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Inefficient structures

Repeka Nasiko
Saturday, March 01, 2014

FIJI Pine has, throughout its history, suffered from a culture of short-term benefits for a selected few at the expense of long-term benefits for the industry and its landowners at large, according to Fiji Pine Group of Companies executive chairman Faiz Khan.

Mr Khan said over the past three decades Fiji Pine had paid hundreds of millions of dollars in ground rent, forest-based levies and stumpage payouts.

"And provision of exclusivity over silviculture, cartage and logging contracts, many jobs have also been created, yet the benefits have failed to truly reach everyone," he said.

"Inefficient cost structures have existed in the pine industry to support institutions that in theory were created to provide returns to the landowners but have failed to do so."

He said some of these institutions received a benefit through commission alone of up to half a million dollars a year from having exclusivity of contract from Fiji Pine.

"If they did not do anything, they would make a profit of half a million dollars a year, yet by running a business they make losses and further expect Fiji Pine to subsidise their inefficiencies despite contract terms well above market rates.

"The simple ideas of doing business is that the money invested must grow as opposed to disappear, frankly, these institutions that turn a commission benefit they receive from Fiji Pine Limited into a loss need to relook at the way they do business."

The executive chairman explained that by inventing the lease security bonus payment system, Fiji Pine intended to have closer links and foster stronger bonds with landowners through more direct benefits.

"There have also been many instances of past managements and even board of directors taking loans from the company and never repaying or abusing the system for their personal gain.

"We cannot go back to such practices."

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