October Edition by Islands Business

October 2013

Vol. 39, No. 10

Contents

SHIPPING WOES: Should industry be left to market forces? Cover reportâ&#x20AC;&#x201D;pages 16-19.

Cover Report

16 Shipping woes

Environment

Competition versus Micronesian model

36 Adapting to climate change with SPREP

Forum

Regular Features

20 Majuro Forum talks climate and regionalism But Forum continues to sail in choppy seas

24 Forum ignores business proposals

Businesspeople disappointed with leaders

Politics

24 U.S. funding stalemate highlights Marshalls angry over Compact rules

4 Letters to the Editor 6 Views from Auckland 7 We Say 12 Whispers 14 Pacific Update 34 Business Intelligence

26 Tough times ahead for Bishop

Minimal exposure to international diplomacy

27 Challenges for islands law ministers New technologies and help on offer

28 Fiji TV to shed PNG shares

Anticipating changes in media ownership laws

Business

30 Ok Tedi natonalisation

Biggest ever legal chalenge?

32 The frontline tuna guardians

Protecting our marine resources

ports S 33 Pacific Games Council ponders changes PNG strong contender for Pacific Games Islands Business, October 2013 3

L E T T E R S Managing Director/Publisher Godfrey Scoullar Group Editor-in-Chief Laisa Taga Group Advertising & Marketing Manager Sharron Stretton Staff Writer Robert Matau Graphic Design Dick Lee Virendra Prasad Main Correspondents Australia Rowan Callick Nic Maclellan Davendra Sharma Fiji Samisoni P Pareti Dionisia Tabureguci French Polynesia Thibault Marais Marshall Islands Giff Johnson New Zealand Dev Nadkarni Jale Moala Ruci Salato-Farrell Duncan Wilson Niue Stafford Guest Papua New Guinea Baeau Tai P

Polygamy ups AIDS cases in PNG The asserTI asser on ThaT ha polygamy conTrIBuTes To haT the spread of HIV/AIDS is mistaken. The issue is men having sex with those who are not their wives; it is not the number of wives. Your own article acknowledges that the rise in infections was “due to sexual relationships outside marriage.” Why then confuse things by attacking a form of marriage? In Uganda, where polygamy continues, leaders ran an anti-AIDS campaign that used the phrase “Zero Grazing”. This metaphor refers to a goat tied to a stake and grazing within a circle. The message: Keep your sexual behaviour at home. Christian groups were able to get behind the campaign because it promoted faithfulness, while polygamous households could embrace it as well. Infection rates dropped significantly. If you aim to change infection rates instead

We’ve Got it!

Sam Vulum Patrick Matbob P Peter Niesi Solomon Islands Evan Wasuka Alfred Sasako T Tonga Taina Kami-Enoka T V Vanuatu Bob Makin Islands Business is published monthly by Islands Business International Editorial & Advertising Offices Level III, 46 Gordon Street, PO Box 12718, Suva, Fiji Islands. Tel: +679 330 3108 Fax: +679 330 1423 E-mail: Editorial: editor@ibi.com.fj Subscriptions: subs@ibi.com.fj Advertising: advert@ibi.com.fj

of entire cultures, you will have better results. For more about this, see the book “Tinderbox: How the West Sparked the AIDS Epidemic and How the World Can Finally Overcome It”, by Craig Timberg and Daniel Halperin. Thomas Humiston Kalamazoo, Michigan UNITED STATES

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Column

Views from Auckland BY DEV NADKARNI

Lip reading the doublespeak Protocol and decorum all too often define dealings with people in power. There is an undercurrent of political correctness even in what is palmed off as candidness in freewheeling media interviews with politicians because consummate politicians know well that there is no such thing as an off-the-record comment. It is therefore not very often that a scribe is witness to a remarkably no holds barred verbal sparring between an astute politician and an intelligent, well informed and articulate private individual, where both parties let their hair down in a rare display of free and frank collegiality. Recently, I was caught up in such an intellectual, articulate verbal crossfire between two very eminent gentlemen. In deference to the senior and sensitive positions that these gentlemen hold in their respective fields of work, I wouldn’t venture to even give so much as a clue to their identities, let alone mention their names. Besides, it was an informal social outing and, as the two men began their verbal sparring, I had promised I wasn’t wearing my journalistic hat. (Even then they squinted at me from the corner of their eyes more than once during their conversation.) But some of the very sensitive and controversial issues these men discussed and cogently argued about is something I thought would be well worth sharing with Islands Business readers, especially because of the enduring interest in this topic around the region and beyond for the past several years. To set the context, however, I would need to give a brief background of the two men: one is a dual citizen of Fiji and one of the ANZAC nations, and the other is a lawmaker of one of these ANZAC nations. This is not an exact, verbatim record of what each of the men said but it certainly is a faithful narration of how the largely collegial but sometimes heated conversation went (it must be remembered that the setting was informal and the two men had their wine glasses topped up twice during the pow-wow). From what I recall, Mr Dual Citizen (Mr DC) started out accusing the ANZAC nations of having lost the plot on Fiji soon after December 2006 and holding on to an ill advised, somewhat naïve isolationist position for far too long. Mr Law Maker (Mr LM) jumped to the 6 Islands Business, October 2013

defence of his own government and that of the ANZAC brother nation, saying that was the only tenable position his country could hold based on the values the two countries were founded on. Mr LM was at pains to explain that for the ANZAC nations democracy was not negotiable under any circumstances and it would be impossible to justify any government formed by a group of people by force or by any undemocratic means or through fraudulent elections. He waxed eloquent about the tenets of democracy, freedom, liberty, rule of law, transparency and all that goes with it. The ANAZC nations would find any government that wasn’t founded on democratic principles and did not guarantee these attributes difficult to deal with. It wasn’t Fiji alone, Mr LM assured. It didn’t matter which party was in power in the ANZAC nations, these principles are nonnegotiable and that was why the two nations were consistent in their response to the events in Fiji since December 2006, Mr LM soldiered on. Double standards He was speaking on behalf of his country, not reflecting the views of his political party, he pointedly said. There was no other recourse available and the two countries continued to hold that position. Mr DC was unimpressed. He said he wondered if these principles had double standards that exposed the ANZAC nations’ “hypocritical” position. He said, by the same “moral high ground” from which the ANZAC nations arrived at their decision on Fiji in the years immediately following the December 2006 development, the ANZAC nations shouldn’t be seen in the company of the likes of China and Pakistan. Australia has a hugely successful commercial relationship with China while New Zealand bent backwards to sign a free trade agreement. It doesn’t seem to matter that democracy is a non-existent concept in China, when it comes to business and commerce, Mr DC asked. He rubbed it in saying New Zealand even gave a red carpet welcome to then Pakistan dictator Pervez Musharraf, now jailed on a slew of charges, when he visited the country while he was nothing more than an undemocratically self-appointed “strongman”. Caught on the back foot, Mr LM mustered

his typical parliamentary fobbing off techniques. Those situations were different, he said rather tamely. China was never a democracy, so the government there hadn’t been formed by force or military action overthrowing a democratic one, he said. It was always like that and it is like that now, so the world has come to accept it, he added. And how about the dictator of Pakistan? Mr DC needled. That’s a distant country, not in our Pacific backyard, Mr LM countered, realising full well that he was losing ground to his worthy opponent. So, these principles are inversely proportional to history and distance? Mr DC asked. It wasn’t as simple as that, Mr LM countered. There were many other factors to consider. Such as what? asked Mr DC and continued without waiting for Mr LM to answer: was it one set of rules for a comparatively smaller, poorer, powerless neighbour and another for a bigger, richer, militarily more powerful trading partner and a distant dictatorial country that has been under the scanner for accusations of abetting global terrorism? The parliamentarian’s body language and tone now became decidedly conciliatory. The ANZAC nations had now changed their stance quite considerably, he said. Ever since the steps towards holding elections became credible, far fewer sanctions now remained. The erudite Mr DC wasn’t convinced this was the only reason. He asked if the United States had anything to do with the gradual but firm come-down. Mr LM appeared surprised. By way of explanation, Mr DC said the fact that the ANZAC nations having had their backyard taken for granted, they had failed to seriously notice the growing Asian geopolitical clout in the world’s biggest untapped regions for natural resources. The United States is a natural ANZAC ally and asked the two ANZAC nations to pull up their socks and regain what they had lost in the Pacific to China. That was a bigger motivator in the come-down, more than anything else, Mr DC said. Conspiracy Mr LM shook his head dismissively saying now the conversation was heading into the realm of conspiracy theories and that he did not wish to be part of it. Mr DC asked Mr LM, what the ANZAC nations’ approach to Fiji would have been if they were to start all over again. Mr LM was probably thankful for the master of ceremonies’ spoon clinking an empty wine glass to call everyone’s attention to the first of a series of long and boring speeches of that evening. But that conversation for me was like lip reading political doublespeak.

WESAY ‘…it is almost crunch time now. For in 2020, just over six years from now, the Cotonou Agreement, which enshrines the relationship between the European Community and the ACP nations comes to an end. There have been several opinions expressed on what shape and form the relationship ought to continue given the changing realities of the global marketplace…’

long-standing relationship between two of the most far removed groups of nations—culturally, geographically and economically—is under re-examination. The European Community is one of the richest groups of nations in the world. Despite the global financial crisis that has ravaged it for the better part of the past decade and driving some of its members to the brink of bankruptcy, it retains its position as a group of nations that offers one of the highest living standards for its citizens. At the other end of the financial and living standards spectrum is a group of nations that is made up of three geographically scattered subgroups of nations under the name African Caribbean Pacific Group, abbreviated as ACP. It is the largest trans-regional intergovernmental grouping in the world with as many as 79 member countries. The islands nations of the Pacific form the ‘Pacific’ part of ACP. Though geographically and culturally disparate, there are certain factors that closely bind these nations: An overwhelmingly large number of these 79 nations fall under the list of Least Developed Countries (LDC). While some of them are landlocked in Africa, others are small islands in the Caribbean and the Pacific. Whether landlocked or isolated in the distant oceans, climate change is beginning to affect a very large number of these nations. The relationship between the European Community and the ACP Group of nations goes back a long way but has not evolved enough to reflect the changing realities of the world even though the quantum of financial aid and the number of aid programmes has increased over the years. Though there have been several instances in the past where a review of the relationship was mooted, particularly at the instance of the LDCs on matters such as trade, progress has tended to flounder under a climate of uncertainty. But it is almost crunch time now. For in 2020, just over six years from now, the Cotonou Agreement, which enshrines the relationship between the European Community and the ACP nations comes to an end. There have been several opinions expressed on what shape and form the relationship ought to continue given the changing realities of the global marketplace with its rapidly changing trade, information technology, security and geopolitical scenarios. More pertinently, the effects of climate change need to be factored in as well.

It is the deadline of 2020 that has spurred on some serious soul searching among the stakeholders of the group, with a certain sense of urgency. Earlier this year, a group of eminent persons, drawn from several walks of life throughout the three subregions and of course the European Community was formed to deal with this task. The Eminent Persons Group (EPG), as this group has been officially termed, has a band of advisors that will consult with stakeholders of the subgroups to gather feedback on how they view the future of the relationship based on the experience of the past few years and the ever changing scenarios of the world’s geopolitical, business, trade and climate change dynamics. There is a great need for careful deliberations on what the successor agreement to the Cotonou agreement should look like. Interestingly, the EPG will begin its consultations with the Pacific subgroup of the ACP. This month, a high level team of advisors, led by former Nigerian President Chief Olusegun Obasanjo, will be visiting the Pacific holding consultations with stakeholders in Apia, Samoa, on October 17 and 18. Consultations in the Caribbean and African nations will then follow. The Pacific subgroup comprises the farthest lying countries from the European Community and has a set of attributes that are different from those of Africa and the Caribbean.

Crunch time for ACP/EU

The three subgroups have both similar and different attributes that bind and separate them and this is reflected in their relationships with the European Community, both as individual nations and parts of their respective

subgroups. For instance, the Caribbean and Pacific nations share similarities of being islands states, many of them threatened by the ravages of climate change. They are also small economies with sparse populations with economies of scale that are difficult to maintain. On the other hand, the African subgroup has burgeoning populations and a newfound resource boom but are ravaged by issues of increasing political instability, terrorism, internal warfare, plunging living standards and new political and diplomatic alignments with the fast growing economies of Asia like China and India. There is more investment coming into developing and LDC African nations from Asia than there is from the European Community. It will therefore be extremely interesting to see how this diversity Islands Business, October 2013 7

WESAY in points of view of the three subgroups will be reflected in the suggestion for the proposed successor of the Cotonou Agreement. In fact, the interests of the three subgroups, particularly in complex matters like trade concessions—which, indeed, has been one of the more defining aspects of the Cotonou Agreement that has shaped exports from the Pacific into Europe—is likely to be even more complicated in the future. It remains to be seen how these disparate interests especially in the face of the maze of competing trade agreements will be factored into a single post-Cotonou Agreement document to cover all the three subgroups. It is hardly surprising therefore that some critics have raised the argument that the concept of the ACP Grouping itself might reach its use by date well before 2020. The question to be asked is whether the same compulsions that lead to the formation of the ACP Group so many decades ago exist today or whether the world has moved on and the subgroups need

to be treated separately under an over-arching agreement underlying some common, basic principles to reflect the original intentions of setting up the ACP Grouping. Predictably, the political leadership of the subgroups wants another Cotonou-type agreement to replace it beyond 2020. This may simply be driven by the fear that in the absence of such an agreement, substantial funding avenues might dry up. Stakeholders being consulted by the EPG should not let these fears cloud their responses while suggesting a successor agreement. For it is highly unlikely that a body like the European Community would cut back funding if a Cotonou agreement did not exist. On the other hand, it might well increase its funding if it is convinced of a reorganisational plan that better reflects the present state of play in the subregions rather than blindly following the legacy of a grouping whose rationale looks neither practicable nor realistic any longer.

‘Mayor Powes Parkop’s knee-jerk reaction to the report where he promised severe measures for curbing the chewing of betel nut in the capital is a band-aid measure that has failure written all over it. As well as undermining a traditional industry running into millions of kina a year, it will also render thousands of people unemployed’

he very mention of the Pacific Islands conjures up images of pristineness in the mind’s eye. Worlds of extraordinary beauty, an exquisite blend of sea, sand and surf with the added bonus of unique littoral life forms, beautiful smiles of friendly people with their unique cultures—a perfect environment for a relaxed holiday far from the madding crowds of western urban life. Indeed, that image of Pacific Islands destinations is the stuff of tourism posters, promotional films and advertising ever since the islands began attracting tourists from afar. While that image has been the staple of travel and destination literature for decades now, in more recent years, the news media has tended to purvey another image of at least some of the islands. Ever since ‘climate change’, ‘global warming’ and ‘sea level rise’ entered the discourse in the mainstream media, many islands are seen as climate-challenged to varying degrees. So pristine environments of peace and quietude peopled by some of the world’s friendliest people who are now bearing the brunt of the deleterious effects of climate change is an oft repeating theme in magazine articles and blogs. The mega meets on climate change in different parts of the world in the past decade have helped reinforce the image of some islands

8 Islands Business, October 2013

as severely threatened by climate change and in need of urgent action to save them from being lost to rising seas. What has so far remained behind the scenes in the mainstream global media is yet another attribute of the islands: environmental and ecological degradation caused not by the distant nations that are often accused—to a certain extent justifiably—for the world’s ecological problems including climate change but by their own denizens and governments. Images of environmental degradation caused by islanders themselves have made it into the mainstream media now and then but a news item regarding the urban environment of a significant Pacific Island nation last month made global headlines. Every year, the list-obsessed media publishes assorted results of all sorts of research organisations that seem to delight in monitoring and ranking all manner of things—lists like the ten most liveable, the ten worst cities to live in; the ten best countries for women to work in, the ten worst and so on. Most media consumers take such lists with a pinch of salt because they add little more than mere conversational value and no one really goes into details of how much effort and what kind of methodology is used to compile and rank them. But even though they make for light reading, they tend to be remembered by certain sections of people and the positive aspects

WESAY are often amplified in promotional literature to leverage the high ranking, while the negative ones are enough to exaggerate loathing and fear in the minds of media consumers. Last month, the publishing of one such negative statistic dealt a severe blow to the long-held pristine, beautiful, unique and pure image of the Pacific Islands region. One thing that sets the Pacific Islands apart from other countries is the absence of sprawling urban areas. In most of the developing world, such areas are associated with squalor, overcrowding, law and order issues and a slew of other problems because of which, they are seen as poor touristic and even investment destinations. The Pacific, fortunately, has very few areas that can be seen as urban in the same sense that we see the term used in Asia. Yet, in recent years, urbanisation in the region has been growing. In fact, the Betio area of Tarawa, Kiribati’s capital, is reputed to be the region’s most densely populated urban region, presenting a paradox by dint of being situated in one of the world’s most isolated locations. Other growing urban areas in the Pacific islands region are the Fijian capital of Suva and Port Moresby, Papua New Guinea’s capital city. It was Port Moresby that was in the news last month. The region’s biggest city and symbol of PNG’s rapid economic progress in the past couple of decades, has turned out to be a rather disappointing statistic. Port Moresby, whose urban sprawl has necessitated the area surrounding it being designated as the National Capital District, is now ranked among the ten worst cities to live in, according to a global urban liveability list published in early September.

PNG amongst 10 worst cities to live in

The city features poorly on several fronts including law and order, transportation, living conditions, sanitation, education, healthcare and other indicators that make up the index. This is indeed an unfortunate outcome for not just PNG but for the region as a whole. For a region that has collectively pointed the finger at western nations as being responsible for their plight because of climate change, this is one statistic in which the blame lies squarely at the door of the Pacific’s leaders and its people. The administration that runs Port Moresby has been struggling to shore up its act as a provider of a liveable urban environment. The usual suspects undermine its efforts—endemic corruption, the lack of vision and political will and the paucity of resources to fund urban infrastructure. Fiji’s capital Suva is also finding it increasingly harder to maintain the quality of life for its ratepayers. It is indeed unfortunate that the few urban centres that the region can lay claim to are in such a sorry state, running counter to what the tourist brochures promise. Visionary leadership and firm administrative practices are urgently needed if Port Moresby is to drop off the list of the 10 least desirable urban areas to live in anywhere in the world. Mayor Powes Parkop’s knee-jerk reaction to the report, where he promised severe measures for curbing the chewing of betel nut in the capital is a band-aid measure that has failure written all over it. As well as undermining a traditional industry running into millions of kina a year, it will also render thousands of people unemployed. A tour of the central business districts of Port Moresby and Suva and a drive through their increasingly clogged streets quite easily gives the lie to the painfully cultivated image of the pristine islands. It will need measures far more well thought out than banning betel nut chewing.

‘It is imperative that all concerned stakeholders in the future of the islands and that of the region and Planet Earth should rise up to the occasion to deal with this threat to food security on multiple fronts. If not, future generations will face the prospect of living in the middle of a forlorn, watery desert— a fishless Pacific Ocean, much like a treeless Sahara Desert’

ccess to natural, nutritious food has never been an issue in the Pacific islands region in the same way that it has been and continues to be in many different parts of the developing world. Its lands have been blessed with plentiful fruit and vegetables—both native and introduced—and its waters have provided islanders with a bountiful supply of fish and other marine food.

That is partly the reason why poverty in the region doesn’t seem quite the same as it is depicted in other parts of the world where deprivation of food, water and shelter define it. But that does not mean poverty does not exist in the islands. It does. But in ways that are different from the extreme and dire images of poverty that have come to be associated with regions like sub-Saharan Africa and some remote regions of South Asia. Islands Business, October 2013 9

WESAY But the Pacific’s relatively fortunate position as regards access to food that it has enjoyed since times immemorial cannot be taken for granted as something that will remain so. While Pacific islands populations have always lived sustainably taking from nature’s food chain only what they have required for their daily needs, the forces of globalisation have destabilised that fine balance in nature’s established ways. Overfishing in both the high seas and littoral areas has resulted in fish stocks depleting precipitously, though there is rarely any agreement between various concerned parties on how much the decline has been in real terms. But there is no doubt that fish stock continues to be depleted despite a slew of 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 an issue of 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—be it from livestock based on land or in the waters. This demand is tipped to grow even faster in the coming decades and unfortunately the race to supply that demand is poised to deplete resources further before the balance that is sought from sustainable farming practice—whether on land or in the water— begins to make any difference. Pacific islanders have borne the brunt of the effects of climate change because of the callously selfish pursuit of riches through unsustainable industrialisation by distant waters fishing nations for the better part of the last century. Tiny Pacific islands countries like Tuvalu have cried hoarse at climate meets about how carbon emission driven climate warming has threatened their livelihoods, their shelters and their very future. While little is being done to counter the effects of climate change in the affected nations, another threat is looming before these very nations—that of food security. And again, because of the callous action of distant industrial nations and their insatiable appetite for commercial growth at a pace that outstrips the relatively slower speeds at which the world’s living resources are replenished. Despite several mechanisms in place, overfishing continues to threaten the food chain and therefore the food security of the people of the islands. A report published last month spells out the unthinkable: Alarmingly, Pacific islanders, who have been surrounded by such a reliable protein source as fish ever since they made the islands their home

The looming threat of food security

Islands Business, October 2013

face the unbelievably grim prospect of importing it from distant foreign lands. This is what the report, entitled “Climate Change and Development Strategies for Coastal Communities of the Pacific Coral Triangle Countries,” released in Port Vila, reveals. It has based the study in what is referred to as the Coral Triangle, also known by the moniker “Amazon of the Sea”. It is 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 rather alarmingly points 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. It is a sad commentary on how the pursuit of globalisation and mindless industrialisation has led to a situation where people who have fished in natural waters ever since the dawn of their civilisations now have to adopt technology to do the same. The report recommends the uptake of aquaculture to ensure sustainable fish rearing in the islands. While this is not a difficult option given the financial resources and knowledge, the report’s other recommendation is more daunting to achieve. It suggests the formation of more protected areas in the islands’ exclusive economic zones and coastal areas to promote sustainability and give a chance for marine species to replenish stocks in their own natural cycles. This indeed is a noble suggestion but it is not new and has been 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. Even if these suggestions are adopted in letter and in spirit, the islands face an uphill task not least because they will have to work against yet another invisible force—climate change. Factoring in the effects of climate change in any new sustainable fishing activity will also pose a challenge, which will make demands on knowledge from new research. It is imperative that all concerned stakeholders in the future of the islands and that of the region and Planet Earth should rise up to the occasion to deal with this threat to food security on multiple fronts. If not, future generations will face the prospect of living in the middle of a forlorn, watery desert—a fishless Pacific Ocean, much like a treeless Sahara Desert. They will have no choice but to depend ever increasingly on salt, sugar and fat-laden imported, processed canned foods that are already ruining the health of islanders with non communicable diseases in almost pandemic proportions. • We Say is compiled and edited by Laisa Taga.

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Whispers Kiribati’s pie in the sky…First i-Kiribati were told migration was inevitable, then their government started buying up land overseas, and now, an ambitious proposal to construct giant-satellite looking floating cities to avoid sea level rise. At least one cannot accuse Kiribati President Anote Tong for want of trying. The northern Pacific leader has reportedly teamed up with Shimizu Corp, a Japanese construction company based in Tokyo, to produce what media reports say is the blueprint for the world’s first floating country. “The floating city would consist of a series of lily-pad-like islands, each with a central tower over half a mile high, or about twice as tall as New York’s Empire State Building,” reports the International Science Times. The towers resembling giant satellites would house about 30,000 people each and have space for offices, stores and services. The central shaft would be used to grow fruits and vegetables and the base would have residential zones for about 10,000 people, as well as forests, beaches, arable land and port facilities. Each floating pad would be secured to the ocean floor like giant oil rigs, said President Tong. And the cost of such sci-fictionlooking islands? Just a cool US$505 billion!

to be stashed with $16 million in Fijian currency? They had in their possession, it was whispered, a total of 17 suitcases. And since the flight originated from Fiji, questions were sent back as to what went wrong with pre-departure screenings at Nadi International Airport. Port Vila authorities were informed that screening machines in Nadi were faulty on the day. Coincidence or more sinister forces at work? Those in power in the island nation are scratching their heads as to how such large consignments of cash could be slipped out undetected when border authorities had just invested in new and expensive x-ray screening machines!  Bemobile’s wheeling and dealing… So it seems no one is going to spill the bean on what actually transpired in this multi-million dollar deal witnessed with much fanfare earlier in the year by the two leaders of Fiji and Papua

one version of why the deal was called off , Whis-

pers was told, was for ethical reasons. Apparently,

Whispers was told, the contractors insisted by the PNG authorities for Vodafone Fiji to use had put in a bid worth $30 million more than Vodafone’s preferred contractor.  Thousands Shifting Sand…Fiji Government-endorsed casino operator One Thousands Sand Limited may undergo a name change to shifting sand soon with the way it is going with its proposed casino site. After a big song and dance about a ground-breaking ceremony last year, the Indian American-owned company has been embroiled in an endless series of controversies ever since. Months after the grand ceremony, it was discovered the proposed casino site had a different owner! So One Thousands Sand got a new piece of land, said to be owned by someone who might have had a hand in getting them over

 Rodgers’ replacement: Well, we will know by November who will be replacing Dr Jimmie Rodgers as the director-general of the Now you see it, now you don’t…The Marshall Islands government spent a busy week at the Pacific Islands Secretariat of the Pacific Forum leaders meeting trying to keep both China and Taiwan happy. Problems arose when the Chinese delegation raised Community (SPC). But concerns about participating in meetings in Majuro’s International Conference Centre (ICC), a lavish facility funded by what Whispers has been Taiwan (in the ICC foyer, there’s a large plaque bearing the flag of Taiwan). The first apparent sign of trouble was the abreliably told is that 11 sence, unannounced, of Chinese climate official Dr. Li Gao from the Panel of Climate Experts which launched the week’s people were interviewed activities. To placate the Chinese delegation, the Taiwanese flag and plaque in the foyer were covered up (see photos by Nic in Noumea last month Maclellan). Then Taiwanese complaints forced the Marshall Islands government into furious behind the scenes manoeuvrfor the position. Out ing, and the flag was uncovered. Finally, the Chinese delegation agreed to attend the Post-Forum Dialogue, but entered the of the 11, three names ICC via another door, to avoid walking past the Taiwanese flag at the main entrance! Taiwan’s ambassador was encouraged will be put forward to to vacate the building, as Taiwan doesn’t have the status of a forum dialogue partner. More diplomatic fun and games await the SPC Council when next year, when Taiwan-aligned Palau will host the 2014 Forum. it meets in Nadi next month for its decision. to Fiji in the first place. But this has not solved New Guinea only to be bungled up months later. Of those 11 who were interviewed, they included their dilemma. From this month, the company What was supposed to be a walk in the park for former US Ambassador to Fiji, Steve McGann; incurs a fine of US$100,000 for every month Fiji’s superannuation fund when it offered to Forum Secretariat’s deputy Secretary-General construction is stalled. buy out Telikom PNG’s near bankrupt mobile Feleti Teo; Fiji’s Ambassador to Japan, Isikeli operator and handed the management contract Mataitoga; PNG High Commissioner based in of Bemobile to Vodafone Fiji turned sour when  Fiji, Peter Efeare; and Fekita Utoikamanu, SPC’s both parties accused each other of being too rigid, deputy director-general based in Suva. and the deal was off. At least one commercial bank Oceania Custom saga, Take umphteen: was left fuming at the lost opportunity, given that So chartered accountancy firm KPMG forensic  it is owed millions of dollars in unpaid loans. But accountants have come and gone, and yet stone of course the accountancy firm that did the due silence on the fate of the snap audit! At the centre Cash-strapped suitcases…So what’s the diligence on behalf of Fiji’s National Provident of the investigations it has been whispered were real story about an Asian couple who got caught Fund was laughing all the way to the bank! Well, unexplained “personal expenses” said to have in Port Vila airport with suitcases of hard cash said 12 Islands Business, October 2013

Whispers amounted to a little over $1 million in 2012. That’s 30% of its total budget! It has been further whispered that two main funders of OCC—Australia and New Zealand—have put a freeze on their fundings, and most of the organisation’s work has been held up as a result until KPMG completes its investigations. Meanwhile, the said executive still enjoys the perks of a high flyer, even to the point of smoking in clearly marked no smoking zones in the OCC office!

flew into the country on a big private jet and were whisked away to a remote island resort in the Yasawa Group, in Fiji’s western sea borders, block-booking the entire 6-star resort for themselves. Their hosts were told the trip was strictly private and media requests for interviews were turned down. If sun, sea and sand are what they aren’t after, then could it be fresh, drinking water?



Road deal: Fiji’s Public Accounts Committee has dug up some interesting findings with regards to the Fiji Roads Upgrading Project. They have found that the consultancy agreement with an international firm for the Kings and Lodoni Roads was budgeted for just over F$5 million. However, the company was paid F$11.5 million. The excess amount was not approved by the Public Works Tender Board as is the procedure. Looks like an investigation is looming.

Georgian wine: New Zealand provided food and drink for the official launch and social functions at the Majuro Pacific Islands Forum meeting. But hardworking delegates could also quench their thirst with some very fine Georgian wines. Could this contribution have anything to do with Georgia’s concern that some Pacific countries support the breakaway Georgian provinces of Abkhazia and South Ossetia, with some Russian aid as the incentive?  SPREP MIA: In Majuro, the RMI government invited an international array of participants for the Panel of Climate Experts, which preceded the Forum leaders meeting. A notable absence was any representative from SPREP, which is the lead agency on climate policy for the region. A sign perhaps that some SPREP officials were less than enthusiastic about the Majuro Declaration on Climate Leadership, the centrepiece of the Majuro Forum?  Still on the Forum meeting…Pacific Plan review team’s Number 1, PNG’s former PM Sir Mekere Morauta—arrived in the Marshalls— only to find his name not on the protocol list So what does that mean? He had no accommodation and transport to get him into town—so one good Samaritan—an Aussie journo—offered to provide him transport to town to await his accommodation.  Dressing down: Kiwi and Aussie journos covering the Majuro Forum meeting got a dressing down from one very senior regional diplomat for taking their time to cover the leaders retreat and being in the way of islands leaders.  Middle East royalty: What could attract a member of the Royal Family in the Middle East to the South Seas when both seem to share common attractions; sun, sea and plenty of sand! Be that as it may, Fiji played host to a member of the Emir of Qatar family recently. The entourage

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 Eco-label battle: An eco-label session at the recent Pacific Tuna Forum in Honiara last month became heated with supporters of two ecolabelling brands—Friends of the Sea and Marine Stewardship Council—having a shouting match and resorting to accusations and counter accusations. It took the calm Dr Transform Aqorau of the PNA Secretariat to calm the two parties down.  Boundary claim: What’s the latest from Tonga on their claim for boundaries they share with their neighbours Fiji? Whispers hears the Kingdom is preparing to take their claims to another level—what that means is a mystery.  Sabbath confusion: Seventh-day Adventists are adamant that “on the seventh day God rested”, according to the scripture. But deciding which day of the week is the seventh-day in Samoa continues to divide the church. In his article “Called to proclaim Messages of Life” published on September 14 and circulated to Adventists globally, president Ted Wilson repeatedly referred to the seventh-day Sabbath by the name of the day, Saturday, without making an exception for Tonga, Kiribati, Wallis and Futuna, and now Samoa is at odds with the rest of the SDA worldwide church by worshipping on Sunday. The current confusion with the SDA day of worship in Samoa is a result of the local administration’s decision based on the assumption that the Samoa Government changed the calendar and renamed the days with Sunday now the seventh day of the week. • Whispers is compiled and edited by Laisa Taga. If you have any Whispers, please contact us on editor@ibi.com.fj

Advertising & Marketing Manager Sharron Stretton Advertising Executive Abigail Covert-Sokia Islands Business International Ltd. Level III, 46 Gordon Street PO Box 12718, Suva, Fiji Islands. Tel: +679 330 3108. Fax: +679 330 1423. E-mail: Advertising: advert@ibi.com.fj Circulation & Distribution Litiana Tokona ltokona@ibi.com.fj subs@ibi.com.fj Sandiya Dass sdass@ibi.com.fj Regional magazine sales agents Pacific Cosmos – 89 Brisbane Street, Oxley Park, NSW, Australia Pacific Supplies – Rarotonga, Cook Islands Yap Cooperative Association – Colonia, YAP, Federated States of Micronesia Motibhai & Co. Ltd – Nadi Airport, Fiji Paper Power Bookshop – Town Council Bldg, Main Street, Nadi, Fiji Suva Bookshop – Greig Street, Suva, Fiji Chapter One Bookshop – Downtown Boulevard, Suva, Fiji Kays Kona Shop – Dolphin Plaza, Suva, Fiji USP Bookcentre – USP, Laucala Campus, Suva, Fiji Garden City Bookshop – Garden City, Raiwai, Suva, Fiji Bulaccino – Garden City, Raiwai, Suva, Fiji Samabula Drugstore – Samabula, Suva, Fiji Kundan Singh Supermarket – Tamavua, Suva, Fiji MH Superfresh – Tamavua, Suva, Fiji Methodist Bookstore – Stewart Street, Suva, Fiji Textbook Wholesalers – Bsp Centre Suva, Fiji MHCC – Suva, Fiji Hachette Pacifique – Papeete, French Polynesia Kiribati Newstar – Bairiki, Kiribati One Stop Stores – Bairiki, Kiribati Robert Reimers Enterprises – Majuro, Marshall Islands Pacific & Occidental – Yaren, Nauru South Seas Traders – Alofi, Niue Nouvelle Messageries Caledoniennes de Presse – Noumea, New Caledonia Wewak Christian Bookshop – Wewak, PNG Boroko Foodworld – Boroko, PNG UPNG Bookshop – Waigani, PNG Lucky Foodtown – Apia, Samoa Wesley Bookshop – Apia, Samoa Panatina Chemist Ltd – Honiara, Solomon Islands Officeworks Ltd – Honiara, Solomon Islands National Stationery Supplies – Honiara, Solomon Islands Friendly Islands Bookshop – Nuku’alofa, Tonga Tuvalu Air Travel, Shipping – Funafuti, Tuvalu Trade and Consultancies – Funafuti, Tuvalu Stop Press – Port Vila, Vanuatu A year’s subscription to 12 issues of Islands Business within Fiji costs $50 and includes a complimentary copy of Fiji Islands Business.

Islands Business, October 2013 13

Pacific Update

Sopoanga ropes in donors to help in roadmap By Robert Matau

lion surplus as a result of an unexpected surplus in fishing licence fees and funding from donors which they had not recorded in their estimate. They had estimated they would receive A$4.3 million in fishing licence frees but instead received A$6.4 million. They also estimated they would receive A$4.7 million in external assistance from donors like AusAID, New Zealand, World Bank, International Monetary Fund Asian Development Bank and other donors, but actually received A$8.4 million.

uvalu’s cabinet is embarking on a fresh roadmap and vision for the island nation as they take stock of the various needs of each ministry before they compile their budget for 2014 in December. The roadmap contains a long list of needs by each government ministry. The roadmap contains Tuvalu’s needs in areas including good governance, foreign relations, social development, policing, private sector employment, education and human resources, More funds needed agriculture and fisheries. Sopoaga said in August the naA high-level partners dialogue tion, which relies heavily on the was held in Tuvalu on September Tuvalu Trust Fund (TTF), fish18 where Prime Minister Enele ing licence fees, ‘dot.tv’ internet Sopoaga and his cabinet predomain revenue plus remittances sented the roadmap to donors from seafarers working on interlike AusAID, NZAID, European national ships, needs more fundUnion, Japan, India, Taiwan and ing for programmes next year. United Nations Development Foreign Affairs Minister Programme. Taukelina Finikaso said they had A donor said they had asked agreed in cabinet to provide a government to present them a Enele Sopoaga…new roadmap and monthly update so that the taxsummarised list, which prioritises vision for Tuvalu. Photo: Nic Maclellan paying public would know where their needs. their money was being spent. “The donor roundtable was “Last month each minister an opportunity for the new government to present was given the chance to brief the group of donors to partners and for them to consider where assisin Funafuti on the current programmes and areas tance could be targeted based on a clear direction they hope to implement with overseas aid,” he told from the Tuvalu government,” one donor agency Islands Business. revealed. “The donors will now return and see where they The move follows revelations last month by Socan provide further assistance and get back to us.” poanga that his country was facing financial diffiAs the roadmap presented was too extensive, culties. the donors have asked the Tuvalu Government to Already living up to his promise for more acprovide a more compact one, prioritising areas that countability and transparency, Sopoaga has also deneed urgent attention, Islands Business was told. livered his first monthly budget update (for August), Sopoaga believes his roadmap is more practical in which his government has recorded a A$4.1 miland easier to achieve in its current form.

While his new approach demands a new work culture from the public service, he also hopes to address ineffective service delivery in his roadmap. Donors told Islands Business that they have witnessed a change in attitude by government workers. “He knows what he wants and that is to serve the people,” a donor said. “In the past, workers were being driven by people who were more interested in their political survival than delivering on a vision to lead the people.” Donors provide assistance to a number of initiatives in Tuvalu including institutional strengthening, financial management and infrastructure needs plus education and health. The donor roundtable gave the donors a chance to come back and revise how they could improve their aid to the nation in light of their recent briefing. The donors will meet early this month in Suva to discuss these strategies to avoid duplication and ensure their aid targets priority areas. Australia will provide A$13 million in development assistance to Tuvalu for the years 2013/2014 which goes into the Tuvalu Trust Fund and improving financial management and planning. “The Australian High Commission welcomed the opportunity for Australia to participate in the Tuvalu Government’s roadmap briefing, which provided an update on the Tuvalu Government’s development priorities,” a spokesperson for the Australian High Commission told Islands Business. “Australia already has a close relationship with the Tuvalu Government including through a Partnership for Development through which Australia supports Tuvalu to strengthen economic and financial management, support climate change adaptation and help build a skilled and educated workforce”. They also provide support for early education and opportunities for tertiary study. Australia has invested A$34.5 million in Tuvalu in the previous three years.

Tourism operators suffer as MA60 debate drags on By Robert Matau

viation employees who adhere to the utmost safety standards will tell you that the industry has no room for trial and error. One error can come at a huge cost—human lives and safety of passengers and crew. This is what New Zealand is trying to tell the travelling public when it comes to Tonga’s MA60 aircraft—a gift from the Chinese Government. But one cannot help but feel that while New Zealand is quoting safety issues, the origins of the aircraft could play some part in the aggressive travel advisory issued by the Kiwis, which Tongan tourism operators are claiming is crippling its industry. The advisory was accompanied by a decision to hold New Zealand aid for tourism development in Tonga. 14 Islands Business, October 2013

Shane Walker, who owns Moorings and Sunsail Yacht Charter companies, Mango Restaurant, Boathouse Apartments and Tongan Beach Resort—all based on Vavau Island—told Islands Business they were looking at their legal options on the issue. He said the advisory was certainly having a major impact on businesses in the outer islands in Tonga. “The cost to outer islands operators is now in the millions—but time will tell just how severe and how long the effects will be felt,” he said. “I am concerned that there appears to be a lack of consistency on the part of New Zealand. I note that they have not issued the same advisory to 20 other countries where the MA60 is operated. He said he had cited a copy of an agreement between the New Zealand Civil Aviation Authority and the Civil Aviation Administration of China last year, which is a technical arrangement on de-

sign approval, export airworthiness certification and post design approval activities. “It’s is basically a reciprocal agreement between New Zealand and China for aircraft parts and components including engines and propellers and each country agree to accept the other’s certification processes subject to certain conditions,” he said. Travel advisory Walker says while New Zealand issued its travel advisory, Australia had initially not followed suit but it has now included a sentence in its own travel advisory stating that New Zealand had issued an advisory on the issue. He said the US Department of State’s Bureau of Consular Affairs posted on their Tonga site that the U.S. Federal Aviation Administration (FAA) had assessed the government of Tonga’s Civil Aviation

Invest now on PACER Plus, advisor urges By Samisoni Pareti

ustralia and New Zealand will have to concede significant concessions if the proposed free trade and development agreement between them and Pacific Islands Countries is to become a reality. That is the view of the man who is the Pacific Islands Chief Trade Adviser in PACER Plus negotiations with the two Trans-Tasman neighbours, Dr Edwini Kessie who heads the Office of the Chief Trade Adviser based in Port Vila, Vanuatu. “Compared to other negotiating subjects, we have not made significant progress on these two issues (labour mobility and development assistance), Blowing panpipes in the Solomons…labour mobility a difficult issue under PACER Plus. Photo: Dennis Merita mainly because they are difficult issues and would require significant concessions from Australia and New Zealand,” said Dr Kessie via electronic mail from his Port Vila office. would come to the middle ground and be able to tainable development through increased trade and “Regarding development assistance, for example, overcome their differences. investment.” the FICs (Forum Islands Countries) would like to He believes it would be to the two bigger counTime is of the essence, the former World Trade see the establishment of a dedicated tries’ interests in the long-term for PACOrganisation legal adviser on trade believes. Both fund which would help address the ER Plus to come into being. parties need to move closer at forging a deal. To supply-side constraints which have pre“There has to be movement on these leave it too late could only result in a package of vented them from taking advantage of two issues, otherwise it would be difficoncessions that are diluted. market access opportunities under varicult to get a PACER Plus agreement. “There is the realisation that if we wait too long, ous preferential trade agreements. “Australia and New Zealand have the benefits will be diluted, especially consider“It is envisaged that the fund will committed themselves to a new trading that Australia and New Zealand are involved help entrepreneurs from the Pacific to ing arrangement with the FICs which in multiple trade negotiations, including the TPP enhance their production and marketwould provide the basis for their eco(Trans Pacific Partnership) and RCEP (Regional ing skills and strengthen their capacity nomic growth and sustainable developComprehensive Economic Partnership). to benefit from PACER Plus. ment. “With flexibility on all sides, particularly on is“Regarding labour mobility, Australia Dr Edwini Kessie…time is “Concessions given in the context of sues of importance to the FICs, we should be able and New Zealand would be required to of the essence. Photo: PIFS PACER Plus should be seen as a necesto make substantive progress in the coming months relax border controls to facilitate the sary investment which would generate and hopefully wrap up the negotiations very soon movement of Pacific workers into their dividends in the medium to long-term so that the FICs can rely on trade as an engine of territories to work for temporary periods. for both the FICs and Australia and New Zealand. economic growth and sustainable development.” “As you can see, these are difficult issues and “Should Australia and New Zealand strengthen The next round of intersessional meetings bewould take time for the parties to bridge their difthe productive capacity of FICs to enhance their tween negotiators would be next month in Auckferences. participation in the global trading system, it would land, New Zealand. It would take place in the mar“In that respect, the parties have been refining result in a reduction of aid that they provide to the gins of the PACER Plus Officials meeting scheduled their proposals and there is now greater underFICs. there in the week of November 25. standing of each other’s positions.” “Put differently, it is the long-term interest of The two thorny issues of labour mobility and Dr Kessie was hopeful both the FICs on the one Australia and New Zealand to support their Pacific development assistance are expected to be on the side and Australia and New Zealand on the other neighbours to achieve economic growth and susnegotiation agenda.

Authority as being in compliance with the International Civil Aviation Organisation’s (ICAO) aviation safety standards for oversight of Tonga’s air carrier operations. At the same time, he said FAA had not issued their “Type Certification” for an MA60 as they are only responsible for aircraft operating in US territorial airspace. “I believe no one has ever tried to take an MA60 and use it in US airspace,” Walker said. He said he had been told the MA60 aircraft had recorded eight accidents—one air related and the other ground related,” he said. “The eight accidents involved only four fringe airlines who, between them, had racked up dozens of air accidents on a variety of good, well known aircraft.” Walker said at the same time New Zealand has had over 90 fatal air accidents since 1998 but Tonga

has never had one. “It is encouraging to know that the Tonga Government is making moves on this, but what the outcome will be, no one knows,” Walker told Islands Business. “I do believe there is a case to answer for the losses that we as operators suffer.” Meanwhile, New Zealand’s Foreign Affairs Minister Murray McCully’s updated the New Zealand travel advisory posted on August 10 saying “the plane is still a subject of concern for aviation experts”. “It is not certified to fly in New Zealand and would not be allowed to do so without a thorough certification process under civil aviation rules. “The MA60 is not certified by comparable jurisdictions such as the European Aviation Safety Agency (EU), the Federal Aviation Administration

(US) and the Civil Aviation Safety Authority (Aus),” McCully says. “In the absence of an internationally respected certification process for Tongan conditions, it is the government’s obligation to draw the attention of the travelling public to these issues and our Tongan travel advisory has been updated accordingly. The New Zealand Government has put support for the Tongan tourism industry on hold, and we will not be spending taxpayers money promoting tourism in Tonga until we are satisfied with the safety and reliability of this new air service. “We are in discussions with the Tongan Government on this issue. I reiterate my offer of support to Tonga to assist them in ensuring aviation safety, a critical component of tourism in the Pacific islands,”McCully says. Islands Business, October 2013 15

Cover Report

Making strides...the regionâ&#x20AC;&#x2122;s transport ministers and officials at the the Central Pacific Shipping Commission (CPSC) annual general meeting in Suva last month. The meeting endorsed companies and operators serving the central Pacific routes. Photo: SPC

SHIPPING WOES Central Pacific explores solution but will it work? 16 Islands Business, October 2013

Cover Report mission (MSC). Again, the private sector is calling it another needless layer of bureaucracy and wants it scrapped. International shipping service, they say, is a business best left to the competitive market and too much government intervention is only throwing more spanners in the works if what we want to see in the region is regular shipping service at a reasonable cost. “For a market, the best way forward is through competition,” said Stephen Blade, general manager for Transam Fiji, exclusive agent for Pacific Direct Line (PDL), which has been servicing most countries in the Pacific region for over 30 years. PDL was one of five shipping lines present at CPSC’s bid launch in Suva, Fiji, last month. “The idea of tendering out services like this to specific regions takes away the competitive elements of it, which means you only have possibly two service providers who are on fixed pricing. “If you have more than one carrier involved, then those carriers have to compete for the same cargo, which in an open market, theoretically drives the price down. “So from a commercial point of view, I think this is probably not the best solution for those countries but the flip side is they can contract the winner of the tender to provide services on a consistent and regular basis and at a price they know they are going to be able to afford, so that’s the rationale behind this,” Blade told Islands Business.

and launched the call for expressions of interest in the presence of representatives of shipping

By Dionisia Tabureguci

nternational shipping in this part of the world is famously fraught with irregularities and high freight costs that finding a solution to satisfy both governments and the shipping companies is still an unresolved enigma, especially where the very small Pacific islands countries are concerned. Imagine having to service a handful of countries, each with a population of under 100,000, some as low as under 10,000 and separated by miles of ocean. On the other hand, imagine if essential cargo does not reach these countries and they are starved of the basic necessities to run their economies and feed their people. In the Northern Pacific, a model of regulated shipping service run by the three freely associated states of Palau, the Federated States of Micronesia and Marshall Islands to deal with this tricky predicament is already under fire from the private sector for being “an unnecessary layer of bureaucracy” in the effort to provide reliable and consistent shipping service to that area at a reasonable cost. But last month, their neighbours down the Central Pacific were celebrating when they endorsed and launched a call for expression of interest from shipping companies who wish to provide them with shipping services. The model they adopted – where regulatory functions are managed through a new entity called the Central Pacific Shipping Commission (CPSC)—is a duplication of what the Micronesians are doing through their controversial Micronesian Shipping Com-

Elusive solution Whether this latest attempt will survive, time will tell but it’s worth noting that the MSC model, while said to be working for its members, is not popular among the private sector in the Northern Pacific. They say they haven’t seen the promised benefit of lower freight costs and that the regulated service is hampering rather than helping things for them. The CPSC for its part is borne out of the need by its four members—Kiribati, Marshall Islands, Nauru and Tuvalu—to bring some form of regularity of services to their islands, after previous regional attempts to link the islands failed. In fact, irregular shipping services and high freight costs in the region were so serious and persistent a challenge that it led to the creation of the Pacific Forum Line (PFL) by the Pacific Islands Forum Leaders in 1978. It was supposed to serve its 12 initial shareholders (New Zealand and 11 Pacific islands countries, among them the four CPSC members) but the small Pacific islands states have been the first ones to complain that PFL never benefitted them. They accuse it of serving only the bigger Forum member countries and overlooking the small ones, hence the reason why it flopped and currently struggling with its initial mandate to provide shipping service to all shareholders. “PFL is a sad story,” said Tuvalu’s Minister for Communications and Transport Monise Laafai. “Tuvalu was part of PFL and we have, in the past been paying our subscription to PFL but we have not benefitted a single cent from it. I think in our case, the reason was that our cargo volumes were so small that PFL was not interested or didn’t bother to come and service Tuvalu, so we were being left out. The sad thing is I don’t know what happened to it. The last I heard it was bankrupt.” PFL over the years had declined to a loss making entity and by the time controlling stakes in it was bought by the California-owned and Oceania-based Neptune Pacific Line last month, the shipping line had only one chartered ship servicing seven countries in the region. It is expected that under Neptune, PFL will be in a position to resume its regional mantle as the two organisations (Neptune and Islands Business, October 2013 17

Cover Report PFL) combined will serve the 12 Pacific islands countries. For a CPSC member country like Tuvalu with a tiny population of close to 10,000 and mainly a subsistence local economy, it isn’t difficult to imagine the reluctance of ships to provide services to it. CPSC members are up against their smallness, low level of economic development and isolation. Among them, the four countries have a combined population of only a little over 172,000, hardly enough to talk economies of scale. This is why they believe a regulated shipping service is the way forward because what it theoretically does is compel shipping companies—who under the model will have to pay huge sums of money for their licence—to service designated routes and do so under “reasonable” tariffs.

not sure if controlled competition will resolve the challenges faced by small islands states and there is a concern raised over just how their investments will be protected. “It is an admirable mission, there’s no doubt about that,” said Neptune’s managing director, Rolf Rasmussen. “You have to balance the frequency and the cost of freight with obviously the cost of providing the service, so one of my questions was what are the expectations on the service levels, say to Nauru for example? “Do they want us to be there once a month, twice a month, because that reflects heavily on the cost of providing the service. I think it’s a good cause but the fear that I have in the process is that the investments that are made in the shipping lines won’t be recognised. “So it’s a double edged sword. There are five shipping lines here (bidding for CPSC routes) and we all compete with each other. Some already have assets in the region, some employ Pacific islands seafarers, some don’t. So, I want to make sure that our investments are protected,” Rasmussen added. All the companies that took part in the CPSC bid last month also service Shipping men..Rolf Rasmussen, Neptune’s managing director and the Northern Pacific and therefore are Steven Blade, general manager for Transam Fiji, exclusive agent for familiar with the model. Pacific Direct Line. Photos: Dionisia Tabureguci

Controlled competition “What we want is controlled competition,” said Taberannang Timeon, Kiribati’s Minister for Transport. “You just have to look at our geography to know the problems we face. “We’re small, we’re in the middle of the Pacific Ocean and our low volume of cargo is not attractive enough for big shipping companies to come to Kiribati. “Last year and the beginning of this year, our cargoes didn’t arrive on-time. We had arrangements with several shipping lines but they didn’t arrive on-time and because this is constantly happening, our people have been suffering for quite some time now,” he said. For Kiribati, ship delays are so frequent that it isn’t uncommon to see locals queue up for something as ordinary as two kilogrammes of rice, for example. Ship delays mean late cargo arrivals which boil down to rationing of food and medical supplies in their island country. In the past, a feeder service run by a small ship owned by the Kiribati government picked up cargo from the four countries and shipped them to and from Fiji, which served as their hub. According to Timeon, that model worked well until the ship outlived its useful life and they could not afford to replace it. But he considers that to be the best model for small countries. “The problem of irregular shipping service continued for us and we hope it will be resolved through CPSC,” Timeon said. “We are using the MSC model and the MSC experience because that one works very well for them.” But based on their experience of the MSC model in the Northern Pacific, the shipping companies who took part in the CPSC bid are

Unique ports But there may still be that proverbial disconnect between business and government. The CPSC, through technical assistance from the Secretariat of the Pacific Community (SPC), has admirable objectives that try to balance the interest of shippers and governments in the interest of ensuring regular services at reasonable costs. “CPSC will serve as a medium for consultation on matters affecting international shipping to all of its members. It will cooperate in advancing an attractive shipping environment to service providers and form a united front for the negotiation of favourable shipping services through joint regulation and enforcement of shipping policies,” said SPC’s shipping advisor John Rounds. However, the harsh reality of the shipping business in the region, according to Blade, needs to be taken into account, because while so much expectations are being placed on the shipping companies, there are factors unique to the region that are often being overlooked and which may be strong determinants in the pricing of freight and regularity of service than having a model that does or does not work. “Delays in shipping are inevitable all the time because like most

CPSC launches call for expression of interest from sh The central Pacific region’s ambition for a more reliable, affordable and sustainable shipping service is making strides after a historic endorsement of a call for expressions of interest by the region’s ministers and officials at the conclusion of the Central Pacific Shipping Commission (CPSC) annual general meeting in Suva last month. Transport ministers and officials from Kiribati, Marshall Islands, Nauru and Tuvalu endorsed and launched the call for expressions of interest in the presence of representatives of 18 Islands Business, October 2013

shipping companies and operators serving the central Pacific routes. Under the policies coming into effect on January 1, 2014, CPSC will issue shipping licences to approved shippers with validity period of five years. Shipping companies will be given a one-month notice for the processing of applications. SPC’s (Secretariat of the Pacific Community) Economic Development Division Director, John Hogan in his opening address acknowledged the extensive work done by CPSC member countries

and SPC to operationalise the commission. Regional effort “I am very pleased that we have now come to this stage of the journey of CPSC. The shipping commission has had a long gestation period and the road has not always been smooth. “There were a lot of detractors who told us we couldn’t do this but we are here today and endorsing the operations of CPSC,” he said. “The hard work and the consistency in commitment to this regional effort has been amazing.

Cover Report businesses, you have things that are always going to be beyond your the cost of providing that service is high,” said Blade control,” he said. “If a ship breaks down because of engine problems or there are Joint effort problems with the weather or the ports, those things are inevitable There is consensus among CPSC members that they wouldn’t and they are bound to happen at some point in time. These are the want to go down the same road that the Pacific Forum Line went, things that shipping companies have to pay for. And that’s why the especially where the latter had failed to relate to the needs of its prices are what the prices are.” members. In particular, smaller countries in the region lack the infrastructure “We have had all the regulations done but the benefits from this to accommodate big ships, so their needs are particularly specific. remain to be seen,” said Laafai. “We dream about an undertaking “You have to be very specific and you have to like this and we hope it is going to bring us more benefits charter the correct type of vessel to service these than costs, so we need to see how the commission will places,” said Blade. deliver for its member countries in order to really gauge “They’re very small ports. You can’t put a what the benefits are.” 20,000-tonne ship in a port like Tuvalu or Majuro. In being tailored close to the MSC model, CPSC as a They don’t fit. So you have to have the right type policy will be implemented through an Entry Assurance of ship with the right type of gear, the right type of System, where an Entry Assurance Certificate (EAC) crew and those ships are actually very hard to find. will be required for all commercial carriers servicing the “If one breaks down, it literally takes weeks to get member countries, according to a paper on the concept another ship because there’s none here in the Pacific prepared by SPC. with the tonnage. There’s a worldwide shortage of The scheme is financed through an annual fee for each ship tonnage to supply all the needs of the world, EAC issued, and for CPSC, operators are potentially lookso if we have a breakdown, we have a breakdown. Taberannang Timeon..Kiribati ing at paying up to US$10,000 a year for an EAC. That’s just the reality.” Under MSC, the pre-requisites for granting EACs wants controlled competition. In addition, the often mediocre ancillary sup- Photo: Dionisia Tabureguci include that: port services at small Pacific ports mean that these • Routes satisfy basic trade requirements; ships often have to absorb other costs not directly related to their • Tariffs charged should be reasonable for the service proposed; operation. • The carrier must demonstrate capability to provide a reliable “For example, we lose time in Tuvalu on a regular basis because and stable service in terms of frequency, regularity and on transit the forklift breaks down,” said Blade. time performance; “You lose half a day because the forklift is not working, that’s • The service must be flexible to accommodate both specialised F$7,000 to a shipping company. So when the forklift breaks down, and conventional cargo; we put our engineer onshore to fix it. If they need parts, I go to the • The capitalisation or investment of the operator must be sufworkshop here in Fiji, I find the parts, put it on a plane and send ficient to adequately sustain the proposed service; and it to them. • Employment is provided to citizens of the three countries, “That’s because it’s my ship I don’t want it delayed and it’s their including internships with the operators. service they want. So while it’s not actually my problem, indirectly It’s a starting point to tackling the long-standing deficiencies in it is. There are also other things like the weather. Let’s take Nauru, international shipping services in small Pacific islands states. for instance. It’s a lighterage port. However, a word of caution from the operators is, for these “You put cargo on a barge, it goes to shore and comes back. If countries to also make an effort to come halfway, especially in terms the weather is bad, you cannot work, so you sit there for three days of port efficiency. waiting for the weather to get better because you can’t control the “There needs to be a joint view of things here, not just from weather. In Wallis Island, the wind is offshore three months of the shipping companies but also from the islands concerned, who want year, which means it’s blowing ships against the wharf, so the ship to have a better, more reliable and affordable services,” said Blade. cannot leave the wharf because if it does, it will hit the reef because “Not only for us to deliver in terms of our services, but for them the wind is too strong. to also deliver in terms of their services to the shipping companies. “So we have to sit there for a week and that’s costing us. I’m not “Infrastructure, we’d like to have ports that work, cranes that work, blaming anyone but these things are normal and we’ve got to keep forklifts that work, because these are the kinds of things that a shipping them in mind and have that kind of overview and be aware of why company factors in to its cost of providing a service,” he added.

ippers This is a home-grown effort by the Pacific for service to the Pacific Islands countries,” he added. CPSC was launched in October 2010 in Tonga with the intention of controlling competition, enhancing socio-economic development and providing affordable and sustainable commercial shipping services to small islands states in the region. An annual awards night to reward the efforts of shipping companies/stakeholders that provide highly efficient and effective service to the CPSC member countries is also planned.

SPC’s shipping advisor John Rounds said that once it assumes its regulatory role, the commission will “regulate international commercial shipping operations but at the same time protect approved shipping companies”. Regulate and protect “CPSC will serve as a medium for consultation on matters affecting international shipping services to all its members. “It will cooperate in advancing an attractive shipping environment to service providers and

form a united front for the negotiation of favourable shipping services through joint regulation and enforcement of shipping policies,” he said. “CPSC is modelled after the Micronesian Shipping Commission. “We have a memorandum of understanding with MSC and we are hoping for continued collaboration between the two commissions in the future,” Rounds said. • Source: Secretariat of the Pacific Community.

Islands Business, October 2013 19

Forum

Majuro Forum talks climate and regionalism But Forum continues to sail in choppy seas Text and photos by Nic Maclellan as flag-wavI wav ng chIldren of the Marshall Islands turned out to welcome Presidents, Premiers and Prime Ministers to the 44th Pacific Islands Forum, the assembled leaders were scheduled to arrive in a series of traditional canoes. But inclement weather and choppy waters on the lagoon forced a change of plans, and leaders were driven to the opening ceremony. The Forum itself continues to sail in choppy waters. The Majuro meeting focused on climate policy, frameworks to replace the Millennium Development Goals and relations between Fiji and other Forum member countries. But the low-key gathering revealed a number of unresolved problems, which continue to affect regional cohesion. Firstly, the gap between rhetoric and reality was very clear. Representatives of major powers queued up to meet Forum leaders, pledging support and solidarity, but their policies on climate, trade and fisheries pose major threats to many Pacific communities. Statements of climate solidarity are not matched by sufficient action to reduce the emissions that threaten regional livelihoods, environment and security. The unresolved question of Fiji’s relationship with the Forum continues to haunt regional politics. The suspension of Fiji from Forum meetings since 2009 has not stopped the Bainimarama regime from driving regional debate on a range of political and development agendas, aided by Suva’s current role as chair of the G77 plus China

group within the United Nations. Regional concern over the military’s role in drafting Fiji’s new constitution and doubt over the credibility of next year’s scheduled elections has not constrained Suva’s initiatives in the region, highlighted by the new Pacific Islands Development Forum (PIDF). A flare-up of jousting between China and Taiwan caused dramas throughout the meeting, with Beijing’s representatives reluctant to attend sessions in Majuro’s International Conference Centre (the Taiwan-funded complex features a large plaque and Taiwanese flag in the foyer!). Taiwan’s relations with six Pacific countries, including 2014 Forum host Palau, will continue to rankle Beijing, at a time when China’s influence is increasing across the region. The Obama administration has responded with pledges of regional engagement, but the US Congress seems reluctant to hand over resources required to implement climate policy or development strategy. The host government wanted to talk climate rather than nuclear policy, but atomic survivors rallied to highlight Washington’s failure to deal with the radioactive legacy of 67 atmospheric nuclear tests at Bikini and Enewetak atolls. Finally, the Forum Secretariat and other member agencies of the Council of Regional Organisations of the Pacific (CROP) are under pressure from all directions: donor demands, burgeoning sub-regional organisations, civil society critiques and concern from some member governments that resources are not flowing to the national level. In Majuro, leaders were briefed by former PNG Prime Minister Sir Mekere Morauta, following his team’s review of the 2005 Pacific

Welcome to Majuro...Marshallese children welcome Pacific Islan

Plan for Strengthening Regional Integration and Co-operation. The wide ranging review has highlighted the crisis in the Forum Secretariat and other regional institutions, with Morauta telling Forum leaders: “There is a compelling argument for greater regional cooperation and integration across the Pacific. However, progress in regionalism has in our opinion slowed down, and by too much.” (see story titled Morauta outlines Pacific Plan challenges.). Climate politics The main focus for the meeting was climate change, with the theme “Marshalling the Pacific Response to the Climate Challenge.” A team of officials led by Marshall Islands Minister Tony de Brum prepared a Majuro Declaration for Climate Leadership as the centrepiece of the meeting, seeking commitments for more urgent action to phase down greenhouse gas emissions. Following Hillary Clinton’s successful foray to last year’s Forum in Rarotonga, Marshall Islands

Morauta outlines Pacific Plan challenges In majuro, former png prIme mInIsTer sIr Mekere Morauta briefed Forum leaders on the findings and recommendations of his review of the 2005 Pacific Plan for Strengthening Regional Integration and Cooperation. Following the 2012 Winder review of the Forum Secretariat (which was critical of the priorities and capacities of the regional organisation), Morauta’s review took on greater importance. What began as a review focussed on priorities in the Pacific Plan has broadened to a much wider debate about the future of regionalism. With the review team releasing a series of working papers before the Forum, it’s been clear that there is widespread disenchantment on how the plan has been utilised since it was first adopted at the Madang Forum in 2005. There is growing debate about whether the Islands Business, October 2013

Forum’s pre-eminence is being supported or challenged by a growing range of sub-regional institutions, including the Melanesian Spearhead Group (MSG), the Micronesian Chief Executives meeting, and the Polynesian Leaders Group (PLG). The newly established Pacific Islands Development Forum (PIDF)—an initiative of the Bainimarama regime—provides both a mechanism for debate about sustainable development in the islands context and an alternative meeting place to the regional body perceived as dominated by Australia and New Zealand. The debate on regional politics was best summarised by Roch Wamytan, a member of the recent MSG Eminent Persons Group. In Majuro, the Kanak leader told Islands BusIness the major powers need to respect the growing sense

of autonomy in islands nations. “You see this across the region, especially with the Melanesians but also with the Polynesians and Micronesians,” Wamytan said. “All of us want a certain autonomy and to cease constantly being under the influence of the colonial powers—or even the larger nations like Australia and New Zealand. We want to have a space where we can talk amongst ourselves without each time having to refer to the big countries, each of which have their own interests and agendas.” In Majuro, Forum leaders were given a special briefing on the findings and recommendations of the Morauta review, giving them a chance for input before the report is finalised in the coming weeks. Morauta said there were many positives about Pacific societies revealed in his consultations

Forum

President Christopher Loeak issued an open letter to US Secretary of State John Kerry, inviting him to attend this year’s meeting with new initiatives on climate change. Kerry didn’t attend, instead sent a video message to the Panel on Climate Experts that preceded the official Forum opening. According to the US Secretary of State: “The science is clear. It is irrefutable and alarming. If we continue down our current path, the impacts of climate change will only get worse.” After a week of discussions and backroom lobbying, Forum leaders endorsed the Majuro Declaration, which will be presented to UN Secretary General Ban Ki-Moon in September and used to lobby international fora in the coming months. The initiative asks countries and organisations to sign the declaration and “list specific commitments that contribute more than previous efforts to the urgent reduction and phase down of greenhouse gas pollution”. It stresses the importance of islands governments obtaining

technical and financial support for “the necessary energy revolution and economic transformation to low-carbon development.” However, the major polluters brought little to the table in Majuro beyond existing policies. New Zealand’s Prime Minister John Key confirmed there would be no new commitments from his government at this stage. The head of the US delegation, Interior Secretary Sally Jewell, said the United States would sign the declaration but only pledged President Obama’s existing Climate Action Plan. With national elections held the day after the Forum, Australian representative Jacinta Collins (the outgoing Minister for Health and Ageing) could not make any new pledges. However, there were few illusions in Majuro that the post-Forum change of government in Canberra would bring positive new climate initiatives. A centrepiece of Tony Abbott’s successful election campaign was his pledge to abolish the ALP

government’s carbon price and amend renewable energy policies. A shiver ran down the Forum’s collective spine when word arrived in Majuro that incoming Finance Minister Joe Hockey would cut A$4.5 billion from the Australian aid programme over the next four years. Given Canberra’s funding for climate adaptation in the Pacific is drawn from the aid budget, Australia’s role as co-chair of the global Green Climate Fund will become more complex under the new government! After attending the 2011 Auckland Forum, EU Climate Commissioner Connie Hedegaard was again active in Majuro. Promoting an EU-Pacific climate alliance, Hedegaard supported the Majuro Declaration as a “realistic and constructive initiative”. She told Islands Business that Pacific voices carried weight in the global climate negotiations: “Two years ago it was very clear that what we discussed amongst ourselves at PIF actually made an impact when we came to Durban. The Majuro Declaration is a strong call for action—it stresses the urgency but in a very constructive fashion.” Others were more sceptical that yet another declaration would address the failure of key industrialised nations to act on emissions. In the corridors, some delegates and officials suggested that the declaration’s “non-adversarial” process downplayed core issues raised by the Alliance of Small Islands States (AOSIS), including the current push for a legally binding treaty with set targets and an international mechanism on loss and damage. AOSIS Chair, Ambassador Marlene Moses of Nauru, said: “I’m often told I need to be more realistic, that I should be more satisfied with incremental progress. That’s fine if you don’t live on an island, if you don’t live on an atoll. I’m asking for more, much more. Developed countries must provide predictable and accessible sources of finance sufficient to fund critical adaptation activities and the development of renewable energy. Most importantly, and I’ll say it again, greenhouse gas emissions must reduce.” In their final communique, leaders “called on donors and development partners to report on their climate change financing and how they differentiate or integrate such financing with their ODA allocations, noting New Zealand and

across the region: “A society that cares for itself and its neighbours. A society that is proud of its heritage, diversity and values. But a society that is nervous about where the Pacific is heading, and a Pacific region that is disproportionately vulnerable and disproportionately dependent on others. A region which needs collective action among and between countries to deal with its challenges, and to thrive in the future.” Describing a region “at the crossroads”, Morauta was sharply critical of the 2005 Pacific Plan: “It is very difficult to see how the Pacific Plan or the processes surrounding it are—now —driving regional integration with the scope, pace and scale intended in its original framing. “Confidence in the Pacific Plan and some of the institutions around it has fallen to the point where some observers question their survival.”

For the review team, “the solution lies in reestablishing a robust political process around regionalism, as opposed to—simply—refreshing a technocratic shopping list of Pacific Plan priorities. It is a matter of reaffirming the role of politics in Pacific development and how political choices are prosecuted through the region’s peak political body.” Morauta presented a range of suggestions for reflection, review and action in the coming months— • the establishment of a high-level council of past and present Forum chairs to restructure the Forum Secretariat; • devolving more power to ministerial meetings and sub-regional organisations to avoid overloading the agenda of the annual Forum leaders meeting;

• debate on the criteria for Forum membership, given the growing involvement of the US and French territories, and whether ‘selfdetermination’ should still be a defining factor for full Forum membership; • further work to articulate the concept of sustainable development; • better co-ordination and management of donor support for regionalism. Above all, Morauta stressed: “The network of regional agencies needs to be responding to the political agenda, not setting the political agenda.” Forum leaders agreed that Morauta’s final report should be sent to the Forum Officials Committee before being presented to a special leaders meeting which Papua New Guinea has offered to host.

nds Forum leaders to their country.

Islands Business, October 2013 21

Forum Australia’s existing efforts in this regard.” Hedegaard and SPC Director General Jimmie Rodgers signed a 20 million Euro “ACP-EU Building Safety and Resilience in the Pacific” programme to build synergies between disaster risk reduction and climate change adaptation. In Kerry’s absence, Interior Secretary Jewell announced a new Pacific American Climate Fund (PAC), and recycled pledges of US$30 million in US assistance for the Pacific region, including US$4.5 million over five years for disaster preparedness in FSM and the Marshall Islands, and US$6 million funding for SPREP and SPC. However, after the announcement of the new fund, briefing notes provided to journalists revealed that “USAID has launched a new procurement of US$20 million-US$24 million, subject to the availability of funds, for the PAC Fund project.” In other words, there won’t be a new US action on climate adaptation without approval and dollars from the US Congress and that may take a while. As Interior Secretary, Jewell was on her first international visit (Memo to US officials: when the head of your delegation pledges solidarity with low-lying atoll nations, she should be briefed on how to say their names. Kiribati is not pronounced “Kiribarty”!)

In Majuro, leaders agreed to grant Post-Forum Dialogue partner status to Cuba, a recognition of Havana’s support with the training of dozens of medical students, and joint participation in AOSIS and the UN Special Committee on Decolonisation. A similar bid from Spain for dialogue partnership was deferred for a year. During their retreat on Eneko Island, some Forum leaders raised concerns over Spain’s fisheries policy, with reports of illegal fishing in Nauruan waters and recent statements from Spanish MPs attacking the Parties to the Nauru Agreement (PNA). Spain is also competing with New Zealand to represent the Western European and Others Group (WEOG) on a rotating seat at the UN Security Council. In their communique, Forum leaders reaffirmed support for New Zealand’s bid “to maintain a Pacific voice in the world’s primary body to address international peace and security.” (Following a NZ initiative, leaders also “noted with concern” the situation in Syria and “expressed their abhorrence at the use of chemical weapons by the Syrian Government”).

process with fair and timely registration; independent election monitoring; freedom of expression, media and assembly in election preparations; and a general acceptance of the election outcome by the people of Fiji.” Key said that Fiji’s reinstatement to the Forum would only come after the proposed elections: “The view of Australia and New Zealand and increasingly others, was that there’s a test here, it’s sort of a bright line: hold free and fair elections and you’re over the line.” As Fiji’s elections are not scheduled until after next year’s Forum meeting in Palau, there’s still a way to go before Suva will be invited back to Forum gatherings. The question remains, however, whether an elected Bainimarama government would want to re-join the Forum!

Preparing for the SIDS summit The Majuro Forum was a timely step in the lead-up to negotiations for a global climate treaty in 2015. The same year, the United Nations must bring together a new development agenda to replace the Millennium Development Goals (MDGs). As the 2015 deadline looms closer, Pacific Fiji on hold for elections governments and officials are working to carry the After years of diplomatic spats, the incoming particular concerns of Small Islands Developing States (SIDS) into key international meetings. Development With Samoa to host the partners next Global Summit on Small With Australia sidelined during Islands Developing States in the Forum because of national September 2014, regional offielections, New Zealand sent a cials are developing proposals to large contingent to Majuro, led take to the international arena. by Prime Minister Key. For the Forum Secretariat’s As the Kiwi delegation rolled Development Co-operation into town, one islands delegate Advisor Alfred Schuster, the wryly remarked: “It looks like it’s Samoa SIDS summit is well New Zealand’s turn to play bad placed to prepare for crucial cop rather than good cop.” decisions on climate and deBut other Forum members staked their ground. PNG Smiling leaders...Samoa’s Prime Minister Tuilaepa Sailele Malielegaoi (left) and Nauru’s President velopment. “Strategically, it’s significant Prime Minister Peter O’Neill Baron Divavesi Waqa. They were in Majuro for the Leaders Summit. that the SIDS conference is announced his country will embeing held in our region,” said bark on a programme for regional Schuster. “It places us at the forefront of the Abbott government will build new links with Fiji, assistance with smaller countries in the Pacific, global conversation. There’s a real opportunity with key Australian corporations keen to improve with a specific budget allocation from 2014. for the region to make its mark in the global relations with the region’s second biggest islands With Papua New Guinea experiencing sigprocess.” economy. Speaking at the Australia-Fiji Business nificant economic growth and looking forward In Majuro, Forum leaders received a report Council meeting in July, the new Foreign Ministo revenue flows from the exploitation of oil and on the progress by Forum islands countries ter Julie Bishop said: “It is now time to rebuild the gas reserves, the largest Forum island country is to achieve the MDGs and proposals for new bridges. I commit to ensuring that normalising making small but significant development conSustainable Development Goals (SDGs) to be relations between Australia and Fiji is a priority tributions to smaller islands states. introduced after 2015. The Forum and other of an incoming government.” Speaking to journalists, O’Neill highlighted CROP agencies are focused on ensuring that In Majuro, the Forum reaffirmed existing PNG’s cyclone relief for Tonga and Samoa, cliglobal development targets designed to replace policy on Fiji, after the visit of the Forum Minmate adaptation funds for Tuvalu and Marshall the MDGs reflect the particular circumstances of isterial Contact Group last April. Islands and 25 million Kina to aid preparations small islands states and bring together different Leaders welcomed the release of Fiji’s new for Fiji’s 2014 elections, with a similar grant the measures to measure sustainable development. constitution as “an important step towards free following year. and fair elections” (a decision that may worry The PNG government has also been rolling Changing the rules for membership? civil society critics of the new military-backed out assistance to Canberra, agreeing to bail out the While the public focus in Majuro was on cliconstitution, which lacks many of the provisions Australian government through the detention and mate, development and life after the MDGs, there found in the 1997 Fiji Constitution or the draft processing of asylum seekers on Manus Island. was a significant discussion behind-the-scenes prepared by Yash Ghai’s constitutional commisThe incoming conservative Coalition under Ababout the membership of the regional body. sion in 2012, which was summarily abandoned bott has pledged to maintain key aspects of Kevin The 2005 agreement that legally established by the Bainimarama government). Rudd’s “PNG Solution” for asylum seekers, with the Forum Secretariat in Fiji has still not been In their communique, Forum leaders set out a refugee policy likely to complicate regional relaratified, and there is ongoing discussion on the number of elements that would ensure “free and tions in the coming months. legal criteria for full membership—especially as fair” elections in Fiji, scheduled for September Beyond the 14 Post-Forum Dialogue partners the US and French territories have now obtained 2014: “a constitution that credibly reflects puband the growing list of official observers, there is observer status or associate membership of the lic views; an independent elections oversight a queue of delegations appearing at annual Forum regional body. mechanism and election monitoring; free and fair meetings to lobby in the corridors, from Turkey As part of its regional dialogue, the Pacific Plan participation by political parties in the electoral and Georgia to UAE. 22 Islands Business, October 2013

Forum review team led by Sir Mekere Morauta visited New Caledonia and French Polynesia—the two associate members of the Forum. In his briefing to Forum leaders in Majuro, Morauta called for “reflection on the involvement in this process of territories that are not currently full members of the Forum, and whether ‘selfdetermination’ should still be a defining factor.” Currently, Forum membership is restricted to Australia, New Zealand and 14 independent islands nations (with Fiji suspended from meetings). Both New Caledonia and French Polynesia want to upgrade their status from associate membership. France, Australia and New Zealand are supporting President Harold Martin’s bid for full membership, even before a decision on New Caledonia’s future political status is taken in a self-determination referendum scheduled before 2018. But New Caledonia’s bid for membership is overshadowed by sub-regional politics, which can complicate as well as complement Forum cohesion. There are tensions within and between members of the Melanesian Spearhead Group (MSG) and the Polynesian Leadership Group (PLG) over controversial topics like Fiji, West Papua and decolonisation. Over the next year, the MSG will be chaired by Victor Tutugoro of New Caledonia’s Kanak independence movement, the Front de Liberation Nationale Kanak et Socialiste (FLNKS), while the incoming chair of the PLG is French Polynesia’s President Gaston Flosse, a long-standing partisan of France and outspoken opponent of independence in the French Pacific territories. President Flosse told Islands BusIness that he had offered to establish and fund a permanent PLG secretariat in Papeete, but that “the Polynesian leaders are still reflecting on our offer”. Flosse’s revived regional role has not won overwhelming endorsement from all Forum islands countries. Earlier this year, many Pacific governments rallied to support outgoing President Oscar Temaru’s bid for French Polynesia’s reinscription on the UN list of non-self-governing territories. Solomon Islands, Nauru, Tuvalu and other nations sponsored a successful resolution on reinscription at the UN General Assembly last May, even though the newly elected assembly under President Flosse condemned the UN action. The final communique from Majuro did not mention New Caledonia’s bid for membership. Instead, leaders endorsed the report by outgoing chair Henry Puna of the Forum’s July 2013 mission to New Caledonia (the first in eight years). Forum Secretary General Tuiloma Neroni Slade said: “There will be continuing contacts with New Caledonia to consult and discuss the arrangements for membership. We need to undertake another specific study on criteria for membership of the Forum, having regard to the legal instruments of the Forum.” The Speaker of New Caledonia’s Congress Wamytan, a long-time independence leader, agreed that most Forum members wanted a step by step discussion before New Caledonia’s membership is finalised: “France continues to control the sovereign powers like defence, foreign affairs, currency and so on. That could put our friends in the Pacific in a dilemma because the Forum and the MSG want New Caledonia to be a member of their organisations but they don’t want France to join at the same time!”

Forum ignores business proposals Businesspeople disappointed with leaders By Giff Johnson pacIfIc BusInesspeople who met in Majuro in conjunction with the Pacific Islands Forum wanted political leaders to back initiatives and remove hurdles to creating airline and shipping opportunities to improve north-south service in the region. But even though business leaders were given the opportunity to present a brief statement about their pre-Forum meeting to the leaders, the Forum leaders’ nine-page communiqué makes not a single mention of these business issues and does not acknowledge the presentation made by Marshall Islands Chamber of Commerce President Brenda Alik Maddison on behalf of the regional business meeting. Officials with the Marshall Islands Chamber of Brenda Maddison...disappointed. Commerce, who Photos: Giff Johnson organized the early September Private Sector Dialogue, expressed their disappointment at lack of recognition to business objectives in the final communiqué because the point of doing these meetings—the fourth in as many years—is to offer input to the annual leaders’ meeting. The theme was “Enhancing Transport Solutions for increased Trade and Mobility—Connecting North and South Pacific.” During the two-day business consultation, businesspeople from the Marshall Islands, Kiribati and Tuvalu said lack of air service makes development of tourism and other business opportunities difficult. Jerry Kramer, CEO of Pacific International Inc. based in Majuro, said the Marshall Islands government is subsidizing operations of Our Airline service that links Majuro with Brisbane and Fiji via Nauru. “Though it is much needed, it is not financially self-sustaining,” he said. But if Fiji approves an application from Air Marshall Islands to exercise landing rights in Fiji, the service “could be selfsustaining,” Kramer said. Key to making the route viable is a link connecting Majuro, Kiribati and Fiji. Kramer hopes the Fiji government will look favorably on the Marshalls’ application and also that Fiji Airways will look to using its reciprocal

landing rights in Majuro to extend its current south-north air service. “An outcome we need (from this dialogue) is to get governments to remove impediments to transportation,” said Frank Yourn, executive director of the Australia Pacific Islands Business Council, who is based in Queensland. “We support a recommendation to liberalize air service to allow airlines, not governments, to decide where service can be operated profitably.” Concern was raised about governmental bodies adding a layer of red tape to shipping service in the region. “There was agreement amongst these private sector representatives that the Micronesian Shipping Commission (MSC), adds an unwanted and unproductive layer of bureaucratic regulation that significantly raises shipping costs and hampers, rather Jerry Kramer...Fiji to look than assists, shipfavourably on MarshallsÕ ping services,” application. Kramer said. The delegates were unanimous in disagreeing with the formation of the Central Pacific Shipping Commission—an entity that was recently established by governments in the central Pacific region. While many smaller islands suffer from lack of air service, the Cook Islands and Palau have prospered in recent years with two different models. Cook Islands representative Stephen Anderson said the government has subsidized service by Air New Zealand because it generates about three times the investment. “Would Air New Zealand fly without it?” he said. “No.” But the subsidy has a larger social and economic benefit to the country, he said In Palau, a Chamber of Commerce partnership with the visitors bureau and tourism association led to an agreement to promote improved air service. Over the past six years, Palau’s tourism numbers have jumped from 70,000 a year to nearly 120,000 and from two carriers to seven providing hundreds of flights a year. “We have seven carriers and we’re still looking for a couple more,” said Palau Chamber of Commerce President Ken Uyehara. “We’re still looking for carriers from Australia and New Zealand. We want to diversify.” Despite these successes in specific markets, the major challenge for the Pacific remains: expanding north-south air services. Islands Business, October 2013

Politics

Marshall Islands

by the same amount each year. While grants have declined by US$5 million since the start of the Compact’s current 20-year funding cycle, there has been little attention paid to the issue in Majuro, where the Ministry of Education, for example, is nearly 90 percent dependent on U.S. funding for its operations. “We remain very concerned at the number of issues that are still unresolved even though they have been addressed repeatedly in prior JEMFAC meetings and consultations,” Pula told Muller in August. “Budget submissions are late and not compliant with (the Compact’s) Fiscal Procedures Agreement. The Marshall Islands government has not submitted a budget decrement plan in U.S. budget limbo...The lack of agreement on Compact funding could hurt public elementary schools in the accordance with JEMFAC Resolution 2010-1.” Marshall Islands, which are dependent for operations on U.S. aid. Photo: Suzanne Chutaro Pula said a document recently provided by the Marshall Islands’ Ministry of Foreign Affairs relating to medium-term planning not only did not meet Compact fiscal requirements, but lacked any linkage to a separate “Fiscal Management Model” submitted by the Ministry of Finance. Muller acknowledged the lack of action by his government. On decrement plans and medium-term budget planning, “our efforts fell short,” Muller said, adding he shared JEMFAC’s frustration at his government’s delay in producing these documents. But the Marshalls’ side was angered by the U.S. limiting the amount of Compact funding that can be used to pay electricity, rental housing and food expenses a “continuing resolution” to give By Giff Johnson by the Ministries of Education and it spending authority for the first Health, which forces the Marshall quarter of the new fiscal year. For the first time in nearly Islands to share these expenses 50-50 Since the second Compact agree30 years of relations between the with the U.S. ment was implemented in late 2003, Marshall Islands and the United Muller said this plan was approved the Joint Economic Management States governments, the two have been unable to despite his government asking for a and Financial Accountability Comreach an agreement on a budget allocation for the “more reasonable” cost sharing of 10mittee (JEMFAC)—on which the new fiscal year, a development that highlights in90 or 25-75. And he said bluntly that U.S. holds a three-to-two majority creasing dissatisfaction in President Christopher his government has been unable to but is required to make decisions by Loeak’s nearly two-year-old administration with come up with other sources to fund consensus—has routinely approved the U.S. government’s accountability control these costs and that JEMFAC should budget plans each year. over money it provides to the Marshall Islands. “be focused on Compact grants and Since coming into office in early The two sides were unable to reach an agree2011, the Loeak administration has Marshall Islands Foreign not intervene in the Marshall Islands’ ment at their annual late August budget meeting chaffed at the rules of Compact Minister Phillip Muller... internal budget processes”. on a funding plan for Compact of Free AssociaPula and the other U.S. JEMFAC funding, which provide for oversight invasion of sovereignty. Photo: tion allocations for the fiscal year 2014, which members, in a September 16 letter by JEMFAC, which is led by the Isaac Marty started on October 1. to Muller, said the decision to limit Interior Department’s Pula. The dispute centers on the U.S. government’s Compact funding for power, rent and food “proMuller views the JEMFAC oversight process as requirement that the release of the second half vides the opportunity for the Marshall Islands an invasion of his government’s sovereignty and funding for the fiscal year 2014 will be contingent to redirect approximately US$1.8 million of has said so during parliamentary debates. on the Marshall Islands submitting planning Compact assistance into areas of its health and In responding to Muller’s concerns over U.S. documents that the U.S. has been asking for education budgets that will address significant imposed conditions on the FY2014 funding, Pula since 2010. unmet needs in each sector and promote budgetcommented in mid-September: “The Compact “Full Compact grant allocations should be an ary sustainability.” is a binding agreement between our two nations annual allocation and disbursement with no conDespite Muller’s request to rescind the with obligations and responsibilities for each dition,” Foreign Minister Phillip Muller wrote resolution capping FY2014 Compact funding for government.” to the Department of Interior Insular Affairs power, rent and food—which Muller described One of the two resolutions that were approved Director Nikolao Pula on September 4. as “a serious setback to our primary social deby JEMFAC in August allows for Compact “The two sides don’t disagree on the amounts velopment goals”—the U.S. side was unmoved: funding unspent in previous years to be used to allocated for education, health and other sectors, “After careful review, we continue to view our complete “satisfactory plans to address annual just on the conditions. The funding in limbo current position as a sensible and necessary apdecrements (reductions) in Compact funds, to represents about 25 percent of the government’s proach forward in the absence of a detailed and produce reliable indicator data used to track budget. long-term decrement plan from the Marshall progress in education and health, and/or to adAs a consequence of the dispute, the Marshall Islands,” said Pula. dress all single audit findings in a timely manner.” Islands government did not submit its annual The lack of action to approve the FY2014 ComFor more than three years, the U.S. has been budget to parliament on the second week of Seppact budget affects US$23.7 million, nearly half of asking the Marshall Islands to produce a “decretember as expected, and it appeared that, with no which goes to the Ministry of Education and includes ment plan” to address the ongoing annual reductime to submit the budget and hold the required US$7.5 million for health and nearly US$3.9 million tion in Compact grant aid. public hearings by the end of the fiscal year on for a special fund for Ebeye Island, the overcrowded Compact grants decline by US$500,000 annuSeptember 30, the government would take the island next to the U.S. Army’s Reagan Test Site. ally, while U.S. trust fund investments increase unusual action of introducing in parliament

U.S. funding stalemate highlights

Marshalls angry over Compact rules

24 Islands Business, October 2013

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Politics

AUSTRALIa

The power duo...Australia’s Prime Minister Tony Abbott (left) and foreign minister Julie Bishop. Photo: www.odt.co.nz

Tough times ahead for Bishop Minimal exposure to international diplomacy By Davendra Sharma W ith a new government in Canberra has come an inexperienced foreign affairs minister with minimal exposure to international diplomacy. Her first chore after being sworn in was to meet key officials and politicians from Papua New Guinea, Indonesia, China and Japan—the four countries of paramount trade and strategic importance to Australia. PNG and Indonesia are main recipients of Australia’s foreign aid—around A$1.5 billion out of a mega annual handout budget of nearly A$6 billion. But she has made no secret of the fact that Julie Bishop is Australia’s first female foreign affairs minister “I believe that it sends a pretty powerful message for Australia that we have a female foreign minister,” Bishop told the local media after assuming office. “I don’t overstate it, but it’s a milestone that has been reached now. It is always easier for the next woman that comes along.” Bishop has not always had a charmed run in international affairs, which points to the fact that she will have a tough term ahead—especially in dealing with Australia’s full-time role in the powerful world group, the United Nations Security Council, where the country has a seat. Bishop’s Liberal Party strongly opposed Australia obtaining a Security Council seat when it was in opposition but now it has to deal with it even if it does not approve of it. It is irony of sorts as the Liberals went to the 2010 elections saying they will scrap Australia’s campaign to gain a seat. 26 Islands Business, October 2013

Australia will also host the 2014 G20 leaders’ summit, where Bishop needs to excel but can she? Some doubt that her relationship with her own department let alone foreign governments may be questionable. “The diplomatic service is not accustomed to a minister without significant experience in international affairs or, at least, strongly formed views,” noted one newspaper analyst. Within a week of her appointment, she was sent on a punishing schedule—attending the UN General Assembly to debate on Syria and Iran. After New York will be Jakarta with another key agenda—people smuggling and asylum seeker issues. Also in the pipeline are trips to New Zealand, Papua New Guinea, Singapore and back to Indonesia. Next on the cards will be Japan, China, South Korea, Fiji and India. “I don’t see it as a transactional portfolio by any means. I see it as developing relationships that will benefit Australia over the long-term,” Bishop says. “My aim is to be the very best foreign minister that Australia could wish for. Is that a high enough standard for you?” Slash foreign aid Linked to Bishop’s approach to foreign policy is Australia’s stance on foreign aid to underdeveloped and developing countries in the Asia and Pacific islands region. Her government swiftly moved to announce that AusAID will be scrapped as an independent statutory agency and that the overall aid programme is in urgent need of reform. Under the former Rudd-Gillard governments, no other department budget grew so rapidly as

foreign aid. Some handouts were arguably politicised partly to solicitor support for Canberra’s efforts to seek votes for Australia to have a nonpermanent term on the UN Security Council. Some say it was also politicised to give Rudd a role in Middle East peace talks. While Rudd-Gillard’s programmes were destined for alleviating poverty and promoting development, some critics saw the foreign assistance was not an arm of diplomacy or an arm of national power for Australia as a nation as aid should be. “Folding AusAid into DFAT (Department of Foreign Affairs & Trade) gives a renewed and proper emphasis back to the national interest part of that equation,” argued one senior government advisor. PNG reaps A$507 million from Canberra and because of its strategic importance, the amount is expected to stay if not be increased even without AusAID, one of Australia’s biggest spending agencies since it was introduced in the 1990s. “We have made known our disappointment with aspects of AusAID’s operations in PNG for some time,” said Prime Minister Peter O’Neill. Australia’s handout to the region has also ballooned in recent times especially RAMSI, the Honiara-based Regional Assistance Mission to Solomon Islands peacekeeping force. The Rudd-Bob Carr government pledged A$500 million this year. Australia had set a multi-million millennium goal, which was initially supposed to be attained in the 2015-2016 financial year, however with the looming deficit, that target was pushed out twice to 2017-2018 financial year. Manus Island and Nauru to stay Caught in a web of increasing number of refugees arriving and seeking shelter in Australia, the former Labor government has had to divert funds previously allocated for development aid to building and maintaining visa processing centres at PNG’s Manus Island and Nauru. Since immigration processing on Manus Island and Nauru was started by the old Coalition government, both regional centres are expected to stay or even attract greater importance from the new regime, which is as keen on stopping illegal migrants as the previous Rudd government. Together, the two centres in the region have costed up to A$1 billion yearly in the past. There have been suggestions that BishopAbbott should heed Rudd’s hardline assylum seeker policies of sending refugees to PNG and Nauru for settlement there. “He needs to swallow his pride and it’s hard to swallow his pride so soon after what was such a big win for him,”said outgoing Immigration Minister, Tony Burke. Ironically only China has closely match Australia’s contribution to the Pacific islands region in terms of aid across a spectrum of industries and fields. Australia has over the past two years increased its aid by 9.6% while other rich OECD (Organisation for Economic Cooperation and Development) countries have reduced their handouts by an average of four percent. Australian’s economy has stood the test of times in the last four years as it had fended off global pressures and maintained a recession-free economy despite slowdown on the world scene —as noted by Standards & Poors rating agency in its assessment of Australia as AAA economy.

UNITED KINGDOM

‘Aid is not a luxury choice’ But other commentators were more critical of the government decision to slice or in some cases freeze and defer aid handouts. Australia could and will pay a high price for cuts to overseas aid and diplomatic corps, warns an expert from the respected Canberra-based Australian National University. “The fact is, in a globalised world and in our neighbourhood, Australian foreign policy and development assistance is not a luxury choice or an act of charity; it’s a shrewd, hard-headed investment. Our economic well-being is not always in the hands of politicians,” aid and diplomacy expert, Dr Susan Harris Rimmer of the ANU Asia-Pacific College of Diplomacy, noted. At a time when Australia was riding high with a 3.25% GDP growth, a low inflation of 2.5% and unemployment of 5.5%, the government could have done better than just pay lip service to the islands region. “We know this, deep down. So why does the

government think that aid and diplomacy are such a soft target for budget cuts, especially when Australia’s only hope in the global economy is to understand more about our world and region, not less?” Rimmer argued that Australia’s own international reputation takes a beating every time Canberra cuts back on development aid to the developing and under-developed countries around the region of Asia and Pacific. “We are only hurting ourselves with this pattern.” She said regional governments who look up to Australia and New Zealand for development assistance will not be happy about our internal politics of domestic surplus. She said with long-term delays in the release of aid funds to the region, Australia was withholding A$2.9 billion over four years. “This led to a redirecting of funds earmarked for overseas poverty alleviation to pay for the costs of the domestic asylum seeker programme, including mandatory detention.” Around the region and parts of Asia, the Australian aid delays have forced the closure of health, education and women’s rights programmes announced by Gillard at the Pacific Islands Forum meeting in 2012. A review from the OECD last month warned that the move by Canberra would undermine the predictability of Australia’s foreign aid commitments. Either way, Bishop will have a tough time convincing her own government to keep aid at pre-Abbott levels or influencing the regional governments that cuts are inevitable.

Challenges for islands law ministers New technologies and help on offer By Davendra Sharma

law mInIsTers In small Islands states face ever-increasing new challenges in delivering appropriate access to justice for victims of crime. But all that is about to change with the Commonwealth Secretariat kicking in support to the region. Justice departments in small countries can now tap into new technology for use in courtrooms, introduce alternative sentencing measures to prevent prison overcrowding and address violence against women more effectively. Tonga’s Attorney-General Neil Adsett said that small jurisdictions have similar laws, histories and challenges, allowing for an understanding of their needs and practical assistance in a low-key way. Adsett chaired a September summit in London

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Australia also announced under Rudd-Gillard to target future aid to alleviating malnutrition in the wake of a Work Bank finding this year, citing the Pacific islands countries as amongst countries having the highest prevalence of malnutrition, obesity and food-deficiency related diseases. World Vision Australia chief executive Tim Costello said governments should comprehend that no dollar is better spent than foreign aid and that Australian aid had saved 200,000 lives in the past year. “Australians are smart enough to know that overseas aid is for overseas,” he said.

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Islands Business, October 2013

Politics

International crime syndicates have tried to penetrate small islands states hoping to capitalise on their inefficient legal systems. of over 30 law ministers and attorneys-general bers have dealt with this problem, and we are representing small Commonwealth jurisdictions even going home with a template of some in Africa, Asia, the Caribbean, Europe and the recommendations based on the findings by the Pacific, where specific challenges facing justice Commonwealth Secretariat on this issue. That’s systems were isolated. very exciting.” The meeting was told that island states needed The Commonwealth will provide expert to cooperate with and learn from each other to advice as well as personnel to deal with criminal face such crimes as anti-corruption, anti-money cases in small islands states which take lengthy laundering, counterterrorism and cyber crime— processing time. which are increasing at an alarming rate in the Adsett noted that many other international region. organisations offered aid but had little underAs ministers disclosed the specific chalstanding of the problems small states face. lenges embracing their small justice systems, He said the Commonwealth—which hosts practical solutions were being offered by the such meetings every three years was to address Commonwealth Secretariat to deal with issues current issues—is different because its small like—backlogs in criminal cases, protection of jurisdictions have similar laws, histories and witnesses in serious criminal cases, women’s acchallenges, allowing for an understanding of their cess to justice, sustainable law revision, the use of needs and practical assistance in a low-key way. technology in court and the impact of the internet “I find The Commonwealth unique in the and social networks on freedom of sense that it really deals with expression. matters that, back home in our “The Commonwealth Secrecapitals, we confront almost daily. tariat, and the Commonwealth “These are very practical, family more widely, are committed down-to-earth matters that we to offering assistance in overcomare experiencing in the process ing these challenges, which in legal of administering justice,” said affairs often stem from a lack of one delegate. capacity and limited resources,” The ministers were presented its secretary general Kamalesh with a report from the meetSharma told the meeting. ing outlining ways to deal with Small states are sovereign counspecific issues affecting their illtries with a population below 1.5 resourced justice systems, as well million like Vanuatu and Tonga, as common-day problems. amongst 30 others around the “The Commonwealth Secreworld but the Commonwealth tariat, and The Commonwealth reckons even some larger states family more widely, are comlike Papua New Guinea should mitted to offering assistance in also be classified as small states Neil Adsett...Tonga’s Attorney- overcoming these challenges, because they face similar chal- General. Photo: Courtesy of Davendra which in legal affairs often stem Sharma lenges—decline in global trade from a lack of capacity and limited and investments, lack of readily resources,” said Sharma. available data for investors and trading partners, Assistance handed out to islands states would as well as capacity to harness growth. include training and mentorship for justice secSharma said such vulnerable islands states tor officials, development of model laws and best have limited capability to absorb external shocks practice guides and expertise advice. caused by adverse global economic conditions, The small states will also benefit from support natural disasters and extreme weather events. with legal research in emerging areas, facilitation Their justice systems faced as many challenges of country-to-country collaboration through the as their entire governments with a unique set of use of pro bono mentoring and placements and development challenges posed by their size and facilitation and support for regional networks corresponding narrow production and export of justice sector officers, such as prosecutors, to bases. enhance skills and promote co-operation. As evident from the 2008-2010 global ecoInternational crime syndicates have in recent nomic slowdown, small islands states took longer times tried to penetrate small islands states hoping to bounce back as they experienced prolonged to capitalise on their inefficient legal systems— downturn, which extended well beyond the which is why issues like anti-corruption, antiend of the recession and “significantly eroded money laundering, counter-terrorism and cyber economic and social gains”. crime—should be addressed urgently by islands Small jurisdictions often have to cope with pargovernments with backing from The Commonticular challenges posed by their small population, wealth Secretariat, the meeting was told. remoteness and resource constraints. The meeting set a timely platform as the Small islands state ministers at the London Commonwealth prepares to host poor and small conference were told how a growing backlog of islands government leaders to debate major social criminal cases was attracting public outcry from and economic issues at the Global Conference on the populace. the Sustainable Development of Small Islands “At this meeting, we heard how other memDeveloping States in 2014. 28 Islands Business, October 2013

Fiji TV to shed PNG shares Anticipating changes in ownership laws By Samisoni Pareti Fiji’s largest commercial television is to shed its majority shares in Papua New Guinea’s number one television company EMTV, as Prime Minister Peter O’Neill’s government moves to introduce new media ownership legislation. Waigani has yet to formally announce the new law but Fiji Television Limited (Fiji TV) is moving ahead in anticipation of the imminent move by the PNG Government. In one of his first media interviews as Chief Executive Officer of Fiji TV, Tevita Gonelevu told Islands Business that its PNG subsidiary EMTV has been “privately informed” of the PNG Government’s intentions. He said the plans were communicated to the company through a number of senior government ministers and officials in Waigani. He said PNG’s Trade and Commerce Minister Richard Maru had also made mention of these intentions in parliament. “EMTV is the number one television provider in PNG,” explains Gonelevu. “From the PNG government side, there have been indications that they would want changes in the ownership of the company. “They would be enacting a law, something like the Fiji Media Decree, where ownership would be majority owned by locals. “The board of Fiji TV is aware of this fact and in the next few months, we would be working closely with stakeholders in PNG to find the right path. “We don’t want to exit from PNG. We think we have much more value to bring into the PNG media market and we will work closely with our new partners to deliver.” Protecting investment Asked by Islands Business whether Fiji TV had attempted to seek the help of the Fijian Prime Minister in protecting its investment in PNG, Gonelevu said Fiji TV had not done so. “The Fijian Government has got similar legislation on media ownership and the stance of Fiji Television has been we would comply with all legislation on the media in whatever country we operate in.” Research by Islands Business reveals that the Melanesian Spearhead Group’s Trade Agreement covers trade in goods only for now, and therefore the proposed PNG media ownership law does not contravene the MSGTA. Even when the MSGTA is widened to include

Business trading in services and labour mobility, MSG member countries can still protect certain industries from foreign competition by putting these industries in their ‘negative list.’ Peni Sikivou, deputy Director General of the MSG Secretariat in Port Vila, said: “I can confirm that the MSGTA is a goods only agreement and excludes services. “However, leaders have agreed for members to negotiate a roadmap on the possible inclusion of investment, trade in services and labour mobility in a new economic cooperation architecture which would further deepen the level of integration between the MSG membership. “A meeting of MSG’s Trade and Economic Officials will be held in November to discuss the draft roadmap. The new architecture once completed, will be tabled at the 20th Leader’s Summit in Honiara in 2015.” In Papua New Guinea, it is unclear whether the rest of the media companies operating in PNG are aware of the PNG government’s plans, and whether some have begun moves to comply like EMTV. In an Australian Associated Press (AAP) dispatch dated 17 November 2003, then Deputy Prime Minister Andrew Baing created controversy when he announced moves to change media ownership laws in PNG. He was deputy to Sir Michael Somare at the time. “The statement sent shockwaves through the audience of business and media chiefs, which included Tevita Gonelevu..Fiji TV’s new CEO. representatives of Rupert Murdoch’s Photo: Fiji TV News Corporation and Kerry Packer’s Publishing and Broadcasting Ltd,” said the AAP report. AAP had said then that Baing’s proposals would have serious implications for investors in PNG, at a time when the country is desperate to attract foreign money and promote stability. Then, EMTV was wholly-owned by Kerry Packer, while the Post-Courier newspaper is majority-owned by Rupert Murdoch. Malaysian logging giant Rimbunan Hijau owns The National newspaper, whilst a Fijian radio firm owns two of PNG’s major radio networks.

The company’s aggressive plan will be pursued in its home market in Fiji too. November 1 is the launch date of the new-look Fiji TV, according to Gonelevu. “Viewers should expect a fresh-look and sound from November 1. Expect changes in our content, including our premier news service at 6pm every day. Even our local signal too, especially in some parts of the Suva-Nausori corridor should improve.” Sky Pacific will also increase its paid channels from the current 17 channels to 25. Admitting that competition in Fiji’s small TV market is intense, the Fiji TV head adds that “competition is good. It keeps us on our toes.” Unlike its PNG subsidiary, Fiji TV is still broadcasting in the analogue mode. The company is ready to move into the digital phase, all its local programmes for example are produced digitally. It is only the signal that is produced through analogue and the Fiji Government would need to approve the switch over. As newer television sets are digitalised, Gonelevu hopes not many of their viewers would need to change their TV monitors when approval is granted for the switch over from analogue to digital broadcast. Digital broadcast allows for greater clarity in the TV signal. Since the military coup of December 2006, relations between the Fiji Government and Fiji Television have been strained at times. For some time now, Fiji TV has been operating on a temporary licence for a six months duration. “Through the help of our parent company, representations have been made to the Fijian government to see if we can have a longterm TV licence. We have told the government that we would be happy to meet all the requirements and we hope to receive some good news in due course.”

Aggressive

Fiji TV did not buy EMTV until January 2005 when it purchased it for A$2.1 million, according to the Fiji Times. Despite this obvious setback in its investment portfolio overseas, Gonelevu who until his Fiji TV appointment was General Manager Investment for Fijian Holdings Limited, which bought the controlling shares of Fiji TV from another Fijian investment company, Yasana Holdings early this year. The new TV boss said the Fijian TV company is still pursuing investment opportunities in Solomon Islands, Samoa and Kiribati. He described the company’s expansion plan into the Pacific as “very aggressive” and that it should be announcing its investment in Solomon Islands soon. Similar talks with a local partner are being pursued in Samoa while Fiji TV is looking into managing Kiribati’s sole television service. Gonelevu has appointed the man he succeeded to lead Fiji Television’s foray into the wider Pacific and grow its investments as the Pacific’s largest media conglomerate. Tarun Patel is the company’s new Chief Strategy Officer. He has been CEO of Fiji TV since 1 January 2009. Islands Business, October 2013 29

Business

Ok tedi mine…at stake is not only the mine worth A$876 million, but also the A$1.5 billion in a long-term fund established by SDP to be used for the people of the province when the mine closes. Photo: SDP

Ok Tedi natonalisation, biggest ever legal challenge? PNG govt to defend aggressive move By Rowan Callick T he P apua N ew G uinea government on September 18 nationalised through parliament the vast Ok Tedi copper-gold mine by 62 votes to none—a move which is expected to trigger the country’s biggest ever legal challenge. This is likely to see the government defend its aggressive move in both Port Moresby and also in Singapore, where PNG Sustainable Development Program (SDP), the trust that owned 63

percent of the mine is legally registered. This structure was arranged to ensure that most benefits of the mine—which is the biggest single contributor to the PNG government revenues, A$543 million or about 16 percent of the total government income—flow to people in the Western province, where it is located. It was devised with Australian mining giant BHP-Billiton when it pulled out of Ok Tedi more than a decade ago, following environmental disasters.

Aust Pacific workers scheme should be expanded By Rowan Callick T he A ustralian government has been urged by one of the country’s leading development experts to boost the low number of guest workers from the Pacific. Stephen Howes, director of the Development Policy Centre at the Australian National University, said that Foreign Minister Julie Bishop “seems ideally placed” to be a champion for the Pacific Seasonal Worker Programme, which she has previously sought to strengthen. He said—in an article written with research officer Jesse Doyle—that Australia should start catching up with New Zealand, which last financial year took on 7,456 workers compared with Australia’s 1,473. Almost all of them work in horticulture— with 82 percent of the workers in Australia 30 Islands Business, October 2013

coming from Tonga. Howes and Doyle say that “the horticultural industry in New Zealand has less illegal labour, is better organised and easier to regulate since it is more compact”. It also produces largely for export, while the Australian industry is mostly domestically focused. The minimum wage for fruit picking in New Zealand is NZ$13 per hour, whereas in Australia it is A$18—57 percent higher: “The higher legal minimum wage increases the incentives to employ illegal labour and the more dispersed area makes it harder to enforce compliance.” The writers urge the government to consider removing the incentive for backpackers to pick fruit. After three months’ agricultural work, they are able to extend their visas for a year. Howes and Doyle want the “specified work” list removed, so any work in regional Australia qualifies for a visa extension. They propose a

At stake is not only the mine worth A$876 million, but also the A$1.5 billion in a long-term fund established by SDP to be used for the people of the province when the mine closes. Prime Minister Peter O’Neill, proposing the takeover, said that SDP shareholders would be compensated—but the amounts have not been determined. This will be decided by the prime minister, according to the legislation, acting on Cabinet’s advice. The act, which cancels SDP’s shares in Ok Tedi Mining Ltd and issues new shares to the government, giving it 100 percent control, also removes the immunity for BHP against action for compensation, which was granted at the same time as the trust was established. In an explanatory memorandum attached to the legislation, the government says: “Any person who has any choice in action or right to pursue or enforce legal proceedings against or in relation to BHP in connection with the operation of the Ok Tedi mine will now have their full rights restored.” The remaining connection of BHP with Ok Tedi is that it has retained veto power over changes to the constitution of SDP—chiefly in order to ensure that the long-term fund, which comprises a form of compensation for the environmental impact of the mine, remains fully available to benefit those affected. The chairman of both Ok Tedi and SDP, former prime minister and former central bank governor Sir Mekere Morauta, said: “Where we can fight, we will fight. Why are we expropriating assets from our own people? Ok Tedi is a nationally-owned mining company.” One of the issues that triggered the government takeover, was that it claimed it was not consulted earlier in the process by which Morauta became chairman of both entities. The O’Neill government has received widespread support from the public and from politicians since making its unprecedented move. But leaders of the mine-affected area of Western province, almost all of whom signed the Community Mine Continuation Agreement to apclampdown on illegal workers, with the immigration department estimating the numbers at 60,900. They say: “The government has harsh penalties, but seems to lack the capacity to carry out its directive.” They say employers should be able to recuperate the full cost of airfares and internal transfer costs in bringing Pacific workers to their properties—while in return the workers should be given more freedom to shift between employers. They say the numbers involved in the scheme “are a drop in the ocean given the size of Australia’s horticultural industry”—and that the cap on numbers should be removed. They want the government to promote recruitment from Melanesia: “Perhaps the aid programme could subsidise facilitators for Vanuatu, Solomons, PNG and Timor Leste to help expand their presence” in the scheme. And they want the Working Holiday Maker visa scheme to include Pacific islanders. They say the extension of the guest worker scheme beyond horticulture to sectors such as cotton hasn’t worked, but want other nonagriculture sectors considered.

Business prove an extension of Ok Tedi’s operation beyond the end of this year in return for a flow of dividends and other benefits via SDP, have attacked the mine nationalisation. The association of such communities wrote to O’Neill saying that they had agreed to the mine’s continuing operation in order to gain development benefits via SDP, but “we have not consented to the takeover of SDP shares in Ok Tedi by the government”. Morauta said these villagers “have been tricked by a ruthless prime minister focused on his own ambitions.” Stephen Howes, director of the Development Policy Centre at the Australian National University, who co-wrote an independent review of SDP in 2011, said the government’s move “raises serious questions about government-business relations and the security of property rights in PNG.” Morauta said the government’s assumption of ownership would be “the trigger forced on the company to start drawing down” the A$41.5 billion long-term fund, to which two thirds of the dividends from the mine has gone. The SDP chief executive David Sode said the trust in its first decade spent about A$450 million on 662 projects, focused on education and health from the other third of the dividend income in Western province and elsewhere in PNG. O’Neill said however: “It is time to put the ownership of the mine and its future beyond doubt. The behind-the-scenes influence of BHP and its representatives and appointees has gone on for too long.” The move underlines a trend towards economic nationalism in PNG. Mining Minister Byron Chan has told parliament “the government is looking at taking over” the A$5.6 billion Frieda River copper/gold project, 81.82 percent owned by Swiss-based GlencoreXstrata. And Commerce Minister Richard Maru earlier this month blocked the partial takeover of New Britain Palm Oil Limited (NBPOL) by Malaysian company Kulim Berhad—which wanted to increase its stake from 48.97 percent to 68.97 percent—saying that 90 percent of the economy is controlled by foreigners: “The government’s aspiration is to reduce that to 50 percent by 2030.” He said that not only was Kulim barred from increasing its stake in NBPOL, perhaps PNG’s most successful agricultural venture, but it would have to reduce its present stake by selling shares to provincial governments where the company operates. He said the government would restrict full foreign investment or participation in some sectors of the economy, including in agriculture and fisheries. Maru said: “We have to create two million jobs immediately, otherwise we’re going to continue to have social problems. And as a responsible government, we’re going to take some very drastic steps, including legislative changes to create more opportunities for own citizens to enjoy the wealth of our nation.” The battle for control of Ok Tedi and SDP with its massive funds began almost a year ago when O’Neill told parliament that leading Australian economist Ross Garnaut—who was chairman of both entities and had chaired SDP since its establishment—was “no longer welcome” in the country. O’Neill said after introducing the nationalisation bill to parliament that SDP “has collected money and parked it in the bank and hasn’t been investing it in helping every day issues.” Morauta said that “the risk of turning Ok Tedi Mining Ltd into a stateowned enterprise far outweighs the benefits. “It would destroy the mine and threaten the flow of dividends”—with “reliable sources estimating that at least billions of kina have gone missing from government coffers in the last few years.” A multi-billion dollar scheme to bring hydro power from PNG’s Purari River to Queensland in Australia, via a joint venture between Origin Energy and SDP, would appear to be one of the casualties rippling out from this massive row enveloping PNG’s political and economic worlds. It remains unclear how the government will pay for the takeover. The share of the mine owned by SDP alone is valued at the equivalent of 55 percent of this year’s originally budgeted deficit. Morauta said the parliamentary legislation “would undermine investor confidence at a time when a number of very large investments are on the horizon”. PNG Treasurer, Don Polye revealed in parliament during the same week as the nationalisation of Ok Tedi, that the budgeted fiscal deficit for 2013 of 7.2 percent of gross domestic product—following a succession of balanced or near-balanced budgets—is expected to deteriorate to 7.7 percent. He attributed this in part to falling commodity prices, in part to large corrupt payments for “ghost workers”—staff who have died or moved or collect more than one salary—on government payrolls.

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Islands Business, October 2013

Business

At work...a fisheries observer. Photo: SPC

The frontline tuna guardians Protecting our marine resources By Robert Matau W hen P acific I slands F orum F isheries Agency (FFA) observer Chris Ragi (not his real name) boarded a tuna purse seiner fishing boat for the first time in 2009, he did not know what to expect. He was engaging in his first job observing the region’s tuna, which at the time was valued at US$1.5 billion. Little did he know that tuna would take him to places he had never been to. The Solomon Islander certainly did not believe that two trips later, his accurate report and observations on a United States flagged purse seiner would take him to a Hawaiian hearing to testify, earning the boat owners stiff penalties for fishing violations. We chose to withhold his identity as he has continued to serve the FFA faithfully and provides them with reports and data that are crucial to fisheries monitoring and assessments each year. After he reported the violation in 2009, United States National Oceanic and Atmospheric Administration (NOAA) in Hawaii called him up in 2011—querying his report. “They asked me to verify the data I had provided the FFA and how I had observed the whole episode. “After the interview, they told me the issue would ultimately lead to a court hearing and there was a high possibility that I would be called to testify against the boat for the violations.” As the case developed, he was advised to prepare himself and avoid any contact with other boats. Then in January 2012, he was flown to Hawaii 32 Islands Business, October 2013

to testify before a United States Coast Guard Administrative Law Judge against the ship he was observing, as the case was an administrative one. “It was not only going to be my first trip to the United States of America but it was going to be the first time I was testifying in that situation,” Ragi told Islands Business in Honiara. In his testimony, he related how the ship set a purse seine net around a pod of False Killer Whales. “The fish were swimming underneath the whales and the crew were trying to chase the whales to get to the fish underneath, but in the process one whale got trapped and they tried to cut it free but the fish also escaped in the process,” he said. “As an observer, we don’t give advice to vessel operators nor do we ask them to stop...we only observe and report what we see. “I noted in my logbook that the vessel was interacting with the whales and whilst they should stick one mile away, they got as close as 20 to 30 metres.” Ragi got off in the Federated States of Micronesia after spending a month on the boat and flew back to Honiara where he reported the incident to his superiors at FFA. “I also reported that they were using lights on their boat and life boats as a makeshift Fishing Aggregate Devices (used to lure fish that are attracted to light and large objects on the surface of the ocean) and in the morning they were able to catch the fish,” he said He joined five other observers who had given similar reports on other boats in the hearing and NOAA took the vessels, flagged as United States boats fishing under the United States Tuna Treaty

in the region, to task. The evidence from observers like Ragi, secured a US$1.5 million fine against six US tuna purse seiners—which is significant in the US Treaty observer programme with the FFA, which has been in existence since 1988. All of the boats had been accused of fishing on fish aggregating devices (FADs) during the FAD ban in 2009, a measure put in place across the region to reduce catches of small bigeye tuna. Several vessels were also charged with placing FADs during the closure and setting their nets on whales. The observers gave evidence in two longrunning cases brought by the US authorities, who enforce regulations on their own fleet fishing in Pacific Islands waters, under the Western and Central Pacific Fisheries Convention Implementation Act and the Marine Mammal Protection Act. An official of the Enforcement Section of NOAA Office of General Counsel (the US National Oceanographic and Atmospheric Administration) paid tribute to the six Pacific Islanders. “The observers were the heart of the cases and did a terrific job. The judge’s decision demonstrates that he found the observers credible, trustworthy and persuasive,” Section deputy chief Alexa Cole said. The observers (from Solomon Islands, Marshall Islands and Federated States of Micronesia) were called to testify in Honolulu in early 2012. All six had been placed onboard the vessels by FFA and had been trained cooperatively by staff of FFA and the Secretariat of the Pacific Community (SPC). An observer training officer from SPC updated the hearing on the training observers receive, and the Pacific Islands regional observer standards that they have to meet. An economist from FFA was also called to testify about the value of tuna catches—an important factor in setting the penalties. SPC and FFA have been supporting the development of national observer programmes in their Pacific Islands member countries for many years, and over 700 observers are now deployed. Purse-seine vessels fishing in the region must carry an observer at all times. A lot of data recorded on the boats is processed by the SPC and forms part of the scientific data presented each year on estimated catches—which also influences appropriate conservation management measures. Observer training is currently supported by a number of development partners—the European Union, New Zealand, Australia and Japan—but most other costs of the observer programme are recovered from the fishing industry. Today, the value of the Pacific’s tuna fishery has increased to US$3 billion, thanks to various sustainable fisheries measures put in place by FFA and the Parties to the Nauru Agreement, made up of Marshall Islands, Kiribati, Tuvalu, Solomon Islands, Federated States of Micronesia, Nauru, Palau and Papua New Guinea. The US is also currently re-negotiating the terms of its current treaty and they have agreed to increase their fishing access fees from US$21 million to US$63 million. Underpaid, spending long periods away from home, yet highly motivated, FFA fisheries observers continue to be the region’s frontline tuna guardians.

Sport

NEED TO KNOW:

The medal ceremony for the men’s 110 metres hurdles (from left)... Tahiti’s Toriki Fabian Urariri, 2nd, PNG’s Mowen Boino, gold medal winner (middle) and Samoa’s Tutaia Galoiola, 3rd (right). Photos: Peter Rees

Pacific Games Council ponders changes PNG strong contender for Pacific Games would be disappointed at finishing fourth with 13 gold medals (tied with Samoa) for a total of 43 medals. Fiji came to the mini games expecting to Papua New Guinea is shaping up as the team dominate the medals in athletics but the disqualito beat when they host the Pacific Games in 2015 fication of the 4x100m men’s relay sprint team, after topping the medal tally at the 9th Pacific which handed the gold to PNG, was a low point. Mini Games in September. Bau bullet Banuve Tabakaucoro restored some PNG sent the biggest team of the 20 countries pride by breaking Jone Delai’s Pacific Games that took part in Wallis and Futuna, close to a record in the 100 metres with a winning time of fifth of the total 800 athletes. And those numbers 10.33 seconds. He followed that up by reflected in their medal haul; a total of winning the 200 metres final. 87 medals including 30 gold. There were also celebrations after Team PNG was consistent throughFiji won the team gold in Sailing. Beatout and medalled in all eight events at ing the Australians made victory even the games; weightlifting, beach volsweeter. Australia and New Zealand leyball, indoor volleyball, sailing, va’a, were invited to participate in sailing and taekwondo, athletics and rugby sevens. weightlifting, but only Australia sent The majority of their medals came in their sailing team. weightlifting and athletics. PNG won Samoa sent just 36 athletes but re28 gold medals in the first week alone Chef-de-Mission, Richard Kassman Vi d hya L a k h a n … turned with 29 medals to finish fifth. was ecstatic at the medal haul saying the Pacific Games Council Eleven of Samoa’s 13 golds not surprisingly came from their weightlifters. results bode well for PNG ahead of Port president. Mary Opeloge was the standout breakMoresby hosting the Pacific Games in ing the Oceania clean & jerk record with a lift of two years’ time. 133kg in the 75kg women’s category. Samoa saved “We came here focused to make a really good their best for last when they thumped Fiji 31-12 showing here, and, yes, there were some young in the rugby sevens gold medal match. people and a sprinkling of seasoned athletes, and There was also plenty to celebrate for the we brought them back deliberately because it was smaller nations. important to have these seasoned athletes take a Tuvalu weightlifter Lapua Lapua won his lead for a lot of young people that we brought,” country’s first ever gold medal. The 22 year old he said. claimed gold in the men’s 62kg snatch and just Tahiti finished second, taking home 40 medmissed out on another gold by body weight. als. Eleven of their 26 gold medals were won in Lapua said it was a special moment. “I’m very Taekwondo. happy because this is my first ever gold and this New Caledonia was third with 43 medals, is like history for Tuvalu too.” including 21 gold. The French territory did the Solomon Islands’ female weightlifter, Jenly double in the 10,000 metres with Anne Beaufils Wini Tegu scooped all three gold medals in the and veteran runner Nordine Benfoda winning under 58kg women’s category, breaking six of gold in the pouring rain. her previous South Pacific records in the process. After topping the medal tally in 2009, Fiji

By Peter Rees

• 15 of the 20 countries and territories won gold medals in Wallis and Futuna. • Northern Marianas and Tokelau did not participate in Wallis and Futuna. • PNG is hosting the next Pacific Games in Port Moresby in 2015. • Vanuatu will host the next Pacific Mini Games in 2017. • Northern Marianas is bidding to host the 2021 Pacific Mini Games. Cook Islands, the host of the previous Mini Games, sent only eight athletes. But they managed to return with 10 medals, including two gold medals. Mauke discus queen Tereapii Tapoki grabbed gold and a silver in the shot put to establish herself as one of the region’s top throwers. First time hosts Wallis and Futuna should be pleased with their performance, even if there was disappointment when their champion men’s volleyball team was beaten in the gold medal match by PNG. They produced their best ever Mini Games medal haul winning 36 medals, including two gold medals to para-javelin thrower, Tony Falelavaki and the other to Jurgen Vegi in taekwondo. Wallis and Futuna’s Chef-de-Mission, Suliano Likiliki hailed the games a success for the hosts. “The games is an opportunity for the countries who are visiting to know the culture [and] the way of living of the population that is hosting them, and I think we have shown the countries how the Wallisian people and the Futunan people live and now they know the culture,” he said. Likiliki hopes his country gets another chance to host the games in the future. But that may be unlikely given that the Pacific Games Council is reviewing the future of the Mini Games which could even affect Vanuatu hosting the next Mini Games in 2017. The condensed format of the games has lost relevance for many of the countries who sent smaller teams. Some held back their top teams and athletes and instead sent their junior athletes. There is another call gaining momentum for the games to be replaced by a Youth Games which focuses on providing a stepping stone for the region’s rising talent to the Commonwealth Games and Olympics. The proposal is backed by Fiji javelin thrower, Leslie Copeland: “I believe the youth games would give younger athletes a venue to compete with athletes of their own age and gauge where to go from there. It can be used as a stepping stone to get to higher competition,” he says. The inclusion of Australia and New Zealand in future games has also been mooted. The reasoning is their inclusion would gain international recognition for the games to be a continental qualifier. While the proposal is supported by Games Council president Vidhya Lakhan, some traditionalists believe a move in this direction would undermine the smaller islands nations who already struggle to host big events and consider the Mini Games as their own “Olympics”. The Games Council met during the games to vote on the inclusion of New Zealand and Australia in the 2015 Pacific Games in up to eight sports, but the resolution was rejected. Members have asked the Executive Board to revisit the issue next year because they needed time to be briefed on the details. Islands Business, October 2013 33

Business Intelligence New business reforms

anuatu’s new Companies (Insolvency and Receivership) Act and Insolvency (Cross Border) Act, in combination with the 2012 Companies Act, will make it easier for local people to conduct business. The Asian Development Bank (ADB) supported the drafting of the legislation through the Pacific Private Sector Development Initiative (PSDI). “These ADB-assisted business law reforms will help lower the costs of establishing, running and winding up businesses in Vanuatu,” said George Andrews, Commissioner of the Vanuatu Financial Services Commission. “ADB is supporting the implementation of the Acts to ensure the benefits are enjoyed by all involved in business in Vanuatu,” said Andrea Iffland, Regional Director of ADB’s Pacific Country Liaison office. “These new laws present a range of choices for entrepreneurs, including single shareholder/director companies, and an innovative community company structure. Electronic business registry development is also part of implementation.” ADB and the Vanuatu Financial Services Commission have begun consultations to assist the government in implementing the new laws. Awareness-raising is an integral part of implementation, during which members of the private sector, potential entrepreneurs and others will be informed of the benefits of the new laws. The company law reforms in Vanuatu are part of a larger regional effort by ADB to introduce modern company laws that are more suitable for small islands economies. Through PSDI, ADB is also supporting company law reform initiatives in Solomon Islands, Tonga, Samoa Cook Islands, Palau and Kiribati PSDI is a regional technical assistance facility co-financed by AusAID, the New Zealand Aid Programme and ADB.—ADB

PNG power shortage

he Papua New Guinea Government is embarking on a major electricity project, to ease the continuous power problem affecting the National Capital District and surrounding areas. The Independent Public Business Corporation (IPBC) and PNG Power Limited (PPL), signed a contract for the project, worth over K25 million (US$9.6 million), with an Israeli company, LRGroup. This company will upgrade all major power transmission networks in the city. IPBC Managing Director Wasantha Kumarasiri, PPL Chief Executive Officer John Tangit and representatives of LR-Group signed the contract agreement in Port Moresby. The Port Moresby Power Transmission upgrade project came about as a result of a thorough consultation and survey carried out by the IPBC into the power issues affecting the city. Once upgraded it’s believed all power distributions will be done automatically, replacing the current manual distribution system. Kumarasiri, says the city is growing and it needs improved power supply. IPBC will meet all the cost. Meanwhile, the project will commence soon and it’s expected to be completed within a two-year period.—PACNEWS 34 Islands Business, October 2013

Luxury cruise liner Sea Princess...in Tonga. Photo: Tonga Tourism Authority

Tonga prepares for more cruise liners By Robert Matau

onga’s tourism and transport industry not only got its first taste of what a cruise luxury liner can bring to its shores but more importantly how to reap the benefits from the thousands of tourists disembarking on the kingdom. When cruise boat Sea Princess, bringing with it 1950 passengers from Australia, berthed at the newly upgraded Vuna Wharf in Tonga’s capital Nuku’alofa last month, the industry was focused on ensuring the visit was memorable for the visitors and worthwhile for the hosts. Thanks to a South Pacific Tourism Organisation organised Pacific Port Preparedness Workshop, held in August, the Tongans have mobilised themselves into a Tonga Cruise Steering Committee, made up of stakeholders from the Tonga Ports Authority, hotel operators, cultural centres and domestic tour operators. Stakeholders like Tonga Ports Authority’s Mosese Lavemai said the workshop was a success as it equipped stakeholders with facts and trends learnt from fellow SPTO member nations (14 nations). “In the workshop, we were able to identify the weaknesses that we may not have noticed in the past and how to benefit from the short visits,” he said. “We formed our Tonga Cruise Steering committee where stakeholders who attended the workshop were able to gather information from the workshop to ensure our people gained maximum benefits from the visit. “We have a strategy aimed at enhancing the onshore visitor experience using our coordinated approach.” He said on September 7, they invited one of the workshop coordinators, John Nell back to Tonga to conduct an observation survey and report back to the committee. “We will be meeting soon to discuss the findings and how best to address the next cruise liner visit,”Lavemai said. “But the information from that workshop definitely pointed us in the right direction and from here it is full steam ahead.”

The kingdom expects to see more cruise ships visit the kingdom in 2013 especially following the opening of the new Vuna wharf in December 2012. Acting CEO of the Ministry of Tourism, Moana Taukolo, said earlier this year, they expected 17 cruise ships with 13 ships calling on Nuku’alofa, and other ports on Vava’u, Niuatoputapu, Niuafo’ou and Ha’apai. She said with a dedicated wharf and a cruise steering committee now in place, they expect more cruise ships to help develop Tonga as a cruise destination. Pacific Islands nations like New Caledonia and Vanuatu and islands closer to Australia and New Zealand benefit more from cruise liners and the Secretariat of the Pacific Community estimated that five percent of the world cruise market goes to the Pacific. Cruise activity in the Pacific peaks in November to April, during the northern winters when tourists escape the cold to get more sun and sand in the tropical Pacific. French Polynesia, New Caledonia and Vanuatu offer multiple destinations within the individual nations, thereby allowing the cruise to spend several days in their waters, which is ideal for cruise ships. The SPC stated at a similar workshop in Vanuatu in 2011 estimated incomes from cruise ships for destinations in the region were approximately US$19 million for French Polynesia; US$15 million for New Caledonia; US$11.5 million for Vanuatu; US$11 million for Fiji; US$1 million for Kiribati; US$300,000 for American Samoa; US$150,000 for Marshall Islands and US$30,000 for Cook Islands. Trends have also shown that cruise passengers have a high tendency to revisit destinations. SPTO chief executive Ilisoni Vuidreketi said cruise shipping is a promising segment for tourism in the region. He said SPTO is working towards assisting South Pacific cruise destinations to increase their passenger numbers, how much passenger spend ashore and improve awareness amongst local cruise stakeholders of this segment’s potential.

New deals not profiting Aussie airlines By Davendra Sharma

referring to Qantas reaping a thin profit in a tough market. Morningstar analyst Nathan Zaia said the Qantas result was a bit better than the overall expectations as the airline’s international strategies—using Jetstar on routes to the South Pacific and Asia—begin to pay off. “Much is being made of a potential lift in consumer confidence post-election, but we think the bleeding in the domestic business, across the flagship Qantas banner and Jetstar is more to do with defending share against a loss-making Virgin Airlines.” Since venturing into the South Pacific with its first flights to Fiji in March 2010, the airline has linked routes to other destinations in the region as part of Qantas’ two-brand strategy. Its Asian move has allowed tourist flows from such high-travel countries like Hong Kong, Japan,

ustralia’s two major airlines flying thousands of tourists to the region—Virgin and Qantas—lost millions in revenue this year as they grapple with the global slowdown in aviation and rising fuel costs. Multi-million mergers and alliances with megarich airlines from the Middle East fail to ease the pain of the airline giants—engaged in fierce price war in the region, encompassing Australia, New Zealand and the South Pacific. As reported by this magazine last month, the performance of the two regional airline leaders comes against a backdrop of IATA (International Air Transport Association) estimating that the airlines lost US$22 billion in the last financial year. Qantas lifted its bottom line back into the black to the year in June, 2013 posting a modest A$6 million full year net profit after recording its first loss since it was privatised. With its low budget carrier Jetstar spreading its wings in the South Pacific and Asia, Qantas has kept its image brand name but has suffered heavily due to dwindling travel demands across the region. The poor profit comes in a year in which Qantas launched its alliance with Emirates as part of an attempt Qantas…pessimistic about maintaining a profit. Photo: business.blogs.starnewsonline.com to turn around the performance of its under-perTaiwan, China, Cambodia, Malaysia, Indonesia, forming international operations. Singapore, Vietnam and Thailand to seek holidays Its chief executive Alan Joyce cautioned that the in the broader South Pacific region of Australia, world travel market was still slow but there were New Zealand and the islands. signs of recovery in 2014. “The operating environment remains complex Virgin loss and volatile, but we are now beginning to realise the In contrast the fast-expanding Virgin Airways benefits of the tough decisions that we have made has hit ground level with a disappointing loss in the over the past 18 months,” announced Joyce. 2012-13 fiscal year. Joyce remained pessimistic however about QaVirgin incurred an underlying loss of A$73 milntas maintaining its upward spiral in profits after lion for the year, the second loss in three years. The a historic loss of A$144 million last year—the first downfall is a huge contrast to the A$82.5 million since being privatised in 1995. profit it recorded in 2012. He said the outlook for the next six months to A carrier known to have made huge inroads in December 2013 remains challenging and volatile the travel industry in the South Pacific with fullydue to uncertainty in fuel costs, competition, exfledged operations from Australia and into Fiji, change rates and the global economy. Tonga, Samoa, Vanuatu, the Solomon Islands, He argued that the market was very tough but Cook Islands, French Polynesia and Papua New smart airlines need to focus on elements it can conGuinea, Virgin has captured a growing slice of the trol to stay high in the skies. leisure market in the region and the domestic AusRegional aviation analysts also noted that airtralian market. lines needed to streamline and review their operaVirgin may have found a case of excess supply tions regularly to keep upbeat with profit numbers—

of seats into destinations it flies to as demand for travel has dropped dramatically, according to IATA. Analysts argue that fares need to be pulled down a lot to stimulate travel in case of excess supply on routes that are intensively competed or face excess supply of seats, like the islands region where Virgin is up against national carriers of those countries like Fiji, Vanuatu, the Solomon Islands and PNG. The operating loss comes despite new alliances Virgin created in 2012 with Air New Zealand and Middle East-based rich Etihad Airlines, which generously injected assistance into the ailing carrier to save it from a steeper loss in the financial period. Virgin launched into the South Pacific region in a very decisive and strategic manner after it was founded by billionaire English businessman, Richard Branson in Australia in 2000. Virgin’s downside has been its shift in strategic direction as the airline began aggressively chasing revenue opportunities in an environment where it would seem that the markets are quite heavily saturated. Markets It seems to perform well in markets it can offer combined t r ave l / l e i s u re and accommodation packages. Under the regional Framework for Action on Transport Services, the Secretariat of the Pacific Community (SPC) attempts to assist the islands lowbudget carriers in coping with competitive foreign carriers like Virgin and Jetstar. As noted in the September issue of Islands Business, such global shocks like the four-year-old financial crisis, record oil prices, further terrorist attempts and impacts of natural phenomena such as cyclones will continue to plague regional carriers. “These continuing concerns prompted the SPC (South Pacific Commission) to launch its aviation paper series to support a better understanding of emerging issues for air travel before they begin to have an impact.” The SPC noted in its analysis that the emergence of low-cost carriers (LCC) like Virgin and Jetstar have had a remarkable impact on the region’s traditional government-backed airlines over the last five years. “Given the ongoing interest shown by LCC operators in the region, at least on higher density routes, it is important that countries and territories understand the issues involved so they can make informed decisions.” Islands Business, October 2013 35

Environment

SPREP with David Sheppard

Adapting to climate change with SPREP

he Pacific Islands Forum Leaders Meeting in Majuro in September underlined the urgency of the climate challenges facing our region. The Majuro Declaration for climate leadership noted that climate change is the greatest threat to the livelihoods, security and well-being of the peoples of the Pacific and one of the greatest challenges for the entire world. The Forum Leaders Meeting noted that Pacific countries are taking decisive actions to adapt to climate change and to move to carbon-free economies through renewable energy. In the words of President Christopher Loeak of the Republic of the Marshall Islands to the Forum: “In the Pacific, we are doing more than waving our hands in distress. These actions send a clear message to the rest of the world that: “if we can do it, you can too”. Nowhere is this spirit of developing Pacific solutions to Pacific problems more apparent than in the Pacific Adaptation to Climate Change (PACC) Project. Led by the Secretariat of the Pacific Regional Environment Programme (SPREP); implemented by the United Nations Development Programme and funded through the Global Environment Facility and the Australian Agency for International Development, this project spans 14 Pacific islands countries and territories. PACC has developed practical approaches to best-practice adaptation through projects in three key climate-sensitive areas—coastal zone management, food security and food production, and water resources management. PACC has led to many innovative approaches to climate change adaptation in our region. In 2011, Tuvalu declared a state of emergency due to water shortages. Through PACC, a community cistern that can hold 700,000 litres of water was developed in Lofeagai to help build resilience to water shortages. This was linked with community education and awareness programmes to encourage better conservation and management of water by the community. In Kosrae, Federated States of Micronesia, PACC has helped to re-design or “climate proof ” a road frequently damaged by flooding and erosion as a result of intensive rainfall. This road is significant in that it will provide the infrastructure to help relocate families from the coast to inland, away from coastal erosion and frequent flooding they experience. With PACC as a catalyst, the coastal road is now being improved, elevating the most vulnerable road sections, while adding culverts and installing proper drainage which will not impact negatively on coastal vegetation. The PACC project is helping to ensure enough food supply to the local community of Ontong Java in the Solomon Islands. Salt water intrusion and lack of soil nutrients has impacted upon the production of root crops that are a source of food for those on Ontong Java. 36 Islands Business, October 2013

agencies and communities in the PACC islands nations. It is also a project that has seen Pacific governments applying cutting edge science and local knowledge from villages and communities to develop the best possible adaptation decisions. As it enters its final 18 months, one of the key priorities of PACC is to ensure sustainability beyond the project end date. In August, all PACC countries, agencies and partners came together for the annual review meeting from which a sustainability strategy was developed. This will help see the production of a “PACC toolbox” which will contain all the lessons learnt, the innovations and the wealth of experience garnered from this initiative to ensure continuation of adaptation activities. The PACC board at the review meeting agreed that the Marshall Islands, Nauru, Solomon Islands, Tokelau, Tuvalu, Samoa and Vanuatu will benefit from AusAID’s US$2.3 million multicountry funding allocation to further upscale their work conducted under PACC. This additional funding is being referred to as PACC+. The Cook Islands, Niue, Tonga and Tokelau will continue to receive funds under PACC+ through bilateral funding Addressing water shortage...in Tuvalu a community cistern that can from AusAID. This level of support can hold 700,000 litres of water was developed under PACC. Photo: SPREP help strengthen the sustainability of the PACC project after its completion. While the outcomes of the annual Through PACC, the new salt-resistant root review meeting will help enhance the contincrops are being trialled and the trial plots have ued success of the project, it is clear the biggest been deliberately designed to be energy-efficient, achievement of the Pacific Adaptation to Climate low maintenance, high-yielding and inter conChange Project is how local communities have nected, taking into consideration extreme events benefitted through developing practical responses and climate change trends. to adapt to climate change. PACC has also set up a hybrid solar drier in SPREP is pleased to be associated with such an Honiara to demonstrate preservation of food initiative that has helped bring about change and which can then be shipped and stored on atoll innovation for Pacific communities. communities for times of need. It is these positive and direct impacts upon In the Cook Islands, PACC has developed a our Pacific people that will be the lasting legacy special calculator tool to help design climateof the PACC Project. Real solutions to Pacific proof infrastructure; in Vanuatu a 3D mapping problems stemming from climate change led tool has helped engage local communities and by Pacific islands governments have been at the enabled their participation in decision making heart of PACC—a truly innovative, Pacific-wide regarding various climate adaptation options, adaptation initiative. such as the location and design of roads. PACC has provided a focus for mainstreaming In Fiji, the engagement of community faciliclimate change in the different Pacific islands tators in climate change adaptation projects has governments and a stimulus for other climate helped ensure ownership and sustainability of change programmes within the region. adaptation activities that address food security and PACC has provided a stimulus for supporting production. These are just a few of the outcomes other adaptation work and activities taking place of the multi-million dollar programme, which is in our island nations so we can only become now entering its fifth year. stronger and more resilient to the impacts of PACC is the Pacific region’s most extensive climate change. climate change adaptation initiative and the success of this project has been largely due to the • David Sheppard is director-general of SPREP and is based in Apia, Samoa. partnerships between regional agencies, national

Australian Government AusAID

Director Pacific Regional Health Program The Australian Agency for International Development (AusAID) manages the Australian Governmentâ&#x20AC;&#x2122;s aid program in a range of sectors including Health, Education, Civil Society, Economic Growth and Climate Change & Environment in the Pacific. The AusAID Pacific Regional Health Program comprises annual expenditure of approximately $25m per year and provides support to a range of regional and country level health functions across the region. Over the past six months, AusAID has engaged UN agencies, SPC and other partners on the future directions of AusAID Pacific Regional Health Program. These deliberations are being captured in a Pacific Regional Health Program Delivery Strategy. A vacancy exists in the AusAID Suva Office for a dynamic, experienced and high performing professional to lead the Regional Health team. The Pacific Regional Health Program Director will provide high quality policy and technical direction, overseeing and leading the reform of the Australian regional health portfolio in the Pacific, and representing the Australian Government in dialogue with Governments and development partners on relevant health and development issues in the Pacific. How to apply Âť Applicants should visit the Australian High Commission Fiji website at www.fiji.embassy.gov.au for information about the job description, selection process, the package to be offered and how to submit your application.

Applications close: 14 October 2013

Australian Government AusAID

Director Pacific Regional Education Program The Australian Agency for International Development (AusAID) manages the Australian Government’s aid program in a range of sectors including Health, Education, Civil Society, Economic Growth and Climate Change & Environment in the Pacific. The AusAID Pacific Regional Education Program has annual expenditure of approximately $70m and provides support to a range of regional and country level education functions across the region. AusAID’s support for education in the region is guided by the Pacific Education and Skills Development Agenda (PESDA). The objectives of PESDA are: ensuring access to quality basic education and opportunities for young people to develop skills and gain valued qualifications. A vacancy exists in the AusAID Suva Office for a dynamic, experienced and high performing professional to lead the Regional Education team. The Director Pacific Regional Education Program will be responsible for the implementation, management and performance assessment of AusAID’s Pacific Regional Education program. The Regional Education Program has a strong, though not exclusive, focus on post-primary education. The Program Director will provide leadership for Australia’s Regional Education Program in the Pacific. The role is required to engage at a senior level across the Australian government and with international development partners, working in a fast changing and challenging environment. How to apply » Applicants should visit the Australian High Commission Fiji website at www.fiji.embassy.gov.au for information about the job description, selection process, the package to be offered and how to submit your application. Applications close: 14 October 2013

50 CHEERS FOR 50 YEARS

For 50 years Ela Motors has been extremely proud to serve the communities throughout Papua New Guinea. As Ela Motors PNG celebrates such a milestone, there has been one very important aspect to this and that is you. Without your support in our businesses throughout the South Pacific, Ela Motors PNG would not celebrate such a milestone. So we say thank you for your support and love of many fine products and services that our South Pacific Group has offered you over the years.

Thank you to everyone who attended the very successful Ela Motors Expo We look forward to seeing you at the Ela Motors PNG Expo

Papua New Guineaâ&#x20AC;&#x2122;s first Automotive and Marine Expo was a huge success. Crowds enjoyed the two day event which was held at the Sir John Guise Stadium in Port Moresby. Ela Motors would like to thank everyone who Stadium Port Moresby Sir John Guise attended this event in commemoration of doing business in PNG for 50 years.

Papua New Guinea Ph: (675) 322 9400 Solomon Islands Ph: (677) 30314

American Samoa Ph: (684) 633 4281 Samoa Ph: (685) 20800 Fiji Islands Ph: (679) 338 4888 Tonga Ph: (676) 23500 Vanuatu Ph: (678) 22341

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