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fiji
Fiji's economic freedom score is 61, making
its economy the 80th freest in the 2009 Index. Its overall score decreased
by 0.8 point from last year, reflecting deterioration in four of the 10
economic freedoms. Fiji is ranked 13th out of 41 countries in the
Asia–Pacific region, and its overall score is slightly above the world
average.
Fiji scores higher than the world average in seven of
10 economic freedoms but is very strong in only two areas: government size
and labor freedom. The flexible labor market operates with minor
restrictions on hiring and firing. Government expenditures are relatively
low, but economic dominance by state-owned enterprises and excessive
public debt hinder more vibrant economic growth. Government interference
is also evident in price controls on a number of products.
Fiji is weak in investment freedom and property
rights. All foreign investment is subject to government approval. Foreign
ownership of real estate is technically allowed, but leasing is more often
the reality for non-nationals. The judicial system's enforcement of
regulations remains erratic, and court dockets are clogged by a
significant backlog of cases.
Background
The Pacific island nation of Fiji is ruled by an
interim government backed by military forces led by Commodore Frank
Bainimarama, who seized power in 2006 and dismissed the elected
government. Fiji has long suffered from ethnic tension between the
indigenous, mostly Christian population and a large minority of Hindu or
Muslim Indo–Fijians. The recent military coup has stunted the crucial
tourism industry. Fiji’s main trading partners, including the European
Union and Australia, have imposed economic sanctions that have hurt vital
agriculture, clothing, and fishing industries.
Business freedom 66.0%
The overall freedom to conduct a business is
relatively well protected under Fiji's regulatory environment. Starting a
business takes an average of 46 days, compared to the world average of 38
days. Obtaining a business license takes about the world average of 18
procedures. Bankruptcy proceedings are generally straightforward, but the
lack of transparency impedes entrepreneurial activity.
Trade freedom 69.6%
Fiji's simple average tariff rate was 10.2 per cent in
2006. Some import taxes, import licensing restrictions, some quarantine
delays, weak enforcement of intellectual property rights, and tax
concessions for exporters add to the cost of trade. Ten points were
deducted from Fiji's trade freedom score to account for non-tariff
barriers.
Fiscal freedom 76.0%
Fiji has moderately high tax rates. The top income and
corporate tax rates are 31 per cent. Other taxes include a value-added tax
(VAT) and a land sales tax. In the most recent year, overall tax revenue
as a percentage of GDP was 21.8 per cent.
Government size 76.0%
Total government expenditures, including consumption
and transfer payments, are moderate. In the most recent year, government
spending equaled 28.3 per cent of GDP. The monopoly position of
state-owned enterprises adds growing costs to the economy. Public debt
hovers around an unsustainable 50 per cent of GDP.
Monetary freedom 77.3%
Inflation is relatively moderate, averaging 4.0 per
cent between 2005 and 2007. The government influences prices through
state-owned utilities and controls the prices of various products,
including food.
Ten points were deducted from Fiji's monetary freedom
score to adjust for measures that distort domestic prices.
Investment freedom 30.0%
Fiji restricts foreign investment but also offers tax
incentives to investors in preferred activities. A number of investment
areas are reserved for Fijian nationals, and investors must meet certain
conditions before investing in some other restricted industries. Foreign
investors are discouraged from acquiring controlling interest in or taking
over established, locally owned enterprises. The government requires
foreign investors to undergo several bureaucratic registration procedures
and must approve all investments, often in a non-transparent manner.
Residents may hold foreign exchange accounts subject to approval by the
government; non-residents also face certain restrictions. Most payments
and transfers (including capital) are subject to government approval and
limitations on amounts. Foreign real estate ownership is technically
permitted, but leasing is the typical approach to land use.
Financial freedom 60.0%
Fiji's stable financial system is relatively well
developed, but much of the population has limited access to credit.
Banking accounts for about 35 per cent of financial system assets and is
largely private, though the state-owned Fiji Development Bank offers
business development loans and some commercial banking services. The
government withdrew from commercial banking in 2006, selling its minority
stake in the National Bank. Foreign participation in banking is
significant.
The two largest banks are Australian and account for
80 per cent of the market; three other foreign banks operate freely. The
insurance sector consists of 10 companies and is dominated by foreign
firms. Fiji's stock exchange has listed fewer than 20 companies in recent
years but is developing. In the aftermath of the December 2006 coup, the
Reserve Bank of Fiji tightened foreign exchange controls to curb credit
growth and avoid a devaluation of the Fiji dollar. This has limited the
amount of investment profit and capital that may be repatriated. Some
controls were eased in June 2007, and others are to be phased out.
Property rights 30.0%
Protection of property is highly uncertain. The
backlog of cases in the courts is significant, and there is a shortage of
prosecutors. Government actions have undermined the judiciary's
independence, and several judges have resigned. The many difficulties
involved in obtaining land titles seriously impede investment and growth.
Freedom from corruption 40.0%
Corruption is perceived as significant. Fiji was
ranked 55th out of 158 countries in Transparency International's
Corruption Perceptions Index for 2005. It was not ranked by TI in 2006 or
2007. Fiji has a small population and a limited number of persons in
positions of power, and personal relationships can be a significant factor
in business and government decisions.
Labour freedom 84.8%
Fiji's flexible labor regulations enhance employment
and productivity growth. The non-salary cost of employing a worker is low,
and dismissing a redundant employee is costless. Restrictions on
increasing or contracting the number of work hours have become more
flexible.
— Courtesy: The Heritage Foundation
Quick Facts
Population
0.8 million
GDP (PPP)
$3.8 billion
3.6% growth
2.8% 5-year compound
annual growth
$4549 per capita
Unemployment
6.4%
Inflation (CPI)
4.8%
FDI Inflow
$102.6 million
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