIRPORT
Exploiting stock market incentives
MILLIONAIRE FARMER OF MELANESIA
FIJI - $5.00FJD • PNG - 10.00PGK • VANUATU - 250.00VUV • SOLOMON ISLANDS - 20.00SBD • NEW CALEDONIA - 500.00XFP
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Business Melanesia January 2014
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Nurturing you to the highest level of your career Aims
Programme Objectives
Excellence, flexibility and relevence are the aims of our Masters in Business Programme.The Programme is intended for managers, practicing executives, administrators and other professionals. The main aim is to provide them with knowledge and skills to enhance their performance and to enable them to assume broader responsibility in the rapidly changing environment faced by business and government alike.
• to build solid foundation skills that will enable USP MBA Graduates to keep acquiring sophisticated new knowledge after they complete the program; • to help managers deal with the complexities of doing business in multinational and global environment; • to equip managers with knowledge, understanding and skills so that they can respond effectively and creatively to the business opportunities and constraints of the South Pacific • to help develop greater self-confidence in ones ability and to implement decisions
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Business Melanesia January 2014
content
08 New beginning for MSG stock 10 Exploiting market incentives
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business managers for the 12 Training region
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New Vanuatu $350m airport set for construction
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the Bush to 28 From Urban Planner
Executive service
26 Port Moresby is safe for business 44 The spying game with Solomon Islands PM 33 Q&A Gordon Darcy Lilo
bonds between 40 Reaffirming Fiji and the Solomon Islands Reaffirming bonds between
42 PNG and the Solomon Islands ISSUE 01
63
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23 BSP Pursues Credit Corp
Milestone for Pasifika 56 Land Holdings
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The Billion Dollar Pacific Games PNG declares it is on track to host the biggest and most expensive Pacific Games
60 Mining: Striking a Balance
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The Spearheads
Farmer to millionaire
Business Melanesia January 2014
editorial
from the
editor Stanley Simpson
Like all business start-ups, we have thought long and hard, and of course like all business there is the element of risk that we have to endure and overcome to succeed. It is something we often take for granted when utilizing a product or service – the time, hard work, resources and
Publisher Dixie Pombe Business Melanesia Ltd, PNG Editorial and Creative Design Business Media Fiji Ltd Managing Editor Stanley Simpson
Marketing Manager Tomasi Raikivi
It is not easy starting a regional business, as it is not easy trying to put out a regional magazine.
The concept here is simple. Melanesian countries are poised for strong economic growth and greater economic integration under the Melanesian Spearhead Group free trade agreement.
However at the very least, for those that appear in Business Melanesia, we commit to ensure that decision makers across the 5 Melanesian countries will get this magazine delivered to them at our cost.
Our leaders are talking about it every chance they get, and many businesses across Melanesia are already making their move. There will be gains and losses, good breaks and risks, positive and negatives, opportunities and challenges to consider. We aim to provide sound, critical, fair and balanced assessment of the various initiatives being undertaken, but also tell the inspiring stories of people and companies who are making it against the odds. As I travelled through Papua New Guinea, Solomon Islands and Vanuatu to make a first impression, it is clear to see that many individuals and companies are trying to take advantage of this new era of business opportunities - to expand or further their investment. To project their image across the region, and find a way to break into the various markets. Or simply find a partner they can start negotiations with.
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
We all know how difficult it can be to be seen and heard. Business Melanesia will also endeavour to give similar amount of coverage to all the Melanesian countries – challenging though that will be, particularly with the Francophone New Caledonia. Like any business we will look to find solutions, and improve through experience. We are a magazine based in PNG, with a Fiji firm providing editorial and graphic services, and offices to be set up in Vanuatu and Solomon Islands as we grow. We welcome you to join us on this journey, as much as we want to know of your journey. A Merry Christmas and wonderful 2014 to you as we set this ship out to sea. Here it is – our first edition!
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.
ISSUE 01
Creative Director Germaine Lee
commitment that is put in by various people to get that product in someone’s hand.
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It’s always exciting putting something new out. This is the third magazine that I have started (4th if you also count the USP journalism newspaper Wansolwara) after Fiji Living magazine, and Mai Life magazine, and the thrill, tension and nervousness is there like it was the first time. Of course, the more you do it the more you are able to handle it better. In high school a teacher once referred me to the Ralph Waldo Emerson quote ‘Unless you do something beyond what you have already mastered, you will never grow.’ So here is Business Melanesia. Trying to be something. Trying to grow.
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Business Melanesia January 2014
message
A new beginning for the MSG message from the
Director General MSG Secretariat Mr Peter Forau Greetings from the Melanesian Spearhead Group Secretariat in Port Vila!
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Firstly, on behalf of the staff of the Secretariat and our Members, we wish to extend our very warm congratulations to the team of Business Melanesia for having the foresight and fortitude of publishing this new magazine. It is an achievement that manifests a sub-region that is growing in maturity and taking its rightful role as a leader in business and commerce amongst Pacific Islands. The magazine is a welcome initiative for Melanesia. We are delighted that the magazine is addressing a void in the area of business and other key information in Melanesia. A contemporary magazine which we can all be proud as uniquely Melanesian in its content and focus! The magazine will enable our business men and women, investors and Governments to make informed decisions on a multitude of opportunities that are inherently present and offered. Business Melanesia also offers a linkage between policy developments and business interests and prospects. As MSG’s economic integration deepens and unfolds, there is certainly renewed optimism for increased linkages in business opportunities in Melanesia, contributing to our leaders vision of a deepened MSG sub-regionalism and economic integration.
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In this context, I am deeply honored to be given this opportunity to say a few words on this auspicious occasion, to mark the launching of this new magazine – Business Melanesia.
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Indeed, for some time now the Secretariat has been contemplating increasing its visibility on the many business oriented policy initiatives that are intended to foster the growth of business in Melanesia. The
launching of this new magazine has come at an opportune time. A time when the MSG celebrates its 25th Silver Jubilee since our founding fathers saw it in their wisdom to establish our organization on 14th March 1988. This year 2013 has been a historic and momentous occasion in MSG’s history. Our MSG Leaders have endorsed the report of our Eminent Persons Group. A report deeply enriching in scope, depth and foresightedness which not only reviews the MSG’s performance over the past 25 years but sets out a very clear vision and plan for the MSG for the next 25 years. Our leaders have adopted a vision of: “An MSG community that is strong, integrated, enlightened, happy, prosperous, secure and caring.” It is a manifestation of the region’s commitment of “turning scars into stars”. This plan will set the necessary platform for a prosperous Melanesia focused on the objectives of Political Stability, Economic Prosperity, Social Equality and Inclusivity, and Sustainable Development. It also envisions an outreach program to the rest of the Pacific with the vision to integrate meaningfully into the wider regional and international economies. After successfully evolving from an organization emphasizing the deep rooted political endeavor of decolonization of the Melanesian Kanaks in New Caledonia in the eighties, the MSG has grown from strength to strength. Over the years, MSG has taken on mandates in trade, economic development, and more recently environment and climate change. The past five years have been one of consolidation for the Secretariat, since its establishment in 2008. Next year 2014 is a new beginning for the MSG. A Year of take-off! To facilitate this take-off, the MSG Secretariat is expected
to adopt a new institutional structure that is responsive to our members’ needs and expectations. 2014 is the beginning of the implementation of the MSG 2038 – “Prosperity for All” plan. Resource-rich Melanesia offers significant business opportunities for investors. We offer investors duty free market access opportunities under the MSG Trade Agreement. We offer mobility of skilled labor under the MSG Skills Movement Scheme. And we offer a labor market comprising approximately 9 million people and richly endowed in natural resources! In the very near future, we envisage increased capital flow across our MSG borders. Already, intra-MSG trade is growing. In the next two years, negotiations on the revised MSG Trade Agreement will focus on trade in services, investment, labor mobility and possibly public procurement. It will be an instrument for achieving MSG’s enhanced sub-regionalism and our Vision for the next 25 years. The outcome of this integration is an anticipated growth in intra-MSG trade, investment and services. An indication of growth and maturity! This will be the basis for achieving the organization’s objective of social equality and inclusivity. The signing of the Declaration on Environment and Climate Change by
2014 is the beginning of the implementation of the MSG 2038 – “Prosperity for All” Plan. Resource-rich Melanesia offers significant business opportunities for investors. We offer investors duty free market access opportunities under the MSG Trade Agreement.
Business Melanesia January 2014
message
message from the
Publisher Business Melanesia Dixie Pombe
Leaders, and endorsement of the five (5) MSG Green Growth Goals is again a major milestone achievement. Indeed, a true indication of the growing realization amongst MSG members on the importance of sustainable development. Closing the gap between economic and ecological efficiencies and promoting sustainable business opportunities are two of the key pillars of MSG’s Green Growth Goals.
Again the magazine is a welcome initiative for Melanesia. We look forward to viewing the key highlights of business prospects in each economic sector in Melanesia in the magazine’s future editions. On behalf of the MSG Secretariat staff and Members, I wish to congratulate Business Melanesia for this milestone achievement and look forward to many exciting years ahead!
of Melanesia, as well as feature major projects and business ventures.
I give warm greetings to fellow businesspeople, fellow Melanesians and friends.
We are proud and delighted of the partnership and support we have received from the Melanesian Spearhead Group (MSG) secretariat, as well as from companies and business people across Melanesia.
From Port Moresby to Suva, Honiara to Port Vila and Noumea, Lae and Lautoka, and all the various other towns, centres and cities – the Melanesian region is vibrant with a diverse mix of companies - large and small, private and public, foreign investments and local home grown enterprises. These are the people we want to connect in the magazine. Things are happening and if we know more about what each other is doing, we can make more things happen. We are seeing unprecedented economic activity within Melanesia and some really exciting projects and entrepreneurship, both big and small. Business Melanesia aims to tell the dynamic story of how Melanesian businesspeople and Melanesianbased companies are emerging and establishing themselves in their own countries, within the Melanesian group, as well as in the Pacific, Asia Pacific and international marketplaces. It will also highlight business news, trends and inspiring profiles of successful businesspeople and leaders
Business Melanesia aims to support the MSG leaders vision for the next 25 years which is to focus on political stability, economic prosperity, social inclusivity, and developing sustainably, as well as greater economic cooperation and integration. Think of it – we are 9 million people, with the largest land mass in the Pacific, 90 per cent of the natural resources and poised to be the region of opportunity, prosperity, and sustained economic growth. It is time we bring all these together, talk about it, analyze, summarize and provide some in-depth look into weighing the various perspectives.
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Next year, MSG will hold two major events – the 5th Melanesian Arts and Culture Festival in Papua New Guinea and the inaugural Melanesian Games in Kanaky New Caledonia. For the first time young people from Melanesia will be brought together to compete in sports activities and be given the opportunity to attend forums to discuss common issues surrounding the region of Melanesia. We will be sharing more information on these major events in the coming months.
Gude, Bula, Halo Oloketa, Alo, Bonjour and Hello,
We invite you to come on board. We want to inform, build and find solutions. Melanesia has a wealth of human resources and expertise in various sectors who are not being fully utilized or given a platform to be heard. Business Melanesia aims to provide this platform. We aim to connect a growing Melanesia.
MSG Secretariat Port Vila, Republic of Vanuatu
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We wish you and your family and all our colleagues a Merry Christmas and a prosperous 2014.
Finally, as we approach the festive season, we wish all the people of the MSG a blessed Christmas and a Prosperous New Year 2014!
9 The Business Melanesia team
Business Melanesia January 2014
stock market
South Pacific Stock Exchange (SPSE) market indicators & activities
ISSUE 01
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by Jinita Prasad CEO South Pacific Stock Exchange
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The South Pacific Stock Exchange (SPSE), embraced the year 2013 with a strong determination to forge ahead its strategies in terms of trading opportunities and providing a platform for capital raising. In face of this demanding environment where stock markets worldwide have witnessed challenging times amidst increasingly soft economic conditions, an ongoing challenge for the Exchange is to continuously reinvent itself on the marketing front. The Exchange is acutely aware of its responsibilities and the central role it plays in enabling market efficiency through capital raising and distribution, investor confidence and providing stability to facilitate economic growth. To ensure business sustainability and to enhance growth, our focus has always been to increase the number of listings, expand the multiplicity of investment products offered via the Exchange platform as well as develop an investment culture in Fiji, which inturn will boost the level of market activity. The incentives announced in the 2014 national budget address by the Fiji Government surely lays a platform for the Exchange to envisage deliverables both in terms of listing and trading. The reduced corporate tax rate of 10% across the board to companies listed on the SPSE will surely communicate
Exploiting stock market incentives a gesture amongst those companies that have contemplated listing for a while to accelerate their moves to join SPSE’s official list. This tax incentive extends to offshore companies, which falls in line with SPSE’s plans to become a regional exchange through attracting some of the performing blue-chip companies from across the South Pacific region to list here. As an enticement to boost the overall level of trading on the stock market, any gains from trading of shares on the Exchange will be exempt from Income Tax and Capital Gains Tax for residents. Exemption from Capital Gains Tax also extends to non-residents. With this incentive, the Exchange aims to witness various institutional and retail investors using the capital markets as an attractive means to realise long-term returns. Furthermore, all consequential gains arising from any restructure, reorganisation or amalgamation of private companies for the purpose of listing on the Exchange will be exempt from any taxes. This will entice many private companies, in particular, those who have come to a stage where listing is the ideal next step, to utilise the capital markets as a means to further strengthen their capital flows, level of good governance practises and an elevation to another level of their development cycle by going public.
Any gains from trading of shares on the Exchange will be exempt from Income Tax and Capital Gains Tax for residents. Exemption from Capital Gains Tax also extends to non-residents.
Business Melanesia January 2014
stock market Market Capitalisation As a barometer of investor sentiments, the SPSE market has wavered to selling pressures in certain listed securities which rally as market heavyweights and lost 12.10% of its market capitalisation on a year-to-date basis until November 2013. Telecommunications giant, Amalgamated Telecom Holdings Limited (ATH) remained the market heavyweight comprising 35.89% of the entire market as at the end of November 2013. It was followed by the manufacturer of alcoholic beverages, Paradise Beverages (Fiji) Limited (PBF) and the supermarket chain, RB Patel Group Limited (RBG) making up for 17.70% and 10.04% respectively of the overall market capitalisation. By industry sector, the communications and the media sector held the largest portion of market capitalisation due to the presence of the ATH.
Stock Indices On a further performance front, the SPSE Total Return Index (STRI), which includes the value of dividends and interests that investors receive concluded at a value of 1741.16 as at November 2013, an 8.04% fall in comparison to the 2012 year end value. However, SPSE’s Equal Weighted Total Return Index, which gives the Summary of Security Trading
Dec-12
Nov-13
% Change
816,249,812
717,456,366
-12.10
SPSE Total Return Index (STRI)
1893.30
1741.16
-8.04
Equal Weighted Total Return Index
2420.21
2592.21
+7.11
Market Capitalisation ($)
Trading Activities
4.75%
Insurance
0.48%
Comm/Media
41.68%
Retail
10.04%
Manufacture & Wholesalers
32.43%
Automotive
5.07%
Banking
3.02%
Forestry
2.55%
In terms of overall trading activity, 7.86 million securities exchanged hands in 927 transactions garnering $12.47 million in value on a year-todate basis until November 2013. The most promising aspect of trading this year has been the increase in the Summary of Security Trading
number of trades by 36.52% which indicates higher participation in the stock market by the retail investors. SPSE carries out a number of investor education programs to instil the saving and investing culture in the general public and this is being positively reflected through the increase in order flow especially on the buying side. Jan-Nov 12
Jan-Nov 13
% Change
679
927
+36.52
Volume of Securities Traded
19,266,843
7,855,676
-59.23
Value Traded ($)
118,373,645
12,467,787
-89.47
Number of Trades
For any further information, please contact South Pacific Stock Exchange on +679 3304130 or visit our website www.spse.com.fj.
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Investment
same weight to all listed companies witnessed 7.11% increase and concluded the month of November at a value of 2592.21. The equal weighted index is vital given that the three largest securities make up 63.63% of the total market capitalisation, thus it is important to maintain a form of measure to reflect the general performance of the market without being skewed by the heavy-weights.
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The pie chart below indicates the contribution of each sector towards the overall market capitalisation.
Amalgamated Telecom Holdings Limited (ATH) remained the market heavyweight comprising
By industry sector, the communications and the media sector held the largest portion of market capitalisation due to the presence of the ATH.
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Business Melanesia January 2014
Training business managers for the region by Professor James McMaster There is a chronic shortage of welltrained managers in Melanesia and the lack of managerial capacity is a major constrain to economic and social development
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www.businessmelanesia.com
I congratulate the entrepreneurs who have launched Business Melanesia. It will play a most valuable role in supporting networking and disseminating information on doing business in Melanesia including the latest business innovations and developments and on export oriented business projects focused on the global markets.
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I take this opportunity to inform readers on the activities of the Graduate School of Business (GSB) at the University of the South Pacific that is a successful self –funded school in the Faculty of Business and Economics. GSB has grown rapidly over that last five years as it has expanded its operations to deliver its internationally accredited Master of Business Administration (MBA) program on a face to face basis at the USP campuses in Solomon Islands, Vanuatu, Marshall Islands, Cook Islands, Tonga, Samoa and in Fiji in Nadi, Labasa and Suva. The MBA programme was established in 1995 and was the first MBA in the South Pacific region. A special feature of our MBA is the strong focus on training our students in responsible, sustainable business management practices. A core course in our MBA is on the South Pacific business environment. It is an integrative course that draws on the knowledge and skills learned in business economics and it analyses the whole spectrum of sustainable business development challenges for enterprises operating in the South Pacific. It focuses is on Pacific enterprises and the competitive environments in which they operate, their future growth prospects and long-term strategy for sustainability. The topics include corporate social responsibility, regionalism, utilization
of natural resources, impact of culture on business problems, labour relations, national economic planning, public policy analysis, government support for business, entrepreneurship, privatisation, private sector development and the consequences of foreign investment. The relationship of business, sustainable development, culture and the natural environment as well as the ethics of various viewpoints and practices constitute major themes. The course involves the analysis of Pacific Island business enterprise case studies and the growth prospects of industries and innovative products and services. The core role of our MBA programme is to train and empower business leaders, managers, civil servants, entrepreneurs and leaders in non-government organisations who will drive sustainable socio-economic growth particularly in USP member countries. Why Expand to the Region? Our decision to expand our face to face delivery of our MBA was demand driven. In the early years of our MBA programme, managers from the regional countries came to our headquarters in Suva for one year to undertake their studies on a full-time basis on leave from their employment. On their return to their enterprises many were promoted to CEO positions and recommended their middle managers to enrol in our MBA. We now have over an thousand MBA alumni who are playing leadership roles in their countries. Our Alumni is a most valuable network and we greatly benefit from networking with them to identify suitable candidates for admission to our MBA programme. There is a chronic shortage of well-trained managers in Melanesia and the lack of managerial capacity is a major constrain to economic and social development. Project management skills are in short supply. Many aid funded projects suffer
implementation problems because of the lack of experienced capable local project managers. Our MBA course on Project Management is one of our most popular and valued courses. Promoting Entrepreneurship and Private Sector Development in Melanesia It has long been recognised by all Melanesian countries and recorded in their National Strategic Development Plans that entrepreneurship, business innovation and private sector development are the key driver of economic growth, employment generation and poverty reduction. However when it comes to allocating funds in their national budgets, insufficient funds are allocated to fund private sector support programs and the activities of the small business centres, youth entrepreneur training programs, microfinance schemes, national on-line business toolkits, business mentoring, small business performance assessment and business incubators. Our MBA at the Graduate School of Business, USP provides our students with a course on new venture creation that provides comprehensive training in all aspects of starting a new business and preparing a business plan and marketing strategy. There are many valuable and innovative entrepreneurship training programmes being delivered by non-government organisations and religious organisations in Melanesia such as the Tutu farmer training program in Taveuni in Fiji. I know that entrepreneurship and business innovation will feature in the future additions of this magazine and that the achievements of entrepreneurs and lessons learned from their experiences will be highlighted. Sharing of these experiences in entrepreneurship among the Melanesian countries is of value to all interested in promoting entrepreneurship support programmes.
Professor James McMaster is the Acting Head of School, USP Facilty of Business & Economics
cover story
Business Melanesia January 2014
the Spearheads
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by Stanley Simpson
They are the leaders of the biggest countries of the South Pacific, directing the use of 90 per cent of the resources, and commanding approximately 9 million people. The leaders of the membership of the Melanesian Spearhead Group have had to manage major challenges in 2013, and face bigger challenges in 2014 as they try to explore and exploit opportunities to grow their economies and improve the livelihoods of their people.
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They will also lead pioneering efforts toward greater and unprecedented economic integration between Melanesian countries. Business Melanesia provides a brief overview of their accomplishments, issues, challenges and vision.
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Business Melanesia January 2014
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Business Melanesia January 2014
cover story
Peter Charles Paire O’Neill
Prime Minister, Papua New Guinea
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When Peter O’Neill took over as Prime Minister of PNG in August 2012, the country had just undergone a serious political crisis that threatened to derail progress towards the economic boom many saw coming. Many wondered loudly if politics in PNG could get any worse. O’Neill’s efforts to move quickly to establish control and political stability, encourage investor confidence, and set a solid foundation for growth and development was further hampered at the start by legal challenges. Maneuvering his way through the various affiliations and complications that characterize PNG politics, O’Neill broke through with a certainty and confidence that surprised many domestically and internationally.
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A year and a half on PNG’s international standing has never been better. World leaders, major investors and with them, the international media from the Japan Times, New York Times, Time Magazine, China Daily - among others are paying Port Moresby a visit to see for themselves if PNG could possibly be an emerging tiger.
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While Obama’s absence stole the show at APEC allowing the Chinese and the Russians to take centre stage, it was the
announcement that PNG would host the next APEC meeting in 2018 that had many rubbing their eyes. Suddenly, the nation once seen as having the most dangerous and uninhabitable city in the world, and who featured regularly in lists of the top 10 violent places not to visit, would be hosting one of the world’s most premier events – the APEC Summit. Leaders from the most powerful and economically influential countries in the world will soon be rubbing shoulders in Port Moresby, all at one time. Many still find the idea impossible – but you could not get a more spectacular opportunity to show the world the new PNG and O’Neill is up for the challenge. Preceding APEC will be the Melanesian Festival of Arts in 2014, and the Pacific Games in 2015 both significant regional events in their own right. His tenure has not been without controversy. Actions on Ok Tedi and the Manus Island deal with Australia drew a lot of flak and criticism but O’Neill has shown ever since he assertively took over as PM, the ability to make bold political and economic calculations. Domestically, like all PNG prime ministers – he is at times vulnerable. Corruption remains a major hindrance
that he needs to tackle, and there are major decisions to be made in 2014 on certain significant loans and the operations of state owned enterprises. However O’Neill is presiding over an economic boom – and despite the wobble of the sliding kina – PNG’s growth is expected to one of the best in the world next year. It is a growth he is sharing with his neighbours exemplified by the $50 million kina to support Fiji’s elections and $5 million each to Tonga and Tuvalu for cyclone and climate change relief. One of his first state visits was to Fiji, overseeing and encouraging PNG investments and greater partnerships. He then this year hosted the biggest Fiji trade delegation to visit his shores. PNG is reaching out for more trade with the Melanesian countries, and the Melanesian countries are eyeing the opportunities that are there to be taken from their bigger brother, especially once things open up further within the MSG free trade agreement. Under O’Neill, PNG is taking on a more prominent role within the Melanesian Spearhead Group and finally living up to its role as a regional leader.
Business Melanesia January 2014
cover story
Voreqe Bainimarama
Prime Minister, Fiji Islands the Melanesian Spearhead Group. He has also outmaneuvered Australia - in particular their efforts to remove Fiji from any UN Peacekeeping operations.
He has however successfully mobilized the Melanesian family behind his roadmap for ‘real democracy and sustainable socioeconomic development’ for Fiji.
The stubborn stalemate that existed for years between Fiji and the US, Australia and NZ was cleverly dismantled by Bainimarama’s growing cooperation with China and Russia (and increasing number of diplomatic relations with non aligned countries including those from the Middle East, South America and Africa) – which forced the ANZUS group to reflect how this was not going their way.
His critics may disagree but in essence Bainimarama has always had a plan on how he will achieve his vision for a better Fiji – and when confronted with sudden or unexpected challenges has shown the resilience and the ability to make strategic counter steps. Significantly he has not been intimidated by the threats or pressure put to him by the bigger countries that oppose his rule, or the sanctions imposed such as the EU’s removal of aid to the critical sugar industry, or Australia and New Zealand’s travel bans.
Fiji’s removal from the Pacific Islands Forum has also backfired with Fiji well and truly putting the spanner into the works of the regional body. Bainimarama has come to the fore as one of the leading campaigners of the MSG trade agreement and greater economic integration within Melanesia Businesspeople have had little to complain about in the last two budgets presented by Bainimarama, and even social workers have described it as ‘propoor’.
He has assumed chairmanship of the Group of 77 (G77) and China, chairmanship of the International Sugar Organisation, and was chairman of
The country has undertaken infrastructure developments initiatives such as free education, taxes and policies to facilitate
bold and with and
The thorn at Bainimarama’s side is that his opponents still see him as a dictator lacking transparency, accountability and the mandate to make the decisions he has made. There is no doubt however that Bainimarama enjoys widespread support throughout the country for the developments his Government has put in place. Bainimarama has consistently stated that he does not want democracy for the sake of democracy. That there needs to be in place entrenched systems that hold elected leaders and public office holders accountable and steer away from the politics of racial division that has almost destroyed the country at least twice. In September, a new Constitution and new electoral system for Fiji was unveiled, and after ruling Fiji for the last seven years, Bainimarama has announced he will stand in the country’s national elections to be held before September 2014. That is where he will ultimately be judged.
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Under his leadership Fiji has achieved remarkable diplomatic success through shrewd and strategic alliances, or by simply filling the gaps that existed previously.
encourage business among the best in the region.
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No other leader has both inspired and divided the region as much as Fiji’s Prime Minister Commodore Voreqe Bainimarama.
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Business Melanesia January 2014
cover story
Gordon Darcy Lilo
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Prime Minister, Solomon Islands
Solomon Islands Prime Minister Gordon Darcy Lilo has taken on the challenge to lead his country to the next stage - beyond the Regional Assistance Mission to the Solomon Islands (RAMSI), and assert greater independence to shape their development. The major goal he has set himself is growing the Solomon Islands economy He has declared that he needs to focus on sparking the economy, to strengthen and broaden its base, and create opportunities for Solomon Islanders to enjoy a good livelihood. The Solomon Islands has a narrow economic base and largely relies on natural resources for its revenue.
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For the economy to grow, Lilo knows well that the country needs political stability, and cannot afford a return to the past.
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“I am confident that our recent history of armed conflict will teach us that violence can only take us in two directions, backwards and downwards. It is my hope that we do not forget too quickly the effects of conflict but learn from the shortcomings and failures which led to the conflict and makes the hard shifts in
action necessary to create a different and better country,” he has said. “We must leave the past behind and build a community that we can be happy to be part of and proud to pass on to our children and their children. “ While his focus has been on the domestic front, Lilo has been a strong supporter of Melanesian solidarity and the rights and freedoms of Pacific peoples. In May 2013, supported by a number of other Pacific countries he introduced the motion which led to the United Nations General Assembly re-inscribing French Polynesia on the United Nations list of Non-Self-Governing Territories. The move drew a strong denouncement from France. Through Lilo’s term there have been significant investment in infrastructure around the country, and the government has also begun to implement its obligations under the Extractive Industries Transparency Initiative (EITI). In terms of spreading development, the Government is now directing capital to the rural areas where most of the people and resources are.
Many analysts see the Solomon Islands with its rich resources as the ‘next big thing’ as long as the foundation is laid right. The Government also has to resolve the alleged corruption and controversies surrounding the logging industry and ensure a more sustainable development process. Lilo presided over the Prime Minister’s Roundtable on Development, Society and Environment in November 2013 to design a development path for the country. “It is important to rethink the development path the Solomon Islands has been on for the last thirty five years and to project the kind of future the Solomon Islands wants – one that is inclusive and sustainable in the medium and long terms,” he said. “Together we can bring about transformational change, change that is desperately needed for our country to shift from this economic paradigm which excludes people, to one that is more in line with our cultural values and respect for the environment that we live in.”
Business Melanesia January 2014
cover story
Moana Carcasses Kalosil
Prime Minister, Vanuatu
His first 100 days in office was marked with some real shake-up including pulling out of a defence cooperation with Indonesia, telling China to relocate a major aid project, and revoking the diplomatic passports that the previous government gave to a string of roving ambassadors. One of them was the roving ambassador to Russia, who struck a deal to get 15 per cent of whatever aid money she could attract. ABC Pacific Correspondent Sean Dorney reported that: “One of the first acts of the new prime minister of Vanuatu was to haul his cabinet ministers, senior officials and even the diplomatic corp out of the capital Port Vila to a part of the country they don’t often visit, the northern most province of Vanuatu which borders the
Solomon Islands. It’s the first time that has been done and they held meetings with community leaders. But Moana Carcasses Kalosil is used to breaking the mould. He is Vanuatu’s first non-indigenous prime minister. He was born in Tahiti and his parents moved to Vanuatu in 1965, when it was still a colony jointly administered by France and Great Britain.” Under his leadership Vanuatu remains the strongest supporter of Melanesian independence movements in the Pacific particularly for West Papua. “I’m saying as Prime Minister, I want this issue of West Papua to be heard. I want them to be part of MSG, to be members, and I am going to try to make sure they do become members because it is important for us,” he said earlier this year.
of ‘blackbirding’ saying they had to recognize a ‘shameful’ part of history. He wants Vanuatu to benefit more from trade and has said he does not want NiVanuatu to be mere spectators in the country’s economy. “When he became PM in March this year, he released a list of things he wanted to achieve in his first 100 days in office and he has completed more than 50 per cent of that list,” Tony Wilson, the editor of the Vanuatu Independent newspaper told Business Melanesia. “This has typified his leadership, he is seen as a ‘can do’ Prime Minister and things have happened in the country since March. He also boasts the biggest majority of MPs seen here for many years and it is the most stable we have seen in government in Vanuatu for some time.”
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He may be the first naturalized citizen to become Prime Minister of Vanuatu but Moana Carcasses Kalosil has displayed the same principled forthrightness and defiance that has characterized and defined Vanuatu leaders over the years beginning with the founding Father Walter Lini.
In September this year he again raised the issue of West Papua at the UN General Assembly. In August this year he called on the Australian government to apologise for the treatment of people taken from Vanuatu during the notorious era ISSUE 01
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Business Melanesia January 2014
cover story
Victor Tutugoro
MSG Chairman / FLNKS Representative
Kanak and Socialist National Liberation Front
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It is perhaps fitting that at the 25th anniversary of the MSG, a Kanak should take the position as chairman of the Group. For the decolonization and independence of New Caledonia as championed by the Kanak and Socialist National Liberation Front (FLNKS) was a driving reason why the MSG was formed in the first place. Former Prime Minister of Papua New Guinea Sir Michael Somare said as much at the 25th anniversary independence celebrations in Kanaky New Caledonia earlier this year, when he declared:
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“MSG countries owe it to the Kanaky people to remain true to their commitment to defend and promote independence as the inalienable right of indigenous peoples of Melanesia as espoused in the Agreement establishing our organisation.”
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It is a pity that many young Melanesians today are unaware of the history and ambitions of the FLNKS, of the bitter and violent struggles and suppression they had to endure in the 1970s and 1980s, and of the great Kanak leaders such as Yann Celene Uregei, Eloi Machoro, Jean-Marie Tjibao, and
Yeweni Yeweni who wanted nothing more but to be independent like their Melanesian brothers and sisters. The pro-independence FLNKS is made up of four political parties - the Union Calédonienne (UC), Union Progressiste Mélanésienne (UPM), Parti de Libération Kanak (PALIKA) and Rassemblement Démocratique Océanien (RDO). Victor Tutugoro, the leader of the UPM is their spokesperson and representative to international bodies, hence his chairmanship of the MSG. Tutugoro was the President of UPM from 1996-2001 during which time he participated in the negotiations of the Noumea Accord, of which he is a signatory. His chairmanship this year was marked with a historic official address to the Parliament of Vanuatu. In his statement to Parliament Tutugoro reaffirmed the pillars that will guide his tenure for the next two years and called on leaders not to lose sight of the decolonisation of Melanesia and political emancipation for the people of West Papua and Kanaky.
Tutugoro also alluded to the concept of Parliament of Melanesia, which was adopted by MSG Leaders in June 2013. MSG Parliamentarians could be involved in discussing broader cooperation arrangements within the MSG and would be a catalyst for strengthening intra MSG cooperation. The Secretariat has been tasked to begin scoping the concept, ramifications and applicability. The MSG Chairman reaffirmed the need for MSG members and the Secretariat to develop a roadmap for the implementation of the MSG Eminent Persons Group (EPG) Report adopted by MSG Leaders at the 19th Summit in Noumea. Tutugoro qualified the EPG Report as “a report which will give MSG a new direction and a new vision for the next 25 years, and which will define the MSG community as well as to determine the new geopolitical and geostrategic contours in the Pacific region.”
Business Melanesia January 2014
At a Glance The following statistics were taken from forecast projections provided by the Asian Development Bank.
GDP growth
(2014 Asian Development Bank Forecast)
POPULATION FIJI
874,742 PNG G
PN
% 6.0
u uat Van
3
.4%
7,167,010
%
3.3 nia ds o Fiji n d a e Isl Cal on New om l o S % 2.4
% 4.0
SOLOMON ISLANDS
549,598
VANUATU
247,262
254, 5251
Inflation
PNG
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NEW CALEDONIA
7.5%
Solomon Islands 4.0%
Currency
2.5%
Vanuatu
2.0%
New Caledonia 1.40%
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Fiji – Fijian Dollars (FJD) PNG – Kina (PGK) Solomon Islands – Solomon Island Dollars (SBD) Vanuatu – Vanuatu Vatu (VUV) New Caledonia – CFP franc (XPF)
Fiji
(Source: Asian Development Bank Projections, Trading Economics)
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Business Melanesia January 2014
fiji export council
ISSUE 01
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improve market access through regional and external trade
22
For details contact us on 3316 344 or email: info@fijiexportcouncil.com Or visit us at www.fijiexportcouncil.com
Business Melanesia January 2014
BSP pursues Credit Corp subsidiaries purchase by Matilda Simmons
Despite the earlier rejection of their offer to buy Credit Corporation’s four finance subsidiaries, Bank South Pacific (BSP) is still pursuing the deal to secure all of the Melanesian interests - Credit Corporation Finance Ltd, Credit Corporation (Fiji) Ltd, Credit Corporation (Solomon Islands) Ltd and Credit Corporation (Vanuatu) Ltd. BSP Fiji Country Manager, Mr Kevin McCarthy told Business Melanesia that there were still ongoing discussions but declined to discuss the subject further.
On 11th September 2013, BSP had entered into negotiations with Credit Corporation to acquire Credit Corporation (PNG) and its subsidiaries in Fiji, Solomon Islands and Vanuatu for a sum of K250 million (F$190.8m). The buy-off would mean BSP acquire Credit Corporation’s financial services businesses, and end Credit Corporation’s activities in the financial services market. Credit Corp would be left with its property companies - Credit House Limited, Era Dorina Limited and Ela Makana Development Limited and a total of 39,848,331 shares in BSP – an 8.9% stake.
The LEA had valued the buy off range to be between K196m to K224m adding
But three of the biggest shareholders of Credit Corporation thought otherwise. Teachers Savings and Loans Society Ltd (TISA), who own 15.3% of Credit Corp rejected the offer outright, urging fellow shareholders to do the same prior to their general meeting in October. Nasfund and Nambawan Super Ltd are the other major shareholders with 18.7% and 15% stake in Credit Corp. “The TISA board rejects the recommendation to sell Credit Corp and strongly urges all shareholders to do likewise,” TISA’s Gabriel Tai reportedly said. PacNews reported that TISA did not support the sale as the Credit Corp board and management were not showing innovation and willingness to turn challenges into opportunities, Credit Corp had not been assessed for its performance and what was anticipated in the future, and the independent expert report (IER) was only focused on assessing the valuation of CCFL and testing the fairness and reasonableness of the BSP offer. Questions sent to TISA Chairman Mr Gabriel Tai and the BSP Chairman, Mr Kostas Constantinou were not returned while Nambawan Super Ltd Chairman Sir Nagora Bogan, the chairman of Nambawan Ltd cited conflict of interest.
For the year ending 31 December 2012, Credit
Corp recorded profits
at K106.11 million (US$50 million). “I am sorry that I am unable to assist here because I am also a director on the board of BSP and am conflicted,” he emailed Business Melanesia. In recent years Credit Corporation has enjoyed significant growth especially in the PNG economy. Credit Corporation (PNG) Limited commenced business in 1978 as a general finance company diversifying itself into a range of business activities including owning several properties and investments. For the year ending 31 December 2012, the company recorded profits at K106.11 million (US$50 million). Corporation Chairman Garth McIlwain valued its assets at over K1 billion ($US470 million). Despite recommendations by the Credit Corp board to sell its subsidiary companies, the shareholders have a different view. BSP is not letting up though. Interesting discussions are ahead.
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A Lonergan Edwards & Associates Ltd (LEA) Report was engaged by the Credit Corporation Board to provide an independent expert’s opinion into the deal after BSP’s unsolicited offer in December 2012.
that the K250million (US$117m) offer by BSP was “reasonable and fair.”
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“There are still some ongoing discussions with Credit Corp (but) it is not appropriate at this stage for us to make any comment on your questions,” Mr McCarthy emailed.
BSP and Credit Corp offices side by side in Honiara, Solomon Islands
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Business Melanesia January 2014
Tackling non-tariff barriers to trade by the Fiji Export Council
NON-TARIFF measures are simply measures that nations adopt to prevent access of certain products into their market - usually aimed at protecting their local industry. Most often exporters are slapped with impossible demands and regulations or requirements before they can be considered.
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These are both time consuming and costly, as it is critical for exporters to get their product to the market on time. For instance, it is as simple as getting a newspaper out on the street before your competitor. Only this time you face regulations as to how your newspaper needs to package itself, provide a proper masthead or improve the quality of your newsprint. On an international level, an example was when Fiji’s fish was delisted from the European Union’s list of imported goods for failing phytosanitary standards, and had to go through a maize of requirements which included establishing a competent authority. This became the Food and Health Safety Unit now based in Toorak, Suva.
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Tests for various diseases needed to be conducted before Fiji’s fish was allowed to find itself back on the export list for the EU. Heading the charge of returning Fiji to the EU was Golden Ocean based in Walu Bay, a company that has processing plants in Kiribati. But the ban denied Fiji access from European markets for a number of
years before it was approved. That was enough time to affect business ventures that had invested so much money into infrastructure and improvements. Fiji Fish alone recorded losses of $6m a year in gross sales from the delisting. The industry itself exported about 675 tonnes of tuna, worth about $10million per year to the EU market
“The MSG is a regional group with huge potential. Together, we can achieve remarkable gains for the people of our countries. before the delisting. Fiji as a whole lost about $US18m-$US25m ($F32.91m$F45.71m) as a result. Many of the same firms took drastic measures such as redundancies and other cuts to save them money and keep their companies afloat. This was the case with Fiji’s fish business sector, which lacked information capabilities and facilities needed — but we learnt. While it is a continuous global effort to increase economic liberalisation that seek to eliminate or reduce tariffs, there has been a steady increase in the number of non-tariff measures over the past decade. Non-tariff barriers are particularly challenging when it comes to trading agreements.
But we reiterate the sentiments of Fiji Prime Minister Commodore Voreqe Bainimarama at an MSG special summit where Melanesian states began to tear down these barriers so more trade could flow between members. “The time has come to face this problem head-on and eliminate all tariff and non-tariff barriers on trade in goods. I urge all of us to work with our relevant agencies and stakeholders to overcome the roadblocks and regulatory challenges and work toward the full implementation of the MSG Trade Agreement,” Commodore Bainimarama said. “The MSG is a regional group with huge potential. Together, we can achieve remarkable gains for the people of our countries. Notwithstanding our individual sovereignties, we must continue to expand economic relationships within the bloc, which will help us focus individually on our respective strengths.” While there are 9 million consumers in the Pacific, permanent secretary for Industry and Trade Shaheen Ali said penetration into this market had been slow because of a number of issues such as high import tariffs, stringent biosecurity requirements and high freight charges. So we, as a group of trading cousins, need to see where we have faltered in the past and ensure that we continue to thrive on our own economies and intra economies so that we grow together.
Business Melanesia January 2014
PACIFIC
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www.clickpacific.com
ISSUE 01
Click Pacific Limited, Port Moresby NCD, Papua New Guinea Phone: +675 70091076
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PNG’S PREMIERE AUDIO/VISUAL PRODUCTION FIRM
26
ISSUE 01 www.businessmelanesia.com
Business Melanesia January 2014
profile
Port Moresby
is safe for business
Police chief of South Pacific’s biggest city assures visitors it is okay to come
It was once labeled one of the most
says Bawa, “and a good thing is when we
can just call me and I will ensure their
dangerous and unlivable city in
have such events, people throughout the
concerns are addressed.”
the world – but for Port Moresby’s
country rally and show their support, so
Metropolitan Superintendent Andy
it is not just the Police, but the people,
Bawa that is a thing of the past.
the communities that embrace and
“That may have been correct in the past,
welcome our visitors.
He also pointed to good working partnership with the Australian Federal Police. 47 AFP officers are currently working with the PNG Police to help
but not now, and it wont be in the future”
“They know that this is an event of
with capacity building, assisting with
he declares.
significance and an opportunity to
training supervision and management.
“We are improving our policing in terms are a lot of things happening in the country in terms of the economy, so there
are really keen to change the image and perception of our country that is often held by others.”
are a lot of investors coming in, there is
“We are gearing up for it, the country is
a lot of potential to grow the economy
excited, and Government is embarking
so the Government is focusing on law
on projects to ensure we are ready for
and order – and that is improving so it
it, and the Police and security agencies
should give confidence to our investors
are putting our strategic plans in place,
and visitors.”
upgrading our systems to handle all
There are three big events coming up for
these events.”
Papua New Guinea and Port Moresby in
“The Police will be accessible to the
particular that will measure the validity
communities, to the visitors and to the
of Andy Bawa’s statement, as well as a
investors. If anyone is feeling uneasy or
litmus test for the country’s image and
insecure there will be people to call, and
attempts to change how it is perceived.
we won’t be far, unlike before when the
In 2014 PNG will host the Melanesian Festival or Arts, the Pacific Games in
Police was invisible. Now we will be both visible and accessible.” Bawa says he has published his number
that will see the leaders of some of the
in the newspapers to make himself
most powerful countries in the world
accessible and give confidence to the
including the US, China and Russia.
communities.
“We have successfully hosted big events
“If anything happens in the city, in
in the past with no major security issues,”
the communities or suburbs – people
his metropolitan command in Port Moresby,
which
has
an
estimated
population of 750,000 (almost similar to the population of Fiji). He says Government will increase police manpower to address the growing population heightened by the economic boom, as by 2020, Port Moresby could have a million people and they need to plan for that now. The Superintendent has also been having discussions with the business community on how the Police can give them more confidence, as well as how the business community can support Policing efforts. “I want to reassure them so that they can invest longer in PNG, and through that they reassure other investors that they can invest in PNG.” by Stanley Simpson
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2015, and in 2018 host the APEC summit
Bawa has 800 police officers under www.businessmelanesia.com
of resources and capabilities and there
improve the country’s image. Our people
27
Business Melanesia January November 2014 2013
profile
From the Bush to Urban Planner
Taking on the job that no one in PNG wanted
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The first white settler to set up in Mendi in the Southern Highlands of PNG only did so as recently at 1954, more than a century after most of the Pacific had come into contact with the Western world. Max Kep – the man who now leads Papua New Guinea’s Office of Urbanisation was born in this isolated environment in 1958, only four years after the first white man arrived. Construction of the first basic primary schools in Mendi started in 1958 – and when he went to school in the 1960s, Kep became one of the first students from his Pongpa Village to receive any semblance of education.
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50 years on – and the man from this isolated of places – now sits in an office in Waigani- soldiering on the job that no one wanted some 10 years ago, and very few would want to take on even now – to handle the daunting task of planning the complex and rapid urbanisation process in Papua New Guinea.
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“No one wanted to deal with urbanisation issue, it was seen as too messy and complicated,” Kep tells Business Melanesia. “I was the first employee of the Office of Urbanisation.” After primary and secondary education in the highlands, Kep made his way to Sogeri Senior High School, one of the
four senior high schools in the country before going on to the University of Papua New Guinea where he wanted to do law, but ended up doing economics. He graduated from UPNG in 1982 and joined the Labour Department in 1983. In 1989 he joined the Employers’ Federation of PNG as Director of International Relations and Labour before becoming the First Secretary for the Ministry of Labour, from where he got elevated to be the Chairman of Industrial Arbitration in PNG. “During this time I learnt to see the different perspectives, from the workers as well as the employers. I was instrumental in the deregulation of wages and removal of the fixed wages system in PNG as advisor on labour matters for the team representing employers,” says Kep. “As chairman of the Industrial Arbitration, I resolved most of the industrial disputes including long outstanding ones paving the way for a period of industrial serenity for the next 15 years.” In 2002 circumstances beyond his control saw him move to the Office of Urbanisation. When he was appointed (after political maneuvering saw his position as
Chairman Arbitration hijacked) – the Office of Urbanisation never existed. His boss then - reluctantly told him he could not have his old job back, but offered him the chance to make something out of nothing. “He said Max there is this position on urbanisation that is being tossed around like a hot potato, nobody wants it – and if you make it happen, you have a job, but if you don’t make it happen, you are out of a job,” said Kep. “He basically told me – you either sink or swim.” Just over 10 years on, it is clear that Kep has made it happen, overseeing 35 employees at the Office of Urbanisation. It has not been an easy road – from being governed by an excessively large committee to building the office and his team from scratch. Kep says one of the biggest challenges was for the people of PNG and their leaders to understand what urbanisation is. “In PNG most of the MPs are from rural areas – and they do not consider urbanisation an issue that concerns the whole country. When the former Port Moresby South MP, Dame Carol Kidu raised urbanisation concerns once in Parliament she was shouted down by the MP’s from rural areas who stated ‘that’s
your business and your constituency’s business – not a national issue.’ Eventually Parliament was convinced that something had to be done about the growing number of rural dwellers migrating to the cities – causing havoc to an already strained and struggling infrastructure. A Parliamentary committee was set up and a bureaucratic committee of 15 agencies was also set up to discuss strategies about the planning and management of cities – but not many agencies turned up to the meetings – so it was reduced to 5 agencies and was called the National Consultative Committee on Urbanisation. Kep then led, as chairman of the NCCU, the coordination of a National Urbanisation Policy, and undertook a number of pilot projects including accessing customary land in Port Moresby and Goroka and developing a
number of service centres in rural areas so that urban services were brought closer to the people. “A major issue we face is that it is difficult to expand the town boundaries. The policy being advocated is to discourage the outright purchase of land, instead for customary landowners to lease their land to the state or private developers for development., The pilot project experience is that while the planning and formal approval process was being undertaken, speculators came in and landowners could not resist the money they were being offered and sold it away although this is illegal. They did not follow the proper process set out.” He has preached this message for over 10 years but a key outcome awaits him next year onwards, when a bill is introduced in Parliament to give his office legal basis and authority to overlook urban planning and urbanisation management throughout the nation.
Prime Minister O’Neill has announced the concept of 4 mega cities for PNG – Port Moresby, Lae, Kokopo, and Mt Hagen, as well as second tier cities and district service centres. This is timely given the rapid changes and challenges PNG is facing due to rapid unplanned urbanisation. The Government has also established the Ministerial Committee on Land and Housing which are key implementation components of the National Urbanisation Policy. This committee’s work will boost efforts to address urbanisation, land and housing issues which are identified and critical areas for action. Kep is keen to implement and is driven by the philosophy to ‘plan first’ before infrastructure is put in place and people move in. “We don’t want to turn our cities into slums” he says. “We need to learn from the experience of others.” by Stanley Simpson
“We don’t want to turn our city into slums. We need to learn from the experiences of others.”
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Business Melanesia January 2014
message
Expanding beyond the horizons By Commodore Voreqe Bainimarama
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Prime Minister of Fiji
30
Our theme this year is “Expanding beyond the Horizons of Fiji”. It means seeing further than we can already see, beyond the traditional. It means taking the “Fijian Made” brand further afield into parts of the world we haven’t yet reached. It means being smarter, more innovative, more imaginative. We have wonderful goods and services and new ones we can develop. How do we identify them? What are they? How do we develop new markets? These are the questions we need to constantly ask ourselves, both and together as Government and the private sector. We need to strengthen our partnership with the view that any growth must benefit every Fijian. We are opening up new markets and unleashing some exciting possibilities.
iTaukei Exporter Award WINNER - Peni Moi (right) with Investment Fiji CEO Ravuni Uluilakeba
Our aim is a common market within the MSG for the free flow of goods, services and human resources
Business Melanesia January 2014
Many of you accompanied me on my state visit to Papua New Guinea which doubled up as a trade mission. It was extremely gratifying for me to see how successful a trip that was in opening up new opportunities for Fijian exporters. Our aim, of course, is a common market within the MSG for the free flow of goods, services and human resources. As I keep telling my fellow Melanesian leaders, the idea of a Common Market is both good policy and good sense. We will be far more effective in the global marketplace as a trading bloc than as individual countries, especially when it comes to our negotiating power. Indeed such strength in solidarity is most critical as we negotiate the Economic Partnership Agreement (EPA) with the European Union. I also want to talk about the importance of the partnership between Government and the private sector in the context of the 2014 Budget. As you all know, the budget has been overwhelmingly well received. I’m very proud of its
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Even within our existing horizons, my Government believes we can do better and we must invest in it. In the 2014 Budget, we have allocated resources to appoint a full time Trade Commissioner in Papua New Guinea. We will now refocus the role of the Counselor Office in Sydney to that of a Trade Commissioner. We have done this because we believe that there are numerous opportunities in the largest Pacific Island country - which has a population base nearly double the size of New Zealand and growth led by mineral and oil and gas exploitation - and in a developed economy like Australia which has numerous untapped potential areas. The same thinking is behind our Budget decision to send a Fijian trade mission to New Caledonia, the island state with the highest income per capita in the Pacific.
So we are broadening our existing horizons and seeking new ones – all in partnership. We made great strides in expanding our markets within the Melanesian Spearhead Group in particular with the removal of the negative list by Papua New Guinea. This I know has resulted directly in the investment by Fijian businesses targeting exports. There will be some new announcements made very soon regarding the expansionary policies of business houses to capitalize on the access facilitated by my Government.
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In November, Fiji Airways announced a new interline cargo agreement with Emirates that produces a quick and seamless link between Fiji and the wealthy markets of the Gulf States and beyond. A fresh food producer in Fiji can now send his produce on Fiji Airways to Auckland or Sydney and immediately connect with Emirates flights to Dubai and the rest of the Emirates network. Along with the increase in frequency of Fiji Airways flights to Los Angeles and Hong Kong, and the real possibility of now flying direct to Singapore, for which we have allocated funds in the 2014 Budget, these developments provide better opportunities for the marketing of Fijian goods and services. You must capitalize on these Government led initiatives.
message
31
Business Melanesia January 2014
message centerpiece – the introduction of free education in our primary and secondary schools and the tertiary education loans scheme for those seeking studies in our universities. Never again will a Fijian family worry about how they are going to pay to educate their children. But the half-billion dollar investment in the education sector is also the boldest and best investment made by any Government in Fiji. Because it is an investment in all our futures.
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I am certain that everyone in the business community shares our vision of a clever and well trained and skill based country. Now that we are taking education to a new level, my Government is certain that the opportunities for new investment – new growth in our economy - will be even greater. We do it not just for ourselves as Fijians but are convinced that a smarter Fiji will be better placed to take a leadership role in our region and improve the lives of every Pacific Islander.
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Some people, mainly politicians and one or two of the same economic academics have asked, perhaps rhetorically – how can Fiji afford to make this investment? Where’s the money coming from? As I stated in my budget address we can afford to make these investments because of our reforms. The answer
including new jobs.
Now is the time to invest, to ride the wave of new opportunities. enterprises, and working more closely with all stake holders. Smartening up our state owned enterprises has also provided the opportunity for the Government to divest some of its interests. Unlike previous governments we are not using fly by night consultants and advisors to sell to dubious and/or $2 companies. We are and we will target worthy partners who not only will bring in the equity but will make those enterprises more efficient. We will also use such divestments to truly grow our capital markets and provide investment opportunities not just for the big and specialist investors but for the ordinary mums and dads. It’s already happening on the nation’s wharfs, where the Sri Lankan company, Aitken Spence, has bought a stake in our ports and has taken over operations in Suva and Lautoka. This Fortune 200 Blue Chip publicly listed company has a solid record of revolutionizing port operations in Asia and Africa and is set to drastically improve shipping turn-
As I keep telling my fellow Melanesian leaders, the idea of a Common Market is both good policy and good sense. We will be far more effective in the global marketplace as a trading bloc lies in the strength of our commitment to prudent financial management, identifying and paying off expensive debts before due dates at cheaper interest rates, reconfiguring past practices of managing operational costs, enforcing rules pertaining to revenue collection, smartening up our state owned and run
around times here in Fiji. The days of you having to pay higher shipping charges because of delays on our wharves will end soon. It will help our exporters and also our importers and with improved efficiency shipping companies will use Fiji as a transshipment hub. This of course will create new opportunities
The same public-private partnership model will soon see a major international player join us through Airports Fiji Limited. It is expected that the announcement of the new partner will be made within 3 months time. We are already positioned to be a shipping hub for the region; we plan to become a true aviation hub also. And we have plans to divest some of interests in Fiji Electricity Authority with the view to amongst other things reduce Government’s current debt exposure. A reduction in debt exposure will, of course give Government increased fiscal flexibility. This is all part of our vision – our grand plan – to take the country forward. It includes the new Fijian Constitution, which enshrines the principle of equality and fairness in our national life and guarantees ordinary Fijians a range of civil, political and for the first time comprehensive socio-economic rights. It lays to rest categorically the anxieties of land ownership and access. And it includes our determination to hold an election next year that is not only free and fair but conducted to international best practice. We are building a new and better Fiji and all have a stake in that vision. I appeal to the business community to play your part. Don’t cling to the past because it will not pay dividends. Now is the time to invest, to ride the wave of new opportunities. Confidence is high. New levels of prosperity are imminent as we hold Fiji’s first genuine parliamentary elections next year. Together, and with my Government’s vision and focus we all can ensure a prosperous and sustainable future for every Fijian, their children and future generations.
Excerpt from the speech made by Commodore Voreqe Bainimarama at the Fiji Exporter of the Year Awards held on 16 November, 2013.
Business Melanesia January 2014
Linking the economies of PNG and Solomon Islands Q&A with Solomon Islands PM Gordon Darcy Lilo
Papua New Guinea is a large investor in the Solomon Islands – how would you like that relationship to develop in the future?
LILO: In the resource sector, three points are important for triggering the Solomon Islands’ economic growth for the next 10-15 years. First, the state must have an institution that will provide independent regulation of the sector. Second, we need to build a regime to ensure the income flow is well managed and conducted in a transparent way to enable us to maximise the flows that will come into the country as well as diversification into other sectors. Finally, we must involve stakeholders to ensure better management of cultural and environmental resources. We are putting these building blocks together to prepare the Solomon Islands for managing the growth that will be triggered by the mining sector via Gold Ridge and other projects.
Australia is speaking of the “Asian century”, China is playing a bigger role in the South Pacific and ASEAN is also very active. How will the Solomon Islands balance the interests of these players? LILO: This is where we need to harmonise our approach. We need a more coordinated analysis and an assessment of how we can manage the prospect of linking economies that will see sustainable economic development cooperation in the future. We have to find new opportunities. This is a natural tendency, and there is room for more development cooperation in ASEAN and in Asia’s emerging markets. We cannot distance ourselves from the values of development cooperation. It has to reflect good returns that go right down to the people in the country, so that we can have societies that are better geared to capturing the mounting opportunities. The information is published by Oxford Business Group, the highly acclaimed global publishing, research and consultancy firm. Please see here for more articles about this region: www. oxfordbusinessgroup.com/economic_ updates/Papua New Guinea
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We are developing legislation to establish the Mining Development Authority, to ensure we have a fair deal with our foreign investors and to bring in the capital for development of these resources for our economy, people and government. We will then be able to invest in other key services, with education being a priority. We will also need to deal with other partners – not only the private sector, but our also people, land-owning groups who are the first residents of the land and will be subjected to actions as a result of the development of these resources.
Photo: 350.org
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LILO: I believe our relationship should be harnessed forever. The connection between PNG and the Solomon Islands is historic, particularly the strong connection in tertiary education investment. Over the past 10 years we have seen a rise in bilateral engagements by the private sector, some driven by the interests of increasing market expansion, especially in the agricultural sector. A good example is the palm oil industry, managed by PNG’s New Britain Palm Oil with participation mainly from Solomon Islands companies and land owner groups. Supporting industries in agriculture requires investment – in farming technologies, equipment supply and other industrial areas – to help support this growing industry. Recently, PNG moved intensively into downstream tuna processing. Under the Parties to the Nauru Agreement, the Solomon Islands and PNG have the capacity to promote investment in the tuna industry, with the land and infrastructure that could accommodate onshore processing and encourage local employment while linking to other service sectors. Nonrenewable resources will one day reach a stage of depletion, and we need to look at how best to harness their economic potential. PNG and the Solomon Islands are mapping a path for the creation of a market and an economy that will present a good prospect for growth in this part of the region.
While PNG has the liquefied natural gas project, in the Solomon Islands the Gold Ridge project is on track and prospecting is taking place. What lessons can be learned from PNG’s experience?
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Business Melanesia January 2014
The Billion Dollar Pacific Games www.businessmelanesia.com
Dismissing controversy and doubt - PNG declares it is on track to host the biggest and most expensive Pacific Games, and promises that it will be the best ever
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There is a sense of tension at the Holiday Inn room in Port Moresby as the coaches and officials of the PNG Kumuls Rugby League team arrive to give their first press conference after coming home from a disappointing World Cup campaign. The press conference is led by Sports Minister Justin Tkatchenko, and a formidable line up of Mel Maninga, Adrian Lam and the top brass of PNG Rugby League are in the spotlight to face the music from clearly disappointed sports scribes. The speakers are quickly put on the defensive, but get back on the attack as the unrelenting questions from the PNG sports journalists ensure a back and forth, with speakers and journalists at times shouting each other down, cutting each other off, and accusations and justifications are made.
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Suddenly amidst all the savaging, comes a question from the left field that had nothing to
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do with Rugby League, but was bound to come with Tkatchenko in the room. “Why was the contract for the building of the Pacific Games village given to China Railway Construction Engineering for K263 million despite the job being valued at only K190 million?” asks a journalist. “Here we go again,” the Sports Minister replies. “I have already spoken about that, you already know the answer, I have even stood on the floor of Parliament to answer that question, I have answered this many times, I am not going to comment on it again.” “But I am asking you now,” counters the journalist. “You may have answered everyone else but you have not answered my question.” “Answer the question,” comes the chorus from the journalists. Tkatchenko now goes on the offensive – laying out the transparency and accountability of the
Business Melanesia January 2014
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We are spending nearly a billion kina in investment in our athletes and our infrastructure development... all the sports that will be played in the Pacific Games will be played under new facilities and one to which they are devoting a staggering amount of resources.
process involved in awarding the tender, and then admonishing a journalist asks “did you get all that? Did you? Make sure you put that word for word in your paper.” “That is all just wind-talk,” a journalist counters and another keeps on the attack “but why K73 million more, why K73 million more?” he asks. “Its not about the money,” Tkatchenko thunders back. “It is about delivering the Games on time!”
He is quite aggrieved about a recent visit by Pacific Games officials who undertook an inspection of games facilities, and came up with a negative record card. “They never spoke to me, they never came to see me while they were here so they were only going on what they were seeing. Most of the projects are well underway. Let them come in 12 months time, and assess for themselves where all the projects are.” “Preparations are way on track, some of the projects and infrastructure development are ahead of schedule, and we are pleased with the development for
1 Billion for ‘Best Games Ever’ Tkatchenko is also adamant that this will be one of the best Pacific Games to be ever staged. “We are spending nearly a billion kina in investment in our athletes, in our infrastructure development, building up our infrastructure that really has not been improved for the last 20 years, and putting in management and trustees to manage for future legacy programs at the end of the Games so what we do invest in is not wasted, and has a longterm benefit for our people and sport in Papua New Guinea. “All the Pacific islanders will have a lovely place to stay, to live in when they come here – a brand new state of the art Games village, designed by a New Zealand company, and they will be housed well and fed well so they will be comfortable, and play to the best of their ability. Among the facilities being built are three brand new stadiums, which will seat between 15,000 – 20,000, brand new gymnasiums with the latest modern systems for basketball, volleyball, netball and such, and a brand new aquatic centre for the swimming competition. “All the sports that will be played in the Pacific Games will be played under new facilities, and it will be something very special,” Tkatchenko says, adding that efficient transportation to and from venues, a common challenge in past Pacific Games, will not be experienced.
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The exchange not only highlights the vibrant media and democratic process in PNG, but how both the PNG Government and the PNG public is serious and concerned about the Pacific Games they will be hosting in 2015,
“They need to wake up,” Tkatchenko answers combatively. “We still have 18 months to go, and that sort of talk is immature and unfounded.”
“We are micro-managing this, full steam ahead, Government is right behind it, the funding is there, the contractors are very well aware of the times they have to complete this project, and they are working overtime to ensure it is done. So that is just a misleading statement that has no qualification.”
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Justin Tkatchenko
Moments later, as Business Melanesia sits down to have its own (much quieter) interview with the Sports Minister, we ask him about recent comments and whispers from around the region (even from some within the Pacific Games Committee) that they doubt PNG will have its infrastructure ready by 2015.
all the different venues that will be there for all the Pacific to enjoy.”
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Groundworks being laid out for the Pacific Games in PNG
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“We have got over $500 million kina of road infrastructure actually being built in this capital city, for the Games as well, and that is very important that we open up some of our road congestion areas, and that is being worked on as we speak. In Port Moresby right now, there are five major road projects currently being constructed for the Pacific Games and beyond. From the airport to different areas of Port Moresby to the Games village and venues,” he says. “PNG is not wasting any time, looking at our roads, looking at beautification, and when our Pacific friends come, they will see why PNG is the best in the Pacific.” Contracts controversy In November the PNG media started to demand answers about the awarding of contracts for the Games infrastructure, questioning how some projects were given to those that quoted way above what they were independently valued at. Tkatchenko firstly defended the tender process when Business Melanesia put the allegations to him.
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“We have a very intensive programme when it comes to awarding contracts through a tender procedure,” he said.
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“All Government contracts in the country is firstly publicly advertised, those tenders are brought in to the Central Supplies and Tenders Board, they are then put in front of a Technical
“We made a commitment that we are ready to rock and roll and we will make this Pacific Games the best the Pacific has ever seen.” Evaluation Committee, which is independent. From there it is referred back to the Central Supplies and Tenders Board with the recommendation of the three contractors that they feel are up to the standard and are qualified and meet all the requirements to do this job.” “From there it is sent up to the National Executive Council and it is given to them to make the final decision, based on the recommendations of the Technical Evaluation Committee and the Central Supplies and Tenders Board as to who is the preferred contractor.” “Once they endorse that, then it is given to the State Solicitor, who looks at all the legal aspects of the contracts and the amounts are correct and everything is checked. From there it goes to the Governor General for signing.” The Sports Minister declared the process independent and straightforward. Tkatchenko also pointed out that the current Government inherited the Games two years behind schedule and were making up for lost time.
“Time is money, and we have to deliver these projects on time. The assessments of these projects are done on their performance – if they are going to work double shifts, seven days a week, 24 hours a day, that is going to cost more than a normal contractor working normal hours,” he said. “But we made a commitment that we are ready to rock and roll and we will make this Pacific Games the best the Pacific has ever seen.” “We have to work overtime and we have to pay for it, and the Government has budgeted for that extra time and expenditure to ensure that the job is done on time.” “I give confidence to our fellow Pacific nations that yes we will have the Games done on time, yes it will be in our wonderful city Port Moresby, and the facilities they will utilize will be the best in the region, and they will be able to play to their full potential.”
by Stanley Simpson
Business Melanesia January 2014
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Business Melanesia January 2014
profile
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EXECUTIVE SERVICE
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Providing value for money at the Grand Papua 38
by Stanley Simpson
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The Executive Lounge at the 15th floor of Papua New Guinea’s high end Grand Papua Hotel is a powerful place to be. On any given day it is frequented by influential political and businesspeople, heads of inter-governmental and non government organisations, corporate leaders and board members, decision makers and deal makers, and people who are scoping for high-level opportunities. You have to have special access to come here, and surveying the room one can easily conclude that right now, despite its once shunned reputation, the world is coming to check in - and check out Port Moresby.
Business Melanesia January 2014
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“We aim to capture the top 10 per cent of business.”
“The Grand Papua’s primary target is corporate business, that’s in our DNA, and this is largely made up of executives from the resource sector, agriculture and infrastructure development, as well as big NGOs,” says Wilson. “We aim to capture the top 10 per cent of business.”
In the last month alone, the hotel has hosted journalist teams from the New York Times, Japan Times, Singapore Times, the China Daily, and a research team from Oxford Business Group.
Wilson came to PNG after building his reputation and experience in almost 11 countries, a journey that began in the mid-80s when he joined the Fiji National Training Council apprenticeship program. “Hospitality is in our blood,” says Wilson – whose hospitality experiences included his initiation in Kings Cross Sydney, onto popular and established hotels in Sydney, Perth and Melbourne. He first came to Port Moresby in 1989 and joined the Travelodge Port Moresby and Davara Hotel as part of the SPHC Group. Wilson describes that period in his life as the ‘good old days’ but travelling was also in his blood, as he made his way through three continents before returning to the South Pacific.
“I went to a destination, found work as a barman or something like that, and earned enough to take me to the next destination,” said Wilson. In the 10 years between 1995 and 2005 Wilson worked at a range of hotels including Perth Park Royal, Melbourne’s Centra Hotel, Adelaide’s Hindley Park Royal, Canberra’s Crown Plaza and National Convention Centre, Sydney’s Stamford Group, and for IHG in Darwin – mainly as Food and Beverage manager. He returned to PNG in 2005 where he worked for Holiday Inn before becoming regional manager for the Coral Sea Hotels including Gateway, Ela Beach, and Whitaker Apartments. He then went across to Vanuatu as General Manager and Project Manager for the Warwick Hotels South Pacific before joining an exclusive 5 star resort at Rarotonga, Cook Islands. When the Grand Papua opened last year – Wilson was ready to receive – welcoming guests as the general manager. The Grand Papua’s rates are among the highest in PNG but Wilson is confident that the security, comfort and ease of business – is value for money.
Apart from the Executive Lounge, very popular is the hotel’s dedicated female floor that caters exclusively to the female business traveller. “The feedback has been very positive,” says Wilson. “Most of these business travellers are often always busy, and when they arrive they are pleasantly surprised that they can get a manicure or pedicure here, or even have their haircut. They don’t have to bother about the hassle of leaving the hotel and finding a good place to have a haircut, and that strokes the feel good factor,” he says. Among the other goals he is working on is having express check in, where guests get their room key within 2 minutes, as well as VIP check in when guests arrive at the airport. “We want to come to the airport with our laptop, check you in, give you your key, and pick up your bags,” says Wilson. “You bypass the reception desk.” That is work in progress, but Wilson is not one to shy away from hard work. It’s a philosophy he has lived by – even while growing up in Vatukoula and Lami in Fiji – where he says his father taught him to always bring something to contribute.
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He went to Singapore, Nepal (where he did a bit of work as a tour guide
He financed this himself.
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Here on a Tuesday afternoon in November, sitting next to a group discussing a million dollar project, I had a chat with the man who takes care of the Grand Papua’s 15th floor and all other floors down to the car park - Fijian Alex Wilson.
and trekking guide), India, Africa, and through Europe between 1990 and 1996.
“Our strength is safety and security, which is paramount for any corporate traveller, and the other key thing here is our facilities, which provides ease and comfort to guests such as the spa, restaurant and beauty salon.”
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Business Melanesia January 2014
trade talk
Reaffirming bonds between Fiji and the Solomon Islands
By Ratu Epeli Nailatikau President of Fiji Likewise, Fijians came willingly to spread the word and lived in the Solomon Islands since the first Fijian missionaries arrived early in the 20th century. We were then both colonial countries. But my connection with the Solomon Islands though unlike that of the earlier Fijians was just as deep.
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My late father, my uncles and other relatives, like many Fijians of their time volunteered and served here in the Fiji Military Forces – as it was then called - that was deployed in the Solomon Islands campaign during World War Two together with forces from neighbouring Pacific, and Pacific Rim countries. My father was a company commander in the 3rd battalion. It was a time when Melanesians and many others endured great hardships. So I am naturally proud of my family’s and Fiji’s contribution to the Solomon connection.
Solomon Islands Governor General Sir Frank Kabui receives a copy of Fiji’s new Constitution from President Ratu Epeli Nailatikau.
Fijian President Ratu Epeli Nailatikau made a state visit in October to the Solomon Islands. This is an excerpt of the speech he made at the State Dinner.
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This is a duty which I am proud to perform although it is tinged with great emotion because the Solomon Islands and Fiji share so much history.
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The first Solomon Islanders were reluctantly taken to Fiji more than a century ago, and since then Fijians of Solomon Islands descent who settled there have made significant contributions, and are still doing so to our development.
My father, as indeed all members of the Fiji Military Forces, had a very high opinion of the people of the Solomon Islands and was greatly appreciative of the tremendous part that your grandparents displayed in that campaign and especially the support they provided to our soldiers. You are all aware that some fifty seven men of the First and Third Battalions of the Fiji Military Forces lost their lives during the Solomon Islands campaign. So, in a way we are a part of you, just as you are a part of us. Over the years our relationship has grown more cordial and since the Independence of our respective nations this has cemented and we have remained close friends.
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We Fijians 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. After all, we are fellow Melanesians each with a proud heritage and a shared destiny. A destiny that we are now determined to set for ourselves. Today, the Solomon Islands and Fiji are proud sovereign nations. We face new but common challenges—everything from rising sea levels to economic development to the struggle for national identity and good governance.
But there is much that we can do for ourselves if we maintain a spirit of sharing and cooperation, and if we always remember our strong connections as Melanesians – where we are several nations, but one people.
We Fijians are enthusiastic about what a Melanesian common market can mean
It is not true that all good solutions come from external sources. Certainly, the developed nations have much to offer, and we need to embrace their experience and assistance when and if they benefit us. But even with the best will in the world, - as our respective histories have recorded - sadly they do not always understand our culture, our aspirations, and our challenges. Fijians believe in the people of the Solomon Islands. We are proud to be fellow Melanesians. We are equally convinced that by working together, we can counter any challenges. We are honoured to be your partner – to stand beside you and be an understanding friend - as we both deal with those aspirations. Just as we stood by you early in the 20th century and in world war two, we stand by you today. Where you need solidarity, we will give you solidarity. Where you need assistance, we will assist you as much as we can. Where you need friendship, you will always find that with the Fijians. To that enduring friendship!
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Through the Melanesian Spearhead Group, the Pacific Islands Development Forum, and the other regional institutions, we are now taking control of our destiny and helping each other. If we keep on working together, we can increase trade among Melanesian nations and raise the living standards of all our peoples, we can share our experiences not only to solve common problems but also to assist each nation to solve our own unique problems. We may be in different stages of development, but as neighbours we are all travelling in the same direction.
A common market will lift all our economies, spur improvements and encourage sharing in our most important industries—like agriculture, fisheries, tourism, mining, timber and manufacturing. And 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 settlement and in every village.
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Certainly, we need external support from the countries that we had served with during World War II as well as those that we were against, including other countries as well, to help solve many of these challenges. So we need to have good relationships with as many nations as possible particularly those nations that have the resources to provide assistance, expertise, and markets for our exports.
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.
Vinaka vakalevu, thank you.
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trade talk
Reaffirming bonds between PNG and the Solomon Islands
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PNG Minister for Trade, Commerce and Industry Richard Maru led a PNG trade delegation to PNG in August 2013 – this is an excerpt from his opening speech.
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I am extremely delighted to be here for this historic visit with the biggest trade delegation ever to come to your shores from PNG. Our strong and friendly relationship with the successive Solomon Islands Government and our people did not happen overnight, but started since the 1900s with the arrival of pioneer Solomon Islands missionaries, who sacrificed their lives to bring the gospel to our country. It was not easy then without roads, the dangerous rivers they had to cross and complete lack of services. Many died and were buried in PNG, others returned at retirement and many married and raised families and their legacies remain today. I take this opportunity to thank your people who sacrificed their lives and contributed to the development of Papua New Guinea. They sowed the seeds and built the foundation that led to a strong, emotional and robust relationship between our two countries. Our own contribution to the development of Solomon Islands started initially through educating your leaders including your current Prime
Minister, your public servants and professionals in our schools, colleges and universities and until recently by foreign direct investments in the Solomon Islands which has resulted in employment creation, the training and development of your local professional and technical work force, and increasingly making a direct and strong contribution to your economic growth and development aspirations worth $2 billion. BSP, Guadalcanal Plains Palm Oil Limited, Farmset, Bishop Brothers Engineering, the Heritage Hotel investment and such are examples of our growing investments in the Solomon Islands. We are working together as brothers in international and regional organizations like the Pacific Islands Forum, and more recently in the new and increasingly important Melanesian Spearhead Group. After the O’Neil, Dion Government took office in August, 2012, we have over the past 12 months taken a stocktake of our socio, political and economic performance over the last 38 years of independence, assessed our opportunities, and internal and external threats going forward - as we are also affected by global markets forces. We have made many mistakes over the last 38 years of our independence, we have wasted vast resources and lost many opportunities to better develop our country. We are keen on partnering countries and regional trading blocks
that will be of mutual benefit to our growth and development. Like you we have many development and growing challenges. We have to reduce our cost of doing business, make it easy to do business in PNG, open our market further by breaking down national state monopolies for more open competition and create more employment for our citizens by growing the SME sector. As our economy gets stronger we are investing heavily in developing worldclass infrastructure, providing better and cheaper educational and health services to our people, investing to improve our law and order situation and growing our economy. To grow our economy we need both domestic and foreign direct investments into PNG. The purpose of our Trade and Investment Mission to the Solomon Islands are to : Market PNG as an attractive investment destination for Solomon Islands businesses, canvass opportunities for PNG companies to invest in the Solomon Islands, canvass market opportunities for PNG made products under the duty free market access provisions of the MSG Trade Agreement, offer to provide services to your Government and private sector in areas like accounting, law, construction, engineering, management consulting, insurance, education, retail and wholesale. Finally we are also here to engage with your Government on a number of critical bilateral meetings to sort out a number of issues our private sector has raised with us on the successful implementation of our duty free market access arrangements under our MSG Trade Agreement.
Business Melanesia January 2014
trade talk
to Solomon Islands It is important that we develop goodwill and trust in the early stages of the implementation of the MSG Trade Agreement.
It is our plan to negotiate and sign a Double Tax Treaty before June, 2014. I acknowledge that trade is in PNG’s favour. Annual exports from PNG are reaching K40 million and imports from Solomon Islands now at K4 million but this can grow if we invest in developing trade between our two countries. PNG, despite our problems and challenges is fast becoming a very popular investment destination for many global giants like Exxon Mobil, Shell, Japanese conglomerates, for Chinese and Malaysian investors and recently for Fiji Islands investors, and we sincerely would like to invite the Solomon Islands Government and its private sector to consider and take up investment opportunities in PNG or with PNG based companies here with your growth and development aspirations.
We have over 100 years of friendship built on the back of the sacrifice of your pioneer missionaries, through people to people connectivity, education, sports and Government to Government bilateral relationship. It is in our mutual interest to continue to treat each as equal partners and with deep respect. PNG has learned its lessons over the past 38 years. We have matured and with our strong economic growth over the last nine years of an average of 7%, which will be strengthened by the first sale of our LNG next year and the second Gulf LNG project in the pipeline, PNG will be a strong and growing market with our growing population. Our people love the Solomon Taiyo and we are ready to buy more from you provided you produce more exciting products. We encourage you to stop exporting raw materials and manufacture here where market opportunities exist. We encourage you to target investment in PNG as our own economy doubles in the next few years and provide attractive long term investment opportunities for your Government and private sector.
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If we cannot we cannot and will not move to phase two which is on labour mobility which we would very much like to move to because we are very short on nurses and teachers. We are also here to impress on your Government and public servants to sort out the issues they have in relation to finalizing the final text of the Investment Promotion and Protection Agreement so PNG can protect its investments in Solomon Islands and vice versa. This is critical to give the private sector in both our countries confidence and provide security for their investments. If the Solomon Islands want to attract PNG investments to help create employments, to grow and develop your economy then it is my hope that priority will be given
to having this agreement signed before December, 2013.
investments in Solomon Islands
It is important that we develop goodwill and trust in the early stages of the implementation of the MSG Trade Agreement. ISSUE 01
Richard Maru
43 Photo: Fiji Sun
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Business Melanesia January 2014
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by Matilda Simmons
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Business Melanesia January 2014
Whether Fiji had come across some information, or worked out that Australia seemed to know too much, or Commodore Voreqe Bainimarama was simply having a dig at the Aussies – we don’t really know. However Fiji Attorney General Aiyaz SayedKhaiyum still remembers the moment well.
The three of them were sitting very close to each other when Bainimarama suddenly asked Smith “So are you tapping our phones?” According to Sayed-Khaiyum, Smith, taken by surprise, suddenly went red in the face and stuttered. Bainimarama pursued “just tell me, are you tapping our phones?” Smith finally responded that he did not have access to that kind of information to which Bainimarama laughed and jokingly tapped Smith “so you ARE tapping our phones.” The conversation ended there, Smith like a good Foreign Affairs Minister ‘neither confirmed, nor denied’ while for the Fijian leadership, the response was a confirmation.
When Sayed-Khaiyum came out just before Christmas in December 2008 to allege that Australian and New Zealand authorities were tapping phone lines and using locals employed at their High Commissions to spy on the interim government, he was ridiculed and accused of trying to divert attention. But exactly two years later, just before Christmas in 2010 Fiji was vindicated to a degree.
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It was in 2008, and Australian Foreign Affairs Minister Stephen Smith was visiting Fiji to again pressure the Bainimarama Government to set a date for elections.
Cables from the whistle-blowing website WikiLeaks revealed that New Zealand had been using its Waihopai communications base to spy on Fiji’s military. The WikiLeaks cables pointed to the NZ Government Communications Security Bureau as being capable of listening in to Fiji mobile phones, and quoted US officials praising the valuable information provided by the NZ Government’s Signal Intelligence. New Zealand did not confirm, nor deny. ISSUE 01
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“I also saw in Suva many years ago that members of the Australian High Commission carried out a lot of human intelligence with local groups and politicians in Fiji” - Hunter
Metuisela Mua
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Then came Snowden. This time it was Papua New Guinea, and Peter O’Neill’s turn to fume. Documents leaked by Snowden show that the Australian Embassy in Papua New Guinea was one of the many clandestine surveillance sites being used by Australian spies to intercept phone calls and monitor online activities within PNG and across Asia Pacific. The embassy in Port Moresby, along with embassies in Jakarta, Bangkok, Hanoi, Beijing, Dili and Kuala Lumpur were used as bases known as “stateroom” run by the Australian Defence Signals Directorate for surveillance collection facilities. “For our very own security, I am concerned that this has happened,” O’Neill said. “No country has the right to spy on any other country, but on a personal level, you know for me personally I wouldn’t mind them hearing my conversations, all they have to do is ask and I will tell them to come and join the conversation.”
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“We have got no secret, everything I do is out there for the public to see but it is disappointing to hear that they are spying on us, we are supposed to be friends and friends are not supposed to spy on each other.”
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Former Fiji Intelligence Unit Director, Metuisela Mua is not surprised about the scale and level of intelligence gathering being revealed.
Mr Mua was the founding director of Fiji’s Intelligence Unit which was established in the 1980s. Mua says the unit was formed following an agreement between US President Ronald Reagan and Fiji’s first Prime Minister the late Ratu Sir Kamisese Mara. “Spying is a noble profession,” Mua says. “It is the second oldest profession in the world, but we’re in an age where technological advances is changing our geopolitical axis, the desire for information can be insatiable especially in the world of security information,” Mua explains. Former Fiji Prime Minister, Sitiveni Rabuka agrees. “It’s all part of international relations. No man is an island. We are all interrelated. Embassies are expected to send reports of what that nation is doing and what their policies are so we can formulate policies for our country. This is all just information gathering. It’s not really saying anything – those things happen anyway.” However the tensions caused by the revelations and leaks clearly show that countries do not appreciate being spied upon or have their conversations listened to, especially by countries that like to hold the moral high ground. To paraphrase Fiji’s Attorney General there have been a lot of ‘red faces’ all round. Political Economist at the University of Malaysia Perlis Professor Murray Hunter lists the reasons for spying in the region as commercial, economic, political, asylum seekers, money laundering, possible terrorist activity, and trying to find out what other trade and diplomatic missions are doing.
Business Melanesia January 2014
He also sees intelligence gathering by the corporate industry becoming a major industry. “You will see the major foreign companies operating in the Pacific have good relations with politicians,” Hunter says. “I also saw in Suva many years ago that members of the Australian High Commission carried out a lot of human intelligence with local groups and politicians in Fiji.” “The future will be more commercial intelligence.”
about
This is not the first time that Australia has found itself in the hot seat over spying. In the 1980s, leaked documents exposed the Defense Signals Directorate’s phone tapping operation called Reprieve, based in Australia’s High Commission offices in PNG, Indonesia and Thailand. After the leak, operation Reprieve was reportedly shut down. Then there was the incident at the Forum Economic Ministers Meeting in Cairns in 1997, when a highly secret government document drawn from Australian intelligence agencies was accidentally left on a table, and was picked up by the media. The publication marked ‘Top Secret’ contained disparaging remarks made by Australian officials about various Pacific Island leaders calling them “crooks”, “drunks” and “lickspittle.” A red faced Alexander Downer, then Australia’s foreign minister had to visit certain Pacific capitals to soothe things and distance the Australian government from the report. So then the question – do Melanesian countries spy on each other? “I don’t think so,” says Mua. “For us in Melanesia it’s a collection of data really, I don’t think Melanesian countries spy on each other.” Of course, countries would like to know more about what other countries are doing, and how they are going about it, even Melanesian countries, but when you have the same interests, and doing many things as partners - do things the proper way, or be prepared to try to smile with a red face.
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Business Melanesia January 2014
shipping
Matson and Silent World team up for direct Shipping line to Solomon Islands Renowned international shipping company Matson has linked up with Solomon Islands company Silent World to establish a direct shipping line from Brisbane to Honiara.
T
The deal has freight companies and
“We went to buy a ship from Matson
importers and exporters breathing a
who had recently acquired the assets
sigh of relief as previously their cargo
of Reef Shipping,” Bennett says of the
mostly came from Brisbane-Sydney-
how the deal was struck.
Melbourne all via Papua New Guinea – taking about 4 to 6 weeks to arrive, says Silent World Managing Director
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Glenn Bennett. “There were times in the past, if they did not have much cargo coming here to Solomon Islands, they would just bypass us, and take our cargo back,” says Bennett. The new service, which started 4 months ago using a 300 container capacity ship called ‘Mana’ now sees cargo arriving in Honiara 3-4 days
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after leaving Brisbane.
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PH + 679 7070545 Level 1, Garden City, Suva, Fiji
“We were looking to start the direct shipping line process ourselves – and during negotiations they told us that they were intending to do the same thing.” “It would have been silly for us to compete – so we have joined forces and are now doing this together.” Bennett contends that since they have started the run – fresh fruits and vegetables have been arriving regularly and in supply in the Solomon Islands.
Business Melanesia January 2014
GENESI ASSET MANA INTERNATIONAL AND REGIONAL ASSET MANAGEMENT EXPERTISE
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Phone/Fax: (+679) 331 8247 / 331 8249 Mobile: (+679) 999 7375 Email: william@genesi.com.fj P.O. Box 17338, Suva, Fiji Islands www.genesi.com.fj
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- Local & international security services - We are a Certified training provider - All courses are grant claimable (for Fiji)
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Business Melanesia January 2014
New Vanuatu
$350m airport www.businessmelanesia.com
set for construction Singapore Group secures US$350m contract. Upgrades to see direct flights, employment and future infrastructure
Work on Vanuatu’s new US$350 million international airport, along with remedial and upgrade work on other airports, Baurfield International Airport, Pekoa Aiport on Santo, Norsup and Whitegrass airports, are set to commence following an agreement between the Vanuatu government and a Singapore group known as the Vanuatu Trade Development Private Limited (VTDPL). The cost is twice the annual budget of Vanuatu, according to the Vanuatu Daily Post.
Surveys of the new airport are currently being undertaken before actual construction begins, with the project estimated to be completed in 2016. According to Singapore VTDPL group executive director David Mak, once completed the new international airport will take on aircrafts the size of a Boeing 747 or similar size wide bodied aircraft that can make direct 10,000 km – 13,000 km flights from Vanuatu to other destinations.
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A Fiji Airways 737 aircraft at Vanuatu’s Bauerfield International Airport. The new airport will take on aircrafts the size of a Boeing 747.
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Business Melanesia January 2014
“The company is very proud to be awarded the project for the new international airport. Once completed Vanuatu will have direct connection with the rest of the world. We estimate there will be one million visitors – tourists annually and these 1 million tourists and visitors annually will need food, accommodation, transportation and cultural and other activities. It is the beginning of the new era to move Vanuatu economically into the future,” said Mak. “Vanuatu needs a catalyst to start shaking up the country’s economy and we believe that this new international airport project is that catalyst. We believe this is the biggest project in Vanuatu.” “Vanuatu will need more hotels, restaurants, transport systems, local food and meat supplies, cultural activities, more investors and yes Singapore visitors and investors are waiting for the completion of the project,” Mak told the Vanuatu Daily Post. The signing ceremony between the Vanuatu Government and the company was done in July this year.
Speaking during the signing ceremony Vanuatu prime minister Moana Carcasses noted that this would be the “single most important economic infrastructure development of this magnitude” ever undertaken in Vanuatu. Carcasses said the project will facilitate direct flights in and out of Vanuatu without having to transit to Australia, New Zealand, Fiji or New Caledonia to other parts of the world. “We understand that there are pros and cons from some people and quarters regarding the project but we proceed with it for the benefit of all,” Carcasses said. Before the signing former Finance Minister and current Vanuatu Liberal Democratic Party leader Willie Jimmy warned against the deal. Jimmy reportedly produced documents allegedly showing that the Singapore company had lost an appeal case against the Government of the Maldives for construction and repair at the Male Airport in 2012.
That contract was reportedly worth more than $500 million dollars. Jimmy said the proposed investment was too big for Vanuatu, and airport developments must be made on a stage by stage basis. Under the Concession Agreement signed between the Government and company, Singapore VTDL will design, build and operate the project for 50 years before transferring the entire project to the Vanuatu Government free of charge - to be owned by the Government and the people of Vanuatu. This means there is no loan involved on the part of the Vanuatu government. This project is the first of its kind signed under the Act of Parliament.
Sources: Vanuatu Daily Post/ Pacific Islands Report
At UMW, we understand that business is all about people not only meeting, butbut exceeding expectations.
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UMW NIUGINI LIMITED PO BOX 5243, Boroko National Capital District E-mail: enquiries@umw.com.pg
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Business Melanesia January 2014
advertising feature
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:
Quarrying and
Aggregate supply
Concrete supply
Concrete pre cast
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manufacturing
52
Bridge Construction
Road Construction,
Sheet Piling design
early works and
Steel supply and
infrastructure
Importation
Piling design and
development
Shaft construction for
construction
access chambers and
Ground Improvements
pump stations
design and
Bitumen
construction
Demolition
General earthworks
Building construction
Large Scale
construction
Mine exploration,
and construction
Paving, Sealing,
Basement design and
Marine Piling, Wharf, Port, and Jetty construction
Earthmoving
Heavy Haulage and Truck rental
Machinery Rental
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. 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.
CPNG has recently diversified into full development packages for entire groundworks disciplines
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.
Business Melanesia January 2014
advertising feature CPNG can also offer the following convenient services to the Papua New Guinea Mining, Civil, & Construction Industry:
CPNG 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
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Daily, weekly and monthly rentals
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Performance Contracting - m3 rate, tonne rate, acre/ hectare rate
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On-site management including reviewing cycle times, load requirements, terrain, environmental assessment, and material type - to help you select the right equipment for your job
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Highly experienced staff that will work throughout Australasia, Papua New Guinea and the Pacific Islands for long periods on major contracts
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Highly experienced staff with many years’ experience in major earthmoving and land clearing operations.
Our Fleet consists of the following: Dozers up to D10’s Excavators from 8tn to 80tns Articulated Dumps trucks 40tn cap Graders Rollers Compaction Equipment Loaders up to 4.5m3 cap Tip trucks 8x4 12m3 cap Water Trucks
Service Trucks Heavy Haulage Low-loaders Crushing Plant Concrete Batching Plant Piling Rigs Cranes Drilling Rigs Lighting Plant
Quality
CPNG is committed to providing a working environment that is safe and without risk to health in accordance with its Occupational Health and Safety Management systems, and in a manner which complies with AS/NZS 4801.
We are committed to providing a high standard of service and develop project specific quality plans and testing to meet the requirements of ISO 9001 and of our clients.
CPNG employs two Health and Safety representatives who can draw upon the knowledge and experience of the full time Health and Safety Manager. He is responsible for the development and management of personnel safety and training programs within the group, of which CPNG is a part. Our Safety Representatives cover the operations throughout Australia, New Zealand and the Pacific Islands. A positive safety performance is encouraged throughout the company through safety improvement initiatives and a hazard identification program.
CPNG is fully aware of it obligations in regard to the environment and the cultural heritage and works closely with all stakeholders to ensure minimal impact in these areas. Our policy undertakes to perform work and maintain its Environmental Management systems in accordance with AS/NZS 14001. CPNG always works towards the latest Environmental accreditations.
Design and Engineering We are able to assist with project design and engineering, we have experienced and qualified staff to support our client’s projects.
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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CPNG is working towards full integration into the Diversified Construction Corporation’s safety system which includes full safety accreditation to AS/ NSZ 4801 in the near future.
Environment
With experienced operators, fuel, ground engaging tooling, transport or service costs
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Safety
Design assistance
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Business Melanesia January 2014
Munda airstrip upgrade boosts economy New runway to land bigger planes and save fuel costs
achieve certification as an emergency alternate runway.
The centerpiece of a $25 million infrastructure investment programme by the governments of New Zealand and Solomon Islands, the Munda Runway on Munda, Solomon Islands is now in operation and benefitting the tourism and fisheries sector in the Western Province. At Munda runway, the New Zealandfunded civil works have lengthened the runway from 1,400 to 1,800 metres and widened it from 15 to 30 metres, so that it is now large enough to land B737s and A320s.
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A second phase will include fencing, lighting, and navigational aids. With these, and planned fire-fighting capability, the runway will be able to
This will be a much closer option than current alternate runways in Vanuatu, PNG and Australia. Certification will therefore significantly benefit passengers. Currently, aircrafts have to carry about 7 tonnes of reserve fuel to reach the nearest alternate runway, in case of an emergency. When Munda can be used instead, at least 2.5 tonnes less fuel is needed, resulting in higher freight volumes, lower cargo rates and cheaper airfares. Also completed as part of the $25 million investment programme was the rehabilitation of the Noro-Munda road and the Nusatupe runway which services the regional tourism hub of Gizo.
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LOCALS AGENTS FOR
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HEAD OFFICE 3rd Flr Ra Marama a Hse 91 Gordon St O. B Box P. O oxx 36 Su Suva P. 330 4528 F. 330 0057 E. commercial_FJ@neptunepacific.com
CONTAINER DEPOT P. 330 4528 M. 999 1811 LAUTOKA OFFICE Ports Bldg, Queens Wharf, Waterfront Rd P. 665 0667 F. 665 0663
Business Melanesia January 2014
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ISSUE 01
Tel: 3373 946 Fax: 3373 205 Mobile: 7078 078 /9664341 26 Kula Street, Samabula, Suva, Fiji Islands GPOBox 13308,Suva, Fiji Islands Email: mwhippy679@gmail.com
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Business Melanesia January 2014
construction
Land milestone
ISSUE 01
www.businessmelanesia.com
for Pasifika Holdings
56
Joe Caniogo with landowners of Baruni
Business Melanesia January 2014
construction
Fijian Holdings Ltd’s PNGbased subsidiary Pasifika Holdings achieved a milestone in October when they secured a 25-year lease for a 13-acre property in Baruni, outside Port Moresby. The company had been trying for over a year to acquire a piece of land to grow the business, and were close to throwing in the towel on the idea several times – given the challenges of land acquisition in PNG.
In fact, Fijian Holding’s three years in PNG has been nothing short of a baptism of fire in every sense of the word. While the previous management could see the potential growth opportunities – their implementation was way short of the mark. So Caniogo was asked by the new FHL management to help turn things around.
A view of the 13 acre property acquired by Pacifika Holdings
“My brief was to acquire land here at Baruni and seal this deal for FHL. Having the land was very important to grow our business and also establish FHL investments in PNG,” he told Business Melanesia. Acknowledging the difficulties of the previous two years Caniogo says things could have been done differently.
Things are slowly turning around and the acquisition of the 13 acre property for 25 years has Caniogo optimistic about growth in the new year. “We aim to move in February 2014, so in this property we will have our batching plant, base our distribution of Fiji Industries cement, and also set up our office and residences here,” Caniogo says. “Acquiring this land is key to our strategy and growth.” FHL is the only second company to acquire land in this area. “There are only two companies now that have managed to successfully acquire land in Baruni, one is Red Sea, a Saudi Arabian based company, and the other one is Pasifika Holdings, a Fiji based company. There were almost 8 companies that tried to acquire this land. “ Pasifika Holdings current business in PNG include supply of cement mix to the construction industry, finishing the aircraft pads on the domestic side of Jackson Airport, working with City Pharmacy Limited on warehouse construction, working with Matrix on the current extension of the international airport, as well as work on apartments for Air Niugini that is also being done by Matrix.
by Stanley Simpson
ISSUE 01
“When FHL first established in 2010, they really did not analyse the market and growth opportunities well – we came in here not really assessing the situation well,” he says.
“Once they came in, one big letdown was the machines breaking down and our trucks not producing as much as we should. That was a big letdown for the first 2 years,” he says.
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Joe Caniogo was appointed General Manager of Pasifika Holdings earlier this year and got his baptism of fire in PNG, but has pulled through and enjoying the challenges and opportunities being presented.
“We came in with old machinery and equipment thinking we could compete with the established competitors here but that was a big mistake. We put in second hand trucks, old machinery and plants, not knowing that the market demand here they were all working on new machines and new resources.”
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Business Melanesia January 2014
Fiji based domestic airline to spread wings next year
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Aviana Airways Corporation will complete a $6 million buyout of Sunflower Aviation by the end of this year as it begins rolling out its operations in Fiji having firmed up March 17th 2014 as its new launch date. The company based in the United States is acquiring Fiji’s Sunflower Aviation to help ‘speed up its process’ of starting their business in Fiji. Aviana Airways Corporation is the parent company of Inter Island Airways (Fiji) Limited which is scheduled to start as Fiji’s newest domestic carrier. They also own Inter Island Airways in American Samoa. They are hoping to get final approvals from the Civil Aviation Authority of Fiji (CAAF) by the end of the year to be able to start flying scheduled flights out of Nadi and Suva in three months time.
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Aviana Airways Corporation and Inter Island Airways (Fiji) Limited President and Chief Executive Officer Barney Sene said in total they will be pouring in $7 million into the business venture which included the acquisition of Sunflower Aviation.
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Barney Sene
Sene said the buyout of Sunflower Aviation is a hundred percent share purchase which means they will not only absorb assets but staff as well.
before it was sold to Fiji Airways (then Air Pacific) in 2007. In those days there were two domestic carriers Sun Air and Fiji Air.
“The purchases is an upward of FD$6 million at this stage and we will also be putting in close to a $1 million in addition to that, to beef up Sunflower in terms of expanding it. The whole idea with Sunflower was not just purchase the organization but also buildup what Sunflower actually has today, for example the Flying School.”
From 2007 Pacific Sun started domestic flights and offering cheap air fares which eventually led to the closure of Fiji Air in 2009.
“Our process right now is that we have an agreement to acquire Sunflower Aviation and we will basically look to close that deal by the end of this year so basically it’s a process of finishing all the legal documents and any due diligence and so forth that we are required to do to then close the transaction.” The company has been negotiating with the late Don Collingwood on the purchase of Sunflower Aviation for more than a year. Collingwood who is regarded as the Father of local aviation passed away in September. He formed Sunflower Airlines (later Sun Air) which flew domestic flights for nearly 30 years
Inter Island Airways expected arrival in Fiji will make it the most competitive domestic market in the history of the industry with Pacific Sun and Northern Air already flying locally. However it hasn’t been smooth sailing for Inter Island Airways, they were originally scheduled to launch in Fiji in December 2012 and have been forced to delay start as they wait for their Air Operating Certificate from the Civil Aviation Authority of Fiji (CAAF). Barney Sene said they hope to get this certification by the end of the year however there will be more compliance issues which they will have to meet. “The issuance of the AOC will take place once all the requirements are met. However AOC is not the only document that CAAF issues for start up operations like Inter Island Airways. There are many others such as the airworthiness
Business Melanesia January 2014
certificate for aircraft, the licenses for pilots and engineers, the maintenance organization certificate for their facility for maintenance and repair of aircraft, the aviation security program approval etc,” said CAAF Chief Executive Officer Netava Waqa Inter Island Airways will have a fleet of three Dornier 228 aircraft to service the routes they plan to fly to. Sene said they will gradually triple their fleet size as they begin flying to destinations like Kadavu, Labasa, Rotuma, Savusavu and Taveuni. But more importantly they hope to make air travel more affordable and have plans to connect these local flights to regional hubs in their future plans. “Our focus right now is to really focus on the domestic market to bring that operations up and make sure that we can deliver what we promising to the public.
One of the things we are committed to is regular, frequent air service and also bring the prices to something that is more reasonable and competitive for the traveler. We have heard many things – the air fare is too expensive for example.” Sene said. Within the next few months Inter Island Airways will begin releasing its flight schedules and ticket prices.
by staff writers
Inter Island Airways will have a fleet of three Dornier 228 aircraft to service the routes they plan to fly to. www.businessmelanesia.com
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 January 2014
mining
STRIKING www.businessmelanesia.com
A BALANCE
PNG’s great wealth in minerals and resources is the envy of many countries but for Shadrach Himata, the country’s Secretary of Mineral Policy and Geohazards Management, the search continues to find the right balance between the economy, the environment and the distribution of wealth to resource owners.
well as transparency, accountability, and sustainable development.”
the environment, and the investments of the company.”
Tailings and waste management is of particular concern and PNG is looking at banning all tailings disposal in river systems, and address concerns about deep-sea tailings as well as experimental seabed mining.
Himata notes that there is a bill before Parliament for ownership of minerals to be transferred from the state to landowners, which he says is a direct result of people not seeing enough of the benefits.
Ownership and the distribution of wealth and benefits from mining also remain a critical issue.
However Himata does not support the bill.
The Department of Minerals Policy and Geo-Hazards Management is one of two entities that was formed after the Department of Mining was disbanded in 2004 in order to split the functions and create more effective and focused services.
“We have had so many problems in the past when resource owners see that despite the great wealth generated from mining, they are not seeing tangible benefits on the ground,” says Himata.
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Himata’s crew is in charge of developing mineral policy and legislation, while the second entity, the Minerals Resources Authority (MRA) handles enforcement.
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“We are currently reviewing and updating legislation to ensure it addresses relevant current issues, as we are still operating under the Mining Act of 1992,” says Himata. “The legislation we are reviewing aims to address the issue of environment protection, and distribution of wealth as
“There definitely has been weaknesses.” “We have learnt from the days of Panguna and the Bougainville crisis, and then came Ok Tedi, and Porgera, and we established the Mining Act 1992, but from then until now – this is 2013, we have still seen gaps,” says Himata. “The mining business is an evolving business, technology has changed, new methods being introduced, new deposits found, minerals have been diversified so we need to make sure that the technology is updated, to ensure the law is there to protect both the landowners,
“We have formed the view that we need to maintain the current regime, the current status simply because it will become very complicated if we transfer the ownership to individuals. It is best that the state owns the minerals, but more benefits need to be transferred to landowners. This will also help give equal opportunity to people from around the country who can also benefit from the projects,” he says. Himata who hails from Bougainville, has himself worked at a number of mining projects including Ok Tedi and Red Dome in Northern Queensland and has a degree in Mineral Processing Engineering from the University of Technology in Lae. He believes the country has laid a solid foundation for investments in the mining sector.
Business Melanesia January 2014
mining
PNG continues review of Mining Act Shadrach Himata
“We can guarantee security of tenement, and protect their investment as well as ensure a proper balance, so people have a sense of ownership of the project as well.” “In the past the feeling of ownership was not there as it was mainly between state and investor, not the provincial government and landowner.” “However in mining developments today – all stakeholders are party to the project.”
It is best that the state owns the minerals, but more benefits need to be transferred to landowners.
www.businessmelanesia.com
“We have a stable legal framework in the country, and also the fiscal regime in the country is quite attractive. In fact PNG could probably rank top five in the world, among the best legislation in the world in terms of the mining business,” says Himata.
by Stanley Simpson
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Business Melanesia January 2014
mining
US Attorney to g n i t f a r d n i t assis s w a l g n i n i m of Fiji Attorney Thomas S. Mullikin has been appointed to head a project team that will assist in drafting Fiji’s mining laws.
www.businessmelanesia.com
His appointment follows a memorandum sent out early this year from the American Bar Association (ABA) following a request from the United Nations Development Programme (UNDP) in Fiji for “multiple experts to assist in providing a legal opinion on Fiji’s draft Mineral Act.” Mullikin – who reportedly has an extensive global environmental background – was asked to assume the top post. According to an article in the South Carolina business website MidlandsBiz: “Following multiple selecting, organizing, and planning conference calls with experts from
around the world, Mullikin and his project assistant, attorney Chelsea Bacher, flew to Fiji in late September 2013. There they met with government officials and stakeholders to discuss a way forward.” “Fiji has rich reserves of minerals and other natural resources. They need concrete legal means to protect those resources and the Fijian people who stand to be the beneficiaries of a stronger economy because of the extracting of those resources. The Fijians need a clear balance of interests between protective mining and environmental interests,” Mullikin is quoted as saying. Mullikin’s team is composed of more than 50 legal experts, various agency heads, industry leaders, and environmental non-governmental organizations (NGOs).
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“The Fijians need a clear balance of interests between protective mining and environmental interests’ - Mullikin
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Business Melanesia January 2014
Millionaires of Melanesia
Many who meet farmer Etuate Draunidalo for the first time will never guess that he is a millionaire, and one of the richest kava farmers on the island of Ovalau in Fiji. by Matilda Simmons For 20 years of his life Draunidalo was a civil servant, living in the Fiji capital Suva, faithfully catching the bus to be at work by 8 am, and catching the bus back home at 5 pm to complete the daily grind.
He spent many days and many nights quietly thinking about this, about how he can do better with his life, and do something different. What skills did he possess? What resources were at his disposal that he could start with? How could he make some changes and make things happen? A plan formed over and over in his head, it was a simple plan – but one he became deeply committed to. He decided to leave the city and return to his home island of Ovalau, and make use of some of the hundreds of acres of his Mataqali (tribe) land lying idle. “I decided to come back to my island to take up farming and I have not regretted since,” says Draunidalo.
The father of four paid all his children’s school fees from high school to university with the money made from his kava harvest. Three of his four children now hold degree qualifications while the youngest helps him on the farm. Interestingly he only started farming six years ago. It only took 6 years for farming to turn him into a millionaire.
He now has over 30, 000 kava plants on his land. “Many villagers look down on farming,” says Draunidalo, “however it is a great money earner.” His message to fellow indigenous farmers: “I want to stress the importance of saving, don’t keep your money at home, bank it and invest it somewhere so you can get returns on it,” he says.
His start up capital? $300!
“Draunidalo is a role model for most farmers here. He is hardworking and a quiet achiever,” says provincial administrator Kelepi Kubunameca.
Draunidalo says while his start-up capital was small, he started with a deep sense of discipline and selfdetermination, and worked his way to
Indeed Draunidalo’s inspiring story is another example of how agriculture can make many more millionaires across Melanesia.
He only started farming six years ago. It only took 6 years for farming to turn him into a millionaire.
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The 59-year-old is regarded as one of six millionaires now living on the island of Ovalau and according to provincial administrator Kelepi Kubunameca, these men go about their business without attracting any attention.
The farmer famously does not spend much on shopping, keeping to his basic needs. His family shopping bill has been known to be at times, around $70 a week.
planting as many as 500 kava plants a week, increasing the numbers over the years.
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He collected his pay every fortnight, just enough to make ends meet in the city, and the cycle continued week after week.
“Even though he has a lot of money, you can’t tell he has it,” says Kubunameca.
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Business Melanesia January 2014
women in business
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Following in Mama’s footsteps
Tucked on a corner of the beautiful seawall that lies
Della Sekom runs a stall in Vision City shopping mall
alongside Port Vila in Vanuatu, it is hard to miss the
Papua New Guinea selling bags, jewelry and other
Mama’s market and the colorful dresses, lavalava and
accessories.
handicraft on display.
The lady from Goroka in the Eastern Highlands rents the
Here among the flamboyant stalls, Business Melanesia
stall for $1200 kina per week (around $300 Australian
met Linda Lango from Pentecost who is following in
dollars per week).
her mother’s footsteps selling handicraft and printed
She tells Business Melanesia that while the rental fee is
lavalava, as well as traditional massage services.
high – she still manages to make enough to pay her bills
“My mother Hilda Lango was one of the six ladies that
and earn a little extra.
started the Mama’s market in 1970,” says Linda.
She sources her bags and jewelry from Australia.
“I started here as a little girl, working with mum – helping
“Someone in Australia sends the bags, jewelry and
her do grass skirts.” “In 1985 my mother taught me to do braiding and traditional massage, and I developed my skills.” “I now run my own stall, buying and making what I can, hand-printing lavalavas and doing my own sewing,” she says. The stall fee is $6,000 vatu per month, which Linda says is manageable. “I worked for one of the local companies for 7 years but found that its not as good as running my own business,” she says. “Being in the market is much better than working in an office,” says the mother of 4, who hopes they will also
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follow in her footsteps.
64
Hoping to Expand
other stuff to me,” she says. Sekom intends to start small but hopes to expand when she earns enough.
Business Melanesia January 2014
The Bilum Tree Market
Nelu Mamaruki, Leni Bosoboy, Vavilyn Walalau &
women in business
Business goes on for Mele
Mele Cocker has been in the handicraft business in Fiji
Lensa Magiza
for over two decades.
It is hard to miss the colors and variety of craft hanging
“In the beginning when my husband and I started out, it
from the tree as one walks past.
was successful but now it’s not that good. Sometimes
On the side of the road in Honiara, Solomon Islands Business Melanesia approached the group of women,
we make hundreds of dollars and sometimes I don’t make anything at all.” However she shrugs that off, saying that is the nature
Islands Women in Business Association (SIWIBA).
of business.
“This was formed to give women a market and try to
Mele was among the many vendors closing up on a
help them support their family,” says Lensa.
Thursday afternoon when Business Melanesia visited
“They got the skills – we provide the market.” “We applied to the town council to do this for free, without paying license fees.” “The ladies call this the Bilium Tree Market.” More than 20 women are involved in the project mainly selling pandanus and coconut woven baskets, woven bags, food and printed lavalava. Lensa helps train the women on the basics of sewing and craft.
the handicraft centre in Suva. Bearing many carved wares and baskets from around Fiji, the 78- year-old showed off her baskets that hung in her two stalls Originally from Tonga, Mele has lived in Fiji for over 50 years and considers herself more Fijian then Tongan.
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and met Lensa Magiza the facilitator for the Solomon
“I came to Fiji when I was 18 years old, my father was ordained as a priest in Fiji in 1956. Since then I have lived all my life here with my Fijian family.” Interestingly, Mele’s older brother is currently the Archbishop of the Diocese of Polynesia, Reverend
Another major event for the women is the Mere’s Market
Winston Halapua. “No need to go to Tonga now, I’ve lost
that is held every two months.
touch with family there. I like meeting people here, and
“These women are earning their own to be self-
make friends,” she says with a smile.
sustainable and feed their families,” says Lensa.
Mele adds her customers are mostly locals, with only a
“They often earn more than people who work in the
few tourists trickling in for sightseeing.
office.”
“Fijian handicrafts are intricate, it’s beautiful, and not that different from Tonga. My busy season is close to it’s slow but what should I complain about – sometimes we are lucky sometimes we are not. We pick up and move on.”
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Christmas, but with the economic situation right now,
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social scene
Business Melanesia January 2014
SolBrew Launches Heineken Beer Solomon Islands brewery company, SolBrew launched the new Heineken beer in Solomon Islands in November. The company celebrated its 20th anniversary this year.
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The gala night at the Heritage Park Hotel was alight with the Heineken signature green. The guest list included the who’s who of Honiara and local sports stars such as Michael leong (Pro Tennis Player) and Elliot Ragomo (Futsal Captain). The famous beer is present in over 170 countries.
LAUNCHES Vodafone Fiji launches 4G network Vodafone Fiji launched its 4G mobile network technology into the Fiji market in early December.
ISSUE 01
The “Space age styled” event was launched by the Prime Minister Commodore Voreqe Bainimarama who hailed the event as a milestone for the country.
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The Fiji public will now enjoy state-of-the-art ultrabroadband internet, through their laptops, USB wireless modems, smartphones and other mobile devices. 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
Business Melanesia January 2014
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Business Melanesia January 2014
yOur coMfort
ISSUE 01
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OUR PLEASURE
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