18 October 2004

"Fiji and Australia: New Economic Partners"

Speech to the 17 th Australian-Fiji Business Forum, Gold Coast

Introduction

Minister for Foreign Affairs and External Trade, the Hon Kaliopate Tavola

Minister for Commerce, Business Development and Investment, the Hon Tomasi Vuetilovoni

Distinguished guests, ladies and gentlemen.

It is a pleasure for me to address the 17 th Australia-Fiji Business Forum - the premier annual business event between our two countries.

Today I would like to share some thoughts on business linkages with Fiji and on the opportunities I see for further expanding these linkages

• particularly in the context of the theme of this business forum "Fiji and Australia: New Economy Partners."

First I would like to thank the business councils for their excellent work in building and supporting the trade and economic relationship.

The Fiji-Australia Business Council and its counterpart, the Australia-Fiji Business Council, are doing an important job in promoting trade and investment between Australia and Fiji.

In government, we certainly value the opinion and advice of the business councils as we look for ways to work more closely together in the region

• particularly in relation to nurturing the investment climate and the growth of the private sector.

The breadth and depth of our bilateral links underpin our shared economic and commercial endeavours.

And our shared interests see us working together in many fields of endeavour.

Of course, we have a shared love of a number of sporting pursuits.

We cannot currently claim to be as good at golf as you - which pains me to say, as a keen golfer myself

• but I think we still tip the scales in the rugby union.

Of course, on a more serious note, we also have a fundamental, shared interest in a stable and prosperous Pacific

• indeed our own economic and security interests rely on this being the case.

Fiji is a key player in the regional reform agenda

• and therefore an important partner for Australia and a valued neighbour to other island states.

Fiji plays a vital role in the Pacific Islands Forum and has been a keen supporter of efforts to build security and stability

• involved in activities from combating terrorism to addressing transnational crime.

Bilaterally, our law enforcement officers cooperate to fight organised crime

• with some recent success against narcotics producers and traffickers.

Regionally, in RAMSI in Solomon Islands, Australia and Fiji are proving to be an effective team.

For Australia's part - and as a long-standing friend of Fiji - we want to see Fiji continue along the road of political stability and sound economic management.

As we know from our shared experiences in the region, key elements to achieving these goals are good governance and a thriving business community.

We congratulate Prime Minister Qarase and his Government for the work they are doing to help neighbours as well as ensure stability and prosperity for Fiji and its people.

Adopting a strategy of prudent economic management has put the country back on a growth trajectory

• with Fiji achieving annual GDP growth of 4 to 5 per cent in the last two years, and investment increasing.

These kinds of achievements are key to developing a strong and prosperous Fiji for the future.

To support this, Australia's development cooperation with Fiji is helping to build appropriate conditions for the private sector to flourish

• including through enhancing governance and accountability, and improving the management of human and financial resources.

In Australia we know the value of building an open, efficient economy to ensuring we are competitive in the international trading arena.

The IMF is forecasting world growth of 5 per cent in 2004-05, the fastest growth rate in a generation

• and so with expectations of strong global demand, prospects are bright for Australian exporters.

Trade makes a significant contribution to jobs and Australia's standard of living, and we must continue to work hard to maintain and increase Australia's export drive

• both here and abroad.

The Australian Government is committed to pushing forward with the Doha round - doing all we can to get meaningful global market access gains for all Australian exporters

• and we encourage Fiji - along with all our regional partners in Asia and the Pacific - to fully support a forward-looking, truly liberalising approach to the Round - so that we can all benefit.

In addition, Australia is also pursuing free trade agreements where it makes sense to do so - where we can get deeper trade and economic gains for Australian exporters and within shorter timeframes than are available currently at the multilateral level.

The developments I have just outlined point to exciting prospects for mutual growth in the Australia-Fiji bilateral trade and economic relationship.

In 2003, annual trade between our countries in goods and services stood at a healthy $1.2 billion.

Services are becoming a much more important part of the equation

• with two-way goods trade worth $700 million in 2003, but services quickly catching up at $522 million.

Australia is keen to build on the vibrant investment and business relations that already exist between our private sectors

• to ensure two-way trade and investment links continue to grow.

We know that sectors such as tourism and hospitality, information technology and construction provide real potential for economic growth - and I shall return to these in some detail in a moment.

But we also know there are some challenges ahead.

The Fiji Government needs to continue its work to improve the competitiveness of existing industries

• to ensure they can continue to compete in a globalised environment

In this regard, textiles, clothing and footwear (TCF) is one sector that Australia is particularly focused on.

There are deep linkages between the Fiji and Australian TCF industries - in 2003 the sector accounted for 52 per cent of Fiji's goods exports to Australia and 10 percent of Australia's goods exports to Fiji.

We are also acutely aware that the sector employs some 13,000 mainly Indo-Fijian women - an important segment of the population.

Prime Minister Howard was pleased to announce at this year's Pacific Islands Forum a seven-year extension of the South Pacific Regional Trade and Economic Cooperation Agreement-Textiles Clothing Footwear (SPARTECA-TCF) Scheme until 2011.

Together, we must continue to examine other possible measures to help existing industries become more competitive

• just as together we need to look at ways to stimulate new industries.

Innovation and impediments

With such challenges in mind, I am pleased that the Australia-Fiji Business Forum has chosen as its theme "New Economy Partners" - focusing on the dynamic opportunities presented in the expanding services sector.

Of course, Fiji has been doing well in several innovative manufacturing industries - from bottling of water to furniture manufacturing

• I am pleased that Australians have been involved in developing what is a world-class furniture manufacturing industry in Fiji - importantly, helping to develop export markets for these unique products.

Fiji is also leading the way in a range of innovative new services industries in the region.

As a stunning tropical setting, Fiji is making admirable inroads into the television and film industries.

And the establishment of call centres and data processing offices demonstrate Fiji's capacity to be a global player in the services field

• ANZ Bank is active in this area in Fiji - and is expected to expand its call centre operations there next year.

More broadly, the attractiveness to investors and customers of this particular aspect of the services sector in Fiji could be even greater if there was a more liberal telecommunications environment

• an environment which allowed more players to enter the market, passing on lower usage costs to business customers.

There are other areas where conditions in Fiji hold great potential but could be made more attractive to investors - including by building up levels of skilled labour.

Fiji has experienced a migration of skilled labour since 2000.

The shortage of skilled labour in some areas risks hampering investment

• for example construction, which is currently experiencing a major upsurge and needs more skilled labour to ensure the opportunities for trade and investment can be maximised.

Indeed, I would urge all businesses operating in Fiji to focus on vocational training as a way of strengthening the capacity of the workforce.

In this regard, expatriate businesses and workers can make important contributions - transferring relevant skills and experience to Fiji industries and workers.

There is no better industry to mention in this regard than tourism, where training can make all the difference to attracting customers back.

Fiji should be congratulated for rebuilding its tourism sector in recent years

• indeed, over the last year, the number of tourist arrivals to Fiji has risen by almost 20 per cent.

In the Asia-Pacific region where competition for tourists is very high, this is a remarkable level of growth.

The number of four and five star hotels that developers are planning to build in Fiji over the next year is a testament to the confidence that investors have in the tourism market.

It is also important to note that increased competition in the aviation market has been a key driver of the growth of the tourism sector in Fiji.

The entry of low-cost carriers to Fiji brings significant rewards - opening new routes between our two countries and attracting a wider range of tourists.

It is this market that offers the greatest potential for Fiji - it represents the bulk of travellers.

Today's youth travellers and backpackers are tomorrow's mums and dads.

If they reflect fondly on a holiday in Fiji 10 years ago, they will surely be more inclined to return with their families later in life.

Expanding the people-to-people links that tourism represents also helps to underpin our bilateral relationship and fosters understanding of our cultures.

This is a dividend whose economic value should not be underestimated.

With aviation and tourism shaping up as key growth sectors for the Fiji economy I urge business to embrace the dynamic opportunity offered by an expanded aviation market.

Regional resources

A similar opportunity exists with the pooling of regional resources

• in particular in the shipping and aviation sectors which are so crucial to servicing the island economies scattered across the Pacific.

At this year's Pacific Islands Forum, leaders agreed that providing regular, reliable and competitive air and shipping services was critical to the future of Pacific Island countries.

Rationalisation is long overdue

• with PIF members recognising that running national carriers which drain national budgets is counter productive and an inefficient use of resources.

You, the business community - as significant users of Pacific aviation services - will surely testify that more efficient aviation services mean more efficient business generally.

The dividend for Fiji is that such rationalisation will enhance its status as a regional hub for aviation and related support services.

Conclusion

It is vital that our business communities - and both governments - continue to look for new opportunities to further develop and support the strong business relationship that exists between our two countries.

It is my firm view that Australia and Fiji have a lot to gain from ongoing cooperation, exchanges of experience and expanded links.

Australia has trodden the difficult - but necessary - path of deregulation

• and our economy is much stronger because of it.

Fiji is now facing these industry adjustment issues - with a complex domestic setting.

But over the last four years the Fiji government has delivered growth.

There is no reason to expect that with continued sound economic management such growth will not continue.

Fiji's prosperity adds to the economic well-being of its trading partners, including neighbouring Pacific Island states.

Australia looks forward to being a partner in that growth and contributing where we can to the success of Fiji.

In the meantime, I would like to wish you well for the rest of the 17 th Australia-Fiji Business Forum.

Thank you