Why PNG companies should look at doing business in Fiji
In recent times, Fijian companies have been attracted to Papua New Guinea because of the size of its market. There are plenty of reasons for PNG companies to also look in the other direction, as delegates to the 2019 Business Advantage Papua New Guinea Investment Conference heard earlier this year.
“There are good opportunities for PNG companies in Fiji. It is a similar economy to PNG in many ways,” says Brett Hooker, who spent three years running Westpac’s operations in PNG’s Melanesian neighbour before arriving this year to run Westpac PNG.
First, Fiji’s economy is travelling well.
Its government is forecasting real GDP growth of 3.4 per cent for 2020. Inflation is comparatively low by PNG standards: forecasted at 4.1 per cent this year, falling to 3.5 per cent in 2020.
Second, Fiji’s corporate tax rate is attractive. There is a low corporate tax rate of 20 per cent and a 10 per cent tax rate for listed companies on the South Pacific Stock Exchange.
Fiji has been experimenting with tax-free zones on its main island of Viti Levu.
“We’ve seen the success of the tax-free zone in Suva,” notes Nitij Pal, a long-serving board member of the Australia Fiji Business Council.
Hooker says that PNG companies will find good infrastructure in Fiji. “They have got a world-class international airport (at Nadi),
Fiji’s economy is travelling well. Its government is forecasting real GDP growth of 3.4 per cent for 2020.
very good access through to Asia, Europe, the Americas – they are a hub for the
South Pacific as well. Fiji has experienced some phenomenal growth numbers in recent times.”
Work to expand Fiji’s second airport, Nausori, is expected to start in the next year, facilitating direct flights to the capital, Suva.
Hooker also points to the first-class access, cost and reliability of data in Fiji.
“This is one of the reasons why ownership of smartphones in Fiji is so high; everyone’s got at least one and some have two,” he says.
“One of the challenges that we have in the South Pacific is we’ve got all these great banking tools to promote the digital economy, but we need reliable data and reliable networks.”
One issue Pal thinks Fiji does need to address is its foreign exchange controls – something with which PNG companies would be familiar.
“Sometimes, if head office wants to move money out of Fiji to fund other operations there can be difficulty. But it’s a smallish economy exposed to natural disasters and internal shocks – that’s the reasoning the Reserve Bank of Fiji has for foreign exchange controls to maintain a stable currency.”
Tourism accounts for more than two-fifths of Fiji’s economy and it remains a major source of business opportunities.
“We facilitate a lot of business on the ground in Fiji for both Australian companies and international companies … what you’re seeing is a whole combination of small and medium enterprises entering the market, predominantly in tourism,” says Pal.
Nevertheless, he notes, there are plenty of opportunities outside this sector, especially given Fiji’s skilled and educated labour force.
“As things start to improve in PNG, there’s a lot of opportunities both ways for both PNG and Fiji companies. Logistics management is going to become a growth area for Fiji, as is data warehousing and management, because they’re building an ecosystem around business process outsourcing.”
Westpac’s Brett Hooker … says Fiji’s corporate tax rate is appealing.