In recent times, Fijian companies have been attracted to Papua New Guinea because of the size of its market. There are plenty of reasons for PNG companies to look in the other direction, as delegates to the 2019 Business Advantage Papua New Guinea Investment Conference heard last month.

Suva Harbour. Credit: Pacific Towing

‘There are good opportunities for PNG companies in Fiji … it is a similar economy to PNG in many ways,’ observes Brett Hooker, who spent three years running Westpac’s operations in PNG’s Melanesian neighbour before arriving this year to run Westpac PNG.

Hooker was speaking at last month’s 2019 Business Advantage Papua New Guinea Investment Conference, in a special session on business opportunities between the two countries, which also featured Nitij Pal, Principal with Australian law firm Ande + Co, who is also a long-serving board member of the Australia Fiji Business Council.

Travelling well

Ande + Co’s Nitiji Pal [left], Business Advantage International’s Robert Hamilton-Jones [centre] and Westpac PNG’s Brett Hooker during the 2019 Business Advantage PNG Investment Conference. Credit: BAI

Next, Fiji’s corporate tax rate is attractive.

‘There is a low corporate tax rate of 20 per cent and a 10 per cent tax rate for listed companies on the South Pacific Stock Exchange—so there is opportunity there,’ says Hooker.

Fiji has also been experimenting with tax-free zones on its main island of Viti Levu.

‘Like in any small economy, you’ve got to jump through hoops to make sure you get foreign investment approval.’

‘We’ve seen the success of the tax-free zone in Suva,’ notes Nitij Pal. ‘The Government is now looking at setting up the second one in the Lautoka area.’

Infrastructure

Westpac’s Brett Hooker

Hooker notes that PNG companies find good infrastructure in Fiji (although, Pal adds, ‘there’s a lot of deferred maintenance and investment in infrastructure that is occurring and needs to occur’).

‘They have got a world class international airport [at Nadi], very good access through to Asia, Europe, the Americas—they are a hub for the South Pacific as well. Fiji has experienced some phenomenal growth numbers in recent times.’

Work to expand Fiji’s second airport, Nausori, is expected to start in the next year, facilitating direct flights to the capital, Suva.

Hooker also points to the ‘first class’ access, cost and reliability of data in Fiji.

‘Data in Fiji is cheaper than what you pay in Australia. For companies in this day and age, that is critical.’

‘This is one of the reasons why ownership of smartphones in Fiji is so high; everyone’s got at least one and some have two,’ he says.

‘One of the challenges that we have in the South Pacific is we’ve got all these great banking tools to promote the digital economy, but we need reliable data and reliable networks.’

Regulatory environment

Pal told the conference that Fiji is ‘an easy place to do business’ but there are challenges.

‘Like in any small economy, you’ve got to jump through hoops to make sure you get foreign investment approval which, if you’re from Australia, New Zealand or Singapore, you can find a bit onerous,’ he says.

‘My understanding is the government has recognised that this needs to be reformed.’

He says there’s talk that Investment Fiji, the country’s foreign investment body, cannot ‘continue to be both a regulator and an investment promotion authority.’

Nevertheless, he described the Companies Act 2015, as ‘really good legislation’, similar to equivalent laws in Australia, New Zealand and PNG.

‘One of the challenges that we have in the South Pacific is we’ve got all these great banking tools to promote the digital economy, but we need reliable data and reliable networks.’

One issue Pal thinks Fiji does need to address is its foreign exchange controls—something with which PNG companies would be familiar.

‘Sometimes, if head office wants to move money out of Fiji to fund other operations … there can be difficulty. But it’s a smallish economy exposed to natural disasters and internal shocks—that’s the reasoning the Reserve Bank of Fiji has for foreign exchange controls to maintain a stable currency.’

Opportunities

Sheraton Resort Fiji

Tourism accounts more than two-fifths of Fiji’s economy and it remains a major source of business opportunities.

‘We facilitate a lot business on the ground in Fiji for both Australian companies and international companies … what you’re seeing is a whole combination of small and medium enterprises entering the market, predominantly in tourism,’ says Pal.

Nevertheless, he notes there are plenty of opportunities outside this sector, especially given Fiji’s skilled and educated labour force.

‘As things start to improve in PNG, there’s a lot of opportunities both ways for both PNG and Fiji companies.’

‘Logistics management is going to become a growth and interesting area for Fiji, as is data warehousing and management, because they’re building an ecosystem around business process outsourcing (BPO) in Fiji.

‘Those two industries are natural fits with Papua New Guinea because, as you have some of these larger projects, you may find it’s easier for you to do some of these things in a place like Fiji.’

‘There’s opportunity to supply industries with hardware and so on as well,’ observes Hooker.

‘As things start to improve in PNG, there’s a lot of opportunities both ways for both PNG and Fiji companies.’