Need for a Vibrant Capital Market
Moreover, the Government has recently divested some of its important shares to some state owned enterprises Aiyaz Sayed-Khaiyum. Acting Prime Minister, Attorney-General and Minister for Economy, Public Enterprises, Civil Service and Communications.
The need for a vibrant capital market was highlighted by the Acting Prime Minister, Attorney-General and Minister for Economy, Public Enterprises, Civil Service and Communications, Aiyaz Sayed-Khaiyum.
He spoke about this at the South Pacific Stock Exchange (SPSE) Annual Awards
The awards on Friday night were attended by people from some of the biggest businesses in Fiji. Mr Sayed-Khaiyum stressed on the need for a vibrant capital markets and told the audience that a vibrant capital markets provide opportunities for companies and the individuals who run them to raise capital.
“Many companies in Fiji have been through a third or fourth generation phase.
“Due to this third and fourth generation phase, there is a need not just for capital injection,” he said. He explained the problem that arises with such family-run businesses.
“When you have a family company that is so large, it has an enormously large number of people who become shareholders.
“But, most importantly, what actually happens is that a lot of people make decisions.
“This could lead to lack of professionalism in the manner in which your companies are actually run.” He said such an environment also results in the companies being unable to adapt and adopt new technology.
Government incentives
Several initiatives from Government have provided a number of incentives to encourage people running companies to list on the stock exchange.
“The number of tax incentives, tax breaks, the ability to write off, stamp duty exemptions, paying corporate taxes at 10 per cent as opposed to 20 per cent and doing away of capital gains, are some of the benefits extended,” he said.
These initiatives are also useful for ordinary Fijians to be able to find another means to invest in local companies.
“It allows ordinary mums and dads to buy shares as we have seen for example through investing through Unit Trust. “Moreover, the Government has recently divested some of its important shares to some state owned enterprises,” Mr Sayed-Khaiyum said.
These developments have allowed several new players such as Fiji Ports Corporation Limited to be listed and be available for people to invest.
“The idea is to get the right strategic partners to be able to take advantage of the enormous and sustain the economic growth that we have had.
“We now have eight years of consecutive growth in Fiji which is unprecedented,” he added.
Growth opportunity
Recent economic data indicates growth in the economy.
“The opportunity is very right, the environment is very right for not only companies that are listed, but also for those that are not listed to be able to participate in this growth,” Mr Sayed-Khaiyum said.
“With 69.4 per cent of the Fijian population being under 40-years-old, there is enormous opportunity for young Fijians to participate in the growth of the economy.
“A growing capital market, also breeds in specialisation in this new investment environment.
“It creates not only job opportunities. The youngsters offer bring in new professionalism and new knowledge base, which is critical for us to actually take advantage of in this growth rate,” he said. “These developments are critical for a country, as it needs to provide economic empowerment for economic growth.
Equal opportunity
“The payoff of these developments has resulted in reducing inequality in Fiji compared to the other five countries in the Asia-Pacific region.
“The right type of intervention by Government through its social economic sectors and providing a conducive environment for business to actually have confidence to invest have helped achieve this equality,” he said.
He also cautioned about the impact of climate change on the economy. “As the Reserve Bank will tell you, if you look at the inflation graphs for the past seven years or so, you’d see that we had huge peaks precisely for two reasons – world fuel price and cycles or floods.
“When we have cyclones and floods it can really throw you off your path, even for a small country like ours.
“Within this climate change framework there is also opportunities for businesses,” he said. There was also mention of the need for renewable resources to be explored.
He said the many possibilities that one could take advantage of is the renewable energy space.
“As announced in the budget, we are looking at Green Bonds, which we are hoping for with the assistance of the Governor of the Reserve Bank and his team,” he said. Mr Sayed-Khaiyum ended his address by thanking the stock exchange for the critical role it played to maintain its credibility. He reminded the staff of SPSE to maintain their credibility to allow investors to invest in listed companies.
“We want people to be able to make money, be able to be transparent and be able to pay the right amount of tax. If everybody follows this, we can create more opportunities for everybody else.”
He reminded the staff of SPSE to maintain their credibility to allow investors to invest in listed companies.