Critical times in Pacific tuna

Islands Business Magazine interviews Andrew Wright, Executive Director of the Pohnpei-based Western and Central Pacific Fisheries Commission (WCPFC). Better known as the Tuna Commission, the WCPFC is linked to management and conservation of the Pacific’s tuna resources.


Wright…ensuring sustainable tuna stock in Pacific waters

By Dionisia Tabureguci


After years of gestation, the Western and Central Pacific Fisheries Commission (WCPFC) was finally set up in 2004 to “bring together all those with an active interest in the tuna resources of the Western and Central Pacific Ocean (WCPO) in an effort to work collaboratively for the effective management, long-term conservation and sustainable use of tuna stocks in this region,” says executive director Andrew Wright.

As an organisation therefore, the Tuna Commission—as it is more commonly referred to—is a meeting point for countries that own tuna fishing grounds in the Pacific and countries that are not from the region but who come here to fish. In fishing speak, the latter are more commonly known as Distant Water Fishing Nations (DWFNs).
More specifically, they include fishing boats from Asia, Europe, South America and to a lesser extent Australia and New Zealand.

Nakelo men revive old meke

* Islands Business Exclusive

"The meke, performed only by men and held in high regard by the villagers, is called: 'Maravu Levu', which literally translates to mean: 'The Great Calm', but in the context of this dance is the name of a so-called 'waqa ni meke' or 'the ship that carries dances'"

by Dionisia Tabureguci
Thu, 5 Oct 2006

SUVA, FIJI ---- Spectators at the official opening night of the 3rd Melanesian Arts and Cultural Festival were treated to a rare performance of an over 70 year old meke (dance) by an 80-member group from Nakelo village in the province of Tailevu, central Viti Levu.

The meke, performed only by men and held in high regard by the villagers, is called: “Maravu Levu”, which literally translates to mean: “The Great Calm”, but in the context of this dance is the name of a so-called “waqa ni meke” or “the ship that carries dances”.

ANZ’s new Pacific chief confident in regional economies

“We have made much progress but progress to us here at ANZ is not just how many accounts we have opened nor how much people have saved with us. It is more a question about how we are contributing, how we are helping to unlock the potential in rural areas of the Pacific and whether we are making a real difference to the lives of the people we provide bank accounts and other services to.” 

- Mike Guerin, new managing director of ANZ's Pacific operation.


by Dionisia Tabureguci

PACIFIC island countries are going to see more of the Australia and New Zealand Banking Group as it continues to make its presence felt in the region.

The new managing director of its Pacific operations Mike Guerin said the bank has a number of plans geared towards extending its reach in the region further than the 10 countries that it operates in. 

“I believe ANZ can contribute to the local economies by providing international expertise and knowledge transfer, building local employment opportunities and international career options for Pacific islanders and by ensuring ANZ maintains and grows points of representation throughout the Pacific,” said Guerin in an interview with Islands Business Magazine.

Interim government investigates “new information” in mine deal

Rehab Deed for mine sale delayed

By Dionisia Tabureguci

FIJI’s interim government has deliberately delayed the signing of the Deed of Rehabilitation for the sale of Emperor Gold Mine (EGM) in Vatukoula because of what it says are “new information” that it has begun to investigate.

As corporate announcements in Australia allude to the completion of the sale process between Emperor Mines Ltd (EML), the ASX-listed owner of EGM, and Westech Gold Pty Ltd, a private company in Australia headed by former EGM engineering consultant Brian Wesson, Fiji’s interim attorney general Aiyaz Sayed-Khaiyum has confirmed to Fiji Business magazine that “certain matters have come to light and which we are in the process of investigating and verifying”. Saiyed-Khaiyum chose not to elaborate on what these “certain matters” may be but gave indication that a decision may be reached by the end of the week (end of March).

Will Datec Crumble?

SAP enters Fiji's software market through Pacific Connex but Datec Fiji is not batting an eyelid

by Dionisia Tabureguci

DEPENDING on who you’re talking to in Fiji’s software industry, there are varied views on the advent of SAP business solutions to our shores but if there is a common ground, it has to be the growing perception that this Johnny-come-lately is a harbringer of changes never seen before in the market.

There are those who prophesy the demise of a certain major reseller, those who believe in the possible transformation of the smaller software companies, the shift to oblivion of those not receptive to the anticipated changes forecasted for the industry and most will nod emphatically as if it is a kind of vindication that, yes indeed, SAP will be something of a reckoning for a lot of people.

Rick Hou sure of Solomon Islands economy

by Dionisia Tabureguci
photo of Rick Hou supplied by Central Bank of Solomon Islands


WHEN the century turned in 2000, so did the social and political matrix of a few countries in the Pacific islands. While nations like Samoa and Cook Islands were earnestly mending the nets of their economies to better their prospects, others like Fiji, Papua New Guinea and Solomon Islands were going the other way. In particular, the meltdown of Solomon Islands towards the end of the 1990s is well documented as being linked to land-related tension between native Guadalcanal islanders and neighbouring Malaitans.
The reign of the Isatabu Freedom Movement, a group that comprised Guadalcanal islanders, saw the attacks and subsequent displacement of Malaitan settlers on Guadalcanal, finally erupting into a takeover of Honiara and Bartholomew Ulufa’alu’s government in 2000 by armed militants that belonged to the Malaita Eagle Force.
Continued standoffs resulted in the occupation of Solomon Islands by the Australian-led Regional Assistance Mission to the Solomon Islands (RAMSI) in 2003. Law and order were gradually restored and economic rebuilding began.
In those trying times, one institution that held fast to its mandate was the Central Bank of the Solomon Islands. With governor Rick Hou at the helm, the country’s economy began a slow but steady climb back to normalcy. In April this year, Solomon Islands held its first national elections since the ethnic tension.
However, the newly elected government and its prime minister drew a violent public outcry after being accused of corrupt collaboration with Asian businesspeople.
Rioters burned and looted Chinatown, a commercial section in the capital Honiara run by Asian businesspeople. While this did put a dent to progress made in rebuilding the economy, Hou remained optimistic that the country will not suffer. In an interview with ISLANDS BUSINESS Magazine, he spoke of an economy that is faced with other major challenges.


INTERVIEW

IB: You were optimistic about the Solomon Island economy before the April riot. Do you still feel that way?

Hou: Oh yes. I am still optimistic. Last year, the economy turned a 5 percent growth and our forecast this year is 6 percent. Given the persistence of the trend that we saw happening most of last year, indications are that the trend will continue so we will keep our growth forecast for this year and last year. We will not review them.


IB: So the April riot is not going to be affecting the economy so much. How is that?

Hou: Our assessment is that there is not a lot of impact in the short term. We looked at the government revenue side and felt there would not be a lot of impact there. I guess the areas where we will have negative impact are in security, property rights and investment confidence. The riot came at a very bad time when we were trying very hard to rebuild confidence and it is not a good thing to happen at a time when we are doing this. So I think we will have to work very hard again to convince not only our own people here but also most overseas investors to invest.


IB: What then has been the driver of Solomon Island’s economic growth?

Hou: Last year, the main drivers of the economy were construction, utilities and distribution or wholesale activities. That one has dramatically gone up.


IB: Is this because of RAMSI?

Hou: I think so. But generally, the economy is picking up, especially the construction sector. There’s a lot of construction going on…roads, bridges, buildings. But along with that, consumption has also gone up really dramatically.


IB: RAMSI, we have been told, will extend its stay in the Solomon Islands. How do you see that in relation to the country trying to put forth a good image for investment?

Hou: You ask the ordinary man on the street about the presence of RAMSI and they will tell you that, yes, we need RAMSI. I guess the feeling of normal Solomon Islanders here is that our institutions are still fragile and there is still a need to get on top of the issue of law and order. Our government departments need to be sorted out. So there is a lot of need for institutional building, training, skills upgrade…these are all happening at this time and I think it is not going to be a short-term thing.
I also believe that these are areas where RAMSI’s input should be - in building our confidence in our institutions and that our own people can manage them, for example, the government department, finance. I guess it is in the rebuilding process where we will need RAMSI to help us in. So I think the extension of RAMSI will be positive there. But I think what RAMSI should be careful of is giving an impression that it can fix everything because it cannot.


IB: You were saying that there is a need for rebuilding and strengthening institutions. What is the situation right now?

Hou: Yes, there is that great need. Look at our police force for instance. It was badly affected during the ethnic tension. We had officers who were taking sides and as a result, the integrity of the police force was badly affected by the ethnic tension. We are now in the process of re-recruiting and retraining and in the process, we hope that the confidence that the public has in the police force will return. At the moment, it is still doubtful. So our police force is one institution that needs to be upgraded in terms of the confidence that people have in it, that it can really enforce the law. Other institutions like government departments; well, some of them are doing very well because of RAMSI’s presence in them, for example the Ministry of Finance and Treasury. They have people in there who are looking after things, for example, in treasury, things are now under control as far as government finance goes. Now they are going to have local counterparts to understudy the overseas RAMSI officials that are occupying positions there. Good things are also already happening in the judiciary. Much improvement is needed in other areas like the utilities. Our electricity and water supplies are very weak at the moment. Also in the areas of good governance, we are very weak here in the Solomon Islands so we need to revamp the governance aspect of our all institutions, whether in government, semi-government or those in the private sector.


IB: And then there is the issue of corruption…

Hou: Yes, there is a fair bit of that still happening and this is because of the absence of governance principles, rules and regulations. Some people tend to interpret rules and regulations according to how it is convenient for them and in some institutions, the checks and balances are still not there. One of the things that people have been urging RAMSI and government to do is to bring to account any corruption cases. There are a lot of speculations and allegations going on but nothing has really come to the front to prove that corruption has taken place. People have been terminated and sacked as a result of allegations for corruption and in the last government, ministers were sacked left right and centre but I don’t think there has been any case where the court has sent people to jail for their involvement in corruption.


IB: You were talking about the problems of over-logging. How much of a threat is that to your economy in your effort to gain from your natural resources?

Hou: I have three concerns when it comes to logging. The first concern is that of the environmental damage that logging is causing to our country. I am not sure about the management practices that logging operators apply in the forests. I can only see it in my own local area where – I mean I know very little about forest management - but all I know is that rivers are not flowing and what you have in the lagoon is mud and that’s all I see. So definitely, some environmental concern is there. The other concern I have is: what will happen when we run out of trees? According to the forestry experts at the Forestry department, we will run out of trees in six years’ time if we keep cutting at the rate we are cutting. Six years is not a long time and that is where my third concern is, when we will be looking for something to fill this gap.
Sadly for us, logging has now become the mainstay in terms of foreign exchange and in terms of our exports as it accounts for almost 60 percent of our exports. In terms of our exports, logs is one of our few exports and it account for more than 50 percent of our exports. It is also an important government revenue – it accounts for more than 30 percent of government revenue so it is a very important commodity at the moment. My concern is: what will happen in six years’ time?
The third concern that I have is really a question that I have been raising for a number of years that I just have this gut feeling that the local economy is not getting maximum benefits out of logs. Yes I mentioned that it is the leading export earner for us but it could be more. I am not sure about the prices that we are getting out of our logs because we do have very valuable trees here. I am not sure about the value we are getting for our exports and the value we are getting in terms of our import duties because for a number of years, these logging activities have enjoyed a lot of exemptions. I am also overly concerned about the resource owners. I am not sure whether they are getting any benefits out of this. I have my doubts.


IB: So this is mostly the private companies who are here to do logging?

Hou: At first it used to be foreign companies who come in here to do logging. The license allowed you to do logging and give you a quota, which allows you to log a certain cubic meter of logs. In the last few years, the government had moderated that project. What it did was gave resource owners the license and, in theory, these resource owners and landowners would own and run the logging operation. However, things did not happen that way. The thing that is happening now is the landowner or the license holder, usually goes out in search for a foreign company to operate the logging operations. And there’s very little government involvement in the negotiation process. And this is where I see the landowners losing. For example where I come from, some of the landowners are getting SB$40 (US$5.20 per cubic meter) and I am not sure if the landowners know exactly that they are getting the wrong end of the stick.


IB: Isn’t there a mechanism or process in place that will take care of the marketing of this commodity?

Hou: There have been suggestions and discussions and proposals on this but unfortunately the way the whole process has been managed is so murky and disorganised that everyone is doing their own thing. And as long as you can get a license, a concession and landowner agreement, you go ahead and log. At the end of the day, I think the landowners are the ones who are losing out the most.


IB: Solomon Island’s foreign reserves situation looks attractive with an average seven months import cover, mostly from aid monies as you’ve mentioned. Would you expect this situation to continue in the immediate future?

Hou: Solomon Island’s external reserves position has been relatively high since 2004. In fact, over the last 18 months, the foreign reserves represent an average of six months of import cover. This is quite an achievement given that the Solomon Island’s external reserves have, historically speaking, been always below three months of import cover. So for the moment, our external position could not be better. We are very mindful however, that much of this was derived from donor assistance and other RAMSI related activities in the Solomon islands. However, since last year, we have seen some improvement in long-term sustainable sources of foreign exchange, for example in exports and foreign direct investment. I believe the favourable situation would continue for some time yet. Much of the economic reforms and physical infrastructure rehabilitation work has barely started and hence with government commitment and donor assistance, it should still continue for the foreseeable future. These reforms and the rehabilitation process will take time and commitment, but when pursued consistently, economic activity is expected to pick up further.


IB: Inflation is at around 10 percent. Could the economy sustain such high rates and what is being done to mitigate inflationary pressures?

Hou: Historically, double-digit inflation is not new to the Solomon Islands. However in the last two years, it has been maintained in single digits. More recent numbers released by the Statistics department show inflation has declined to 8.5 percent by the end of 2005. This is within the central bank’s policy objective, which is to keep inflation below 10 percent per annum. Prolonged inflation of over 10 percent would pose a threat to economic growth. Current monetary conditions however pose potential risks to this policy objective. The banking system is highly liquid and the government has built substantial deposits with the banking system. Higher oil prices, accelerated lending by commercial banks, a draw down of government balances and the RAMSI spending could all add to inflationary pressures. In a small open economy like the Solomon Islands, price stability is vulnerable to all these movements. The previous government had acted sensibly and responsibly to help ease this pressure and the new government should do the same. The central bank is poised to take appropriate action to lessen any inflationary pressure by mopping up excess liquidity to influence domestic credit growth. We may also use administrative measures where necessary and of course, use moral suasion. We do however encourage financial institutions to provide greater access to financial services in the rural areas.


IB: What about exports, how is that faring?

Hou: Solomon Island’s export base is very narrow and is mainly in raw materials. Production levels of our main commodities – round logs, fish, copra and cocoa – have rebounded since the restoration of law and order. Log production has been running at record high, although unsustainable, levels. Production levels in other commodities are already close to pre-crisis levels. There is still capacity to increase production and to broaden the economic base. The Oil Palm project, which has been taken over by a PNG-based investor, is expected to start production this year. Given the high level of interest in this commodity, it may in future become a major source of employment, foreign exchange and general economic activity for the Solomons. In the mineral sector, although its production schedule has been pushed back by about a year, plans to restart the Gold Ridge mine is already a source of confidence building.


IB: What is your view on the progress of the global economy and how Solomon Island’s economy can benefit from it?

Hou: The positive growth indications in the global economy are encouraging as it will be helpful to us. More particularly in Japan and some of the Asian countries, which are important destinations for our exports, we are hopeful that these positive trends will continue. However, the consistent rise in oil prices will seriously undermine these hopes. For Solomon Islands, oil accounts for about 40 percent of our total imports and is an important component in local production. The increasing oil price therefore poses potential risks to this positive outlook. And for a small open economy like Solomon Islands, we are extremely vulnerable.

---
NOTE: This is the original transcript of a Rick Hou interview, published in the Islands Business Magazine as: Interview: Rick Hou, GOVERNOR OF THE CENTRAL BANK OF SOLOMON ISLANDS, pp 34,35, September 2006 edition.

Islands Business is the flagship publication of Islands Business International.
***

Training top on APP agenda

Association of Pacific Ports consolidate through new secretariat

by Dionisia Tabureguci


TRAINING of management level personnel is top on the agenda for the South Pacific Community’s Regional Maritime Programme (SPCRMP), the new secretariat of the Association of Pacific Ports (APP).
It takes over from the Ports Authority of Fiji (now Fiji Ports Corporation Ltd) and was formally handed the function in the signing on a Memorandum of Understanding between SPCRMP and APP during the latter’s 31st annual conference held in Fiji last month.
SPCRMP’s maritime ports security officer Timoci Tamani said the move should go a long way in helping the organization to realise its goals by virtue of SCRMP’s expertise and the network that it has already established in the regional maritime industry.
“In the past years, the APP secretariat had been taken up by Fiji on a volunteer basis so all the expenses and everything related to the secretariat was borne by Fiji all along. And because there was no full time person responsible for that role, most of the activities that APP did or would have liked to put in place were not done. In essence, everything just went to sleep as those tasked with doing the secretariat’s job had their own responsibilities with FPCL,” said Tamani.
It was only logical, he added, that the role be transferred to SPCRMP, a programme that comes under SPC’s Marine Resources Division.

More important are the two key components of this programme which include the provision of legal advice on maritime policy and legislation as well as the provision of training to maritime administrations, training institutions and seafarers throughout the region to bring their operations into line with international codes and conventions.
Now with the two organizations in direct alignment with each other, what has been envisaged is “the strengthening of APP as a formidable lobby group in the Pacific with SPCRMP harnessing the power base of its members to take up regional issues collectively with the objective of bringing about awareness and proactive change to the Port industry.”
That is a key, although long-term goal. A more immediate issue that APP is faced with, according Tamani, is the lack of formal training for port workers and this is what the new secretariat will set out to do first.
“We have a F$500,000 grant from China for port development for the next five years and we will be using it for training. We are already lining up target recipients for that,” said Tamani “We think we will spend all that amount within two or three years because of the need that is there.”
Also under discussion is a proposed Degree level course at the University of the South Pacific to treat the subject of maritime transport management, in a bid to inject a more serious tone into the port business.

“The course will be for the shipping industry – for the ports, shipping and movement of cargo. There is not a place in Fiji where one can go to and do those courses so we are talking with USP it already has campuses around the region. Last year, we held discussions with people in the port industry and as a result, we saw that there was a need for such a course. Many people working in the port industry are experienced workers but very few have proper qualifications because the courses are only available overseas,” said Tamani. “We are proposing with USP for this course to come under its School of Marine Studies and we hope that it will start by next year.”
With an expanding and what is now becoming a more sophisticated port business in the region, the APP conference ended with the views that the need for training is crucial.
Also on its agenda - and which the secretariat will be expected to play an important role in – is to get governments in the Pacific to recognize the importance of their port business to their economy.
“We are all island countries and we depend on a large degree on seaports for our external and internal trade. But the emphasis seems to be on tourism and air traffic,” commented Herbert Hazelman, executive president of APP. “We feel that Pacific island ministers and governments should give seaports and the maritime industry more recognition. Give it the recognition that it deserves because we are island nations and all we do is rely on the sea for the transfer of 95 percent of our trade and the majority of our population between the islands.”

After its symposium, APP presented its list of issues to the meeting of ports chief executive officers also held in Suva on the same week.
“We did a one hour presentation and it was well received. Hopefully, there would be some changes in attitude by governments in the Pacific in that they give due recognition to ports as a major player within the economies of island countries.”
Hazelman said most of the issues common to all ports in the region are pollution, the presence of derelicts and the lack of a formal training programme for land-based port management.
“With SPC’s involvement, we will hopefully be able to push our agenda up there to be recognized alongside air transport, tourism and the rest of it,” he added.
---
NOTE: This article was written after coverage of the 31st Annual conference for the Association of Pacific Ports (APP), held at the Fiji Ports Corporation Limited's HQ, Kaunikuila House, at Flagstaff Suva, Fiji from June 04 to June 7, 2006.
The article was published in the Islands Business Magazine as: TRAINING TOP ON APP AGENDA, Bringing port operations into line, p37, December 2006 edition.

Islands Business is the flagship publication of Islands Business International.
***

Vodafone Fiji upgrades to 3G

But where is the ISP license?

by Dionisia Tabureguci

IS FIJI's Internet Service Provider market really deregulated or is it still showing signs of a hallucinating monopoly haunting the living daylights out of existing and potential newcomers?
One must not ask Lionel Yee a question even closely resembling that because he will only politely direct your attention – and in a very rhetorical way - to the decision made by that previous government which chose the model of deregulation for Fiji’s telecommunication industry.
As chief executive officer of Amalgamated Telecom Holdings (ATH), holding company of Telecom Fiji Limited (TFL) which is the majority shareholder in Vodafone Fiji, Yee is often heard to express to the media how peeved the conglomerate is at the way the telecommunication industry had been handled and how short people’s memory seemed to be when it came to acknowledging that.
If ATH has become a beast that people love to hate, then the beast was created not by its management, but by past decisions that loiter around like a bad smell that wouldn’t go away.
“We didn’t get into this space for free,” says the veteran corporate manager who is also chairman of the Vodafone Fiji board. Yee’s foray into telecommunication began immediately after the Fiji National Provident Fund bought 49 percent of ATH from the Fiji government in 1998. He had taken over the role of ATH CEO after serving at the top management level of the pension fund for a number of years.
“We paid close to F$250 million for this and don’t forget, part of the agreement when we bought it was that we have five years of status quo. But we never had one minute of peaceful existence. Every five seconds, we have people trying to barge into us.”
Yee made another classic side step during a press conference in Suva last month when asked about Vodafone Fiji’s ISP license status, since the company has now begun to offer Internet based services to the general public.
He mumbled something about the country’s sole mobile telephone service provider going into wireless Internet and the rest was inaudible.
While announcing its US$15 million partnership with Ericsson Australia for the upgrade of its mobile network to a 3G standard – which its release says will cost it a total US$50 million over a five year period - this affiliate to the country’s biggest listed company had nothing to say about its procurement of a license to provide what would now become new revenue sources among its range of services.
“High speed web surfing and data access while mobile will become a reality so the experience will be the same whether you are in the office or outside. Speeds of at least 1MB/s and up to 14 MB/s should become the norm,” Yee announced. “The new technology will allow Vodafone Fiji to launch a whole host of new infotainment services such as Vodalive!, multimedia messaging, video telephony, location-based services and high speed wireless Internet.”
Behind the grand design however, no one is in a hurry to talk about levelling the playing field where licensing is concerned. There are people in the industry who are confused about this. Does Vodafone Fiji need an ISP license to operate or does it not?


...ATH CEO and Vodafone Fiji chairman Lionel Yee announces the Vodafone Fiji/Ericsson partnership in Suva, Fiji, November 2005.






If it needs a license and does not have it, why has it been allowed to provide Internet services? Another subsidiary question pops up: where is the industry regulator in all this?
What has been labelled as “one hell of a messy confusion” does not end there. Both TFL and its subsidiary, Internet Services Fiji Ltd (trading as Connect) do not have ISP licenses, a point that was raised by the Commerce Commission in its recent ruling on the price of telecommunication services in Fiji. If, under Fiji laws, companies are required to be licensed in order to provide Internet services, as has been required of the new independent ISPs, why are Connect and Vodafone Fiji exempted from this rule?
The Department of Communication, which is the industry regulator and licensing authority, had referred all queries to its ministry’s chief executive officer.
The Ministry of Information, Communications and Media Relations is silent on this issue and did not reply to questions sent to it.
In all fairness, it may be pointed out that telecommunication is a complex industry where problems are not solved overnight. But ISP licensing has been a sticking point since the Internet was introduced into Fiji in 1995. Local media reports at the time had pointed out that there was no mention of the issuance of an exclusive ISP license to Telecom Fiji. Ten years on, this point remains unclarified despite the huge change in Internet and Internet technologies since then.
Yee later reiterates what TFL has consistently argued over the years. That the exclusivity clause in TFL’s telecommunications license is all-embracing and covers all forms of communication in the domestic market, whether transmitted via telephone, telex, telegraph or in data form.
This same rule applies when TFL transferred the part of its license that deals with mobile communication to Vodafone Fiji when the latter was incorporated in 1993.
The conglomerate’s deep conviction with this argument has, over the years, seen it reluctant to allow new players into the market despite government moves to gradually deregulate certain parts of the industry. To illustrate the incumbent’s reluctance, one ICT specialist pointed to the fact that despite the number of ISP licenses that has been issued by the government since it opened the ISP market in 2000 – and this amounts to more than 10 licenses – not one new player has entered the market until this year. If those who had applied for those licenses had banked on some brilliant ideas that they could bring cheap connections to their customers by buying bandwidth directly from offshore resellers or directly from FINTEL (Fiji International Telecommunications Limited), they were greatly disappointed. TFL waived its exclusive licence and emphasised its right of control in the domestic telecom kingdom. No one was going anywhere if they did not go through its network. That being one part of its argument, it then moved to dub itself an ISP and created Connect in 2002 to trade its Internet business. As the Commerce Commission highlighted, both still do not hold an ISP license. But as Yee and TFL managing director Josaia Mar have often argued, every move that TFL makes is catered for in the company’s telecommunication license.
This argument has never been legally challenged however and there are those in the industry who still wonder about how this license, issued in1989, could have foreseen the advent of the Internet when this medium of communication was still a budding cocoon at the time and the world had yet to come on line.
But if the unclarified issue was swept under the carpet, as some commentators believe, then it has been flushed out again as the ATH Group of companies, particularly Telecom Fiji and its subsidiaries Vodafone Fiji and Connect, are forced to compete in a business that is rapidly reinventing itself.
As this edition went to press, it is understood that Connect has finally applied for an ISP license but Vodafone has yet to make an application.
---
NOTE: This article was published in the Fiji Business Magazine (www.islandsbusiness.com) as: Vodafone Fiji US$50 million 3G upgrade...But where is the ISP license? pp 7,8, December 2005 edition.

Fiji Business is a publication in the Islands Business International portfolio and sold only in the Fiji islands as an accompaniment to Islands Business Magazine.
***

Yaqara Studio City developers seek F$4.5 million

Stage one of studio city to cost F$200 million. YGL seeks F$4.5 million for documentation, marketing of stage one.

by Dionisia Tabureguci

THE Yaqara Studio City project has been called many things, among them, a ‘pie in the sky’ dream that some critics believe will never happen.
With the gestation of its genesis now going into its eighth year, an overhaul in management last year and perception in some quarters that project owner, Yaqara Group Ltd (YGL), may be a cash-strapped outfit that periodically resorts to the capital markets to raise funds to survive, it may seem likely that the benefit of whatever doubt there is would go in favour of the critics. YGL had been exploring ways within the markets to help it raise parcels of the funds that it needs, an exercise that led to the listing of the company’s B class shares on the South Pacific Stock Exchange in 2005 followed by another fundraising drive via the issuance of convertible notes to an Australian company Pooled Investments Pty Ltd in the same year, with conversion obligations, scheduled to be honoured in January this year, still under negotiation between the two parties.
Its annual report for the financial year ended March 31 2006 saw it reporting an operating loss of F$1.823 million taking the total loss accumulated by the company in its seven-year life to some F$6.696 million.
This was accompanied by a note from independent auditor G. Lal + Co. on the company’s “inherent uncertainty regarding continuation as a going concern”, where, in a nutshell, the accounting company reminded members of YGL that the company’s existence was dependent upon its ability to raise enough capital to bring to reality the range of products that make up the Studio City and further from this, its ability to generate income out of it and make a profit.
Stockholders were reminded that should YGL fail to reach this stage, “it may be required to realize its assets and extinguish its liabilities other than in the normal course of business and at amounts different from those stated in the financial statements”.

Some critics interpreted this extra service by the auditor as confirmation that the company was really in financial distress and that its announcement last month of yet another convertible notes issue – via a rights issue to shareholders including Pooled Investments Pty with the aim to raise up to $4.5 million and this time around, with the official support and partnership of local investment banker Kontiki Capital Ltd, which has agreed to underwrite the issue – was really to help the company keep its head above the water.
But behind the misty curtain of this project, the company’s management is unfazed and believes that with the right combination of management people, strategies, committed investors and partners plus focus and tenacity from all stakeholders, Yaqara Studio City will emerge not only to see the light of day but become a project that Fiji and the Pacific region can be proud of. And that the mere size of it – a value that the company put in today’s dollar terms to be in the vicinity of F$4-F$5 billion – would naturally mean that it would take a while for the project to be realised.
Last month (October), YGL executive chairman Mark Falzon and managing director Lyndon Driscoll held a meeting with representatives from Suva’s brokerage houses to inform them of the company’s developments and to disclose that this latest fundraising exercise is going to be the last in terms of equity input and that the money raised would be used not just to keep the company going but to help in marketing of the residential units under stage one of the project and to put together the final documents needed for stage one of the project to attract debt funding. The company said that Stage one, which is further broken down into three phases of development, consists of some 200 residential units, apartments and foreshore development as well as a Yaqara Yacht Club/Marina and Yaqara Gold Club facilities. The total cost of this stage, Falzon said, is tagged at around F$200 million, funds that the company hopes to take out as a loan from what may be a syndicate of international finance entities seeing that “I’ve got about 20 international investment groups lined up who are very excited about investing in this project”. Falzon said YGL would be using the pre-sale of its residential units as security for the loan.
But in order to secure the pre-sales, the project needs to be marketed and this is one of the areas that part of the F$4.5 million would be put into.

Mark Falzon...YGL executive chairman

“We will put that money (F$4.5 million) into producing feasibility studies, lodgement of the site plans, schematics, the visuals and the contracts as well as marketing materials required to take the project to those clients for them to see and say: ‘gee, I want to buy this unit in that lot and I want it to look like this…a 2-bedroom’. Then we get them to sign a contract, which requires them to put up, say, 10 percent of the cost of that unit and gives them the option to purchase it when it is built. Once we get these pre-sales in place, it would allow us to bring in debt funding which will then allow us to take the first project forward.” Once the F$4.5 million is raised, it may take the company up to 14 months to market and fully sell out the residential units of stage one and get the debt funding, said Falzon, and although it would only need to secure 60 percent of this pre-sale, there has been some indication that the response from the market may be a favourable one.
YGL had tested the waters last year when it released, via its residential sales and marketing company Horizon Sales and Marketing (Fiji) Ltd, 60 purchase options of its Peninsula Apartments. The option contracts were all sold within 10 weeks, according to a company announcement in September last year. As well, some Yaqara Marina berths options had been sold.
But getting Stage One to the point where physical work actually begins would be a thing of certainty once the company is able to secure the debt funding.

Seen in its entirety, appraising such a mammoth project (by Fiji terms) as the Yaqara Studio City could be a daunting task for one not used to visualising projects that has a wide array of products and not limited to the tourist business theme.
The Yaqara Studio City ‘dream’ or ‘impossible dream’, depending upon whom one is talking to, is an attempt to build a city using methods that are guided by the world’s best practices that are environmentally friendly and ecologically sensitive, said Falzon. The aim is to create a community that will live in a setting that supports a vibrant lifestyle and is sustainable. The sugar coating would be what is considered by some as the ‘world’s best tax incentives for financing audio visual productions’ as well as the tax free opportunities associated with a Studio City Zone. Yaqara Studio City has been declared such a “zone”.
With over 5,500 acres of land and foreshore to be developed and turned into what would someday become a city equipped with audio visual production facilities, hotels and premier accommodation facilities, educational institutions, sports facilities and ancillary facilities and services like the yacht club and marina and the golf club, YGL’s management is prepared to be misunderstood by the general public and respect the opinions of critics but not necessarily endorse them.

“It is about strategically unfolding this huge project in a way that makes it sustainable, that makes it realistic, that makes it work,” said Falzon. “There will always be critics but I have complete faith in Fiji’s capacity to make this a reality. It has government support, it has enormous support locally, it has international support and what encourages me more than anything is, when I travel internationally and talk to other groups, the incredible optimism, support and encouragement from visionary organizations and groups that have materialised large-scale projects all around the world. I think we have a committed board and we have a number of committed investors behind it as well as a committed government. A big project like this only happens if you bring people together and stay focussed on the vision and the outcome and you deal with each issue or each problem as it arises along the way. And there will be all sorts of issues and problems along the way. But you don’t let that stop you. You just keep going.”

---

NOTE: This article was published as a cover story in the Fiji Business Magazine (www.islandsbusiness.com) as: Yaqara Studio City: A pie in the sky? pp 3-5 November 2006 edition.

Fiji Business is a publication in the Islands Business International portfolio and sold only in the Fiji islands as an accompaniment to Islands Business Magazine.