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Not-so-welcome consequences

Fr. Kevin Barr
Monday, May 21, 2012

Over the last few years at various meetings a lot of concerns have been raised relating to recent trends in the economic developments in our country.

Of course (as with previous governments) we hear a lot about the need to encourage investors (both local and overseas) in order to stimulate economic growth.

And in the last few years government's "look north" policy has welcomed loans and investments from Malaysia, India, Korea and especially from China.

Huge loans have been offered through the Exim Bank of China for housing projects and through the Exim Bank of Malaysia for roads, bridges and housing projects. Companies such as the China First Railways Group, Naim and Top Symphony have made a dramatic entry onto the Fiji stage and taken over some very large projects.

The attraction with some of these loans are that they are long term (20 Years or more) and at a very low interest (2%-3%). So they are generally welcomed by Government and some local stakeholders.

However many are beginning to question the wisdom of being so excited and complacent about these loans. They are beginning to ask what are the not-so-welcome consequences of these developments?

nAre these overseas companies responsible for the decline in some of our local building and construction companies as well as mining and quarrying companies?

nBecause these overseas companies want to bring in labour and materials from their home countries (especially China) how do they benefit our local economy? (In one particular project one Chinese company was alleged to have brought in all its labour and all its materials down to the last screw and last panadol from China.)

nThere are also serious consequences for employment within Fiji.

Most of these companies want to bring all or a large number of their workers from overseas - from China, Malaysia or the Philippines.

Hence their employment levels at home are boosted but those of Fiji go into decline even if and when we demand that a certain percentage of workers be employed from within Fiji. (We have even heard complaints from local prostitutes that they are losing out to some overseas workers who double up as prostitutes.)

nOne of the reasons often given for bringing in workers from overseas is that they are more skilled or more productive whereas our workers are lazy and less skilled. But one would think that one of our requirements of overseas companies should be that our workers receive up-skilling, learn new techniques and be encouraged to be more productive and efficient. (One of the stories noted in the newspapers was that a reader saw a Chinese flagman directing traffic on the road at a construction site and questioned why someone from Fiji was not capable of doing such a simple job.)

nThere are also consequences for wages. On the one hand overseas companies could get away with paying wages and providing working conditions acceptable in their own country but which may not be acceptable in Fiji. Moreover where local workers are accepted to work in overseas companies they may often not be paid the established Wage Regulation Order, FNPF, overtime etc. We have had a number of complaints on this score which the compliance unit of the Ministry of Labour has been asked to look into.

From another viewpoint we have been told that many of our best local skilled workers are migrating to Australia, New Zealand or Papua New Guinea because they are offered attractive wages - sometimes ten times what they receive in Fiji. Part of the answer would be to ensure that our own skilled workers are paid a decent wage to keep them in the country.

nLiving conditions of overseas workers have sometimes been called into question as substandard and should also be subject to Fiji OHS requirements and inspection.

nAgain questions have been raised as to the quality of workmanship, the quality of materials used and whether parts can be easily replaced. Of course this can be made subject to local inspection in contract documents. There have been reports of good workmanship as well as reports of quick substandard work.

nYet another concern is whether the costs of so-call low income housing has been fully assessed and whether our people will be able to afford it.

nAnother area of discontent involves environmental issues. Many of our roadside billboards tell us not to cut down mangroves and that our future depends on protecting our seaside tiri resources. Yet some overseas companies are allowed to lay waste acres of mangroves or tiri land in the name of investment. And the environmental impact of mining companies especially must be a constant area of concern.

nFinally it seems that proper company searches and the track records of some companies establishing themselves in Fiji have not been well conducted before they are allowed to set up and operate in the country.

So in a number of areas overseas companies could be getting away with conditions which are not just unacceptable in Fiji but which allow them to under-cut local companies. Consequently:

(a) Our local building, mining, quarrying and road construction companies are in decline or facing unfair competition;

(b) Our workers are losing out on employment opportunities;

(c) Our workers who do receive employment are not paid the appropriate Wage Regulation Orders, FNPF and overtime rates and other requirements of the Employment Relations Promulgation.

In order to keep a level playing field and not allow undue advantage, overseas companies who opt to invest in Fiji should be required to pay the local Wage Regulation Orders for their local and overseas workers, deduct and pay FNPF, and adhere to the hours of work and OHS regulations spelt out in the Employment Relations Promulgation of 2007.

In other words Fiji's work legislation should be adhered to by all overseas companies. They should not be allowed unfair advantage over local companies.

Moreover as media outlets have reported, some overseas companies bring into the country only a minimum financial investment, borrow from our local banks, pay relatively low corporate and personal taxes and repatriate a high percentage of their profits overseas.

In the tourist industry for example it is claimed that only 40c - 42c in the dollar remains in the country. The rest is repatriated. Yet the industry has been receiving $24m in recent budgets to promote tourism overseas.

It is not the intention of this article to speak against any racial group or country offering aid or loans to Fiji but simply to give voice to some of the misgivings commonly being expressed today among a number of well informed and concerned people.

Analysts always express their suspicions about the motivations of those who provide aid or loans. Are they sincerely wanting to help in an unselfish way? If not, what do they want in return? Do they want to help us but also help themselves at the same time?

Michael Somare once said that Australian aid to Papua New Guinea was "Boomerang aid" because, while it certainly came to assist PNG, it also returned benefits to Australia. Consultants came from Australia or materials were brought in from Australian companies.

Certainly suspicions are rife that China wants to boost its strategic and diplomatic influence in the Pacific region, to make new friends, and expand its trade in goods and services.

China is a growing world power with a large population and a huge demand for resources. Our timber and especially our mining and fishing resources would surely be an attraction and our position as the hub of the Pacific is of critical importance.

The USA and Australia seem to be concerned at China's growing influence in the Pacific region and seek to counteract it. Are we being caught like the meat in the middle of the sandwich? The danger is that we think we can gain all the advantages and not have to face a pay-off.

Years ago Julius Nyerere, the President of Tanzania. had to face a similar dilemma - stay with Britain and the West or also turn to China and the East in his efforts to see his country develop. In the early years, China saw a great opportunity to get its way in Tanzania and offered all types of assistance.

At a banquet, President Chou En Lai made great promises of assistance. Nyerere stood up and told him in a friendly but firm manner that, although he welcomed Chinese help, Tanzania was not for sale. On that understanding a very fruitful relationship of assistance developed which was balanced by assistance from other nations as well.

Nyerere was willing to receive help from any nation, provided that the aid was not part of an effort to intervene in the domestic affairs of Tanzania or gain special concessions. Perhaps we could learn something here.

It is very easy to want to achieve everything at once and embrace all those willing to support our interests. But we need always to be wary that there may be a price to pay - if not now then in the future. And are we fully aware of what that price might be?

Fr Kevin Barr is a frequent writer to The Fiji Times. This opinion is his and not of this newspaper.

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