Stronger business investment is the way to address challenges faced by successive governments in rolling out massive capital works program to improve its core service delivery.
Sydney-based ANZ Group Pacific economist Dr Kishti Sen made the comment in response to a question on his assessment of the national budget performance so far this financial year.
He said governments did not have a magic wand and budgets were limited in what it could achieve because of scarcity of resources, especially in an environment where economic growth was not translating into strong jobs growth in the private or formal economy sector.
He added budgets had had to balance past promises, vested interests, deficit implications and expenditures associated with rebuilding after natural disasters.
“This has meant that rolling out massive capital works program to improve core service delivery has been a challenge for successive governments in Fiji. The way to turn this around is to have much stronger business investment,” Mr Sen told this newspaper.
“That will come. We know that Fiji’s space requirements have increased, boosting fresh interest and investment in hotels, new office towers, shopping centres, warehouses and factories.
“Fiji’s increasing role as a regional distribution hub, access to finance, lower borrowing costs and increasing interest from foreign investors are all playing a part in sowing the seeds for Fiji’s upturn in commercial and industrial buildings.”
Mr Sen said once that cycle became entrenched, government finances would improve, and it would be in a stronger position to bring in new infrastructure investment in schools, hospitals, policing, utilities, ports, and jetties and roads.
He said new business investment this year was a “tad disappointing”.
He said privately funded construction work done, although trending up, was still 24 per cent below its recent peak.
“Despite Fiji’s vaunted multi-billion-dollar private investment pipeline, the conversion rate to new commencements has been slow and low.
“That said, building approvals data have picked up strongly recently. Let’s hope of these permitted projects hit the construction phase in the new year and catapults Fiji to a higher plane of economic growth and keeps it there for a long period of time.”
Mr Sen said bringing new sources of economic growth was an ongoing challenge and Fiji continued to rely on international tourism for its investment and jobs growth.
“Perhaps a little more progress towards a mixed economy status would have been ideal.”
In the meantime, the senior economist said overall public demand – that is operating and capital expenditures combined – remained high, “and that is exactly what the economy needs in this soft transitioning period to a mixed economy status”.
He said higher public demand was keeping people in jobs, which in turn was sustaining household final consumption expenditures.
