Vol. 38, No. 11
Contents 39 Viewpoint What’s next for islanders?
40 Samoan tenors excite Opera world Pati brothers on the threshold of greatness
42 Region’s food production under the microscope Need collaborations to address challenges
44 Pacific @ forefront of climate change action How SPREP is helping the islands
Regular Features 4 Letters to the Editor
MSG markets open up. Cover report—pages 16-19. Cover photo: Computer generation by Dick Lee
6 Views from Auckland 7 We Say
Cover Report 16 It’s Open!
Markets for goods and services within MSG are now more liberalised
22 Intra-MSG trade grows
But stilll dependent on Aust, NZ
12 Whispers 14 Pacific Update 46 Business Intelligence 49 RAMSI Update
23 Peter O’ Neill’s Pacific plan
The ‘PNG Push’ into the region
24 The grim realities of EPA negotiations Who benefits from the trade agreement?
25 Aust worker programme up and running Fijians want to join seasonal scheme
28 PNA gains hit industry, but EU roadblocks Islands split over 85-15% US treaty revenue
29 Tuna re-ignites islands dollars
Could beat tourism as top exporter earner
30 Lae port extended to cater for demand Expected to be completed in 2015
32 Reforms needed but slow in coming
But there are some good news in the mix
33 Governor escapes impeachment
But says removing him no solution to their problems
36 Royal dress furor now takes a new twist US Consular agent banned from Govt House
38 De-population or over-population?
PNG’s growing population threat to region Islands Business, November 2012 3
L E T T E R S Managing Director/Publisher Godfrey Scoullar Group Editor-in-Chief Laisa Taga Group Advertising & Marketing Manager Sharron Stretton Staff Writer Robert Matau Graphic Design Dick Lee Virendra Prasad Main Correspondents Australia Rowan Callick Nic Maclellan Davendra Sharma Fiji Samisoni Pareti Dionisia Tabureguci French Polynesia Thibault Marais Marshall Islands Giff Johnson New Zealand Dev Nadkarni Jale Moala Ruci Salato-Farrell Duncan Wilson Niue Stafford Guest Papua New Guinea Baeau Tai P Sam Vulum Patrick Matbob P Peter Niesi Solomon Islands Evan Wasuka Alfred Sasako T Tonga Taina Kami-Enoka T V Vanuatu Bob Makin Islands Business is published monthly by Islands Business International Editorial & Advertising Offices Level III, 46 Gordon Street, PO Box 12718, Suva, Fiji Islands. Tel: +679 330 3108 Fax: +679 330 1423 E-mail: Editorial: firstname.lastname@example.org Subscriptions: email@example.com Advertising: firstname.lastname@example.org Printing: Oceania Printers, Raojibhai Patel Street, Suva, Fiji.
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www.islandsbusiness.com Islands Business, November 2012
I write opinion, not news: Davis
tion on one important issue, because it has been misconstrued by another party to this debate, perhaps in the hope of discrediting my arguments. I am not in favour of the “libertarian” model of journalism, under which there are no rules and anything goes. I am instead in favour of social responsibility in journalism. My opponents, it seems to me, are not in favour of an independent self-regulated press, as seen in the Western social responsibility model, but in an authority-centred “communitarian” model that works with government to achieve shared goals. I believe that is a dangerous path for any society
Your edItorIal I , Fourth estate stoush, casIal tigates me for simultaneously being a journalist and PR consultant, as if the two are in conflict. I write opinion, not news, in the Fiji context and items on my blog are republished in the Fiji Sun. I also work part-time for the US company Qorvis Communications, which has the Fijian Government PR contract. Were I to be working as a mainstream journalist in Fiji covering the daily news cycle, of course, I would have a conflict of interest. But my pieces are clearly labelled “opinion” and my association in the with Qorvis is declared on both my blog and nalism ative’ r u o j r in the Fiji Sun. I fail to see how this is ethe liber w: wh ility ’ or ‘de ertarian o n anything other than come tim sib lib r some ocial respon r the more ter. Assopletely transion fo t ‘s e g e e h e b t r h t e t i e parent. suits alism’, or wh s in th sed on demic hould be ba e favours— s to prefer— ‘peace journ lism. I also a s bi ls host a politPacific which Ro h Edge seem by the labe rative’ journ c o i o — l b g h e a t l w d ical discus‘col mo wha e’— ebate er are d’ and rn styl sion program sting d an e ‘weste ith the form lism’, ‘guide r e t n in si a w on Australian ucted nd thi ciated ment journ s arou l and cond reat ideas n p television o o i l s e s a v g e e egi iscu aimed specifi- ‘d The d e been coll churn som he posts on v t d a l y h u b he o d s cally at regional l hat w if one goe an see that t wou t e h r t e r h e t u c Australia, with p u o m s e b a F o n , n o s to ink atm The no crossover uld th ites and blog generated in arks. o e w t e a t n s e o d Es em eb whatsoever with ic and sacist r e of w h a rang rom this top ngly petty r have cast a stous my work in Fiji. s f i g g n y i m o a l o o w b c g a So there is no quesved tons unbe bsites and o e l n e m e k s v s e a e t as we nd leak d se h tion of any mainiscour ccusations a ut on these , exhumed p reproduced ople d y stream journalism I pe ,a lit to ty, calling s slugging i er ’s credibi f improprie n called for ts and do being tainted. h o e a t r v e o e r e n artie h h a e t t P v Your author disn one sed one ano ce, and ha ts of veiled o s n o ll sor plays a fundamental persi cades, accu responden n r ng of a e eir ow misunderstanding back d ails and co to say nothi ded th veered d a d m n , e as ya about the difference work up and leave bate h er rovers k e cont ocess, the de et fight rath between opinion and h t o t to pac threats. e r n r i t p s e d a e h t g d er news. Maybe that is uncount nts have wa guments. In n, resemblin derstandable in a region Stude m to the ar here it bega o that doesn’t have a strong of ven from w tradition of opinion jour- bit years away t h nalism. But the fact remains lig to follow and that the press should instead be that any reader of my work independent of government and report critically knows precisely what I do and for whom. on its policies and actions. They may not agree with my opinions but that is another issue altogether. —Graham Davis Suva, FIJI
Fourth Estate stoush Your edItorIal I Ial “the Fourth estate stoush” was cogent and insightful. I believe that the issues it discusses are too important to allow the level of discourse on them to descend as low as it has. Perhaps those who stoop to attack others anonymously online should have their views disregarded and the issues should be decided by listening only to those who have the courage to put their names to their arguments. In that regard, I would like to clarify my posi-
—Marc Edge, PhD University of the South Pacific Suva, FIJI
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Canberra Diary BY DEV NADKARNI
Capital letter America want to build the Great Wall of China in Like most major national capital precincts their own countries to keep Huawei out. Huawei, around the world, Canberra, too, has that geoin this modern version of trade warfare, has emmetrically clinical, imperiously distant quality ployed some very high profile people to fly its flag. about it. For instance, former Australian foreign minister The straight and wide avenues that connect Alexander Downer is a director in its Australian the centres and symbols of power, the manicured arm and champions its cause in the country. gardens and artificial water bodies that structure But none of those fears come in the way of the agoras seem carefully designed to overawe, my posting a couple of pictures instantaneously employing the scale, immensity and grandeur to on my Facebook page. Within minutes, friends convey in no uncertain terms the collective greatfrom halfway across the globe are laughingly joinness of the people of the country and its place in ing the dots between my visit to the Australian the scheme of things in the modern world. The parliament and Julia Gillard’s now famous ‘trip’ capital turns 100 next year. in New Delhi just the previous day. Australia’s billion-dollar parliamentary comThe Australian Prime Minister’s accidental plex in the capital’s heart is undoubtedly one stumble and fall on her way to an official engageof the finest modern buildings anywhere. It is ment in the Indian capital is somewhat symbolic a fitting symbol of the country’s enviable sucof the stumble in the relationship between the cesses in so many diverse fields. But unlike such two countries after the spate of bashings that left building complexes around the world, Australia’s seems strangely welcoming and accessible. The security is minimal and unobtrusive—the corridors of power are not guarded by gun-toting soldiers or slick, prying plainclothes security personnel—admittedly though, the houses aren’t in session during my visit. There don’t seem to be any no go areas and the guided tour is excellent. Among details of the workings of Australia’s bicameral parliamentary systems, the articulate guide let us in on many interesting tidbits about the building and Parliament complex...in Canberra. Photo: Dev Nadkarni the precinct. One of these creates little eddies of excitement in the group: There’s free wi-fi in the building. People reach out for their smartphones several Indian students in Australia injured and and are clicking away. even a couple of them dead last year. The incidents have apparently seen a big drop Kilroy was here in the number of students from India coming into It’s too hard to resist the mobile, digital version Australia for tertiary studies and technical qualifiof ‘Kilroy was here’—especially when you don’t cations, causing a dent in that significant revenue have to pay eye-watering data roaming charges. stream. Then, there has been the uncertainty How very easy it has become to let the whole around the supply of uranium ore for India’s huge world know of what you’re up to—even if you nuclear power generation programme. are at one of the most politically sensitive places But Gillard has played her cards well. She in a country. All you need is a little device. And, has aimed well to find India’s soft spot and anof course, a network to transmit. nounced during last month’s trip that Indian Which, on an entirely different level, worries cricket legend Sachin Tendulkar will be presented countries like America and Australia. Both are with the Order of Australia. extremely wary of doing business with Chinese While this has sent positive vibes throughnetworking giant Huawei. Both want to block out Tendulkar’s considerable fan world, not its multi billion dollar plans to join local partners all Australians have been impressed. And in all to build broadband networks in their countries. probability that’s not because Tendulkar is not Their fears seem to border on paranoia. But on Australian. It is because it is hard not to dub the the other hand, those fears might be justified. We move a political stunt to mollify the 400-million don’t know yet. It’s as though both Australia and 6 Islands Business, November 2012
strong Indian middle class and its huge buying power. There is little doubt that the gesture will go some way in mending perceptions in India. Whether that translates to runs on the board as regards fresh waves of students coming in remains to be seen. Time will tell if Gillard hit a six or just played the ball for no run. Scribes no more We catch up with Ed, one of my former students at the University of the South Pacific’s Journalism Programme. Ed lives with his wife in Canberra. As it happens, like many of my former journalism students, Ed isn’t a journalist anymore. We discuss the old times over some delectable Thai food. Thanks to social networking most of Ed’s class is in touch with one another despite a decade that separates them. And within seconds, thanks to it again, they know we’re having dinner in Canberra. Almost none of that batch is in journalistic jobs, Ed tells me. Being a scribe doesn’t pay anymore. It’s a great stepping stone to other far better paying communication jobs, though—especially in the government and development sectors. So a great number of my former students are spinning tales for their employers for our consumption through the media and getting paid much more than they would have had they stuck to reporting on stuff like what goes on in places like the splendid building I visited that morning. We discuss how the big Australian media houses have been culling journalists for a while now and how newsgathering and reporting are changing because of social media propelled so-called citizen journalism. Coincidentally, one of the big headlines of that day is that one of the world’s high profile newsweeklies, Newsweek, is to cease production of its print edition and will be available purely in the digital format. How exactly the Fourth Estate will eke out a survival from an increasingly digital world is pretty much up in the air right now but there is no doubt that some sort of revenue model will emerge at some stage. Ed and his wife are just back from a month in Burma, which is where he comes from. Burma has opened up in the past couple of years and its most visible face, Aung San Suu Kyi, has begun travelling the world and is being feted by hordes of admirers and world leaders alike everywhere she goes. She’s a great symbol for the sea change that promises to sweep the country, despite the ongoing ethnic clashes that are being reported over the past several months. Ed strongly reckons adding Burma or Myanmar to my bucket list is a great idea. It’s absolutely fascinating he and his wife say proudly. I hope to visit sometime soon and look forward to writing a Yangon Diary sooner rather than later.
WESAY ‘Many of the Pacific Islands countries have already cast their lot with China and by extension most things that China has to offer, including telecommunication technologies. If the standoff between the west and China on the issue of telecommunications security continues, it could quite easily lead to a trade war or even worse, if wiser counsels don’t prevail. On its part, China will have to be forthcoming on opening its doors to western scrutiny’
olitical observers in recent years have often discussed the possibility of the Pacific region turning into the next battleground of the superpowers. The obvious reasons for their speculation are the race to increase the superpowers’ influence in a bid to establish geopolitical hegemony in the world’s largest single geographic feature and to gain access to the substantial natural resources that lie within the sovereign boundaries of islands nations—big and small—that dot the region. In the past few years especially, the world’s superpowers have made announcements about their plans for the Pacific islands region with greater vigour and frequency and followed them up with firm action. For instance, the United States has followed the People’s Republic of China’s many initiatives to build up its diplomatic presence in the islands with bigger embassies and more personnel, as well as new assistance programmes. Given these developments, some regional developments, particularly such as those in Fiji, have changed the complexion of geopolitics in the region with the Pacific islands’ long-time allies New Zealand and Australia having serious competition from around the world for the attention of islands leaders over the past few years. This is borne out by the fact that there has been a lengthening beeline of countries from around the world at successive annual forums of Pacific Islands leaders over the past few years. Earlier this year, international geopolitical analysts and experts even said that the next arms race might well take place in the Pacific, what with the United States waking up to the fact that China had made great progress in extending its circle of influence around the islands region while it was busy waging pointless wars in the Middle East for more than a decade. The conspiracy-minded among analysts find the Pacific an excellent place for the superpowers to kick-start an arms race with a view to reviving their global financial crisis-ravaged economies. The Pacific also seems attractive for believers of this line of reasoning because of the relatively low potential for collateral damage. While all these scenarios lurk on the edge of possibility, it is equally possible that the next big conflict might be triggered by completely different factors: trade and technology, for example. And even then, the Pacific Islands region might still have to bare the brunt of the pain. A taste of how this might pan out began to unfold earlier this year and reached fever pitch last month in several countries around
the world but most notably in the United States and Australia. At the centre of the controversy is Chinese telecommunications giant, Huawei, which has a presence in nearly a hundred countries around the world including many of the Pacific Islands. While it is not primarily a telecommunications service provider, it has grown to become one of the world’s biggest suppliers of information and communication technology (ICT) hardware and systems in the world. The United States House Intelligence Committee has classified Huawei as a security threat because of a number of reasons ranging from the fact that it was formed by a former Chinese military official to rumours that it is actually financed by soft loans from the Chinese government to the tune of some US$30 billion. There is even belief in some quarters that it is an arm of the Chinese government. There are fears that Huawei’s equipment, when plugged into a country’s network, can transmit sensitive data back to its masters in China. While there is no evidence this has hapPacific next pened, the fears have spread to a number battleground of nations where Huawei either has already for superpowers bid or is in the process of bidding for billions of dollars worth of projects to establish and upgrade broadband networks. These range from Canada, the United Kingdom, several countries in Europe and Australia, which also has said it would bar Huawei from bidding for its nation-wide fast broadband network. One of the few western nations that so far has not made any noises is New Zealand where the company has had a far deeper presence than Australia. Much of the hardware used by cellphone companies in New Zealand is Huawei’s. The company has also bid and partnered with an indigenous business group to provide a link between Australia and New Zealand—which will be up in the air if Australia sticks to its guns and prevents Huawei or its constituents from tapping into its network in Australia. A couple of months back, Pacific Fibre—co-promoted by New Zealand millionaire and founder of well-known auction website TradeMe—which sought to connect Australia, New Zealand and the western United States fell over, citing its inability to raise some $400 million to complete the project. Such a figure is not an insurmountable one in international ICT projects of this scale. Speculation is now rife that the reason for the falling over could Islands Business, November 2012 7
WESAY well have been the refusal by both Australia and the United States to terminate the undersea cable at both ends because of the heavy involvement of Chinese companies in the project. This raises the question whether countries that align themselves with Chinese technology companies, especially in the ICT space, will be disadvantaged because of the paranoia—justified or not—of several western countries ranging from the United States to Australia. Most Pacific Islands nations like New Zealand have opened their arms to cheap technologies that Huawei and companies like it offer. That is one of the reasons why telecommunications and data tariffs have continually fallen in New Zealand and many countries of the region. Will these mean they will have difficulty in aligning with western economies? Simplistic as it might look, the problem has the potential to blow into a crisis, especially if the security threat perception escalates for any reason. In any case, cyber attacks on government
websites as well as utility networks have been on the increase and there has been general agreement in the western world that such attacks can be traced to Chinese sources. Some sources have gone to the extent of contending that these may even be sponsored by the Chinese state. Many of the Pacific Islands countries have already cast their lot with China and by extension most things that China has to offer including telecommunication technologies. If the standoff between the west and China on the issue of telecommunications security continues, it could quite easily lead to a trade war or even worse, if wiser counsels don’t prevail. On its part, China will have to be forthcoming on opening its doors to western scrutiny. So whether it is for geopolitical hegemony, the race for natural resources or the tug of war over communications technology, the Pacific and Pacific Islanders will soon find themselves at the epicenter of developments. And there is little they or their leaders can do about it.
‘It is heartening to see that an event promoting women in business is bringing together women entrepreneurs, academics, financial and business experts, bankers and women media persons together in Fiji this month to identify the ongoing challenges women face in their business endeavours and deliberate on finding solutions’
he Pacific islands region finds itself lurking at the bottom of too many indices that measure women’s role in society. The percentage of women’s representatives in parliament around the region is the worst in the world—worse than many economically poorer regions such as sub-Saharan Africa. There are fewer women conducting business activities in the Pacific islands region than in most other regions around the world—at least in the recognised formal sector. The scenario is quite different in the often unrecognised and “under the radar” informal sector, where sheer necessity drives women to earn a livelihood through business activities. It is estimated that women-owned businesses account for over one-third of all firms and they are the majority of businesses in the informal sector in most Pacific Islands countries. Women entrepreneurs in the Pacific region are just about 20 percent of all entrepreneurs. Women also tend to be far less educated, especially at secondary and tertiary levels, than men in terms of sheer numbers. As for health and well-being, women are prone to suffer more than males because of a number of reasons ranging from lack of education to lack of access. As a result, fewer women compared to men are self-
8 Islands Business, November 2012
employed in the region, fewer women start businesses or have the ambition to do so. Like in many other parts of the developing world, social mores and attitudes tend to reinforce age old notions of women’s subservience to men, many times making their status little different from tradable commodities or domesticated livestock. This is despite male leaders making a song and dance of how tradition teaches respect for women and how in many Pacific traditions “women are placed on a pedestal,” as one senior and high profile Pacific politician often said in his political speeches. Yet, in many of these Pacific islands countries, leaders have dragged their feet in ratifying international conventions such as CEDAW (Convention on Eliminating Discrimination against Women). For instance, as of 2012, three islands nations are yet to do so—Nauru, Tonga and Palau. This inaction speaks volumes for the lax manner in which male politicians throughout the region treat issues relating to women’s wellbeing. Unfortunately, these traditional male dominant attitudes leave women economically dependent on men. It keeps them out of the decision-making process for bettering their own lives and those of their children, which more often that not end up becoming their main responsibility in terms of feeding, clothing, sheltering and
WESAY educating them. Obviously, they have to depend on menfolk for the money required for these onerous activities. Women’s situation has remained so despite dozens of worldwide studies that clearly and unambiguously show that empowering women with education and bread winning skills always ends up benefitting society. Studies have also shown that contrary to popular belief, women are far more judicious in controlling budgets and resources than their male counterparts, especially when money and resources are scarce. Women are also far better at managing time, multi-tasking and at many other tasks around the family unit that males would struggle to accomplish. Pierre Guislain, Director, Investment Climate Advisory Services of the World Bank Group, in his foreword address in the International Finance Corporation’s Gender and Investment Climate Reform Assessment report, says, “Studies show that when women are given economic opportunity, the benefits are large also for their families, their communities, and ultimately for national development efforts. Opening economic options for women put poverty reduction on a faster track.” Speaking of women in the Pacific islands region, he says, “Pacific Islands women are a powerful force for economic growth and development, making important contributions to the economy as entrepreneurs and employees, and to the welfare of their families”. It is heartening to see that an event promoting women in business is bringing together women entrepreneurs, academics, financial and business experts, bankers and women media persons in Fiji this month to identify challenges women face in their business endeavours and deliberate on finding solutions. It is extremely important that an environment in which women who run small businesses, which often gets lumped in statistical data as “the informal sector” can more easily grow their businesses. Skills, finances and infrastructural support that is available to businesses in
Promoting women in business
the formal sector need to be extended to women operating in the informal sector because, clearly, at one third of all businesses in the region, these are the true engines of economic activity—invisible though they may be for the most part. This month’s regional conference aims to connect women entrepreneurs with government, civil societies and community leaders to raise awareness of the challenges and opportunities as well as regional agencies that assist in the development of business and how they can be supported to utilise market opportunities. It also hopes to connect women entrepreneurs with community leaders to build relationships and develop a roadmap to guide the work towards the enhancement of women entrepreneurs at national and regional levels. While the intentions of holding such a conference are laudable, it is extremely important and urgent to bring about a sea change in how the male-dominated political establishment in the Pacific islands region views the lot of women. Nothing substantial can be achieved at a fundamental level without purchase from the political establishment and its appreciation of the role women can play in not just social but economic development as well. The absence of women in the region’s lawmaking machinery is a matter of shame for the entire region—much more for its collective male-dominated political class. Conferences such as these, while discussing ways and means to help women entrepreneurs and encourage more women to be self sufficient by establishing businesses, must also hold a mirror to this political class to show them where they stand in a world that is increasingly recognising the many natural talents that women bring to socio-economic development. Groups involved in promoting women in business would do well to also adopt an initiative to encourage entrepreneurial businesswomen to enter the political arena to help mould conducive policies to empower women and establish an environment that promotes their socio-economic emancipation.
‘Fiji’s poor citizens have missed out on a huge opportunity to better their living standards because of these illogically unreasonable restrictions that ostensibly are aimed at hurting the interim administration. While it has made little difference to the administration, it has hurt people badly by keeping them out of the scheme’
t is high time Australia and New Zealand review their policy towards Fiji in the light of developments taking place towards re-establishing a democratic polity two years from now. Especially so in easing the strict conditions imposed on the movements of common Fijian citizens, which thwart their bid to earn their keep in those countries
through their seasonal work schemes. New Zealand’s Recognised Seasonal Employer scheme (RSE), which has been operational for a number of years now, has been hailed a success and is a subject of study by many countries. Some of its features have been found to be replicable in countries situIslands Business, November 2012 9
Huge opportunity...Vanuatu workers now have a new revenue stream established, thanks to thousands of VanuatuÕ s citizens employed in the seasonal labour scheme. Photo: Dev Nadkarni
ated in other parts of the world. Countries from where the workers are employed have been extremely appreciative of the scheme and there have been several documented stories of workers returning to their countries and investing their earnings in local businesses creating jobs and boosting the local economy. New Zealand’s successful scheme has also given Australia the confidence to fast track its own seasonal employment scheme for Pacific islanders after a long trial phase. The full fledged scheme that came into force since June this year is seeing more and more Pacific islanders working seasonally in Australia’s horticultural and farming industry. There is even talk of extending the scheme to other sectors in future years. Unless something goes terribly wrong, these schemes are only likely to be scaled up—because even the conservative parties are viewing it in a positive light. Not that the scheme has been without problems. There have been instances where people have been cheated out of their earnings by unscrupulous elements and agents. Research findings have shown that the cost of transferring earnings from Australia and New Zealand into the islands is far higher than in other parts of the world, despite intervention from the World Bank and many of the islands countries’ central banks. There have also been logistical and management related problems. But what is important is that the benefits overwhelmingly outweigh these minor problems. So missing out on this revolution almost exclusively is Fiji among the islands nations of the South Pacific region. Since the December 2006 ousting of the last elected government, the Australian and New Zealand governments have placed a range of sanctions on Fiji. These have completely restricted travel to and through Australia and New Zealand for those working in the Fijian administration or even connected with the regime in any way. While such action is understandable, what is quite unnecessary especially after so many years is the blanket restriction placed on common Fijian citizens to benefit from seasonal migrant worker schemes. It is a long known fact that remittances are the single largest earner of foreign exchange for almost all the islands of the South Pacific barring a few resource-rich countries. Contrary to popular perception, tourism comes second in the revenue earner stakes in many of the countries. Countries like Vanuatu, which had minimal remittances before the New Zealand scheme kicked in, now have a new revenue stream established, thanks to thousands of Vanuatu’s citizens employed in the seasonal labour scheme.
Easing strict labour conditions
Islands Business, November 2012
Fiji’s poor citizens have missed out on a huge opportunity to better their living standards because of these illogically unreasonable restrictions that ostensibly are aimed at hurting the interim administration. While it has made little difference to the administration, it has hurt people badly by keeping them out of the scheme. On Australia and New Zealand’s part, the seasonal employers have missed on benefitting from the work ethic, skills and experience of Fiji citizens, many of whom are well versed in horticulture and farming practices, rural Fiji traditionally being an agrarian economy. The Fiji community in Australia is beginning to make its voice heard. It is organising to lobby the government over Fiji’s exclusion, arguing that visa restrictions on senior figures of the Fijian regime should not be extended to poor rural farmers seeking employment opportunities. Fijian community leaders in Australia have said that the restrictions are causing a raft of problems within the community and in Fiji. For instance, people struggling to find work in Fiji are travelling to Australia on visitors’ visas and working illegally on farms to earn a few extra dollars. Not being part of the official scheme, these individuals are liable to be exploited by unscrupulous agents and even employers. If caught, they also risk bearing the full brunt of the law, being deported and not being able to enter the country again. There is also further risk of not being able to participate in any future scheme if ever Fiji gets admitted to the scheme. Clearly, this ill thought sanction is hurting everyone involved. It is driving desperate people towards illegality, robbing the host countries of trained, skilled and experienced manpower and helping perpetrate poverty back in the islands, while the skills to overcome it exist. It is just a question of providing the opportunity. Denying it based on a policy that no longer makes sense especially because of the length of time and equally importantly because of the positive steps the regime has been taking to bring back a democratically elected government in 2014 is simply irrational and callous. The Australian and New Zealand governments must forthwith reexamine this isolationist policy that is clearly outdated, ineffective and more than anything else promotes illegality and poverty, where proper legal and procedural frameworks already exist to include Fijians in the seasonal worker schemes. Continuing with their heads buried in the sand while yet slowly easing other sanctions in the run up to the year 2014 is something that neither makes economic sense nor wins any political brownie points in the international arena for the two ANZAC nations. The sooner they lift these sanctions and include Fiji in the seasonal schemes, the better it will be for all concerned. • We Say is compiled and edited by Laisa Taga.
Whispers Forum threat: Should alarm bells be ringing? Well, it depends. For Fiji, which endorsed the setting up of a Pacific Islands Development Forum last month as a successor to the Engaging with the Pacific meeting, this could be another forum where it can air its views without interference from New Zealand and Australia. Fiji is being suspended from the Pacific Islands Forum. Whispers hears an international NGO is the brains behind this new forum. Will this be an alternative to the Pacific Islands Forum? If what the Fiji Attorney-General is saying is correct, then Fiji’s inclusion in an alternate forum—the Pacific Islands Development Forum—should send a clear message to Australia and New Zealand. “I think Australia and New Zealand need to question themselves on how they think they can position themselves in the Pacific.” Leaders see PIDF as the opportunity for all national players in the Pacific Small Islands Development States (PSIDS)—governments, private sectors and civil society to unite in discussing and identifying options that will ensure sustainable development outcomes by establishing green PSIDS economies. Bowing out? Could we be seeing the bowing out of a head of a Pacific regional organisation anytime soon? Whispers hears from a reliable source close to the head of the organisation that he is thinking of throwing in the towel. The source says the head is finding it difficult working with his employer and he is contemplating resigning from the top job. Still on regional organisations…W Whispers hears the current Pacific Islands Forum
Solomon Airlines’ Queen of the Domestic Skies one oF the regIon’s longest runnIng aIrlInes, solomon aIrlInes wI w ll mark Its 50th anniversary on Monday November 12 with the arrival of its new acquisition—a Dash8 aircraft (pictured). “It’s the biggest event in Solomon Islands’ aviation history with the airline spending around SOL$40 million (US$5 million) on the aircraft,” says Solomon Airlines’ General Manager Operations and Commercial Service, Gus Kraus. The aircraft has been named Megapode to commemorate Megapode Airways, the precursor to Solomon Airlines, set up in 1962 by Australian aviator Laurie Crowley as a charter service between Solomon Islands and Papua New Guinea. The 36-seater Dash8 aircraft will service Solomon Airlines’ domestic routes. The plane’s arrival will be the climax of the airline’s anniversary celebrations which includes the opening of a new headquarters at Honiara Airport. Secretariat deputy secretary-general Feleti Teo, whose term comes to end early next year, could be heading to Polynesia. Whispers hears that the Polynesian leaders have been talking to him about heading their secretariat. When questioned, Whispers sources said, he did not reveal much. But it is being said that the Polynesian job offer is one of several Teo is being offered. Keep tuning in for more details.
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Change of guard: In PNG, there is also talk of a change of guard at the foreign ministry. The rumour is that the current Permanent Representative (ambassador) of Papua New Guinea to the United Nations in New York, Robert Guba Aisi could be the next foreign secretary, replacing Lucy Bogari, who is at the moment acting in the
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Whispers position. Bogari, an experienced diplomat herself, has on several occasions missed out on the top position. Interesting to find out the reasons behind this. Fuel scheme: So what has happened to the Fuel Bulk Purchase Scheme initially spearheaded by the Pacific Islands Forum Secretariat? Well, according to one top official at the Forum Secretariat—the scheme is one of the biggest failures of the Forum. Despite the enthusiasm from Forum member countries and the thousands of dollars worth of work done by the Forum Secretariat, when it came to the crunch Forum members were not willing to cough up. The fuel bulk purchase scheme was aimed to ease the high cost of fuel for Pacific countries.
beyond the initial deadline set for 2007. There is now a new sense of optimism among some EPA negotiators, not least in the European Commission, which could mean that the conclusion of more trade agreements is in sight. This would be a welcome outcome, provided it reflects key interests of all parties. But many uncertainties, and the disappointing experience of protracted negotiations definitely call for caution. Talking about EPAs…what kinds of trade regimes do Pacific countries have with the EU? PNG and Fiji have IEPAs (Interim EPAs); Least Developed Countries Kiribati, Samoa, Solomon, Tuvalu and Vanuatu—EBAs (Everything but Arms); Cooks, FSM, Marshalls, Nauru, Niue, Palau and Tonga—GSP (Generalised System of Preferences).
Using the bible: An Australian aid agency is using passages from the Bible in an effort to curb rates of domestic violence in Solomon Islands. Aid agency World Vision is using passages from the Bible in an effort to curb rates of domestic violence in Solomon Islands. The World Vision programme, which is already in place in parts of Africa, teaches about Bible passages which are often misinterpreted. World Vision Australia CEO, Tim Costello, told the Australia Broadcasting Commission many men misinterpret passages from the Bible to justify violence against women. Costello says two in three women in Solomon Islands are victims of physical or sexual violence from a partner, which is the highest recorded rate in the world. World Vision says it is partly funded by the Australian Federal Police, who are in the country as part of a peacekeeping mission. EPA 10th anniversary: 2012 is the 10th anniversary of EPA. At the opening ceremony of the negotiations of Economic Partnership Agreements (EPAs) between the European Union (EU) and the African, Caribbean and Pacific (ACP) States the chairperson of the ACP Group arrived late, keeping hundreds of officials and diplomats, not least then EU Trade Commissioner Pascal Lamy, waiting. This was on 27 September 2002. Ten years and four EU Trade Commissioners later, the EU still seems to be waiting for many ACP countries to come along. Perhaps with few exceptions, the EPA agenda has not generated the enthusiasm for effective development partnership it was meant to stimulate. To-date, only 36 ACP countries have concluded some type of agreement, out of them 8 still have not signed it though and 15 have not even started ratification. So, while the only full regional EPA covering the 15 Caribbean countries can be deemed a diplomatic success, the negotiations on a regional basis with other African and Pacific continue at a slow pace, having gone way
Scrapped Scrap? The next time you’re in Fiji, watch out for open manholes, kitchen appliances that might blow up or an alarm system that might not work. It wouldn’t be the fault of service providers but of scrap metal thieves who have spared nothing as they rampage through towns and cities skewing local roads, drainage systems, power and telecommunication cable lines, roadsigns and anything reachable else that can be sold to scrap metal merchants. And not even a piece of legislation to specifically regulate Fiji’s scrap metal business could deter them or the rogue outfits they sell to from milking the country’s infrastructure. The problem has escalated to a national crisis in the country, to the point that all scrap metal dealers’ licenses in Fiji’s Western division were suspended last month and all scrap metal exports stopped by its tax authority, according to local media reports. The move sparked a series of urgent meetings between dealers and government officials, still at deadlock status when this edition went to press. Local media reported the growing concern over the issue by Fiji’s power, water and landline telecom operators, all of whom have lost millions of dollars through cable theft alone. The water company lost 140 manhole and sewer covers while the telecom operator lost around F$5 million last year to cable theft in just the Western division. Alarm systems serviced through the telecom company’s networks were often compromised as looters rip apart its accessible copper cables. The power utility reported copper stolen from its transformers and authorities are worried that this could lead to power-related complications, even accidents in homes. It seems supplying scrap metals to junkyards has become so rewarding that some locals are finding it a more preferred way to earn a living.
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Pensioners file lawsuit against Toribiong By Bernadette
nother lawsuit has been filed against Palau President, Johnson Toribiong, this time by the Palau Civil Service Pension Plan Board of Trustees. Also named as defendants in the 13-page lawsuit are Vice President and Finance Minister Kerai Mariur; National Treasury Director Marino Rechesengel; and Budget and Planning Director, Dennis Oilouch over unremitted pension President Johnson contributions by employees. T o r i b i o n g . . . According to Civil Case might consider a No. 12-177, since December settlement. 2011 until now, the government has allegedly failed to remit any payment to the Pension Plan. The lawsuit further said that as of October 4, defendants allegedly owed the Pension Plan the amount of $4,354,349.84. This amount includes $3,101,713.62 in principal and $1,252,636.22 in interest at a rate of 18 percent per annum. It claimed that since December 2011, the government had been deducting contributions from employees every pay day but has not remitted the money plus the employer’s share to the pension plan. The complaint showed there were 22 pay periods when the government withheld contribution from the employees. Contribution withheld from the employees in each of the 22 pay periods amounted as follows: $71,162.03 on December 16, 2011; $69.529.14 on December 30, 2011; $74,192.13 on January 13, 2012; $74,750.25 on January 27, 2012; $70,696.41 on February 10, 2012; $70,027.82 on February 24, 2012; $69,907.17 on March 9, 2012; $70,191.99 on March 23, 2012; $72,552.15 on April 6, 2012; $70,190.12 on April 20, 2012; $70,233.92 on May 4, 2012; $72,961.35 on May 18, 2012; $69,888.28 on May 31; $74,962.04 on June 15, 2012; $69,826.64 on June 29, 2012; $69,913.95 on July 13, 2012; $73,014.67 on July 27, 2012; $69,864.76 on August 10, 2012; $70,075.62 on August 24, 2012; $69,682.10 on September 7, 2012; $72,020.22 on September 21, 2012; and $73,371.46 on October 4. The pension board has been asking the government for payments but it has not responded to the demand letter. To pay its pension contributors, the pension plan has been taking money out of its invested accounts but will soon run out if the government does not pay up. The plaintiff prays for judgment against the defendants for $8,094,501.74. This amount includes $3,101,713.62 for contributions, $1,252,636.22 for interest and $3,740,151.90 for lost earnings. In addition, the plaintiff prays for cost of suit incurred and for any and further relief the court might deem just and proper. President Toribiong said he is looking into negotiating a settlement.
14 Islands Business, November 2012
Tuilaepa: PFL: Sick pet that needs to b By Merita Huch
I did say once that the best business practice in sales would be to buy it when a pet is fat— not when it’s skinny and unhealthy…but this is not our pet, this is somebody else’s sickly pet and we need to make sure it’s fed well and gets fat,” says Samoa’s Prime Minister Tuilaepa Sailele Malielegaoi. Against opposition to the purchase of Pacific Forum Line—the government of Samoa went full steam ahead with the buy, a move considered by the Opposition Party Tautua as a huge risk that may end up like another “Polynesian Airlines”, another failed investment costing Samoan taxpayers millions of debts. The government thinks otherwise. It says that aside from keeping the ownership of PFL within the region, the other major reason behind this bold move was to provide regular transport services that Samoa can control and expand. Tautua Party’s (Opposition Leader) Palusalue Faapo II, upon receiving the news that the government had gone ahead with the purchase, immediately called a media conference in Apia. He said the government has failed to “exercise good governance and transparency” in this particular purchase, ignoring the opinion of the Samoan people, and opting instead to make a decision it will suffer from for many years to come. “Our biggest concern is the loss this purchase may incur,” Palusalue Faapo II says. “I don’t see the logic in government purchasing a business that’s already making huge losses”. “I just don’t want to see another “Polynesian saga” where millions of taxpayers dollars were lost in running it and we’re still paying the Polynesian debts today”. For two years ending 2011, PFL had recorded massive losses of up to NZ$14 million. This is due to what the Samoan Prime Minister had blamed on simply “bad management”. New Zealand’s foreign affairs and trade minister, Murray McCully blames PFL’s decline since 2007 as a result of “some poor decision-making in earlier times”.
Forum Samoa II...the 8115-tonne cargo ship at Darling Harbour, Sydney. Ph
Negotiations pertaining to the sale of PFL was so discreet that an earlier report on the New Zealand Sunday Star-Times reported that the 35-year-old shipping line was to be sold off to Singapore-owned shipping company Sofrana—that’s servicing the Pacific through chartered trips by PFL. Urgent meetings were understood to be made in Tonga and then Fiji to discuss plans to sell off the only Pacific shipping line. “It is being conducted not simply privately, but in secret without the chance for those people who will be deeply affected by the decision to have a say,” Labour Party and Foreign Affairs spokesperson Phil Goff was quoted as saying in the Sunday Star-Times. The very next day—a comment by the current Chief Executive Officer of PFL on Radio New Zealand International gave away the first piece of news about Samoa, which owned only eight percent (8%) of the regional shipping line, purchasing the remaining 92% and confirming full ownership of PFL. “Some days later, Samoa’s deputy Prime Minister and Minister for the Pacific Forum Line confirmed complete ownership of PFL. In a brief statement, he announced that “Samoa was committed to the objectives of why PFL was founded 35 years ago of maintaining shipping services to encourage economic development of all Pacific countries”.
Shaving it ALL for a good cause By Merita Huch
t was close to 4pm on a Tuesday afternoon. Parliament had just finished the day’s session. Prime Minister Tuilaepa Sailele Malielegaoi, in a grey suit and ulafala (pandanus fruit lei) walks out to the foyer of the Government Building’s fifth floor. There was hardly any space—his administration team had placed chairs covering the whole foyer right up to the elevators. “I don’t know why there are so many people here at this time of the day,” he giggled and took a seat at the front row already filled with some members of his cabinet, Opposition Party Tautua Samoa, business heads and, of course, the me-
dia. The only other person standing, not seated next to him is “Dr John” a popular hair dresser in Apia. “See how disrespectful this man is,” he told the many now gathered at the foyer. He shouldn’t have turned up—he wants to make a name for himself by shaving off my hair,” he said. PM Tuilaepa...had the The cause for this brief most expensive hair ceremony was to raise funds cut—all for cancer. within 25 minutes for the Photo: Merita Huch
eds to be fed well
He went oto say that “…Samoa will secure the successful future of PFL through a more suitable business model for PFL, for the benefit of all Pstakeholders”. Fonotoe Pierre Meredith added that the government’s priority was to satisfy all PFL customers, old and new alike, including Pacific countries. Opposition continued in Samoa with the Tautua Party insisting it was a ‘dodgy’ deal that wasn’t explained properly, a bad example it says of good governance and transparency. “It goes against everything that this government had pushed in the past,” Palusalue Faapo II explained. “He went on to explain how the Prime Minister himself had always pushed the business concept of selling companies when they’re profitable not when they’re in debt. The concept was compared to a pet that had to be fed and when it’s fat it’s the best time to sell it. “And here he is doing the opposite”.Then the price tag to PFL was made known—about a week after the purchase was publicised—NZ$1.6 million. Prior to the first meeting with its shareholders in Auckland last month, Meredith went on TV One and explained that there were hundreds of Samoan sailors who will benefit in terms of employment from this new ownership. He explained that there were options in terms of
clearing the close to NZ$14 million debt that PFL has. It wasn’t detailed however. Despite the gloomy picture painted of such a deal, the government and other observers in the country felt that this was a risk worth taking, especially with the need for the country to establish a strong sea transportation system. At least Samoa’s Prime Minister thinks so. On the last week of October, Tuilaepa said while it was important to maintain control over a Pacific asset, most of the reasons behind the purchase were towards Samoa’s own development. “The sole reason the Pacific islands decided to establish the Pacific Forum Line was due to the lack of shipping services to the remote islands of the region. “Because of the monopoly foreign shipping companies had on the transportation schedule and costs, the small islands were not able to get supplies they needed, they couldn’t control the schedule nor could they control the costs of imports. “We’re seeing that again today and we decided to buy it to ensure we’re able to control the shipping services provided to Samoa and the current stakeholders of PFL,” Prime Minister said in a weekly talkback show in Apia. The Prime Minister added that Samoa’s biggest employer, Yazaki EDS Samoa Limited which employees close to 2000 locals was also feeling the brunt of the monopoly in the shipping services available now. He hopes that with Samoa owning PFL—the flow of export would be controlled and monitored, and delivery of the wire harnessing goods produced in Samoa would arrive on-time. Tuilaepa says Forum Samoa II and the Fua Kavenga from Tonga serviced PFL but at the moment the chartered system with foreign shipping lines would continue until Samoa is able to expand and purchase another ship. “It’s important that we keep PFL within the region, we’ll never have a chance to own a shipping service again if we had allowed another shipping line to take over,” he said in his weekly radio talk. As for the “good business concept”, Tuilaepa admits he did say it. “It’s true I said it but the Leader of Opposition shouldn’t talk because he has no idea what’s happening. It’s a very simple transaction—and it’s for many good reasons.”
Samoan Cancer Society. A week earlier, 29 other brave people—Samoans and expats alike—had their hair shaven for the same cause. The Prime Minister wasn’t in the country so his hair cut had to wait until he returned from New Zealand and Australia. “I thought they’d forgotten about it,” he continues to joke as “Dr John “ covered his suit with a cloth and was busy getting his equipment out onto a table next to the PM. Then it started—just after two shaves on each side of his head, Tuilaepa got up and removed the cloth: “Maybe I don’t want to do this,” everyone chuckles and Opposition MP Lealailepule Rimoni Aiafi called out to continue the hair cut. Bluesky Samoa started the donation by putting in $2000—this was to stop the shaving. In response other companies put up $5000, $3000 and the Op-
position Party $1000 to continue the hair cutting session. He sat back and bent his head forward as Dr John proceeded with the haircut and within the first ten minutes more than 10,000 tala was given. By the end of the 25 minutes 80,000 tala was made—the most expensive haircut ever. Pondering over the hair that now lay scattered all over the cloth covering his suit, the PM smiled and thanked the witnesses who all clapped and cheered for spending on a good cause. The rest of the week saw similar responses to wherever he attended—and as for the cancer society, the 80,000 tala made in such a short time was added to the 107,000 tala made from the others who braved Dr John’s clipping equipment to raise funds for a serious illness that’s taken many lives in Samoa—cancer.
g Harbour, Sydney. Photo: Steve Bromley
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Welcome to ours shores...Papua New Guinea’s Peter O’Neill being traditionally welcomed in Fiji. With him is Fiji’s Prime Minister. Photos: Fiji’s Ministry of Information
Will Papua New Guinea drive regional integration? Markets for goods and services within MSG are now more liberalised with the recent opening up of the Pacific’s biggest market.
By Dionisia Tabureguci
ould these be the twilight days of “regional integration” rhetoric in the Pacific? Where “regional integration” can truly move from being a political dream to a tangible state of free trade and free labour movement in the region? The huge shift last month in trade dynamics within the Melanesian Spearhead Group (MSG) and the line of thinking emerging from government and the private sector in Papua New Guinea (PNG) seem to support views along those lines. Huge shift was PNG granting duty-free market access to goods 16 Islands Business, November 2012
originating from fellow MSG countries—Vanuatu, Solomon Islands and Fiji—as it implemented its commitment to remove barriers of trade under the MSG Trade Agreement (MSGTA). With the exception of sugar, salt and mackerel, all goods from MSG countries that satisfy the Rules Of Origin (ROO) requirements of the MSGTA can now enter PNG duty-free. The MSGTA, however, does not cover most products classed under Chapters 22, 24 and 27 of the Harmonised Commodity Description and Coding System (HS) like alcoholic beverages, tobacco and mineral fuels. It also does not cover cane sugar (HS Code 1701 1100), so these items are still taxed, even if they originate from MSG countries.
In full force...the PNG delegation who accompanied Prime Minister Peter O’Neill during a visit to Fiji last month.
But in an almost unexpected move, PNG decided to lift import tariffs on over 400 items on its Negative List component of the MSGTA, opening its market of over 7 million people, quite a luxury for a region where countries, scattered and far-flung from developed economies and from each other with little to offer by way of trade, are more water than land. And where PNG alone is 76 percent of total population, 87 percent of total landmass and 15 percent of total Exclusive Economic Zone (EEZ) area if you take the collective geography and population of the 14 Pacific members of the Pacific Islands Forum (PIF). Not only that, the resource-rich country is now in an economic growth surge on the back of a growing list of minerals and gas projects that are pumping millions of dollars into the local economy. Free labour movement Huge shift too was the weight thrown by MSG countries behind the MSG Skills Movement Scheme (SMS), a temporary labour scheme allowing MSG skilled professionals to move freely across member countries to work. MSG Leaders initially announced the SMS during their special summit in Suva in March this year, fast tracking what they would have wanted to achieve as members of PIF. Under PIF, MSG countries are also parties to the Pacific Islands Countries Trade Agreement (PICTA), a free trade agreement among Pacific members of PIF and under which a lengthy and complex negotiation course on trade in services is still being carried out. By September, MSG’s SMS was up and running in all MSG countries and take-up should, in the months ahead, begin to take
form once official procedures in the four countries are synchronized. Imagine hundreds of skilled MSG nationals – doctors, engineers, pilots, mechanics and teachers – moving with little restriction across four of the Pacific’s biggest economies to work. The scheme, not yet legally binding and still a Memorandum of Understanding according to MSG Secretariat Director of Trade Mere Falemaka, is capped at 400 at this stage depending on the labour shortages of MSG member countries. All eyes are unsurprisingly on PNG, with its minerals bonanza and renewed interest in tourism creating a big vacuum for skilled workers that it doesn’t have. One can only guess what an exodus to PNG would do to the other MSG economies in terms of freeing up their own job markets and foreign exchange earnings from remittances. In Solomon Islands, its sole employment recruitment service agency Pasifiki Services Ltd hopes the scheme would give the country’s young graduates the chance to gain the experience normally required by employers and which they often lack because few employers would take fresh graduates. “An interesting feature that we are just learning from our data base is that the largest number on our database is people with finance and management qualification. And it’s also the company position that we get most frequently asked to help find,” said Bob Pollard, managing director of Pasifiki Services operating out of Honiara. “But employers are always looking for someone with experience so we’re caught in a situation where we have a large number of predominantly certificate, diploma and degree holders but they don’t have experience. And it’s just sad that at this rate, our economy is not Islands Business, November 2012 17
Battling it out...President Ratu Epeli Nailatikau leads the Fiji team against PNG in a golfing competition at Pacific Harbour in Fiji.
able to provide the opportunities we need for employment, especially for the young ones that are coming through college and university,” said Pollard, whose company’s database of jobless in Solomon Islands had reached 1400 by last month. “If PNG wants to take our experienced workers, it could in the short-term create some gaps for us here, but I know what PNG was doing earlier on...they were taking up graduates and providing them with experience, which was a very good move. “If PNG opens its doors to experienced ones, it will simply push up the price for experienced workers here in the Solomon Islands and may make it a bit more expensive for businesses to find workers. But at the end of the day, there are more opportunities and I guess the more opportunities there are, the better,” Pollard said. PNG Push So if what’s uttered by PNG’s Prime Minister Peter O’Neill are anything to go by, PNG has already embarked on an unprecedented onslaught to really drive regional integration, where goods and people move freely and PNG can share its wealth and help lift living standards first among MSG member countries and in time, the rest of the Pacific. “Our view is we’re trying to have a free movement and engagement of people in terms of working and doing business in the Pacific. As a population, we’re nearing 10 million across the Pacific and I think we can look after ourselves if we work together,” O’Neill told Islands Business in an exclusive interview in Fiji last month. He led a delegation of over 100 businesspeople and their families on an investment promotion tour where he called on Fiji’s Prime Minister, Voreqe Bainimarama, as well as visited Fiji-based PNG investments, among them BSP (Bank of South Pacific), Grand Pa18 Islands Business, November 2012
cific Hotel (GPH) and the Deuba-based Pearl South Pacific Resort and Spa. “We believe strongly that PNG, with a population now of seven million people, need to engage more with the rest of the Pacific. I know that we talk to our development partners and everyone around the world to work with us but we know our Pacific better than anyone else and by working together, we can resolve issues like climate change, food security, education, health, potential investment across the Pacific,” said O’Neill, a former accountant and businessman who once led PNG’s Opposition and served as treasurer under the leadership of Sir Michael Somare. On the ground, dollar spinoffs from this mining capital have started to filter into its Pacific neighbours through investment vehicles like the state-owned Mineral Resources Development Company (MRDC), National Superannuation Fund (NASFUND), financial institutions like BSP, Credit Corporation, and private firms like Lamana Development Ltd. Already, these companies have moved capital into MSG countries. Credit Corporation, for instance, with its vision to “be the South Pacific’s leading financial institution, assisting in developing the aspirations of all Pacific Islands nations”, is present in Vanuatu, Fiji and Solomon Islands and its home base in PNG. “Green bank” BSP, listed on the Port Moresby Stock Exchange, is said to be eyeing Vanuatu after opening branches in Solomon Islands, Fiji, Niue and an unsuccessful attempt to buy into National Bank of Samoa last year, although that does not stop it from growing organically there. It has among its top 20 shareholders the PNG Government through the Independent Public Business Corporation, a host of local trusts and pension funds and the International Finance Corporation.
Cover Report PNG workers, was already partnering with PNG property development firm Lamana Development and the Solomon Islands National Provident Fund in two projects in Honiara—the Heritage Park Hotel and the Heritage Park Commercial Complex. The same NASFUND/Lamana partnership had formed a joint venture with the Fiji National Provident Fund to buy and revamp the Suva-based GPH, an icon in Pacific tourism and a thriving tourist center in its early days until it fell into disrepair when the Nauruans bought it in the 1990s, then went into financial problems shortly after. The new owners are planning a grand opening in 2014 to coincide with its 100th birthday. NASFUND chair Mel Togolo told Islands Business after the PNG entourage’s GPH tour that the scope of diversification for the over 300,000-member pension fund is not limited to MSG. “We are also looking for additional opportunities in the Pacific region, so we’ll be looking at other Pacific countries as well. At the moment, we’re looking at Samoa and it will be a joint venture with Samoan entities, including their provident fund,” said Togolo.
At the Grand Pacific Hotel...PM Peter O’Neill visiting one of the projects owned by Papua New Guinea investors.
It is strategically positioned too as also among its top 20 shareholders are NASFUND, Petroleum Resources Kutubu (PRK) and Mineral Resources OK Tedi No. 2 (MROT), three strong PNG forces that have entered Fiji, the latter two being landowner companies and investment partners to MRDC in the purchase and redevelopment of the Pearl South Pacific Resort and Spa in Fiji. MRDC, a management company set up by the PNG government in 1975 to manage equity on behalf of landowner companies from major resource development project areas, valued its investment portfolio at Kina 870 million (US$408 million) in 2009. The MRDC/ PRK/MROT consortium had bought the Fiji hotel for K34 million (approximately US$15.9 million) last August. The big PNG push, actively encouraged by the O’Neill government as he professes to continue the vision of the Pacific’s founding fathers, including his own predecessor Sir Michael, for a unified Pacific—does not end there. When in Fiji, O’Neill unveiled the Pearl Resort’s F$82 million marina development project and later told Islands Business that it would be an eye-opener for most Papua New Guineans. “It gives them an opportunity to see that other Pacific islands are also doing quite well. They come to Fiji, they enjoy the hospitality and they mix easily with the local community and I think wherever they go in the Pacific, it is the same.” The entourage also had an opportunity to be introduced to Cook Islands Prime Minister Henry Puna, who is also chairman of the Pacific Islands Forum. PM O’Neill said there would be investments in the Cooks in due course, adding that PNG businesses were also talking to counterparts in Samoa for joint ventures. Again from PNG’s private sector, NASFUND, a Kina 2.2 billion (US$1.03bn) compulsory savings superannuation fund owned by
Exciting Times Looking like exciting times in Melanesia perhaps? “Very exciting,” said MSG Secretariat’s Falemaka. “If our politicians ensure there is a stable political environment, then we can guarantee this growth. Don’t forget that PNG is experiencing a natural resources boom and right now they want to diversify out. “For us, the transformation happening in Melanesia is exciting; the MSGTA is now on track, the implementation of duty-free by 2013 (of Vanuatu, which will make three out of four MSG countries a free trade area by next year), the SMS coming on board and all these investments that are going on, so it is an exciting time for Melanesia.” It’s not easy for other MSG countries to match PNG’s growing investment footprints in the region but they are as interested in PNG with whatever little they have to offer. When it opened its market last month, it became the second MSG country to do so, following Fiji’s lead in 2005, when the MSGTA was revised and switched from an initial Positive tarriff concession list to a Negative List approach. Although members were allowed five years to protect infant industries, which they put on their Negative Lists before they begin implementation of a gradual duty reduction schedule, Fiji immediately decided not to have a Negative List. Since 2005, imports from MSG countries were entering Fiji duty free as long as they were covered under MSGTA and complied with its ROO. Already, Fiji was getting canned tuna from Solomon Islands and beef from Vanuatu while products like tea and coffee had begun to trickle in from PNG, all under MSGTA trade. In general, MSG countries were already trading with each other in commodities like timber, kava, vanilla and other herbs and spices. Now, PNG and Fiji’s duty free area combined gives the rest of MSG and indeed the entire Pacific roughly 7.94 million people or 85 percent of the Forum’s Pacific population and 91 percent of total landmass. “Obviously, the opportunity to trade with Fiji and PNG is there,” said Mereia Volavola, chief executive officer of the Pacific Islands Private Sector Organisation (PIPSO), the Forum’s private sector development arm. “The issue is whether they can make use of these trade opportunities and in this regard, the national private sector organisations (national affiliates of PIPSO) should be playing a more pro-active role in informing their members the opportunities arising out of the action taken by PNG.” In Fiji, the private sector is particularly excited, knowing its educated workforce and level of infrastructure sophistication, especially in manufacturing, are unrivalled in the Pacific. “PNG, if we do it well, will become a strategic partner for Fiji in the future because they’re still growing and their demand and expectation for quality is high,” said Joeli Taoi, chairman of the Fiji Export Council. “We have the ability to meet those demands given that our infrastructure for manufacturing, processing, for textiles, canning…are very much in place. That’s where our comparative advantage comes in—our ability to produce. Our biggest challenge I think is perhaps the shipping service and I understand some companies have already started talking about numbers, now that PNG has opened up,” Taoi Islands Business, November 2012 19
Diplomacy at work...Fiji’s foreign minister Ratu Inoke Kubuabola (in blue) doing his bit at the golf course in Pacific Harbour last month.
added. Maersk Shipping, he said, provides shipping services from Fiji to PNG, as well as to other Pacific countries. The ideal route for Fiji exporters though would be a direct link between Fiji and Port Moresby. New Zealand-based Reef Shipping announced last March its new Fiji-based service to Nauru, Solomon Islands and PNG where it will call in at both Lae and Port Moresby ports. “This decision recognises the key role Fiji is playing in developing other Melanesian neighbours and at the same time, meets the many requests we have received from exporters who are looking to expand the markets they have established,” Reef said in statement. Opportunities Fiji, although the second biggest economy in the region by population, does not have money to splash but its manufacturers that supply Pacific markets have already established distribution networks in the region and in doing so, they have possibly busted the myth of the impossibility of scattered islands in the Pacific to have meaningful trade with each other. Fijian goods are already being exported into MSG and other islands countries. For example products manufactured by Punjas & Sons and FMF Foods Ltd, two related family owned companies but fierce competitors in the Fiji market, are now available in most Pacific islands countries. Lautoka-based Punjas recognises itself as an extensive trans-Pacific goods distribution network and “one of the largest privately-owned companies in the South Pacific region”. It has outlets in Samoa, Tonga, Vanuatu, Kirbati, Solomon Islands and PNG through which it pushes its wide range of products from spices, soaps and detergents, rice, edible oils, tea, dairy products and biscuits. Hardware materials are already moving from Fiji to PNG via local hardware consortium Vinod Patel in collaboration with PNG-based Fijian Mahesh Patel, owner of Port Moresby listed City Pharmacy Ltd. The partners own Hardware Haus, which operates 10 retail outlets 20 Islands Business, November 2012
in nine major cities and towns in PNG and is considered the largest retailer and distributor of hardware and building materials in the country. Vinod Patel already has market presence in Vanuatu, Cook Islands, Nauru, Tuvalu, Samoa, Kiribati, Wallis & Futuna and Tonga. The water bottling industry, which launched in Fiji after the success of globally recognised Fiji Water, is now a growing sector where players have already diversified into the region. Water is classified under Chapter 22 of the HS system and goods under this chapter are not covered under the MSGTA, even if they satisfy ROO requirements. However, the exception is made of items in HS 2201, 2202 and 2209. Water falls under HS 2201, qualifying it to be included as a duty free product under MSGTA as long as it complies with the ROO requirement. Fiji-listed Pleass Beverages and Packaging told Islands Business it had already begun investigating the MSG markets for increased sales, now that the duty free market has just become bigger. It currently supplies Nauru, Kiribati, Tuvalu and the Marshall Islands. There are expectations too that Fiji’s textile, clothing and footwear manufacturing, a developed industry in Fiji with exports mainly destined for Australia under the extended South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA), could also carve a niche in PNG. “PNG’s demand and expectations may not be what we do for Australia and New Zealand but I think it has opened up opportunities that medium-sized factories who do small runs could supply,” said Taoi. A trade trip by Fiji to PNG is being planned for as early as possible Taoi added. PNG’s liberalisation has now made a wide range of items including flour, potatoes, TCF products, jewellery and vegetables among others duty free, as long as they are grown or processed in MSG countries. MSG vs PICTA? Businesses in the four MSG countries were still ruminating on this sudden explosion of opportunities in Melanesia when contacted by
PNG Prime Minister Peter O’Neill...hears out Suva businessman Sir James Ah Koy. With them is Adi Koila Nailatikau, wife of Fiji’s President Ratu Epeli Nailatikau.
Islands Business last month but, said one commentator, “the private sector moves fast” so in the coming months, they expect intra-MSG business, investments, goods and services trade momentum already in the clockwork to gather pace. And a number of due diligence work to be carried out by new local, intra-MSG or outside interests exploring ways to be part of this. Seeing that PNG is driving this momentum, the question asked is whether a stronger MSG integration would conflict efforts made by PIF for regional integration under PICTA, the two are in fact viewed as complementary as their ROO components are not very different from each other. The MSGTA ROO is considered the easier of the two for exporters to handle, as it requires only a change in tariff heading of Harmonised System in order for a ‘transformed’ or manufactured product to be deemed as ‘originating’ from an MSG country and thus qualify for preferential or duty free access. When it was reviewed in 2005, tariff schedules were expanded from 4-digit to 6-digit HS headings to better identify products covered under preferential treatment and now this detailed classification has widened the range especially of processed products that could enter duty free under MSGTA. Satisfying the ROO requirements of MSGTA is half the job done in satisfying the ROO of PICTA, which is based on the value added criteria requiring that at least 40 percent of the factory cost of the final goods be represented by ‘qualifying expenditure’, considered a more cumbersome and costly procedure for exporters. “The way we see it, MSG can actually use any of these two agreements so MSGTA is complementary to PICTA in that respect that they (MSG countries) can use both to trade with Pacific islands countries,” said Falemaka. Vice versa, non-MSG Pacific countries are not shut out of any opportunity they might see in MSG, especially Papua New Guinea. “It is important that other Pacific islands examine the opportunities under PICTA and should they like to trade with PNG, there is nothing stopping them from holding bilateral talks with PNG,” said
PIPSO’s Volavola. On paper, it appears the MSG brotherhood is slowly re-inventing itself as a powerful trade bloc in the Pacific region, although it is a given that they are still very dependent on Australia and New Zealand for trade and so do most of the Pacific. Where in the past the two developed neighbours have been accused of misusing that leverage to bully Pacific countries into doing what they want, there is also that all-embracing concept of oneness among PICs through pre-European historical links with one another, often seen to override any perceived fragmentation at regional level. The way Waigani thinks these days, there just might be a way the two concepts of loyalty to non-Pacific trading partners and loyalty to each other could co-exist. PNG, although recognising its alignment with MSG countries under MSGTA, has come across as interested in tapping into as many Pacific Islands countries as it can, now with political stability at home, very deep pockets and a new leader whose vision is for a unified Pacific that can stand on its own, resolve its own socio-economic issues the Pacific way and trade internationally as a unified region while respecting the rights and needs of individual countries within the group to maintain a level of bilateral cooperation with countries outside the Pacific. “Individual countries have territorial issues that they have to protect which we understand very well but people to people relationships and government to government relationships should not be an issue when it is not a territorial issue,” said PM O’Neill when reminded of how the so-called Pacific unity tended to be thrown out the window when it came to negotiating trade deals as a bloc with other countries or trading blocs. “Of course, if trade arrangements with different countries will benefit each individual country, we encourage that. People have to have relationships with the United States, Australia or China for that matter. But as Pacific Islanders, I think by engaging more within ourselves, there’s a better chance of resolving many of our issues than engaging with others that don’t understand the Pacific Way.” Islands Business, November 2012 21
Intra-MSG trade grows But still dependent on Aust, NZ By Dionisia Tabureguci A survey of trade within the Melanesian Spearhead Group (MSG) member countries under the MSG Trade Agreement (MSGTA) had revealed a sharp increase since 2005, although there is still a heavy reliance on Australia and New Zealand. “We did an assessment of the implementation of the MSGTA in 2010, probably a first assessment of its kind for the MSGTA. It showed that although the MSG trade was small, it was growing,” said Mere Falemaka, Director of Trade and Investment at the Vanuatu-based MSG secretariat. “Between 2005 and 2009, imports grew by 64 percent and exports grew by over 300 percent which indicated there was potential for increased trade within MSG. And this was with only Fiji providing duty free access for MSG goods under the MSGTA. “But the trade within MSG is small in relation to MSG trade with the rest of the world. Australia is still the biggest trading partner—43 percent of our exports go to Australia and 31 percent of our imports are coming from Australia so we are still very much dependent on Australia and New Zealand,” Falemaka said in an interview with Islands Business last month. Last month’s decision by PNG to remove over 400 items from its MSGTA Negative List has put the magnifying glass on intra-MSG trade and it also coincides with the activation of a Memorandum of Understanding (MOU) signed by MSG Leaders’ Meeting in Fiji in March for an MSG skilled labour mobility scheme (SMS). The removal of the items means most goods from MSG countries can enter PNG duty free as long as they meet MSTGA Rules of Origin (ROO) requirements. Only three items—sugar, salt and mackerel—remain on PNG’s Negative List. Where initially the MSGTA signatory countries took the Positive List approach when they inked it in 1993, where listed goods could enter duty free, they reviewed the agreement in 2005 and switched to a Negative List approach because the Positive List kept growing. Each country has a Negative List, explained Falemaka, and they confine in it only goods linked to infant industries they want to protect. These goods attract high import duties and the countries are given time to protect these industries before they begin duty reduction. Initial signatories were Vanuatu, PNG and Solomon Islands who had formed the MSG subgroup in 1986. Fiji became an observer member in 1993, a full member in 1996 and officially signed the MSGTA in 1998. Also a full member, although not a signatory to the MSGTA, is New Caledonia’s pro-independence movement the Kanak Socialist National 22 Islands Business, November 2012
Merewalesi Tabilai Falemaka...“the whole idea of opening up is to induce some competition to improve efficiency, reduce the price and improve the quality of their products so they become more competitive. Photo: Islands Business
Liberation (FLNKS), who has been part of the group since 1986. When the switch to Negative List was made in the MSGTA in 2005, Fiji immediately granted duty free access and did not have a Negative List. It fell on the other three to implement their commitments to reach duty free status for MSG products by 2013. In 2010, Vanuatu began reducing import duties on goods listed on its negative list and most of them are now at six percent and all are scheduled to go to zero duty by next year. Opening up Solomon Islands began duty reduction on its Negative List last year and because it has been given time to recover from the 2006 riots, half of its goods will be duty free in 2015 and the rest by 2017, said Falemaka. “The whole idea of opening up is to induce some competition to improve efficiency, reduce the price and improve the quality of their products so they become more competitive. “So it was designed to be a stepping-stone for entry into markets outside the MSG, especially the international markets,” said the former Pacific Islands Forum Secretariat Trade Policy Advisor. The MSGTA, she added, had a comparatively
simpler ROO component based on the change in tariff heading of the Harmonised System and this made it easier for exporters to document their products for duty free qualification. Under MSGTA, goods can be exported duty from one MSG country to another as long as it originates in that MSG country or it has undergone some form of transformation, which is determined by a change in tariff heading that distinguishes it from its imported raw material component. Goods on the Negative Lists are exported under preferential duty while goods under Chapters 22, 24, 27 and cane sugar HS Code 1701 1100 are not covered at all by the MSGTA, meaning they will be taxed even if they comply with the ROO requirements. An exception is made in Chapter 22—all items described in HS Tariff Code 2201, 2202 and 2209 are covered by the MSGTA and are now deemed duty free in PNG and Fiji. They include sweetened, non-sweetened and natural water, ice and snow, non-alcoholic beverages, vinegar and substitutes for vinegar from acetic acid. Goods not covered under MSGTA are mostly alcohol and alcoholic beverages, tobacco and manufactured tobacco substitutes. To facilitate the smooth passage of goods within MSG, now that import duties are coming down, MSG countries are collaborating at bio-security and quarantine level to harmonise their procedures. MSG customs officials are also working together to achieve similar goals. On the skilled labour movement scheme, Falemaka said it is capped at 400, and was still a non-binding arrangement based on a MOU and MSG countries were still trialling it out. “MSG Leaders want to experience it as a flexible instrument and learn lessons from it before moving to a legally-binding agreement,” she said. “The MOU basically has three elements: one is through provisions that sets out the rules of how the MOU will operate, the category of jobs, the responsibility of the receiving country and the sending country. The second is an annex, similar to what we have in the trade in goods arrangement where we have a Negative List. The MOU has a schedule on the category of jobs that they are going to allow to each other. The third part of the MOU is an annex on things like mutual recognition or complementary measures to facilitate the operation of the scheme. For example, one criteria of admitting people into the scheme is qualification and because it’s about skilled people, there has to be a standard recognition of qualifications so MSG countries will have to work together to decide what institutions they will recognise for the different skills category that they have in the scheme.” Falemaka said the Labour ministries in each MSG country will be the implementing agency and a worker can be part of the scheme provided he or she is an MSG national and is a successful candidate to a job offer advertised in another MSG country. Worker’s permit and visas are then issued when the Labour ministry gives the green light after liaising with Immigration and Education agencies. All four MSG countries are now implementing the SMS and most of the agreed occupations are engineers, accountants, pilots, doctors and nurses, trade skills and vocational teachers.
Peter O’Neill’s Pacific Plan The ‘PNG Push’ into the region There is an unmistakable push by Papua New Guinea into neighbouring economies in the Pacific region to invest and operate businesses there. The promise from its administration is that this trend will be seen over the next few years. Championing the ‘Pacific Way’ of looking out for each other, PNG will reach out to as many Pacific islands countries as it can in a form of engagement that it says will see wealth from its minerals boom flow through to help them achieve the Millennium Development Goals and ordinary Pacific Islanders lift living standards. In an interview with I slands B usiness , PNG’s Prime Minister, Peter O’Neill, shared his vision of a unified Pacific, where the free movement of trade and people is a reality, supported by individual national policies to drive economic development. O’Neill, a former accountant, businessman, Leader of Opposition and government minister, served as Treasurer in 2007 under Sir Michael Somare’s government. He was elected Prime Minister in a parliamentary vote in August this year. O’Neill led a PNG business delegation to Fiji last month and held informal talks with Fiji leader Voreqe Bainimarama. Islands Business spoke wih him. Here’s excerpts of the interview: There is a lot of interest lately by PNG investors to push into the Pacific region. Is this something we will be seeing more of during your term as Prime Minister of Papua New Guinea? PM O’Neill: PNG is an economy that is growing and growing very strongly. Insofar as the opportunities that are there, I think the rest of the Pacific need to participate in helping us provide the necessary support in terms of skilled labour force and many other capacities that we in PNG are lacking. So this is why we are now embarking on a programme where we work together with other Pacific countries where we can try and encourage labour mobility, increase trading and investments and, of course, try to provide regional security in a sense we take advantage of the economic growth that is now happening in PNG so that we can also assist many other Pacific Islands Countries. Now that PNG has opened up free trade to MSG countries, how do you view the new trade dynamics that will be triggered off with PNG’s massive population? PM O’Neill: I think we in the Pacific as a region with close to 10 million people, we can look after ourselves better if we work together. That’s why we believe strongly that PNG with a population now of seven million people need to engage more with the rest of the Pacific. I know that we talk to our development partners, we talk to everybody around the world to work with us but we know our Pacific better than anyone else and it is important that we work together. PNG has decided to immediately implement its duty free commitments under MSGTA, instead of
Peter O’Neill...wants to share PNG‘s wealth with the rest of the Pacific. Photo: Fiji’s Information Ministry.
gradually phasing out duty from goods on its Negative List, like Vanuatu and Solomon Islands. Why? PM O’Neill: We have been in discussions with officials on this issue for a long time. But PNG is trying to integrate many of the economies in the Pacific so that we can work on supporting each and this is why we want to fast-track some of these issues. PNG is working very closely with Fiji, Solomon Islands and Vanuatu, mainly because the Melanesian countries are the biggest in the Pacific and once we are able to engage more actively together, I think the rest of the Pacific can be able to follow us. As the economy continues to grow in PNG and opportunities increase, we are able to assist more and I think in a couple of years time, we will be development partners in many other sectors, not only in trade and investments, but in health and education, and so forth. Q: We have the MSG temporary workers scheme now in place. What is the extent of PNG’s need for skilled workers? PM O’Neill: Over the next few years, worldclass resources projects will be developed in PNG. Some that we are now doing are going to be the biggest in the world so as a result of that, many of our skilled workers are now joining those sectors. As a result some other sectors are missing out on the labour force that is available in PNG. So that is why we are trying to encourage other Pacific islanders to engage with us and take advantage of the opportunities that are there. By reducing restrictions that we have between each other, particularly in labour mobility, Pacific
Islanders who want to come and work in PNG will just have to buy a ticket, get on a plane and come to PNG, arrive at the airport there and work for anyone they like and you don’t need a visa, you don’t need government approval. That’s our ultimate aim, which we’re hoping to achieve throughout the Pacific. So if Papua New Guineans want to go and invest in Cook Islands for instance, they don’t necessarily have to go and get a visa. Our ancestors have been travelling around the Pacific for thousands of years, these visa concepts are foreign to us. Pacific economies have differences at local levels, different challenges, levels of bureaucracies, etc. Is there an understanding by PICs of what PNG is trying to do and perhaps streamline their economies so that everyone is on the same page? PM O’Neill: We all have our own individual levels of politics in each individual countries, but our socio-economic issues like poverty, opportunity to get employment, opportunity to do business, opportunity to get a better standard of living…those are issues that concern us and PNG of course as a country with the biggest population in the Pacific, has a responsibility to help. We have our own challenges within our own country which we are attending to. But I’m hoping we can get our people in the Pacific to appreciate that nobody else is going to come and resolve our issues. We’re talking about climate change, we’re talking billions and billions of dollars yet no Pacific islands country has seen much of it. So people are just talking because they think that it’s the right thing to say but you know we need to resolve our issues, it’s our own efforts that will make the difference. Do Papua New Guineans support your vision for PNG playing a supporting role to other Pacific Island nations and what are the interests by local (PNG) business in other Pacific Islands? PM O’Neill: I think the one that we had this weekend (unveiling of the re-development plans of Pearl South Pacific in Fiji) is an eye-opener for most Papua New Guineans. It gives them an opportunity to see that other Pacific islands are also doing quite well. They come to Fiji, they enjoy the hospitality, they easily mix with the local community and I think wherever they go in the Pacific, that is the same. As I said (at the unveiling ceremony), this is not a relationship that was established overnight. Our founding father Sir Michael Somare led the way and had a very close relationship with Ratu Sir Kamisese Mara and the others who were here before, so for us it’s natural therefore that we engage with Fiji and many other Pacific islands countries. We have a lot of families either living here or living in PNG, we have Fijians living in Papua New Guinea. So I think it will be very unfortunate if we do not promote that because we can engage with Asia much better than the Pacific, because Asia gives us a lot of opportunities. But while we’re doing that, I think it’s very important that we take many of our Pacific Islands families with us when we are engaging at that level. Indonesia has 200 million people and is one of the biggest markets in Asia and it’s right across from us. But in terms of culture, the way of life, Indonesia is very different. So we feel very comfortable in the Pacific and I think Papua New Guineans in general support the initiative that the government is taking, that is to engage with the Pacific more, and hopefully we will do that over the next two years and we look forward to that. Islands Business, November 2012 23
Grim reality...is the European Union interested in an EPA with the Pacific? One of the tasks of the new Pacific Islands Forum chair PM Henry Puna (left) of the Cooks is to ensure an EPA is signed with the Europeans. He will banking on leaders like PM Toke Talagi (right) of Niue to help him make a decision. Photo: Lisa Williams-Lahari
The grim realities of EPA negotiations Who benefits from the trade agreement? By Dr Roman Grynberg On September 27, the EPA (Economic Partnership Agreement) negotiations between the European Union (EU) and the African Caribbean and Pacific (ACP) states turned 10. Thus far the only completed regional EPA negotiation is the Caribbean treaty which only occurred when Caribbean negotiators gave the EU almost everything in return for almost nothing of commercial value. For the Caribbean negotiators, a good dose of the free market was all the Caribbean really needed to be transformed and developed and the EPA would deliver. The negotiators were convinced by the European voices they heard but evidently their political masters were not. Since the completion of the negotiations four years ago, the Caribbean states have not willingly moved to ratify and implement the EPA. The EPA negotiations were never supposed to last that long and should have been completed several years ago. Now, the EU has set a new deadline of 2014 which is likely to be extended to 2016. 24 Islands Business, November 2012
Like the Doha negotiations at the World Trade Organisation, these will drag on for years for the same reason—there is simply no appetite amongst countries to make the sort of concessions they feel will benefit someone else. The fact is that negotiators are unable to justify the huge amounts of money spent travelling to Brussels and Geneva in simple terms that explain to their constituents what the commercial benefits are to their nations. As modern globalisation evolves, the beneficiaries of it are increasingly being seen as either workers in China or India and few other countries and those consumers who may still have enough money to buy what are now cheaper consumer goods. The NGOs have aptly dubbed the regional economic partnership agreement (REPA) the ‘grim repa’ and like the Angel of Death, it now appears to be forever with us. No-one was wishing the EU makers of this treaty a happy birthday and certainly there are no Pacific trade ministers wishing it many happy returns. In fact, the Pacific ACP ministers have given Pacific ACP negotiators a deadline for negotiations to be over by 2013.
The Pacific has more important negotiations with Australia and New Zealand. If the Pacific ‘gives away the shop’ for global sourcing of tuna, then Canberra will also offer the dog a very small bone to sign PACER Plus and given what has happened so far, the Pacific islands will do what the ‘masta’ says.
Nevertheless, the Pacific negotiators did what the EU had long asked of them and just a week after the official birthday arrived in Brussels after having long ago given the EU 14 tariff offers. DG Trade, true to its traditional form of complete contempt for piddling states, had not even bothered to read them properly and could not respond to what the Pacific negotiators had proposed. Instead, they called for a joint technical working group next March. The fact that this is beyond the deadline set to Pacific negotiators by their ministers is of little concern to DG Trade. They will just have to extend the mandate. In Brussels, the EPA is barely talked about these days, it is seen as an unfortunate embarrassment from the past and a place where trainee negotiators in the trade directorate can cut their teeth in negotiations with irrelevant places in Africa and the Pacific before they go on to the ‘real thing’. Most of the senior people in DG Trade wish the ACP would go away and in particular the Pacific. But now there is a recognition in Europe that the Pacific is willing to sell the shop ie do what the Caribbean did in order to get an extension of the global sourcing rules for chilled tuna so that the PNA countries, most of which have no tuna canneries, can take advantage of the provision to export chilled fish to the EU. It is said the difference between a neurotic and psychotic is that a neurotic builds castles in the sky and a psychotic lives in them....The psychiatrist, of course, collects the rent. If what
Business occurred at the beginning of the EPA negotiations was clearly neurosis ie we built castles in the sky by thinking the EU would in the spirit of Lome and Cotonou negotiate with some generosity towards ACP states then the current generation can be properly diagnosed as having a serious psychosis. They are starting to believe the voices from Brussels—‘just give up any vestige of rights to trade policy and you will be allowed to export all the fish you like to us...and you will become developed’. There are good commercial reasons to believe that the only ones who will benefit from this will be Europe i.e, the psychiatrist. There are four reasons to believe that the dream of becoming major exporters of tuna to Europe is delusional. First, the sheer logistics and the draconian EU sanitary regulations for getting chilled fish from the small islands states to the EU will make it very difficult for the small states to benefit. PNG and Fiji may benefit but can Kiribati and Tuvalu? Second, the EU simply cannot be trusted —the EU giveth and the EU taketh away. Just ask the South Africans what happened in the late 1990s when overly generous EU negotiators gave them easy access for cheap South African wine into the EU market. They gave the concession and then under pressure from the south European states which had to compete had to claw it back. Only those who understand nothing of the ‘pain in Spain’ can think that this fishing nation will quietly sit by and allow global sourcing rule to proceed unhindered and watch its unemployment rate climb even higher than its current rate of 25%. Third, the Asians are not sitting idly by and watch their own tuna canning industries dismantled by concessions to Pacific islands states. Both Thailand and Philippines are negotiating a partnership agreement with Europe and tuna concessions are high on their agenda. If one of these countries get improved market access to the EU, then PNG and Fiji can kiss goodbye to the dreams of becoming major tuna hubs. Fourth, if you read the fine print of the current global sourcing rule in the interim EPA, you will discover that the EU can abandon it basically any time it wants. What the Pacific negotiators are committing is a very serious strategic mistake. To close the EPA negotiations having received almost nothing more from the EU except a wobbly promise to allow global sourcing of tuna fish is just bad trade policy. The Pacific has more important negotiations with Australia and New Zealand. If the Pacific ‘gives away the shop’ for global sourcing of tuna, then Canberra will also offer the dog a very small bone to sign PACER Plus and given what has happened so far, the Pacific islands will do what the ‘masta’ says. Perhaps the most telling observation about the never-ending EPA saga is that some of the people I once taught at USP are now the leading lights in the EPA negotiations. They should be patient and leave the EPA negotiations to their children as there is almost nothing to be gained from closure and much to lose in setting such a bad precedent for the PACER Plus negotiations. • These are the personal views of Professor Roman Grynberg who, with great subsequent regret, managed the beginning of the EPA negotiations at the Pacific Islands Forum from 2006-2009.
Aust worker programme up and running Fijians want to join seasonal scheme By Nic Maclellan Australia’s Seasonal Worker Programme is up and running with opportunities expanding in new sectors like fisheries, agriculture and tourism. But as more Pacific countries are gaining access to the Australian labour market, Fijians living in Australia are lobbying for their homeland to be included. The expanded programme replaces the Pacific Seasonal Worker Pilot Scheme (PSWPS), first announced in 2008. By the end of the three-year pilot, which ran until 30 June 2012, only 1,614 out of 2,500 visas had been allocated. Tonga benefitted most from the pilot, with 1316 visas in 2009-2012, followed by Vanuatu (113), Papua New Guinea (82), Kiribati (52), Samoa (39) and Timor-Leste (12). While the pilot scheme focused only on the horticulture industry, the new Seasonal Worker Program (SWP) is expanding beyond orchards and vineyards to start trials in other sectors. The Gillard government has committed $21.7 million for the programme’s expansion. At its launch during a conference in August with government, grower and community representatives, Australian officials confirmed the SWP will issue 2,600 visas a year, with numbers for horticulture capped at 10,450 visas between 1 July 2012 and 30 June 2016. Pacific workers can be employed for between 14 weeks and 6 months, at a minimum average of 30 hours per week. Another 1,550 visas will be allocated over three years to 30 June 2015 in new industries: cotton and cane farming; the fishing industry and aquaculture; and accommodation providers in the tourism industry. In the hospitality sector trial in the Northern Territory and North Queensland, seasonal workers can be employed a variety of menial jobs, including waiters, café workers, garden labourers, housekeepers, kitchen hands, and cleaners. Backpackers and grower costs As Islands Business has reported in recent years, the Australian pilot was very slow getting off the ground. Researchers at the ANU’s Development Policy Centre have tried to analyse why numbers in Australia are far below those for New Zealand’s RSE scheme (Since 2007, there have been nearly 40,000 RSE workers from the Asia-Pacific region, including 27,263 from the Pacific islands). In surveys of growers, researchers Stephen Howes and Danielle Hay found that the massive growth in the number of backpackers in recent years has reduced labour shortages in Australia. This process accelerated after reforms initiated by the Howard government that gave backpackers a second 12-month visa if they spent three
Seasonal work programme expanding...from horticulture to fisheries, agriculture and tourism. Photo: Nic Maclellan
months working in specified sectors (such as fruit picking) in a rural or regional area. In some rural towns, European or North American backpackers are preferred because they tend to spend more of their earnings in Australia rather than remit them to family at home (Tourism Research Australia has estimated the economic value of the backpacker market at more than A$3 billion). In spite of government promotions of the SWP, many of the growers surveyed by ANU are unconvinced the change to recruiting in the Pacific is worth it, with concerns over compliance risk and cost. There are ongoing complaints by employers’ organisations like the National Farmers Federation (NFF) that the scheme is over-regulated with a need for less red tape. But the same lobby groups are arguing that the governments rather than employers should bear the costs of pre-departure preparation and other administrative systems. NFF Vice President Duncan Fraser has argued that the Australian government should cut grower costs by enhancing the skills of Pacific workers before they arrive through ‘job ready’ training programmes at offshore training facilities like the Australia-Pacific Technical Colleges (APTC). However, there are problems with privileging APTC over other Pacific institutions. A 2011 Australian National Audit Office (ANAO) review of APTC found widespread concern that the Australian-owned and operated trainIslands Business, November 2012 25
Business ing institution competes with and undermines the capacity of local providers, noting concerns over “the high cost of the initiative and lack of integration with existing technical and vocational training systems.” APTC is an expensive model for vocational training: as it was established in 2008–09, APTC expenditure accounted for 22 per cent of Australia’s education spending in the Pacific. Even though APTC is preparing students with Australian-standard qualifications, only 1.7 percent of graduates had found employment outside their home country by mid-2011. Beyond training, Canberra is funding the World Bank to assist sending countries across the Pacific, in areas such as pre-departure and on-return briefings; developing a “Work-ready” pool of applicants who have met health checks; monitoring licensed recruitment agents and direct recruitment; strengthening the Labour Ministry’s management capacity and creating a marketing plan to promote the country’s workers to potential employers. AusAID is working with the World Bank across the Pacific (and with ILO in Timor) through a Training and Facilitation Team (TAFT) that assists each country with its initial Pre-Departure Briefing. In turn, Pacific countries are boosting staff to manage the programme, both at home and in Australia. For example, Nauru has appointed a SWP coordinator in the Department of the Chief Secretary and an officer in the Nauru Consulate General in Brisbane, while Timor-Leste has appointed a Labour Attaché in its embassy in Canberra. New countries involved While the original pilot began with four countries, the new SWP is open to a range of Forum Island Countries (Kiribati, Nauru, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu), along with Timor-Leste. Last June, Nauru became the first Forum member to sign an MOU for the new program (ironically just as Canberra is sending a new wave of people to the island, with asylum seekers arriving in Nauru under Australia’s offshore detention program for refugees). As a late entry to the original pilot, Timor-Leste sent its first group of 12 workers to Broome in Western Australia, working at the Cable Beach, Eco Beach and Mercure hotels as housekeeping, laundry, gardening or kitchen staff. Timor has now eagerly engaged with the SWP, with plans to recruit staff for the tourism industry across northern Australia. This is part of a much wider effort to access labour markets across the Asia-Pacific region—over the last three years Timor-Leste has sent more than a thousand workers to South Korea on 2-3 year contracts. Winning the majority of visas from the threeyear pilot, Tonga has historically been a laboursending country and has one of the highest rates of remittances in the world. But the expansion of seasonal worker and Working Holiday Maker programmes into Papua New Guinea and other Melanesian nations is a significant shift in regional labour trends. In September, as PNG’s Minister for Industrial Labour Relations Mark Maipakai welcomed home seasonal workers from Queensland and New Zealand’s Hawkes Bay, he noted: “The SWP is the first of its kind in our country’s history as Islands Business, November 2012
In August, members of Pacific communities living in Melbourne came together at the Australian South Pacific Islanders Forum. The rights of New Zealand passport holders and the exclusion of Fiji from seasonal workers programmes were high on the agenda.
PNG has largely been a labour-receiving country since Independence. Hence, labour-sending arrangements present new policy challenges and opportunities to the Government.” Since the RSE and PSWPS were created, however, Fiji has been excluded from both seasonal worker programmes, in the aftermath of the 2006 coup. In Australia, the local Fijian community is organising to lobby the Gillard government over Fiji’s exclusion from the SWP, arguing that visa restrictions on senior figures of the Bainimarama regime should not be extended to poor rural farmers seeking employment opportunities. In August, members of the Pacific communities living in Melbourne came together at the Australian South Pacific Islanders’ Forum. The rights of New Zealand passport holders and the exclusion of Fiji from seasonal workers programmes were high on the agenda. Local community member Semi Vuetibau told the Forum: “Because Fiji is not part of the scheme, it has created problems for those of us living here and for our community back home. For example, we have relatives and friends who are struggling to find work in Fiji or earn a decent living and they have heard about how much money they can earn working on the farms. So they come over on holiday visas and go and work on the farms illegally.” Vuetibau noted that for Fijians working in breach of their visa conditions, there is great potential for exploitation, which also places extra burdens on families, churches and the wider Fijian community living in Australia. “Most of them work the same hours as those working here legally, but they will get paid less and there’s nothing they can do about it,” he said. “We even hear of people who may not get paid and still there’s nothing they can do about it because they’re here illegally. They have no rights and no protection. If they get sick or in an accident, there is no medical cover which may be provided through the scheme. This places a
huge financial burden on family members or the community here.” Protecting workers? Even as the SWP expands to new sectors, there are still problems on the ground, with some workers facing problems over housing or guaranteed work in one location. In July, a group of Samoan workers in South Australia were relocated three times within a month, ending up in Victoria’s Sunraysia district when their housing and support fell through. According to Fair Work Australia, the government agency which regulates wages and working conditions in the Australian labour market, “workers employed through the programme have the same rights as other workers covered by Australia’s national workplace relations laws.” In reality, however, overseas workers with no citizenship rights are disadvantaged compared to their local counterparts and often have limited information on their rights in the workplace. There are practical reasons why some Pacific workers choose to keep their heads down and avoid complaints to the boss—the chance that an employer will invite you back for a second or third stint to work in Australia provides a disincentive for workers to assert their rights. Despite efforts to reduce the cost of sending money home—such as the website sendmoneypacific.org—Pacific workers still face higher costs than other regions to transmit funds to family or community. A 2011 study presented to the Pacific Islands Forum Economic Ministers Meeting found that the cost of remitting money to Pacific Islands countries ranges from 15-26 percent of the total amount, while global costs have fallen to 9 percent worldwide and just 5 percent in some regions. As new countries come into the scheme, there is also evidence in Solomon Islands and Papua New Guinea that some applicants are being ripped off by con-men, who charge fees to provide visas or guarantee a place in the scheme, then disappear with the money. In September, Australian and Solomon Islands officials increased their publicity about the government-run recruitment process, after reports that aspiring workers were being ripped off. The Australian High Commission in Honiara has announced that applicants should only apply through the Labour Mobility Unit created within the Solomons’ Ministry of Foreign Affairs and Trade or four registered Solomon Islands recruiting agents: Allen Sepe Agasi of Rosmat Enterprise; Jeremy Rua of Tribal Trading Company; Peter Kakamo of Grasrut Employment Management Service; and Tony Kwarafi of Islander Workforce. In spite of these problems, there are many workers still eager to join the seasonal work programmes. Since the RSE scheme started in 2007, a number of Pacific workers have returned to New Zealand for a second or third time, and researchers at Waikato University have found that there are increases in wages and productivity as the more experienced workers come back to the same property. With Australia’s conservative Coalition parties now endorsing the Seasonal Workers Programme—a policy shift since the Howard years—the issue of labour mobility will remain on the regional agenda in the coming years.
Business PNA Koos: The Taiwanb a s e d Ko o ’s Fi s h i n g company has flagged all its purse seiners in the Marshall Islands, from where it operates a small fleet including Koo’s 108 (pictured).
PNA gains hit industry, but EU roadblocks Islands split over 85-15% US treaty revenue By Giff Johnson The Parties to the Nauru Agreement (PNA) has hit several hurdles in an aggressive push to take control of a fishing industry long dominated by distant water fishing interests. Its latest challenges are the product of a series of successes over the past year—from getting the United States to agree to triple the annual fee for its industry to fish to gaining certification for sustainably caught skipjack tuna from a globally recognized body. PNA members—Papua New Guinea, Solomon Islands, Federated States of Micronesia, Kiribati, Nauru, Tuvalu, Marshall Islands and Palau—control waters where 50 percent of the global supply of skipjack tuna is caught. Although it seemed earlier this year that a new treaty for 2013 was a “problem solved” with US-Pacific agreement on financial terms, a key question is whether PNA members will be willing to provide the 8,000 days agreed to when they will likely be able to get more money selling these same days to Asian fishing companies. Despite gaining the Marine Stewardship Council certification of skipjack caught without using fish aggregation devices (FADs), PNA says the industry has so far thwarted trials to actually deliver certified tuna to market. Finally, European Union officials continue to frustrate islands officials with an unwillingness to acknowledge PNA management rules for conservation of tuna. The US Treaty The US government and industry agreed earlier this year to increase annual access payments from $21 million to $63 million annually beginning next year with a new treaty economic package, which breaks down as a $21 million government aid package and a $42 million industry payment. The deal is predicated on the US purse seine fleet getting 8,000 days for access to PNA waters and another 300 days from non-PNA members. 28 Islands Business, November 2012
PNA power...Dr Transform Aqorau (left), CEO of the Parties to the Nauru Agreement Office; and Glen Joseph, Director, Marshall Islands Marine Resources Authority. Photos: Giff Johnson
Setting the “fishing days” in the US treaty apart from deals PNA members have with other nations is that the US fleet gets access to waters of all eight PNA members with a “fishing day” as opposed to other fleets who buy days on a singlecountry basis. This is why Papua New Guinea announced its intention to withdraw from the US treaty a year ago when the US had balked at upping annual payments and PNA members have demanded higher payments than what the $5,000 per day base rate that Asian purse seiners pay. The Pacific Islands Forum’s approval in its communiqué from the Cook Islands meeting in August for maintaining the current status quo of the 85-15 percent split of US treaty revenue has tossed a wrench into the works. In the existing treaty, 85 percent of the funding —after various administrative and development fund deductions—goes to the islands on the basis of where tuna is caught, which means PNA members get most of the 85 percent. Given the tripling of money from the US, PNA nations want to reduce the 15 percent, which is money divided equally to all Pacific
Islands Forum Fisheries Agency (FFA) members, regardless of where fish is caught. The matter was still to be resolved among fisheries officials from all the islands involved in the ongoing US treaty talks when the Forum said the status quo should prevail. “The 15 percent distribution had not been discussed yet (by Pacific Islands Parties),” said Dr Transform Aqorau, CEO of the PNA Office in Majuro. It needs to be revised from 15 percent to between five and nine percent to maintain the value of the fishing days for PNA members. Non-PNA members don’t like it, but they are only contributing 300 days to the treaty.” The trade off for maintaining the 85-15 percent split was agreement to ask the US to increase its annual payment. But at a recent session in Vanuatu, US officials informally said they are not prepared to consider increasing the payment from the agreed level of $63 million, Aqorau said. He said that when the $21 million government aid is taken out of the equation—since PNA nations do not accept Japan or other nations’ fisheries aid as fishing days access payments—the industry payment, after various deductions for payments to non-PNA members will likely be around $4,000, considerably below the minimum figure paid for single exclusive economic zone access paid by Asian purse seiners. Islands officials will likely have to agree to lowering the share for non-PNA nations to make it worthwhile for PNA members to provide the days required under a new treaty that is to go into effect in mid-2013. PNA certified skipjack PNA’s purse seine fishery was certified earlier this year as meeting international standards but PNA officials said in mid-October that every attempt so far this year to actually deliver certified skipjack—which brings a higher price—has been frustrated by the industry. “May be they are making too much money to care about certification,” said Parties to the Nauru Agreement Commercial Manager Maurice Brownjohn. The price of skipjack on the world market has jumped from $1,000 a ton in 2009 to $2,400 this year. Revenue coming to PNA countries has doubled. Meanwhile, said Brownjohn, the profit for industry has skyrocketed “seven to ten times” since 2009. The PNA certification of skipjack by the globally-recognized Marine Stewardship Council can add an additional 20 percent profit margin because conservation-conscious consumers are willing to pay a premium for sustainably caught tuna. “Maybe skipjack is too profitable for the industry to care,” Brownjohn said of the fact that not a single trial for delivering certified fish has been successful to-date. Certification requires what is known as a “chain of custody” from catch to processing factory. This chain of custody is necessary to confirm that the skipjack is caught sustainably without the use of fish aggregation devices (FADs) and does not get mixed in with skipjack on the same vessel that was caught with FADs. Brownjohn said PNA onboard observers on every purse seiner fishing in PNA waters are doing their part to monitor the chain of custody. “We’ve gotten certified fish within sight of the factory processing cold storage area,” he said.
Business “But somehow it gets accidentally mixed with non-certified fish.” There is a “huge demand” in Europe and elsewhere for PNA’s “Pacifical” brand of certified tuna, Brownjohn said. But until the industry plays ball with the certification process, PNA is unable to begin delivering on the global demand for a supply of sustainably caught skipjack. Despite difficulties in initial attempts to complete the chain of custody delivery of fish, Brownjohn said PNA is not giving up on a product that will generate increased revenue for the region while helping to sustain the resource. “The leaders wanted a sustainable, certified product and a brand,” he said. “We’ve done it and gotten commitments (to buy) from the markets at the retail end.” Now, he said, it is up to the industry to play its part to support the plan. The European Union While its has taken time to get distant water fishing nations on board with PNA measures— from the vessel days scheme to moratoriums on the use of FADs and high seas closures—most are playing ball with the new reality of the PNAdriven fishery. Not so the European Union. PNA officials have accused the EU fishing industry of ignoring PNA management measures that every other fishing nation abides by and the EU has bluntly stated it doesn’t need to include PNA measures in either the fisheries chapter of the Economic Partnership Agreement free trade deal under negotiation with the region, or abide by these in its bilateral agreements with PNA members. Another issue surfaced at a technical meeting in Pohnpei in October. All purse seiners have vessel monitoring systems (VMS) that continuously transmit position data to the Western and Central Pacific Fisheries Commission and to islands fisheries departments when they are fishing in the 200-mile exclusive economic zone of an island. Marshall Islands’ fisheries director Glen Joseph said a loophole in the current administration of VMS allows vessels not to transmit position data to an island when they are “transiting,” although the VMS continues to transmit this data to the commission. “I want this data when fishing boats are transiting Marshall Islands waters,” said Joseph. “Other countries are using international law (innocent passage for transit) to justify not transmitting data to us. It’s a violation of our sovereignty.” Joseph said the islands are not arguing about the right of vessels to transit their waters, “it’s about our ability to monitor our zones.” Virtually every country attending the Pohnpei technical meeting, including the distant water fishing nations, “understood our argument and said this is the way to go,” Joseph said. But, he said, EU officials attending the meeting said they had to take the issue home to consult with their officials. Joseph’s comment on the inability of the EU to support even this modest request of the islands: “Why? It’s data for a zone they are transiting through. It’s data that is already there (on the VMS) and is being transmitted to the commission. We want it to monitor our zone.” Based on developments this year, PNA-EU relations will continue to be strained until the EU accepts that when it fishes in the Pacific, it needs to follow rules established by the Pacific islands.
Offloading tuna...Crew on board a Marshall Islands-Taiwan joint venture purse seiner off-loading a haul of skipjack tuna to a mother ship in Majuro Atoll. Photo: Giff Johnson
Tuna reignites islands dollars Could beat tourism as top exporter earner
By Davendra Sharma
New foreign investments in fisheries could gradually leapfrog Oceania’s oldest export industry to reclaim the number one export earner status again ahead of tourism. From Cook Islands to Vanuatu, it seems at least ten islands countries and territories have attracted fresh investments in fisheries in recent years from the United States, China, France, Vietnam and Philippines, with the promise of more as the fragile industry solicits new lucrative markets abroad. Earnings from fisheries exports from Fiji, Solomon Islands, Papua New Guinea, Vanuatu, American Samoa, Palau and Cook Islands to European Union, North America, Southern China and Hong Kong have peaked at unprecedented levels. Principal export items of tuna, shark, trochus and beche-de-mer have already made headlines in Fiji and Vanuatu, where fish exports have become the country’s largest export earner in recent years. Government estimates that Fiji’s gross annual earnings from tourism is headed towards $1.1 billion, which is more than the combined revenues of the country’s top six exports—fish, sugar, water, garments, timber and gold. But while declining production and changes to export subsidies have forced a downturn in foreign dollars in sugar and textiles, fish exports
has clearly shown a huge upturn. A Reserve Bank of Fiji report reveals fisheries raked in $F200 million in 2011, a year when tourists brought $1 billion to Fiji. Sugar exports now account for 21%, garment sales represent 9% of exports and mineral water raked in $F120 million. But fisheries is the talk of the town as the sector became the country’s leading export earner in 2010 and 2011—rising 10-fold from a tiny $F21 million in 2006 in five years. Fiji’s oldest fish processing company, PACFO has had a facelift amidst forecasts of a phenomenal growth but the country now has seven new players—Golden Ocean, Solander, Sea Quest, Tosa Busan, Celtock, Hangton Pacific, Fiji Fish and Tri Pacific. To comply with expectations of new-found markets in Europe, USA, Japan and China—the Fiji competitors have streamlined their factories and vessels. Regional fish processing hub in Pago Pago Tri Marine is leading the charge in Oceania with active operations in the Solomon Islands, American Samoa and the Federated States of Micronesia. Samoa Tuna Packers, owned by Tri Marine International, has cited minimum wage increases as a major cause of slowing their expansion but Islands Business, November 2012 29
Business a recent move by the United States Congress to place a freeze on increments has brought relief to both Tri Marine and Starkist (Dongwon), the other main tuna processing firm in Pago Pago. Since 2009, rising labour costs forced the two canneries to downsize and lay off hundreds of people. The legislated minimum wages was supposed to rise by $0.50 increments until it matched the rate in the rest of the United States of $7.25. In response to the wage freeze by Congress, Tri marine started a new value-added fresh and frozen tuna export operations. At the Tri Marine-owned Samoa Tuna Processors cannery in Pago Pago, there are hopes other neighbouring countries will look at the islands territory as regional hub for fish processing. As it received the green-light for a new plant in the American territory last month, Tri Marine’s managing director Joe Hamby noted that despite being surrounded by rich stocks around the islands states, many Pacific countries lack the land area, population and infrastructure for fish processing for exports. “If the boats that fish in Tuvalu never unload in Tuvalu and they never have a chance to see what is happening, then they’re not able to manage their fishery as well as they might otherwise. So by partnering with say, American Samoa, they can direct their fish to come here,” he told the media last month. “They can say, you want to fish in American Samoa waters, the fish has to be unloaded in American Samoa. That’s a very revolutionary idea but it’s possible,” Hamby asserted with optimism as senior executives and owners of Americanbased Tri Marine International jetted into Pago Pago to inspect new premises at its Atu’u plant and shipyard. In recent months, the Funafuti government has been scouting for potential joint ventures to redevelop NAFICOT, a defunct long-line base and processing facility. Investors will be able to catch tuna in Tuvalu’s EEZ and process for exports. But Tuvalu is pinning its hopes on a reliable investor to cash in on the government’s offer. Cook Islands is moving ahead with plans to establish an office in Pago Pago to enhance monitoring of 40 long-line vessels in the country’s EEZ that unload catches to processing facilities in American Samoa. Across the islands in Apia, the government paid $A1.3 million to buy the regional carrier, Pacific Forum Line so that 260 Samoan sailors who work overseas have their jobs safeguarded. Stimulating fish exports from Honiara Tri Marine’s National Fisheries Developments (NFD) Limited in the Solomon Islands also obtained 50 long-line licences in support of Soltai’s processing requirements so that the two companies move towards increasing exports of processed fish. Soltai and NFD employ around 1100 in Honiara and the Solomon Islands government’s new licensing policy will open jobs for another 500 as a second shift to its processing operations is added. Under new 2012 government regulations, companies fishing in the country’s EEZ will have to offload their catches in Honiara. Solomons’ Fisheries and Marine Resources Minister Alfred Ghiro said the new measures will promote participation in the tuna industry 30 Islands Business, November 2012
and stimulate the country’s growing economy. He said such a change in policy will “increase the effectiveness of Solomon Islands control of their fisheries.” “Boats which maximise their Solomon Islands landings will have priority in future licensing periods.” Tri Marine’s Hamby explained that the flow-on effects of the change in Solomon Islands policy will be multi-fold. “This change effectively increases the participation of Solomon Islands in the tuna industry. “It sets a new standard and puts Solomon Islands in a leadership role in the islandisation of the Western and Central Pacific tuna business.” New businesses could also spring up in Honiara to cater “for the fishing boats and their crews that will now be calling at Solomon Islands ports to buy food, supplies, fuel, bait and make repairs.” Samoa Tuna Processor in Pago Pago and the Solomons NFD are part of 15 of Tri Marine Group of Companies in Western Pacific. It has fish operations in strategic spots around the world and the global player has grown to be one of the largest tuna supply firms in the world with an “efficient, cost effective and flexible supply chain solution for its customers”. The government is also seeking potential investors to establish a tuna processing facility at Tenaru in Guadalcanal province. A Philippines-based company Frabelle has shown interest in developing tuna loining and canning businesses but the government is open to other foreign investors as it guarantees purseseine fishing days. Another Solomon Islands long-line processing and export facility run by Southern Seas Investment Ltd and owned by Taiwanese investor Yuh Yow, has recently expanded and made the island country’s second onshore tuna processing following Soltai. It now operates 40 long-line vessels. Investors in Palau, PNG and Tokelau A Taiwanese outfit, Fong Haur Fishery Co Ltd, also began construction of new purse seine vessels in Palau last month. As new markets of Japan and the mainland United States offer lucrative offers of exports from Palau, the government in Palau has started negotiations with the Philippines to allow 100 handline vessels to fish in Palau waters for exports. Papua New Guinea will get its largest tuna processing investment when a new plant opens in Lae this year. Initially employing around 3000, Majestic Seafoods will start operations with a partnership deal between a Thai and Philippine company. PNG is also on the target books of a French multinational, Sapmer, which has a growing business in the Indian Ocean. Sapmer plans to establish a fishing and value-added processing operation in PNG. Tokelau and Nauru have joined hands in their purse seine vessel day scheme under a new Tokelau Fisheries Policy designed to lift economic earnings for Tokelau from tuna fished within the country’s EEZ. Outgoing Pacific Islands Forum Fisheries Agency director-general Su’a Tanielu told Islands Business last month that it was imperative that struggling islands nations unite in both processing and export of the region’s most abundant resources.
Overview...of the Lae Tidal Basin project.
Lae port extended to cater for demand Expected to be completed in 2015 By Oseah Philemon PNG’s biggest port project now underway in Lae will see its wharf extended to cater for the increasing shipping traffic in the nation’s industrial city. China Harbour Engineering Company (CHEC)—a world-reknowned international contractor—is building the Kina 800 million project. The Lae Tidal Basin Project—funded 70 percent by the Asian Development Bank and 30 percent by the PNG government—will see the present Lae wharf extended to cater for the increasing shipping traffic in and out of Lae. Former Prime Minister and Minister for Public Enterprises Sir Mekere Morauta, who performed the ground breaking ceremony in Lae, said he had visited projects constructed by CHEC in Singapore, Sri Lanka, Hong Kong and China and they were impressive.
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Sir Mekere Morauta...impressed with CHEC. Photo:
He has every confidence CHEC would complete the Lae port project to the highest quality, on-time and within budget. The project is expected to be completed in 2015. Morauta hailed the project as a signifcant addition to the national stock of transport infrastructure, saying projects such as this are vital for PNG’s development. “Lae port is the most important port in the country, accounting for 60 percent of the nation’s trade. It has become one of the busiest in the south-western Pacific. “Nearly all of PNG’s coffee exports are shipped out of Lae. It is also the port of entry
for all machinery and equipment for the multibillion dollar liquified natural gas (LNG) project in the Hela Province, as well as port of entry for the Hidden Valley Gold mine and the multibillion dollar Wafi-Golpu copper and gold project in the Morobe Province. “Lae needs this new port, it cannot meet current demand. It is congested, inefficient, and an impediment to national development. “As major resource projects start producing and construction of new ones such as the Wafi gold mine begin, the port would have become an even greater obstacle to regional and national development. “The new facility will also spur other economic developments in the region, including agriculture, by helping to lower the cost of taking goods to local and international markets as well as reducing the transport costs of inputs,” Morauta said. “In the medium term, once this project is completed, it will help create more employment opportunities for local people including seafarers, port labourers, drivers and equipment operators and office staff in port agencies and in local stevedoring and transport companies. “In the longer term, I believe the flow-on industrial and commercial development resulting from the project can add several hundred more jobs. “It gives me great satisfaction to see that our government’s efforts to ensure local participation have borne fruit already—local contractors and landowners have been employed to help prepare the site. This also includes the hire of local equipment.” CHEC has 40 overseas branches and offices covering more than 70 countries and areas. It is currently undertaking major infrastructure projects in various countries to the value of US$10 billion.
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Islands Business, November 2012
Politics • The government continues to run at a deficit, its 2010 audit had the most problems identified and the highest level of questioned spending in many years—including outright theft by government employees, and the government was forced to delay the 2011 audit for lack of preparation, an audit that is expected to continue the trend of accountability problems from 2010. Most Pacific countries are buffeted with reports by such institutions as the Asian Development Bank, International Monetary Fund and World Bank calling for fiscal reform and improved governance, and the Marshall Islands is no different. But in 2009, the government’s cabinet impanelled a taskforce composed mostly of Marshall Islands citizens to evaluate fiscal problems and presAir Marshall Islands: The country’s national airline provides a vital link to remote islands, but since 2007 despite large injections ent a Comprehensive Adjustment of funding from government, has been unable to provide reliable service. Photos: Giff Johnson Program to decision makers. The CAP report offered the government a series of options for reducing government spending, starting with cutting back subsidies and ingrained perks to government VIPs and landowners. More than three years later, virtually nothing in the CAP report has been acted on—with one exception—telling the country what national leaders think about reform, even reform urged by its own citizens. The one exception is a piece of legislation aimed at overhauling SOEs introduced to parliament in October. If passed at a future session of parliament, however, it will require an onerous level of reporting—busisince the implementation of ness plans, strategic plans, By Giff Johnson the second Compact funding performance reviews, all package with Washington. with timetables spelled out The Marshall Islands is one of Although Compact grant in the legislation—that will the most aid-dependent nations in funding is declining and is probably join the United the world, with 70 percent of its slated to end altogether in States-required quarterly national budget funded by donors. 2023, the Ministry of Educareports from the Ministries Despite 26 years in a Compact of Free Astion, the government’s largest of Health and Education as sociation relationship with the United States employer of personnel, is curan exercise in meaningless that articulates the goal of developing greater rently 90 percent dependent paperwork that helps neither self-sufficiency, the Marshall Islands is as defor salaries on US funding. the donor nor donor recipipendent today as when the first Compact was • Since the government ent to evaluate or improve implemented in 1986. airline Air Marshall Islands performance. The country is now at the halfway mark in collapsed with plane and With 60 percent of the naits second Compact—the economic package of financial problems in 2007, it tional budget paid for by the which expires in 2023—and the lack of reform has never rebounded, providUnited States, and another across government is becoming an increasingly ing unreliable service despite 10 percent accounted for pressing problem. government injections of by Taiwan and other donor The government is financially stressed belarge subsidies. The lack of grants, it would appear the cause: reliable air service to the outer country ’s leaders—there • Nine state-owned enterprises (SOEs) lost islands has helped undermine Marshall Islands President Christopher have been four presidents money over the past three years, and the governLoeak...has thrown his weight behind public a nascent tourism industry since 2007—are complacent ment was forced to provide an average of $8.2 education reforms. that has seen visitor numbers about attacking financial million in subsidies annually to keep them afloat. slide from 7,000 in 2007 to problems and reform needs. The subsidy required by SOEs, which doubled 4,000 a year ago and the country’s flagship dive But the lack of reform is putting the governin the past decade, amounts to about 25 percent destination at Bikini Atoll shut down. ment on the spot financially and creating fertile of the government’s locally generated revenue. • Performance in government offices, with a ground for donor-driven reform programs in• The Marshall Islands Social Security Adfew notable exceptions, has declined. The issue stead of home-grown decision making. ministration has warned for more than three surfaced just before the last session of parliayears that the retirement system urgently needs ment came to a close in October, when Majuro Reforms legislative reforms to halt its downward spiral MP David Kramer, in remarks on the floor, said Among plans now capturing leadership attento bankruptcy in 10 years. But no action has donors are giving the country a lot of funding, but tion are a World Bank-driven plan to break up been taken. the government is very slow to use this money the government telecommunications monopoly • US provided grants through the Compact to deliver needed services to the public and is by liberalizing the telecom sector by offering of Free Association decline $500,000 annually, taking too long to get needed projects moving to government up to $13 million if it meets the which means that this fiscal year that started improve the quality of life for citizens. conditions for sector reform. October 1, the grant funding is down $5 million
Reforms needed but slow in coming
But there are some good news in the mix
32 Islands Business, November 2012
MARSHALL ISLANDS Critics of the legislation drafted to open up the telecommunications sector say it is more favorable to an outside company than to the existing Marshall Islands National Telecommunications Authority that is 100 percent owned by government and local private shareholders. Digicel, which is reportedly financed by an arm of the World Bank, is seen as the leading contender to enter the Marshall Islands market if it is opened up. Then there is a tax revamp—legislation was tabled in parliament in October for possible passage at the January session—that is a condition of a multi-million dollar injection from ADB. But while some aspects of the legislation are well received by the private sector, the legislation is based on similar regimes from countries such as Australia that some local critics say is inappropriate for a small island with its lack of capacity to implement the paperwork required for a VAT (called a consumption tax in the legislation) and a net profit tax. Tax and telecom reforms are being driven by outside entities and the government’s difficult fiscal situation makes it vulnerable to donor-driven plans. The fact that for the past dozen or more years, the Marshall Islands has not had a national development plan with targets and benchmarks for performance is suggestive of the lack of leadership that is afflicting many development and service sectors. Some good news There is some good news though in the mix. Despite systemic challenges that would daunt the most avid reformist, the Ministry of Education is at the outset of an aggressive attempt to turn around dismal performance in public schools. With the combination of Education Minister Dr. Hilda Heine, the country’s only PhD and long-time educator Secretary Gary Ueno, the ministry has set a goal for a five percent annual academic improvement in all schools, established a variety of benchmarks for measuring education progress and, perhaps most importantly, is hammering home the message that the current state of public education is “not okay”. Heine’s message since taking over the education portfolio in January is the need to increase expectations from everyone: principals, teachers, administrators, students and parents. “Raising expectations is really important,” she said. “We live with ‘ebwe’ (‘okay’). We’re too comfortable with ‘ebwe.’ We need to move beyond this.” The fact that she and Ueno are pushing this message at every opportunity is a significant change at the leadership level. Coupled with this, President Christopher Loeak has put his weight behind the education revamp and his minister’s reform plans. The Marshalls Energy Company, the government’s utility company, has teetered on the brink of bankruptcy since the late 2000s. But since 2010, it has forged ahead on a reform plan that has fixed old engines and stabilized power generation, gained a low-interest loan from ADB to pay off a higherinterest loan to a commercial bank, negotiated a two-year deferment on a long-term loan with the US government’s Rural Utility Service—giving it financial breathing room, and signed a new contract for fuel supply with Taiwan-based Winson Oil that includes $5 million financing to refurbish an aging six million gallon (22.7 million liter) tank farm with plans to use this resource unique to this part of the Pacific as a hub for sub-regional supply. The three economic developments that are showing promise for the Marshall Islands are its participation as a member of the Parties to the Nauru Agreement (PNA), which has already m ore than doubled annual tuna revenue, the continuing expansion of its ship registry, now the world’s third largest behind Panama and Liberia, and developments at its copra processing factory, Tobolar, with copra cake supply contracts with companies in Vietnam, Taiwan and the Federated States of Micronesia. The latter is key because copra is the main income source for outer islanders who have seen their quality of life decline significantly from government neglect in recent years and who stand to gain from increased demand for copra products. The challenge The challenge remains reform. As the fisheries sector has begun injecting significant amounts of cash into the country, it has been used largely to bail out ailing SOEs. Air Marshall Islands was given $1.6 million earlier this year from fisheries coffers, while a $2 million fisheries loan was issued recently to the Marshalls Energy Company. Meanwhile, domestic fisheries in the outer islands is a top priority for the government’s fisheries department. The main question is whether government will allow it to use a significant chunk of its new wealth to develop the domestic fisheries programme to increase self-sufficiency. With 2023 and the end of compact grant funding looming, it cannot come a minute too soon.
Governor Benigno Fitial...removing no solution to CNMI’s problems. Photos: Haidee
Governor escapes impeachment, at least for now But says removing him no solution to their problems By Haidee V. Eugenio Governor Benigno R. Fitial of the Northern Marianas gets to keep his job—at least for now—after a first ever House of Representatives resolution impeaching the governor got only nine of at least 14 “yes” votes needed to move the process to the Senate for trial. The defeated resolution listed 16 allegations of felony, corruption and neglect of duty against the governor, now serving his second term of office. It was the first time in CNMI’s history that a resolution to impeach the governor was formally introduced, taken up by a special committee that subpoenaed dozens of witnesses and documents during weeks of hearings, and voted on by the House of Representatives. Impeaching the governor also proved to be one of the most divisive political issues in CNMI history. The allegations against the governor included those in connection with: • The escape of a federal inmate in January 2010 to give the governor a private massage during the wee hours of the morning; • A no-bid $190.8 million power purchase agreement that binds CNMI utility consumers to diesel power for 25 years despite a lack of a full economic analysis; and •The governor’s failure to enforce the law when law enforcement officers including his police security aide and driver shielded a former attorneygeneral from being served a penal summons on his way out of the CNMI. But the governor is not yet off the hook. He faces another impeachment Islands Business, November 2012 33
Politics resolution as early as January 2013 once most pro-impeachment candidates for the House win the Nov. 6 mid-term elections, movers of the impeachment said. Fitial said removing him from office “is not the solution to CNMI’s problems,” including a crumbling pension system, a disappointing health care system, skyrocketing power rates and a dismal economy. House minority leader Guerrero, the main author of the impeachment resolution, said a lot of CNMI’s problems are because of the governor. Private citizen Glen Hunter said removing the governor is “a step in the right direction.”
NORTHERN MARIANA ISLANDS on the eve of a surprise House session. Guerrero said he’s “disappointed” with the outcome of the vote. He, however, said the governor’s impeachment now rests with CNMI voters who would decide on the composition of the next House of Representatives. If pro-impeachment candidates win and form an alliance to form a new majority in the House that is not aligned with the governor, it would be easy to pass an impeachment resolution as early as January 2013. Representative Tony Sablan, one of those who supported impeaching the governor, said all hope is not lost. He said as a consolation, “the mere fact that the impeachment resolution has reached this stage should be an undeniable testimony and a clear warning to those who blatantly abuse and
Impeachment vote By a vote of 10-9 with one absence, the impeachment resolution was defeated in the House of Representatives during a tension-filled session that lasted through the night on Oct. 17. The impeachment measure, House Resolution 17-111, needed at least 14 “yes” votes from the 20-member House to move to the Senate. At least six affirmative votes from the ninemember Senate are needed to convict the governor. Guerrero said the House leadership chose to suppress evidence backing the allegations against the governor. He said the “ulti- In support...there were also banners in support of Governor Fitial. mate cover up” was perpetrated by the House leadership disregard the rule of law, that there are those in when it decided to vote on the impeachment the community who are willing to stand up and resolution ahead of a special committee’s compledefend the idea that we are a society of law, and tion of a report and recommendation on the that those who think or act otherwise might not resolution. be so lucky the next time.” The House majority is aligned with the govDespite the impeachment resolution’s defeat, ernor and his Republican Party. other legislative investigations and review of the House Speaker Eli Cabrera, a governor’s ally, same impeachment issues press on. said he did not allow for an extension of time The House Committee on Judiciary and Govfor the special committee to complete its work ernmental Operations, for example, continues to because he said the panel has “wasted so much review the $190.8 million power purchase agreetime” by engaging in a “fishing expedition” that ment that the governor and his former attorneyin the end didn’t convince him the governor did general signed without a full economic analysis something wrong. recommended by the CNMI government’s own Guerrero told the speaker and his colleagues utilities experts. that had the House leadership waited for a few more days to get hold of a completed report ‘Move on’ based on evidence and testimony under oath, it A day after the defeat of the impeachment would be hard for House members to vote against resolution, the governor called on lawmakers to impeaching the governor. “move on” and “stop the practice of accusations “I can only conclude that this is an attempt without solutions”. to prevent the materials from being put on the “Over the past few months, the issue of imfloor to prevent each member from being able to peachment achieved nothing more than to create objectively review and make a decision. an unnecessary division amongst our people and “I think it is in the governor’s interest not to a hindrance in our ability as elected leaders to have these materials appear before the members work together,” Fitial told the House speaker and because it would be very hard for the members to Senate president. vote ‘no’ on each article if they were to base their The governor’s appeal is receiving lukewarm decisions on the materials before them so yes, response from many lawmakers. anyone, any reasonable person, would come to Senate President Paul Manglona said if the that conclusion,” Guerrero said in a news briefing Islands Business, November 2012
governor is serious about lowering utility rates, he should “invalidate” a $190.8 million diesel power agreement he signed with a company and redirect efforts to developing renewable energy sources. The existing diesel power plants, according to experts, still have a lifespan of over 10 years which should be ample time to reduce dependence on fossil fuel and develop a sustainable renewably energy system using the sun, wind, or geothermal sources. Other lawmakers supporting the impeachment said the governor should have issued a request for proposal instead of awarding a “sole-sourced” contract and make the procurement process as transparent as possible. The impeachment hearings, according to the authors of the impeachment resolution, showed a “pattern of abuse of power and corruption” involving the governor, uncovered missing prison log books, nonfunctioning prison surveillance videos, law enforcement of officers not upholding the very same law they’re supposed to uphold, violations of ethics and election laws by an attorney-general that were not addressed by the governor, and sole-source contract awards, among other things. It’s now up to voters Private citizens supporting the impeachment said the nine House members did the right thing voting to impeach the governor, while 10 of their colleagues “chose to turn a blind eye on the evidence of corruption, neglect of duty and felony against the governor.” “Voters will never forget the stance taken by these House members,” said Glen Hunter who, along with other private citizens, organized an anti-corruption rally on Oct. 21. The rally also drummed up support to proimpeachment lawmakers. “I’d be very surprised if any of those people (anti-impeachment lawmakers) make it back to the office because the overwhelming majority of people firmly believe the governor deserves to be impeached,” said Jeff Race, one of the participants in the anti-corruption rally. Sylvan Rangamar, a retired police officer, said some current police officers are “being silenced.” He said it is “not right” that police officers are ordered by their superiors to provide escort and shield anyone, especially an attorney-general, from being served a penal summons. The placards and slogans on display at the day of the anti-corruption rally said it all: “End corruption.” “Stand up against corruption,” “Voters against corruption.” “Impeach Fitial.” “Stop corruption on Nov. 6.” “United We Stand, with Fitial we Fall.”
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Royal dress furor now takes a new twist
did not include the blue island shirt and the red/ fuschia dress that were worn. The statement also quoted formal correspondence from Clarence House which while acknowledging a well-organised Solomon Islands tour, also relayed the frustration with the mix-up that resulted in the faux pas. The media publicity over the incident led to a public outcry with numerous letters flooding the newspaper—some in support of Saunders. The anger in Honiara was further inflamed by a cartoon published in a Cook Islands newspaper her husband—Bruce—a knighthood during the which represented the incident by depicting an By Evan Wasuka Queen’s Birthday celebrations in July. angry bare breasted Solomon Islands woman. It all Began wI w th a dress and “The royal visit was a complete success, thanks This only served to heighten feelings with an island shirt left in the room to the ability and wisdom of Solomon Islanders. many calling it racist and uncalled for. Some of Prince William, the Duke of It was only the part played by Saunders in the even suggested that the issue be brought up Cambridge, and Catherine, the Duchess of Camdress blunder that was regrettable,” a statement and discussed at government level, because the bridge during their recent visit to the Solomon from Government House, said in mid-October. cartoon was offensive and racist against Solomon Islands, that has embarrassed palace officials, According to Government House, Saunders Islands as a country. sparked furor in cyberspace and anger in Honiara breached a security cordon by going into the Cook Islands Prime Minister Henry Puna subtowards a Cook Islands newspaper. couple’s hotel room and leaving gifts of chocosequently was pulled into the saga, slamming the The outfits—mistakenly worn by the Royal lates and soaps as well as laying out the contronewspaper for publishing the article. This seems couple to a state function hosted by Governor versial outfits. to have calmed the waters in Honiara. General Sir Frank Kabui—embarrassed officials The statement continued to say that clothing For Saunders herself—in a front page interand angered Solomon view with the Solomon Star Islanders. newspaper she apologised The anger was fuelled for what she said was a further by a Cook Islands misunderstanding. newspaper cartoon deShe disassociated herself picting a fat bare-breasted from the designer saying Solomon Islands woman she had attended the Pain what appeared to be a cific Islands Forum Leaders paroxysm of rage. Meeting in Rarotonga and Formal apologies have had bought dresses from come in from Clarence the designer for two girls House on behalf of the who would be presenting Royal couple and from flowers to the Royal couple the woman at the centre in a ceremony. of the protocol breach, When the designer heard honorary US Consular what the dresses were for, Agent Keithie Saunders, she gave Saunders, a dress for what she says was a in two sizes and a blue shirt simple misunderstandalso in two sizes, for the ing and from the Cook Royal couple. Islands newspaper pubSaunders said she only lisher. agreed to take the clothes Some say it’s a storm if a note was written from in a teacup, others say it’s the designer. an identity issue showing About entering the coua lack of pride in Solomon ple’s room, she rejected Islands culture and talent. the statement by GovernWhat can’t be denied The Duke and Duchess of Cambridge...thrilled with the Solomon Islands visit. Photo: Evan Wasuka ment House saying she is the level of anger. On had proper permission to Facebook’s Forum Soloenter the room and leave mon Islands International the gifts. group, the first thread on the issue easily hit 200 arrangements had been in place months prior to Clarence House officials said the Duchess had comments within the first hour. the visit—a locally-sewn shirt depicting Solomon chosen to wear the dress because it was laid out The furor has now focused on a breach of proIslands images to be worn by Prince William, with in the room and she believed it was a gift from tocol by Saunders in accessing the Royal couple’s the Duchess of Cambridge expected to wear a the Solomon Islands Government. room and leaving behind, along with gifts of dress brought with her from England. “Had she known it was a Cook Islands dechocolates and soaps, a dress and an island shirt Instead, the pair appeared in the Cook Islandssigned dress she would not have worn it.” designed and made in Cook Islands. designed attire at the State Dinner at Government The fallout from this dress-saga should not Although the initial question was why the House. detract from what was truly a memorable event choice to wear foreign-designed outfits, it is now Their tropical attire became the centre of for Solomon Islands. apparent that they were mistakenly worn by the attention—with several international media carOver 60,000 people—young and old—flocked visiting Duke and Duchess of Cambridge who rying stories highlighting the dress and its Cook the streets to witness the Royal couple’s entry believed them to be official gifts from their hosts. Islands designer. into Honiara. The outrage may have died down but the reQuestions were immediately raised on SoloThe level of support and adoration was unprecpercussions are still being felt in Honiara. mon Islands’ most popular Facebook forum— edented with almost the whole of Honiara out on Saunders has since been barred from all pubFSI-International—about the decision to dress the streets to catch a glimpse of the young couple. lic functions at Government House while the the Royal couple in foreign-designed attire. Their jam-packed schedule included a A$700 drawn-out issue has brought into light questions Government House responded with a statea head fundraiser lunch to a walkabout tour of a regarding the decision by government to award ment clarifying the early arrangements which demonstration Solomon Islands village.
US Consular agent banned from Govt House
Islands Business, November 2012
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Anote Tong, Kiribati President (second from right)...science is telling us that it is just a matter of time.Photo: Lisa
De-population or over-population? But PNG growing population threat to region By Davendra Sharma While climate change fears and migration are causing grave concerns of de-population in parts of Polynesia and Micronesia, another part of the region is being cautioned about overpopulation. An unprecedented growth of 1.8 million in Papua New Guinea’s population over the last decade is alarming regional environment analysts because of imminent dangers of over-exploitation of fisheries and forestry resources in the predominantly mountainous country. A jump of 36% from the count 10 years ago, PNG now boasts a population of 7,059,653— higher than that of New Zealand or any other islands country with Fiji being the closest at 840,000. Influential Australian scientific group, CSIRO, said in a report in October that PNG’s growing population is “more of an immediate threat to the region’s sustainability than climate change”. Incoming governments will be faced with extreme pressure on its basic infrastructure like water and electricity as well as social services like healthcare and police. “But the problem is if you increase population pressure on top of that (natural disasters like tsunamis, cyclones, droughts and floods), it makes basic services like electricity and water and so-on, much harder to provide,” said James Butler, head of CSIRO’s environment and development team. He said as PNG was hugely dependent on foreign aid from Australia, which is its largest donor with A$500 million in handouts this year, the continuous population growth will increase demand on Canberra to increase its aid. Butler noted that both PNG and Australia need to prioritise aid expenditure with greater thought 38 Islands Business, November 2012
about population growth. The two governments agreed on a “zero tolerance” approach to impropriety in October as the new O’Neill government launched its anti-corruption policy. “Any fraud against development funding is in effect taking money from the least privileged members of Papua New Guinea’s society,” said AusAID’s Director General Peter Baxter. 10-20 years to arrest population growth In his research report, Butler said PNG’s phenomenal population jump would need to be addressed and restricted over the next 10-20 years before the region’s most populous nation loses control of its economic growth. This report follows another warning from another donor, Asian Development Bank (ADB), which warned that PNG had one of the lowest per capita incomes in the island region” despite such a large mining and resource sector. The ADB report in August said PNG had a lower per capita income than that of Fiji, Samoa and Tonga and that Port Moresby needed to become more aggressive in its tax approach to balance economic growth with population. Climate change and declining natural resources coupled with population growth will impose undue pressure on governments of the future when they grapple with matching high population with economic growth. “There’s no question over the centuries that people in Oceania have coped with all sorts of tsunamis and volcanoes and earthquakes and so-on and are actually very adaptable in some ways,” Butler noted. While PNG had a wide-ranging terrain in its vast land mass, such continuous population growth will soon have a bearing on resources. “The approach we’re trying to introduce is a
much more fine-grained analysis of the places that are most vulnerable. “In West New Britain...we’re discovering that there are one or two places which are extremely vulnerable and in general these tend to be the highly populated coastal regions or small islands just offshore. “These places need to have very specific strategies designed for them based on those very specific impacts that we’re projecting.” Butler said while population cannot be expected to grow evenly over all the regions in any country, PNG was unique in that regard. It is generally accepted that population expands faster in areas where there is an economic boom, thus creating urban sprawl in poorer countries. “The general prognosis is that population will continue to grow quite rapidly,” Butler told media. The CSIRO report gives impetus to an earlier Australian study on PNG’s urbanisation which revealed that the unprecedented growth in population is driving rural-urban migration. PNG urban numbers to hit 3.5 million? The findings by PNG National Research Institute (NRI) shows that PNG’s current 804,000 urban population will hit 3.5 million by 2030 if infrastructure and job opportunities are not spread out to the rural region of the country. The NRI findings point to how soon PNG would have to combat urban poverty as access to employment, education, health, housing, sanitation and other basic services like water and electricity becomes difficult. The paper’s author Donovan Storey of the University of Queensland reflected on a need to pool together policy makers, donors and researchers to help curb rapid population growth. Storey argued that if overall population growth was not curtailed in PNG, the resulting problem of rural-urban population shift would continue to haunt future governments. He said towns and cities will become “unlivable and ungovernable”. “Almost all employment creation is in the informal sector, for which there has been only limited policy support and these urban characteristics of informality are no exceptions, but the norm of cities and towns for the foreseeable future also show that,” Storey noted in his detailed analysis. A country’s greatest concern is keeping its economic growth and available resources in line with its population numbers. For PNG, economic growth is incredibly high due to increased mining and forestry boom in recent years. But the country’s per capita income is among the lowest in the region due to the high population. “The primary issue not just for PNG but for all in the Oceania region is the level of adaptable capacity,” said Butler. Vanuatu and the Solomon Islands have shown modest growths in population in recent years and as such their economic development should be considered sustainable. While PNG has to come to terms with rapid rise in population, the Cook Islands, Kiribati and Samoa are faced with de-population because of low fertility and migration to Australia, New Zealand and the United States. Last month government officials in the Cook Islands, host to the 43rd heads of government meeting of the Pacific Islands Forum meeting
KIRIBATI in August, began seeking avenues of bolstering population numbers, which shrunk by 2000 in a span of two years. Climate change and attraction of greener pastures in western countries have helped lure islanders away from the region. Appealing to the United Nations last month, Kiribati President Anote Tong asserted that the low-lying islands in the South Pacific— Kiribati, Niue, Tokelau, Samoa, Tonga and the Cooks— are being threatened by rising sea-levels due to greenhouse effect. “We want our people to have the option to migrate with dignity”, said President Tong Tong said the UN has a moral responsibility to urge the nations guilty of greenhouse emissions to helpt the islands countries resettle their people when it becomes necessary. “I applaud the commitment of our SecretaryGeneral to this particular security threat, but he needs the support of all nations to take the necessary action to address it. “We must step up our collective efforts to mitigate global greenhouse gas emissions,” Tong told the UN General Assembly. The Kiribati government has bought a piece of land in Fiji should the need arise “for a future where our islands may no longer be able to sustain our population.” Tong said the government in Tarawa was also training workers in high-demand fields so that they can compete for jobs in the international labour market. “We want our people to have the option to migrate with dignity should the time come that migration is unavoidable. And all the science is telling us that it is just a matter of time,” he said. “Whether it is over-population or de-population, one thing is pretty clear: we are leaving an uncertain future for our kids by slowly decimating our forests, fisheries and land around the Pacific islands region. I frequently find myself watching my grandchildren and wondering what sort of a future we are leaving them,” Tong cautioned. Food shortages in Kiribati and Cooks Environmental group, Oceana raised the concern last month about how the world’s five small island nations—Cosmoros, Togo, Cooks, Kiribati and Eritrea —could face food shortages when the combined effects of higher carbon dioxide emissions and ocean temperatures, and the increasing acidity of the world’s water takes its toll. It said the Comoros islands in the Indian Ocean is most vulnerable although all five of the listed countries who depend heavily on seafood as a source of protein will face food insecurity. “Most of the nations that will suffer have done very little to cause climate change,” the study’s author, marine scientist Matthew Huelsenbeck said in California. The report coincided with the third ‘Symposium on the Ocean in a High CO2 World’ in the Californian coastal town of Monterey, which is addressing increased ocean acidification. The Intergovernmental Panel on Climate Change is due to report in 2014 on ocean acidification. It projects that climate change will worsen over the next 50 years and while the smaller islands states would suffer tremendously, the fisheries industries world-wide would feel the impact of greenhouse pollution.
Nan Madol...meaning the Place of Intervals, was a massive stone city that is often called the Venice of the Pacific. Photo: Daryl Tarte.
What’s next for islanders? By Daryl Tarte
he Pacific ocean is unimaginably vast. It contains more than 20,000 islands of all shapes and sizes. In his wonderful book, Mystery Islands, Tom Koppel describes how many of these idyllic islands were first discovered and settled over 3000 years ago. He tells how the first people drifted from the continental land masses to what was called Near Oceania, and then sailed off towards the distant horizon in frail craft with their families, basic tools and plants, in search of unknown land. It is an incredible story of courage and survival. It is almost impossible to have any comprehension of the magnitude of their achievements without replicating the journey. The closest I could get was to fly to Hawaii and then west to the Marshall islands and the Federated States of Micronesia. My first glimpse of Majuro as the Boeing 737 aircraft approached, was a stark reminder of how remote and environmentally vulnerable these atolls really are. The airstrip took up the whole landmass on one end of the atoll. It was 200 metres wide with the ocean crashing on to one side and the lagoon lapping on the other. I had personal empathy for this island as well as others like Bikini and Enewetak in the Marshalls as I had covered part of their tragic nuclear experience after the World War II in my book Islands of the Frigate Bird. With the passage of time, it is easy to forget what happened to those unfortunate people. But I was reminded of the tragedy by a UN report issued recently by a UN Special Rapporteur. He stated: “The Marshallese people were told that the tests were necessary for the eventual wellbeing of all the people of the world.” One has to wonder whether the “people of the world” have really benefitted from these tests and whether they were told what these islanders had to endure. Certainly, no thanks nor apology has ever been made. From 1946 to 1958 the US conducted 67 detonations in the Marshalls. The atoll of Enewetak was vaporised by a hydrogen bomb 1000
times more powerful than the one dropped in Hiroshima. The people were moved from one atoll to another, but never far enough away to shield them from the poisonous radiation. Some had no lagoon, protective reef nor fishing grounds. “They experienced skin burns, hair loss, nausea and other symptoms of acute radiation. Their sea food, fruit and other crops were contaminated by nuclear fallout. Even today, sixty years later, Marshall islanders believe their land is still contaminated. There are high rates of still birth and congenital birth defects. The Special Rapporteur commented on the indignity and shame these people had to endure. “Women were subjected to examinations by Geiger counters while naked and hosed down in the presence of male relatives as well as enduring on-site analysis of their pubic hair by American male personnel.” The Rapporteur concludes, “nuclear testing and displacement has created nomads who are disconnected from their lands and their cultural and indigenous way of life.” My next island stop was Kwajalein. It is owned by descendants of the original settlers. But they no longer live there. Their island has been leased to the United States government and it is now a highly secret military base with a concentration of bunker structures, military personnel and MIT graduates. There is a golf course, Burger King and Pizza Hut. Of course, we passengers were not allowed out of the plane while it was being re-fuelled and there was a very careful security search of the aircraft. The landowners themselves live on the small atoll of Ebeye, 20 minutes by boat from the main island. Their primitive housing is congested and they have a few creature comforts. All this, despite the fact that the US government pays landowners millions of dollars in rent each year. Tragically, I am told most of the money goes to a few chiefs who live in luxury in Hawaii. After leaving Majuro, the plane crosses an invisible border between the Marshalls and FSM. The first stop was at Kosrae. This is not an atoll but the jagged peak of a volcanic eruption that exploded into the blue Pacific thousands of Islands Business, November 2012 39
Politics years ago. There are small pockets of coastal land and a necklace of coral reef around its perimeter. There was not enough flat land for an airstrip on the island so it was constructed out on the reef, with a causeway to the mainland. My final destination was Pohnpei. Like Kosrae, this island is the sharp peak of a volcano whose base lies thousands of metres down at the bottom of the ocean. It is about the size of Taveuni in Fiji but has extremely steep terrain with a rainfall of over 400 inches in the centre. This results in a profusion of jungle growth. Many of its 20,000 people live in the capital, Kolonia, while others are on pockets of flat land. In recognition of the harm they caused by nuclear testing, the US entered into a Compact of Free Association with the Marshalls and pays millions of dollars annually in reparation. It also gives millions of dollars in aid to the FSM and allows automatic entry into the US for all citizens. While this is a worthy and honourable gesture by the US, there is a very serious downside and that is the people have become aid dependent. There does not appear to be any will to work and there is little industry in Pohnpei. Agricultural land is seriously overgrown. When the Japanese were in the country before the second world war, there was a small sugar industry. Now, all that has remained is a chimney protruding above the dense foliage. There are seldom strong winds so the trees grow to an enormous size and creepers cover the power poles and lines. People live in dilapidated, unpainted and unfinished houses and the compounds are badly neglected. Wrecks of old cars litter the roadside. Many of the people are obese and dress poorly. In fact, there appears to be a strong sense of poverty and hopelessness. One morning at my hotel I woke up early and went out to the dining room. The security guard was asleep on the dining table. Possibly because of the dangers of eating local food after the nuclear testing, when imported food was introduced, people have a very poor diet and there is an extremely high incidence of NCDs. Where in Fiji we eat dalo, in Pohnpei they eat via (a variety of dalo which grows in swamp land). I saw many skinny dogs running along the roads and I was told that dog is a favourite food. “It tastes like lamb,” I was told. But in fact the island state is not poor. As stated, the US government pours in millions of dollars each year. Other aid donors like the EU and SPC spend vast sums annually on such issues as fisheries, agriculture, energy, education, health, youth and climate change. The Western and Central Pacific Fisheries Commission has its world headquarters in Kolonia and, while I was there, an international conference was under way with over 300 delegates from around the world. It was held in a huge complex built by the Chinese government. There is a strange irony about Pohnpei. While it may seem like a hopeless case today, in fact in ancient times there existed an incredible civilisation that built one of the most amazing cities of the ancient world. Nan Madol, meaning the Place of Intervals, was a massive stone city that is often called the Venice of the Pacific. Unbelievably, it was built out on the reef. Massive boulders, some weigh40 Islands Business, November 2012
MARSHALL ISLANDS ing over 20 tons, formed the foundations. The dwelling structures were made of basalt logs 4 to 5 metres long and half a meter wide. They were cut with such precision that they appeared like timber logs that had been milled by a saw. The finish is like glass. The walls were 3 metres thick and 4 metres high. Many thousands of people once lived in this unique place where there were about 90 small structures, with the rulers massive “castles” in the centre. It covered about 80 acres. I approached the ruins by a rocky pathway through a mangrove forest of giant tress as large as coconut trucks. I paused at the coast and gazed with awe at the unusual stone construction out on the reef. As I walked around the ruins, and touched them, it was impossible not to have a profound sense of antiquity and wonderment. Who were the ancients who made and lived in this incredible place? I crawled into a cellar like cavern beneath the main structure and wondered what kind of person had sat there so long ago. The questions that boggle the mind are, where did the rock come from; how were such enormous weights moved to the site; how were they raised into position; how did they feed so many people? And above all, what happened to them? I have read studies of this place by archaeologists but no one seems to have the answers. The locals simply explain it by saying the spirits did it all. When I returned to our car with my guide, we had to pass through an untidy compound where there was an unkempt house. An elderly man emerged and told me I would have to pay $1 for the privilege of visiting the site. The smallest denomination note I had was a US$20. I handed it to him but he gave no acknowledgment. The city was apparently controlled by the Saudeleur dynasty for hundreds of years and reports seem to indicate that they were brutal rulers. Some say that the slaves eventually rebelled, wiped out the dynasty, and, without rulers, the civilisation died out. It is difficult to reconcile the Pohnpei of yesteryear with that of today. As I boarded the plane and again headed east, I was reflective and saddened about what I had experienced in this lonely part of the world for I knew the worst was still to come. The real agony for the Pacific people is yet to be experienced. When I again gazed down on the airport at Majuro, looking like a finger pointing out into the great ocean, the end for this beautiful atoll and all the others scattered across the Pacific, was not difficult to imagine. The polar ice caps will inevitably melt. Sea levels will rise. The fragile fresh water lens that exist under every little island that provides sustenance for the people, plants and other life forms will shrink. The islands will be inundated. Life will become unsustainable. The people will have to move. They will have no choice Koppel postulated that the human movement from West to East across the great ocean has never really ceased, and indeed it has not. The islanders will have to move on. But, as I flew over Honolulu and looked down on that huge city and also thought about other great cities like San Francisco and Vancouver on the west coast of USA and Canada, I wondered how atoll dwellers accustomed to a simple life, living close to nature, could possibly survive in a mega metropolis. Nothing could be more foreign to their way of life. Yet, humans have a way of adapting.
Amitai Pati...won the Lexus Song Quest, NZ’s most prestigious si nging cont
Samoan tenors excite Opera w orl
Pati brothers on the thres hold By Peter Rees The opera world is scrambling for superlatives to explain how two of the genre’s hottest young properties have come not just from the same country, but also the same family—a migrant Pacific islands family from south Auckland to be precise. When a couple of tenors won Australasia’s top two opera awards within the space of a few weeks, the region’s media didn’t take much notice until discovering the soaring voices belonged to two Samoan brothers. To find such strong, natural and melodic voices in men so young is rare, let alone two from one family. It has prompted some of opera’s leading figures to predict the Pati brothers will soon have the opera world at their feet with a sound, New Zealand is now claiming as its own. In August, Amitai Pati, 22, won the Lexus Song Quest—New Zealand’s most prestigious singing contest which has launched many successful opera careers, including the country’s two most famous opera exports, Dame Kiri Te Kanawa and Dame Malvina Major. The following month, Amitai’s elder brother, Pene, 24, won Australia’s equivalent, the Bel Canto Award.
estigious si nging contest. Photos: Peter Rees
ors a w orld
hres hold of greatness Almost overnight, the brothers were thrust to the fore of Australasia’s opera scene and on the doorstep of opera’s power base in Europe and America. The opera fraternity appears to be impatiently fast tracking the Pati brothers to fame and fortune. Dame Malvina Major describes the Pati brothers as possessing a “phenomenal sound”. “Pene is remarkably like a young Pavarotti who I first heard in England. But I just think it’s phenomenal to have two tenors of such quality from one family. They have the potential to do whatever they like,” she says. Earlier this year, Pene spent a week in London working with Dame Kiri Te Kanawa who gave him a crash course in handling the demands of the opera world. “She was an amazing mentor, she taught me a lot about what to do and what not to do, to be disciplined and being punctual,” explained Pene, in an exclusive interview with Islands Business. Being endorsed by New Zealand’s premier divas flattered Pene. But he’s determined to carve his own niche and “tell my own stories” through his music. Born in Samoa and hailing from his parents’ villages of Tanugamanono and Satupaitea, Pene was only two years old when he moved to New Zealand with his parents and two older sisters.
Pene Pati...music kept him out of trouble.
Amitai was born just a few months after they had arrived in Auckland. Life was a struggle, Pene remembers and his siblings had to make do with what little their parents could afford, as other families around them were no doubt dealing with in working class Mangere, a suburb rich in Pacific migrants. Pene Snr and Juliette Pati made many sacrifices for their children. But the greatest gift they gave their children was their love of music. A policeman back in Samoa, Pene says his dad was also a talented singer. Pene remembers singing being part of his life from an early age. In his youth he and his siblings would perform every week to patients at a rest home where their parents worked much like the Von Trapps of The Sound of Music fame. The experience of “bringing joy to others” made a weekly chore, a fulfilling one for the Pati brothers. It also helped to instill within them important cultural values—a notion they don’t take for granted. “I’ve been singing since I was four. If hadn’t began singing from a young age, at church and other places, my brother and I wouldn’t be where we are today. I’m doing it for my family,” Pene remarks. “I want to be successful and show the world that even people from a poor family from Samoa can make it to the top. My dream is to sing to a packed auditorium of people who have paid to come and see me.” If the parents helped sow the seeds for the Pati brothers’ success, it was their school choir master, Terence Maskell, who ensured their talent got recognised and nurtured. Maskell is one of New Zealand’s foremost choir teachers and he’s immersed himself in training Polynesian voices in South Auckland for nearly 40 years. He is credited with discovering the Pati
brothers as teenagers at Mangere’s Aorere College. “These two are something out of a box—they have a God given talent. Things came naturally to them,” says Maskell. Pene says Maskell was crucial in pushing him and his younger brother to reach their potential. From performing in the school choir, the brothers rose up the singing ranks quickly, making the Graduate Choir of New Zealand and soon after the New Zealand Youth Choir and New Zealand Secondary Schools Choir. Pene says it was music that kept him and his brother out of trouble in their formative years. There was a dalliance with rugby, but music was always their passion. However, the turning point for Pene came in 2008. He was into the second year of a music and arts degree at the University of Auckland when he attended his first opera, La Boheme. He was so blown away by the experience— particularly the lead part of Rudolfo—that he decided to switch his major to opera. In only his second public competition, Pene won the 2009 Aria Competition—New Zealand’s second most prestigious singing competition. He stunned the audience with his renditions of Questa o Quella from Rigoletto by Verdi and Lensky’s Aria from the great Russian tragedy Eugene Onegin by Tchaikovsky. Last year, Pene won a scholarship to Wales to train at the Cardiff International Academy of Voice. He returned to compete in the Bel Canto which he won, netting him a lucrative NZ$30,000 scholarship and a coveted place at the 2013 Georg Solti Accademia summer school in Italy valued at NZ$10,000. Amitai will now join him in Wales after taking out this year’s Lexus Song Quest, which won him a combined scholarship and prize-money worth NZ$25,000. “I firmly believe that Amitai has the potential to become a superstar. Time will tell,” said world famous Welsh tenor, Dennis O’Neill, who was one of the Lexus judges. He will now be tutoring the Pati brothers in Wales. Pacific opera singers from New Zealand who have gone on to the world stage are not rare. The opera world has already been introduced to the talents of baritone, Jonathan Lemalu (1998 Lexus winner), Ben Makisi (2001 Aria winner) and Aivale Cole (2006 Aria and 2009 Lexus winner), who is now based in London. Composers such as Fiji-based Igelese Ete and Opeloge Ah Sam, the first Pacific islander to conduct the New Zealand Symphony Orchestra, have also helped to blaze a trail for Pacific people in opera in the past decade. The Pati brothers have the potential to take that success further on a commercial level. Islands Business, November 2012 41
Planting for the future...Kanwai Pouru, Head of the Papua New Guinea Forest Authority, plants a fruit tree in Sabeto Village, Fiji. The meeting of Pacific Ministers of Agriculture and Forestry focused on strategic threats in the face of fears for future food security. Photo: SPC
Region’s food production under the microscope Need collaborations to address challenges A regional meeting has stressed the need to address the strategic threats faced by the region’s agriculture and forestry services in the face of fears for future food security. Regional heads of Agriculture and Forestry Services meet every two years to review and provide guidance to the work programme of the Secretariat of the Pacific Community (SPC) Land Resources Division. The outcomes of this September Nadi meeting were presented to a higher-level ministerial meeting that immediately followed. The ministerial meeting is held every four years. Climate change was among threats discussed at the meetings. About 70% of agriculture is rain-fed in the region. Predictions of prolonged variations in normal rainfall patterns as a result of climate change could be potentially devastating 42 Islands Business, November 2012
for agriculture in the region. In addition, rising temperatures are expected to change the distribution of pests, invasive species and diseases. The expected increase in frequency and the severity of natural disasters such as cyclones as well as new pest and disease incursions directly threaten agricultural productivity. In his opening remarks, SPC Director-General Dr Jimmie Rodgers said that to be able to confidently face the future, the region needs to find answers to strategic threats and develop practical solutions. He noted that SPC plays a leading role in supporting Pacific agriculture and forestry and outlined its work in key areas of food and nutrition security, resources management and biosecurity. In his opening address, Fiji’s Minister for Lo-
cal Government, Housing, Urban Development and Environment and Acting Primary Industries Minister Colonel Samuela Saumatua noted that the region faces increasing food insecurity stemming from factors such as rising prices for imported food, climate change-related threats to agriculture, and urbanisation. These challenges are compounded by the growth in the Pacific region’s population, which estimates indicate now exceeds 10 million and is expected to reach 15 million by 2035. The region will need to increase food production by over 50 percent to meet the demand without significant increases in prices. It is generally recognised, however, that agricultural activity in the Pacific is falling and has been for the past three decades. The outgoing chair of the ministerial meeting, Samoa’s Minister for Agriculture and Fisheries, Le Mamea Ropati, emphasised the importance of close collaboration in order for the region to meet these challenges. The incoming chair of the ministerial meeting, the Minister for Agriculture and Livestock for Papua New Guinea, Tommy Tomscoll, said Pacific farmers and foresters must be smart, innovative and progressive if their industries are to remain productive and economically viable. He also pointed out the importance of tailoring the technical support from SPC and development partners to local needs, due to the diversity within the region. A significant discussion point at both meetings was the issue of securing access to land for agriculture and forestry, given the nature of land tenure systems in the region. This is becoming more urgent due to population trends and land degradation. Ministers echoed the importance of national policies and plans in addressing land utilisation, development and environmental protection. The ministers welcomed updates on successful farming ventures, including the promotion of organic food production, increasing market access and trade, thanks to technical assistance for smallholder enterprises from SPC and other organisations, and growth in processing and other ways to add value to agriculture and forest products. They also agreed on the importance of ensuring youth and women are fully involved in agriculture and forestry to develop Pacific Islands’ social and economic activity. The ministers acknowledged the gravity of non-communicable disease crisis in the Pacific and urged SPC, Pacific Islands countries and territories and development partners to undertake more research and work to increase awareness through education on food safety and food quality Ministers emphasised the importance of making healthier food choices and the need to enhance local food production and consumption. They also urged SPC and development partners to continue to align their support to implement national priorities through capacity building, supplementation or substitution, grants and technical assistance. Attendees agreed that there is a significant need for future SPC technical assistance to countries to make use of traditional knowledge in agricultural practices, especially in post-harvest processing and developing value-added products to address food security. • For more information, please contact email@example.com, or visit www.spc.int/lrd.
Creating awareness...a billboard on Pacific adaptation to climate change in Tonga. Photo: SPREP
Pacific @ forefront of climate change action How SPREP is helping the islands By Espen Ronneberg & David Sheppard The Secretariat of the Pacific Regional Environment Programme (SPREP) has been actively working on climate change in the Pacific for almost 25 years—long before climate change became a household word of global interest and concern. Pacific countries in fact, have been at the forefront of international action on climate change, starting with Vanuatu’s role as the first chair of the Alliance of Small Islands States (AOSIS) in 1989. SPREP was called at this time by Pacific governments to support this work, particularly through providing briefs for negotiations and especially for the Rio Summit in 1992. SPREP was also requested to provide assistance to Pacific countries in the negotiations to establish the United Nations Framework Convention on Climate Change (UNFCCC). This landmark convention entered into force in March 1994 after sufficient countries had ratified. Pacific countries were amongst the first to sign and ratify the treaty, notably Marshall Islands followed by Fiji, Papua New Guinea and Vanuatu. All Pacific Islands Countries (PICs) are now 44 Islands Business, November 2012
parties to the UNFCCC and its Kyoto Protocol. As parties, they are obligated to provide a national report, called a national communication. The UNFCCC secretariat, the Global Environment Facility (GEF) and SPREP provided early support to the region to prepare these reports, which clearly highlighted the seriousness of climate change challenges and the need to take practical measures. The early reports provided the baseline for future projects on adaptation and mitigation that we are implementing today. SPREP is assisting countries in the Pacific region with mitigation actions through PIGGAREP (Pacific Islands Greenhouse Gas Abatement through Renewable Energy), even though emissions in the region are miniscule on a global scale. Our aim is to reduce emissions and remove barriers to utilising Renewable Energy Technologies, for example, by allowing the private sector to produce electricity and sell it back to the grid. This is implemented in partnership with the United Nations Development Programme (UNDP) and GEF, as well as other key agencies like the Secretariat of the Pacific Community (SPC), Pacific Islands Forum Secretariat, International Union for Conservation of Nature
(IUCN) and Pacific Power Association. PIGGAREP has carried out a number of feasibility studies, including establishing wind monitoring stations and renewable energy demonstration sites, which provide a basis for investment projects. There are opportunities to upscale and replicate those initiatives, and SPREP is seeking continued support for PICs in this important area. These mitigation efforts make sense from an economic perspective and also provide a powerful political message to the international community—that the most vulnerable countries, who are the least responsible for climate change, are taking significant action on mitigation within their own means. SPREP also supports Pacific countries to adapt to climate change through the Pacific Adaptation to Climate Change project (PACC) in partnership with UNDP and GEF. PACC’s aim is to increase resilience and reduce vulnerabilities of communities and priority development sectors of participating Pacific Islands Countries and Territories. PACC priorities (sustainable water management, food security and coastal management and development) were first highlighted in the national communications referred to earlier. PACC is also based on lessons learned from prior regional adaptation projects coordinated by SPREP such as a Canadian funded project in 4 countries (CBDAMPIC). PACC is implemented in 13 Pacific Islands Countries and one territory—Tokelau (through funding from Australia). The project was designed in 2006, approved for GEF funding in 2008, and started implementation in 2009. PACC is the largest climate change adaptation project in the Pacific. Since 2009, PACC has analysed adaptation options for each country to ensure these can provide benefits to communities in terms of reducing
climate vulnerabilities. These adaptation options include improving water management and storage, introducing salt or drought resistant crops, and protecting coastal infrastructure. Design and implementation of climate adaptation options are being carried out by national teams in participating countries. Through PACC, regional, national and community institutional frameworks have been established, re-affirmed and strengthened, thus enabling planning and implementation of climate change adaptation measures within sectors. PACC provides a framework for development and implementation of future adaptation projects and lessons learned from PACC will help avoid a case of “reinventing the wheel”. Lessons learned and best practices from PACC are being captured to enable development of site-specific tools, guides and frameworks. This provides opportunities to upscale and replicate these lessons and practices which can happen at a number of levels—within the same sector, across sectors and across countries. A key lesson learnt is that capacity development and capacity support is an important ongoing requirement and it is thus important to secure resources now if successes of PACC are to be replicated or upscaled in the region. Underpinning the work on adaptation and mitigation is SPREP’s work on policy and climate change science, closely linked with the support provided to national weather services. SPREP is partnering with the Finland Meteorological Institute, the World Meteorological Organisation and the United States National Oceanographic and Atmospheric Administration (NOAA) to
We’ve Got it!
implement a capacity building programme over the next four years to support national weather services to deliver weather, climate and early warning services to Pacific communities. This project will enhance national capacity to respond to the growing needs of communities to prepare and respond to climate change. SPREP sees this as a crucial contribution to enhanced preparedness for adaptation, and it will also contribute to better understanding of mitigation opportunities. SPREP has also partnered with SPC to develop Joint National Action Plans (JNAPs) for disaster risk and climate change adaptation through a thorough process of participatory consultation and planning in several PICs. These JNAPs identify a comprehensive list of actions designed to reduce the impacts of disasters and climate change. These plans are far reaching, seeking solutions across a number of governance areas (e.g. policy, institutional, operational and awareness) related to the management of disaster risk. These include risk reduction, disaster preparedness, response and recovery. Disaster risk management is a cross-sectoral activity requiring coordinated interventions at all levels of society and amongst all stakeholders—government, private sector, civil society and communities as all sectors are vulnerable to disasters. The plans provide a number of inter-linked strategies and actions that have been specifically designed to address the critical needs identified by each country. A further development in the field of climate change science is the establishment at SPREP
of the Pacific Islands Global Ocean Observing System (PI-GOOS). This system recognises the crucial role that oceans play in climate change, and the particular challenge of understanding the interactions with the atmosphere for a vast ocean like the Pacific. Weather and climate around most of the Pacific Islands is controlled predominantly by the ocean. Data from various sources is used to predict short-term weather (e.g. ocean heat available for cyclones), seasonal variability (e.g. El Niño and La Niña conditions) and longer term climatic changes (e.g. predicted sea level rise, air temperature and rainfall). PI-GOOS is now assisting in providing a valuable measurement of rainfall and evaporation in previously difficult to reach locations. In conclusion, it is important to stress that the approach of SPREP in implementing climate change programmes is one that is driven by the on-ground needs and priorities of Pacific Islands Countries and Territories. We have a close working relationship with our member governments, national and regional climate change experts and others working in this field. As such SPREP is well placed to support PICTs with projects and programmes that meet the real needs in-country and is responsive to country priorities. We will continue to provide advice, suggestions and support to our members to help address the pressing and urgent challenge of climate change in our Pacific region. • Espen Ronneberg is SPREP’s climate change adviser and David Sheppard is director-general of SPREP.
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Islands Business, November 2012 45
Islands officials disappointed with EU By Robert Matau
isappointment was the general consensus of the Pacific group of the African Caribbean Pacific countries who flew all the way to Brussels last month to be only told the European Union was not ready to progress the negotiation of their Economic Partnership Agreement. In fact, if you ask these leaders, they feel that reaching an agreement is now further than ever and may never be achieved given the current circumstances. The last formal negotiation of the PACP-EU EPA was held in October 2009. Led by the Pacific Islands Forum, the PACP nations headed to Brussels to negotiate amongst other things the export of fresh and frozen tuna to the EU. The catch was to seek global sourcing—or source their tuna from anywhere in the world and export it to European markets, something the European Union’s large fishing nations were not too keen on. Apart from that, Pacific Islands nations were also trying to get flexibility on export tax and access for infant industries. But at the end of the day, Pacific islands nations used that opportunity to present their positions to the EU. “We were all disappointed that the EU was not ready to conclude the talks by the end of this year,” one of the Pacific islands delegates said. “Apparently, they have not given much thought to our submissions (market access offers and legal text) despite the fact that some of these have been with them for some time. “But we have agreed to set up a small working group which we hope will be able to meet the EU officials anytime soon in our preparation for the next Joint Technical Working Group meeting scheduled for March 2013. “For some PACPs, a comprehensive EPA is the best option but should this fail, then countries do have the option of either walking away or perhaps consider an interim EPA,” the source said. Sources in Brussels revealed the EU may have
lost its enthusiasm and energy to continue negotiating with the Pacific ACP region, particularly when they already have PNG and Fiji with an interim EPA (iEPA). “The EC’s silent strategy, in my view, is to try and get as many PACP countries to sign on to the IEPA,” the source said. “They (EU) cannot afford to have two EPA agreements for the PACPs running in parallel, and more so the EU’s interest and resources are now more focused on concluding EPA negotiations with the other resource-rich African states and also Asia. “Also, the process of ratification of agreements in the EU parliament is so long and can take up to more than 10 years after the conclusion of negotiations. “The IEPA signed by EU, Fiji and PNG took four years for EU to fully ratify.” The Brussels source said improved access forchilled and fresh fish to the EU markets had made it very challenging for the EC negotiators and the conclusion of this issue can prolong the whole process. The EU has two large fishing nations in Portugal and Spain and they have influence on fishing matters like this—particularly access to their markets. Hence, the underlying irony that while the EC has a number of lucrative projects on sustainable fishing efforts, its fishing nations tend to influence them at times to make decisions that are not supportive of the Pacific islands’ sustainable fisheries efforts, the source said. FFA position Pacific Islands Forum Fisheries Agency (FFA) Deputy Director General James Movick said FFA and PIFS officials also took the opportunity to meet relevant EU officials in charge of EU Illegal, Unreported and Unregulated (IUU) certification and EU SPS (Sanitary and Phytosanitary) and Fish Food Safety certification. “This was further to the direction given by PACP fisheries and trade ministers in their joint meeting in Port Moresby last year, that EC agencies be re-
quested to recognise the role and engage with FFA to assist PIC members . “The initial formal EU response to that request was to reiterate their reluctance to engage with regional organisations such as FFA in matters that they consider to be of purely of national concern. “However, in our meetings in Brussels on September 25, the Directorate-General for Maritime Affairs and Fisheries (DG Mare) and EC Directorate-General for Health and Consumers (DG Sanco) on food safety issues, have now both recognised that FFA does play an important role in assisting PACPs on these issues. “They agreed that they will now also deal with FFA in this technical facilitating capacity while all parties recognise that the final formal certifications will be made by the PACP national authorities in accordance with their national laws and procedures.” Movick said both EU units also expressed willingness in principle to consider regional and subregional mechanisms that will more efficiently support PACPs in their national certification processes, another development that has long been proposed in the region. “This is a significant new development that will permit FFA to intensify the assistance that we are already providing to four PACPs adversely affected by these certification requirements, with other PACPs also expressing interest for similar technical support in the near future. “We are now taking steps to re-structure our technical support services and work plan in this area to expedite national IUU and SPS certification. “It might be noted that we are undertaking this work even if the EPA fisheries market access negotiations do not come to successful fruition. “Even without direct market access for processed fisheries products, PACP fishing vessels wishing to sell fish to processors that are selling processed products to the EU will continue to face these traceability and food safety requirements. “We also anticipate that other major market players will also be adopting similar certification processes in the not too distant future,” Movick said.
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46 Islands Business, November 2012
Benefits of an integrated approach to regional issues By Dr Jimmie Rodgers Director-General, SPC
ow do we as a region tackle huge challenges —such as ensuring food security, preventing non-communicable diseases, adapting to climate change—which cut across almost every sector and often feed into each other? Climate change, for example, is projected to increase the frequency and severity of natural disasters and impact infrastructure, transport, marine ecosystems, agricultural food production and health, as well as access to safe drinking water. In the next 10 to15 years, more than 1 million Pacific Islands people are likely to die from noncommunicable diseases, equivalent to 10% of today’s Pacific population. No other cause of death will come close. Add communicable diseases and the picture is even more serious, presenting a dilemma on where investment is best directed to save lives. Addressing these challenges requires commitment from everyone, through effective partnerships and greater multi-sectoral collaboration using a ‘many partners-one team approach’. Whole of government and whole of society approaches hold the key to achieving sustainable, long-term solutions. For its part, the Secretariat of the Pacific Community (SPC) is drawing on expertise across some 20 sectors including agriculture, energy, fisheries, forestry, gender, geosciences, health, transport, statistics and demography, water and sanitation and in cross-cutting areas including climate change, disaster risk reduction, food security and human rights, to take a consolidated multi-disciplinary approach to pressing regional issues. This multi-disciplinary approach will be at the heart of discussions at the annual meeting of SPC’s governing body, the Committee of Representatives of Governments and Administrations (CRGA), which will be held in Noumea from 12 to 16 November. The meeting brings together representatives from 22 Pacific Islands countries and territories and the four metropolitan founding members—Australia, France, New Zealand and the United States—-that make up SPC’s membership. Important issues on the agenda at this year’s meeting are climate change and oceans. On climate change CRGA will discuss the potential benefits of adopting new approaches to climate change adaptation. Although there has been a significant increase in the flow of climate change resources to Pacific Islands in recent years, to date adaptation strategies have largely been dealt with through a sector by sector, project by project approach. This has increased the administrative and coordination burden at the national level for many members without necessarily delivering long-term sustainable outcomes. Implementing multi-sector approaches to adaptation offers many potential benefits and SPC has been working with members and development partners to design and implement integrated methods.
Dr Jimmie Rodgers...SPC Director-General. Photo: SPC
SPC has become the region’s principal scientific and technical ‘organisation. It has and will continue to play a very important role in the development agenda of Pacific Islands countries and territories. In one example, a ‘ridge-to-reef’ approach being trialled in Choiseul Province, Solomon Islands, combines work across several sectors, including agriculture, forestry, water, infrastructure, fisheries and health together with the efforts of landowning communities, the government, other development partners and regional agencies. The approach blends the resources being made available through several climate change programmes and is supported by dedicated in-country coordination staff. The work is directly linked to national-level development plans Ocean resources SPC has also been working towards an integrated ‘one team’ approach in delivering climate change services to other member countries. But to work effectively, the approaches need commitment from national-level stakeholders, and willingness on the part of government ministries and communities to work together.
This 2012 has seen unprecedented interest in oceans at both global and regional levels. The theme of the 43rd Pacific Islands Forum, ‘Large Ocean Island States—the Pacific Challenge’ focused attention on what is the region’s greatest natural asset. The Rio+20 process, the launch of the World Bank’s Global Partnership for Oceans and our very own Pacific Oceanscape initiative are examples of commitments that acknowledge the value of our oceans. With water covering some 98.5% of the region’s total area, it is not surprising that many countries and territories regard marine resources as the key to their future development. At the same time, the distance between islands and small populations makes trade and communication more difficult. Benefitting from ocean resources is a complex challenge involving technical issues (we know much less about the ocean than the land), international law, a wide range of stakeholders and often competing priorities. CRGA will look at some of these key challenges and proposed solutions for responsible use and conservation of our ocean. Specific areas that SPC has been working on include oceanic fisheries science, coastal fisheries management, maritime boundaries, deepsea minerals, coastal erosion and deposition, shipping services for small island states, safety at sea and marine pollution. External review of SPC CRGA will also discuss the findings of an independent external review of SPC that was conducted in the first half of 2012. Overall, the review provides a very positive assessment of the organisation and its core business while highlighting areas where change needs to occur. The review’s recommendations include changes to the structure of the organisation’s senior management team; more focus on reporting results; emphasis on the priorities of smaller islands states; greater attention to the human resources, financial systems and ICT support needed by a large decentralised organisation; an increase in core resources; enhancement of the bilingual (English and French) functioning of the organisation; and better communication outreach and advocacy. SPC has become the region’s principal scientific and technical organisation. It has and will continue to play a very important role in the development agenda of Pacific Islands countries and territories. Its wide sector coverage provides the organisation with a dual platform for service provision within each sector as well as across multiple sectors. It is thus able to develop a suite of ‘comprehensive and integrated solutions’ to challenges requiring inputs from multiple sectors. In this regard, SPC is a ‘one-stop shop’, particularly for addressing cross-cutting priorities in our region. Islands Business, November 2012 47
Pacific women doing justice in Solomon Islands ‘From policing to prosecution, some impressive Pacific women are helping Solomon Islands build a strong, fair and accessible justice system. As Erin Gleeson discovered, their stories reveal just how much a shared Pacific Way is making a difference to the country’s efforts to entrench the rule of law and revitalise the legal system.
rawing its members from 15 countries “I wanted to come here because of the challands judges presiding on the bench listening to across the Pacific, the diversity and lenge. The challenge of building here what I Solomon Islands lawyers leading cases. experience of the personnel who make helped build in Fiji and to the same standard.” It is a dramatic change from a just few years up the Regional Assistance Mission to Solo“I feel very blessed to be part of RAMSI. Our ago, when, in the early days of RAMSI, scores of mon Islands has always been one of the keys to hearts are in the Pacific,” she says. international lawyers dominated the country’s RAMSI’s success. Building the Case for Confidence courts after years of neglect and the breakdown As the Pacific Islands Contingent (PIC) coorLinda Folaumoetui comes from Loto Ha’apai, of the rule of law during the period known locally dinator of RAMSI’s Participating Police Force, in the Friendly Islands of Tonga, where she once as The Tensions. senior Tongan police officer, Superintendant Tita served as Solicitor-General. This turn-around is partly the result of the efFe’ao, is at the heart of this success. After more than four years as an adviser to forts of people like Fijian prosecutor Andie Driu Responsible for more than 30 police officers the Attorney-General’s Chambers in Solomon and her predecessors, who as advisers and capacity from 11 different countries and as the first woman Islands, Mrs Folaumoetui’s still brings an irrebuilders have gradually helped to strengthen local appointed to the role, Superintendent Fe’ao says pressible smile and can-do attitude to her work. skills and knowledge as part of RAMSI’s efforts it is both an honour and a challenge. It is these traits that have won over her Soloto help Solomon Islanders rebuild confidence in “I am enjoying working with mon Islands counterparts. people from different countries. “Linda has given me Working at this level and with this the confidence to stand many people; it’s another experiup and talk in court,” says ence altogether. John Muria, a senior crown “But it tells the story that fecounsel with the Attorneymales in policing can go anywhere General’s Chambers. as long as they are committed.” “I used to be hesitant As well as her role as PIC coabout going to court and ordinator, Superintendent Fe’ao would get butterflies. But as a RAMSI policing advisor also she always gives me a conprovides advice on strategy and fidence boost and tells me policy to the Royal Solomon IsI can do it; she pushes me, lands Police Force (RSIPF). and now I can.” With a career spanning 17 years Folaumoetui provides in the Tonga Police, she brings legal advice to government a wealth of experience in policy, departments and represents criminal investigation and trans- Making a difference...Tita Fe’Ao, Andie Driu and Linda Folaumoetui are just a few of the impressive the State in litigation cases Pacific women helping Solomon Islands rebuild after The Tensions. Photo: Erin Gleeson national crime. in courts. In return, Superintendent Fe’ao She also works with her says she is learning a lot from her Solomon Islands counterRSIPF counterpart, the Director of RSIPF’s parts to build their capacity in drafting legal their country’s justice system. Strategy and Policy Department, Inspector opinions, developing trial techniques and re“Advisers are stepping back now,” explains Driu Stanley Riolo. searching case law. who is working in the Office of the Director of Watching Director Riolo at work has helped But for Folaumoetui the biggest achievement Public Prosecutions. her deepen her own leadership skills in ways that has been the working relationships she has dePull of the Pacific had not occurred to her before. veloped with her team and the growth she has “Two years ago, advisers still had that lead role “As a leader, you can’t always go along at your seen in their confidence and capacity to do their and were taking charge of most cases. Solomon pace. You have to look back and see whether jobs effectively. Islands prosecutors are now taking the lead in your people are still following you. You have “I think I’ve managed to establish a confidence coordinating cases in the courts, not only in the to reassess your leadership skills there. That is in me from my local staff, and have been able to Magistrate’s Court, but in the High Court, the something that he is giving me, that more meaalso get back government’s confidence in the Court of Appeal and with the provincial circuit sured approach.” office.” courts,” Driu explains. Superintendent Fe’ao believes the time is right For Folaumoetui, it has been the diversity of “This would have not been possible if our for RAMSI’s transition. Solomon Islands that has made her life in the advisers had not trained them to do so, and it’s “With a mission like this, if you leave too early country so memorable. a good change.” it’s not right. And if you stay too long, it’s not “I am quite in awe of the richness and diversity With more than 15 years experience in public right. RAMSI’s timing is spot on. of culture in Solomon Islands—in language, race prosecutions in Fiji, Australia and the Marshall “It is about giving Solomon Islanders the and custom. I come from a culture that speaks one Islands, Driu brings a huge level of know-how ownership and confidence to go forward on their language, and we are just one race. Here, there are to her job and the team of local staff whom she own two feet. Solomon Islands have a lot of good Polynesians, Micronesians and Melanesians, and assists to prepare legal advice for government things to show. I believe they have the commitI am amazed by the ability of Solomon Islands to departments, to prosecute on a range of matters, ment to make the country work.” live and work together and be able to approach from corruption and money laundering to sexual Prosecuting Change issues from all those different backgrounds, and assault cases and those involving juveniles. Walk into a courtroom in Solomon Islands yet still be able to consider Solomon Islands as Driu says it was the ‘pull of the Pacific’ and today and most likely you will see Solomon Isheir home and their country.” the challenge that drew her to Solomon Islands. Islands Business, November 2012 49
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