June 2014 by Islands Business

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June

2014

Vol. 40, No. 6

Contents 29 10,000 foreign workers to go in the Marianas US Labour Secretary has until july 4

Aviation

30 Air Marshall Islands’ ongoing downward spiral Lack of money fuels air woes

Climate

31 Coastal flooding to threaten Vanuatu Technology predicts catastrophe

Fisheries

32 Revival of a disappearing resource SPC and partners work to rebuild green snail fishery in Vanuatu

Sports

33 Samoa-born Leapai loses fight but $1million richer Declares “bigger, badder” comeback

Viewpoint Mr. Nickel: SMSP’S Andre Dang transforms New Caledonia’s nickel industry. Cover report—pages 16-21. Cover photo: Nic Maclellan

34 A cheap wood-fired cooking stove for the islands

Environment 35 World Oceans Day - 8 June

Cover Report 16 Mr. Nickel

SMSP’S Andre Dang transforms New Caledonia’s nickel industry

20 Andre Dang President & CEO of New Caledonia’s Société Minière du Sud Pacifique (SMSP)

22 The rush to Fiji’s elections

Regular

Features

4 Letters 6 Views from Auckland 7 We Say 12 Whispers

So much to do, so little time, but Fiji’s Elections Office is optimistic

14 Pacific Update

Politics

36 Business Intelligence

24 New Caledonia elections reaffirm divisions Loyalist and independence parties face off

25 Three Opposition MPs suspended in Nauru Crackdown against critics continues

Business

26 LNG project absorbs skilled workers in PNG Calls for more job training

27 Selling the Pacific to the world under one roof SPTE 2014 a ‘success,’ says organisers

28 Big construction project in Chuuk in limbo Legal wrangle holds up road work Islands Business, June 2014 3

L E T T E R S Managing Director/Publisher Godfrey Scoullar Acting Editor Samisoni Pareti 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 Dionisia Tabureguci French Polynesia Thibault Marais Marshall Islands Giff Johnson New Zealand Dev Nadkarni Jale Moala Ruci Salato-Farrell Duncan Wilson

Nauru Debacle Your artIcle on nauru (IB March 2014) contains many inaccuracies and accepts as true untested and generalised defamatory allegations from unnamed persons against ex magistrate Peter Law. I note as follows; Firstly, Jacobson left Nauru on 31 January and has not returned. Secondly, your claims that “following a string of misdemenours including improper conduct with staff ” is libellous. There were untested and denied allegations of misbehaviour. The government has never identified who made the allegations save for one person whom the President himself said had no credibility. Thirdly, I did not say the sacking of Law was a breach of “common law.” I said it was a breach of the rule of law, and it plainly was. Y You do not sack and replace a judicial officer because you want to get a different result. Fourthly, it is false and defamatory to say that “apparently Law was not capable . . . time after time he had his impartiality challenged.” Over three years, his impartiality was never challenged before his dismissal. In addition, your assertion that “Eames ignored an injunction . . .” is wrong. It was the President and Minister for Justice who ignored my injunctions which restrained them from deporting Law,

and later Henshaw. Furthermore, there were no sackings of Australian citizens that were done “because of their links or allegiances to Law and Justice Eames.” That is completely false. The government refused to give any reason for deporting Henshaw, who was not an employee of government in any event. No employee was sacked because of an association with me or Law. W We did not even know the second businessman who was deported (a Fiji citizen by the name of Haneef Mohammed). Geoffrey M Eames AM QC Australia.

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Column

Views from Auckland BY DEV NADKARNI

Slumbering elephant awakens

Analysts and long time India watchers see this election as a turning point in the country’s history, not only internally within the country and not just with its neighbours, with many of whom it has had difficult relationships, but also with the rest of the world. Throughout his election campaign, Mr Modi has stressed on inclusiveness and even in this most decisive of election victories has invited dialogue with an all but decimated opposition.

Mantra of inclusiveness Pakistan Prime Minister Nawaz Sharif became the first ever prime minister of his country to attend the oath taking ceremony of an Indian Prime Minister. Prime Ministers of nearly all the SAARC countries, too, attended. It is widely believed that Mr Modi will most likely look east India, often described as a sleeping elephant in contrast to the Chinese dragon, before he looks west. Reports indicate that the Chinese dragon seems happy to play ball with the has thrown up a clear verdict for change. With a new prime minister and an stirring elephant: it is looking forward to the new dispensation in New Delhi and to building new all-new government, what will this mean for the world – and the Pacific? bridges with a fresh administration that is widely seen as being far more business Last month the world’s largest democfriendly and efficient than the one before. racy delivered its most decisive verdict in three India’s old ties with Russia are also likely decades, completely belying the prognoses of to be strengthened. An India-Russia-China political pundits of all hues. An overwhelming counterweight to the west looks more posmajority of India’s voters sent a loud and clear sible now than at any stage before in history. message to the political class: they were fed up In his television interviews in the run up with the status quo and wanted big changes in to the polls, he has talked about improving the world’s second most populous nation. Does relations with countries across the world this signal the stirring of the proverbial slumberfollowing the ancient Indian concept of ‘the ing elephant? world is truly one family.’ He has talked exThe Indian elections are a statistical spectacle tensively, particularly about reaching out to that has always held the free world spellbound. It nations that are now home to India’s nearly is the biggest political logistic exercise anywhere 30 million strong diaspora scattered across in the world. The latest polls had 815 million elithe globe. That includes countries like Fiji, gible voters, 935,000 polling stations, 11 million Mauritius, the Maldives, Suriname, the election officials, 8250 candidates contesting 543 Narendra Modi...Indian’s new Prime Minister Photo: indiatimes.com Caribbean states, among others. seats, in an election process that ran from April 7 to May 12, the longest ever. The voting was totally Opportunities for the Pacific paperless with the deployment of more than 1.7 There is great hope among Indians as million electronic voting machines. At more than well as the rest of the world that the coun66 per cent, this election saw the biggest voter touted as the second fastest growing economy, try’s stalled business reforms will continue and turnout ever – underscoring the steely determiwith near double digit growth rates at the turn Indian business will be far more integrated into nation of the Indian public to vote for change. of the century, has slowed down to almost half the world economy than before. This presents a that. Infrastructure growth is lagging behind and great opportunity for the Pacific Islands region Unambiguous verdict the country’s institutions, its bureaucracy and just as it does for many other countries. Just as The results were declared on May 16 and the its workforce are in dire need of modernisation. the region has developed deep links with China, country’s nationalist Bharatiya Janata Party was which is now beginning to bear fruit for the declared the winner with a clear majority. The Negative portrayal belied islands, it can now look with hope to another Congress Party, which has been in power for most Prime Minister Modi has been widely porhuge marketplace of a billion people and more. of the years since the country’s independence, trayed as being a hardline right wing politician Indian businesses are slowly but surely increassuffered the worst ever loss in its history. For and has been accused of complicity in a major ing their presence in the region. There are several the first time in thirty years, the electorate has communal conflagration in 2002 in the western Indian firms operating in Papua New Guinea delivered so clear a verdict that the winning party state of Gujarat where he has been the chief minand looking for opportunities further into the will need no coalition support from its allies. It ister for 12 years. The fact that India’s Supreme Pacific. Indian professionals are also known the can govern on its own. On May 26, Narendra Court has exonerated him has not convinced a world over for their work ethic, pragmatism, Modi, who led the party to this decisive victory, section of his critics. But now the silent Indian entrepreneurship and innovative styles of doing became India’s new Prime Minister. voter, with such an unambiguous verdict, has all business. Their ability to communicate in the In many ways, this election has been a game but silenced even his bitterest critic. English language makes it easier for them to work changer for India and its dealings with the world. The campaign against Mr Modi and his party with the rest of the world. This is an asset that For one, the voting public has put the dynastically was so strong that several countries including the the region can leverage, just as the US and the ruled Congress Party and its corruption tainted United States and the United Kingdom denied UK have over the past few decades. leaders out to pasture. It has swept to power a him visas while they had no qualms about layNow is a better time than ever before for the humble, former street tea vendor to the country’s ing out the red carpet to proven political rogues Pacific’s leadership to think in terms of setting highest office – something that has not only never from other parts of the world. These two powup a collective presence for the region in New happened before but was inconceivable given the erful countries, too, have been delivered a firm Delhi particularly with a view to attracting investNehru-Gandhi family’s dynastic hold on the upmessage by the Indian voter through the most ment in the region and promoting trade. The per echelons of India’s politics. democratic of processes – a message they simply Pacific region as a whole, bar Fiji, has been a bit The previous regime was racked with dozens cannot ignore. And they haven’t: just hours of a blind spot for Indian administrations in the of mega corruption scandals running into billions after the results were declared last month, both past. That needs to be corrected if the region is of dollars, involving almost every core industry countries shamefacedly extended invitations to to benefit from the new, forward-looking Indian sector ranging from mining and energy to teleMr Modi to visit them. Government. communications and infrastructure. India, once 6 Islands Business, June 2014

WESAY “Not all repetitive tasks are replaceable by machines. At least not yet – and therein lies the opportunity for Pacific Island nations that are blessed with an able bodied, young population, ready to work with some training”

ne of the most oft quoted traditional Maori proverbs goes, “He aha te mea nui o te ao? He tangata! He tangata! He tangata!” This simple, universally relevant and permanently valid home truth translates as, “What is the most important thing in the world? It is people! It is people! It is people!” There is nothing in the world as powerful as the collective power of the people. Civilisations have been built, empires expanded, new frontiers conquered and new knowledge has been acquired because of people power. Leaders ancient and modern have known this fact and those who have used it wisely and appropriately have created history – not just in the military and in politics but also in every human endeavour. How gainfully its people are employed has a great bearing on the wellbeing of any society. Rates of gainful employment are critical for the economies of any country, which is why high rates of unemployment are such a worry to governments anywhere in the world. The Global Financial Crisis has sent unemployment rates soaring to as much as 30 to 40 per cent in some European countries like Spain and Portugal – an unprecedented level in peacetime. In the fast growing economies of Asia, unemployment has been comparatively lower. But with world trade becoming increasingly interconnected and the economies of countries becoming intertwined with one another because of the forces of globalisation, what happens in one part of the world can quite easily and quickly begin to affect other parts of the world. So no country can ever rest easy on what seem like lower employment levels. They must continually strive hard to increase investment to create avenues of work and keep people employed. This is especially true of countries that have young populations like those in the Pacific Islands region. More than half of the population of the collective Pacific Islands comprises young people below the age of 24, which is in stark contrast with much of the western world, where most of the population is ageing with fewer young people. While this is an asset for Pacific Island nations, it can be only so if these people are gainfully employed. If European unemployment figures have shocked the world, the reality in some Pacific Island countries is far worse. Some countries in the region have as much as 58 per cent of its work-capable population unemployed. It is probably masked only because many of these countries rely on a strong subsistence economy, unlike European nations. It comes as no surprise, therefore, that a new World Bank report titled “Wellbeing from Work in the Pacific Island Countries” says that the creation of avenues for increased employment is critical for the economic sustainability of the Pacific Islands region. As populations grow, numbers of young people grow, with these young

people then tending to gravitate toward urban areas. Stronger urban concentrations then tend to create social unrest, especially with increasing poverty because of low employment rates. This underscores the importance to create opportunities for harnessing this readily available human capacity, especially for women and youth, to contribute to the economy and avoid falling into poverty, the report says. The report identifies some practical avenues for achieving this. Some of these have already proved successful and need to be scaled up, in the interests of the sustainability of Pacific Island economies. For instance, the report has highlighted the role of seasonal labour – like the successful Recognised Seasonal Employer (RSE) Scheme in New Zealand – in providing productive work and critical income for thousands of Pacific Islanders. The Pacific Islands Forum Secretariat’s trade and investment promotion arm, Pacific Islands Trade & Invest (PT&I) NZ has been involved in New Zealand’s RSE scheme since inception in 2007. Thanks to this scheme thousands of Pacific Islanders find seasonal employment in the farms of New Zealand every year. Commenting on the seasonal labour programme in the region Tobias Haque, Economist for the Pacific Islands at the World Bank and lead author of the report said, “migrant workers can access higher incomes in Australia or New Zealand than would ever be possible at home, while remittance flows are providing critical income for many Pacific Island economies. At the same time businesses in Australia and New Zealand have also benefited from access to a productive, highly reliable workforce.” He termed the scheme a “win-win” situation saying, “the ability of Pacific Islanders to work overseas provides a ‘win-win’ scenario for both sending and receiving countries.” The report offers four key policy recommendations to increase employment opportunities and the wellbeing people can expect from work: Looking beyond business-environment reforms; Increasing opportunities for international labour mobility; Embracing urbanisation while managing the risks and leveraging public spending to create high quality employment opportunities. Unlike in the past, employing humans for repetitive tasks is increasingly seen as a liability than a worthy investment at least in the western world. The emphasis is on replacing humans with automation in the name of greater efficiency and cost savings. But not all repetitive tasks are replaceable by machines. At least not yet – and therein lies the opportunity for Pacific Island nations that are blessed with an able bodied, young population, ready to work with some training. Pacific leaders have to lobby hard for schemes like the seasonal employment arrangement in New Zealand and It’s a ‘Win-Win’ Scenario

Islands Business, June 2014 7

WESAY Australia to be expanded. This is an employment niche that is likely to remain intact for at least some time. The leadership in the Pacific must work together among themselves and internationally to assuage the fears of host nations about any misgivings as regards employing migrant workers. Regional trade agreements like PACER Plus should take on board the importance of seasonal labour. This must be followed through at all levels of government. The greatest challenges to seasonal labour schemes come from attitudes in recipient countries. Opposition for such schemes can

come from several quarters including businesses and communities. There must be checks and balances employed to dispel fears of illegal immigration and other perceived socio-economic challenges that might or might not be justifiable. It is of primary importance that a conducive environment and frame of mind is created within the host countries if seasonal migration is to be scaled up. The great success of such a scheme in New Zealand is beacon of hope to countries across the region that seasonal migration can quite realistically turn out to be a long term solution for gainful employment for the Pacific Islands for several decades to come.

“Perhaps the region’s hospitality industry needed global endorsement about the islands’ cuisine to take it more seriously. Now that it has been garnered in good measure, they should take to it forthwith”

t is rare that positive news from the Pacific Islands region makes it to the world stage. More often than not, it is for all the alarming reasons that the islands find themselves making global headlines. In most cases it is issues like climate change, the geopolitical machinations of the big boys of the planet in our neck of the woods and stories like the massive islands of floating plastic traversing the world’s largest ocean, the drying up of fish stocks and dastardly tales of whaling that find their way into the world media. So, positive stories from the Pacific that catch the world’s notoriously ephemeral attention spans must be celebrated around the region with gusto and pride. And Pacific Islanders and national governments must strive all the more to encourage more positive stories from our islands, villages and people. One such big story broke last month in the People’s Republic of China. It’s an incredibly big positive story for the Pacific, the kind of which rarely breaks in the region. A new book on the cuisine of Samoa and Polynesia and an associated television show won one of the most coveted of awards. ‘Mea’ai Samoa: Recipes from the Heart of Polynesia’ and its associated television cooking show, Real Pasifik won the Gourmand Award for Best TV Chef Cookbook In The World 2013. The Gourmand Award is considered the Oscars of cookbooks. It comes from the reputed house of Cointreau, the family that brought to the world the famous Cointreau liqueur, as well as the Cognacs Frapin and Rémy Martin. The global award was founded in 1995. The Mea’ai Samoa book written by the Pacific’s celebrated chef Robert Oliver beat 187 countries that participated in the competition. Of the 94 that were shortlisted, 61 made it to the top three. Finalists were from Australia, New Zealand, South Africa, the United Kingdom and the United States of America. This is no mean achievement by any standards. For a small island nation and a remote region’s cuisine to grab the

8 Islands Business, June 2014

attention of the world, beating long established cuisines is incredibly big news for all Pacific Islanders. And what is all the more rewarding is that this is not the first but the second time that Pacific Island cuisine has been thus rewarded. The first time was in Paris for Mr Oliver’s first book, Me’a Kai, three years ago. That award spawned a worldwide interest in Pacific Island cuisine and took Pacific dishes into the kitchens of the most celebrated restaurants the world over. Winning the award a second time in such a short period of time only means there is something incredibly special about Pacific Island cuisine. Its attributes are not far to seek: Natural ingredients, simplicity of preparation and cooking processes and a range of clean, subtle flavours directly reminiscent of the origins of the ingredients – the ocean and the pristine and fertile land – are but a winning combination. Not to mention the ancient recipes that have preserved for centuries. There is an old saying that goes, “The way to a man’s heart is through his stomach.” In the modern world, we may as well tweak it to “The way to the world’s heart is through its palate.” The winning of the award, while a matter of pride for the whole of the Pacific, is a tremendous opportunity that can be leveraged in many ways as well. The Pacific should not forego the potential benefit it can bring to its people. How it is done is a matter of vision, imagination, entrepreneurship and political will. The most significant beneficiary of the award can well be the region’s biggest revenue earner – tourism. Cuisines are one of the most prominent draw cards for tourist destinations. As well as the attraction of a place, tourism promoters equally focus on accommodations and food and drink. The iconic drink ‘Singapore Sling’ and the famous ‘Waldorf Salad’ are shining examples of the ‘cuisine

Tourism is the winner

WESAY as attraction’ phenomenon people’s stories – all of which at work. make the whole experience While Pacific Island tourof partaking food incredibly ists have tended to concenricher. trate on the first two, that is It is indeed a shame that the allure of destinations and the collective South Pacific the quality of accommodatourism industry has failed to tions, cuisine has not been appreciate his efforts and the a strong selling point for Parecognition he has brought cific destinations. They have to the region’s unique cuihitherto all but neglected to sine in any substantial way. focus on the exotic range It is high time the big forces of food and drink in their of Pacific tourism put their marketing spiels. heads together to leverage all Besides, Pacific destinathis priceless recognition that tions have tended to concenhas come the way of the retrate more on western fare gion’s cuisine in recent years and consistently downplayed – the latest and biggest one their own exquisite cuisines, of them all, just last month. which are relegated to mere Award winning Chef and Author Robert Oliver (right) observes Samoa cooking on the beach. Pacific tourism has always (Photo: Supplied) sideshows on restaurant relied on location, isolation, menus. Perhaps the region’s pristine purity and the allure hospitality industry needed of sea, sand and surf to attract global endorsement about the islands’ cuisine to take it more seritourists. Only recently has it added concepts like sports tourism, ously. Now that it has been garnered in good measure, they should adventure tourism and eco tourism. It is now about time they added take to it forthwith. the islands’ globally acclaimed cuisine to their offerings. Chef and author Robert Oliver has taken it upon himself, to The international buzz around Pacific cuisine will undoubtedly promote Pacific Island cuisine wherever he goes. He is a one man whet people’s appetites for travel as well. The worst thing would ambassador of the islands’ delectable cuisine. be for them to read the book, take the long and expensive journey He has gone to great lengths to visit distant and remote places, and then find that none of the food they read about in the book is research and document ingredients, learn cooking styles and listen to available to eat and drink in any of the resorts.

“Pacific Island states have suffered greatly for too long at the mercy of distant rich nations who for decades have systematically plundered their natural oceanic resources offering in return a pittance, which has been accepted without much complaining by Pacific leaders”

t a major business event in Papua New Guinea late last year, the audience heard from a number of industry leaders about the great business opportunities that this fast growing economy of the region had on offer. While PNG’s progress is well known, the country has been making rapid strides on the live oceanic resources side as well. At the event, a representative of one of the country’s biggest tuna canneries said the company was expecting to treble the production of processed fish which would create more than 13,000 new jobs. While the US$110 million dollar company is a pride for any

country anywhere in the world, especially since it notched up its success in less than two decades since inception, it needs to be noted that tuna is a natural resource that is not limitless in supply. Though this is not to suggest that the company is indulging in any activities that might be contributing to widespread reports of depleting tuna stocks, one hopes that sustainable fishing is one of its important business practices. It is a known and oft quoted and discussed fact that overfishing in the high seas and coastal areas in recent decades has resulted in fish stocks depleting precipitously, though there is rarely any agreement Islands Business, June 2014 9

WESAY between various concerned parties of how much the decline has been in real terms. But there is no doubt that fish stock continues to be depleted despite measures and treaties that have been put in place. While such measures have helped raise awareness of the issue, success in curbing overfishing has been limited. It is clearly driven by demand and supply. As the world’s population increases and economic growth boosts affordability of more and more people to raise their living standards, the demand for protein based food increases. This demand is expected to grow even faster in the next few decades and the race to supply that demand will undoubtedly deplete resources further before the balance that is sought from sustainable farming practices begins to make any difference. Last year, a report published in Port Vila titled “Climate Change and Development Strategies for Coastal Communities of the Pacific Coral Triangle Countries,” said Pacific islanders who have been surrounded by such a reliable protein source as fish face the grim prospect of importing it from distant foreign lands. That is the seriousness of the situation according to this report. It was based on studies in what is referred to as the Coral Triangle, which is also known as the “Amazon of the Sea.” It is an area spread across 14.7 million square kilometres of ocean, encompassing six countries in Southeast Asia and the Pacific including Indonesia and the Philippines. The study pointed out that many of the Pacific coral triangle countries could become net importers of fish and that per capita consumption of domestically produced fish could decline without significant adaptation measures. The report suggested forming protected areas in the exclusive economic zones and coastal areas of sovereign island nations to promote sustainability and give a chance for marine species to replenish stocks in their own natural cycles. This is a noble suggestion but it is not new and has proven to be hard to implement. In more recent times, however, there have been notable successes, especially when national leaders have displayed political will and the spirit of cooperation between nations. Pacific Island states have suffered greatly for too long at the mercy of distant rich nations who for decades have systematically plundered their natural oceanic resources offering in return a pittance, which has been accepted without much complaining by

Curb on Overfishing

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Pacific leaders. It has been known for decades that foreign countries, mega fishing companies and fly by night operators have been plundering the fish stocks in the exclusive economic zones of island nations with impunity. Despite all sorts of agreements and accords in place that are supposed to report catch, limit it to sustainable levels and compensate the island nations concerned correctly and fairly. But it is clear that this rarely happens. Poor island nations have neither the financial muscle nor the infrastructure to enforce their laws, which in some cases don’t even exist. Last year, Palau acted strongly to place a ban on fishing in its waters. That could be dangerous for any maritime economy. Fishing is vital to the country’s finances. An immediate ban could rob the exchequer of vital income. But at the same time, illegal fishing might well continue especially since Palau does not have the resources to police the vast swathes of its commercial waters. Because imposing a ban is one thing. Enforcing it is quite another. As well as losing revenue by banning fishing in its exclusive zone, it risks spending its meager resources on trying to enforce the ban. Countries that contemplate pursuing Palau’s example should rather develop alternative revenue streams through tourism investments before implementing blanket bans on fishing in its commercial zone and risking throwing the nation into financial trouble. Last month political developments in New Zealand have led to an announcement that might be encouraging for the region’s fishing industry, if everything goes to plan. An expert in the fishing industry and a strong administrator has been picked to lead a new organisation to be formed in New Zealand to work with Pacific Island countries in the areas of fishing and industry and business development. His name is Shane Jones. He is a man of great experience in fisheries and is known for his tough stands. It might well be a welcome development for the region as a whole to have him at the forefront of Pacific fishing issues, particularly overfishing, to which a reference has been pointedly made during discussions of the nature of his work in the new role. If all goes to plan, New Zealand might well bring in expertise and resources in helping curb illegal fishing, the scourge of the region, which is the biggest contributor to the overfishing of fish stocks. But any such efforts will need complementing from regional governments, which will need to deal with the vested interests and corruption ridden networks within their own systems.

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Whispers SG race heats up: The race for the new Secretary General of the powerful regional political body, the Pacific Islands Forum is shaping up to be a very, very interesting one. With incumbent Samoan diplomat and jurist Neroni Kaliopate Tavola Dr Jimmy Rodgers Tuiloma Slade completing his second of three year term this December, leaders of the 15 independent island nations of the Pacific including Australia and New Zealand will have to agree on a successor at their annual Forum being hosted this year by the northern Pacific republic of Palau. Fiji is the 16th member, but it copped a suspension following the coup of 2006 although it is expected to take its rightful seat in the regional grouping following its September 17 general elections. Be that as it may, the suspension has not stopped the island nation and host of the Forum Secretariat from throwing the name of its candidate into the ‘SG ring,’ that of retired Ambassador and former Foreign Minister, Kaliopate Tavola. In not only proposing Ambassador Tavola’s name, Fiji very quickly got the endorsement of its three other neighbours in the Melanesian Spearhead Group of Vanuatu, Solomon Islands and Papua New Guinea. Alas, just two months away, surprise, surprise, both Solomon Islands and PNG are rumoured to be putting up

‘Different animal:’ Fiji is a different animal when it comes to tourism. That’s the verdict of a seasoned Pacific tourism campaigner when confronted by Fiji’s aggressive presence in the Australian market. “Fiji is a very different animal,” said Linda Kalpoi, head of Vanuatu Tourism. “We’re not comparing apples and apples here.” Kalpoi was dead right. No long after her remarks were reported in Australia, Tourism Fiji announced the dismissal of its head, Rick Hamilton and only after he had taken up a senior appointment with Tourism Queensland. Tourism Fiji was also the only national tourism office that stayed away from the regional tourism exchange held in Auckland last month.  Land pressure in Tarawa: Not so pleasant figures came out of South Tarawa, the main urban centre of Kiribati recently. Overcrowding is putting extra ordinary pressure on the republic’s over-stressed, under-resourced and highly fatigued public health service. Figures released by the Asian Development Bank show 35,000 people in South Tarawa get sick from diarrhoea, dysentery and related illnesses each year. This cost the national government A$7 million in health treatment, that’s about 4 per cent of the country’s Gross Domestic Product. To offer some 12 Islands Business, June 2014

their own national candidates for the job. From Honiara, its none other than Dr Jimmy Rodgers, the most recent Director General of the region’s largest regional organisation, the Secretariat of the Pacific Community. Dame Meg Taylor Neroni Tuiloma Slade Not to be outdone and to add salt to the ‘MSG solidarity wound,’ PNG is rumoured to be proposing its own candidature, that of a highly qualified lawyer (LLB from Melbourne University and LLM from Harvard!), and long time PNG ambassador Dame Meg Taylor! Already emissaries from several Forum member capitals have been burning the midnight oil canvassing for support. Again Fiji took the lead with a Pacific tour of its President over the last three to four months. Australia’s chief diplomat was seen in the Fijian capital not too long ago in an overnight visit many were not aware of. Waigani has also dispatched its own lobbyist. So who it is going to be? Only time will tell. Analysts did say that if merit is the only criteria, then all three can take up the SG job any day. But as its often the case, the decision of the Leaders may come down to more than just deservingness when it comes to appointing their 10th Secretary General.

sort of relief, the ADB is investing A$22.5 million to upgrade the atoll’s sewerage system.  GG’s poll: Solomon Islands has come up with a novel way of appointing its head of state, turn to the ‘almighty’ ballot box! Undecided of who to support or wary perhaps of the various political, geographical and even religious alliances, the government of Prime Minister Gordon Darcy Lilo took the easiest way out by calling for a vote. And in another first, the parliamentary ballot for the country’s next Governor General was held behind closed doors, with members of the media and the public turned away. Incumbent Sir Frank Kabui came out victors in the end, although journalists were told later that it was no easy run for the Queen Representative. There were four rounds of ballot in total; Sir Frank lost the first round but the victor, Honiara’s Lord Mayor Andrew Mua didn’t get the majority vote, both drew in the 2nd and 3rd round and Sir Frank finally edged his rival by a mere 2 votes in the 4th and final round.  Russians over Guam: The proverb when elephants fight, the grass dies is apt for the northern Pacific territory of Guam when it comes to Rus-

sia’s dispute with Ukraine. Only this time it’s the mother ‘bear’ picking a fight with one of its cubs! Senior US Air Force officials have confirmed that Russian warplanes have been sighted on the coast of California and “around the US Pacific island of Guam.” As a matter of fact, US Air Forces in the Pacific say they have a photo of one of their F-15 fighter jets intercepting a Russian ‘Bear’ aircraft over Guam. Not that caniforms are now taking to the air from Russia but the bear is in reference to Russia’s Tupolov Tu-95 strategic bomber. American military is attributing the high air activity to Russia’s intervention in neighbouring Ukraine!  ‘Mirror, mirror on the wall, who’s the fairest of them all cops?:’ That seems to be the mantra of at least two senior government officials in Samoa with still no word on their future in the public service. Both the chief cop of Samoa Lilomaiava Fou Taioalo and his Assistant Commissioner Sala Uili Seana who also performs the role of Commissioner of Prison were suspended with pay in August last year, subjected to a Commission of Inquiry that completed its hearing in February this year and then, nothing. Well actually, a Kiwi, formerly a scientist now turned correctional specialist has arrived in Apia and has been introduced as the head of the new Correctional Facilities of Samoa. So there

Whispers goes Assistant Commissioner Sala’s job. Now Commissioner Lilomaiava awaits his fate and according to him, the wait is driving him insane!  Suing the hand: Marshall Islands is showing the world its taking its opposition to nuclear armament seriously by taking the nine nuclear powers to the International Court of Justice. The northern Pacific island republic says the nine have failed the human race by failing to fulfil their obligations to disarm. At least New Zealand has declined to comment publicly on its support or otherwise of the action of the Marshall Islands Government. Neither too is the International Atomic Energy Association. Israel on the other hand is wondering about the usefulness of such legal actions when the US itself does not recognises the International Court. 

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Polygamy’s legally over: Gone are the days of acquiring many lawful wives or husbands for that matter in Papua New Guinea now that changes to the country’s civil registry act have been passed. These amendments meant only one wife or one husband marriages would be deemed lawful from next year, 2015. It also meant that any customary marriage would be considered a registered alliance between a man and a woman. In making this announcement, PNG’s National Civil Registry didn’t disclose the fate of those that have enjoyed more than one wife or husband prior to the change.

Wondrous consultants: One will never know what these long queues of consultants will come up these days. What about this recent report where pages after pages were dedicated to the wonderful impact of remittances, in that exporting our highly skilled labour force to New Zealand or Australia will earn our countries the much-desired foreign exchange and one that would ultimately lead to a better living standard for us all? Yet wasn’t this the same group of people that some years ago decried the impact of remittances in the islands because the transmitting of money from our overseas relatives were breeding a group of lazy islanders? .

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Award for trying: No one can accuse Ioane for not trying. The I Kiribati father finally lost his legal fight to stay in New Zealand last month when that country’s Court of Appeal denied him the opportunity to claim refugee status in New Zealand for him and his family. His three-year work visa had expired in 2010, and he had told the court that he could not take his family of wife and three children back to South Tarawa because climate change is destroying his home. Rising salt water is killing some coconut trees and crops and king tides inundate homes, sometimes, Iowane told the court.

Coup of sorts: Its not actually a good word to be used together with Fiji but even die-hard critics will have to admit that in securing the attendance of Indonesia’s top man, President Susilo Bambang Yudhoyono for this month’s annual summit of the Pacific Islands Development Forum, Fiji’s 2006 coup leader now Prime Minister Frank Bainimarama has staged, well a coup of sorts. At the inaugural PIDF last year, Bainimarama convinced Timor Leste’s former President now Prime Minister Xanana Gusmao to participate, and now its Timor Leste’s bigger and more wealthier neighbour’s turn to attend. “The President’s involvement in the event signals the growing importance of the PIDF in the region for issues such as sustainable growth and development,” comments a Fijian Government announcement.

RAMSI’s $2 billion bill: Eleven years later and A$2.6 billion poorer, that’s how long and how much it has cost Australian taxpayers to prop up the Regional Assistance Mission to Solomon Islands. Bulk of that money, some $2.1 billion was spent on law and justice alone. That’s 83

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per cent of the total RAMSI spending since it landed Pacific troops in Honiara on July 24, 2003. Singularly, the Australian Federal Police used $1.5 billion on RAMSI over that period. The stats were the work of Lowy Institute’s Myer Melanesia Programme, which is said to be the first report to put a price tag on the regional peace mission.

Chequebook diplomacy is it? With Papua New Guinea and Nauru getting a handsome package in the recent Australian Budget of Prime Minister Tony Abbott, are the two countries being rewarded for agreeing to host refugee processing centres? Waigani got almost a A$60 million hike in aid assistance to $577.1 million while Yaren gets a cool $27.1 million. The UN Higher Commissioner for Refugees is reportedly unimpressed by Canberra’s offshore asylum detention centres, telling an Australian Senate Committee hearing last month that it is Australia’s legal responsibility to look after any refugee that cannot be resettled by PNG. ‘Telling them they might have to wait between two to five years for a final decision did not meet international standards,’ the UNHCR told the Senate hearing.

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• Whispers is compiled by the Editor. If you have any Whispers, please contact us on editor@ibi.com.fj

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Islands Business, June 2014 13

Pacific Update

Carsasses’ out, Natuman’s in By Tony Wilson

in an ersatz show of loyalty or shift in power in his own party. But 40 MPs gave their support to the new Prime Minister Joe Natuman in one of the bigt had all the guile and secrecy of a commando gest political coups in Vanuatu’s short history. raid. And as much impact. Natuman, 61, is the first person from the volcaThis was the demise of Vanuatu Prime nic island of Tanna, renowned for its warrior like Minister Moana Carcasses after 14 months in the men, to be elected Prime Minister. Sectop job. He entered parliament on retary general of the Vanua’aku Pati, he May 15 confident he had the numis the tenth Prime Minister since Indebers to survive his fourth motion of pendence (although some predecessors no confidence. have served multiple terms). He had reason to be confident He graduated from the University as only the day before he had stood of the South Pacific in the 1980s and shoulder to shoulder with his Deputy joined the civil service, rising to the Prime Minister Edward Natapei at a position of First Secretary to the Prime press conference and listened as the Minister’s Office from 1987 to 1991 wily former PM pledged his support during the time of the nation’s first and that of the Vanua’aku Pati he Prime Minister Walter Lini. He then leads with its 17 MPs. Another seworked as Assistant Registrar at the nior Minister Ralph Regenvanu had University of the South Pacific in Suva, also given the unequivocal support of himself and his Groan Mo Jastis Pati In as Vanuatu’s new Prime Fiji, until 1995. Minister, Joe Natuman. Natuman entered politics in 1995 with its three MPs. Photo: Supplied becoming a Tanna MP and within 12 And both Natapei and Regenvanu months, he had risen to ministerial levhad been the architects of Carcasses’ el. He has served in various governments and held ascension to power in March 2013. Jaws then ministerial positions in internal affairs, foreign afdropped as all the MPs from these two parties fairs, education, justice and social welfare. plus two others joined the 17 Opposition MPs Political observers said a number of factors led and, in one fell swoop, the reign of PM Carcasses to the downfall of Carcasses, but ethnicity played was over. a role, as he is Polynesian and not Melanesian. Natapei abstained from voting for a new PM

There were concerns about his blinkered pushing for a new US$350 international airport, involving promissory notes for that amount, dual citizenship and his personal control of government matters. Natuman said many people in Vanuatu are concerned about government’s spending. “In my view, we are doing things which have not been what people expected of our founding fathers,” he said. “Basically, I want us to go back to our roots and redirect the country and ensure that we live within our means.” Natuman said unnecessary spending has seen the government selling its citizenship and passports, something he wants to review. He also said he wants to review the funding of a new airport. Last year, the government signed a deal with a Singapore-based company to build a new international airport and upgrade several regional airports. “We want a new airport to increase our tourism, but what I’m opposed to is the promissory note,” he said. Natuman said he will target the use of diplomatic passports, which the government had been accused of selling for up to US$69,000. “If people are using diplomatic passports for criminal activities then Vanuatu’s name will be tarnished,” he said.

Lack of data affects tuna stock assessments By Robert Matau

oreign fishing nations who benefit immensely from fishing in the Western and Central Pacific region’s US$7.2 billion fishery are not releasing valuable tuna stock data needed to manage and sustain the industry. Forum Fisheries Agency Director General James Movick said the effect of that attitude was that stock owners in the Pacific would reduce the amount of fisheries to be fished. “In the absence of accurate data we have to employ the precautionary approach and restrict fisheries to lower levels, in order to take into account the greater risk that we may be overfishing,” he said. “In a way, the distant water fishing nations that refuse to honour their agreements to provide operational data to the scientists are shooting themselves in the foot.” Movick’s comments were made in response to concerns raised last month at a tuna stock assessment meeting by Dr Shelton Harley head of the Stock Assessment and Modelling team within the Secretariat of the Pacific Community (SPC) Oceanic Fisheries Programme. The annual meeting, hosted by SPC, helps scientists assess the status of bigeye, skipjack, and yellowfin tunas in the Western Central Pacific Ocean. Harley said in early 2014, three scientists from Taiwan came to SPC headquarters in New Caledonia and brought with them important data on Taiwanese fishing. 14 Islands Business, June 2014

“It was a very large data set representing over 200,000 longline sets with details of the tuna caught,” he told Islands Business. “The data was based on logsheets of fishing vessels and are similar to the logsheets used by other fleets in the Pacific. “Governments of several major fishing fleets in the region are currently unable to provide this detailed data to organisations like the SPC or the Western and Central Pacific Fisheries Commission (WCPFC) because of domestic laws surrounding data confidentiality. “All SPC members provide these data and some like the United States and the European Union have changed their own rules to enable them to provide these data.” He said they shared some very useful analyses with the Taiwanese experts but after two weeks they went home and took the data with them. “While this is a useful first step, it means that follow-up analyses that might be required as the assessments develop and as other data are received cannot be undertaken.” Nevertheless, Dr Harley was thankful that the Taiwan fisheries administration took this useful first step, and encouraged other major fishing countries to support stock assessments by allowing scientists’ access to the data. “Critical to the assessment of the albacore, bigeye, and yellowfin tuna stocks is data like this on how the catch rates of these tuna change over time, but without the detailed data it is very difficult to

know whether boats might be changing their fishing behaviour (trying to target other species for example) or whether the abundance of tuna is changing,” he said. Harley said the missing data is generally from the high seas areas in the Western Pacific, which are very important to longline fishing. FFA’s Director General Movick said such data was important in formally assessing the viability of the fish stocks that Pacific Island Small Island Developing States need to manage at the operational level. He said most other scientists from Regional Fisheries Management Organisations would die for the kind of data that Pacific Island SIDS put into SPC/ WCPFC stock assessments. “It is the lack of operational data from certain flag states – certain distant water fishing nations and high seas vessels – that Dr Harley is rightly complaining about.” Movick said each WCPFC member has made a legally binding commitment to provide this operational data to WCPFC, for whom SPC is the scientific services provider, as well as the scientific services provider to its own member countries and territories that include FFA members. “While there is a WCPFC legal loophole that provides for countries with “domestic regulations” that need to be amended before this data can be provided, some of these countries have been delaying amending their regulations for at least 10 years now,” Movick said.

Prime Minister’s signature is expensive By Merita Huch

he decision of Samoa’s Prime Minister to sign a letter in support of two convicted rapists has raised serious questions from the country’s Opposition Party Tautua Samoa. According to the Party, the Prime Minister should avoid giving away his signature in support of criminals. Fatu Seti of the Le Vasa Resort about 10 minutes west of the Faleolo International Airport was deported to New Zealand last year after a decade of hiding from New Zealand authorities over a rape charge. He returned to Samoa where he was born and lived for most of his young life using a different identity working in the tourism industry in several jobs as an entertainer. Le Vasa Resort was where his fire knife dancing prowess attracted many tourists and locals alike. A likable character, Fatu was well known and when police finally arrested him, many were shocked to learn of his criminal past. He had committed rape as a teenager living in New Zealand. Fatu’s mother then apparently approached the Prime Minister, also the Minister of Tourism for help to have her son returned to Samoa to serve his prison sentence. His mother asked Tuila’epa Lupesoliai Sa’ilele Malielegaoi to put in a good word for her son to help him in court. The Prime Minister did and so did the Speaker of Parliament. But that endorsement backfired because instead of the original four years he was to have served for the crime, Fatu is now serving five and a half years in an Auckland prison. It was reported that the sentence was extended because Samoan Government leaders were accused of trying to influence the courts in New Zealand, a judgement Prime Minister Tuila’epa felt was unfair. The Opposition’s Tautua Samoa however blames the Prime Minister for meddling in the court case, resulting in the extended prison sentence. In his letter, the PM asked the court to deport Seti back to Samoa where he could serve his prison sentence because it is where his family was. “The Prime Minister should not be support-

“In this particular case I did think about it and felt that there was always a chance that an unjust decision may be handed out for Seti because his response in English was questionable. The arguments could have been presented to court wrongly and that would result in Seti not being able to give a full defence.” The Prime Minister went on to say that what he did in the letter to the Let’s talk rugby...Samoa’s Prime Minister Tuiale’apa with New Zealand’s TV3 news anchor New Zealand courts John Campbell. Photo: Merita Huch wasn’t anything new. “As is the normal practice of many ing criminals of this sort, those involved in sexual New Zealand or American judges, once a Samoan crimes,” says Opposition Leader Palusalue Faapo II. citizen is convicted they would then be deported to “This incident is embarrassing for Samoa and their homes to serve these sentences and that’s why to make it worse our country’s leaders, the Prime I wrote adding that his wife and family live here,” Minister and the Speaker are involved. Even as Ophe told the media. position Leader, I still value his post and he should The Opposition Leader says the Prime Minister too,” says Palusalue Faapo II. should simply stop this behaviour. “He should consider that he is the leader of this “I can understand if the letter was for someone country and not to devalue this high office by such whom the whole country knew of his achievements actions.” and the crime wasn’t as serious but for him to say The Prime Minister in response expressed his that this boy from Levasa (hotel) was a country asset “disappointment in Palu,” making reference to the is embarrassing,” says Palusalue. position the Opposition Leader holds in church, The Prime Minister insists there was nothing that of a lay preacher and a deacon. wrong with his behaviour. “If I were in authority of his religious posts, I’d “Remember the story of the convict who was remove them immediately,” Tuilaep told the Samoa crucified alongside Jesus, what did he do, he prayed media when questioned over the matter. to the Lord to remember him when he dies and “Hundreds of thousands of people come and see remember what Jesus said to him. Today I will be me over many matters, they need my help, either with you in Paradise. What is this story telling us, to write a letter in support of their children who’ve even convicts are important. If I do what Palu says, come into trouble with the law, who need medical then it’d be the same as Jesus saying to the convict, help, some ask for water supply, money to go to Go to Hell. See, and this is coming from me to a lay New Zealand, you name it.” preacher and a church deacon.”

Donations to flood victims in Solomons mount By Alfred Sasako

he two-day flash flooding that began on April 2 struck at the heart of Solomon Islands’ administrative and business and commerce power base. It caught authorities napping. If there were any warnings at all, not many people took any notice. As in past natural disasters, Australia and New Zealand were the first to respond, offering financial and in-kind support. According to local news reports, Australia announced an initial SB$350, 000 (AU$50,000) assistance while New Zealand a similar amount. Unlike in the past, Canberra and Wellington now channelled their assistance through non-governmental organisations based in

Honiara. The fear that their financial and material assistance could end up in the wrong hands for political gain had everything to do with the shift in aid disbursements by the two traditional donors. New Zealand also sent in medical teams. Taiwan, with which Solomon Islands has diplomatic relations also helped by announcing about A$290,000 aid package consisting of cash and inkind assistance. It also offered a three-man medical team including two doctors who are now working with medical authorities in Honiara. Of this, about A$213,000 was in cash as well as 50 tonnes of rice valued at half a million dollars. At this point, there are no clearer indications as to how much has come in so far. Locally, the Solomon Islands Government provided A$2.18 million

to assist victims of the flash flooding. The problem is that, rather than give the funds directly to the National Disaster Management Office, Prime Minister Gordon Darcy Lilo’s Government decided to share the money amongst Members of Parliament. Each of the 50 MPs received $300, 000. Criticisms have been levelled at the government for disbursing the funds through MPs with victims saying the government was using their misery to enrich themselves. Local businesses and organisations also made donations. The Solomon Forest Association (SFA) was the first to heed an appeal by the City’s Lord Mayor for help. It provided more than $200, 000 in foodstuffs and other urgently needed items. Islands Business, June 2014 15

Cover Report

SMSP’s Andre Dang.

Rebalancing the economy: The northern smelter at Vavouto. (Photos Nic Maclellan)

Mr. Nickel SMSP’s Andre D ang transforms New Caledonia’s nickel industry 16 Islands Business, June 2014

Cover Report

By Nic Maclellan

t’s just days before New Caledonia’s elections and Andre Dang is angry. The conservative majority in the Southern Province Assembly has allocated exploration rights for two major nickel deposits at Prony and Pernod. The President and CEO of the Société Minière du Sud Pacifique (SMSP) is not impressed that two overseas corporations are trying to steal the crown jewels. “These two mineral deposits in the South are truly gems, the most beautiful jewels on the planet when it comes to nickel,” says Dang. “But they’re just giving them away. I find that really stupid, ridiculous to allow the despoliation of our wealth for the benefit of multinationals like ERAMET and Vale, when they don’t really need these deposits.” “We can’t allow multinational companies to come here and impose their own rules,” he adds. “There will never be peace. This has to stop.” Andre Dang Van Nha is the dynamic force behind the recent

transformation of the nickel industry in New Caledonia, which has seen construction of new smelters and the expansion of mineral sales into emerging Asian economies. Through the 20th century, the French company ERAMET and its subsidiary Société le Nickel (SLN) held a monopoly on smelting nickel, through the SLN plant at Doniambo in Noumea. Today, SLN has competition. In New Caledonia’s Southern Province, the troubled Goro plant is run by the Brazilian corporation Vale. In the north, the US$5.3 billion plant at Vavouto is operated by Koniambo Nickel SAS (KNS), a joint venture between the Northern Province’s SMSP and the transnational conglomerate Glencore-Xstrata. For Dang, the construction of the KNS mining and smelting operation is the centrepiece of efforts at political and economic rebalancing under the 1998 Noumea Accord. Following national elections on 11 May, New Caledonia’s incoming Congress must decide whether to proceed to a referendum on a new political status for the French Pacific dependency. But political tension between supporters and opponents of independence is affected by debates over control of New Caledonia’s nickel industry, Islands Business, June 2014 17

Cover Report with the Pacific nation holding nearly 25 per cent of global nickel reserves. In an interview with Islands Business, SMSP’s Andre Dang says: “I sincerely believe that for the political problem in New Caledonia to be resolved, for there to be peace, we most sort out the problem with nickel.” Colonial history Dang’s personal story reflects the colonial history of New Caledonia. Born in 1936, he grew up during the pre-war Indigénat, when Kanaks and indentured Indochinese workers had restricted rights of movement and no right to vote. Dang’s parents arrived as indentured labourers in 1935 to work in the SLN mines on the Koniambo massif, in the northern mountain chain of New Caledonia’s main island. His father Dang Van Nha (indenture number 10206) wielded a pick and shovel in the mine, while mother Nguyen Thi Binh (indenture A649) was put to work sorting through the ore. “My parents arrived here during the 1930s and they both worked at Koniambo,” recalled Dang. “My father was working there when he had an accident - I was only 17 months old. So I lost my father in a workplace accident, working in the SLN mines at Koniambo. But look now: 60 years later, I came back to take charge of Koniambo to provide the resources for the northern Disposing of molten slag from the Northern Smelter. project. That’s destiny for you!” After training as a mechanic, Andre Dang expanded a service station into a series of companies. During the boom years of the 1960s and 1970s, his business flourished through a distribution deal for Toyota. Selling vehicles to rural Kanaks, he built relationships with members of the independence party Union Calédonienne (UC). Because of his friendship with the Kanak leader Jean-Marie Tjibaou, Dang became a target for Right-wing militias during les Evénements – the violent conflict that divided New Caledonia between 1984 and 1988. He was driven into exile in Australia. With the signing of the 1988 Matignon-Oudinot Accords and the creation of three provinces, a development company was set up in the Northern Province to expand economic opportunities in the rural areas: the Société de Financement et d’Investissement de la Province Nord (SOFINOR). In 1990, SOFINOR bought the SMSP mining company from Jacques Lafleur, the leader of the anti-independence party RPCR. Dang returned from exile that year, to assist SMSP’s Raphael Pidjot and Northern Provincial President Paul Neaoutyine with an audit of SMSP. After expanding ore sales to Japan in the mid-1990s, Dang and 18 Islands Business, June 2014

his collaborators launched the next phase: to build a nickel smelter in the north of New Caledonia’s main island. The project was only possible after the negotiation of the February 1998 Bercy Accord, a precursor to the Noumea Accord signed in May that year. Under this agreement, ERAMET-SLN and the French Government agreed to the transfer of major nickel reserves at Koniambo from SLN to SMSP, in exchange for other deposits at Poum. His work done, Dang retired from SMSP in 1999 to be replaced as CEO by Raphael Pidjot. However Pidjot was killed in a helicopter crash on 28 November 2000, together with six senior SMSP staff. It was a devastating blow for the Northern Province and Dang stepped up to run SMSP again. The vision in the North Under his direction, the Koniambo-Vavouto project has become the centrepiece of SMSP’s transformation of New Caledonia’s mining industry. Today, the project is run by Koniambo Nickel SAS (KNS), a partnership between SMSP and Glencore-Xstrata, which describes itself as “a leading integrated producer and marketer of commodities.” KNS mines nickel ore in the Koniambo massif, with an estimated 21 square kilometres of high grade reserves. The ore is transported over the mountains along an 11.8 kilometre-long conveyor to a newly constructed processing plant at Vavouto. This US$5 billion complex, which began production in 2013, includes a smelter, processing plant, power station, desalination plant, port and industrial zone. The Vavouto project has brought hundreds of new workers and businesses to the province, and transformed the provincial capital Kone, with new housing estates and schools at Teari. Dang says that employment created during the construction phase was a key contributor to the economic rebalancing that is a central pillar of the Noumea Accord: “The project has contributed to peace, because people have jobs in the north.” Even as staff numbers drop with the completion of the plant, KNS proudly highlights that more than a third of its current employees are women, who have taken up jobs in a range of non-traditional sectors. Since the project was first mooted, there has been a series of corporate takeovers which have transformed SMSP’s partnerships. The initial design for the pyro-metallurgical smelter was developed by the Canadian corporation Falconbridge, which merged with Noranda in June 2005. The following year, the Anglo-Swiss conglomerate Xstrata took over the merged corporation, giving the

Cover Report go ahead for the project in 2007. However as the plant finally began production last year, there was a further merger between Xstrata and Glencore in May 2013. With fluctuating nickel prices since 2007, costs have escalated and production targets delayed. Last September, Glencore-Xstrata CEO Ivan Glasenberg told investors that construction costs had risen from US$3.8 billion to $5.3 billion, and were likely to rise further: “Koniambo is going to end up a $6.3 billion project. We always knew it was a problematic project.” Even as costs have risen, the original forecast of 60,000 tonnes of nickel a year has been downgraded. Dang acknowledges the delay in reaching targets, highlighting problems with the power plant that provides energy at Vavouto: “This power problem has set back the date of reaching our nominal target for production, and created a delay of about three years, slowing things down from our initial schedule. However we’re increasing production from 15,000 tonnes this year to 30,000 next year and hope to reach 60,000 by around 2016.” Majority control To raise capital for its share of the Koniambo project, SMSP has diversified operations through a number of joint ventures. Along with Cotransmine (shipping and stevedoring), SMSP has two joint ventures with the Korean group Posco: the Nickel Mining Company (NMC) and the nickel processing company Société du Nickel de Nouvelle-Calédonie et Corée (SNNC). Through NMC, SMSP exports hundreds of thousands of tonnes of low grade ore to Korea each year, to feed the SNNC processing plant at Gwangyang. Although it relies on overseas technology, capital and expertise, SMSP has retained a 51 per cent interest in all these joint ventures.

Dang has also struck a deal with the Chinese corporation Jinchuan (the third largest nickel producer in the world). Through the Caledonian Chinese Mining Company (CMCC), SMSP and Jinchuan will build a nickel processing plant at Guangxi in southern China. In a rare coup, SMSP retains a 51 percent majority in the partnership. Beyond his forays into Asia, Dang’s remains focussed on his longstanding battle with ERAMET (where the French Government retains a 25 per cent stake). SLN’s major shareowners are ERAMET (56 per cent) and Japan’s Nisshin Steel (10 per cent), with the remaining 34 per cent held by New Caledonia’s provinces through the Société Territoriale Calédonienne de Participation Industrielle (STPCI). After the 1998 Bercy Accord, the three provincial administrations obtained these SLN shares as a contribution to the economic “rebalancing” that is a core element of the decolonisation process. To further challenge control by France, independence leaders have suggested that the STCPI stake in SLN could be increased to majority ownership. For Andre Dang, “the country should control its own resources and that’s why we want an increase of the shares to 50.01 per cent.” Dang says that New Caledonia must learn lessons from other Pacific countries that have seen their resources stripped by colonial powers: “Like a parent in a family, you must think in the long term, from generation to generation, so the economic benefits will assist with the development of the country. But to allow the multinationals to come in and empty the place. Well, just look at Nauru – I think it’s sad that you can commit such political errors.” (Disclosure: Nic Maclellan travelled from Noumea to Vavouto courtesy of SMSP).

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Cover Report

Andre Dang President & CEO of New Caledonia’s Société Minière du Sud Pacifique (SMSP)

t his office in Noumea and on a trip to the Vavouto smelter, Andre Dang spoke to Nic Maclellan about the origins of SMSP, negotiations with corporate partners, his ongoing battles with ERAMET and his vision for local control of the nickel industry. Excerpts from the interview:

You were successful in business during the 1960s and 1970s, but this caused you troubles during the Evénements [New Caledonia’s armed conflict in 1984-88]. “From 1984 to 1990 I was a refugee in Australia because of the Evénements. At the time, I was the distributor for Toyota and it was a very successful business. No one wanted to take on the Japanese brands, so this allowed my business to grow alongside the success of the Japanese. “But that success was not allowed for a Vietnamese. We were allowed to open a restaurant, a shop, a hairdresser or the like. But as with the Kanaks, there were some things we weren’t supposed to do, like running a mine or a successful automobile business! I was not well accepted and when the time of conflict came, they chased me out of the country. They burnt down my business and I was forced to take refuge in Australia for six years.” Wasn’t your friendship with FLNKS leader Jean-Marie Tjibaou a key reason for your exile? “I was great friends with Jean-Marie Tjibaou. After the signing of the Matignon-Oudinot 20 Islands Business, June 2014

agreements [in 1988], Jean-Marie approached me and asked if I’d return to help him. I’d built a successful business in Australia by then. In 1989, we had a discussion and I told him: ‘I’m a New Caledonian, I love my country, I was born there. My children are still running businesses there, so it’s natural for me to want to come home.’ “I accepted Jean-Marie’s proposition and agreed to return. However I asked him for three months grace, so I could arrange my affairs in Sydney before coming home. Within a month however, he was taken from us, he was assassinated, so we delayed our return. “Nearly a year later, in April 1990, a group of people from the Northern Province came to see me again. They asked if I would come back to assist them, as I had promised Jean-Marie – and I agreed. “When I got there, the state of play with SMSP was not very good. There were no valid mining titles held by the company, in sharp contrast to what we’d been told. It was a trap that had been laid for the Kanaks. There were no operating mines and no mining titles, so I’d fallen into the

trap as well.” In spite of this, SMSP soon became a major exporter of nickel? “By 1995, we had moved ahead and shown that we were capable. We had become a world leader in mining exports. It was then legitimate to call on the French State to allow us to access the mineral resources that would be needed to build a smelting plant in the North. “We had the objective of promoting economic rebalancing within the country and contributing to the peace - to build peace in this country, you have to engage with people in the North. The Kanaks mobilised in the late 1990s and the State agreed to exchange control of the Koniambo resources and that’s how the northern plant got underway.” During your negotiations with transnational corporations, how have you ensured that majority control remains with SMSP? “With Koniambo, we wanted to change the way things are done. In every developing country and territory (and this is true in Australia as well), the large transnational corporations hold sufficient financial resources to make the decisions. I wanted to turn this situation upside down. “If overseas investors want to participate in our projects, it’s to make money. To make money, they have to bring money with them. But I bring the natural resources as our contribution to make the project successful - without mineral reserves

Cover Report there will be no project. “We must enhance the value of the project, act like it’s your family business, add value so that there are benefits for the whole of the country. Once the mine is worked out, the multinational company will leave, but we remain. That is why I have always argued for 51 per cent control of any project.” “It was within this spirit that I negotiated for 51 per cent and I imposed, if you will, my philosophy. It was very hard to get 51 per cent control and took a long time to negotiate. But we must add value for our country. “Without the necessary mineral reserves, you can’t build a nickel smelter in this country. So if an outside company wants access to nickel, you have to play by the rules of the country - and for our rules, I invented them, I insisted on them. You can always print money, but you have to own mineral resources at the start.” What do you feel about the recent decision by the Southern Province to give rights to ERAMET and Vale over mineral deposits at Prony and Pernod? “This is the colonial system that I condemn, the system that allows the multinationals to impose their own policies. This is unacceptable when you’re allocating mineral reserves. How could you take such an action just one month out from an election? Do you think that the Kanaks are going to stay quiet about this?” To develop the northern smelter, you’ve worked with a series of overseas partners. As costs have risen, how are relations with your current partner Glencore-Xstrata? “At the start, Falconbridge was really a nickel producer and they knew the value of our

nickel reserves. It was easier to negotiate with Falconbridge and then Noranda, because they understand nickel, in contrast to Xstrata and later Glencore who were more financiers. However these companies have played by the rules and stood by the agreements we made at the start, which they continue to respect. “You understand that for Glencore, this hasn’t been a very good deal, but for us here in New Caledonia, it’s been a great deal. Why? Because Glencore can’t do anything without our consent. “Mister Glasenberg [CEO of Glencore] has told his shareholders that if they had to do it all again, they wouldn’t have taken this project on, because it’s a very expensive project and will take 25 years to pay off. However when it comes to relations between us, we’re all very happy.” You’ve long argued that New Caledonia’s provinces should increase their stake in ERAMETSLN. Can you overcome resistance to this proposal on a number of fronts? “Everything is possible – it’s all a matter of will! The country should control its own resources and that’s why we want an increase of the shares to 50.01 per cent. “At the start, it was proposed that after the political negotiations, all the institutions held by the French State should be transferred to New Caledonia. At that time, the loyalists refused to accept this. So we agreed the three provinces would hold just 34 per cent of SLN. Although it wasn’t the best solution, we wanted to accept this deal, because the loyalists and the independence movement could both accept it, and we could change it over time. “The next step is that if we could get another

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4 per cent of ERAMET, there would be another 16.01 per cent of SLN. With the existing 34 per cent, that would take us over the 50 per cent to a majority shareholding. “We need that, not to manage SLN, but so the country can have a say in how the resources are used, instead of having a foreign company do what they want. This is unacceptable! “The resistance we’re seeing from ERAMET is hardly surprising, because on the one hand they have the market and on the other hand, some of the loyalist parties were opposed to the idea, because it would give strength to the independence movement. For the moment they’re opposed to the change, but I don’t think [Calédonie Ensemble’s Philippe] Gomes will oppose it and he’s going to win the election!” Now that the northern smelter is finally in operation, you must feel a real sense of achievement? “I’ve had the luck to win the trust of people here. My family and I have done very well already, so now I’ve committed myself to the interests of my country. Today, the smelter we’ve created is a concrete contribution to the rebalancing of the economy. “In all the political agreements that have been reached, especially from the side of the independence movement, the northern project is recognised as a tremendous achievement. They are very, very proud. Today, that’s also acknowledged by the French State and by the conservative parties. “I’m very proud of this. It cost a lot at the start, because only we believed we could pull this project off. The project has contributed to peace, because people have jobs in the north.”

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The rush to Fiji’s elections Cover Report

So much to do, so little time, but Fiji’s Elections Office is optimistic

By Robert Matau

y first June, the countdown clock on the Fijian Election Office’s official website would read 107 days to poll day. That website www.fijielections.gov.fj actually breaks it down to number of hours, minutes and seconds to 17 September, which has been officially declared a public holiday to allow Fiji’s 550,262 registered voters (and counting) to exercise their democratic right and vote. That ticking clock does appear however to be directed more at the Fijian Elections Office and not so much the country’s voters. With elections just two and a half months away, Supervisor of Elections Mohammed Saneem and his staff are racing to ensure that the country will be ready by voting day. Between now and 17 September, Saneem and his office would need to, among other things: • hire then train 14,000 polling officials • finalise and assign officials to the 1,338 or so polling venues around the country’s central, western, northern and eastern divisions • receive and prepare the thousands of ballot boxes and collapsible voting booth being ordered from overseas • step-up its voter education programmes across all news media • supervise the candidates’ nomination day finalise its unique ballot paper by compil- ing the National Candidates List • obtain Party List from each of the parties approved to contest the September elections. For now, the removal of political party symbol from the ballot paper is a contentious matter. None of the registered political party Islands Business contacted was happy about the use of numbers, instead of party symbols on the ballot. The People’s Democratic Party president Lynda Tabuya seems to think Fiji’s 22 Islands Business, June 2014

electoral decree was designed to confuse the voter. “The Supervisor of Elections has made a ruling after appeals from political parties that there will be no party symbols on the ballot paper,” she said. “Also candidates will be allocated and identified by a number three weeks before the elections. “Imagine 300 candidates each with a number and candidates will have only three w e e k s t o c a m p a i g n o n t h e i r n u m b e r. “This will ensure that the political party that controls the media and has taxpayers’ money at its disposal benefit the most. One guess as to which party that is?” Mahendra Chaudhry, former Prime Minister and Fiji Labour Party Leader agreed. He said a ballot paper without a party symbol would be confusing for the less educated and the elderly. He said in the event the 300 names of candidates made it to election day, the whole process would be chaotic and there was no valid reason for removing the party symbol. Chaudhry’s participation in the September poll is doubtful though. Provisions of the new electoral decree disqualifies him from contesting, given his recent conviction in court for breaching Fiji’s Exchange Control laws for an offshore bank account that he kept. The Labour Leader has vowed however to challenge his disqualification. Confronted about the political parties’ concerns about the removal of party symbols from the ballot paper, Chen Bun Young as chair of Fiji’s Electoral Commission said the Commission was aware of these concerns. He was non-committal however on whether changes would be made. He could only confirm that the Commission was looking into the complaints. “At this stage it is too early for us to definitely say we are going to exclude or we would include it,” he said. Another contentious issue for Fiji’s political parties has been the declaration of one single constituency in Fiji’s new look 50-seat parliament. Political parties say not only would a single constituency prove to be a logistic nightmare, the cost

of campaigning will be too prohibitive as well. Fiji’s longest surviving party the National Federation Party and its young female lawyer president Tupou Draunidalo did agree a single constituency could be expensive to campaign in. But she was of the view that her party would need to counter cost with an effective campaign strategy. “There are pros and cons so in some areas where candidates have a national appeal we will go with that but for others who are well known in their pocket communities we will see how well they can gather support,” she said. Her counterpart at the PDP, Tabuya said the one single constituency in this election was forcing political parties like hers to be imaginative in planning their campaign. The former University of the South Pacific lecturer in law who was forced to choose between work and party said the single constituency meant the political party that controlled the media and has the most money at its disposal benefited the most. A c c o r d i n g t o h e r, w h i l s t t e l e v i sion and radio had the greatest reach there was only one political party that had majority control of media space and airtime. “Campaigning of all 50 candidates all over Fiji is expensive in terms of travelling to all the voters to educate them on our candidates,” she said. “To have an effective campaign for our party to reach the most amount of voters, we will need approximately F$250,000. “With the limitations in political funding and constant auditing, we are limited to a piecemeal budget which we are aiming to be around F$100,000, relying on membership dues and fundraising.” PDP leader Felix Anthony who had to resign from his job as a trade unionist in keeping with the provisions of the electoral decree said while the elections process guarantees one person one vote, the one vote did not equate to one value. “People living on islands and rural areas would find it difficult to elect a representative of their own,” said Anthony. “The current system benefits

Cover Report

Supervisors of Fiji’s 2014 elections ... From left to right: Deputy Supervisor of Elections Micheal Clancy, Supervisor of Elections Mohammed Saneem, Director Operations Robin Boyd and Polling Stations Coordinator Paula Navunisaravi. Photo Robert Matau

candidates from densely populated areas.” Anthony used to be a stalwart of the Fiji Labour Party, but differences with his former Party Leader caused him to help found PDP. His former leader felt very strongly too against having one single constituency in Fiji. “Having an area representative made it easier for the people to hold someone accountable when issues affecting their lives arose,” said Chaudhry. “This new development means no one is accountable to any specific area.” Chaudhry also said the urge to hold a one day election in Fiji was too ambitious and could not be achieved as there were serious logistical problems for voters plus he felt the Supervisor of Elections lacked the experience to manage such an enormous responsibility. Voter education however seemed to be the large, unknown entity as Fiji prepares for its first general elections after its last elected government was ousted in a military coup on December 5, 2006. The short period to voting day was not the only thing that was worrying political parties, but it was also the fact that Fiji would be using a different version of the alternate voting system. This new version was something similar to New Zealand’s mixed member proportional, but with its own Fijian twist. In explaining how it works, Section 104 of Fiji’s electoral decree said that after eliminating any political party or any independent candidate that did not receive a total number of votes that is at least 5% of the total number of votes received by all the political parties and independent candidates, then the Electoral Commission must proceed to apply an equation of allocating parliamentary seats to successful party candidates. “The Electoral Commission must then proceed to divide each of the remaining totals of each political party (and not the total under the name of any independent candidate) successively by a series of numbers beginning with 2, 3, 4, 5, 6, 7, 8, 9, 10 and thereafter by every whole number until the number that is equal to the total num-

ber of seats being contested in the election, and the quotient of each successive division shall be recorded on the Candidate Allocation Form in successive rows under the names of each remaining political party,” subsection 5 of Section 104 of the electoral decree explains. “Each quotient shall be rounded off to the nearest whole number. Once the quotient of each successive division is recorded on the Candidate Allocation Form, the Electoral Commission must then proceed to ascertain, from a comparison of all the quotients on the Candidate Allocation Form, the highest quotients equal to the total number of seats being contested in the election, which, for the first general election of members of Parliament held under the Constitution, shall be 50.” SODELPA, successor to the previous SDL Party of ousted Prime Minister Laisenia Qarase tend to think that it had recommended such a system of voting. SODELPA’s General Secretary Pio Tabaiwalu said however his party had proposed the closed voting system, something similar to New Zealand’s Party List, where voters were only given one option on the ballot papers, and that was to vote along party lines. “If the party wins 50 per cent of the votes, it is entitled to 25 seats so the first 25 candidates (in a 50 seat parliament) on the Party List go to parliament.” But Tabaiwalu said the system now advocated by Fiji’s electoral system was somewhat different because instead of using party symbols on the ballot papers, it was using numbers only. This made it complicated and confusing, said Tabaiwalu. He said by making it harder for the voter, the system was violating an individual’s basic right to make his or her own choice of representation. He said it looked like the system was devised to eliminate the historic significance of political parties - which would give the current government an advantage. “All over the world millions of people vote for their candidates by just ticking the party and

political parties are a cornerstone of democracy. “The Electoral Commission should be held answerable for this very confusing voting system as a member of the Commission has clearly been an advocate of such a system evident by his public presentations on the issue.” He said the media has been reduced to propagating what they think was acceptable to the regime. Tabaiwalu and SODELPA also believe that the moral message of the 2009 Fiji Court of Appeals decision still stands. Contacted at a press conference at the Fijian Election Office late last month, Young, the Fijian Electoral Commission chair was optimistic that come September 17, Fiji would be ready for the polls. He confirmed that the equation on allocation of parliamentary seats was borrowed from New Zealand’s system with the help of one of their Electoral Commissioners, Father David Arms. “We have our own Commissioner Father David Arms who is in charge of that and I have told him to put it into very simplistic form so everybody can understand,” Young said. “You will see our (Electoral) Commissioners have a speciality each - he is from New Zealand and he has been involved in elections systems here in Fiji before.” Young expressed optimism that the Elections Office would meet all their deadlines and should be in a position to conduct free and fair elections by September 17. He said the Supervisor of Elections Saneem had briefed the Commissioners on the progress of preparations and they had spent a fair bit of time talking about the requirements and logistics required. “I think we are on track and as far as we can see there is really nothing that should prevent us from meeting those deadlines.” Editor’s notes: In the compilation of this story, Islands Business had repeatedly sought an interview with Supervisor of Elections Mohammed Saneem. His office instead asked for written questions, which were duly sent but no response has been received by press time. Islands Business, June 2014 23

Politics

New Caledonia elections reaffirm divisions

NEW CALEDONIA

this time by more than 600 votes. Supporters of independence won 18 of 22 seats in the Northern Assembly, with Palika and UC both holding nine seats, against three for CE and one for FPU. The independence movement Front de Libération Nationale Kanak et Socialiste (FLNKS) made a significant advance in New Caledonia’s Southern province, where indigenous Kanaks are a minority. Running on a joint “Rainbow nation” ticket with other pro-independence groups, the FLNKS increased representation from four to seven seats in the 40-member Southern Assembly. In the aftermath of the elections, key antiGael Yanno and Sonia Backes (6). By Nic Maclellan independence leaders met to decide how they They face off against 25 members of indePhilippe Gomes is a happy man. would cooperate after the bitter polemics of the pendence parties (an increase of two from the His anti-independence party election campaign. Leaders of CE, RUMP and last elections in 2009). Union Calédonienne Calédonie Ensemble has done UCF agreed on a “governance pact,” which allo(UC) and the united Rainbow ticket have 15 well in New Caledonia’s elections, gaining more cated positions in key institutions: CE’s Philippe seats, UNI / Palika has seven, while three other seats than the conservative RassemblementMichel was nominated as Provincial President independence parties have one seat each: Parti UMP (RUMP) Party that has long in the Southern assembly; UCF dominated New Caledonian politics. would be supported for Speaker In the 11 May vote for three provinof the Congress; while RUMP’s cial assemblies and national Congress, Cynthia Ligeard would be proCalédonie Ensemble (CE) improved posed as President of the Governits vote over two major conservative ment of New Caledonia. rivals. The result for CE is the latest In spite of breaking with RUMP, in a series of defeats for the previously UCF’s Gael Yanno has again failed dominant RUMP, which suffered a to win widespread support, folmajor split last year, leading to the lowing his defeat during March creation of the breakaway Union pour municipal elections by CE’s Sonia la Calédonie dans la France (UCF). Lagarde, the first female Mayor In a post-election interview with of Noumea (Lagarde had already Islands Business, Gomes stressed that defeated Yanno in 2012 , taking his party’s victory in the Southern his seat in the French National province comes at a crucial time, as Assembly). New Caledonia moves to a decision Gomes, who is also a deputy on its future political status. in the National Assembly, told “We are entering into a special Islands Business that he would period – the exit from the Noumea hold his seat in Congress but not Accord,” he said. “We must negotiate accept another major position in with the independence movement the local institutions because “I and prepare for a referendum. Facing want to devote myself to the prosupporters of independence like Paul cess of negotiating the exit from Neaoutyine and Roch Wamytan, I the Noumea Accord.” think that New Caledonians wanted New Caledonian politics is someone solid. They decided that entering uncertain times. Beyond that person is me, instead of the Rasthe division of posts, there are semblement.” fundamental policy differences beWhile stressing the importance of tween the three anti-independence maintaining ties with France, Gomes parties, on issues such as the aldistinguished his party from the other location of major nickel deposits pro-French coalitions: at Prony and Pernod, the flying “I think that we’re more nationalist, of the flag of Kanaky alongside even though we don’t support indethe French tricolour, or whether pendence. We want New Caledonia to to legalise the rights of squatters remain within the French Republic, Roch Wamytan led the united Rainbow ticket in the South. (Photo: Nic Maclellan) living in peri-urban settlements but also that we should govern ouraround Noumea. selves. That’s the difference between Sooner rather than later, the us and other pro-French parties that clash of policies is likely to once have remained very strongly dependent on again divide the anti-independence movement, as Travailliste, Union pour Construire les Loyautés, France. France is 22,000 kilometres away!” occurred with the short lived “Republican pact,” and Dynamique Autochtone / LKS. Stressing his support across Noumea and the created in similar circumstances after the 2009 In the Kanak-dominated north and Loyalty Southern province, Gomes noted: “Even those Congressional elections. Islands, the leadership of provincial assemblies people who normally don’t agree with my ecoAs Islands Business goes to press, members of remains the same. In the Loyalty Islands, Pronomic and social policies, they now say, ‘Gomes, the Union Calédonienne also announced that vincial President Neko Hnepeune was returned he’s more certain’. In the southern suburbs of they were challenging the results of the Southern to office after a strong showing by his UC ticket. Noumea – the posh suburbs that have never provincial assembly, because of a long-standing All 14 seats in the Loyalty Islands assembly were voted for me before – this time, I won in all dispute over the eligibility of thousands of French won by supporters of independence. those suburbs.” voters. With hundreds of cases currently before In the Northern Province, Paul Neaoutyine of In the incoming Congress, the three conserthe courts, a re-run of the Southern election the Party of Kanak Liberation (Palika) has been vative groupings have 29 members: Calédonie will disrupt attempts to implement the Noumea re-elected as President in every poll since 1999. Ensemble (15), the Front pour l’Unité (FPU) Accord and set a date for a referendum on selfHolding off a strong challenge from the UC list led by Cynthia Ligeard (8) and the UCF led by determination. led Gilbert Tyuienon, Neaoutyine’s UNI list won

Loyalist and independence parties face off

24 Islands Business, June 2014

Politics

NAURU

MPs on suspension from left to right: Hon. Roland Kun, Hon. Matthew Batsiua and Hon. Dr Kieren Keke. (Photo: Supplied)

Three Opposition MPs suspended in Nauru Crackdown against critics continues By Robert Matau Police intervention was required twice in Nauru’s parliament as government and opposition MPs clashed over the suspension of three Opposition members last month. The standoff that has been brewing for sometime flared when the island’s legislature passed a government motion for the suspension of three Opposition MPs, namely Dr Kieren Keke, Member for Yaren; Roland Kun, Member for Buada and Mathew Batsiua, Member for Boe. Government used its majority to get the motion passed. On this particular day, May 5, Dr Keke was the only affected MP that was in parliament. His two other colleagues were overseas. Drama ensued when Dr Keke refused to vacate his seat after the motion was passed, and when the Speaker ordered police officers to escort him out of the chambers, other opposition members of the House surrounded Dr Keke and told officers to leave their colleague alone. The Speaker was therefore forced to adjourn the session. The following day, Dr Keke turned up to parliament house with a crowd of supporters. Although police numbers have been beefed up in parliament, the Speaker took no chances and again cancelled sittings. Justice and Finance Minister David Adeang had proposed the motion to suspend the three MPs after accusing them of making statements to the foreign media that were damaging to Nauru’s development. Adeang claimed the people of Nauru were becoming increasingly worried at the behaviour

of the three MPs. “There is a place to argue your point and that is here in the parliament. These MPs have done what no other country would deem acceptable – use the foreign media to trash our international reputation,” Minister Adeang said. “They were suspended due to their deliberate attempts and damaging comments to foreign media undermining the good work of the Waqa Government to introduce Bendigo Bank to the island, and which also led to concerns raised by donors, and considerations to suspend aid programmes to Nauru.” Adeang accused MP Keke of trying to incite a riot by organising his constituents and supporters to mass outside parliament. “Government will not tolerate this lawlessness, but has given the MPs the option of settling the matter peacefully.” The three suspended MPs had featured prominently in the international media since Minister Adeang ordered the deportation of Nauru’s Chief Magistrate Peter Law and later rejected the entry visa to Nauru of its Chief Justice Geoffrey Eames earlier in the year. After the deportation, Bendigo and Adelaide Bank sent a team to carry out due diligence on its plan to resume commercial banking on the island. That visit resulted in the Bank’s decision to change its plans. Instead of a full commercial banking operation, Bendigo and Adelaide Bank opted for a smaller and much reduced agency option. Both Adeang and the Opposition MPs have blamed each other for the Bank’s change of heart. Speaking to Islands Business, Dr Keke said

their purported suspension from parliament demonstrated the extent government would go to hold on to power. He said the only people that have been damaging Nauru’s development have been the current government. “They would like to shift the blame for their failures on the Opposition, but everybody can see and everybody knows who is causing Nauru’s demise,” Keke said. “Further, everybody knows that any obstacles to development that may have arisen since they have been in government are their own fault, and are not because Opposition MPs have had the odd interview with the foreign media. “This government surely has an exaggerated view of the influence a few opposition MPs can make by simply expressing a few sentences on overseas radio once in a while. If this were true, being in Opposition would be very easy.” Dr Keke said all they had been doing was in keeping with the role of the Opposition, which was to scrutinise the workings of government. “This is why since 1968, we have had question time, debates, select committees and all the other mechanisms of parliament to enable the opposition and non-government members to scrutinise the government and to take them to task for any failures,” Keke said. “We have all suffered and see what happens when we allow a situation where the government does what it wants and nobody knows what they are doing and nobody questions them. “This is how things were in the 80’s and 90’s and we all saw the suffering when Nauru crashed in 2000 as a result of the lack of parliamentary scrutiny.” “We will not allow the same to happen to Nauru today because nobody scrutinises this government and its many failings and corrupt self-serving actions.” According to the Opposition MP, there were areas like health care, school buildings and electricity supply that people in Nauru wanted addressed. Instead, he accused the Government of President Waqa of removing any official who questioned any of their policies or actions. “This Waqa/Adeang Government is ruling by fear and personal favour,” claimed Dr Keke. Islands Business, June 2014 25

Business

The Spirit of Heal with ExxonMobil PNG’s first shipment of liquefied natural gas bound for Japan. (Photo: Supplied)

LNG project absorbs skilled workers in PNG Calls for more job training By Davendra Sharma Operators of Papua New Guinea’s new liquefied natural gas export company have trained nearly 10,000 locals for production and delivery roles as the region’s biggest commercial project rolls off the ground next month. But the mega-rich LNG venture may still face a shortage of relevant skilled workers and the country of 7.7 million would have to turn to neighbouring countries if not Asia for low-wage workers to fill demand in the US$19 billion (K$52 billion) operation. “We have provided a wide range of training opportunities to enhance the skills and knowledge of our PNG workforce,” Australian Managing Director of Exxon/Mobil Peter Graham told journalists in May. “We recognise that making the most of energy resources in this country is about more than LNG production - it’s about developing people and capacity and creating and delivering long-term benefits to local communities.” Graham noted the project management has invested more than 2.13 million hours in training 1600 locals in PNG – including about 30 per cent on women - for specialist roles at the training facilities in Port Moresby and the Highlands. Highly special skilled training have also prepared 140 operations and maintenance technicians to operate the Hides gas conditioning plant and LNG plant during production. 26 Islands Business, June 2014

The lucrative LNG sector will also create numerous side industries, for which the project owners have directly trained, sub-trained or mentored for the months and years ahead. Shortage during construction But project manager of Daewoo E & C – the Korean firm contracted to build the plant – told a PNG-Korea Trade and Investment Fair in Port Moresby last month that the construction process was difficult with huge shortage of technical and expert locals, in fields like electrical and mechanical. Before recruiting expatriates, firms operating in PNG need to submit plans to local department of industrial relations outlining the extent of training the business will give to locals for future positions. Locals from PNG could only fill 11 per cent of the construction workforce during the development stage forcing the Korean company to recruit hugely from the Philippines (60%), Thailand and Bangladesh, said Daewoo’s Young Hoo Kim. The plant site – which commenced July 2011 and took 35 months to polish and shine – showed PNG is not ready for future high-profile projects with inadequate labour expertise in various leading professionals. At the peak of the project’s construction phase, the contractors employed nearly 5,000 men and women but the jobs went begging as locals were not suitably qualified to

take them. Kim cautioned that PNG should seriously invest in training its workforce if further resource projects like a second such LNG plant being speculated, involving French and Australian interests, are thoroughly examined and implemented. Australian Oil Search and Paris-based Total Oil were in March given thumps up by the Peter O’Neill Government for the country’s second LNG in rich Elk and Antelope gas fields, about 300 km away from the first LNG site. PNG could resort to procuring skilled workers and professionals from neighbouring Vanuatu, the Solomon Islands, New Caledonia as well as Fiji – all of whom are members of the Melanesian Spearhead Group under which workers can freely move around between these five island nations. Large-scale modern mining operations – like Bougainville, Ok Tedi and Misima have been fraught with employment problems – employment and recruitment at the beginning of each of the operations have been problematic. The first mine in Bougainville in the early 1970s encountered the same issues as Ok Tedi, the country’s second largest open-cut copper and gold mine in the western province. Just as Bougainville turned to Australians to fill key professional and technical expertise roles, Ok Tedi relied heavily on Asians. By the time Misima middle-sized gold mine got off the ground in 1988, the Port Moresby Government had a ‘Preferred Area Employees’ (PAE) law in place – an influential criteria for the recruitment of labour for the mines. The UNDP/International Labour Organisation asserted in 1993 that costs involved in preparing local labour for mines like Ok Tedi proved to be a burden on developers – Ok Tedi had to wait for eight years to achieve a profit of nearly US$2 billion invested in the construction and development of the mine. But since O’Neill came to power in 2011, he has been a driving force to encouraging employers to recruit locals and also increasing their wages. He has brought good news to the bottom bracket of PNG’s workforce including cleaners, tea-boys, drivers, rural workers employed by companies in fisheries, logging, agriculture, security, hospitality, mines and now gas production. While employment prospects prosper for locals and skilled and professionals from surrounding countries with the impending LNG start-up, the Governor of Bank of Papua New Guinea is sceptical about sudden upsurge in foreign exchange earnings. No revenue windfall in 2014-15 Production from the Exxon/Mobil project will start this month, ahead of schedule – paving way for some revenue for partners Oil Search and Santos, Graham said. Stakeholders in the LNG venture including the government have been cautioned not to expect a windfall in revenue in the first year of production, a report from the central banking agency said. “Export receipts and revenue for the government may be minimal and therefore expectations of windfall revenue and any associated appreciation of the kina might not materialise in the near term,” BPNG Governor Loi Bakani said.

Business 50 buyers including those from long haul markets, Vuidreketi said the first ever regional tourism exchange worked. It also helped that the regional event was hosted right after the conclusion of New Zealand’s annual tourism exchange. For 2015, Vuidreketi says his team will return to the drawing board and study whether they could hold SPTE right next to Australia’s Tourism Exchange. “We want to make SPTE the premier regional tourism event of course. We all recognise how difficult it is to attract buyers in long haul markets to come to the islands so by getting all 16 island member countries of SPTO under one roof in SPTE makes it so convenient for them.” Samoa Tourism Authority Papali’I Selling Tonga to the world...Representatives of Tonga’s tourism sector meet a buyer at the SPTE 2014. (Photo: Samisoni Pareti Matatamali’I Sonja Hunter says with tourism arrivals into the Pacific reaching 1.6 million last year and projections that it would increase further this year, the islands need to identify a platform to capture such growth. “An ideal platform is for tourism operators and providers in the islands to connect directly with decision makers in their sources markets,” says Hunter. “Our purpose is for this South Pacific Tourism Exchange to provide that platform and contribute to capturing the projected growth of tourist arrivals into the Pacific.”  Hunter is also chair of SPTO.

Selling the Pacific to the world under one roof SPTE 2014 a ‘success,’ says organisers By Samisoni Pareti Pacific’s national tourism offices have given thumbs up to efforts by the South Pacific Tourism Organisation (SPTO) to organise a regional tourism buyer and seller market. The inaugural South Pacific Tourism Exchange was successfully held for two days at the upmarket Pullman Hotel in downtown Auckland on 22 and 23 May. “A regional approach to selling the South Pacific always works,” says Dwayne Bentley, Manager Marketing & Promotions with Samoa Tourism Authority. “Having sellers and buyers all under one roof makes it easier and convenient for everyone.” Similar sentiments were echoed by Linda Kalpoi, general manager of the Vanuatu Tourism Office. “For us in the islands, it is vital that we get buyers especially those from our long haul markets to be at one place. It will be very difficult to have them visit us at our individual islands so this concept of a seller and buyer’s market is ideal.” Vanuatu tourism was heavily represented at the SPTE 2014 with a total of seven hotel, resort and tour operators in attendance. Kalpoi’s VTO was also a sponsor. Largest participation from the Pacific’s sellers was Tahiti however, with a total participation of nine industry partners comprising resorts, yacht charter and tour operators with the leadership of Tahiti Tourisme. Notable absentee was Tourism Fiji although the country’s industry key players in resort and tour operators were in attendance.

Fiji Airways together with Air New Zealand were major sponsors of the twoday event. For buyers, a total of 50 participated representing 15 countries from around the world. These included wholesalers from Australia, Belgium, Canada, China, Finland, France, Germany, Italy, Netherlands, New Zealand, Switzerland, Sweden, United Kingdom and the US. “Our aim all along was to make SPTE a one stop shop for all, for buyers and sellers,” explains Ilisoni Vuidreketi, Chief Executive of SPTO. “Being our first SPTE, we have been overwhelmed by the response and naturally come next year we will work on a bigger plan and concept.” With 60 sellers and Islands Business, June 2014 27

Business

FSM’s largest construction project...What started out as a US$25million project ballooned into a more than US$30 million job. Photo: Pacific International

Big construction project in Chuuk in limbo Legal wrangle holds up road work By Giff Johnson After huge cost overruns, major delays and problems with faulty designs, the largest construction project ever undertaken in the Federated States of Micronesia is now at a standstill with multiple lawsuits looming. Majuro and Guam-based Pacific International Inc (PII) completed about 90 percent of a road and sewer project in Weno, the capital of Chuuk state in the FSM before it was terminated last November by the FSM’s Project Management Unit. The contract was originally budgeted for US$25 million but costs escalated significantly during construction that started in 2009 because designs provided to PII contained many errors causing repeated changes, delays and millions of dollars in additional costs. After terminating PII and ordering it to demobilise at the end of last year, the FSM called in the multi-million dollar bond PII had posted for the construction project. United States-funded infrastructure projects in the FSM require a 100 per cent bond be posted by contractors. However, an independent engineering firm, hired by the Saipan insurance company holding the bond, determined that the FSM Government — not PII — mismanaged the construction project. The detailed evaluation of the construction project by engineering firm J.M. Robertson, Inc concluded: “The owner (FSM Government) was found to be in default of the contract for nonpayment of amounts contractually and legally due the contractor (PII) and for other reasons. That included issuing bid documents…that were so highly defective as to be unusable.” The J.M. Robertson report touched off another 28 Islands Business, June 2014

controversy, as the FSM demanded retraction of the report and then filed a complaint with a Guam engineering review board. But J.M. Robertson stood by the report, saying it would stand up to independent review. PII was the only construction firm to bid on the project in 2009 — an initial indication of the challenge to outside contractors doing business in the FSM. As it prepared to get underway in late 2009, PII engineers kept discovering problems with the design plans they had been given: existing sewer connections that were several feet higher than specified in the designs, no provision for lateral sewer hookups to individual households — without which, the new sewer system would be installed without hooking up any customers, sidewalks listed for locations where there was a cliff drop off next to the road and no provision in the drawings for a bridge or other means for supporting the sidewalk, and other issues. The fact that “all errors in the design were never corrected and some came to light only as actual work in the field got underway” was compounded by the FSM Project Management Unit (PMU) that, “in spite of significant new change orders emerging and older ones not being settled, most of which justified additional time… refused to extend the completion date beyond 25 November (2013),” J.M. Robertson’s report said earlier this year. The design flaws caused PII to seek time extensions of more than two years and US$7.2 million above the tendered contract price of US$25 million, of which the PMU granted less than half. The additional time and cost “has come about as a result of mismanagement of the project by the PMU,” the J.M. Robertson report said.

As a result of the FSM ending the contract with PII, over 150 workers including a large number of Chuuk residents, were put out of work last November and the project halted with 90 per cent of the work completed. U.S. Government officials met with FSM Government officials at the end of April to discuss options for a “litigation-free” way of completing the work. Unless the FSM reengages PII to finish the work — which the J.M. Robertson report says is the only viable way to complete the construction project — it appears apparent that multiple lawsuits will develop. And there has been no indication from the FSM that it has any inclination to bring PII back to finish the work. The dispute expanded at the end of April to include the FSM Government triggering a mandatory alternative dispute resolution procedure against Lyon Associates of Honolulu, which was the design contractor for the road and sewer project in Chuuk. The FSM Government is reportedly seeking over $4.6 million in damages from Lyon while the dispute with PII remains in limbo, with PII seeking millions of dollars for work completed before its November termination. In the meantime, the U.S. Government has put a hold on funding for the Chuuk project until a workable plan for completing the project is resolved. Despite the ongoing controversy over the J.M. Robertson report and the hold on Compact construction funding, the FSM Project Management Unit announced in mid-April that it had awarded a contract for completion of the Chuuk road project to Saipan-based contractor, GPPC, Inc. But the U.S. Interior Department has shown no willingness to reinstate the project funding and put up additional grant funds for a new contractor to be brought in. The FSM is estimating that it will cost at least $7.7 million to complete the project. The J.M. Robertson report was blunt in its assessment of the FSM Project Management Unit’s handling of the Chuuk project. In addition to undermining any opportunities for settling matters with PII, the PMU violated the bond agreement with Century Insurance by “soliciting bids from other contractors to complete the work…even before the Notice of Termination was issued to PII and Century Insurance Company,” the report said. Because the PMU refused to negotiate in good faith with PII, J.M. Robertson recommended that discussions for a negotiated settlement “take place without senior PMU personnel who have been so strongly opposed to a negotiated settlement.” “What we want is vindication and verification that PII acted professionally and responsibly and in accordance with contract documents,” said PII CEO Jerry Kramer in mid-May. “We want a decision by a competent authority that the failure at Chuuk is a result of the management by the PMU, and we want to recover our losses and get paid for what we are entitled.” He said PII has handled over $300 million in projects around the region and has never walked away from a project. If the FSM selects a different contractor to complete the project, “so be it,” he said. But Kramer pointed out that PII “had a large, hard working Chuuk crew that showed loyalty and lots of local community support that want us to complete the project. If conditions were acceptable we would consider accepting reinstatement.”

Business

10,000 foreign workers to go in the Marianas

about 40 per cent of its employees when the so-called CW programme ends in 2014. “CW” stands for Commonwealth-only worker. Legislative fix Delegate Gregorio Kilili C. Sablan (Ind-MP) has expressed frustration over the U.S. Labour Secretary’s lack of announcement of his decision with only weeks before the July 4 deadline. And if he decides not to extend the foreign worker programme on July 4, everyone would only have five months to prepare. The delegate made his bluntest public statement about the U.S. Labour’s lack of announceBy Haidee V. Eugenio extension is a “contentious” issue. ment, saying it “has been unable or unwilling to “I nonetheless urge you to continue the necmake a decision” for “14 months.” The delegate “It will be a disaster,” said Juan T. Gueressary efforts to prolong the existence of this has also set his sights on a legislative fix to extend rero, general manager of the largest and oldest programme, which is so critically important to the transitional immigration programme, in case bakery in the Commonwealth of the Northern our economy. The bottom line is that CNMI’s the U.S. Labour Secretary does not extend the Mariana Islands, as he ponders on the fate of this economy is unprepared at this time to withstand programme administratively. Two omnibus terriU.S. territory if and when some 10,000 foreign a mass exodus of alien workers,” the CNMI tories bills and one stand alone bill seek to extend workers that the local economy has relied upon governor told Perez in a follow-up letter in May. the CW programme by five years or up to 2019. are sent back to their country of origin on DeThe governor said this comes at a time when But not everyone is convinced of the need to cember 31, 2014. plans are now underway to build 2,600 new hotel extend the CW programme. Herman R. Deleon Many say such en masse exit would plunge rooms, the first series of major projects initiated Guerrero, president of the Northern Marianas the CNMI into an economic abyss that’s much on the islands “in over a decade” and are expected Descent Corp. said there is “no compelling reason worse than it has ever seen. That’s because the to be the “turning point” for the local economy. to grant a five-year extension to all classes of jobs existing U.S. citizen or local labour pool is simply He said the potential adverse effects of zeroingpresently occupied by foreign workers.” not enough to help the economy grow, let alone out the Commonwealth’s non-resident worker He said many of the jobs held by foreign survive between now and the end of 2014. programme at the end of 2014 would devastate workers can be easily taken over by locals or “Even restaurant food that community memthe CNMI’s immediate and future economic and U.S. workers, including cashiers, bank tellers, bers have come to love will never feature again business growth. gas attendants, construction helpers, if we lose our valuable foreign chefs and the like. and cooks,” said Guerrero, a former “The foreign worker population president of the Saipan Chamber of has already outnumbered the U.S. Commerce, the largest business orcitizens’ voting population, and this ganisation in the CNMI. will certainly marginalise and displace Still, there are some who want to the local U.S. citizens in their homesend foreign workers packing, except land,” he said. for critically needed ones. If the tranThe U.S. Department of Homesitional foreign worker programme is land Security (DHS) is also capping not extended, the CNMI would lose the number of foreign workers in thousands of its relied-upon profesthe CNMI, until it reaches “zero” by sionals and skilled workers – from December 31, 2014. In fiscal year 2012, registered nurses to teachers, accounthe limit was 22,416. This dropped tants, architects, engineers, reporters, to 15,000 foreign workers in FY 2013, technicians, mechanics, masons, still complying with the law to reduce plumbers, house workers, care givers, cooks, farmers, fishermen and beauti- Foreign workers…Some of these workers will have to leave CNMI by the end of 2014 the number of foreign workers yet if the US Secretary of Labour does not decide their fate by July 4. Photo: Haidee Eugenio provides some wiggle room for the cians, to name a few. CNMI to hire more when its tourism Guerrero said it is nearly impossible numbers are up and major developto train or educate anyone to become ments are in the pipeline. a nurse in less than a year, for example, or to The governor also pointed out that such a For 2014, DHS capped the number of foreign become a certified teacher in just six months. result would be in “clear violation” of the Conworkers in the CNMI at 14,000. That’s a long U.S. Labour Secretary Thomas Perez has until gressional Intent of Section 701 (a) (1) (A) of U.S. way from zero. July 4 to decide whether to grant the CNMI’s Public Law 110-229, which calls for the “orderly request to extend the transitional immigration phasing-out of the non-resident contract worker Humanitarian concerns programme for five years or up to 2019. But programme of the Commonwealth.” Besides the economic issues and the potential the mixed signals from the U.S. Department of “There are simply not enough U.S. citizen for skyrocketing costs of goods and services with Labour since 2013 continue to cause uncertainty workers in our islands at this time to bring a shrunk consumer base, the CNMI’s delegate to among CNMI employers asking whether they these projects to fruition and given the ComU.S. Congress is also pointing to humanitarian could still keep their businesses open without monwealth’s somewhat unique economic circoncerns involving foreign workers that have enough and qualified workers. cumstances, history and geographical location, lived and worked in the Commonwealth for Foreign workers in the CNMI are at a an extension of the CNMI-Only Transitional years and decades. loss whether they would still have a job after Worker Classification programme is an absolute “Waiting until the last minute (to decide on 2014. Many existing businesses and prospective prerequisite for success,” the governor said. extending the CW programme) leaves 9,617 investors are holding off expansion or new investInos and other leaders are asking the U.S. Govforeign workers hanging in the breeze. Many of ment plans without knowing whether they would ernment to give the CNMI more time to develop these people have lived in the Northern Marihave enough workers in just half a year from now. and train its own residents or U.S. citizens to anas for decades. They have families and homes fill the vacancies that foreign workers will leave there,” Sablan told the U.S. Labour Secretary at behind should they need to exit after the end of ‘Contentious’ a committee hearing in Washington, D.C. “If this year. Small to large businesses are going to Governor Eloy S. Inos has renewed his call for they have to be gone by the end of this year, we the U.S. Labour Secretary to allow the CNMI be impacted one way or another. The 426-room owe them the courtesy of letting them know as to continue to have immediate access to foreign Hafa Adai Beach Hotel in Garapan, for example, soon as possible.” workers beyond 2014. But he acknowledges the sees “difficult” time ahead if it loses access to

US Labour Secretary has until July 4

Islands Business, June 2014 29

Aviation

Remote airstrips challenging...Air Marshall Islands officials say some runways on remote outer islands in the country are little better than dirt roads and urgently need improvements to reduce damage to planes. Photos: Giff Johnson.

Air Marshall Islands’ ongoing downward spiral Lack of money fuels air woes By Giff Johnson In 2003, an ADB report said: “The financial position of Air Marshall Islands is precarious—it has never made an operating profit and depends heavily on government subsidies.” Ten years on, a report issued late last year had this to say about the government-owned national airline: “Air Marshall Islands has been a company in crisis for many years—continually operating at a loss, with government support only on a crisis-management basis, with weak management and government involvement in operations.” Despite reports detailing the airline’s woes, and pleas from the Marshall Islands Chamber of Commerce and donor agencies, the government has shown little interest in either reforming the airline or letting private companies operate domestic air services. This has undermined private sector tourism development because no one can count on planes arriving or departing on schedule. The country’s flagship scuba diving destination at Bikini Atoll, for example, shut down in 2008 after a dozen years of increasingly profitable operations because international divers were repeatedly stranded by irregular air service. For a week in April, both Air Marshall Islands (AMI) planes were grounded—again—waiting for parts and at least one of them would not get back in the air until last month. The larger Dash-8 resumed flying after just a week’s disruption, while the workhorse 19-seat Dornier, which normally services most of the outer islands, was grounded from late March awaiting landing gear equipment, and was down for about six weeks. A lack of funds to purchase needed spare parts continues to hurt the government’s national airline, resulting in longer grounding periods of aircraft that undermine the airline’s ability to 30 Islands Business, June 2014

generate revenue. For the Dornier, replacement of landing gear equipment is required after a certain number of landing cycles or flight hours. It is among aircraft equipment that has a known replacement schedule, but AMI didn’t have the US$50,000 needed to purchase it in advance of the deadline. The national government approved a $100,000 emergency subsidy at the end of March, which allowed for purchase of the landing gear equipment. But this is only one of many parts needed, “and we don’t have the money to buy them,” said airline General Manager Jefferson Barton. Barton said AMI’s woes stem in part from the poor quality of outer island runways that are “killing the planes.” The key for him is to get government action to improve outer island runways as soon as possible, he said. “We’re operating into dirt roads,” Barton said. “You can’t drive a pickup truck at 30mph on the air strips, but our planes land at 100mph.” Still, the government airline faces deeper problems. Last year’s annual economic report on the Marshall Islands prepared by the Graduate School USA Pacific Islands programme detailed the airline’s financial situation: “AMI continues to run major operational losses, totaling an estimated $0.8 million and $1.7 million in FY2011 and FY2012, respectively. These shortfalls have necessitated continued government capital and operating subsidies, which totaled $1.9 million in FY2011 and $2.3 million in FY2012.” Government subsidies needed to keep the airline afloat have been given to the airline consistently over many years without requirement of reform or privatisation. “A review of AMI in 2010 documented major shortcomings in the company’s performance and presented a set of policy reform options for government consideration,” last year’s economic report noted. “A

Chamber of Commerce public forum on AMI in April 2011 was followed up by a policy advisory letter from the Chamber Executive Committee, which argued for more aggressive reforms by the RMI Government. The letter called for, among other things, a new management team, an end to interference in the day-to-day operations of the airline and removal of all elected officials from the board.” None of these recommendations have been heeded and the results continue to be disastrous for the national airline. A report issued in April paints a disturbing picture of passengers load trends in the Marshall Islands. The study compares Air Marshall Islands passenger loads from the 1990s to 2013, showing a serious countrywide decline in the use of AMI. The study concludes that the huge decline in passenger traffic relates to two major issues: out-migration and de-population of remote islands as people move to Majuro and the United States, and worsening reliability of the airline. “There are several obvious reasons for the decline in the passenger loads over the past years starting with outer island migration,” said the recently issued report on AMI. “The trend for outer island people leaving their homes and moving to the U.S. mainland appears to be accelerating over the past few years. The chance of an improved life with better work possibilities is a powerful draw on outer island people especially if there is little improvement to their standard of living. As the passenger numbers indicate, the domestic market appears to be decreasing and without some kind of outer island development will continue to decline.” The report noted that since 2009, both AMI aircraft have undergone heavy maintenance at overseas facilities necessitating months at offshore repair facilities, negatively impacting service in the country. “Another area (of concern) is the continuing acute shortage of aircraft parts that have caused delays and groundings of the aircraft for unacceptable time periods,” the report said. “The result is a considerable loss of revenue and further decline in passenger numbers due to unavailable aircraft. Unfortunately this trend by the airline has resulted in a loss of passenger confidence and a switch to surface transportation, which has reduced passenger numbers even further.” The eye-opening statistics included in the report show, for example, that Enewetak Atoll, one of the airline’s top revenue-generating destinations in the 1990s, had zero passenger traffic last year. Kili, home to Bikini Islanders, was another high-traffic destination. In 1997, the route saw 2,926 passengers travel by plane. Last year, the numbers plummeted to 657. Bikini Atoll had 505 passengers in 1997 when scuba dive tours operated. But with the dive operation closed, last year there was not a single passenger traveling to Bikini on Air Marshall Islands. Airline GM Barton says the company needs government funding to purchase additional aircraft and spare parts for existing planes, and government focus on outer islands runway improvement. Japan recently approved a grant to purchase equipment the government says will be used for outer island runway renovations, offering a ray of hope for the future of remote airstrips. With government funding tight, however, large-scale subsidies for the national airline are a challenge, while reform continues to be shelved.

Climate

Coastal flooding to threaten Vanuatu

Vila and Luganville would be no longer able to function. On Santo, Unity Parc College de Santo and the copra oil mill would all be under water. The country’s regional Agricultural Research Centre would also become home to the fishes. In central Malekula, Norsup Hospital and a school would be below the water level as would Norsup Airport and Lizliz Wharf. In South Malekula, Lamap Wharf and roads will also be flooded. In the southern islands of Malekula known as the Maskylines, the scenario is looking even worse. said the spokesman. Wesley Donald, who is in charge of collectArmed with this technology, the VMS can ing data for Malekula, said that by 2090, there make a wide range of predictions and more will be no one living on the main island of the importantly take action now to prepare for these Maskylines. situations. He said people there are already facing issues The spokesman said the from sea level rise caused by serious inundations which climate change and a major are projected 20, 50 and 90 cyclone would see tourist years from now in Vanuatu sites and marine conservawill adversely affect lives, viltion areas wiped out. lages, infrastructure and other He said people in that important areas of the country. region are already facing Espiritu Santo He said it showed that the health problems with diamain commercial areas of Port horrea, because they use Vila and Luganville are highly bush toilets and improper vulnerable to flooding from systems. He said rising sea Santo tropical cyclones and storms. levels are polluting the waThe two centres are only a ter tables that are currently few metres above sea level and being used. are home to almost 25 per cent On the island of Efate, of the population. The spokesPort Vila, and the villages Efate man said these two key towns of Mele, Takara and Eratap contain infrastructure and would all be severely affectgovernment services crucial to ed, with photos showing the country’s economy. the main commercial area Port Vila “Sadly, much of the counof Port Vila under water. try’s rural population also live At Mele, which is the in low lying coastal areas,’’ said largest village in Vanuatu, the spokesman. the mapping shows the In February 1987, the worst school and infrastructure cyclone in living memory would be at risk later this Cyclone Uma - devastated century. Vanuatu, claiming 50 lives. It Dr Nathan Quadros all but flattened Port Vila and the destruction it from the Cooperative Research Centre for Spacreated cost US$150 million. tial Information in Australia said the collection of Insurers told Islands Business that the dollar data which was done in 2012 and 2013 is to help figure in 2014 for a similar devastating event government and communities better understand would be more than double Uma’s bill. the risk of coastal flooding and make better plans Under the LiDAR mapping, large tracts of Port for the future.

Technology predicts catastrophe By Tony Wilson More than 3000 PeoPle dIsPlaced BY coastal flooding and large sections of Vanuatu’s two main towns inundated is the catastrophic scenario predicted by the end of the century. Coastal flooding is expected to reach disastrous levels in 90 years with the risk increasing significantly with current sea levels already af affecting Vanuatu. This is the dire prediction from the Vanuatu Meteorology Services(VMS) and is based on the latest technology available. In a partnership between the Australian and Vanuatu Governments, the latest technology has been employed to look at the vulnerable coastal areas of Vanuatu. A VMS spokesman said in these areas there is now an urgent need to better understand risks from sea level rise, coastal erosion and extreme events. The technology involved the collection of high resolution topographic and bathymetric data through Light Detection and Ranging (LiDAR) technology which was deployed for priority areas in Vanuatu – Efate, Malekula and Espiritu Santo. He said that LiDAR is an optical remote sensing technology that provides extremely accurate, high resolution elevation data. Airborne LiDAR measures distances (and therefore height or depth) by sending a pulse of light from a laser scanner towards the area being surveyed. It then measures how long it takes for the light pulse to return. For establishing what is at risk in the coastal areas, this data is critical as it measures inundation levels, catchment boundaries and water flow. “So for disaster planning, this data can be used to model storm surge and tsunami inundation,’’

Vanuatu

Islands Business, June 2014

Fisheries

Introduced green snail (Turbo marmoratus) at Lelepa Island, Efate, Vanuatu. Photo by SPC

Revival of a disappearing resource SPC and partners work to rebuild green snail fishery in Vanuatu Human activity has had profound effects on the productivity of fisheries resources. In the future, climate change could have similarly devastating impacts on some fisheries, including the coastal fisheries many Pacific Island communities rely on for food and livelihoods. Resources that have limited geographical presence, and stocks that have been fished to near local extinction, stand a much higher chance of early disappearance. One such resource is the great green turban shell, Turbo marmoratus, commonly known as green snail in the Pacific Islands. Green snail can grow to over 20 cm and weigh up to 3 kg in live weight. Adults live in shallow waters and can be easily caught by free diving and hand picking. The mottled green outer shell and silver pearly interior makes great inlay decoration, buttons, jewellery and souvenir products popular in Asian markets. In the 1970s and 1980s, 80 to 100 tonnes of green snail were exported annually from Papua New Guinea, Solomon Islands and Vanuatu. However, the fishery has now collapsed. Assessments conducted across the Pacific Islands by the 32 Islands Business, June 2014

Secretariat of the Pacific Community (SPC) and others since 2003 have located living specimens only in Vanuatu and French Polynesia. The collapse of the green snail fishery can fairly be blamed on lack of management. High prices – US$ 40–50 per piece for whole shell and US$ 20–25 per kilo of processed shell – contributed to its demise, as did several other factors. Green snail does not occur in the same high numbers as other large shellfish. Only one in every hundred juvenile green snails grows to adult size, so it is highly vulnerable to breeding failure when stocks fall too low. This is exactly what happened in the Pacific Islands – with overfishing of adult stocks in the 1970s, reproduction failed and the resource could not recover. While small numbers of green snail are likely to be alive in remote areas of Solomon Islands and Papua New Guinea, which along with Vanuatu form the easternmost extent of the resource’s natural range, it is considered to be locally extinct in many traditional fishing grounds. A source of food security and one of the few opportunities for

income have been lost. New generations now have little idea what a green snail is and it is questionable whether they will see a living specimen in their lifetime. Its co-existence with people for generations has helped shape customary resource management in these islands. Its loss also means the loss of this cultural value. After the collapse of the green snail fishery in Vanuatu became evident, a national ban on commercial fishing and export was introduced in 2005 for 15 years. As part of the recovery plan, there was some re-introduction of wild stock through the assistance of the Japanese Government, but finding local stock is challenging. SPC carried out a study in 2013 to assess the recovery of the resource. The results of the study, funded by the European Union, showed positive signs – green snail is beginning to bounce back on Efate Island in Vanuatu. The resource, which had declined due to overfishing, has re-appeared on the reefs of the north, west and south of the island. In the southern island of Aneityum, the same study revealed a rare stock that has been spared from the overharvesting that occurred in the rest of Vanuatu. Isolation from market access, effective community management and alternative livelihoods available through ecotourism have worked over the years to lessen fishing pressure on this stock. SPC is now working with Vanuatu Fisheries Department and the Climate Change Initiative of the South Pacific funded through the Secretariat of the Pacific Regional Environment Programme (SPREP) to develop measures to protect the stock of green snail in Aneityum and provide education to assist the recovery of the resource in the country. Assessments are needed elsewhere in the region to locate existing stocks so they can be protected. Green snail is a useful resource and species introductions offer an opportunity to support food security and provide livelihoods, as long as proper biosecurity protocols and effective management measures are put in place. French Polynesia has benefited from the introduction of green snail in the 1960s. Tonga successfully introduced the species in the 1990s and is monitoring its recovery. Several other countries are interested in developing this resource or building the resilience of existing stocks. The challenge now is to protect existing natural stocks from extinction and to allow the stock to recover to sustainable levels to ensure there is sufficient stock to distribute. SPC will continue supporting this work through its Fisheries, Aquaculture and Marine Ecosystems Division, which provides member countries and territories with the scientific information required to manage and develop their oceanic and coastal resources and the technical support and tools needed to put management decisions into practice. For more information, contact Anne Lefeuvre (annel@spc. int) and Kalo Pakoa (kalop@spc.int), Fisheries, Aquaculture and Marine Resources Division, Secretariat of the Pacific Community (SPC).

Sports I rely on my experience and do things that are important to performance and dominate and terminate my opponents,” cautioned Klitschko, who extended his winning streak to 20 for his triumph over Leapai. He said in his 10-year outing on the top of the boxing world of boxing, he has earned the sport’s greatest prize at the expense of experience. “The reality of boxing is a big difference. It’s a totally different stage, a totally different feeling,” Klitschko declared.

Alex Leapai finds it hard going against world champion Wladimar Klitschko. He bowed out with US$1.5m in his pocket on the 5th round. Photo by www.tz.de

Samoa-born Leapai loses fight but $1million richer Declares “bigger, badder” comeback By Davendra Sharma IT was a fight doomed to favour his opponent yet Samoan-born Alex Leapai entered the world stage ring with an outside chance. He had a few die-hard optimists in his corner though – those who thought he could pull off a miracle and silence the undisputed world champion and in the process claim four world crowns – held by Ukraine’s Wladimar Klitschko, 37. Leapai was carrying hopes for all of Oceania – Australia, New Zealand and the island nations. Everyone loves a surprise, a win by an underdog – so had Leapai’s heavy-handed punches struck at the right time, he would have won fame, millions more in prize-money and followers of all sorts. But it was not meant to be for the man who started his career in outback Queensland. Leapai – boasting an impeccable boxing record of 30-4-3 at the age of 34 was stopped in the fifth round after a brutal hiding at the hands of Klitschko, dubbed Steel Hammer for his powerful punching fight career that spans a decade at the top of his sport. The Ukranian put up his four heavyweight crowns at stake during the fight – the WBA, IBF, WBO and IPO against Leapai, often referred to as LionHeart. The big Samoan succumbed to Klitschko’s killer barrage of punches and counter-punches at the world heavyweight showdown held in Oberhausen, Germany late April.

While the pain of losing such a hyped-up career fight will be unbearable, Leapai knows that even in defeat there is victory for him. He earned a cool US$1.5 million for his five rounds. Had he lasted six more agonising rounds against the rock-solid multi-title defender, the outcome could have been promising and different. Leapai’s performance left much to be desired – especially when he put up a great effort but came short of overcoming the improbable. The dynamics of the sport, however, is such that one good strike can make a world of difference – a down-to-the-floor knockout, a quick rise or no response to the referee’s count – all decided in a split second. Klitschko had thoroughly warned Leapai of what was in store for him. Dominate and terminate “I’m a professional athlete since I was 14,” said Klitschko. “That’s my bread. I beat up people for a living.” His clash with Leapai was his 16th title defense – his world reign of 10 years is just second to that of Joe Louis – who commanded the sport at heavyweight level for an unsurmountable 12 years straight. Had Leapai turned the tables on the night, he would have donned the same crowns held by the might of Mohammed Ali, Joe Frazier, Larry Holmes, George Foreman and Mike Tyson. “I don’t have the feeling that I’m better than my opponents, or anything like that, but of course

Minnows to millionaire for Leapai For Leapai, his rise to stardom was a ragsto-riches type story. Born in Lauli’i, Samoa, he later moved to Queensland, where he was better known for his street fights than his professional career – which revolves around his trademark hook and overhand. He is a reformed Brisbane jail bird, Leapai goes to church – is a choir-singing servant of God, drives a delivery truck and loves his family of wife, Theresa and six children – a typical Pacific islander making a living in Australia. He’s only exception now is that he’s a millionaire. Leapai’s trainer, Noel Thornberry first laid eyes on the Samoan at a Queensland gym in 2004. He began sparring at Thornberry’s family fight factory in the food-town of Gatton, Queensland and ever since then his trainer had high aspirations for the beefy fighter, who became Australia’s first world heavyweight boxing title contender in 106 years after knocking the previously unbeaten Russian Denis Boystov in a WBO fight last November. Inspiration from another Samoan great He draws his inspiration from retired heavyweight great, Dave Tua. “The Samoan bowler,” Leapai calls Tua for his better-known hard punches. “You could argue that Alex punches harder than Tua,” Thornberry notes. “Tua had a shorter sharper punch. While (Australian champion) Meehan had that great long, strong punch. “But yes, you could argue Alex has heavier hands than all of them,” Thornberry said as he contemplates a return career for the great Samoan athlete, whose arm alone weighs 25 kilos. For the sake of Samoa, New Zealand and Australia, Leapai vows he will be back with a vengeance to have a crack at the world titles which eluded him at the challenge grudge match. “It is great to see that no matter what the result, Australia still supports me,” Leapai told reporters at Brisbane Airport, where a sea of supporters including Samoan singers greeted their heartthrob. It’ll bigger, badder and stronger “It’s not the end of me, it’s just the beginning,” promised the LionHeart. “We all get knocked down, you just have to get up and keep going.” “Australia, the LionHeart will be back – bigger, badder (and) stronger.” Encouraged by Samoans in Australia, New Zealand and his birthplace Samoa, Leapai has promised he will put the region on the world boxing map. If a return bout is not matched by world boxing authorities with Klitschko, a possible challenger looming for Leapai would be former WBO champion, Shannon Briggs, 42. Briggs has emerged from a three and a half year hiatus following a loss to Klitschko’s Vitali. Islands Business, June 2014 33

Viewpoint

A cheap wood-fired cooking stove for the islands By Professor Wadan Narsey

ost islands in the Pacific notably Melanesian countries of Fiji, Vanuatu, Solomon Islands and PNG have no shortage of wood fuel for cooking. When I analysed the 2008-09 Household Income and Expenditure Survey for the Fiji Bureau of Statistics, I found that an amazing 77% of all rural households still cook with wood, and over 85% amongst the poorest 40%. But even in urban areas, some 42% of the poorest 20% cooked with firewood, mostly over open fires, which is why so many urban outlets sell dogo (tiri) firewood. Almost certainly, the picture would be the same, or rather even more extreme for the other Melanesian countries. The trend may have strengthened because of the rising price of kerosene and cooking gas which is totally out of the islands’ control. The Ministries of Health in the Pacific have always been concerned that the cooks over open wood fires, mostly women and girls, suffered many health risks, especially diseases to the eyes and respiratory tracts. There is large amount of waste wood being produced, with the harvesting of our mahogany and other forests, and most side cuts left to rot in the forest. The Reserve Bank of Fiji has also been concerned about the heavy burden of foreign exchange required annually to pay for imported fuel, including cooking gas and kerosene. If rural people could cook on efficient wood stoves, there could be many benefits. • health benefits to the women and girls cooking. • wood waste would be reduced. • a more efficient use of firewood. • some eventual net savings of foreign exchange (if the stoves lasted long enough). From my enquiries I found that many earlier

34 Islands Business, June 2014

Mrs Chandra Wati Reddy cooking with the Chinese made Model BSC308 iron stove outside her Suva home. Photo: Prof. Wadan Narsey

attempts to make simple smokeless stoves had not worked out very well for a variety of reasons. From my childhood days, I remembered my mother cooking on great big solid German cast iron stoves. Rough costing indicated that it would be far too expensive to manufacture such cast iron stoves locally, or import them from developed countries like Australia or New Zealand. After a year of looking on the Internet, I finally found a relatively cheap model manufactured in China, in a small town 300 kilometres south of Beijing, called Botou. But was the model really as good as it looked on the Internet? Looks can deceive. By good fortune, I was able to privately visit China last year accompanying my wife to a Confucius Institute Directors’ meeting. While there I gave several seminars on “Pacific Island economies and the role of China, and the future,” one at the Beijing University of Post and Telecommunications. The BUPT was so pleased with the lecture, that they provided a chauffer driven car and an interpreter for me and my wife to visit the fac-

tory and see the stove for myself. Instead of the massive factory I was expecting, it turned out to be a small family run factory on the outskirts of a small town. Happily, the stove (Model BSC308) was as good as it looked on the Internet. Back in Fiji, I imported four assembled units, one for myself, one for a friend, and two to interest the Ministry of Women and an NGO working with rural women. But all three models were taken by my friends. One has been working full-time at the home of Mr Keshwa Reddy, former Deputy Permanent Secretary of Agriculture in Fiji, now working for the Australian Department of Foreign Affairs and Trade in Suva. His mother Mrs Chandra Wati Reddy has already been putting the stove to good use, cooking all the typical Fiji foods, including baking bread or cakes. Indicative Costs The September 2013 invoice cost of the stoves already assembled was around F$500 (app. US$272). The final landed cost was around F$1,000 and less VAT refunds may be around F$900. The prices may have gone up since. The cost if imported in bulk, and dis-assembled may be less. It would cost even less if the Chinese Government subsidises the import as a “development project”. Stove supplier: Company: Botou Sanse Casting Co., Ltd Tel: 86 317 8187722 Fax: 86 317 7613522 Mobile: 86 13082195617 Msn:rubypang21@ hotmail.com Email:info@sansecasting. com Web: http://www.sansecasting.com

Environment

SPREP with David Sheppard

“We are the sea. We are the ocean. We must wake up to this ancient truth.” – Professor Epeli Hau’ofa

World Oceans Day - 8 June

ing the outcomes of this marine debris research. The emerging field of Marine Spatial Planning (MSP) is a recent innovation to better zone ocean areas for a range of uses, including conservation. This is a key tool to promote oceanThe oceans play a vital role in supporting all friendly and sustainable development projects, life on Earth. and SPREP is working with partners and donors, The oxygen in every third breath we take was including the Commonwealth Scientific and produced by phytoplankton, the microscopic Industrial Research Organisation (CSIRO), the plants floating in the surface waters of oceans. German and French Governments, to demonWithout the huge thermal capacity of the oceans, strate the value of MSP throughout the region. the planet would be warming even more quickly. The economic benefits of conservation The Pacific islands region covers over 10% of must be demonstrated to communities if the curthe total global ocean area. It is the repository of rent depletion of the region’s most iconic marine the world’s largest tuna fishery and the planet’s wildlife is to be reversed. largest expanse of coral reefs. SPREP is implementing a New Zealand GovWhile they may be small island economies, ernment programme to support communities Pacific Island Countries and Territories are wishing to protect turtle nesting beaches in in fact Large Ocean States - Kiribati alone, the Solomon Islands, Fiji, Tonga and Kiribati, including its Exclusive Economic Zone, is with a view to developing ecotourism oplarger than India. portunities. We have also promoted whaleThe iconic marine wildlife of the Pacific watching in Tonga and supported initiatives islands region has been seriously depleted in to protect sharks, which are proving to be a recent years. big, and exciting, attraction for divers in Fiji Large whales that overwinter in the region and Palau. and migrate to high latitude feeding grounds But perhaps the most important single acof the Antarctic Ocean each summer were tion to stop the decline in ocean health and largely wiped out by industrial whaling fleets its associated wildlife is the establishment of last century with the exception of the smallest a network of effectively managed Marine of them, the minke whale, and even they are Protected Areas (MPAs). now a fraction of their previous abundance. Our region is becoming increasingly We have learnt that while turtles have alrecognised as the global leader in protection ways been a prized food source in the region, and sustainable development of the oceans, they can no longer sustain existing levels of particularly though the Oceanscape Initiative. take. Green, hawksbill and leatherback turtles SPREP is collaborating with governments, are now all classified as Endangered or Critiregional agencies, donors, coastal communically Endangered, within the IUCN Red List. ties and supporters to promote MPAs and However, hunting of turtles is still permitthe protection of critical habitat for marine ted in many Pacific island countries. Half wildlife. Emerging programmes include a of the ten countries with the highest legal Global Environment Facility-funded project harvest levels of turtles in the world are from on the conservation of dugong and seagrass, our region. to be implemented in association with the Further, there are strong signs that the Convention on Migratory Species (CMS). region’s tuna stocks are facing challenges. At some 40 million sq km, the Pacific The Secretariat of the Pacific Community (SPC) acknowledges that big-eye tuna are Juvenile Green Turtle captured in the Arnavon Islands, Solomon Islands islands region is an area larger than the moon. Partnerships are essential for SPREP to over-exploited, and that yellowfin and alba- for measuring and tagging before being released. Photo by SPREP fulfil its mandate, and we are working closely core tuna are at or approaching maximum with the agencies within the Council of sustainable yield. Only skipjack tuna seems Regional Organisations of the Pacific, Governcurrently to be harvested at sustainable levels. such as seagrass and microscopic phytoplankton. ments, UN agencies, international institutions, The United States Secretary of State, John Nobody can predict exactly the effects of innon-governmental organisations, foundations Kerry, has recently declared climate change to creasing ocean acidification on marine wildlife, and local communities to deliver effective conbe a ‘weapon of mass destruction’ and pledged but they are likely to be profound and severe. servation strategies across this vast realm. that ocean conservation will be a signature Marine debris pollution is an ever-present The Pacific Oceanscape, which has been issue of his tenure. problem in the world’s oceans. It causes a range endorsed by all the governments in the region, Despite its size and relative isolation from of impacts, including entanglement in, and inprovides the framework and the vehicle for reindustrialised countries, the South Pacific Ocean gestion of, plastic debris by sea birds, turtles and gional cooperation to achieve better conservation is under threat as never before. marine mammals. of our ocean. Although the oceans are warming far more The Secretariat of the Pacific Regional En“No people on Earth are more suited to be slowly than the atmosphere, sea temperatures are vironment Programme (SPREP) is currently guardians of the world’s largest ocean than those still increasing leading to coral bleaching and researching the source of regional marine debris, for whom it has been home for generations.” – ocean acidification in our region. its distribution and accumulation patterns; and Professor Epeli Hau’ofa When sea water gets too warm, corals expel the the impacts on marine mammals and seabird But the next decade is critical – the future algae which are responsible for their bright copopulations. Further studies in 2015 and 2016 of of our ocean and its wildlife is in our hands. lours, leading to coral bleaching, which threatens the impact on local wildlife will be prioritised usthe very structure of the reef. Reef resilience is increased when there are no additional stresses such as over-fishing and pollution of the water from land-based activities like run-off from resorts and other developments. As the oceans warm, they absorb more carbon dioxide, creating carbonic acid – a process known as Ocean Acidification. The relative acidity or alkalinity of a solution is measured as its pH. Today’s level of pH in the oceans has not been experienced in 25 million years, and acidity is increasing at an unprecedented rate. The more acidic seawater becomes, the more it dissolves calcium and silicon, which are vital ingredients for a huge range of ocean animals including corals, sea shells and squid; plants,

Islands Business, June 2014 35

Business Intelligence

Australian budget cuts affect TV, climate r

he Australian Government led by Prime Minister Tony Abbott announced its first budget on 13 May and took a hit in the polls. The budget saw significant reductions in spending on domestic health, education and welfare and confirmed previous cuts to Australia’s aid programme. Australian Treasurer Joe Hockey argued that the tough budget was vital for the long-term economic health of Australia, to reduce both debt and deficit. But non-government aid groups like the Australian Council for International Development (ACFID) expressed concern that vulnerable communities in the region are shouldering a disproportionate share of government belttightening. With AUS$7.6 billion (U$7 billion) cut from planned increases in official development assistance (ODA) over four years, ACFID notes “ODA is the single largest savings area in all four years of the Budget, and accounts for 20 per cent of all savings across the forward estimates,” despite being only 1.3 per cent of total government expenditure. The Pacific Islands have been largely spared the reductions that affect other regions around the world, with total ODA increasing from $1.06 billion in 2013-14 to $1.15 billion in 2014-15. Foreign Minister Julie Bishop has announced a new focus on development effectiveness and the government will soon reveal a policy statement on benchmarks for the aid programme. However the budget also includes significant spending cuts for key Australian institutions that work with Pacific partners. These include reduc-

to $168 million) while Nauru has a $2.4 million decrease to $27.1 million. Pacific regional funding has increased from $105 million to $129 million in 2014-15, for programmes such as the Pacific Private Pacific spared from budget cuts Sector Development Initiative and the Pacific ReMuch of the increase for the Pacific is allocated gional Infrastructure Facility. to Papua New Guinea, with a major commitment In the lead up to private sector to the September growth, aid for 2013 elections, trade and the crethe Liberal / ation of a busiNational Party ness innovation Coalition promfund. Funding ised that it would for Papua New deliver “annual Guinea increases increases in nomfrom $519.4 milinal funding in lion in the last the aid budget in financial year to line with increas$577.1 million in es in inflation.” 2014-15, as AusHowever in tralia supports breach of this infrastructure commitment, development, the $5 billion aid funding for elecbudget will not tions, law and justice, women’s Australia’s Prime Minister Tony Abbott and Foreign Minister Julie Bishop. be indexed for inflation over the economic em- Photo: Nic Maclellan next two years. powerment and Total ODA reprogrammes in mains almost unchanged at $5.03 billion, declining Manus province (which hosts Australia’s asylum by 2.25 percent when accounting for inflation. seeker detention centre). Professor Stephen Howes, a member of the 2012 Aid funding to other Pacific countries remains Hollway Review of the Australian aid programme, at similar levels to last year, following major cuts notes that there have been major reductions over a already announced in January. The Solomon Isfive-year period in real terms. lands has received a small increase (up $4 million tions for climate research and the effective closure of Australia Network TV.

Coconut craze with virgin natural oil “life changing” o By Davendra Sharma

coconut oil craze has been circulating beauty parlours around the world for the last couple of years – that it is a miracle answer to skin infections and it’s a natural way to remove makeup. So much so that the popular and affordable oil from the Pacific Islands became a super-hit choice for young girls and even boys in parts of Australia, New Zealand, countries in Asia and even Europe. “As if it isn’t already amazing enough, it boasts a long list of healthcare benefits too,” leading Australian fashion writer Katherine Tweed reported last month. From Samoa cracking the high-end Body Shop market in the United Kingdom, the Kokonut Solomon Islands launch into Australia to a New Zealand Blue Coconut company sourcing pure organic coconut oil from Fiji, Vanuatu and Papua New Guinea – the demand for coconut oil from the Pacific Islands is growing from strength to strength. Promoted as organic and exotic oil, reviews about how pleasant coconut oil has been are phenomenal. Some have said the coconut oil has been “life changing” or simply “perfect” and others have said they are “never turning back.” “As someone who is often sceptical of these fads and phrases, especially ones that are organic or natural, I was pleasantly surprised. 36 Islands Business, June 2014

“Every scrap of makeup, even my waterproof makeup, came off my face with ease and although my skin felt a little oily afterward it was incredibly soft,” wrote Tweed. “Rather than take off all the oil, I splashed my face with water and left it on overnight as a moisturiser.” Another refining and distribution company in New Zealand, Blue Coconut has put out a publication, 50 ways to use coconut oil from the Pacific Islands – where it grows wildly due to tropical weather. Blue Coconut sources its popular highly-organic oil from Madang and Rabaul in Papua New Guinea, Santo in Vanuatu, Wild Virgin Oil from Fiji and those from Samoa. Refined non-virgin versus Virgin Blue Coconut says it cold presses in the Pacific Islands. “Our pure coconut oil contains non additives, contaminants or trans-fats and is naturally cholesterol free.” It said both the refined coconut oil and the virgin brands have been popular. Coconut oil that isn’t virgin is extracted from dried coconut, copra – which in turn is a product of drying the coconut meat, either in open sun, kiln, smoke or a combination of the three. The oil is then refined to remove uninvited impurities. The virgin version of coconut oil contains more

vitamin E and other antioxidants than the refined version of the fruit oil. “Due to unsanitary conditions the copra may have been dried in, the resulting virgin coconut oil is not safe for consumption” and as such sold in pharmacies with a “do not consume” label,” says Blue Coconut promotion. In the islands, coconut oil may also be derived through wet-milling through various techniques such as fermentation, mechanical centrifuge, boiling, refrigeration and the use of enzymes. European pharmacy grade With no input of chemicals, other than citrus acid, the process of physical-refining produces an oil of extremely high quality and freshness. The Pacific Islands-derived oil is now certified as being acceptable European pharmaceutical grade. “This means that it can be eaten raw by the very frail, the very young and pregnant women, with fantastic health benefits and no safety concerns,” promotes Blue Coconut. The choice of oil use often comes down to personal preference – if you like coconut flavour or not a fan of the fruit. “If you love coconut flavour, then Virgin oil is likely to be the best for all but higher heat cooking. If you or someone you are cooking for dislikes coconut flavour or is very frail, then refined oil will be the best,” says Blue Coconut, which

e research According to Howes: “The share of aid in total government expenditure is set to fall from 1.35 per cent in 2012-13 to 1.11 in 2017-18, a fall of 17 per cent. To put this another way, between 201213 and 2017-18, government expenditure on aid is set to fall by 10 per cent in real terms; government expenditure on everything else is set to rise by 10 per cent.” The stabilisation of the budget at around $5 billion means that Australia has abandoned its bipartisan commitment to increase the proportion of aid to 0.5 percent of gross national income (GNI). In 2012-13, Australia’s aid level was 0.36 percent, with both the ALP and Coalition pledging an increase to about $8 billion by 2016. Following this year’s budget, Australia’s ODA programme has gone backwards to 0.29 per cent of GNI. Following the integration of AusAID into the Department of Foreign Affairs and Trade (DFAT), nearly 8 per cent of Australia’s ODA in 2014-15 will be spent through the Australian Federal Police, Department of Immigration and Border Protection and Attorney-General’s Department (as yet, there is no detail of particular programmes for the Pacific because DFAT, for the first time in many years, failed to release a “blue book” with a detailed ministerial statement of individual programme allocations). One growth area is the defence budget, with the Abbott Government reaffirming its plan to increase military spending to 2 per cent of GDP over the next decade, with potential regional benefits such as the extension of the Pacific Patrol Boat Programme for maritime surveillance.

Damage to international broadcasting Beyond the aid programme, a number of budget decisions will impact Pacific Island countries. In a letter delivered to the Australian Broadcasting Corporation (ABC), the government announced it “will terminate the Australia Network contract with the ABC in 2014, which was the result of a fundamentally flawed tender process under the previous Labour Government. The Australia Network has failed to deliver a cost-effective vehicle for advancing Australia’s broad and enduring interests in the Indo-Pacific region.” The decision to end the Australia Network TV contract with 90 days’ notice will have significant impacts for Pacific audiences. The ABC has a number of contracts in Asia and the Pacific for the satellite re-broadcasting of network programmes on local TV stations, which are likely to end. In recent years, the ABC International Service has merged a number of functions between Radio Australia and Australia Network TV. To disentangle these news services and joint activities will cause major problems, with only $15 million of ABC funding available after the loss of $22.3 million this year from the DFAT contract to run Australia Network. “The ABC has in its charter an obligation to be an international broadcaster,” ABC Managing Director Mark Scott told Radio Australia. “Now the ABC management team, the ABC board, has to investigate how we will be an international broadcaster with more than half our money gone. It doesn’t automatically mean we won’t be on televi-

” or simply “perfect” has captured customer markets from big supermarkets, organic health-food stores and other retail outlets in New Zealand. Demand for coconut and its products like the two types of oil has grown steadily over the years since 1969, when the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) formed the Asian and Pacific Coconut Community, APCC. With its 18 member countries, together the group accounts for 90 per cent of the world’s coconut production and exports of coconut products like water, milk, copra, oil, coconut peat, coconut sugar syrup, soap and meat. From the region, the Federated States of Micronesia, Fiji, Kiribati, Marshall Islands, Papua New Guinea, Samoa, Solomon Islands, Tonga and Vanuatu have benefitted from the APCC campaign to create coconut awareness around the globe. Virgin oil from Samoa, Tonga in UK Under a four-year project – Increasing Agricultural Commodity Trade (IACT) - the European Union joined hands with the Secretariat of the Pacific Community to boost production of agricultural produce from the islands. Copra and other coconut products from the Cook Islands, FSM, Fiji, Kiribati, Nauru, Niue, Palau, PNG, Marshall Islands, Samoa, Solomon Islands, Tonga, Tuvalu

and Vanuatu received special promotion in Europe. In the past, the Pacific Islands’ sales of coconut products have been plagued by problems of “inconsistent supply.” “Part of the problem also lies in the lack of reliable statistics on fruiting palms and the lack of replanting,” according to IACT export production officer, Sanfred Smith. He added that while copra and crude coconut oil have long been major export earners for the island nations, erratic supply and price fluctuations have had a vast effect on the region’s output and demand. Last August, Samoa secured a lucrative market deal with the Body Shop in the United Kingdom for its organically-certified virgin oil. The Director of Women in Business Development Samoa, Adimainmalaga Tafuna’i was interviewed recently on radio where she admitted that Samoa needs to be consistent with its production and commitments to its buyers. “Our markets keep expanding. We’re actually working in other countries in the region to see if we can eventually market together,” she said in reference to Samoa’s assistance to bringing coconut plantations’ up to scratch in Tonga. “They’ve got some farms organically certified and they’ve set up quite a few coconut oil production sites on the outer islands of Tonga.”

sion in the region, but Australia Network as we know it will end.” ABC staff and management are currently discussing staff cuts and restructuring to allow the national broadcaster to maintain its international news service at some level. Cuts for scientific research In the medium term, funding cuts to key research and scientific bodies will affect collaboration between Australian researchers and their counterparts in the Pacific on topics such as meteorology, cyclone research and alternative energy. A $111.4 million reduction over four years for the CSIRO, $10 million from the Bureau of Meteorology and $21.7 million from its Environmental Science programmes will impact regional initiatives on climate change, as these agencies have collaborated with island meteorology departments through the Pacific Climate Change Science Programme. In the budget, the government also announced the abolition of the $3.1 billion Australian Renewable Energy Agency, which engages in research for solar and renewable energy technologies. This decision follows government plans to repeal the ALP Government’s carbon pricing system, abolish the Climate Change Authority and the Clean Energy Finance Corporation, and review the country’s Renewable Energy Target. When Prime Minister Tony Abbott joins his counterparts at his first Pacific Islands Forum Leaders Meeting in Palau next month, the issue of climate change will be the one to watch.

Solomon Islands new-age technology

n the Solomon Islands, the Australian Kokonut Pacific Solomon Islands company has introduced new DME (Direct Micro Expelling) process technology to extract the high-demand virgin coconut oil. The robust DME technology works very well at a village level to produce pure, raw, virgin coconut oil at low cost within an hour of opening a coconut. Now 10 years in production, KPSI has developed a niche market in Australia despite starting off what it called a risky entrepreneurial venture. “Virgin coconut oil has brought a new lease of life to the coconut industry as the international copra trade continues to be extremely volatile,” says KPSI. Fiji has also found success with its Taveunibased Mana Fiji Limited’s virgin oil products in Australia and New Zealand. “Australia wants virgin oils in glass bottles but New Zealand wants them in plastic tubs,” Mana Fiji’s director Peni Drodrolagi told local media as his company began supplying up-market resorts on Denarau Island in Nadi, Fiji.

Islands Business, June 2014 37

Islands Business Magazine GOVERNMENT OF KIRIBATI

NOTICE OF INTENTION TO SELL THE BUSINESS OF TELECOMMUNICATIONS SERVICES KIRIBATI LIMITED Tarawa, 8 May, 2014. The Government of Kiribati announces its plan to sell the business of Telecommunication Services Kiribati Limited (TSKL) this year. The plan is part of a broader reform agenda for the telecommunications sector spelled out in the National ICT Policy of 2011 and enabled by a new Communications Act passed in 2013. It also includes the strengthening of the existing regulator’s office, which is now renamed as the Communications Commission of Kiribati (CCK). The government’s objective is to sell the business of TSKL to a reputable international telecommunications company by an open and transparent process that has been well tried in sales of government owned telecommunications companies around the world and which meets the criteria for transparency approved by the World Bank. The Official Call for Pre-Qualification will be released soon. The sales process is led by the Ministry of Communications, Transport and Tourism Development working through the State-owned Enterprise Reform Steering Committee and has the objective of improving the quality and range of telecommunications services available to business and to consumers. For further enquiries please contact: Ms. Teea Tira Chairperson State-owned Enterprise Reform Steering Committee P.O. Box 68, Bairiki, Tarawa, Republic of Kiribati

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TUVALU MARITIME TRAINING INSTITUTE (TMTI) VACANT POSITION – CAPTAIN SUPERINTENDENT/CHIEF EXECUTIVE OFFICER “The Tuvalu Maritime Training Institute (TMTI) in Funafuti, Tuvalu is pleased to invite applications for the vacant position of Captain Superintendent/Chief Executive Officer that now exists at the Institute. Description of the Position: The minimum qualification for the position is a valid Certificate of Competency at Master Class 1 level. (Master Grade 1 SPMC) The candidate should have the following: 1. Minimum of 10 years experience in the Maritime Industry with wide experience of modern shipping operations. 2. Proven human resource management and administration skills. 3. Extensive experience in education and training for the maritime industry, appropriate experience in the operation and management of modern establishment training seafarers for employment aboard vessels trading internationally and a proven record with the industry for quality training. 4. Demonstrated understanding of the principles, and a proven commitment to the practice of competence based training and assessment. 5. Demonstrated knowledge of current international conventions and standards of training as applicable to the maritime industry. 6. Experience in the introduction and the implementation of quality management systems. 7. A keen understanding of fairness and discipline. Responsibilities: The overall management and administration of the Tuvalu Maritime training Institute, the supervision of the training programs, the development of the training curriculum and the overall Organisation, discipline and welfare of a self-contained Institute situated on an isolated island. Development and implementation of; (1) Competency based training programs that meet International standards and employer requirements, (2) staff service programs relevant to curriculum development, (3) quality management systems in all aspects of the Institutes operation. Liaise with senior government officials, representatives of shipping companies and international diplomatic agencies for the betterment of the Institute and enhanced employment for Tuvalu seafarers. Maintain training and discipline standards at a level acceptable to government, industry and international requirements. The position is responsible directly to the TMTI Board of Directors and Permanent Secretary for Ministry of Education. Terms and Conditions: Salary/package: AUS$60,000/pa, on an annual (or bi-annual) contract basis. 30% tax rate with first $6000 earned tax exempt. Accommodation: Rent free fully refurbished house on the Islet, 2 minutes walk from Office Medical Care: Free medical care within Tuvalu and out of Tuvalu in accordance with the Government of Tuvalu General Administrative Order. Leave entitlement: 30 working days per annum Traveling expenses: Relocation and leave air fares are paid for by the Institute (for spouse and up to 3 children of up to 18years of age. For more info: For more information regarding the Contract please contact TMTI Ag. CEO by email; tmti@ymail.com Applications close: 25th July, 2014 Applications and CVs and other relevant documents to be emailed to Acting CEO of TMTI; tmti@ymail.com no later than the closing hours (1600hrs Local Time) of Friday the 25th of July, 2014

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