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Growing Fiji’s Manufacturing Sector A presentation at the Fiji Business Forum Suva 4-Jun-2011 Factors enabling Manufacture • Land – Raw Material • Labour – Intelligent workforce – Cost-effective • Capital – Equipment, Plant & Machinery • Entrepreneurship • Market Access Where we have a natural advantage • Raw Material proximity: – Timber / wood (furniture) – Agri processing (sugarcane, pawpaw, pineapple, dalo, cassava, coconut, ginger, tobacco, herbals) – Processed Marine based (e.g., Starkist) – Mining & minerals (incl cement?) – Water – ‘Natural / Eco’ (organic, bio-tech) – Dairy, meat & poultry processing Fiji's Import of Wooden Furniture $14.35 m 16 14 Jan-Sep $10.76 m FJ$ million 12 10 8 6 $2.32 m 4 2 Source: Fiji Bureau of Statistics 2001 2009 Where we have a natural advantage • Raw Material proximity: – Timber / wood (furniture) – Agri processing (sugarcane, pawpaw, pineapple, dalo, cassava, coconut, ginger, tobacco, herbals) – Processed Marine based (e.g., Starkist) – Mining & minerals (incl cement?) – Water – ‘Natural / Eco’ (organic, bio-tech) – Dairy, meat & poultry processing Other advantages / reasons • Non-price competition: – ‘Fiji’ – perception of pure & unspoiled (can we do herbals?) – Consumer culture similar to PICs and A&NZ (comfort in dealing, quality and disclosure standards) • Strategic: – Food security (Oxfam prediction) – Trade Balance & forex imperatives – Employment & income generation • Based on EPAs, RTAs: – TCF • Historical: entrepreneurial daring What we DON’T always have • Large domestic market • Economy of scale • Labour Productivity • Adequate supply of skilled tradespeople • Access to R&D / Technology • Geographic / Logistic convenience Why we need to continue with Manufacture • Spine of sovereignty • Value addition opportunities / backward integration / market access • GDP growth • Multiplier Effect • Flow-on effect • Employment & Income generation Why Americans can’t find Jobs…* John Smith started the day early having set his )for 6 A.M. alarm clock (Made in Japan While his coffeepot (Made in China he shaved with his electric razor (Made in Philippines ) * - source unknown )was perking, ) , his He put on a trendy shirt (Made in Sri Lanka ) and tennis designer jeans (Made in Singapore shoes (Made in Vietnam ) After cooking his breakfast in his new electric skillet (Made in India ) , he sat down with his calculator to see how much he could (Made in Mexico ) spend that day. ) to the radio Setting his watch(Made in Taiwan (Made in India ) , he got into his car (Made in Germany ), filled it with gas (From Saudi Arabia ) and continued his search for a good paying AMERICAN JOB . At the end of yet another discouraging and fruitless ), day checking his computer (Made in Malaysia John decided to relax for a while. He put on his sandals (Made in Brazil ), poured himself a glass of wine (Made in France ), turned on his TV (Made in Korea ) and wondered why he can't find a good paying job in AMERICA . AND NOW HE'S HOPING HE CAN GET SOME HELP FROM HIS PRESIDENT… ( Made in Kenya ) Industry % to GDP Industrial Growth Forex Reserves Ranking Foreign Direct Investment Ranking Brazil 29% 4.4% 7 16 Russia 41% 1.9% 3 12 India 29% 4.8% 5 29 China 49% 10.7% 1 5 Mauritius 25% 5% 110 Fiji 13.5% 2.5% ~ 132 Therefore: What will help ….1 • Continuing tariff support (small domestic market & no economies of scale) • Cautious approach on EPAs with countries that are ‘kicking away the ladder’ • Recognition of our size & limitations when mingling with manufacturing giants • National focus on Productivity & Quality – Skill based National Training Plan – Quality initiatives – Enabling IR environment • Improved infrastructure (roads, bridges, electricity, water, telecom) What will help ….1 • Continuing tariff support (small domestic market & no economies of scale) • Cautious approach on EPAs with countries that are ‘kicking away the ladder’ • Recognition of our size & limitations when mingling with manufacturing giants • National focus on Productivity & Quality – Skill based National Training Plan – Quality initiatives – Enabling IR environment • Improved infrastructure (roads, bridges, electricity, water, telecom) • Stability / predictability in Taxes & Legislation What will help …. 2 too! • Long Term Industrial Policy (LTIP) based on competitive advantage/ strategic needs (FEDB ?) and a consultative process • Trade delegations & overtures based on LTIP (publicity / leaflets based on that) • Tax Free Zones in viable areas of Viti Levu (Naitasiri, Tailevu, Namosi, Rakiraki) • Forced value addition? • Price controls that encourage investment • Control over imports / level playing field on contents (fortification, NIPs, ingredients) • Encouraging display of Local products • Continue export incentives • Job creation subsidy What will help …. 2 too! • Stability / predictability in Taxes & Legislation • Long Term Industrial Policy (LTIP) based on competitive advantage/ strategic needs (FEDB ?) and a consultative process • Trade delegations & overtures based on LTIP (publicity / leaflets based on that) • Tax Free Zones in viable areas of Viti Levu (Naitasiri, Tailevu, Namosi, Rakiraki) • Forced value addition? • Price controls that encourage investment • Control over imports / level playing field on contents (fortification, NIPs, ingredients) • Encouraging display of Local products • Continue export incentives • Job creation subsidy Vinaka vakalevu