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INTRODUCTION
Country profiles document the nature and extent of the organisations services to individual members. This country profile presents basic country facts and a synopsis of Fiji Islands development background and a narrative summary of the Secretariats assistance during the period 20112012. Annexes include specific country activities and human resource development activities in 2011-2012. Fiji Islands Development Background: Amongst the largest countries of the South Pacific region, the Republic of Fiji was a British colony until 1970, when it became an independent constitutional democracy. Compared to many of the Pacific island countries, Fiji has made good progress towards the MDGs. In the 2010/11 UN Human Development Report , Fijis Human Development Index is amongst the highest in the Pacific region, reflecting a high literacy rate, high longevity, low infant mortality rate, and a relatively high GDP per capita income. Poverty and hardship are serious issues in rural areas and in urban squatter settlements. The Government of Fiji recognizes

that limited employment and income generating opportunities are the major cause of hardship and poverty. In its 2007-2011 Strategic Development Plan, the governments poverty alleviation programme is guided by the Social Justice and Affirmative Action framework prescribed by the Social Justice Act of 2001. The framework specifies 29 affirmative action programmes aimed to address disadvantage people throughout the communities. The notion of disadvantage is defined as those with limited access to education, training, land, housing and commerce.

2. POLITICAL ANALYSIS

Political risks scale: 3.50 The political environment has stabilised following a coup on 19 May 2000, but problematic issues remain. Issues such as the rights of ethnic Indian Fijians need to be solved, and may lead to further friction in the future. However, in a significant step forward, the general elections held in late 2001 were deemed free and air. After initial complaints, the Fijian Labour Party appears to have settled into its role as official opposition, though its leader, former Prime Minister Mahendra Chaudhry, has refused to accept the post of opposition leader. The main problems faced by Fiji are poor governance and political instability, inadequate protection of property rights, weak growth impulses in the export sectors, absence of strong backward linkages in the export sectors, particularly in the manufacturing sectors and the rest of the economy, and very low private sector investment (Grounder, 2002). A factor important for the growth process is skilled labour in the country. Fiji has been affected by an outflow of skilled labour. Employment standards: Fiji offers a high literacy rate by world standards, with a reasonably young working population. Fiji has a well trained customer friendly and flexible workforce. The current litera cy rate of Fiji stands at 93.7%. Labour regulations: Skilled and unskilled labour is readily available locally. However, when shortages are experienced, expatriates with appropriate qualifications are recruited. The Ministry of

Labour, Industrial Relations and Employment is empowered by statute for the administration of the labour laws and for the encouragement of good labour relations and social welfare of the employees. Trade Union Agreement: In relation to those employees covered by a Trade Union Agreement, the union negotiates with the employer for minimum wages, annual increments and other benefits.

Wages Councils: The Employment Relations Promulgation provides for the establishment of Wages Council. A Council is composed of three employer representatives and three independent members. Division of Power Fiji is a group of 322 islands (about 110 of which are inhabited) in the South Pacific Ocean, about two-thirds of the way from Hawaii to New Zealand. A major influence on the formal division of political power is the ethnic make-up of the population (49% indigenous Fijians, 46% Indian Fijians). The so-called '1997 constitution, which came into force in July 1998, provided for a new electoral system. Under this, 23 seats in the 71-seat parliament are allocated to indigenous Fijians, 19 to ethnic Indians, three to other races and one to Rothmans (inhabitants of a Polynesian island annexed to Fiji), whilst the remaining 25 are contested on a non-racial basis. The president, who has a largely ceremonial role, must be an indigenous Fijian. Other top posts can be held by members of any community.

Main Political Parties Soqosoqo Duavata Ni Leweanivanua Party, or United Fiji Party (SDL): The indigenous Fijian vehicle of Prime Minister Laisenia Qarase and his supporters. The Fijian Labour Party (FLP): A political grouping headed by ousted Prime Minister Mahendra Chaudhry, with its roots in the sugar industry's labour movement. Its ideology and policies are (and were in office) clearly left of centre. The New Labour Unity Party (NLUP): Formed by ousted Deputy Prime Minister Tupeni Baba, the NLP is a splinter group from the main Labour Party, backed by those, like Baba, who feel that Chaudhry has been forced by events and his own opinions into a position whereby it would be impossible for the country to unite under him if he returned to power. The Conservative Alliance: A fairly radical pro-indigenous party that did very well in the 2001elections. It campaigns for Speight's pardon and is also a supporter of the current government. Soqosoqo ni Vakavulewa ni Taukei (SVT): Created with the support of the Great Council of Chiefs, its reputation has since been damaged by internal problems. The current leadership has sought to move away from this, pursuing moderate politics

3. ECONOMIC ANALYSIS Fijis economic freedom score is 57.3, making its economy the 105th freest in the 2012 Index. Its overall score is 3.1 points lower than last year due to considerable declines in property rights and freedom from corruption. Fiji is ranked 18th out of 41 countries in the AsiaPacific region, and its overall score is below the world and regional averages. Fiji recorded the fifth largest score decline in the 2012 Index. Performing notably worse across the 10 economic freedoms, the island economy is no longer one of the moderately free economies in the Index. The quality of the judicial framework has deteriorated considerably, severely hampered by the lack of judicial independence or any strong political will to eradicate corruption. With the judiciary becoming more vulnerable to political interference, corruption has become a serious cause for concern and undermines the foundations for longterm economic development. Regulatory uncertainty and the lack of effective open-market policies continue to cause economic stagnation. Public debt has surpassed 50 percent of GDP, a level higher than that in most regional neighbours. Inefficient government-owned enterprises in sugar, electricity, and transportation significantly impede fiscal stability. Monetary freedom remains constrained by state meddling through price controls. The government began to implement industry reform in 2010, but it has done little to improve Fijis slowing economy. THE TEN ECONOMIC FREEDOMS

Open Markets

Financial Freedom Investment Freedom Trade Freedom

Regulatory Efficiency

Monetory Freedom Labor Freedom

Limited Government

Business Freedom Government Spending Fiscal Freedom

Rule of Law

Freedom from Corruption Property Rights 0 20 40 60 80 100

Figure 1: Ten Economic Freedoms

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Table 1: Score changes The Fiji Government has given the green light for the proposed percentage increase in Fiji's minimum wages to be implemented amidst objection from employers. The increase, enabled by a new wage order that was to have come into effect in February, but was deferred to July 1st, sees a rise in minimum wages by 20 percent across nine industries. Wages Council chairman Father Kevin Barr confirms that after meeting with government officials this week, Minister for Labour Filipe Bole announced that the July 1 implementation date will still be going ahead.

4. SOCIO-CULTURAL ANALYSIS
Identification: The Republic of the Fiji Islands is a multicultural island nation with cultural traditions of Oceanic, European, South Asian, and East Asian origins. Immigrants have accepted several aspects of the indigenous culture, but a national culture has not evolved. Commercial, settler, missionary, and British colonial interests imposed Western ideologies and infrastructures on the native peoples and Asian immigrants that facilitated the operation of a British crown colony. People from different parts of India, now called Indo-Fijians, came to work as indentured labourers on sugar plantations. After their term of service, many remained in Fiji. Some became merchants and business-people; others remained on the land as free peasant cultivators. The early immigrants were joined later by freely-migrating people from India's merchant castes, mostly from Gujarat. European immigrants came primarily from Australia, New Zealand, and Great Britain. Location and Geography. The republic includes approximately 320 islands, but only about one hundred are inhabited. The land area is 7,055 square miles (18,272 square kilometers); Viti Levu and Vanua Levu account for 87 percent of the landmass. Viti Levu contains the major seaports, airports, roads, schools, and tourist centers, as well as the capital, Suva. Demography. In 2009, the population was 775,077. Fifty-one percent of the population is Fijian, and 44 percent is Indo-FijianThere are small populations of Europeans, Pacific Islanders, Rotumans, Chinese, and persons of mixed European-Fijian ancestry. Linguistic Affiliation. Fijian, Hindi, and English became the official languages after independence in 1970, and linguistic autonomy was guaranteed by the constitution of 1997. English is the language of interethnic communication, administration, government, trade and commerce, and education. Fijian and Hindi often are spoken at home and are used in religious contexts and on radio and television. Symbolism. The national flag includes the British Union Jack and Fiji's coat of arms, which still bears. National Identity. Common citizenship, multi-ethnic, an English-language mass media that caters to a multi-ethnic clientele, national sporting teams that attract intense following, and
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pride in the beauty and bounty of their oceanic homeland, are some of the factors that help to create a "Fiji Islands" national identity that surmounts the otherwise all-important ethnic affiliations. Ethnic Relations. The principal ethnic groups Fijians, Indo-Fijians, and people of mixed Euro-Fijian descentintermingle with ease at the work place, in shops and markets, and in some educational and recreational settings, but interact much less freely at home. Religion and domestic custom tend to cause greater division than does language. Political aspiration is perhaps the greatest divisive factor, with indigenous Fijians demanding political paramount and Indo-Fijians, political equality. Naturalized European and part-European communities tend to mingle more closely with ethnic Fijians than with Indo-Fijians. Urbanism, Architecture, and the Use of Space Most of Fiji's eighteen urban centers are on the two largest islands, Viti Levu and Vanua Levu. In the first half of the twentieth century, urban canters were dominated by South Asians and Europeans, while Fijians were considered essentially a rural people. Today, however, 40 percent of ethnic Fijians live in cities and towns. These urban areas are Western rather than Oceanic in appearance, and Suva still retains much of its distinctively British-style colonial architecture.

5. TECHNOLOGICAL ANALYSIS
The country is well endowed with natural resources, which accounts for a significant component of the countrys gross domestic income. In addition to agriculture (primarily sugar production) and fishing, Fijis economy also relies heavily on tourism. Industries based on agriculture and natural resources account for

approximately 70 per cent of exports, and 30 percent of GDP. Sugar production alone provides roughly 30 percent of Fijis domestic export earnings. In recent years, remittances have become a major source of foreign exchange for Fiji. Communications: Telephones - main lines in use: 137,000 (2010) Telephones - mobile cellular: 1 million (2010) Telephone system: General assessment: modern local, interisland, and international (wire/radio integrated) public and special-purpose telephone, telegraph, and teleprinter facilities; regional radio communications center Domestic: telephone or radio telephone links to almost all inhabited islands; most towns and large villages have automatic telephone exchanges and direct dialing; combined fixed and mobile-cellular teledensity exceeds 100 per 100 persons International: country code - 679; access to important cable links between US and Canada as well as between NZ and Australia; satellite earth stations - 2 Inmarsat (Pacific Ocean) (2010) Telecommunications Environment: Fijis infrastructure is on par with that of developed countries. For international telecommunications tele communications, Fiji is directly linked to the Southern Cross Cable Network (SCCN), a third generation submarine fibre optic cable system with direct links to Australia, New Zealand and the US West Coast via Hawaii. Domestic telecommunications

technologies available are satellite (VSAT), wireless (WiMax, CDMA and 3G), optical fibre and the traditional copper (ADSL). Broadcast media: Fiji TV, a publicly-traded company, operates a free-to-air channel as well as the Sky Fiji and Sky Pacific multi-channel pay-TV services; state-owned commercial company, Fiji Broadcasting Corporation, Ltd, operates 6 radio stations - 2 public broadcasters and 4 commercial broadcasters with multiple repeaters; 5 radio stations with repeaters operated by Communications Fiji, Ltd; transmissions of multiple international broadcasters are available (2009) Internet country code: .fj Internet hosts: 17,088 (2010) Internet users:114,200

6. ENVIRONMENTAL ANALYSIS Geographical background: The Fiji Group comprises approximately 320 islands of varying sizes with a total land area of 18,333 sq km.While all types of oceanic islands are found in the Fiji group, the largest islands (Viti Levu and Vanua Levu), are of volcanic origin. The major islands are high islands and their interiors are mountainous. (Chandra and Mason 2010). This limits the area of land for development to coastal areas. According to the last census in 2011, the population size was 775, 077. This represents an increase of 59,702 (8.3%) slightly lower than in the previous decade. Since the majority of services, infrastructure, towns, and agricultural land are located along coastal areas, over 90% of this population lives on or near the coast. Over 75% of the population is concentrated on the main island of Viti Levu. Although Fiji has become increasingly urbanized in recent years, over 60% of the population still lives in rural areas. About 80% of the rural population lives within 5 km of the coastline. In Fijis national environment report (Chape and Watling 2010) to the United Nations Conference on Environment and Development (UNCED), the major environmental problems in Fiji were summarised as follows: Urbanization - with subsequent waste disposal problems and pressure on peri-urban marginal agricultural land; The potential effects of global warming; Soil erosion caused by increased planting on steep slopes and logging; Land conversion for agricultural and non-agricultural uses; Lack of long-term land tenure; Significant use of pesticides with little surveillance; Poor sewage disposal from septic tanks; Problems with solid waste disposal and littering in urban areas; Lack of recycling; Moderate deforestation due to large commercial agriculture/rural development projects; Potential hazards from gold, sand, and coral mining; Production of toxic chemicals and other wastes by the sugar industry; and Spread of settlements, urbanization, and related infrastructure.

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7. LEGAL ANALYSIS
Legal risks scale: 3.00
Before the coup of 2000, the legal environment was considered generally satisfactory, but the legitimacy of the government, and therefore any of its actions, has been thrown into doubt by a series of constitutional court cases which have split the judiciary. Court rulings in November 2000 and March 2001 declared the interim government illegal, stating that the 1997constitution was still in effect. The efforts to overturn the current administration have split the judiciary, many of whom support the new order and were involved in providing legal advice to the military in declaring martial law and removing Chaudhry's administration.

Legal - Recent Updates

2009 April - Appeal Court rules the military regime was illegally appointed after the 2006 coup and says a caretaker prime minister should be appointed to call elections to restore democracy. President Iloilo repeals the constitution, appoints himself head of state, sets a 2014 election deadline and sacks all the judges. He then reappoints military chief Frank Bainimarama as interim prime minister. Martial law is imposed. 2010 March - A court jails eight men for attempting to kill Commodore Bainimarama in 2007. Critics say the eight did not have a fair hearing. 2011 August - Government orders cancellation of annual conference of Fijian Methodist Church which has been highly critical of the interim military-led regime - saying that its leadership is too political. 2012 January - Military ruler Frank Bainimarama announces lifting of martial law and says that consultations on a new constitution will begin in February.

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8. BUSINESS PROSPECTS
Fiji has a small but sustainable economy, capable of delivering sound investment opportunities in the primary industry, tourism and services sectors. Fiji's main competitive advantages are climate, accessibility to developed-country markets such as Australia and New Zealand, a literate, welleducated English-speaking workforce and, relative to other South Pacific island states, economic dynamism. Fiji has access to the Southern Cross Cable, a high-capacity (240 Gbits-per-second) fibreoptic cable network linking Fiji to Australia, New Zealand and the United States, giving the Country an edge in the information communication and technology sector. Fiji's recent problems, particularly political instability and uncertainties over land tenure, have hampered its economic growth. In Munro Leys' experience, however, business clients have been able to identify and successfully implement well targeted opportunities, particularly in the tourism, extractive industries and specific niche markets.

Foreign investment consent process

Foreign investment is regulated by the Foreign Investment Act 1999. Fiji's primary foreign investment promotion and regulation agency is the Fiji Islands Trade and Investment Bureau (FITIB). Other regulatory legislation address specific industries. Government policy is aimed at encouraging foreign investment, recognising it as a key means of growing Fiji's economy and employment base. A range of tax incentives is available to investors whose proposals meet Government investment objectives, principally export growth and employment generation.

Business structures
Fiji law is based on English antecedents and the business structures recognised in English law - sole proprietorships, partnerships, limited liability companies, joint ventures and trusts (including unit trusts) - are all recognised in Fiji. Fiji has a small but well-regulated capital market. On 31 December 2008, 16 public listed companies were listed on the South Pacific Stock Exchange, trading in Suva.The Capital Markets Development Authority regulates capital market dealings. The Commerce Commission is responsible for protecting competition in Fiji markets through the operation and Fair Trading Decree 1992. The Decree is modelled on the

Australian Trade Practices Act. The Decree generally provides for consumer protection,
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merger and acquisition regulation, certain consumer guarantees and regulation of restrictive trade practices.

Buying or dealing in Fiji land

Land ownership and dealing are regulated in Fiji under the Land Transfer Act. This legislation establishes a system of indefeasible title using the Torrens System, State Lease (owned by Government and leased to the public) or Native Lease (owned by indigenous Fijian landholding units and leased to the public). Indefeasible title to these interests can be obtained under the Land Transfer Act.

Taxation and stamp duty:

Corporate tax: Corporate tax for resident and non-resident companies for the 2011 income tax year is 28%. Personal tax: The top marginal personal tax rate is 31%, taking effect at assessable income levels above F$22,000 for residents and F$20,000 for non-residents. Dividends: Effective 1 January 2001 dividends paid out of fully taxed corporate income are treated as fully exempt. Different rates apply where relevant corporate income was not fully taxed. Withholding tax on dividends, interest, royalties and management fees paid to non-residents this applies at rates varying between 10% and 15% depending on the nature of the payment and the jurisdiction to which payment is being remitted. Branch profit remittance additional normal tax was repealed effective 1 January 2010 - it applied at the rate of 15% on remittances of branch profits where those profits were not fully tax-paid in Fiji.

Capital Gains Tax (CGT): CGT of 10% applies with effect from 1 May 2011. CGT is payable on gains made on the disposal of capital assets (including land and buildings, plant and equipment, vehicles, aircraft and ships and including options) by residents and non-residents. A credit is allowed for foreign tax paid on the disposal of those assets.

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Value Added Tax (VAT): VAT is charged on supplies of goods and services at the rate of 15% (increased from 12.5% with effect from 1 January 2011). Certain supplies are exempt. Customs and excise duties: Most imported and some domestically manufactured goods are subject to these duties. Charged goods fall into one of five duty bands ranging between 3% and 32%. Further simplification of the system is an avowed Government aim. Stamp Duty: This is charged on a range of written instruments mainly transfers and leases of land, finance and security documents. Transfer duty is charged at the rate of 2% on real property transactions (land, assets) and 1% on documents (share transfers, mortgages and security instruments) involving securities. Double Tax Agreements: Fiji has entered into Double Tax Agreements with the following states: United Kingdom, Australia, New Zealand, Japan, South Korea, and Malaysia, Papua, New Guinea, Singapore. Banking, securities and exchange control The Fiji dollar is a controlled currency. The Reserve Bank of Fiji (RBF) regulates external currency movements under the Exchange Control Act. RBF consent is needed for all external remittances over trading bank-delegated limits, including capital and dividend repatriation. Fiji's currency reserves situation is strong and bona fide remittances.

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Fiji tax rates 2011

A. RESIDENT INDIVIDUALS AND RESIDENT INDIVIDUAL TRUSTEES Chargeable income $ 0-15,000 15,001-15,600 15,601-22,000 22,001+ Tax payable $ Nil 25% of excess over $15,000 150 + 31% of excess over $15,600 2,134 + 31% of excess over $22,000

Table 2: Tax rates-A

B. NON-RESIDENT INDIVIDUALS AND NON-RESIDENT INDIVIDUAL TRUSTEES Chargeable income $ 0- 9,000 9,001-10,000 10,001-20,000 20,001 + Tax payable $ 20% of excess over $0 1,800 + 25% of excess over $9,000 2,050 + 30% of excess over $10,000 5,050 + 31% of excess over $20,000

Table 3: Tax rates-B

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C. COMPANIES (INCLUDING COMPANIES ACTING AS TRUSTEES) (a)Every company, other than companies to which paragraph (b) or (c)

applies.......28% (b)Non-resident shipping companies ............2% (c) Any company listed with the South Pacific Stock Exchange and has a minimum of 40% resident shareholding is eligible for this tax rate for at least 3 years . 20%

D. NON-RESIDENT WITHHOLDING TAX RATES NZ, UK and Japan Royalty Interest 15% 10% 10% 10% 10 15% or 10% 10% 15% 10% 15% 10% Korea Singapore Australia Malaysia PNG

Other Countries

15% 15% 10% 10%

Dividend 15%

5 or 15%

15%

15%

17% 15%

Management fee @ 15% of gross Supply of professional services @ 15% of gross Know-how payments etc. @15% of gross

Table 4: Non-resident withholding tax rates

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Good reasons to invest in Fiji: 1. A regional and global hub. Fiji is the centre of trading in the South Pacific for the South Pacific-Asia region. Fiji is not only the centre of trade, but has transformed into a hub for global communications and transportation (shipping and air travel) routes;

2. Offering a package of trade and investment incentives including duty concessions, investment allowances, tax exemption and tax free regions. Low Corporate Tax Rate of 28%; 3. A Government which welcomes and supports local and foreign investment, within its overall objectives of growing the various sectors of Fijis economy and enticing new, and retaining existing, investors by providing them with tax and other incentives to boost their businesses. 4. State of the art telecommunication infrastructure that provides links through fibre optic cable connections to the rest of the world. 5. A well developed infrastructure, including electricity, water supply and internal communications. 6. Availability of land at reasonable rates for factory and building construction. 7. Well developed banking and financial institutions providing full financial services. 8. Fast registration of foreign investment projects. 9. Well educated workforce with a literacy rate of 93.7%. 10. Good health and medical facilities including a modern private hospital and medical centres. 11. Fiji is signatory to various trade agreements, frameworks and memoranda of agreement. This allows for better market access and provides a conducive investment climate and opportunities with other countries. The trade agreements are as follows:

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9. REFERENCES
Central Intelligence Agency, USA; The World FactBook:Fiji ; Available at: http://www.cia.gov/library/publications/the-world-factbook/geos/fj.html ;

The World Bank; The International Bank for Reconstruction and Development;
Doing business 2012, Economy profile : FIJI ; Washington, DC ;ISBN: 978-0-

8213-8833-4; Available at: www.doingbusiness.org.

Government of Fiji ; online portal ;Available at: www.fiji.gov.fj; Fiji Trade And Investment Bureau ; Investing in Fiji
Available at: http://www.ftib.org.fj/

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