Monday, Oct 23, 2017
Industry & Trade | Asia-Pacific | Fiji

Investment Fiji

Brand Fiji draws in international investors


2 years ago

Godo Müller-Teut, CEO of Investment Fiji
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Godo Müller-Teut

CEO of Investment Fiji

Fiji’s impressive economic performance over recent years has attracted interest from international investors, with 261 foreign projects registered in the Pacific nation in 2014 compared with 117 in 2010. Investment Fiji CEO Godo Müller-Teut elaborates on the islands’ competitive advantages and talks us through the initiatives that his agency is overseeing to further enhance the attractiveness of Fiji for FDI.

 

How do you assess the potential of Fiji to emerge as the globally recognized hub for trade and investment in the South Pacific?

Fiji offers diverse investment opportunities and has a stable political environment that encourages economic growth and development. Economic stability is essential for attracting significant inward investment, with Fiji having both low levels of inflation and positive GDP growth over the past years. In fact, the Central Bank of Fiji recently announced that the economy has grown by 5.3% in 2014, exceeding earlier predictions of 4.5%, which is a remarkable achievement, considering the stagnant conditions across the region and in larger economies like Australia (2.71%) and New Zealand (3.3%).

Fiji has a strong banking sector, with the two largest banks ANZ and Westpac being in the Top 20 of the Global Financial World’s Safe Banks Index of 2014. In May last year Standard & Poor’s raised its long-term sovereign credit rating for Fiji from B to B+, reflecting the stable economic outlook.

There has been a sharp rise in confidence in the domestic private sector and foreign investors; new bank lending for investment purposes has risen by 95%, and imports for investment (excluding aircraft) rose by 7.2% in June 2014.

Fiji has a business friendly tax structure that supports innovation and investment, with 20% corporate tax and a lower rate of 10% for companies listed on the South Pacific Stock Exchange. In comparison, corporate tax rates in PNG are set at 48%, India 40%, Australia 30% and New Zealand 28%.

Fiji is also the region’s foremost trading hub, with excellent shipping routes across the Pacific Islands. Our 850,000 residents and nearly 700,000 tourists create a lucrative domestic market of over 1.5 million people.

The significance of the tourism sector cannot be underestimated and is attracting growing interest from both domestic and foreign investors. The tourism industry is the largest foreign exchange earner in Fiji, with earnings reaching $1.4billion. About half of the arrivals are Australian nationals.

Fiji’s recent re-engagement with her old allies, such as the US, Australia, New Zealand and the EU, has had a positive impact on the perception of Fiji as investment and tourist destination.

Investment Fiji, which registers foreign projects, has seen positive growth over the last four years. In comparison, the total number of projects registered in 2010 was 117, while 2014 recorded total projects of 261. The continued investment in infrastructure, education and training of our workforce all have implications not only for the attractiveness of Fiji as a location for investors, but also for the quality of inward investment, with Investment Fiji witnessing a growing interest from large multinationals.

 

You were appointed as CEO of Investment Fiji in 2015 after an exhaustive search by the board for their top executive. How would you define your mission going forward?

Investment Fiji always had strong focus on process and compliance. Moving forward, Investment Fiji is developing an integrated customer-focused investment promotion strategy that combines investment attraction, facilitation and after care in order to improve its effectiveness in attracting foreign direct investment and maximize the benefits for the Fijian economy.

Image, brand awareness, and perceptions are major factors influencing the location decision-making process for foreign direct investment.

In order to provide comprehensive information on the investment climate in Fiji, we undertake detailed research relative to each industry sector for inward investment. It is essential that there is an internationally recognized brand name that overseas investors can identify with. Brand Fiji, and its image of tropical beaches, pristine environment and premium product connotations, is critical in attracting inward investment. But so are well-established reference sites. In the ICT sector, international players such as Mindpearl and the ANZ Pacific Operation serve as key reference points for other investors when considering Fiji as an ICT destination.

Investment Fiji recognizes that a customer-centric approach is essential to generating a deeper understanding of the investors’ business goals. Knowing our investors is the foundation of our success; we need to understand who they are and where they want to go in order to build and deliver our support programs.

Investment Fiji’s investment promotion strategy is based on an effective structure and coherent objectives, set and agreed by all the major stakeholders and underpinned by rigorous analysis of our competitive position. Close collaboration with key stakeholders both in the public and private sector is essential. We realize that success is derived from engaging in long-term relationship building with investors across priority sectors and combining it with focused marketing.

A major cornerstone of our trade and export strategy is capability support programs designed to build up the capacity of exporters through training and enterprise development, as well as co-operation between focused suppliers. By helping local exporters to upgrade and become first-tier suppliers, it is anticipated that this will improve the attractiveness of Fiji to inward investment, increase local sourcing, and embed investors by raising their exit costs and providing a compelling long-term business proposition.

Effective facilitation is vital if inquiries are to be translated into actual projects. We realize that a professional, coordinated, timely approach is essential. The online registration system plays a vital role in delivering on this proposition.

Investment Fiji is closely working with domestic and foreign investors on after-care support services to maximize the long-term benefits from inward investment and develop a competitive advantage for Fiji. Enabling a proactive investment climate is a prerequisite for business development and increased investment, economic growth, and employment.

 

Last year saw the introduction of the Single Window Clearance System for Tier 1 Investment Agencies, with plans to include Tier 2 agencies in 2016. Can you talk us through the benefits of this system and its effectiveness in attracting investment?

The Single Window Clearance System for investment registration was launched by the Honorable Prime Minister in July 2015, coinciding with the successful launch of the Fijian Trade Policy Framework. The integrated on-line payment gateway allows investors to complete the application irrespective of their physical location.

It drastically reduces the turnaround time for approvals from Investment Fiji as well as other agencies, such as the Registrar of Companies for the Name Reservation/Business Registration, Investment Fiji for the Foreign Investment Registration Certificate & Approval Letter, Fiji Revenue & Customs Authority for the Tax Identification Number, and Reserve Bank of Fiji for the issuance of shares.

This system not only expedites the processing time, but it also allows for greater levels of transparency as investors are able track and monitor the progress of their applications across all agencies. We have created a video highlighting the key benefits of the Single Window Clearance System, available to download at the Investment Fiji YouTube channel.

At the moment, Tier 1 approval agencies are linked to this system. As per the 2016 Budget Address Supplement, Tier 2 agency integration will commence in 2016.

 

To what extent can Investment Fiji now be described as a ‘one-stop shop’ for investors looking at the Fijian market?

Investment Fiji is the agency that issues the foreign investment registration certificate, the prerequisite for any foreign entity to commence operations in Fiji. But no matter how effectively Investment Fiji markets its location and generates leads, this is unlikely to result in actual projects unless there is effective project facilitation.

The purpose of the Investment Facilitation division is therefore to convert an investment enquiry into an actual investment. Investment Fiji helps companies to set up and grow; our dedicated and experienced staff guide and assist investors with uncertainties and obstacles. We are here to help the investor to successfully develop the venture.

So yes, Investment Fiji can certainly be described as a one-stop shop in the sense that it is the agency in which investors will contact first and will be the agency that will be facilitating and assisting the investor meet the requirements throughout their investment and growth cycle.

 

Since your appointment we have seen a notable increase in the number of project proposals being made and the registration fees received. The most popular sectors have been services, wholesale and retail, tourism, manufacturing and real estate. In which sectors do you see the most potential going into 2016?

Indeed, throughout 2014 we have witnessed a significant increase in registrations across a number of sectors, the primary ones being services, wholesale and retail as well as tourism. We would like to see an increase in the manufacturing and agricultural sectors, as these generate domestic employment opportunities and stimulate local supply chains.

Agriculture has an immense potential in Fiji. Our virgin soils and diverse climatic conditions allow for a myriad of opportunities, targeting the domestic market, local hotel industry and export markets. Given our location and size, the key is niche and premium, and what applies to agriculture also applies to manufacturing. Niche manufacturing is a growing sector and rising trends in the garment industry are testament to this development.

And of course the service sector, including ICT, is growing at a steady speed. As Fiji is developing, its services industry is becoming more professional and international.

 

From the headline figure of investment totaling approximately 25% of GDP in Fiji, we understand that FDI represents approximately 7% of this. The USA remains the number one source of FDI outflows in the world and the West Coast can be reached by direct flight from here in under 10 hours. Where would you like to see increased interest from American investors and how are you engaging with potential investors in the US in particular to make them aware of the opportunities in the new Fiji?

The US is, as you correctly pointed out, is one of the leading FDI outflow markets globally, especially for large corporate investments. Fiji offers diverse investment opportunities across a multitude of sectors and industries. Fiji Water, for instance, is a clear example of US investment into a Fijian venture that has now become a globally recognized brand.

As earlier indicated, opportunities are primarily within the premium and niche sectors. Fiji’s reputation and pristine environment allow for potential investments in organic and natural food production, niche manufacturing and assembly for the greater Pacific region including Australia and New Zealand.

Our growing tourism industry requires access to fresh produce, but also quality retail. Moreover, as tourist arrivals grow, our hotel capacity becomes a factor. We already have some of the leading hotel chains in Fiji but there are others who are yet to discover Fiji.

From a promotional strategy, Investment Fiji engages with American investors either directly when the investor contacts us or through the Trade Commissioners office, Foreign Missions, the US Embassy in Suva, or the Fiji-USA Business Council.

Other government agencies also participate in various exhibitions that attract the attention of investors, such as Film Fiji and Tourism Fiji. Building and promoting Brand Fiji is not a mono-agency approach but a joint effort of both the private and public sector.

 

What impact could the Trans-Pacific Partnership have on trade and investment inflows into Fiji, and how does it affect your task of promoting Fiji as an investment destination in the Pacific?

We are not part of the TPP, however Fiji does has a number of regional trade agreements that it is a party to, such as the Melanesian Spearhead Group (MSG) which was devised to promote the free trade of goods and services and ultimately labor mobility between Fiji, Papua New Guinea, Solomon Islands and Vanuatu. SPARTACA caters to Australia and New Zealand as well as PICTA, and there is the currently negotiated PACER-Plus.

Fiji also enjoys the benefits of US trade preference programs such as the Generalized System of Preferences (GSP), promoting economic development by eliminating duties across a number of sectors.

Fiji is developing strong bilateral trade relationships with key regional and international players that will foster trade.

 

Fiji’s airports are undergoing renovations worth FJ$250 million, whilst a Ports Development Master Plan is being mooted now that the ports corporation has been partially privatized. What are the impacts of these ongoing and proposed infrastructure upgrades on Fiji’s competitiveness as an investment destination?

Fiji’s ports are now managed by multinational corporation Aitken Spence, with its vast global experience. It acquired a 51% stake in Fiji Ports Terminal Ltd, translating into control of the business in the Suva and Lautoka ports for a period of 15 years, and embarked on a joint vision to establish them as the leading maritime logistic centers in the Pacific. I do not regard this as mooting of a development plan but rather as a great step into developing a modern infrastructure to international standards.

Other examples include the new port in Savusavu, allowing farmers to directly export from Savusavu to regional markets, rather than via Suva.

The continued investment in infrastructure will stimulate investment and divestment by existing investors, both foreign and domestic. We recognize that modern and well-maintained infrastructure networks, may it be roads, airports or seaports are fundamental to the economic success of Fiji.

 

What do you envision will be the impact on the partial privatization of key state entities on Fiji’s capacity to deliver efficient services to its citizens and companies looking to do business here?

PPPs, or public-private partnerships, are strategic engagements that allow governments to retain overall control, whilst transferring the management of the assets to internationally experienced entities. This not only results in greater efficiency levels but also allows for skill transfer and access to the latest know-how, technology and training otherwise not accessible to Fiji. As such I welcome PPPs as long as they are strategically planned and executed with the most suitable partner and best possible result for Fiji.

In essence partial privatization will open up business opportunities and to some degree allow for competition, which in turn is geared at improved services, increased revenue, and job creation.

 

How do you assess the potential for Fijian manufacturers to penetrate further into sophisticated markets like the US, and what can Investment Fiji offer to help them expand their international reach?

There is tremendous potential for Fijian manufacturers and joint ventures to enter the US. Brand Fiji enjoys a premium connotation spearheaded by Fiji Water and Pure Fiji. One of the key impediments is bio-security, and Investment Fiji is working with exporters and the respective agencies on gaining access to the US market.

Investment Fiji is planning to hold a Fiji-USA investment and export seminar in during first quarter of 2016. More information will be available on our website once the dates and program have been finalized.

 

What attracted you to the idea of representing Fiji and its investment potential on the global stage?

Fiji is undergoing a tremendous growth cycle; it is truly an exciting time to be in Fiji and to promote Brand Fiji.

It is incredibly rewarding to know that one’s efforts have a direct impact on the livelihood of ordinary Fijians, through job creation, and that investments in agriculture, healthcare and manufacturing directly correlate to enhanced standards of living. The ability to make a difference, to work for a cause rather than a company has been the first and foremost motivating factor.

 

What are the qualities that you bring to the role that perhaps helped you stand out from other candidates?

This question, of course needs to be address to the Board of Directors, but I believe my multi-cultural background and diverse experience would be key. I was born in Germany, raised in Singapore, educated in England, spent 15 years in the Middle East as Managing Director of Research and Financial feasibly advisory firm and later COO of one of the largest regional retail chains. Prior to arriving in Fiji I was working on building a collaborative engagement model between large New Zealand corporations and the government’s export promotion agency that is meaningful and of mutual benefit.

Perhaps my broad-based experience with start-ups, regional enterprises, multinational corporations and governments across a diverse array of sectors and industries and countries may have played a significant part in the section process.



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