December 2013 by Islands Business

December 2013

Vol. 39, No. 12

Contents Development

38 SPC well positioned to influence global agenda But performance

will be crucial

Environment

39 Protect your borders against invasive species

Education

42 Education leads to transformation Perene has a school,

thanks to Sisim

42 People’s captain transcended rugby Rest in peace Papali’itele Peter “Fats” Momoe Fatialofa

OUR 2013 PERSON OF THE YEAR: Marshall Islands’ nuclear champion: Darlene Keju-Johnson. Cover report—pages 16-21. Cover photo: Giff Johnson

Regular Features 6 Views from Auckland 7 We Say

Cover Report

12 Whispers

30 years on, Darlene Keju-Johnson’s words still resonate

14 Pacific Update

Politics

40 Business Intelligence

16 Marshall’s nuclear champion

22 O’Neill govt’s new development template Communicating better with Asia

24 Little hope things will get better Corruption rife in the islands

Climate Change

25 World’s oceans to go up about a metre But rise won’t be uniform

Business

27 The cost of climate change in the Pacific Losses likely to rise, need tough decisions

28 Banks go branchless

To reach the unbanked

29 $500m cost to Fiji of domestic violence A huge burden on national economies

Aviation

30 Air transport taxes can impact tourism development Govts’ target for revenue generating 32 Combine premiums way to go for Pacific airlines Which insurance package works for the region? 33 Domestic issues taking its toll on Samoa Air Airline sells aircraft, lays off workers 36 More flights to HK, LA to boost 2013 visitor arrivals SPTO works on creating more destination awareness Islands Business, December 2013 3

L E T T E R S Managing Director/Publisher Godfrey Scoullar Group Editor-in-Chief Laisa Taga Group Advertising & Marketing Manager Sharron Stretton Staff Writer Robert Matau Graphic Design Dick Lee Virendra Prasad Main Correspondents

Australia Rowan Callick

Nic Maclellan Davendra Sharma

Fiji Samisoni Pareti

Dionisia Tabureguci

French Polynesia Thibault Marais

Marshall Islands Giff Johnson

New Zealand Dev Nadkarni

Jale Moala Ruci Salato-Farrell Duncan Wilson

Niue Stafford Guest

Fiji flag Recently much publicity has been given by one of the two Fiji dailies on an Englishman proudly unfurling the Fiji flag on the roof of the world, Mt Everest. By coincidence at the Rugby League World Cup match between Fiji Bati and England, many Fijian fans were enthusiastically and proudly waving Fiji’s ‘noble banner blue’ with the British Union Jack on it, and no doubt shouting ‘Go Bati go’, ‘Go Fiji Go’. Following the convincing defeat of the Fiji Bati, I could not help but wonder if the victorious English were inspired by the Union Jack being waved all over the stadium! Being on the field of play, the English players perhaps could not hear the chorus of ‘Go Fiji Go’ which accompanied the Fiji flag waving! To forever stop the confusion over whose flag Fijians are waving, Fiji should embrace a nationally authentic flag. Surely, after more than 25 years of being a sovereign republic, it is time to have a flag that reflects this fact and better represent Fiji in international community. No former colony of Britain in Africa, the Caribbean, and Asia has the Union Jack prominently painted on its national flag. Closer to home, Fiji can learn from Samoa, Nauru, Papua New Guinea, the Solomon Islands, Palau, the Marshall Islands, Tonga, Fed-

erated States of Micronesia and Vanuatu. It should be a matter of embarrassment that the country that chairs the Group of 77 and China and calls itself a republic has a flag with monarchic symbols! Vijay Naidu Suva, FIJI

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Bangkok Diary BY DEV NADKARNI

Grim forebodings as discontent simmers It takes me four hours to fly from Mumbai to Bangkok. Then five hours in a taxi from the Thai capital’s swishy Suvarnabhumi Airport to a hotel in the city—and that’s not even the hotel I am booked to stay for the next few days. It is impossible to reach that hotel today or even tomorrow, I gather from the taxi driver’s heavily Thai laced English emphasised by jerky gesticulations, which I seem to understand better than the words and sounds I hear. We are ploughing our way through a citizens’ protest. Aerial pictures on the front pages of the newspapers the next day show masses of people thronging the city centre’s Democracy Monument—the kind of picture of a sea of humanity we see at the funeral of a popular leader in the world’s more populous parts. The police say there are 150,000 people. The opposition says there are a million. Some media reports say half-a-million. Anyway, there are enough people to make a 40-kilometre drive from the airport to the city last five hours. The protestors want Prime Minister Yingluck Shinawatra and her government to step down. They say the government is actually run by proxy by her brother, controversial former Prime Minister Thaksin Shinawatra. They accuse it of corruption. Reason for protest The immediate reason for the protests, however, is outrage at a proposed new Amnesty Bill, which was passed by the ruling party on November 1, which the Senate turned down 11 days later. The Constitutional Court ruled that the proposed constitutional amendment is illegal, which the government rejected saying the court had no jurisdiction over it. It’s a classic case of the legislative and judicial arms of a democracy clashing. So far, the executive has steered clear. But the protestors are about to force its hand, too. They are storming government offices, cutting off power and water supply to them, blockading public access to administrative services—and as the latest reports say, they are asking the country’s armed forces to pick a side: either pro or anti-government. When similar protests took place a few years ago, the country went into lockdown for weeks. The airport was blockaded for weeks with international tourists stranded for days, sleeping on the floors of concourses. 6 Islands Business, December 2013

My taxi inches past swarming crowds. They are all smiling and waving flags and plastic palms. Many are whistling intermittently. Whistling has become a signature of Bangkok protests through these past years. Motorists and motorcyclists appear to have infinite patience. They wave enthusiastically at the pedestrian protestors, smiling all the while. They don’t seem to mind that they are being delayed in reaching their destinations because of the hordes of protestors. Productivity In all these four hours, I hear no honking. Not a single honk or toot—just whistling and lots of smiling and waving. My cabbie seems to be full of sympathy for them. It comes as a bit of a surprise when I later read that some 50 people died in violence during the last protests. For now, I can’t imagine how such disarming chumminess between the blockers and the blocked could lead to violence. I am here to attend a UNESCAP hosted Asia Pacific Business Forum, which was originally supposed to be held in Sydney but was shifted to the organisation’s headquarters in Bangkok. Among the reasons cited for the shift was the raging bushfires in New South Wales. I remember reading this in one of the emails. Access to the UN office in Bangkok is blocked. So the venue is changed. Again. It is now in a hotel not far away from mine. But it’s a challenge even to get there. On the morning of the first day of the meet, my hotel concierge says the new venue is out of bounds for any form of transport. A colleague who got to the venue texts advising me it’s possible to get there only by motorcycle taxi. “Get your hotel to write down the address in Thai. The drivers don’t know English,” his text says. I call for a motorcycle taxi. But I can’t sit astride the pillion, nursing as I am a painful tear in my knee and a brace between my thigh and calf and armed with a walking stick to boot! I give up. But I am able to get to the venue on Day 2, though what’s normally a 10-minute cab ride takes me 70. I walk into a presentation about productivity. I wonder how much productivity this country is losing because of the protests. I gather a Pacific Islands team has made an impactful presentation on Day 1 of the forum, which is about putting the ‘P’ (Pacific) back in APBF.

Though the forum is not new, the islands have tended to be glossed over in past years. This year, the islands are purposefully involved with the presence of the Pacific Islands Forum Secretariat’s trade arm Pacific Islands Trade & Invest’s Trade Commissioners from Australia, China and New Zealand. Representatives from Tonga, Samoa, Papua New Guinea, Fiji, the Solomon Islands and Federated States of Micronesia are also present and interact with business leaders and government representatives from ASEAN countries. Presentations at the meet outline both the opportunities and challenges that the Pacific Islands face while dealing with Pacific Rim countries and ASEAN members. While, it is great to see the emphasis put on islands nations as being an important part of the larger Asia Pacific context, what becomes evident is how much of catching up the islands region has to do in order to do business seamlessly with Asian nations. For instance, the ASEAN will be a single market in 2015. While this presents great opportunities, it also puts forth administrative and logistical challenges. In a globalised world, the importance of ICT and connectivity cannot possibly be overstated. That’s where great opportunities lie for the islands. Opportunities Opportunities in back-office support operations, call centres and other related services. This becomes evident at the presentations. Tongan Call Centre operator ProComm Services makes a compelling case for such business initiatives through its Managing Director Sisi Fine—showcasing Pacific Islands capability both in terms of technology and human capacity. The forum is a great exposure for the islands. A calling card that spells possibilities is placed in the lair of the Asian Tigers. The trick will be to stay engaged with those countries and develop business and trade possibilities over the coming months and years. The possibilities are indeed tremendous and very real. It’s a matter of how well the region rises to the occasion. As I leave the venue, my thoughts are on how long it will take me to get to the airport. It took me five hours the other day. I still have six before my flight. I ask a few people how long it will take me to get to the airport. I get differing replies—from one hour to four “depending on mob”, everyone says. I decide to play it safe and hop into a cab a full five hours ahead of my flight. I get to Suvarnabhumi in an amazing 45 minutes—leaving me four hours to scour the duty free shops in the comfort of my wheelchair. Meanwhile, the unrest in Bangkok is simmering away, with all the signs of coming to a boil.

WESAY ‘In a modern, rapidly globalised world, the Commonwealth concept is increasingly being seen as a relic of the past, even a needless grim reminder of colonialism of which many countries have painful memories’

he controversies in the lead-up to last month’s 23rd Commonwealth Heads of Government Meeting (CHOGM) and the cold shoulder it received from high profile leaders of some of its prominent member nations is one more indication the Commonwealth is fast descending into an irrelevant body. A review conducted by an Eminent Persons Group released on the eve of the meet has suggested urgent reforms if the group is to survive and stay relevant for the benefit of its members. The review was commissioned as a direct result of concerns raised at the last CHOGM in Perth, Australia, in 2011 about the relevance of the organisation in the changing world. But that review may be a tad too late. Last month’s meet was one of the most poorly attended in the history of CHOGM. Only 27 Heads of Government of the 53 Commonwealth member nations attended the Sri Lanka-hosted CHOGM. As well as the Canadian Prime Minister Stephen Harper and his Indian and Mauritian counterparts Manmohan Singh and Navin Ramgoolam respectively, several other leaders did not show up. But what is most glaring is that Queen Elizabeth, the figurative head of the Commonwealth, stayed away from the Sri-Lanka-hosted event for the first ever time since the bi-annual meetings began almost five decades ago. Her office cited advancing age and fragile health as reasons for her absence. The immediate reason for the non-attendance of the Canadian and Indian Prime Ministers is Sri Lanka’s hotly debated human rights record in the handling of the ethnic Tamil conflict, especially towards the end of the insurgency, where thousands of Tamils have been allegedly missing, according to international human rights watchdog organisations. These organisations have been demanding answers from Sri Lankan authorities for some time now and not much by way of credible explanation has been received from them. In fact, the Canadian Prime Minister set off the rumblings of dissatisfaction at Sri Lanka as a venue for CHOGM—which was decided at CHOGM 2007—when he first objected to it quite vocally during the previous CHOGM meeting in Perth. He had made it clear then that if the meet went ahead in Sri Lanka, he would not attend. He kept his word. The Indian Prime Minister’s reasons were because of his political party’s close alignment with a pro-Tamil party in India, whose coalition support he has and who he could not afford to upset. British and New Zealand Prime Ministers David Cameron and John Key were hard put to explain their attendance in the face of the host country’s highly controversial human rights record but said it was better to be engaged on the ground rather than staying away. Opposition parties in these countries as well in Malaysia opposed

their leaders’ attendance. Nobel Laureate Archbishop Desmond Tutu also suggested the boycott on the grounds of it being held in Sri Lanka. The Queen of England simply avoided controversy by staying away. Despite the fact that the Commonwealth’s main focus today is promoting human rights across the world besides helping member nations with democratic and economic reforms, it went ahead with plans to allow the hosting of last month’s CHOGM in Sri Lanka amidst significant opposition from several of the Commonwealth’s own members on grounds of its controversial human rights record. What is more, as host, Sri Lanka will remain chair of the organisation for the next two years. Not long ago, the Commonwealth suspended Fiji from its membership. Though what happened in Sri Lanka and Fiji is vastly different in terms of politics and the scale of violence, deaths and disappearances, Fiji seems to have come in for harsher treatment when compared with Sri Lanka, which was rewarded as host and therefore chair for the next couple of years. This reeks of double standards and hypocrisy, especially in the face of opposition from several of its key members. Is it any surprise that half of the leaders did not attend last month’s CHOGM? While Fiji was suspended, other nations have left the grouping on their own volition. Nigeria left in 2003 and Gambia, another African nation, left just before last month’s CHOGM. Most interestingly, Nigeria became a nation because of a previous CHOGM meeting 30 years ago that helped Rhodesia gain independence as Zimbabwe. So a nation that CHOGM helped create has left the fold of its parent organisation. This perhaps is most symbolic of the grouping’s growing irrelevance. The countries that have so left the fold seem to have no plans of rejoining because they see no value in doing so. Fiji also has hinted that it sees little merit in being readmitted to the club. The Commonwealth is also seen as having little influence on the way some of its high profile members have handled and are continuing ongoing human rights issues. The glaring case in point is Australia’s handling of asylum seekers. While this has come in for increasing criticism and concern internationally, the Commonwealth has had no visible input in influencing Australia’s policy—which, indeed, reinforces the growing perception of its irrelevance in the international arena. If it cannot influence its own members, how can it be an effective international force that the world takes seriously? The recent review that recommends a complete overhaul of the Commonwealth organisation will certainly stir the pot in the

Is the Commonwealth relevant?

Islands Business, December 2013 7

WESAY corridors of its power. A bureaucratic culture that still bears the burden of its colonial yoke will find it hard to stomach the changes recommended. If the recommendations are adopted, the organisation will have some chance of surviving, as it would take more of the world’s new realities into consideration. If it doesn’t, there might be no Commonwealth not long from now. For the once hallowed organisation, the controversial choice of

the venue has probably turned out to be a convenient reason for explaining away the absence of so many Commonwealth leaders. It has proved to be a timely red herring to take attention away from the growing perception that the organisation is fast hurtling towards irrelevance. In a modern, rapidly globalised world, the Commonwealth concept is increasingly being seen as a relic of the past, even a needless grim reminder of colonialism of which many countries have painful memories.

‘…Australia caused a kerfuffle and came in for heavy criticism across the board, embarrassing almost all Australian environment groups and climate change action supporters. Global headlines criticised Australia’s stand at Warsaw: It not only refused to increase its contributions to climate change financing but also refused to be drawn into any discussions about it in Warsaw’

he latest jamboree on climate change, which once again concluded inconclusively in Warsaw, Poland, last month is more proof that such mega-conferences achieve little in terms of finding real solutions to one of the biggest issues that mankind faces, and which, if the experts are to be believed, would spell doom for the planet. The enormous costs and logistic efforts that go into organising such jamborees—not to mention the carbon miles that go into flying hundreds of thousands of participants from across the globe—is not only unsustainable, but bordering on the ridiculous. Nothing that the Warsaw conference (COP19) set out to achieve was achieved. So what is the solution? This whole circus will fly to Lima, Peru, next year for another mega-meet to pick up where they left in Warsaw. Everyone evidently thinks mega-meets held at enormous costs in terms of money—and carbon miles, to use appropriate currency— are the only way to find solutions for a beleaguered planet Earth. All that blitzing telecommunication technology in the world apparently comes a cropper when essayed to an ongoing global dialogue connecting stakeholders in real time on a continuing basis. Like other global mega-meets before it, last month’s Warsaw convention, too, was long on quantity and extremely short on deliverables. The attendance was impressive, as always. Hundreds of countries, thousands of organisations, officials, non government organisations, statutory bodies, scientists, media representatives and private individuals attended. The Pacific was well represented, too, with the Fijian members making some important interventions on behalf of the poorer, more climate change affected nations. After all these years, the main divide at these meetings is still along

8 Islands Business, December 2013

the lines of rich and poor nations; the developed and the developing worlds—and all the issues that stem from that divide. The poorer, developing nations, many of which are small, isolated and more vulnerable to climate change have long been asking the richer nations to pay for their sins of polluting the environment during their relentless pursuit of riches through industrialisation and plundering the world’s natural resources. The developing countries have upped the ante in recent years. Their demands have been getting more stringent because many of them are pursuing their own vigorous economic agenda towards prosperity for their people. And many of these are following the same path as the developed nations did decades ago—polluting their way to riches. So, while the developed world has toned down its previous opposition to certain aspects in the negotiations for lowering emissions, the developing nations have hardened their stance. One of the major failures at Warsaw was the inability of the nations to agree on a transparent framework for calculating emission reductions, sought by developed nations, which would enable countries to transparently check on one another’s claims. That was turned on its head in Warsaw, mainly because of opposition from the developing nations. In the agreement signed recently, countries set their own baselines and define their own reduction strategies. This makes country comparisons for reduction in emissions less transparent and far more difficult to calculate. This has obviously created a distance between parties across the negotiating table, bringing in a climate of increasing distrust. Despite assurances for curbing emissions and helping out with financial contributions to help poorer nations mitigate and adapt to the vagaries of climate change over all these years, the rich nations

WESAY have fallen woefully short of honouring them. For instance, developed countries had promised to contribute some US$100 billion annually to affected nations until 2020. When the developing countries’ bloc inquired as to the progress of this promise and demanded a fresh assurance of at least US$70 billion a year, the developed nations refused to commit to any money or schedule. This is extremely frustrating for the developing nations because international agencies have computed the financial losses collectively suffered by nations because of climate change annually as being some US$149 billion—50 percent more than what has been promised by developed nations and which is still forthcoming. That was another failure at Warsaw. The poorer nations also demanded the formation of an independent mechanism to calculate and compensate loss and damage to their economies due to climate change events. The developed countries opposed this, fearing a separate independent organisation would hold them accountable and bind them to making payments to affected countries. A compromise was however reached and a trial mechanism has been put in place, for review after three years. In short, the bureaucrats have bought some more time to discuss further at another mega-conference a few years down the line. Such a scenario, where negotiations seemed to go nowhere and all sorts of time buying compromises fashioned out of thin air so that a false sense of achievement could be imagined and bandied

COP19 bordering on the ridiculous?

about, caused some NGOs like Greenpeace, WWF and Friends of the Earth to quit the conference mid-way. This coupled with other developments like the host Polish Government’s decision to hold a parallel summit on the coal industry at the same time as the climate change meet was on, frustrated NGOs, justifiably dubbing the whole exercise as highly hypocritical. While the Pacific Islands region participated vocally in the deliberations, presenting its concerns well and intervening in the interests of vulnerable nations especially in the drafting of the Warsaw document, Australia caused a kerfuffle and came in for heavy criticism across the board, embarrassing almost all Australian environment groups and climate change action supporters. Global headlines criticised Australia’s stand at Warsaw: It not only refused to increase its contributions to climate change financing but also refused to be drawn into any discussions about it in Warsaw. Though it agreed to the compromised “loss and damage” agreement cobbled together at Warsaw, which indeed tacitly presupposes that extreme weather events are caused by climate change, Australian Prime Minister Tony Abbott has recently been on record saying that while he believes in climate change, he doesn’t think it is responsible for weather events that cause bushfires. After all the hoo-ha at Warsaw, the main aim of all climate change dialogue—to take every possible measure to restrict planetary warming to two degrees—remains a pie in the sky. Even the UN Framework Convention on Climate Change (UNFCCC) contended at the end of the Warsaw meet in a media conference that nothing that was discussed and decided indicated the world was any closer to achieving that one single aim.

‘From issues related to climate change to world trade and everything in between, western governments work as the guard dogs of big business interests…that are as faceless as they are heartless when it comes to considering how their actions affect the disempowered, disenfranchised segment of humanity, which for them is a mere dispensable statistic’

he governments of rich western nations are so completely under the spell of big, multinational business organisations that they go to any lengths to protect their commercial interests and serve as hand-maidens in maximising their profits even if it means putting a sixth of humanity at the risk of starvation and total socio-economic ruin. From issues related to climate change to world trade and everything in between, western governments work as the guard dogs of big business interests—not more than a handful of mega-

global corporations—that are as faceless as they are heartless when it comes to considering how their actions affect the disempowered, disenfranchised segment of humanity, which for them is a mere dispensable statistic. They are so beholden to big business that the process of protecting their commercial interests blinds these governments to glaring inequities, shamefully obvious double standards and callous abrogation of the larger responsibility towards the well-being of a significant section of the poorest of humanity—most of which does not live within their political boundaries—and the sustainability of the Islands Business, December 2013 9

WESAY planet. This attitude is what leads to the intransigence that has become the hallmark of climate change jamborees and proposed trade agreements down all these years. Last month’s spectacular failure in Warsaw was the latest on the climate change negotiations front. A similar preparatory event to another mega-event later on the trade front gets under way this month. This month, the ninth ministerial meeting of the World Trade Organisation (WTO) is being held in Bali, Indonesia. For long, poorer nations have felt that the conditions sought by rich nations on WTO have been unfair on them. There are valid, justifiable reasons for this. Unfortunately, their own leaders neither have the international profile nor the financial muscle to counter the rich nations that are backed by the seemingly limitless resources of big business. The poor nations need every bit of support from right thinking groups and individuals to wrest a fair deal from the negotiations. Activists drawn from more than 30 countries under the banner of the “Our World Is Not For Sale” Network (OWINFS) are travelling to Bali to be present at the venue of the WTO ministerial meeting to engage in lobbying and making their stand and the deeper nuances of the negotiations known to the media, so that the voice of the poorer nations is not drowned out in the spin that the rich nations will inevitably put on the negotiations. They will also keep a watchful eye to ensure that their respective governments do not give in to a bad deal in the WTO. The cohort of developed western nations have so far successfully pushed aside agreements to negotiate on key issues intended to correct the imbalances within the existing WTO, which formed the basis of the development mandate of the Doha Round. These include setting right glaring asymmetries that allow rich countries to subsidise their agribusiness exports but put drastic limits on the subsidies developing countries can use to ensure their own food security, especially in the face of climate change driven problems and a significant number of poor that make up their population. OWINFS rightly contends that developed countries have repackaged the same liberalisation and market access demands of their corporate interests to try to secure an agreement on Trade Facilitation, which would place excessive implementation, regulatory, human resources and technological burdens on developing countries. The poorer nations have neither the financial resources nor the human capacity to comply with this and for which the developed world has stubbornly refused to provide technical and financial

Big businesses dictate agendas

assistance. Though the Trade Facilitation Agreement failed in the last negotiating round in Geneva, it is going to be revived in Bali, according to the Director General of the WTO. An Information Technology Agreement (ITA) and a radical new Trade in Services Agreement (TISA) are also to be brought to the negotiating table in Bali. OWINFS and other civil society organisations have been asking for measures to get the basics right. Signing up to binding trade agreements without considering all aspects of how it will affect poorer nations, especially the poorest segment of humanity, could prove suicidal to these nations. They have been asking for good sense to prevail in first rebalancing existing inequities such as the subsidies question that has been hanging fire for so long. They are also asking for respect for the poorer nations’ right to ensure food security for their own people before signing up to poorly thought out agreements that will shut them out of addressing this basic human need just because of corporate driven interests of western world governments. Importantly, they are also asking for a strong package of policy changes to benefit the Least Developed Countries (LDCs), of which there are quite a few in the Pacific Islands region. The civil society organisations feel that the suggested regime takes many people oriented initiatives from the hands of the public sector to the private sector. This could prove detrimental to poorer nations. While the nations want more privatisation in poorer nations, their governments continue to dole out huge subsidies to keep the playing field skewed to their extremely unfair advantage. Also, countries like the United States have been resorting to issuing food stamps to their poor, while implying a regime without subsidy for the governments of poorer nations through these negotiations. This is only one example of an inequity that the civil society is fighting. What it is up against is much more. In the words of Rosa Pavanelli, General Secretary of Public Services International: “Trade agreements must not continue to treat clean water, education for our children and healthcare for all as commodities to be traded for the primary purpose of profit. It is simply outrageous to include migrants in the trade agreements. Migrants are human beings and workers mobility can be regulated only by tripartite agreement within the ILO rules.” OWINFS and their ilk deserve every ounce of public support they can get in their David vs Goliath fight with western governments and their big business puppeteers. • We Say is compiled and edited by Laisa Taga.

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Whispers So what is the agenda, sir? Staff members of a number of government ministries in one of the Pacific islands were treated to a private lunch—thanks to their kind-hearted minister, who is also the head of government. The lunch was hosted in his office. Staff members were curious to find out what the lunch was all about because it is very rare these days to be treated to a lunch and, of course, without any strings attached.

The current scheme expires on December 31, but staff members are refusing to sign on to the new one, where they are now expected to pay up to $100 a month, just for outpatients services. For dental, eyes, etc, they have to pay extra, including maternity too. The USP Staff Association is advising staff not to sign up. Even those staff who are getting medical insurance from their partners who do not work at USP, are also being told to pay up for the USP new medical insurance.



Tall order: They will be a lot hard work and probably overtime by public servants in the new year if they have to follow through what is required of them. Whispers has been told that one Pacific country leader wants 60% of all projects earmarked for 2014 to be completed within the first six months of next year. Is there an election coming up for that country?

Diplomatic spat: Well, there are usually two sides to a story. One PNG local newspaper carried a piece recently about the Fiji government refusing to recognise the appointment of Papua New Guinea’s High Commissioner, Peter Eafeare as the Dean of the Diplomatic Corps. Eafeare was recently appointed the dean of the diplomatic community in Fiji. However, the refusal by the Fiji Government to vet the appointment has led to Port Moresby recalling the diplomat for “consultations”. The action of the Fijian government, according to the newspaper, has caught the PNG government by surprise, even Prime Minister Peter O’Neill was

 Big chaos: USP, Whispers has learnt, has decided to change the insurance company they deal with regarding their medical insurance scheme.

We’ve Got it!

not sure of the reasons behind the position taken by Fiji. The O’Neill Government has since its election into office last year promoted PNG-Fiji bilateral relations and gave a K50 million grant to the Frank Bainimarama-led government to prepare for the 2014 general election.  Sparks fly: Two major vanilla buyers in Tonga are locked at the horns over price-related issues, igniting a trans-Tasman friction that is being played out in the plush greenery of Vava’u Islands, Tonga’s vanilla growing centre. New entrant Queen Fine Foods, in committing local farmers to a long-term contract to supply it with vanilla beans, has irked rival company Heilala Vanilla, whose higher buying price led some of Queen’s farmers to break camp and sell their beans to Heilala. This in turn has angered Queen, who is reported to have threatened legal action against Heilala on the grounds that the latter’s inflated price is encouraging some of its farmers to break their contracts. Heilala, a Tauranga-based family owned business that built its fortunes on Tongan vanilla, has

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12 Islands Business, December 2013

Whispers

Advertising & Marketing Manager Sharron Stretton Advertising Executive Abigail Covert-Sokia Islands Business International Ltd. Level III, 46 Gordon Street PO Box 12718, Suva, Fiji Islands. Tel: +679 330 3108. Fax: +679 330 1423. E-mail: Advertising: advert@ibi.com.fj

The new South Pacific Queen

Circulation & Distribution Litiana Tokona ltokona@ibi.com.fj subs@ibi.com.fj

The newly crowned Miss South Pacific...Teuira Napa of Cook Islands. Photo: Miss South Pacific Pageant

ook Islands should be rejoicing after they won the Miss South Pacific Pageant in Honiara this month. Teuira Napa won the pageant ahead of nine other contenders. Miss Tonga was crowned the first runner-up while Miss Samoa came second, and the third spot was taken up by Miss Solomon Islands. Solomon Islands Prime Minister, Gordon Darcy Lilo who reflected the elation shown by Solomon Islanders in hosting this unique event, said: “It is an honour and privilege to be standing here hosting this auspicious event. Our people have truly embraced this pageant and ensured that this regional event is a success. This event presents us with the perfect opportunity to show the world what we are capable of achieving.”

been operating in the island kingdom for over 10 years and according to it, the price it pays has always been above market. It accuses Queen of anti-competitive behaviour by creating contract terms that will not benefit Tongan vanilla farmers in the long-term.  Speaker’s cleansing crusade: PNG Parliamentary Speaker Theo Zurenuoc is attracting a lot attention back home with his cleansing exercise to remove all “ungodly images and idols” from PNG’s National Parliament.  First out were the traditionally carved lintels above the public entrance into the parliament’s public gallery which were taken down and chopped into pieces, an action which the National Museum and Art Gallery director Dr Andrew Moutu said amounted to “sacrilege” and could be illegal under PNG laws.  But the Speaker is determined to push ahead with his crusade, telling guests at a recent dinner hosted by the Tertiary Student Christian Fellowship Graduates Network Inc in Port Moresby that Parliament can only contribute to nation building if it was transformed.  While PNG professes to be a Christian nation, he said its people continued to embrace its traditional beliefs and cultures and cite it as “the source of their origin and strength”. “We know that only God is our Lord. He only is our source of strength and our combined heritage.”  However, Dr Moutu, who is an anthropologist by profession, said Zurenuoc’s argument was

flawed as he (the MP) was saying politicians’ irresponsibility was caused by evil spirits which left no room for human error and failure. The argument that evil spirits underpinned the creative genius of Papua New Guineans was also wrong. “The policy which has been partly implemented by the Speaker, is weak because it seeks to actualise a theological speculation by trying to create a heaven on earth within this term of Parliament.” The lintel contained carved anthropomorphic human faces representing images from various parts of PNG and was made from solid rosewood.  Lasting impression: With the Tuna Commission meeting over in Cairns, one wonders whether Australia deserved to host the meeting which attracted almost 600 delegates from around the world injecting hundreds of thousands dollars into the local economy, including hotel accommodation and airfares. In Manila last year, the week-long conference had events hosted by the hosts and various organisations. Maybe tuna is not significant a commodity for Australia who is also a member of the commission. But they sure missed an opportunity to make a lasting impression on delegates visiting Cairns for the very first time. • Whispers is compiled and edited by Laisa Taga. If you have any Whispers, please contact us on editor@ibi.com.fj

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Islands Business, December 2013 13

Pacific Update

US marks 4th year of CNMI immigration By Haidee V. Eugenio

our years have already gone by since the Nov. 28, 2009 start of a five-year transition period for the implementation of United States immigration law in the Commonwealth of the Northern Mariana Islands (CNMI). But indications are rife that neither the U.S. nor the CNMI is ready to end the transition period by Dec. 31, 2014. Signed in May 2008, U.S. Public Law 110-229 or the Consolidated Natural Resources Act extends most provisions of federal immigration law to the CNMI for the first time in the islands’ over 30-year political relationship with the United States. The transition period didn’t begin until Nov. 28, 2009. With the federal takeover, CNMI officially became subject to the same immigration laws as all U.S. states and territories—except for American Samoa, the last U.S. territory to still control its own borders. This means, among other things, U.S. visas are now required of foreigners entering CNMI, just like Guam, Hawaii, and the rest of the United States, except for those from countries included in visa waiver programs or exempted through a parole program. And federalization didn’t happen overnight; it took decades of political wrangling between Washington, D.C. and the CNMI. The CNMI, a string of 14 islands between the Philippines and Hawaii, is still far from being prepared to replace with a still limited U.S. worker pool some 12,000 skilled and professional foreign workers mostly from Asia. They are the nurses, teachers, accountants, auditors, engineers, architects, journalists, auto mechanics, hotel staff, farmers and house workers, among others, who have been relied upon for years and decades to help grow the CNMI economy. Governor Eloy S. Inos and the CNMI’s nonvoting delegate to the U.S. House of Representatives Gregorio Kilili C. Sablan (Ind-MP), along with the CNMI Legislature and the Saipan Chamber of Commerce, have asked the U.S. Department of Labor to extend the transitional foreign worker program called the CW program by five years or up to 2019. “I wasn’t given any reason why they won’t extend the transition period,” Sablan said. Sablan is the CNMI’s first and so far non-voting delegate to the U.S. Congress, and this was also pursuant to the same law that federalized CNMI immigration. Commonwealth voters elected their delegate for the first time in November 2008. The U.S. Department of Homeland Security (DHS) capped the number of CW workers or foreign workers under the transitional worker program at 14,000 for the fiscal year 2014. For many employers, it does not make sense that the cap is still at 14,000 this fiscal year, down only by 1,000 from FY2013, only to zero out the foreign worker population by Dec. 31, 2014. Under the DHS’ CW program, employers in the CNMI can apply for temporary permission to employ foreign nationals who are ineligible for any existing employment-based non-immigrant category under the Immigration and Nationality Act. But the CNMI has also embarked on ensuring as many available U.S. workers are employed in 14 Islands Business, December 2013

Foreign workers...in the the Northern Marianas.Photo: Haidee Eugenio

the private sector so that when the transition period ends, there are still enough workers to run the tourism-based economy. The CNMI government has started gathering data on the number of available U.S. workers, held trainings, job fairs, and has continued to remind private sector employers to prioritize hiring of qualified U.S. workers before hiring foreign workers. “We have to prepare for that [end of a possible five-year extension]. At least that’s one of the criticisms about this extension—that it will just never allow us to be ready for this thing but we want to press the issue and we want to see a gradual decrease in the number of CW workers and a gradual increase in local workforce in those same position and industry,” the governor told a group of private sector employers. While there’s a strong push to extend the transition period so that the CNMI will continue to have immediate access to some 12,000 foreign workers while preparing a larger pool of U.S. workers, there’s also a push to provide pathway to U.S. citizenship to thousands of long-term, legal foreign workers in the CNMI. In both the U.S. Senate and U.S. House of Representatives national immigration reform bills that grant pathway to U.S. citizenship to some 11 million undocumented aliens in America, there is also a provision that grants pathway to citizenship to legal aliens who have been in the CNMI since at least 2008. The CNMI’s non-voting delegate to U.S. Congress, Sablan, worked to ensure such provision is in

comprehensive national immigration reform bills. But whether U.S. Congress would take either S. 744 or H.R. 15 before the end of the year is uncertain. Birth tourism The U.S., through the Department of Homeland Security and its component agencies, also continues to deal with growing pains in securing CNMI borders. Although involving only a small number, socalled “birth tourism” has caught up in the CNMI. Pregnant women mostly from China come to the CNMI to give birth to automatic U.S. citizen children. The United States is one of a few countries that observe jus soli, which grants automatic citizenship to children born within its territory, regardless of the parents’ nationality or citizenship. The governor, in a joint news conference with the delegate on Veterans Day, conceded that when the CNMI gained access to Chinese tourists without U.S. visas in 2009 and the CNMI being the “closest U.S. border, the focus of birth tourism has shifted over to the CNMI.” The lure of a U.S. citizen child has been strong, in fact too strong for a pregnant Chinese woman to break her water bag at the Saipan airport. The delegate and the governor said they want to keep the issue of birth tourism small so as not to risk the U.S. visa waiver for CNMI-bound Chinese tourists. Tourists from China and Russia can stay in the

control CNMI for up to 45 days without being required to secure a U.S. visa. DHS’ decision to waive U.S. visa requirement for Chinese and Russian tourists has brought substantial tourism economic activities to the CNMI. But once DHS decides to lift that waiver, the impact on the CNMI would be devastating. The governor and delegate said the CNMI has started working with Asiana Airlines, which was found to be the airline of choice for those wanting to come to the CNMI for birth tourism mainly because the bookings can be handled privately or through not-so-reputable travel agencies. This is contrary to earlier reports that U.S. media carried out, pointing mainly on chartered flights. Travel agents for these chartered flights have implemented strict measures to deter individuals from boarding planes bound for Saipan for birth tourism. “I don’t know if we can eliminate, but maybe minimize this thing. We haven’t seen any major increase in this situation. In fact we’re seeing less and less. But it only takes one incident to really blow this out of proportion but we’re dealing with it,” the governor said in a news briefing. The CNMI has also reached out to DHS and the Chinese government. As deterrent, the CNMI is also looking at increasing the cost of baby delivery at CHC for tourists and the cost of a birth certificate which is only at $20. Some stakeholders said birth certificate for tourist’ babies should be as high as US$50,000. Asylum The U.S. government, which now controls CNMI immigration, also needs to brace for the scheduled lifting of the CNMI’s exemption from receiving asylum applicants although there are still questions whether that will be on Jan. 1, 2014 or Jan. 1, 2015. Despite the confusion on the date, the CNMI would want to work with DHS to ensure that the asylum provision exemption will also be extended if the federalization transition period is extended beyond 2014. The CNMI is concerned that allowing the federalization law’s provision on asylum to apply as scheduled would open the floodgates for asylum seekers coming here as tourists that could also potentially derail the parole program for Chinese and Russian tourists, among other things. An equally serious concern is catching the ire of the Chinese government, which could pull the plug on airlines servicing the China-CNMI route and could hurt the islands’ tourism numbers, the CNMI delegate said. In the past, most applicants for refugee protection and asylum, for example, were from China. They claimed they would be persecuted or killed for political reasons if they are sent back to China. With only a year left before the end of the transition period—unless extended by the U.S. government—it is crunch time for the CNMI to prepare for the eventual loss of easy access to foreign workers and for the U.S. government to help ensure the CNMI does its part of developing a U.S. worker pool that could sustain the economy and foreign workers, among other things.

Abbott rules out new climate funding

n a blatant disregard for a call by the Pacific entire world is becoming warmer or cooler,” noted Islands Forum leaders meeting this year to lift Ye Li, author of one of the studies on climate efforts and funds for climate change, the new Abchange at the Columbia Business School. bott government in Australia ruled out any new Abbott’s attitude towards climate is more refleccommitment at a global symposium on climate tive of the general consensus today among Austrachange last month. lians, with a new research by Lowy Institute pointIt was a further blow to the region by its largest ing that only about 40 percent of the population player when Australia did not send a senior minisbelieve the issue warrants an urgent response as terial delegation to the UN-sponsored meeting in opposed to 68 percent in 2005. Warsaw last month. Neither foreign minister Julie Bishop, environUN snub ment minister Greg Hunt nor a parliamentary By Australia failing to take part at the highsecretary was sent to the Warsaw talks, aimed at level United Nations Framework Convention on seeking ways to reducing greenhouse emissions on Climate Change, it has snubbed the world body a global scale. as it attempts to collate a unified international Australia declared that agreement to limit global while it will remain “a greenhouse emissions. good international citiA new world consenzen” and will be “commitsus is expected to have ted to achieving the five a blueprint by 2015 in percent reduction” by a meeting in Paris and 2020 of the 2000 levels of come into force from emissions, it has nothing 2020. further to offer. But Bishop who has The new government oversight in the Abbott failed to commit any extra government for climate funds to climate change change negotiations did despite a request by the not show up in Warsaw September 7 regional Fo- Tony Abbott…no extra funds for climate change. and instead joined the Photo: www.the republicssquare.com rum meeting this year for British Commonwealth additional support and heads of government commitment to the lowmeeting in Sri Lanka. lying atoll nations in the Pacific region, like Niue, Canberra came under fire from its own backKiribati, Tuvalu, the Cook Islands, Tonga, Samoa, yard about the lack of representation at Warsaw. Marshall Islands and the Federated States of MiThe deputy chief executive of the Climate Incronesia. stitute in Australia, Erwin Jackson, said it was The decision toughens Abbott stance on the “highly unusual” for a government not to be repreUnited Nations’ negotiations amidst a revitalised sented by a cabinet minister at such crucial talks. push from under-developed countries like those “If you are not at the table, you are on the menu from the region for a $100 billion a year in finance at these climate talks. Not having a ministerial repto deal with climate change. resentative would undermine our ability to represent our national interest,” argued Jackson. Doubts Appropriately themed ‘Marshalling the Pacific Funding cutback Response to the Climate Challenge’, the Forum If anything, a ministerial representative would leaders specifically urged development leaders like have signalled Australia’s ongoing commitment to Australia, New Zealand, European Union and the the full range of emissions reduction targets and United States to handle climate change as priorinternational obligations. ity with as much additional pledges of funding as Australia’s financial pledge towards climate possible. change has generally been funded from the counBut Abbott has famously and openly decried try’s foreign aid budget, which the Abbott-Joe climate change science as “absolute crap”, doubtHockey regime has threatened to slash by up to ing the reality of climate change. A$4.5 billion over the next four years. As drought gripped parts of the eastern states Australia is by far the largest donor to the Pacifin Australia and livestock and properties were lost ic islands region and with such lacklustre attitude through a spate of bushfires over August-October towards pressing issues like greenhouse emissions, this year, Abbott’s climate scepticism became poits commitment towards the region has been queslitically potent. tionable. The new government is constantly reminded Australia’s powerful Greens Party also lobbied of the La Nina-El Nino cycle—which induces exand criticised the Abbott regime for neglecting the treme cold and hot weather patterns in not only climate change issue last month, especially as the Australia but also the islands region—where tropieffects of climate change has gripped a lot of lowcal cyclones and floods have plagued the poor lying nations in the Pacific islands region. economies. Australia seems to be following New Zealand’s “Global warming is so complex, it appears lead, whose Prime Minister John Key confirmed some people are ready to be persuaded by the to the Forum that there would be no new commitweather that their own day is warmer or cooler ments from his government. than usual, rather than think about whether the —Davendra Sharma Islands Business, December 2013 15

Cover Report

The advocate...Marshall Islander Darlene Keju-Johnson. From left: On Wotje Atoll; leading a health show combining music, dance and drama to promote health awareness; directi accountability as part of an income generating project in the mid-1990s. Photos: Giff Johnson

MARSHALLS’ NUC

30 years on, Darlene Keju-Johnson’s words Islands Business has chosen Keju-Johnson as its 2013 Pacific Person of the Year in recognition of her combination of fearless advocacy with island-style innovation that isn’t “merely relevant” in 2013. Seventeen years after her death in 1996, her words and actions continue to speak to key issues confronting Pacific islanders today: nuclear legacies around the Pacific from weapons testing and accidents such as the ongoing Fukushima nuclear power plant radiation spills into the Pacific; how to design and implement effective community health and development programs; and how people from small islands can engage the outside world from a position of strength.

By Giff Johnson

n 1983, Marshall Islander Darlene Keju-Johnson told a global church audience that radioactive fallout from 67 nuclear weapons tested on her islands was more widespread than admitted by the United States government and responsible for serious but unrecognized, health problems among the population.

16 Islands Business, December 2013

Thirty years after her speech shocked church members to action and on the eve of the 60th anniversary of the Bravo test, America’s largest hydrogen bomb exploded at Bikini in 1954, the U.S. nuclear legacy in the Marshall Islands remains unresolved and Keju-Johnson’s words as relevant and powerful as they were on first delivery. Keju-Johnson was invited by Pacific church leaders to be one of four speakers on a panel as part of a ‘Pacific Plenary’ at the World Council of Churches Assembly held in Vancouver 30 years ago—an

ng Youth to Youth in Health in a welcome song for a voyaging canoe’s arrival in Majuro from a remote outer island; and teaching young women on Ailinglaplap Atoll business and

LEAR CHAMPION still resonate

Making the connection...Darlene speaking about conditions for Marshall Islanders at Ebeye Island at a 1983 protest near Vandenberg Air Force Base in California, where long-range missiles are regularly launched at Kwajalein Atoll in the Marshall Islands.

every seven-to-eight-year event that brought together hundreds of church leaders from around the world. “Her impressive speech tore up the curtain of silence around the nuclear legacy in the Pacific (and) caused a wave that went as far as Europe, where it landed on the fertile ground of the anti-nuclear

movement,” said Madeleen Helmar, who worked on Pacific issues from The Netherlands in the years following the speech. Keju-Johnson’s 15 minutes at the podium sparked formation of a working group on the Pacific in Europe which combined peace groups, environmental organizations, churches and donor agencies. Islands Business, December 2013 17

Cover Report Rev. Ekkehard Zipser of the Association of Protestant Churches and Missions in Germany confirmed the impact of Keju-Johnson’s words: “The consciousness of people in Europe concerning the Pacific only really began to awaken after that speech.” With my biography of Keju-Johnson, “Don’t Ever Whisper,” being published this year, I released through Facebook and YouTube a digitized version of the speech video at the end of April—the first time it had been posted on the Internet. Within a few hours of posting, Keju-Johnson’s words went viral with more than 36,000 people seeing it through nearly 600 “shares.” Thirty years on, the response was notable as comments poured in from people who viewed it for the first time. “I watched it once and I was stunned of the content and significance of her plea to the world,” Crispin Ogo, a resident of the state of Oregon in the United States who is from the Northern Mariana Islands, said in mid-November. “Not a minute passed after watching it, I immediately replayed the video. Throughout the video, tears began coming down my face and (I felt) so energized because they were tears of joy. The joy to revive Keju-Johnson’s advocacy work. I couldn’t sleep after watching the video. I also couldn’t wait until daylight to tell people to watch the video. I may be from the Northern Mariana Islands but a day will not pass without trying to figure out how to make Keju-Johnson’s advocacy work come back to life.”

nuclear tests in the Marshall Islands. But in 1979 there was little information available publicly. So for her summer break from university, she decided to fly home to Majuro, then hop on the first available field trip ship heading to northern Ratak Chain islands to talk to older Marshallese about their experience with the Bravo test. These were islands that supposedly were not exposed to nuclear test radiation: Aur, Maloelap, Wotje, Ailuk, Likiep, and Mejit. On this trip, we recorded dozens of interviews on the ship and on land during the brief stops the vessel made at each island to drop off and pick up passengers and collect copra. Women spoke to Keju-Johnson about birth problems. This opened her eyes for the first time to the miscarriages and stillbirths experienced by women on the northern islands. She had read in Brookhaven National Laboratory reports from the 1950s about the heavily exposed Rongelap women experiencing a doubling of miscarriages, compared to unexposed Rongelap women in the years immediately following Bravo. But Brookhaven discounted this development as statistically irrelevant since the population was small and the doctors did not pursue investigations beyond these initial findings. Keju-Johnson had also read former Peace Corps volunteer Glenn Alcalay’s interviews from Utrik, where women reported having multiple miscarriages following Bravo. But to hear it face-toface, from women who had experienced Her story the tragedy of a lost child, was completely In the mid-1970s, I had produced a New book..Darlene’s story, from growing up during U.S. nuclear different than reading a report. Indeed, slide show about the history of U.S. weapons tests at Bikini and Enewetak to pioneering innovative women living on purportedly unexposed nuclear testing in the Marshall Islands community health programs in the islands, is detailed in the biography islands scattered in the Ratak Chain told released earlier this year. and showed it at every opportunity to of giving birth to monster babies, ones raise awareness among Americans. that looked like jellyfish or a clump of grapes, and which were One day as I was putting away the slide projector after a preseneither dead at birth or died soon after. As the trip proceeded, a tation to a university student group in Hawaii, a young woman pattern emerged. walked up and introduced herself as Keju-Johnson Keju from the People on many islands were expressing essentially the same Marshall Islands. experience of post-Bravo health problems and environmental efWhat I did not appreciate at the time was how unusual it was fects—on islands the U.S. government claimed to be unexposed for a Marshall Islands woman to initiate a casual conversation with to nuclear test fallout. an American she did not know. It was a small example of KejuThe research trip to the northern Marshall Islands opened KejuJohnson’s risk-taking style that I would get to know intimately. Johnson’s eyes to the extent of nuclear test fallout damage from the That meeting in March 1978 led to an 18-year association with perspective of people who lived on downwind islands. Keju-Johnson, including 14 years of marriage. She learned first-hand about the psychological and health damage Keju-Johnson later expressed her unhappiness over how little she people attributed to nuclear testing. Keju-Johnson knew, too, that knew about her own history and set out to rectify the problem. “I she was one of only a handful of people—certainly one of the first began to do research on my own,” she said later. “I began to talk Marshall Islanders—to gather testimony of nuclear test survivors. more about the issues in Micronesia. I also read clippings, articles Keju-Johnson did not have a sit back and relax personality when and books on these issues. All of a sudden, something happened to it came to a problem. The picture was complicated by the isolation me. It was like one of those rare turning points I have experienced of people on these remote islands and, for the most part, their lack in my life. of understanding of the English language. “As I was reading and having many discussions, I began to become Even if they could speak English, to whom would they speak? aware of myself: who I am and where I come from. For the first How would they get attention to their problems? Her northern time, I felt very proud of my own identity as a Micronesian or Pacific islands trip could not be locked away in a cabinet as an interesting Islander. This meant so much to me because when I first came here “What I did last summer experience.” (Hawaii), I used to be very ashamed of myself.” Keju-Johnson tried to reconcile the conflict between informaKeju-Johnson wanted to know more about the effects of the tion released by the U.S. government and empirical data she gained

18 Islands Business, December 2013

speaking with Marshall Islanders exposed to the Bravo test. weathermen who had been on Rongerik Atoll during the Bravo test These U.S. reports included the statement, for example, that in 1954. Gene Curbow and Don Baker were among the 28 American people who were on Rongelap during the 1954 Bravo test should weathermen and other military technicians stationed on Rongerik, have “no exposure (to radiation) for the rest of their natural lives”. about 125 miles to the east of Bikini. They monitored weather Yet three years after Bravo, the U.S. government returned them to conditions before, during, and after the huge blast. Rongelap, described by U.S. scientists as one of the most contamiBoth appeared in Australian Dennis O’Rourke’s landmark film nated locations in the world. The U.S. government’s Brookhaven about Bravo and the Rongelap people, “Half-Life: A Parable for the National Laboratory was responsible for studying and monitoring Nuclear Age.” the exposed Rongelap people. Curbow and Baker were unequivocal that the fallout from Bravo “The habitation of these people on the island will afford most was not the result of an “unexpected wind shift,” as U.S. officials valuable ecological radiation data on human beings,” commented claimed. one of Brookhaven’s early reports on Rongelap. The doubling of The two U.S. military veterans said they monitored weather conmiscarriages and stillbirths among Rongelap women noted by U.S. ditions around the clock as the date of the Bravo test neared in 1954. scientists in the four years after Bravo was dismissed as not statistiThe night before the largest thermonuclear weapon ever tested by cally meaningful and never again studied. But what of the testimony the United States, they reported by radio to operations headquarters of Marshallese women on many islands about ongoing miscarriages, that winds were blowing directly toward Rongelap and other inhabstillbirths, and monited islands to the ster babies? east. Despite these From day one, the warnings, Bravo U.S. government was detonated on launched a cover-up schedule. Later, deabout the Bravo test classified nuclear and its aftermath. test era reports conOfficials and reports firmed Curbow and repeatedly state that Baker’s testimony. the 1954 hydrogen Fo l l o w i n g u p bomb test was much her 1979 research larger than anticitrip to the northern pated, which acMarshall Islands, counted for people Keju-Johnson met not being evacuwith medical docated in advance as tors in Physicians a precaution; an for Social Responsi“unexpected wind Attention getting...Darlene put Marshallese culture to work as the foundation for developing youth as leaders and bility in Hawaii and role models. Youth to Youth in Health, which continues delivering services to young people today, incorporates shift” was the cause community the mainland who lively music, dancing and drama to deliver messages about issues ranging from family planning to domestic violence. of people being exwere interested in posed to nuclear test Marshall Islands fallout; and Rongelap and Utrik were the only inhabited atolls healthcare and nuclear issues. Keju-Johnson also met Dr Rosalie affected by fallout. Bertell, a Grey Nun of the Sacred Heart and a scientist involved in Yet testimony of residents of the northern islands indicated that a range of health studies and advocacy. the fallout had not been limited to these two atolls. This testimony A key concern for Keju-Johnson was the U.S. government’s would be confirmed years later by documents declassified many policy of downplaying potential hazards of radiation exposure in years after Bravo that showed Bravo and other tests exposed 20 the Marshall Islands and allowing Marshallese to be continuously inhabited islands to radioactive fallout. Other formerly secret docuexposed to radioactive environments. ments would undermine all other aspects of the U.S. government’s In the mid-1970s, more than 20 years after Bravo, the people of cover-up of the Bravo fallout. Utrik experienced a spike in thyroid cancer, giving them a higher Back in the late 1970s, further fueling skepticism about the rate of thyroid cancer than Rongelap islanders who had received a reliability of U.S. scientific pronouncements was the debacle at dose many folds higher. Bikini where islanders had been told the atoll was safe but were Since 1954, Brookhaven doctors had visited Utrik for Bravo re-evacuated in 1978 when their body levels of radiation soared. follow-up studies and had told the people not to worry about fuThe more Keju-Johnson learned, the angrier she became. Her ture health problems because the radiation to which they had been expanding knowledge motivated her in two directions: after exposed was considered a low dose. graduating with a four-degree in business administration in 1980, The fact that the US government had never conducted a counshe shifted to public health for her master’s degree studies and she trywide epidemiological study on the health of Marshall Islanders began speaking publicly around the world about nuclear testing at astounded and angered Keju-Johnson. Her anger grew at the way a time when only a few people were doing so. U.S. officials dismissed health concerns of Marshall Islanders, particularly those from islands the U.S. deemed unexposed. Exposing the cover-up Keju-Johnson knew from her own research that more than the A quarter of a century after the American nuclear testing program four islands the U.S. government acknowledged were exposed to ended in 1958, the tests were still shrouded in secrecy. Through fallout. speaking engagements and tours, Keju-Johnson connected with Keju-Johnson started discussing with Bertell and other health Atomic Veterans and their wives, lawyers, doctors and scientists people a proposal for a pilot epidemiology study of certain atolls interested in nuclear testing. in the Marshall Islands. While completing requirements for her By the early 1980s, she had established contact with two American master’s degree in health at the University of Hawaii, Keju-Johnson Islands Business, December 2013 19

Cover Report

“My island that is up in the north is also contaminated...I too have three tumors in me. I’m about to have surgery. And I’m frightened. I don’t know whether I should have children or not. Because I don’t know whether I’ll have a child that is like a jellyfish baby. I don’t know whether I will have a child that has six fingers—a child that has a horn on its head. We don’t know what is going on. All we know is we must travel throughout the world and share this kind of experience from the bombs so that we must stop it before it gets to you. Remember, we are the victims of the nuclear age. Don’t become a victim.”

decided she would attempt to make the epidemiological study haptaminated with radioactive fallout. pen as her summer fieldwork project with the Ministry of Health Her speech gave voice to the fears of thousands of islanders exin Majuro. posed but disregarded in the aftermath of Bravo. “My island that The main hurdle Keju-Johnson faced in promoting this unprecis up in the north is also contaminated,” she said. “I too have three edented survey was not the plan itself or lack of funding to make it tumors in me. I’m about to have surgery. And I’m frightened. I happen. It was a political problem. The survey she proposed could don’t know whether I should have children or not. Because I don’t stir up debate about nuclear test issues shortly before the scheduled know whether I’ll have a child that is like a jellyfish baby. I don’t vote on the Compact of Free Association know whether I will have a child that has six that contained a US$150 million nuclear fingers—a child that has a horn on its head. compensation package that would absolve the We don’t know what is going on. All we know U.S. government from further liability while is we must travel throughout the world and eliminating lawsuits worth billions of dollars share this kind of experience from the bombs then pending in U.S. courts. so that we must stop it before it gets to you. As a result, both of Keju-Johnson’s expandRemember, we are the victims of the nuclear ing activism in the field and of the World age. Don’t become a victim.” Council of Churches (WCC)’ engagement Although these words were powerful, it with the Marshall Islands, the WCC extended was Keju-Johnson’s skillful oratory that made to Keju-Johnson an invitation to join a panel this one of the memorable talks of the WCC of Pacific islands speakers to be featured at the assembly, and ignited interest of churches to global organization’s assembly scheduled for work on Pacific issues. In the meantime, the Vancouver, Canada, from July 24 to August Compact of Free Association with its “full 10, 1983. and final” nuclear test compensation package There had never been a focus on the Pacific was approved and implemented. in previous WCC assemblies. Island church leaders decided the time had Nuclear claims in limbo come to get the attention of the global church Fast forward 30 years and here is the situto the “watery continent”. ation: Keju-Johnson didn’t know when she ac• A Nuclear Claims Tribunal established cepted the invitation that she would be the Fearless speaker...Darlene exposed discriminatory U.S. by the Compact’s compensation provisions policies affecting Marshall Islanders at the Kwajalein only layperson and the sole representative of Army functioned for more than 20 years, awardmissile range to global audiences in the early 1980s. Micronesia on a panel that featured a group ing US$96.6 million for personal injuries, of eminent religious leaders from Polynesia but had funds to pay only US$73.5 million. and Melanesia. • The Tribunal awarded US$2.3 billion to Bikini, Enewetak, “Yokwe kom kajojo” (hello to all of you), she began her speech Rongelap and Utrik for loss of use, hardship, and nuclear clean up in Vancouver. With those words on July 30, 1983 Keju-Johnson costs, but had funds to make only token payments to Bikini and launched one of the most famous, controversial, and internationally Enewetak amounting to about US$3.9 million. publicized speeches given by a Marshall Islander (view the speech: In 2000, with the compensation picture appearing increasingly https://www.youtube.com/watch?v=1hxCGlA5oJQ). bleak, the Marshall Islands government submitted a petition seeking Keju-Johnson grew up on Wotje, one of many downwind atolls additional compensation and expansion of health care programs to that the U.S. officials claimed was unexposed but which formerly the U.S. Congress. Except for two Congressional hearings held in secret U.S. government reports from the 1950s showed was conWashington, D.C. in 2005, and a Bush Administration report stating 20 Islands Business, December 2013

the U.S. government was not legally required to pay additional comKeju-Johnson had developed a fierce respect for Marshallese pensation, there has been no official response from the Congress. culture. Her youth health work acted both as a counterbalance As the Tribunal’s situation was proving—for lack of U.S. fundto westernization and as a tool for galvanizing people to reassert ing—to be unresponsive to compensation awards approved, the control over their lives. Bikini and Enewetak communities refiled their lawsuits in U.S. YTYIH demonstrated that Marshall Islanders had the skills to courts in 2006. These were subsequently dismissed by the U.S. resolve many of the problems they faced. The young performers Federal Claims Court in late 2007, and an appeals court upheld were saying through their actions, “These are our problems, and the ruling. The U.S. Supreme Court declined to hear the cases, so here are our solutions.” Marshall Islanders have no standing to bring further legal challenges Of course, there were skeptics who asked what such a small in the U.S. courts, a development that takes pressure off the U.S. group could do to counteract problems that were driving teens into Congress to address the situation. substance abuse, early pregnancy, sexually transmitted infections, Outside groups have called on the U.S. government to pay the and suicide. But testimony from people involved told the story of awards of the Tribunal. A detailed review of the compensation how YTYIH changed lives for the better. situation and the need for Washington to pay Tribunal awards by Keju-Johnson identified the missing link in young people’s lives Harvard law students resulted in the report, “Keeping the Promise: because she had experienced it as a teen struggling in Hawaii schools An evaluation of continuing U.S. obligations arising out of the U.S. nuclear with limited English and a lack of pride. testing program in the Marshall Islands,” published in 2006, and a 2012 Marshall Islanders may have yearned for money to rent the latest report by a United Nations Special Rapporteur for the UN Human hip-hop dance video or to buy vodka, but what was really missing Rights Council similarly urged the U.S. government to pay off the in their lives was pride in being Marshall Islanders. awards issued by the Nuclear Claims Tribunal. Keju-Johnson’s positive feeling of identity had helped her make While American ‘Downwinders’—people living in Nevada, Utah sense of life. If Marshall Islanders were to have hope of successand Arizona who were exposed fully engaging with the outside world, to nuclear test fallout from U.S. Keju-Johnson knew from personal nuclear tests at the Nevada Test experience that they needed to be Site—receive 100 percent of their firmly grounded in their identity as compensation payments, more than Marshall Islanders. 2,000 Marshall Islanders have yet to “Keju-Johnson was the most avid, receive all of their awarded compenpractical, engaged individual I ever sation because of lack of funding. met in the Marshalls focused on reIn addition, today we know vitalizing a sense of what it means to that 20 inhabited atolls and single be Marshallese,” commented Daniel islands, including Keju-Johnson’s Kelin, the drama education director at home atoll of Wotje, were exposed Honolulu Theater for Youth, who has to nuclear test fallout in the 1950s— led theatre trainings in the Marshall not the four claimed by the U.S. Islands since the early 1990s. government. “Her humorous, yet aggressive Health pioneer...Music was an integral part of Darlene’s life. She used it as part The ongoing disconnect between of her master’s degree orals presentation at the University of Hawaii in 1983. nature both drew people in and U.S. official policy and its declassidid not let them off the hook. She fied documents is problematic for inspired with her deep love of being the Marshall Islands. Despite the release of documents that prove Marshallese.” that many more than four atolls were affected by radioactive fallout, She tackled the crisis of culture loss permeating Marshallese soU.S. government officialdom maintains the fiction of the four atolls. ciety, challenging, teaching, and engaging young people and adults to appreciate the power of their culture. That process spun off in Keju-Johnson’s legacy many directions, opening the door to creative solutions to modern Keju-Johnson was an outspoken advocate for nuclear test victims community problems. and later an innovator of internationally recognized community For the twelve years she led the youth program as an integral part health work. When Keju-Johnson returned home in the mid-1980s of the Ministry of Health’s health promotion arm, Keju-Johnson after completing her university studies, she pioneered innovative repeatedly demonstrated the benefits of this home-grown approach, community health programs training young people as peer educaand the direct link between a healthy culture and a healthy comtors. munity. She established Youth to Youth in Health (YTYIH) as the pro“Her legacy,” writes Francis X. Hezel, S.J., in the foreword to motion arm of the Ministry of Health’s Family Planning office, “Don’t Ever Whisper, “was a ‘can do’ spirit and an insistence from and latter spun it off as a successful, stand-alone non-profit agency. the very beginning that it’s up to her people to take the work a few Employing music, drama and dance, Keju-Johnson created a carsteps further. You can’t just sit in the back row and watch what’s ing environment that was fun and exciting for youth participants happening. Get up and dance, she kept urging. You can help remake but also included a high degree of discipline and required adherence the world.” to rules of behavior. An Australian Network News program by Pacific Correspondent Nobody would take their presentations on the dangers of tobacco Sean Dorney aired in September called Keju-Johnson, “The Marand alcohol abuse seriously if they were drinking or smoking themshall Islands’ unforgettable voice.” Thanks to her youth program, selves. This discipline contrasted starkly with the daily life of many now in its 27th year of operations, Keju-Johnson’s legacy continues of the youth entering the program. to impact new generations of Marshall Islanders. Urban populations in Majuro and Ebeye were in great flux as • This article was adapted from the recently published book, “Don’t Ever Whisper: Keju-Johnson traditional practices that had for centuries held families and comKeju—Pacific Health Pioneer, Champion for Nuclear Survivors”. For more information on the book, check www.donteverwhisper.com munities together disintegrated. Islands Business, December 2013 21

Politics as they do on many other matters. Under our laws, it is illegal to tap phones, a serious criminal matter.” The prime minister detailed how the government has embarked on a new economic direction for PNG—one which follows the more state-directed path of many Asian countries. He admires government-owned conglomerates there such as Singapore’s investment house Temasek, with US$175 billion assets, and Malaysia’s resources corporation Petronas, with US$138 billion. He says: “In countries like ours where the economy is not fully developed but with a fast growing population and high youth unemployment, we need to create industries that will engage them more fully. “Other countries around the world have taken that approach.” He points out that Peru and Chile also have major mining companies fully owned by the state. “As long as we create a business model which is managed outside the public service structure and governance issues are addressed properly, the opportunity will yield good returns for our country.”

Peter O’Neill (right)...”I’m putting the country on the right path to the development it deserves.” Photo: Paradise

O’Neill govt’s new development template Communicating better with Asia By Rowan Callick P apua N ew G uinea ’ s most powerful prime minister since independence, Peter O’Neill—who has won the backing of 104 of the 111 members of parliament—has come under fire in recent weeks, especially in social media, over the government’s aggressive management style. But “we are leading the way,” he says in an interview in his parliamentary office. “And in PNG, there is a lot of story-telling without facts.” He says “there has been some apprehension in the community at large, because of the new level of enthusiasm we brought. That’s now starting to rub off. “The public is responding well, they can see new infrastructure, and free health and education, and discipline coming back into the disciplined services.” And a new Asian style model for development is emerging through government businesses. But 15 months after the election, he acknowledges that his team could do better, and anticipates his first ministerial reshuffle. “Everybody now knows there’s light at the end of the tunnel, which can be reached if we work together,” he says. “Over the next four to five years, you’ll find the country in better shape.” 22 Islands Business, December 2013

It is communicating with Asia better, he says—which is providing his new development template—and engaging well with Australia too. “We are developing a business case for the country.” Foreign Minister Rimbink Pato will lead PNG’s team for the annual joint ministerial forum with its Australian counterparts, to be held in Canberra on December 11. Greater involvement of PNG and especially the Manus business community in the asylum seeker centre under construction will be one issue Pato will take up, says O’Neill—as will concerns about spying. Phone tapping It was revealed in November that the Australian government had in 2009 intercepted phone calls made by Indonesia’s President Susilo Bambang Yudhoyono and his wife—and anticipation resulted that the phones of other neighbouring leaders have also been tapped. O’Neill says: “This must be resolved with some level of certainty” at the forum. “We know this might be happening, but it would certainly be a breach of trust. Among friends, this is not necessary. “If there are issues to be discussed, all they have to do is pick up the phone and give us a call,

Management of resources Several Asian countries, he says, “have succeeded economically with very limited resources. We have an abundance. Our only problem has been our management of them. “If we structure well, there is no reason why we shouldn’t succeed as they have done, with professional management teams and independent boards, and an ability to achieve global branding.” PNG has two trains of liquefied natural gas under way now via the US$18.5 billion ExxonMobil-led project coming on stream next year, and O’Neill expects the gas resources controlled by Interoil to provide a further two trains. And a deal is moving closer whereby Interoil will obtain a major international partner—probably by Christmas, O’Neill expects. This would create an LNG hub in PNG, almost the size of Australia’s North West Shelf, which has five gas trains. The government is putting an increased focus on small and medium sized firms, he says, “trying to get Papua New Guineans into business”. He concedes that “many will feel that the focus may lead to the displacement of foreign interests in certain sectors. But it’s not an issue about national content or local ownership or nationalisation of interests.” He says there has been “deliberate misinformation about this peddled by some of our critics, especially in the background of the Ok Tedi mine takeover,” with the government acquiring—so far without compensation—the 63.4 percent owned by PNG Sustainable Development Program, a trust established when Australian mining giant HP-Billiton left. O’Neill says: “We’re not taking over the interests of foreign investors as such in Ok Tedi. We are just re-arranging the structure so we can maximise returns for our own stakeholders, as any company would do.” The budget for 2014—handed down in midNovember—is, he says, framed “with high attention to agriculture and tourism, two sectors that will grow our economy. The government will

papua new guinEa

New media laws The prime minister reveals he is moving to create a national content framework for the media in PNG, linked with a required level of local participation. The national daily newspapers, the Australian owned Post-Courier, the Malaysian owned The National, Fiji owned broadcaster EM TV and Fiji owned FM radio stations are involved. O’Neill says: “We are holding discussions with stakeholders, which we are trying to conclude by the next parliament sitting in February. It’s an open discussion, not something we are forcing on to people. It’s not uncommon around the world.” He says the public sector has been “a bit slow in responding to the demands which the economy is placing on them. So we’re bringing more people from the private sector into the public service, recruiting new people, and now the focus is there. “We’re been able to achieve some level of delivery in 2013, but in 2014 there will be a substantial increase in projects on the ground.” PNG is establishing an Asian-style free trade zone in east Sepik to attract large-scale agricultural investment, in which government and landowners will also participate. He says: “The models we are now putting forward, including tax breaks, will within 12-24 months make significant progress, providing maximum opportunities for employment. We know from our successful oil palm industry, that this model can work, with smallholders

surrounding a nucleus estate. And PNG has agreed with Indonesia to develop jointly their border zone. He says: “The success of this relationship will of course help our Melanesian people who live in West Papua. We appreciate President Yudhoyono’s commitment to empower the people there economically, and also to reduce the level of military presence. “We think that is the way forward, as well as political reform to give people a bigger say in their own affairs. That can all only be achieved through meaningful discussions with Indonesia. And we have recently begun weekly Air Niugini flights to Bali, which have been so successful they are already asking for a second flight.” Corruption The anti-corruption drive is proceeding well, the prime minister says. An Independent Commission Against Corruption is now before the parliament—though it is under review as a result of public requests for more debate. “We are ready to go,” he says. “A lot has been said about corruption in this country, but no government has made a more determined effort to tackle it than we have. Task Force Sweep has started to deliver very good outcomes, and is engaging in a lot of prosecutions.” Former Minister Paul Tiensten was recently convicted of misappropriating a US$3.5 million grant, and leading lawyer Paul Paraka has been charged with five counts of conspiracy to defraud the state, nine counts of stealing by false pretence, two counts of money laundering and two counts of misappropriation, over US$28 million claimed fraudulent payments made by the state.

On November 29, PNG’s Supreme Court at last lifted the injunction—granted to Paraka—that had for three years prevented the public from discovering the corruption revealed in an 812page report produced by judges Cathy Davani and Maurice Sheehan and business leader Don Manoa. This demonstrated that scores of millions of dollars of government funds had been stolen over a few years by a network of top public servants and lawyers, using invented compensation claims that arose from the collaborators and were paid out by officials who were part of the gang. The report recommends a large number of prosecutions, including figures still prominent in public life. Despite public—especially on social media—criticism of continuing corruption, the O’Neill administration has already presided over more cases involving major figures than ever before in PNG’s independent history. O’Neill laments that “personality attacks have been coming from people with nothing to offer the nation—using social media to put out untruths against which we can’t easily defend ourselves. “Some is sourced from political enemies, and we know where that’s coming from. They are determined to derail stable government, and are also trying to compromise sections of the police force and the military. So these are very dangerous people for our country.” But, he insists, “they won’t deter me from doing my job. In fact, it just goes to show I am on the right path. “If I upset a few people along the way, as long as the majority know I’m putting the country on the right path to the development it deserves, I need make no apology to anyone.”

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participate fully in developing these two industries, either as an equity partner or as a partner in providing infrastructure—as well as mobilising resources and landowners ready for take-off.”

Islands Business, December 2013 23

Politics

SOLOMON ISLANDS

Suffering islanders...due to corruption being rife in the Solomons. Photo: Islands Business

Little hope things will get better Corruption rife in the islands By Alfred Sasako Solomon Islands is a country on the mend—an economy in transition after its four-and-ahalf-year brush with civil war early this millennium. The civil unrest brought foreign troops to this once idyllic island nation, the only country in the Pacific region which hosted regional troops including those from Australia and New Zealand for 10 years. The troops’ tour of duty ended last July. Their departure after 10 years has left the nation in a somewhat daze as the populace watch in helplessness the good work the soldiers and civilian advisors have done in terms of the restoration of law and order begin to evaporate in a downward spiral. Today, it is not the law and order problem that the remnants of the Regional Assistance Mission to Solomon Islands [RAMSI] have to deal with, if at all. Rather, it is the increasing level of corruption within the white collar job community in the public service. It is estimated that up to 95 percent of government ministries are involved in one kind of corruption or another. Bribery amongst officials and politicians is widespread and growing. It does appear public servants involved in alleged corruption take their cue from their political masters. To keep a watertight lead on bribery and corruption, whistleblowers are promptly removed. An example of this is a recent case involving four political appointees known as Constituency Development Officers (CDOs)—officers hand-picked by politicians to be a conduit for project preparation and funding for Members of Parliament. These officers formed a company, which 24 Islands Business, December 2013

siphoned off more than SB$1.24 million of public funds in a matter of months. One of the officers went on record to say that he and his three co-conspirators did what they did at the behest of their political masters. Politicians on the other hand, distanced themselves from funds withdrawn from the company account. Despite public outcry, there’s been no police action, largely because members of RAMSI’s Police Participating Force (PPF) have left everything to their ill-equipped Solomon Islands’ counterparts. In another classic example of a corruptionridden public sector was the recent discovery of a SB$10 million fraud within the Ministry of Health and Medical Services—money provided by Australia for health and medical services infrastructure development. In this case, over-charging of inter-island freight consumed much of the money. In one instance, a boat to deliver building materials for a health centre charged well over a million dollars in freight. Payment was made even before the materials were bought. There are honest people as well. One contractor was paid twice for the same job. He returned the half-a-million dollar surplus payment to the government. The Australian government is reportedly furious and is pointing a finger at the Minister of Finance and Treasury, Rick Hou, as to why the fraud was not detected earlier. Australian government auditors are said to have been travelling back and forth between Canberra and Honiara to get to the bottom of this matter. As a former governor of the Central Bank of Solomon Islands, Hou was almost literally “worshipped” by the international community for being a model for keeping a tight rein on expenditures—so much so that the cost of his

last four years at the helm of the Central Bank was picked up by Australian taxpayers. The alleged fraud within the Ministry of Health and Medical Services may have coloured the international lense through which it sees the man. All these are impacting on service delivery to the islanders. In Honiara, the CEO of the government hospital known locally as the National Referral Hospital, Dr. George Manimu has admitted government funding has not reflected well on the real needs of the health sector. “As a result, the function of the entire health system has been affected. If the health sector has a reflective budget, we should not experience the problems we face with health services in this country,” Manimu said. There are indeed problems in the health sector. Apart from the SB$10-million fraud, hospitals and health centres are on a drip-feed financially at the present time. At the National Referral Hospital, also known as Number 9 or Central Hospital, even the most basic of necessities such as medicine trays are unavailable. In the Western Province, where Prime Minister Gordon Darcy Lilo comes from, one hospital has already threatened to close because its workers including nurses have not been paid. Other privately-run hospitals and health centres are in the same boat. In education, a young male student allegedly took his own life the day after he met with the principal of his school to explain that his parents could not afford a school uniform, together with the school fees. His lifeless body was found hanging in front of his dormitory the next morning. School fees here are rather exorbitant for those without a regular income. They range from SB$2,000 up to SB$5,000 or more. It is not as if the government has not set aside funds to take care of the school fees. This year alone, for example, the Solomon Islands cabinet approved a SB$20 million Constituency Scholarship Fund for this purpose. The problem it seems is that the funds were administered by national politicians. Parents are crying foul. At SB$20 million per annum, it works out at SB$200,000 for each of the 50 constituencies. But no one seems to know where politicians have spent the money. And the rural people—up to 85 percent of the population who inhabit the rural areas—are hurting. So much so that the 2014 national general election could turn out to be whitewash for sitting MPs. Exemption from goods and services tax and import duties which previous governments have established as an incentive to encourage new investment is now being used on a preferential basis. It is accorded to foreigners, largely Asians with large pockets, not necessarily for new investment or investment-related items. Many foreign investors are now considering either scaling back or winding down their businesses because of lack of support from the government. So as 2013 draws to a close, there’s little hope that things would get better in the New Year. If anything, indications are that services would be drastically cut as the easy money runs dry. Given that no sizeable investment has been recorded in the last four years, there could be a drought on easy money from 2014 onwards. Then and only then, perhaps politicians would realise they’ve been the largest impediment to development.

Climate Change

World’s oceans to go up about a metre

studies Kiribati, says the lack of evidence tying the 15cm rise of the past 60 years to individual flooding events is not particularly significant. “The weather at a given time and place is not proof of a global climate trend, nor is a global climate trend a good predictor of local weather on a particular day,” he explains. The peak sea level in a given spot will be a combination of man-made factors (has a causeway created currents that swept away the beach that protected a village?); short-term weather patterns (are strong winds pushing water into the lagoon? Are giant swells from a distant in an interview in his office in Tarawa in May. By Christopher Pala storm making matters worse?); medium-term He said “time is running out” and emphasised weather patterns (has El Niño warmed the water the need for an evacuation plan. But scientific T he world ’ s leading panel of climate locally and caused it to expand?) and hourly: is studies have shown that the disappearance of change specialists warned in a report issued in the storm hitting the island right at the top of a Bikeman Island was caused by the constriction September that the world’s oceans will rise on king tide? That happened on February 10, 2005, of causeways between the islands that stopped the average between half a metre and a metre by the when floodwaters damaged the hospital in Betio, supply of sand to their beaches. The crop failures, end of the century. Tarawa’s most populated area. And yet despite floods and evacuation in the village of TebungiBut the picture painted by the Inter-Governeight years of sea-level rise, the level of that day nako in the island of Abaiang, near Tarawa, stems mental Panel on Climate Change is hazy because hasn’t been surpassed. from the fact that it was built a century ago on the rise will be unevenly spread across the world: All these factors, Donner points out, raise or land that was once a pass. land is rising in some places and sinking in others. lower the ocean’s level far more dramatically than Meanwhile, a scientific satellite study showed In addition, even in a single place, the rise an increase of a few millimetres a year. that the southern part of Tarawa, where most iwon’t be uniform: for instance, the periodic What is sure is that when all these factors come Kiribati live, is far from disappearing under the warming of the Central Pacific known as the El together to create a surge, it will get worse as the waves: in fact, it is expanding. Land reclamations Niño phenomenon can change the level by up sea level rises. “If the ocean rises to 45cm in a single year, as it did by a metre, that’s serious trouble in 1998. In most years, it’s a 15cm for Kiribati,” he says. “Scientists increase—as much as the average can’t predict that a given island sea-level rise in the Pacific for the will become uninhabitable at last 60 years. Xcm of sea level rise.” So far, it’s unclear whether these It will depend on a combinawarming events will become more tion of the adaptation measures frequent or not. What is clear is that were previously taken, the that over time, storm surges will characteristics of the island and cause more damage. Predicting the what impacts people are willing effects of sea-level rise in a given to accept, he adds. place—say the Pacific Ocean—is “For now, there’s no need for complicated because the average people to leave Kiribati, but at rise is of no true significance: what the end of the century, coping matters is how high it will reach with high tides when the sea is a during a storm and what damage meter higher may be prohibitively will it inflict on water tables and expensive,” he predicts. buildings. And that is virtually There is one bit of good news: impossible to predict. rainfall is generally expected to In coral atolls that emerge only a few metres above sea-level, the Raising awareness…in Kiribati, the government raises awareness of sea-level rise in schools. increase in the equatorial Pacific. Photo: Christopher Pala The adaptation measures inpicture is further clouded by wideclude moving settlements to spread perceptions that broken places that are naturally less seawalls, flooded homes and disapsusceptible to coastal erosion and spreading out pearing islands are all caused by already-risen seas. increased the area nearly 20 percent in 30 years, the population to parts of the atolls that are wide In fact, scientific studies have shown that a scientific satellite study showed. enough to have large freshwater lenses, so polthey are usually caused by dredging, building It is precisely these actions, often ill-designed, lution can be avoided. causeways between islands, man-made expanthat cause erosion in many other spots frequently Scientists say there is little hope that the live sion into swamps or reef flats and other human shown to visitors as evidence of sea-level rise, the coral that sustain the atolls will grow fast enough disturbances. scientists have shown. to keep up with sea-level rise, or even stay alive Kiribati, Marshall Islands, Tuvalu and the until the end of the century. Maldives in the Indian Ocean are considered to Threat bogus The atolls, shaped like narrow chimneys, have most threatened by the rising seas. Their studies have had political ramifications. been sinking for millennia, but at much slower Kiribati president for the past decade, Anote For Teburoro Tito, Tong’s predecessor as presirate than the sea rising—and that rate is expected Tong, has become a fixture at climate-change dent, they highlight the government’s failure to to accelerate. In contrast, the coral growth rate is conferences. He is one of the best-known advocompetently manage the way the coastline is expected to slow because much of the cause of cates of creating an international mechanism that modified. sea-level rise—warmer water—is itself a source would compel greenhouse gas-emitting nations “Having failed to do his part, he points a finof coral mortality. to pay for the eventual relocation of the inhabitger at climate change,” said Tito, a member of Overfishing of algae-eating fish like parrotfish, ants of the atolls. parliament. “That’s how he justifies the need to which protects corals from being taken over by He often describes his country of 103,000 spend so much time overseas at climate change algae and the acidification of the ocean, which people as being “on the front line of climate meetings. He is like a lazy boy failing to do his absorbs much of the carbon dioxide we spew into change” and says his people are battling the rising work and blaming it on others.” the atmosphere and makes it harder for shellfish seas on a daily basis. For climate change deniers, evidence that and corals to grow, also suggest the corals won’t “We’ve had a whole island disappear, a whole Tong’s claims are false is used to demonstrate be able to keep up with the rise in ocean levels, village has been evacuated, our freshwater is being that the threat is bogus. coral scientists say. contaminated and our crops are dying,” Tong said Simon Donner, a climate change scientists who

But rise won’t be uniform

Islands Business, December 2013 25

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Business While the precise nature and extent of climate change in the Pacific countries cannot be predicted with certainty, the direction of potential impacts is clear. Economic losses suffered by the Pacific region from climate change are likely to rise over time unless some tough policy decisions are made. The ADB study comprises three components: climate change modelling, sector impact assessment and economic impact assessment.

Flooded road…in Lepa, Samoa. Photo: ADB

The cost of climate change in the Pacific Losses likely to rise, need tough decisions By Dr. Xianbin Yao & Dr. Cyn-Young Park

threats to prosperity, stability and security most recently through the Majuro Declaration on Climate Leadership at the 2013 Pacific Islands Forum. The Asian Development Bank has just released a study of the economics of climate change in the Pacific to help policymakers understand and adapt

ADB’ s new ‘T he E conomics of C limate Change in the Pacific’ report estimates the range of potential economic impacts of climate change for specific sectors and economies of the region under various emissions scenarios. The study covers all of ADB’s Pacific developing member countries, but specific results are presented in the study for Fiji, Papua New Guinea, Samoa, Solomon Islands, Timor-Leste and Vanuatu. Climate change is one of the critical challenges of this century for the Pacific region. The physical, social, and economic characteristics of Pacific countries make them highly vulnerable to the rise in sea levels, intensification Figure 1: Country-Specific Cost of Climate Change of storm surges and cyclones, changes in rainfall patterns, and changes in land and ocean to climate risks. temperatures that are foreseen. The study identifies and quantifies potential Indeed, in a region characterised by extensive impacts on Pacific islands’ economies with details growth of rural and urban settlements in coastal provided for key sectors including agriculture, areas, no country of the Pacific can hope to remain fisheries, tourism, coral reefs and human health unaffected by climate change. under various emissions scenarios. The region’s leaders have recognised these

Climate Change Modelling Climate modelling—based on a medium emissions scenario —shows that annual mean temperatures could rise upto 1.8°C higher than the 1990 level in most Pacific DMCs by 2050, and continue to rise higher by 2070, with some countries warming up to more than 2.5°C on average. El Niño and La Niña events are likely to become more frequent in the future, accompanied by intensification of extreme weather events, stronger winds, and heavier rainfall, but less frequent cyclones. Sea level rise is projected to exceed one metre for all the Pacific DMCs but Kiribati by 2100, according to the high-range estimates. Sector impact assessment Sector impact assessments quantify the potential adverse impacts of these changes on agriculture, fisheries, tourism and human health across the region. Agriculture would be particularly vulnerable, with yield losses in some countries of up to more than 50% projected for sweet potato, 9% for sugar cane, 14% for maize, 37% for cassava, and 19% for taro by 2050. Fisheries are also likely to be adversely impacted. Catches of tuna are projected to decrease by 7.5% for many Pacific countries, rising to 20-30% for PNG, under a high emissions scenario in 2100. Tourism could also decline by up to a third as the region becomes a less attractive destination. And negative effects on human health from respiratory diseases and increased malaria vectors could cost the region nearly 1% of GDP. It should be noted that these estimates do not include all sectors in the economy, nor the potentially large cost of replacing coastal infrastructure or of recovering from catastrophic events such as cyclones. For these reasons, the study also employed integrated assessment models to estimate the potential for total economic impacts. Economic impact assessment Across all emissions scenarios, the estimated Islands Business, December 2013 27

Business aggregate impacts of climate change in the Pacific are serious. If the world stays on the current fossil-fuel intensive growth model, total climatechange cost in the Pacific is estimated to reach 12.7% of annual GDP equivalent by 2100. Even under a low emission scenario, economic losses could reach 4.6% of the region’s annual GDP equivalent by 2100. The results suggest that PNG could experience the most significant losses from projected climate change, reaching 15.2% of its GDP by 2100, followed by Timor-Leste (10.0%), Vanuatu (6.2%), Solomon Islands (4.7%), Fiji (4.0%), and Samoa (3.8%). Responding to the impacts of climate change will be expensive. It is estimated that the Pacific region could require between US$217 million and US$775 million (approximately 0.8% to 2.5% of GDP) every year until 2050 to prepare for the worst case under the high emissions scenario. However, the cost of adaptation would be significantly lower under lower emission scenarios. If the world manages to stabilise emissions and keep CO2 concentration below the internationally recommended 450 parts per million, adaptation costs could be as low as US$158 million or 0.5% of GDP per year. The ultimate outcome is dependent on international cooperation. Policy recommendations Climate change is not a stand-alone environmental issue but a development agenda that Pacific countries have given high priority. Important policy recommendations in the report include: • Mainstreaming climate-change actions in development planning is crucial. • Forward-looking adaptation strategies with low-regret options and built-in flexibility are the best basis for a robust adaptation pathway. • Adopting a risk-based approach to adaptation and disaster-risk management can help prioritize climate actions and increase the cost-efficiency of adaptation measures. • Climate-proofing of infrastructure can help improve long-term sustainability. • Improving knowledge and capacity to deal with climate uncertainties is urgent. • Improved access to climate finance is critical for ensuring continued economic growth and development. • Successful adaptation efforts require strong cooperation and coordination among multiple partners within and beyond the Pacific region. If not adequately addressed, climate change could overturn the Pacific region’s development achievements and strong cooperation and coordination among development partners is paramount. ADB’s Climate Change Implementation Plan for the Pacific aims at scaling up climate adaptation efforts based on consensus-building among multiple partners, and assisting capacity development to effectively respond to climate change by implementing these recommendations. ADB has incorporated climate change into the core of its operations and of its assistance to Pacific countries and is firmly committed to support climate-change adaptation efforts. With this on-going research effort and knowledge products, ADB aims to support Pacific countries in achieving climate resilience. • Dr Xianbin Yao and is Director General of ADB’s Pacific Department. Dr Cyn-Young Park is Assistant Chief Economist in ADB’s Economics and Research Department. 28 Islands Business, December 2013

Bank talk: (left to right) Gane Simbe, (Deputy Governor of the Central Bank of Solomon Islands and Chair of the Pacific Islands Working Group of the Alliance for Financial Inclusion ), Pia Roman (Head of Financial Inclusion at Bangko Sentral Ng Filipinas), and Steve Rasmussen (Head of Technology at the Consultative Group to Assist the Poor [CGAP]). Photo: ADB

Banks go branchless to reach the unbanked Bankers see it as key driver in financial inclusion By Michael Hutak It might be the woman market stall holder in a city like Port Moresby, who needs security for her daily takings, or the rural Solomon Islands school teacher who must spend up to half his wage in boat fuel travelling to a bank to collect his pay. Both could use a mobile wallet to solve their problems. Branchless banking, mobile banking, mobile “wallets”, innovations in financial services are seeing thousands of poor and low-income people use their mobile phones to enter the financial system for the first time; to open accounts, get paid, save money and begin to move out of poverty. And so they came to Sydney last month for the first-ever Pacific Branchless Banking Seminar. From Timor Leste to Tonga, the Philippines to Fiji, from all over the Pacific and beyond. Bankers large and small, central and commercial,

were joined by financial service providers, mobile network operators and technology providers to share new approaches to fostering financial inclusion in our region. Sponsored by the Asian Development Bank’s Pacific Private Sector Development initiative and the US-based Consultative Group to Assist the Poor (CGAP), the event was the first of its kind for the Pacific. Representatives from six Pacific Islands Central Banks were joined by about 30 more delegates ranging from small commercial banks such as BNCTL (the National Commercial Bank of Timor Leste), to global giants like Visa International. The meeting sought to identify policies, innovations and practices that are strengthening the enabling environment for branchless banking in the region. Central bankers and the private sector—being the regulators and the regulated—don’t usually

Branchless banking, mobile banking, mobile “wallets”...are seeing thousands of poor and low-income people use their mobile phones to enter the financial system for the first time.

Business interact in this way, but such was the open exchange of knowledge and views, is unlikely this will be the last meeting of its kind. This was a working meeting and leading discussions were experts Gane Simbe, (Deputy Governor of the Central Bank of Solomon Islands), Pia Roman (Head of Financial Inclusion at Bangko Sentral Ng Filipinas), and Steve Rasmussen (Head of Technology at CGAP). Let’s take a closer look at some of the issues identified: • Continuing to increase the different uses for people’s branchless banking accounts is crucial to increase the number of transactions—e.g. enabling people to buy mobile phone credit, pay electricity bills, pay for goods in shops with their account etc. • The need to build sustainable agent networks. The service provider (such as a bank or mobile phone company) needs to supply both customers and agent’s easy and reliable access to banking products to attract customers. Trust in the product and provider is key people need to believe that their money is safe, and that they can access their accounts when they want/need to. • The more we embrace technological solutions to financial inclusion the less opportunities exist for human contact—which in the past has been critical for building relationships and trust between the consumer and the service provider. As many consumers are new to (or uncomfortable with) mobile banking technology this highlights the need to build trust. It also highlights the need to have effective consumer protection measures in place—such as transparent pricing and effective redress mechanisms for consumers that have a complaint. • There is an opportunity to bring together the regulators of the financial and telecommunications sectors in the Pacific. There is some uncertainty at the regulatory level with regards to who is responsible for supervising the providers of mobile money services, if there are competing priorities of each respective regulator this could compromise the efforts of the financial services industry to promote financial inclusion and the expansion of branchless banking. • Applied Product Innovation (API) was a popular concept shared at the seminar. Essentially it is taking the concept of user-centered design principles and applies them to the design and implementation of financial products. The main difference with other design philosophies is that user-centered design tries to optimise the product around how users can, want, or need to use the product, rather than forcing the users to change their behaviour to accommodate the product. • There seems to have been the myth that if technology is there to provide access to financial services, use of it will happen automatically. There is actually quite a lot of technology available in the Pacific but usage does not follow automatically which brings back the human factor into the equation. People do not automatically use services only because they are available. Financial education/client awareness integrated in product implementation was mentioned as a crucial activity. • New Australian Foreign Minister Julie Bishop has said “microfinance is the best form of aid”, and recently at CHOGM she identified “financial inclusion” as one of three priorities for the new government heading towards the G20 meeting next year in Brisbane.

Suva, Fiji...estimating the cost of gender-based violence brings to light the hidden costs to society. Photo: Islands Business

$500m cost to Fiji of domestic violence A huge burden on national economies Estimating the costs of gender-based violence is vital as it brings to light the hidden costs to society and the resources needed to end violence. This was the message from participants at a side event to better understand the cost implications of gender-based violence and inequality, at the 12th Triennial Conference of Pacific Women in Rarotonga, Cook Islands in October. There is growing interest in this area of work in the Pacific as a number of studies show that gender-based violence places a huge burden on national economies. The University of the South Pacific, for example, has estimated that domestic violence costs the national economy of Fiji F$498 million annually. Similarly, a recent study published by the journal Reproductive Health estimated that preventing unintended pregnancies in Vanuatu and the Solomon Islands could save up to US$112 million in health and education expenditures between 2010 and 2025. Pacific Islands Countries have been working with development partners to test and implement a range of approaches, including costing the implementation of laws to address gender-based violence, as well as gender-based budgeting and looking at costing the impact of gender-based violence. In the Pacific, several countries have found successes in estimating the cost of implementing legislation to address gender-based violence. Ruta Pokura from the Ministry of Internal Affairs of the Cook Islands noted that costing the draft Family Law Bill helped the three key ministries of Internal Affairs, Justice and the Police, which would be involved in its implementation, come to understand that the costs could be manageable. From the Marshall Islands, Daisy AlikMomotaro from the Ministry of Internal Affairs spoke on the Marshall Islands’ experience with costing the implementation of the Domestic Violence Prevention and Protection Act 60-2011,

saying that “the costing exercise really helped us to raise awareness in the ministries involved in implementing the law. Going forward we have details on the activities needed to do this, and how much it is going to cost.” Simone Troller from the United Nations Development Programme Pacific Centre noted that the experience in the Pacific shows that the costing of legislative implementation can be an effective tool to secure government funding towards a law’s implementation, but it is not a cure-all to address systemic challenges with regards to resource allocation for gender equality. The discussion also covered broader approaches to costing gender-based violence and inequality in the Pacific. Yamini Mishra, UN Women’s Asia-Pacific Regional Gender Responsive Budgeting Specialist gave participants an overview of such approaches, and provided insight into good practice at the global level. Mishra noted that understanding the cost implications of gender-based violence and gender inequality helps to facilitate enhanced coordination across sectors to prevent and respond to violence against women, and helps to make a more solid case for the implementation of domestic violence legislation. She noted that costing is a political exercise, part of the political process. Without dedicated budgets to implement laws and policies, the services are less likely to follow. Having reviewed a range of costing methodologies in the discussion, moderator Maha Muna from the United Nations Population Fund highlighted the panel’s consensus on the importance of developing approaches that fit Pacific settings and will be a tool towards delivering accountable governance. The side event was co-sponsored by the Pacific Islands Forum Secretariat, UNDP, UN Women, UNFPA, and UNESCAP. • For more information, contact Jennifer Namgyal, UNDP Pacific Centre, Gender & Knowledge Management Specialist, on jennifer.namgyal@undp.org Islands Business, December 2013 29

Aviation

Air transport taxes can impact tourism development

taxes on travelling may be seen as being “politically safe”; taxing tourists (who make up the majority of travellers) is certainly not the same as taxing locals. In addition, many governments are encouraged to continue to focus on the industry’s cash cow because unbridled growth in taxes and charges has not yet significantly deterred people from flying and going on holidays or visiting friends and relatives. But how long can this last? Although levying new taxes or increasing them will undoubtedly generate additional revenue in the short-term, Whilst some of these charges are passed onto negative results will surely surface over the By George Faktaufon* passengers, others are currently being absorbed long-term. by the airlines such as fuel surcharge, biosecurity, Any purchase of the travel product is linked to A dangerous trend is emerging in the Pacific and customs/immigration charges. price elasticity and some travel segments seem to Islands region, where poorly conceived taxes on In Fiji alone, fuel surcharge and biosecurity be relatively more sensitive to price hikes. travel and tourism seem to be spiralling out of charges cost the airlines more than F$3 million The problem is that there is no government control. annually, quite a substantial amount. Fiji recently mechanism in place to make appropriate adjustIf it continues unchecked, we are in danger of increased its passenger departure tax from F$150 ments when it becomes clear that the cost of killing the goose that lays the golden egg. to F$200 from 2014. travel is negatively impacting inbound tourism. It is well publicised that tourism contributes This burden is shifted to the airlines significantly to business and contributes to ensure that if this situation arises, substantially to the economic and social they will have to adjust their pricing development of the region. accordingly and if necessary, absorb For many of the islands states, tour(indirectly) the governments’ taxes and ism may well represent the only real charges. This is the dilemma facing opportunity for economic activity. the industry. A recent study on economic benWhilst most people would agree efits from air transport in the South with the concept of paying taxes, Pacific revealed that the catalytic effect especially if such revenues benefit a on aviation-supported tourism genercommunity through improved infraates more than US$800 million per structure and services, the continued annum (about 6% of GDP) and over increase in their breadth and depth and 130,000 jobs. The study was carried out the resultant rising burden on airlines for IATA (International Air Transport and passengers are creating a dangerAssociation) by Oxford Economics. ous imbalance. Three decades ago, there was hardly New and increasingly less transany tax on the industry. Air travel was parent taxes are now reaching a point relatively immune from taxation, at where they can have extremely negaleast in a direct sense. But more retive implications such as reducing cently, international travel and tourism, Visitors to the islands...easy target for government taxes. Photo: John Brooksbank the number of tourists to our shores considered by many as one of the most and adding unnecessary costs to the successful economic stories of the last airlines. few decades, has come to the attention Governments therefore need to review their of governments as a soft target and an easy way As most of the traditional tax collection tax system on international air transport to ensure for them to raise revenue. mechanisms are already in place, air transport that existing taxes are directly benefitting the inIn the Pacific Islands, taxes range from pasand tourism naturally enough, became noticed as dustry and that appropriate adjustments are made senger departure tax, customs/immigration tax, an important source for government treasuries. where there is evidence of unjustified taxes. biosecurity tax, airport security tax, airport develCollecting these taxes is even regarded as cost opment tax, fuel throughput tax, etc. friendly for governments since the process of These are in addition to fees and charges levied collection may already be in place. • George Faktaufon is Secretary-General of the Association for en-route, terminal and landing of aircraft. of the South Pacific Airlines and is based at Nadi Airport, Fiji. From a government perspective, imposing

Govts’ target for revenue generating

30 Islands Business, December 2013

Aviation

Qantas on a growth path Australian flag carrier Qantas is primed for growth, having returned to profit and its previously troubled long-haul network expected to follow suit by 2015. With the European component of the network having transferred hubs from Singapore to Dubai under a global alliance with Emirates, Qantas has turned its attention to building its Asian presence where it is under heavy pressure from the likes of Singapore Airlines, Cathay and China Southern. Virgin Australia has taken the short-term financial pain of completing three major transformation projects, including switching to the SabreSonic bookings system, acquiring Western Australia’s regional carrier Skywest and a 60% controlling stake in LCC Tigerair Australia to provide a sales platform for a dual brand strategy to match the Qantas/Jetstar model. At the same time, it continues to bed down equity relationships with Etihad, Singapore Airlines and Air New Zealand. The overheated Australian domestic market has cooled in the second half of 2013, with double digit capacity growth giving way to forecasts of between 1.5% and 4%. But Tigerair Australia’s rapid expansion plans, including more than doubling its fleet to 23 aircraft over the next few years to challenge Jetstar, is likely to result in the capacity battle being reignited at the leisure end of the market. Air New Zealand continues to be the standout performer of the region, more than doubling its underlying EPS for 2013 from 6.5c to 16.6c as the benefits of new aircraft and a long-haul network restored to health begins to pay off. Meanwhile, newly rebranded Fiji Airways has continued its turnaround, reporting a taxpaid profit of F$14.1 million (US$7.4 million) for the financial year to 31 March 2013. The carrier has taken delivery of its three new Airbus A330-200s on order. The airline, formerly Air Pacific, is increasing capacity on key long-haul routes from Nadi to Los Angeles and Hong Kong. The A330-200s replace two Boeing 747-400s and together with improved cabins, including angled lie-flat business class seats, the carrier will compete in the leisure market against direct services, particularly between Los Angeles and Australia and New Zealand, by leveraging its one-stop island get-away proposition. Meanwhile, the uncomfortable equity position with minority owner Qantas is still to be resolved. But all carriers in the region have expressed concern at the on-going difficult market conditions, volatile fuel prices, economic uncertainty and, in Australia, a weakening Australia currency. • Story from www.airlineleader.com/regional-focus/ australia-pacific-financial-outlook 32 Islands Business, December 2013

Aerosure Managing Director Greg Rector...premium charged for each airline is influenced by a range of factors, including where they fly, what they fly, policy limits needed and their individual claims records. Photo: Aerosure

Combine premiums way to go for Pacific airlines Which insurance package works for region? By Robert Matau The fact that the global aviation industry is enjoying a period of safety is good news for the travelling public. But for the aviation insurance industry, this is cutting into their ability to secure more business and higher premiums. An aviation analysis by Willis Aerospace’s Research, Analysis, Marketing Support (RAMS) shows that airline premium levels fell by five percent in the first half of 2012, which resulted in insurers collecting US$13 million less in premiums. The analysis stated that the airline insurance market was a catastrophe market with the absence of catastrophies. In the Pacific, Aerosure Asia Pacific Company Limited is looking at ways to battle the global trend and keep premiums interesting. Aerosure Managing Director Greg Rector said the flow-on effect of competition for the same market has meant cost cutting and a reduction of services they can provide. Rector told Islands Business that he had made a suggestion at a recent Association of South Pacific Airlines (ASPA) meeting to combine premiums of Pacific airlines to give them a higher rating for insurance. ASPA has 14 airlines (in 10 nations) as members, employs over 7,000 local staff, carried 5.6 million passengers in 2012, earns a combined revenue of US$2.6 billion, foreign reserves earned overseas and remitted to the Pacific total US$1.7 billion, and deploys about 150 aircraft of which there are 30 jets, 60 turboprops and over 60 light twins and singles. “The benefit of a joint marketing initiative is that whilst no two airlines would influence each other’s claims history, by joint marketing

their policies, a bigger premium pool would be created—making the Pacific region a better and more attractive proposition for underwriters,” Rector said “The premium charged for each airline is influenced by a range of factors, including where they fly, what they fly, policy limits needed and their individual claims records “So subject to these variables in theory, each airline pays ‘enough’. But the problem that occurs after a major loss is the need to “repay” the loss, which would take hundreds of years for a small airline after a catastrophic loss.” Rector said the matter has been discussed at ASPA meetings but never before has this been attempted in the Pacific. “It is not uncommon in other regions such as Europe and the Middle East. “2012 was one of the safest based on industry loss experience which is in the public domain.” He said insurance limits varied but typically went up to as high US$1 billion for most small airlines flying international services. “Other major airlines buy in excess of this (up to US$3 billion) depending on aircraft types and route structures,” Rector said. Aerosure is now brokers for all non-French airlines in the Pacific. “This is the main reason that this initiative can be attempted for the first time,” he said. However, some airlines still prefer the single insurance premium for their airlines as they would not want one airline’s catastrophe to be their loss. Aerosure and Willis has introduced a joint marketing initiative called “Parallel Runways” which has saved 14 participating Australasian airports in excess of 25 percent on the purchase of aviation liability insurance. The combined premium in-

Aviation cludes Perth Airport Pty Ltd, North Queensland Airports, Queensland Airports Limited, Adelaide Airport Limited, Capital Airport Group (Canberra), Airport Development Group, Auckland International Airport Limited and Queenstown Airport Corporation. Canberra Airport Managing Director Stephen Byron in a posting on Aerosure’s website said that using joint purchasing power has delivered very considerable savings—in excess of 25% on the premium cost for the aviation liability insurance. “These are entirely real savings and given the overall scale of aviation insurance costs, they are considerable and deliver real value to the bottom line,” he said. “When this is magnified across the 14 airports, the overall level of savings would be in the many millions of dollars,” Bryon said. ASPA secretary-general George Faktaufon said: “We are trying to avoid a joint insurance scheme —but using the same broker is good since we have volume. It is an advantage we did not have before. We have our own risks and if one airline is risky, their benefit will be less. Although they are individually insured, we are in it together as a group. The reinsurance will look at each airline separately.” This means there won’t be a single ASPA insurance policy because of risks involved. Rather, as almost all of ASPA members now use Aerosure as their broker, they have an advantage of their combined volume which Aerosure will use as bargaining power when Aerosure negotiates for renewal and better rates. In this way, the airlines benefit from their combined volume (discount) without sharing the risks.

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Domestic issues taking its toll on Samoa Air Airline sells aircraft, lays off workers By Robert Matau Samoa Air has taken drastic steps to stay afloat by making staff redundant and selling an aircraft. Airline’s chief executive Chris Langton told Islands Business that they have had to take the action because of two issues involving the state-owned airline—Polynesian Airlines Limited (PAL). PAL reopened Fagalii Airport on Upolu Island charging its own fees to competitors like Samoa Air, and secondly, Samoa Air was anticipating privatisation but this has yet to take place. “The situation has slowed us down a lot,” he said. “We felt we had no choice but to wait until the situation at Fagalii was resolved and there are good reasons for needing a firm timeline for privatisation of PAL. “It was a situation which can’t go on forever,” he added. Fagalii had closed in 2005 due to its poor state but was reopened recently by PAL.

Government had since revealed its own concerns about the matter, preferring the appropriate organisation—Samoa Airport Authority (SAA)— to take over the airport’s operations. PAL’s chief executive Taua Fatu Tielu resigned last September after the government insisted the airline should hand over the operations of the airport to SAA. PAL had argued that if the airport was handed back to SAA, it would close again because it was not be in a position to maintain it. As a result of the two issues, Langton was forced to sell one aircraft to Real Tonga, which meant a certain amount of job losses also. That aircraft, he said, used to service the Samoa/American Samoa route which has now ceased operation. “We had to make some hard decisions and that led to us to selling the aircraft where we also made some of our crew members available to the buyer until they got set up. “So that leaves us with one aircraft for our air taxi service and a daily link between Upolu and

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Islands Business, December 2013 33

Aviation

Chris Langton (middle)...with some of the passengers travelling to Savaii. Photo: Samoa Air

Savaii as well. That market is slowly growing but has a long way to go yet. “We would hope to bring a second small aircraft online next year to keep the domestic scene moving. I’ll be basing an aircraft over in Savaii in the new year.” Langton did not disclose how many staff members had been made redundant but said most staff members were given options to furlough or move on. “So right now, it’s a pretty small number from the 28 or so we had when we were flying to Pagopago.

We’ve Got it!

“Basically it’s a wait and see because we do want to acquire other aircraft but we need to have that level playing field. “We had already made the operational changes to support the new aircraft which is a C208B. But now we have to sit back and see what happens next.” He said the situation with Fagalii was complex but he estimated it would cost them millions of dollars per year. He said the government had announced the privatisation of the airport more than a year ago, so when that would happen, the advantages

would cease. He said his airline could not compete with a state-owned enterprise adding he didn’t go into business with that in mind. “I don’t know of any businessman who would disagree with that. We always said what was needed here was one good airline and not two of any other kind. “I always believed that the government had it right in the first place in deciding to sell off the SOE which included PAL. “A privatised operation can do a lot and do it quickly.” He said his company’s expectation, fuelled by the uncertainty, has hindered development for the airline. “Well, again we went into this with the understanding that the airline (PAL) would be privatised and that’s the most important issue really. There are potentially some really dynamic things, which we can do but there’s that element of doubt in terms of who we compete with and that’s affecting our development as a company. “There has been no end date set for privatisation and that’s something of concern. “What was supposed to have happened last year hasn’t taken place nor has the restitution of the Airport Authority into Fagalii to replace Polynesian, so both of those events have had a huge effect on Samoa Air as far as being able to operate and earn a revenue. “A lot has been said but at this time nothing much has changed and so it’s very hard to justify investing further unless the way is clear”. Langton assures the travelling public his airline would not be giving up.

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Pacific Regional Tourism C a pacit y Building Pr ogr a mme

STRENG T H E N I NG PA C I F IC E C ONOM IC I N T E G R AT ION T H RO U G H TO U R I SM PACIFIC REGIONAL TOURISM CAPACITY BUILDING PROGRAMME Launched in January 2012, Pacific Regional Tourism Capacity Building Programme (PRTCBP) is a three-year component of the ‘Strengthening Pacific Economic Integration through Trade’ (SPEITT) programme, which is funded under the 10th European Development Fund (EDF) of the European Union. The programme will focus on the development of sustainable tourism by supporting a more conducive enabling environment for regional tourism growth through enhanced policy and capacity development as well as increased productive capacity and improved market access. BENEFICIARIES The 15 Pacific ACP states (PACPs) of the Cook Islands, Federated States of Micronesia, Fiji, Kiribati, Marshall Islands, Nauru, Niue, Palau, Papua New Guinea, Samoa, Solomon Islands, Timor Leste, Tonga, Tuvalu and Vanuatu, benefit from the project. Within these countries, the key stakeholders are the National Tourism Organisations (NTOs) and Ministries of Tourism, Port Authorities, other tourism-related public sector bodies, tourism and hospitality training institutes, tourism industry trade association and tourism SMEs.

IMPLEMENTING AGENCIES The South Pacific Tourism Organisation (SPTO), the region’s apex tourism agency mandated by its public and private sector members to market and develop the region’s tourism sector is responsible for implementing this vitally important regional programme. It is designed around the three main result areas: KEY RESULT AREAS • Result Area One – Sector Planning and Policy Development, intended to enhance tourism strategic planning and enabling policies to improve the business environment and private sector growth: • Result Area Two – Market Research and Marketing, aims to increase tourism arrivals and foreign exchange earnings for the region through a market-led approach to tourism promotion and product development; and • Result Area Three – Human Resource Development and Capacity Enhancement, designed to improve human capital and enhance the quality and sustainability of regional tourism products and services.

SOUTH PACIFIC TOURISM ORGANISATION T | +679 330 4177 F | +679 330 1995 E | tourism@spto.org W | www.spto.org

Aviation

Pacific stand...at ITB Asia 2013, a trade show for the Asian market, which SPTO participated in. Next year’s show will again be held in Singapore in October. This is where international exhibitors of all sectors of the travel-value chain, Asia Pacific’s leading travel companies and emerging small and medium-sized enterprises meet with top international buyers from the MICE, Leisure and Corporate Travel markets. Photo: SPTO

More flights to HK, LA to boost 2013 visitor arrivals SPTO works on creating more destination awareness By Robert Matau In the first quarter of 2013, the Pacific recorded 230 flights per week, bringing in 327,199 tourists for that period—a 2.6 percent decline in visitor numbers due to flooding and cyclones in 2012 in Fiji, the region’s main tourist hub. However, the South Pacific Tourism Organisation (SPTO) estimates that flight numbers and visitor arrivals will increase towards the end of the year with more flights from Fiji to Los Angeles and Hong Kong, and plans to introduce a Port Moresby/Shanghai flight. SPTO chief executive Ilisoni Vuidreketi said countries like Kiribati, Marshall Islands and Niue registered very high growths with 38.5%, 23.4% and 20.9% respectively. Mixed performance “The region’s largest country, Papua New Guinea, recorded a slight growth of 0.4%. Other countries’ performances were mixed and only showed slight changes.” Australian visitor arrivals in the region dropped from 105,913 visitors in the first quarter of 2013 compared to 112,122 visitors in 2012. Most of them travelled to Fiji (60 percent), Papua New Guinea (12 percent) and Vanuatu 36 Islands Business, December 2013

(11 percent). trade training activities underNew Zealand travel to the taken by SPTO and its NTO region also decreased by 8.9 partners in key sources and percent with 41,138 visitors emerging markets. arriving in the region for the “SPTO has and will continue first quarter of 2013, compared to organise regional media and to 45,149 visitors in the same travel trade shows into various period of 2012. member islands countries as it Again most New Zealanders aims to increase awareness on opted for a holiday in Fiji (36 destinations and promote intrapercent), then Cook Islands regional travel,” Vuidreketi said. (31 percent), and Samoa (18 percent). Working with ASPA Vuidreketi said SPTO ex“SPTO also works with the pects an increase in visitor Association of South Pacific arrivals across the region for a Airlines (ASPA) and other renumber of reasons, including: Ilisoni Vuidreketi...SPTO expects an gional partners to identify ways • Increased airline capacity increase in visitor arrivals in the region. in which the airlines can better Photo: Islands Business from key source markets, inaddress the needs for increased cluding North America, Asia, connectivity with the islands.” Australia and New Zealand; Vuidreketi said roadshows like the ones • Increased room capacity on the ground in recently undertaken in Canada, USA, China key destinations e.g. Grand Pacific Hotel in Fiji; and the UK are aimed at increasing destination • Growth in emerging markets like China; awareness amongst key travel agent partners (to • Favourable currency exchange rates from key make them South Pacific specialists). source markets—cheaper to travel and spend in He said this would in turn increase their busithe South Pacific; and ness into the region and as well as visitor arrivals • Extensive destination awareness and travel from these markets.

‘Service with Excellence’

Visit us at www.ats.com.fj “Here are some authentic customer statements!” “The entire ATS Team - I apologize for not sending this sooner but we have just completed the world trip and I am finally back in the USA. The trip was the shortest three and a half weeks I have ever experienced and I am very glad to be back home in Florida. I want to take the time to personally thank you for the outstanding service, exceptional attention to detail and the fantastic culinary creations you provided to us on October the 15th out of NFFN. Raj, you are a consummate professional and you are to be congratulated ongoing above and beyond for our VIP flight. Chef and his staff created such incredible items that my job on the flight was extremely easy. The passengers were so impressed with the taste and quality of the menu that they asked for additional servings. Trust me when I say that this was one of the best catering experiences we had the entire trip. As a Chef it was an honor and pleasure to work with you, Chef and the entire ATS Team. Thank you all and the entire ATS team for your support on this flight as it would have not been as successful without you. Air Culinaire Worldwide and I look forward to working with you on future flights”. Richard Peterson Executive Chef Air Culinaire Worldwide

“On behalf of the Minister and Management of the Ministry, I wish to convey our great appreciations and thank you and your staffs, for the support and cooperation rendered to The Heads of States, Heads of Governments, Ministers, Ambassadors, High Level Officials, Foreign dignitaries and Investors, during the month of September. As you know, this office is the door-way for all those mentioned above in terms of impressions- First and Last, and we do really appreciate receiving their positive comments and we thank you and your good team for that. As we advance into another new month, we are looking forward for continuity and consistency of good and efficient service delivery as always witnessed”. Kind regards. JFotu Protocol Office. Could you please pass on my thanks to all the team for the great work and professional service they delivered for the QANTAS - 738 VIP delivery flight.I have over the last couple of days received glowing feedback from passengers and cabin crew complimenting the great tasting meals especially the Fillet Steak and Crepes, Raj the addition of the cream for the crepes was a big seller. Cheers and thanks again!. Best regards Lenny Hopper - Galley Planning Inflight Service Operations / Qantas Airways Limited.

Development ‘identify priorities for the sustainable development of SIDS to be considered in the elaboration of the post-2015 UN development agenda, according to the UN. It is worth noting that the SIDS conference in Samoa is not a meeting of SIDS, but an international meeting focused on SIDS. The outcomes of this meeting will feed into the UN General Assembly meeting later in the same month to determine the composition of the post-2015 SDGs. At its recent conference in Suva, SPC recognised the SIDS conference in Samoa as a ‘unique opportunity to influence the global development agenda’. In particular, the Pacific Community agreed that the issues of culture and mental health should be added to the list of priority areas to be considered in the SDG development process. The Conference of the Pacific Community in Suva in November...chaired by Fiji’s foreign minister, Ratu Inoke Kubuabola. Closest to the camera is the outgoing SPC director-general Dr Jimmie Rodgers. A number of priority areas for sustainable development to be included in the SIDS conference agenda has been determined, including greenhouse gas mitigation and renewable energy, climate change adaptation, disaster risk reduction and the sustainable management of ocean and forest ecosystems. The roll call of issues to be considered makes it clear why SPC has been called on to support Pacific Islands countries in their engagement in the international development agenda process. At present, SPC provides assistance to island countries and territories in 20 economic and social development sectors including fisheries, agriculture, education, health, food and water security, and transport. The contribution of SPC to naBy Sean Hobbs convergence between the posttionally led development efforts in MDGs High Level Panel proThe Secretariat of the Pacific Community these sectors—including building cess established by the United (SPC) will embrace a leadership role in supportsustainable livelihoods—was made Nations Secretary-General and ing its islands members to engage strategically in clear during the 43rd Committee of the development of SDGs will influencing the post-2015 global development Representatives of Governments be discussed at the 69th session agenda. and Administrations (CRGA) of the United Nations General This was one of the decisions taken by the meeting, held from November Assembly in September 2014. organisation’s members at the 8th Conference 12-15 at Vale ni Bose, before the Now, the Pacific region has a of the Pacific Community hosted and chaired ministerial-level Conference of the rare opportunity to exert influby Fiji on November 18–19, 2013, at the Vale ni Pacific Community. ence on the SDG development Bose in Suva. “It was reassuring to listen to our process through several different SPC’s members include 22 Pacific Island members providing feedback on the channels. countries and territories along with Australia, benefit of the services we provide,” Fiji currently chairs the G77+ France, New Zealand and the USA. Rodgers told media representatives. China, a grouping of 133 develAt a post-conference briefing, SPC’s outgoing “It is just as important that deoping countries to the United Director-General, Dr Jimmie Rodgers, explained Nations, and Nauru chairs the Dr Colin Tukuitonga...the new SPC velopment partners that provide the significance of the decision. “We have received Alliance of Small Islands States, director-general to begin in January. funding hear directly from the instructions from our members. They have made countries that are the recipients of which comprises 44 nation states Photos: SPC it very clear in paragraph six of the conference our services.” and observers. Both groupings communiqué. Posing the question, Should deplay a significant role in determining the shape “We are strategically positioned to take on velopment partners entrust their money to SPC?, of the international agenda. a greater leadership role in the context of the Dr Rodgers said: “The answer is yes, yes, yes, all In addition, Nauru, Palau and Papua New Pacific’s engagement with the global post-2015 the way. Their money is safe in our hands because Guinea participate in the Open Working Group development agenda. This becomes a key priority we are delivering real services to members and (OWG) on SDGs, established by the UN in for us. Our performance will be judged on what I think that is a very important point to make. January 2013. we deliver for our members in 2014,” he said. Money is one thing but its translation to impact The OWG process consists of eight thematic In effect, the Pacific Community has requested on the ground is what makes money useful.” meetings on major current and emerging develits secretariat to assist islands members to do CRGA heard that the European Union curopment challenges. four things: to develop shared solutions; analyse rently provides 50.7 million Euros (approximately Moving into 2014, Pacific Islands countries will and communicate information to Permanent US$69 million) in development assistance to continue to engage with the SDG development Missions to the United Nations, based in New Pacific Islands countries and territories through process through their UN Permanent Missions York; facilitate collaboration to ensure that Pacific SPC. The EU is the second largest annual based in New York. Papua New Guinea presently territories are informed and represented through contributor to the Pacific development agenda chairs the Pacific Small Islands Developing States partnerships with the independent Pacific states; through SPC. The largest is Australia, a member (PSIDS) group of Ambassadors there. and build the capacity of members to contribute of the organisation. Another significant opportunity for Pacific effectively to the formulation of the Sustainable The assistance SPC provides to its islands engagement is the United Nations’ Third InterDevelopment Goals (SDGs). members, among other things, is enabling them national Conference on Small Islands Developing The SDGs are expected to replace the current to adopt integrated approaches to the manageStates (SIDS), to be held in Apia, Samoa, from internationally agreed Millennium Development of climate, disaster and human security September 1-4, 2014. ment Goals (MDGs), which expire in 2015. The risks. One of the objectives of the conference is to

SPC well positioned to influence global agenda But performance will be crucial

38 Islands Business, December 2013

Environment

SPREP with David Sheppard

Protect your borders against invasive species this festive season

’m going to be unimaginative and start with a well used, “Did you know?” for my final column this year. It’s a timely topic this month given that it’s at Christmas time that many of us travel across borders, whether we are going home for family reunions, part of church or youth groups visiting different parts of the Pacific, or travelling to visit friends and family. There are very strong reasons why we’ll want to make sure we travel without carrying invasive species across borders. Did you know that globally, the cost of damages from invasive species is US$1.4 trillion annually, almost 5% of global GDP? Invasive species are also costing our Pacific region dearly. In Guam, for example, the invasive brown tree snake costs over US$7 million each year to control. Did you know that invasive species also have significant social and environmental costs? In Samoa, just over 20 years ago, the taro leaf blight wiped out the unique taro varieties leading to a loss of a staple food crop for families. The Pacific has the doubtful honour of some of the highest rates of loss of biodiversity in the world. Approximately 80% of extinctions on our islands since 1800, have been caused by invasive species, particularly the extinction of bird species. Getting back to Guam, the brown tree snake has restricted the existence of native birds to a few specimens of a few species remaining in captivity. I always find these statistics alarming, regardless of how many times I use them for emphasis in my speeches or columns. The impact of invasive species is immense and we must step up to do something about it. We are appreciative of those who recognise this as a critical issue, including our Pacific Leaders. At the 44th Pacific Islands Forum meeting in the Marshall Islands, our Pacific Leaders agreed that: “Integrated action through effective partnerships was required to actively address the escalating threat of invasive species on Pacific economies and environments, including efforts to enhance climate change adaptation, ecosystem resilience, food security, biological diversity and the development of sustainable economies.” Now, it’s up to us to take these words and translate them into actions. We at the Secretariat of the Pacific Regional Environment Programme (SPREP) are working to help Pacific islands countries tackle the invasive species issue. Come 2014, we have several key initiatives that will ramp up this work, all of which were endorsed and supported by Pacific governments. A much-quoted saying reminds us: “If you want to go fast, go alone. If you want to go far, go together”. This is particularly relevant to the major challenge of invasive species where we must work together across disciplines and across boundaries

Brown tree snake...costs US$7 million to control each year in Guam. Photo: SPPREP

to ensure effective and lasting control. The 2014 SPREP meeting saw SPREP members agree on three concrete actions regarding invasive species: First, members endorsed the development of a new regional project to be developed on invasive species. This is to be submitted to the next round of Global Environment Facility (GEF) funds. Building capacity SPREP is currently facilitating a US$7 million project from the GEF–PAS (Pacific Alliance for Sustainability) programme to manage invasive species in 10 Pacific islands countries. The new project proposed will build on and complement this work. Second, the Invasive Species Capacity Development Strategy, developed in consultation with the Pacific Invasives Learning Network and the Pacific Invasive Partnership, was supported by SPREP members. Not all Pacific islands have the experience or capacity to address invasive species. The Invasive Species Capacity Development Strategy will address gaps in capacity and improve invasive species management in the Pacific. We are working through our many partnerships and networks to help strengthen the capacity of our islands members to combat and manage invasive species. Given the nature of invasive species and their ability to travel across borders and impact our Pacific neighbours, when one of us is triumphant, we are all victorious. In September this year, Inter Island Biosecurity training was held for environment and quarantine officers from throughout the region. Third, a Memorandum of Understanding between SPREP and Island Conservation was celebrated during the SPREP meeting, raising awareness on invasive species management and outlining how the two organisations will work together to better manage invasive species. Island Conservation is committed to prevent-

ing extinction by removing invasive species from the islands, and has provided support to continue the Pacific Invasives Learning Network for the rest of the year. Island Conservation has team members in 52 islands worldwide to protect 977 populations of 389 species and will be working with SPREP to address this issue in the Pacific region. Alongside these new initiatives, ongoing SPREP activities include coordination of the Pacific Invasives Partnership (PIP), which comprises technical agencies and experts who provide guidance to Pacific Islands countries and territories. We also have the Pacific Invasives Learning Network (PILN)—the regional network of practitioners in the front-line fighting invasive species—which is led from SPREP. Pacific biodiversity is at the core of our livelihoods in this region. Unless we step up and work together to address invasive species, the losses experienced by Pacific nations will be phenomenal. Remember when and if you plan to travel this year to make sure you are not carrying invasive species across borders as the impact can be devastating in our region. We all have a role to play in this fight against invasive species. Villagers can help stop their spread by becoming aware of the issues and preventing further spread regionally or between our islands. Declaring certain goods when carrying them across international borders or notifying our authorities if unusual plants or animals appear in our villages is also another important step that everyone can take. I know we can do it and I’m looking forward to it. Let’s work together to address this major challenge of invasive species. Stay safe and enjoy your festive season. From all of us here at SPREP, may you have a very Merry Christmas and a prosperous New Year. • David Sheppard is SPREP’s director-general based in Apia. Islands Business, December 2013 39

Business Intelligence

Deadline looms for PNG’s Oil Search stake

il Search will find out this month if the Papua New Guinea government can raise $1.68 billion to avoid giving up its 14.6 percent stake in the company to an Abu Dhabi state-owned wealth fund, which could then expose the company to a takeover tilt. If the PNG government is forced to give up its blocking stake in the Port Moresby-based Oil Search, it could provide a chance for the likes of ExxonMobil, France’s Total or Royal Dutch Shell to move in and attempt a takeover. The PNG government is expected to announce before Christmas whether it will relinquish its stake to the Abu Dhabi sovereign wealth fund, International Petroleum Investment Company (IPIC). In March 2009, the government struck a highly complex financial agreement to fund its share of construction costs in the country’s flagship liquefied natural gas project, PNG LNG. To secure funding, the government issued a five-year exchangeable bond to IPIC, raising US$1.68 billion. The bond matures in March, when the government is due to transfer its 14.6 percent holding to the sovereign wealth fund. Oil Search’s management has just finished an investor week in PNG and is understood to be sounding out interest from overseas funds in the 14.6 percent stake, to get on the front foot in the event the government gives up the stake and IPIC opts to sell it. One person familiar with the matter said: “The concern for management is if they don’t take a pro-active role, they open themselves up to someone they don’t want on the (share) register”. Both Shell and France’s Total have made no secret of their ambition to establish an LNG foothold in PNG and Oil Search could be just their ticket. Oil Search has a 29 percent interest in the US$19 billion ExxonMobil-operated PNG LNG project, which is set to come on stream in the second half of next year. The PNG government could extend the bond or issue a new one, and it has indicated a desire to resolve the issue “sooner rather than later”. —The Australian/PACNEWS

Medical fears of counterfeit drugs into rural areas

he Australian government has been warned a A$38 million medical aid project in Papua New Guinea could be used to foist deadly counterfeit drugs onto some of PNG’s poorest villagers. Department of Foreign Affairs and Trade (DFAT) bureaucrats in Canberra are refusing to say if Australia will continue to bankroll the distribution network despite warnings from the PNG medical community of corruption allegations surrounding the project. Borneo Pacific Pharmaceuticals has won the A$28 million contract to supply medical kits to the PNG government with Australian aid, then send the drugs to aid posts and medical centres around the country. Internal DFAT documents identify Borneo Pacific as PNG’s largest provider of drugs from manufacturer North China Pharmaceutical Group, a known offender in China’s fake drugs crisis. PNG’s medical society alleges that Borneo Pacific “is renowned for giving presents to people in the government procurement system”, and has branded the process ‘corrupt’ and warns that counterfeit medicines supplied under the deal could kill. The revelations come despite promises to clean up the PNG Health Department’s drug supply division, described in 2011 by its own minister as “riddled with corruption”. The internal DFAT documents show officials knew Borneo Pacific did not hold the required quality standards accreditation to compete in the tender and were worried when the requirement was simply removed by PNG’s Secretary of Health after the tender’s deadline. The same document shows that the non-profit IDA group, which does hold the required accreditations, offered to supply its high-quality kits for A$8 million less than Borneo Pacific’s bid. An internal DFAT review of the health kits programme by the Burnet Institute tells of the IDA drugs supplied by Australian aid being saved for

the most desperately ill villagers by doctors and nurses who distrust the locally supplied drugs. The draft Burnet report warns of a “serious problem” of ‘transparency and accountability’ at national level in drugs supply and procurement. The distribution scheme, part of Australia’s A$38 million PNG Health and HIV Procurement Programme, has been lauded as a success in its first three years. But AusAID, before its takeover by DFAT, warned it would walk away if unhappy with the governance surrounding the programme’s next round. In Canberra recently, officials from DFAT were trying to enforce an information blackout on the fate of the project. “Detailed information on the priorities of the aid programme—including arrangements for funding the distribution of medical supplies—will be provided by the government in due course,” a spokeswoman said. But Nakapi Tefuarani of the Medical Society of PNG was more blunt about the programme’s future. “It seems that this year the process will be corrupt once again,” Professor Tefuarani said. He warned of the dangers of Australia’s aid agency walking away from the distribution network and called on PNG Prime Minister Peter O’Neill to reverse the award of the tender. “We will be left with local ‘wantok’ distribution companies sending out low-quality and possibly counterfeit medicines to our hospitals and health centres,” Professor Tefuarani said. In response to accusations in the PNG Parliament last month that the medical kits deal with Borneo Pacific bypassed by the nation’s Central Supply and Tenders Board, O’Neill defended the process. Local media reported the Prime Minister as saying the deal had gone through “a rather rigorous approval process” in which it was sighted and approved by the pharmaceutical and medical boards, the Department of Health and the National Executive Council. —Canberra Times/PACNEWS

Vodafone explores new moves

t’s no denying that Vodafone is world number two in the business of mobile phones—even in the Pacific—but all that is about to change. News was abuzz in the telecom industry late November that the carrier—which has carved a household name in practically every continent—Africa, Asia, America, Europe and the Pacific region—is about to off-load part of its wireless stake as early as 2014. It follows moves by AT&T—the largest telecom carrier in the United States—to expand out of the mainland US where competition has restricted its growth and potential earnings. Last September, Verizon Communications signed a deal to grab 45% of Vodafone as part of acquiring Vodafone’s US business for US$130 billion. The transaction marked one of the largest todate in corporate history but it also became part of Vodafone’s slow disintegration process. 40 Islands Business, December 2013

AT&T entered the scene of Vodafone-Verizon Wireless last month but Verizon showed little interest in AT&T’s offers. But market insiders reckon AT&T and Vodafone have huge business together as any merger between the two carriers would create the world’s largest telecom name. Combined, Vodafone and AT&T would be ranked a major global force in the telecommunications world with an unparalleled market capitalisation boasting around US$250 billion. In a two-fold change, Vodafone is offloading part of its business to Verizon Communications and the second to jump in bed with AT&T. Although Vodafone seems to enjoy its standalone approach, its chief executive Vittorio Colao is open to new deals as the mobile phone carrier is awashed with cash of around US$22 billion after announcing mega profits last month. Vodafone reported a half-year profit of $2.4 bil-

lion amidst a gloomy outlook around the globe, especially in emerging markets like those in Asia and the Pacific. AT&T it seems is not keen on Vodafone’s slow performing outlets in places like India, Africa and some Pacific countries. It remains a choice for Vodafone to either keep the carrier’s operations intact regardless of profits or merge with AT&T and discard the low turnover entities. Smartphone craze Colao told the media in November that despite tough times around the globe, especially in emerging markets like the Pacific, his Vodafone was doing well—thanks to the smartphone craze. Even in the smallest of markets like the Pacific islands region—the carrier is spurring interest in its new product range like never before. —Davendra Sharma

Minimum wage to go up?

Having fun...Bougainville now a new tourism hotspot. Photo: Paradise

Movie Mr Pip puts Bougainville on tourism map By Davendra Sharma

rom a ravaged war-zone 20 years ago to a prime tourist spot every visitor to Papua New Guinea would love to see. That is Bougainville, PNG’s mineral-rich island province where dissidents once claimed a secessionist state in an attempt to break-away from the national government in Port Moresby. Boasting one of the world’s largest copper mines until its closure in 1989 after a bloody and long-drawn civil war that erupted between warring landowners, Bougainville has seen the toughest of times. But gone are the relics of war and so too the armed gangs which once frequented the streets or places like Panguna, where the mine once stood. “The people here are very, very friendly,” says CEO of Bougainville Tourism, Lawrence Belleh as foreign reporters began calling him last month in the wake of the release of the new film Mr Pip shot on the island. “You can walk on the streets during the night unlike Port Moresby,” he claimed in a reference to a recent spate of street violence in the nation’s capital and other provincial towns. Tourism is being put on the front page of the economy with a new website promoting the island’s coolness. “We still have the rawness in the natural environment and everything people would want to see, especially with ecotourism that is around here in Bougainville,” Belleh said. Based on a novel Mister Pip by New Zealand author Lloyd Jones, the new movie which captures the highs and lows of the island’s natural attractiveness, is now captivating audiences world-wide. “Some of the actors and scenes you see in the film are actually the experiences people had experienced during the height of the crisis,” said Belleh. Mr Pip’s adventurous showpiece which featured some local cast added a new perspective to the island’s attempt to revitalise tourism in the aftermath of the civil war.

“There are so many things happening and because of the film, there are so many people now coming to see where the film was actually filmed.” Foreign investment is also on the rise with entrepreneurs from Australia and New Zealand building guest and townhouses on the remains of the war zone. The film has created a new image for the island and highlighted some of the natural wonders of Bougainville which the outside do not know. Things like lakes, mountains and volcanoes, noted Belleh. Mr Pip is named after the chief character in the movie and shaped by the plot of Charles Dickens’ novel Great Expectations. Jones wrote 11 versions of the novel with the original setting on an unnamed Pacific islands country but the movie version was ultimately set against the backdrop of Bougainville. Bougainville provided a perfect fit for the movie’s plot since the island was caught in a war where families were torn apart. So many children were orphaned and women widowed after the clashes of security forces. The movie is about the story of a girl caught in the highs of the civil war on Bougainville. She is guided by her Christian beliefs espoused by her mother and her connection to Pip. After years of suffering from loss of income because of business interruptions and closures on the island and infighting among dissidents, locals now do not advocate reopening the mines. Thousands of lives have been lost in the conflict, which first involved local BRA, Bougainville Revolutionary Army, and the national PNG defence forces. Locals have now readjusted to the lifestyle without the riches the mines once brought them. They are content either on subsistence living or agriculture, fisheries and soon tourism. “One of the things we are trying to avoid is to reopen the mine and that’s the sentiment that we have here, especially the people of Panguna where what they would like to do is to do tourism,” said Belleh.

he stage is set for Papua New Guinea to increase its national minimum wage next year, in a move which is seen as providing much-needed redress for the country’s labour pool. The decision to consider revising the rate of pay, which has remained untouched for the past five years, forms a key part of the government’s plans to create a more inclusive, modern economy. However, with much of the workforce still operating in the informal economy and a lack of skills leaving many locals unable to participate in key projects, the government will be keenly aware of the challenges ahead. PNG’s minimum wage was increased from a fortnightly rate of K30 to K74 when last reviewed in 2008, marking a rise of 146%. A newly appointed board began a series of public hearings in October, with its findings to be submitted to the National Executive Council in January 2014. The timing of the latest review should work well for PNG, which has enjoyed several years of impressive economic growth and high levels of international investment. A US$19 billion LNG project has been instrumental in driving the economy forward, helping the country to notch up average annual GDP growth of 9.5% between 2009 and 2012. The current minimum wage has provided a stable foundation for investors and industry to predict labour costs, but it has not kept pace with inflation, which has averaged 6.4% since 2009. This is lower than expected given the rate of economic growth, but price increases remain a concern. Inflation peaked at 8.6% in 2011, dropped to 2.2% in 2012 and is expected to come in at 5.5% in 2013. While the LNG project has spearheaded PNG’s economic expansion, a few locals were able to contribute to its construction due to their lack of skills, finding themselves sidelined in favour of foreigners. A large part of the local workforce—around 40%—is employed by the informal sector, according to a World Bank survey. Of these, around 80% hold jobs in the wholesale trade, retail, restaurant and hotel sectors. Of people who work in the formal economy, 47% hold positions at private companies, while another 37% are employed by the public sector or the military. The government is keen for the private sector, particularly small and medium-sized enterprises (SMEs), to spearhead new job creation and more generally lead PNG’s economic development. The part that smaller business ventures could play in changing the economic landscape was the main theme of a conference held in Kokopo in April 2011. The Kokopo Summit also led to the setting up of the Indigenous Business Council of PNG. With 90% of PNG’s formal economy still owned by foreign players, the government has begun cultivating more opportunities for local businesses. Some of the proposals which came out of Kokopo such as the restriction on foreign investment, ownership and subsidies for PNG-owned firms were enacted this year. A revised national minimum wage should help PNG create a strong, formal labour pool, which will generate dividends in the decades ahead. —OXFORD BUSINESS GROUP/PACNEWS Islands Business, December 2013 41

Education

Obituary

People’s captain transcended rugby Papali’itele Peter ‘Fats’ Momoe Fatialofa (1959-2013) By Peter Rees

School time…rural children given a chance to get an education. Photo: Olokolas Sisim

Education leads to transformation

Perene has a school, thanks to Sisim By Kate King

ometimes it only takes one determined person to bring about dramatic transformation. Olokolas Sisim, of the Pamosu language community, is such a man. In 2000, Sisim attended a literacy course run by SIL (Summer Institute of Linguistics) in PNG and was inspired to start a school for his community. Perene is a remote village in the Adelbert mountain range, a two-day hike and three-hour PMV drive from Madang town. There was no school in the area and few people were educated, but Sisim believes that education is the key to development. With the help of his community and SIL linguists, Liaw Yong Lam and Chai Sheau Jiuang from Malaysia, Sisim started a prep class with thirty children. Over the next few years the school grew, adding further grades and students, but Sisim knew he needed trained teachers for the higher grades. In 2004, he made the journey to Madang, to seek help from the Education Department. The following year, he became the local ‘Kaunsil’ (councilman) and started raising funds for the school. Despite the school’s growth, the lack of an official operating code was a problem, so in 2011, Olokolas bought himself a plane ticket and flew to Port Moresby to meet with the education department officials. He was successful. In 2012, the school was granted its own operational code, now proudly displayed on the school sign. Emal Primary School currently has over 200 students in seven grades and plans to add Grades 8 and 9 soon. Several Pamosu youth have gone on to high school and one has completed Grade 12. Community support for the school is strong, with workdays, a parent-teacher board, and a business that supports the school—which could not have happened without literacy and numeracy skills learned at the school. The community has changed dramatically, reports Chai. Health, hygiene and infant mortality rates have vastly improved. Education has led to a higher standard of living for all. Sisim has a vision not only for his own community but for development in rural areas across the nation. He urges the government to listen to the needs of remote communities and to support them with education and health services—for the good of the whole nation.

42 Islands Business, December 2013

The news of Papali’itele Peter Fatialofa’s death hit me with the same force as a “coconut tackle”, as some of my esteemed media colleagues would say. Fatialofa was the man who captained Samoa’s national rugby team onto the world stage in their historic World Cup debut in 1991. There, the big man rose to the occasion and led the team on its fairytale run all the way to the quarterfinals. But it was not so much these footnotes in history that I dwelled on as the news broke that Fatialofa, 54, had succumbed to a suspected heart attack on his way to a radio interview in Apia. It was the significance his passing would have on the communities he had so much influence in. He was one of the few personalities who transcended his sport. But we tended to take that fact for granted because of his down to earth personality. I had the pleasure of working with Fats on the New Zealand Samoan Sports Awards and interviewed him countless times down the years. Fats was a media favourite and always great for a quote. On race relations—“Anyone can feel free to call me a coconut, but he’d better be a good friend.” Or how’s this response to a special media re- Peter Fatialofa...died at the quest from a TVNZ reporter who asked: “How age of 54. Photo: Courtesy of would climbing up that palm tree so we can film Peter Rees it sound to you?”Fats replied, “How would ‘get stuffed’ sound to you?” His frankness and honesty always made you laugh even when the matters were serious. He was a physically imposing, but ordinary guy with a big heart and that is how I remember him. It was not below him to support small community events—Fats was in his element at this level. He was a man of the people who had the ability to relate to people of all backgrounds. He spoke his mind, led from the front, and was passionate. He could relate to anyone with his clever wit. You see, although his father was a well-known politician in Samoa’s parliament and in the early 2000s he served a term on his local community board in South Auckland, Fats was not a politician. Yet his actions impacted at the highest level. There were greater players of Pacific heritage than him in terms of exploits on the field. But few had a wider influence on those around them, a persona carved off the field as much as on it. Over 2000 people from all walks of life packed into his funeral in Manukau. Former teammates came out in force to pay their respects. “He was the ultimate team man—on the field he was huge and off the field such a gentleman,” said former All Black and Auckland captain Gary Whetton. Not just Samoans and Pacific islanders mourned—all New Zealanders. The funeral was streamed online and reported by the media and newspapers worldwide. There was plenty of humour among the sadness as speakers strolled down memory lane. The eulogies and messages of condolences poured in from around the world. They were genuine, heartfelt reflections. All Black Ma’a Nonu tweeted: “RIP Rugby legend, brother and father Peter Fats who inspired all of us Samoan kids.” Such was his universal appeal. He was an ambassador not just for Samoan rugby, but Pacific rugby through his actions. Gone but never forgotten. Rest in peace Fats.