BANKERS BACK THE BUDGET PEOPLE’S BUDGET, COMPASSIONATE
GREAT STIMULUS TO ECONOMY
Economy Minister and Attorney-General Aiyaz Sayed-Khaiyum got the budget right says the country’s top bankers. Association of Banks in Fiji (ABIF) chairman, Rakesh Ram highlighted in an interview these key points:
■The budget has a very clear theme, that we are all in this together and we will come out of this difficult situation if we all play our part and make some level of sacrifices.
■The Government’s commitment to continue and improve the first home buyers’ grants programme will assist a lot of Fijians who should take advantage of this scheme and become owners of their first homes.
■For Fijians who earn $50,000 or less, to get a grant of $30,000 for building their first home, is a great help from the Government.”
■The repeal of the Stamp Duties Act which was a very bold move will reduce the cost of borrowings. For example, a business intending to raise a loan of $200,000 would have a direct savings of $3,500.
The members of the Association of Banks in Fiji are Westpac Fiji, BSP, ANZ, HFC Bank, BRED Bank and Bank of Baroda.
Mr Ram is HFC’s chief executive.
Mr Ram said: “The 2020-2021 National Budget has been labelled as the people’s budget, very compassionate and relevant to the current economic environment and a great stimulus to reignite the economy.
“We are hopeful that such incentives from the Government would benefit the people of Fiji greatly.”
Extension of repayment deferment
■ He was extremely pleased that ABIF is playing its part as a key partner.
He thanked the member Banks for agreeing to allow extension of repayment deferment on a case by case basis till December 31, 2020.
“We will continue to play our part by helping our customers to the best of our ability during this global pandemic”.
■He stated that as at end of June 2020, commercial banks have assisted over 30,000 businesses and individuals on a case by case basis who have been affected by COVID-19 with loan repayment deferments totalling over $3 billion.
■This means the banks have not been receiving repayments of approximately $50 million per month.
Unfortunately, this has also resulted in a significant increase in the Banks risk profile and deterioration in asset quality along with a significant increase in bad debt provisioning in terms of normal and prudent accounting standards.
“For example, if only 10 per cent of customers of the total $3bn assisted with loan deferments are not able to repay the Banks loan, this would equate to an increase in bad debt provisioning totalling $300m.
“This is a very optimistic position as recent surveys have shown that more than 10 per cent customers may not be able to survive.
“As such, the Banks have continuously encouraged and stressed to our customers that where they can pay they should continue to pay their loan repayments.
“Customers who have been totally and seriously affected and have no income sources, the banks have continued to help and on case by case basis have also considered options for interest waiver including write off of principal loan amounts for some customers.”
Banks are also suffering in pandemic
Mr Ram noted as at the end of June the Banks have so far written off about $50m and they have just started.
“So banks like any business are also suffering, even banks around the world are suffering under COVID-19.”
He further states that apart from the significant level of potential increase in provisioning for bad debts, revenues have also been affected because there was hardly any credit growth, any trade, or any related businesses.
“So the Banks are suffering like any other businesses.”
He stated that the Banks are only a few of these companies in Fiji where they have not reduced any of our staff salaries, not sent any staff home, not reduced their benefits and continue to look after their staff who are their key asset.
He further states that the Banks are one of the few organisations which continue to recruit staff.
“I work for HFC Bank, which has recruited 20 more people during the period of COVID-19 that represents almost 10 per cent of our staff. “So we continue to meet obligations such as FNPF, Pay as You Earn (PAYE) tax, and contribute towards the general economy of the country.”
He added that Association of Banks cur
For Fijians who earn $50,000 or less, to get a grant of $30,000 for building their first home, is a great help from the Government Rakesh Ram HFC Bank chief executive officer and Association of Banks in Fiji (ABIF) chairman
-rently employs about 1,000 staff and none of them have been affected or impacted in any way, in terms of the working conditions and environment.
Unprecedented challenges
Tappoo Group of Companies Director Mahendra Tappoo said:
■The current COVID-19 pandemic has imposed unprecedented challenges to this small island developing economy of Fiji.
■It’s a one-in-a-100 year event which has shaken the world economy so badly.
■It has negatively impacted the entire world economy.
■The economic challenges brought about by this pandemic is huge and unprecedented.
■The pandemic is not even over yet.
■These are extra-ordinary times with extra-ordinary challenges requiring extra-ordinary action.
■Ad nobody has a magic wand to solve all our problems.”
A path-breaking budget
Mr Tappoo said against this backdrop, the A-G and Minister for Economy must be highly commended for coming up with an admirable, bold, aggressive, positive, optimistic and a path-breaking budget with sweeping economic reforms which lays a solid foundation for economic recovery and future prosperity.
■The flow-on benefits of these economic reforms will only be fully realised in the years to come.
■These are steps towards a liberalised and modern economy which is a proven formula for economic success in advanced economies.
■The budget must be recognised for coming up with a blueprint that will position Fiji for the future.
■There are stimulus packages, relief for employees, investment incentives, removal of bottlenecks for trade and investment, introduction of a more simplified system of doing business, removal of bureaucracy, and so much more.
■For example, the boost for tourism industry. Fiji is so dependent on tourism earnings.
■The tax cuts, incentives and reforms in the tourism sector will make Fiji more competitive against intense international competition post COVID-19, with huge flow-on benefits to the entire economy.
■Unprecedented duty reductions will result in lower prices across a huge range of items in supermarkets, stores, showrooms, and everywhere, across all categories.
This will create a highly competitive environment across all trades and businesses resulting in significant benefits to the consumer.
And the list goes on
■Our family values based on our Founder’s principles
■As a family company with very humble beginnings 78 years ago, we have our own set of management principles based on our family values which has, despite this unprecedented crisis, motivated us to retain all our 1800 employees throughout the Tappoo Group of Companies.
■We have always treated our employees as our extended family and have gone the extra mile to protect our employees from termination of employment.
■We have not terminated or laid off a single employee despite unprecedented financial challenges due to closure of airports and hotels and the closure of tourism industry which we are an integral part of.
“It hasn’t been easy.
“But it gives us a lot of satisfaction to have done that,” Mr Tappoo said.
The Textile, Clothing and Footwear Council of Fiji
The Textile, Clothing and Footwear Council of Fiji would like to congratulate the Bainimarama Government for delivering a Bold, Brave and Absolutely Necessary 2020 – 2021 National Budget.
Council president Michael “Mike” Towler said:
■The honourable Minister for Economy, has undoubtedly prepared a budget under very unusual and difficult circumstances requiring a well-thought philosophy and approach by all concerned”
■The council believes Mr Sayed-Khaiyum’s delivered a budget that supports the survival of our businesses and industries which are also gearing towards recovery.
Mr Towler believes that the budget is necessary for this time of crisis and is focused on our national economic recovery.