9
Fiji*
– Ruci Dakunimata
F iji lies at the heart of the South Pacific, between
longitudes 175 and 178 West and latitudes 15 and 22
South. This is almost directly North of New Zealand and
Population:
PROFILE
835 thousand***
Northeast of Sydney, Australia. GDP (Current US$): 2.3 billion***
Per Capita Income: 2,360 (Atlas method)***
The country is made up of approximately 330 islands, (Current US$) 5,440 (at PPP.)**
which are distributed over 1.3 million square kilometres
Surface Area: 18.27 thousand sq. km
of ocean. Only a third of these islands are inhabited; the
main ones being Viti Levu (which hosts the capital and the Life Expectancy: 69.6 years**
other main municipalities); Vanua Levu; Taveuni; and Literacy (%): 92.9 (of ages 15 and above)**
Kadavu.
HDI Rank: 81***
83 percent of the land1 is owned communally by indigenous Sources:
Fijians, nine percent by the state and eight percent is - World Development Indicators Database, World Bank, 2004
- Human Development Report Statistics, UNDP, 2004
freehold land. Only 16 percent of the country’s land mass (**) For the year 2002
is suitable for intensive agriculture, and these areas are (***) For the year 2003
found mainly along coastal plains, river deltas and valleys.
Economy
Fiji is a sovereign, democratic state. A former British The economy is still agriculture-based with a considerable,
colony, it gained political independence in 1970. Fiji has albeit declining, reliance on one crop, sugar cane. A shift
a bicameral parliamentary system: an elected House of in economic policy in the 1980s from import substitution
Representatives and a nominated upper house, the Senate. to export promotion resulted in a significant change in the
In 1987, the country became a republic after the military structure of the economy. In essence, it involved the growth
ousted a Government led by a party dominated by Indo- of the manufacturing sector and the decline of the primary
Fijians. sectors. The main contributors to growth, in the
manufacturing sector, have been the sugar and garment
The country underwent another political crisis, in 2000, industries.
when some Fijians attempted a civilian takeover of the
coalition Government led by a party dominated by Indo- From 1985 to 2001, Fiji’s real GDP grew at an average
Fijians. Democracy is now restored: a general election was rate of 2.5 percent per annum, whilst real GDP per capita
held in 2002, an elected government is running the country, grew by around 1.3 percent per annum. In 2001, real GDP
and all of the democratic institutions – an independent per capita stood at F$4,1062. Such growth was thought as
judiciary, a free media, freedom of religion, an active civil insufficient to deliver the jobs needed, or provide the social
society, and so on – are functioning. and economic infrastructure necessary for development.
A contributory factor to this low growth is the low level of
* Original paper submitted in November 2004. Revised in February 2006
1 State land is divided into two categories: Schedule A (no traditional owners identified when native land was first registered by the colonial
government) and Schedule B (land unclaimed by indigenous Fijians when the registration was undertaken). These are currently being
reclassified as native land. According to the 20 Year Development Plan (2001-2020), when this process is completed, land owned by
indigenous Fijians will increase to 93 percent.
2 Unless otherwise stated, the currency used in this document is the Fiji dollar.
Fiji 43
investment, which hovered around 11 percent of GDP – export orientation (EO), through trade liberalisation; and
well below the average of 20 percent for developing reforms in the labour market, capital market and public
countries. sector. This was the Government’s attempt to stimulate
competition, in order to promote operational efficiency
Competition Evolution and Environment and lower costs, both in the private and public sectors,
Prior to the introduction of the Government’s export-led and gain the international competitiveness needed to
growth policy, the Government, through licences, quotas support exports.
and price controls, managed the economy. The Government
was heavily involved in the economy, resulting in public With the gradual dismantling of import controls, a wide
utilities and government owned companies being sheltered variety of imported goods entered the domestic market.
from competition. The export-led growth policy supported To ensure fair levels of competition, three pieces of
the removal of barriers to trade, and promoted competition, legislation were promulgated, alongside the deregulation
in order to stimulate economic efficiency and raise programme. These were the National Trade &
competitiveness. Measurement Decree 1989; the Packaging and Labelling
Regulations; the Fair Trading Decree 1992; and the Trade
From 1970 to 1987, the Government’s economic policy Standards and Quality Control Decree 1992. The Counter
was based on import substitution industrialisation (ISI) to Inflation Act was applied only in markets where there is
generate national wealth, economic growth and limited competition. The Commerce Act was also put in place
development. The pursuit of ISI policy for industrialisation in 1998, besides the Fair Trading (Amendment) Act 1998.
entailed the promotion of industries that produced goods,
which replaced imports. Whilst these legislations provided the rules of competition,
they were applied mainly to goods provided by the private
Import replacing industries were granted fiscal incentives sector, and excluded goods produced by the public sector
(tax and customs duty) from the Government and were services.
protected from competition through import licensing and
high tariffs. The entry of new firms into the protected sector Competition Legislation and Overall Regulatory
was highly restricted by the Government and allowed only Framework
if existing firms could not adequately supply the domestic Recognising that rules on competition are required if
market or, if they accepted stringent conditions such as dynamic, efficient, fair and competitive markets are to be
exporting a substantial proportion of their production developed on Fiji islands towards enhancing the Fijian
output. people’s welfare, Government has introduced several
competition-related legislations, most notably are:
In addition, all products that were placed under licence
control were subject to the Price Justification Scheme, 1) The Public Enterprise Act, (1996);
which required companies to justify, and obtain prior 2) The Commerce Act, (1998); and
government approval for any increase in prices. The 3) The Fair Trading Decree (1992) and the Fair Trading
Government, therefore, substantially managed competition. (Amendment) Act, (1998)
During the same period, the Fijian Government adopted a Institutions, Competencies and Anticompetitive
highly interventionist approach that saw Government Business Practices
directly involved in the production of goods and services, The Ministry of Public Enterprise and Reform is
mainly in public goods, such as utilities, infrastructure and responsible for the enforcement and effective
infrastructure support services. implementation of the Public Enterprises Act; while the
Commerce Commission, formed under the Department of
The result was the development of commerce and industrial Fair Trading and Consumer Affairs, Ministry for
sectors consisting of a handful of large firms with dominant Commerce, Business Development and Investment, takes
positions, characterised by excess capacity, high production charge of competition-related matters.
costs, high prices, poor quality, and a limited range of
products. The sheltered environment, consequently, Commerce Commission
resulted in production inefficiency, ineffective use of The Commerce Commission is an independent statutory
resources, and did not stimulate the lowering of prices, authority established under the Commerce Act. The
improvements in quality or expansions in the range of Commission administers the Commerce Act, and part III
products. of the Fair Trading Decree 1992 (dealing with a host of
restrictive trade practices) and the Fair Trading
In 1989, the Government launched a reform programme, (Amendment) Act 1998; register and arbitrate access
of economic deregulation, to redirect the economy towards agreements; and control prices in regulated industries.
44 Competition Regimes in the World – A Civil Society Report
Table 9.1: National Economic Legislation
National Laws Ministry/Agency Category Objectives
1) Commerce Act Commerce Commission Restrictive Trade Practices To promote competition in markets
2) Public Public Enterprise & Reform Reorganisation & To provide for the reform of government commercial
Enterprise Act corporatisation of public-sector enterprises
enterprises
3) National Trade & Trade Measurement & Measurement/Packaging To ensure that there is fair and equitable trading for both
Measurement Standards Unit business and sellers in the market place in respect of
Decree trade transactions involving the measurement of physical
quantity.
4) Fair Trading Fair Trading & Consumer Consumer protection To promote consumer interest and the effective and
Decree Affairs Department provisions efficient development of industry, trade or commerce
through the encouragement of fair competition and prevent
the unfair or undesirable trade practices and to provide
for an equitable, competitive and informed and safe market
place and provide for regulation, where necessary for
supply for goods and services and for related purposes.
5) Trade Standards Trade Measurement & Standards/Quality/Information To make provisions prescribing standards in regulating
& Quality control Standards Unit the safety and quality of goods/services and provide for
Decree standards and quality control authorities.
6) Consumer Fair Trading & Consumer Credit/Hire Purchase To provide a legal framework for the provision of consumer
Credit Act Affairs Department credit by credit providers
7) Counter Inflation Prices and Incomes Board Price Regulated Goods and To establish the Prices and Incomes Board to afford
Act Services powers of control over prices, charges, remuneration,
dividends and rents, and for connected purposes.
The Commission, therefore, exists to promote competition operations or through the operations of public enterprises.
in the market though the effective enforcement of the Efficiency gains will come from both these operations.
competition provisions (Part III) of the Fair Trading Decree Reforms of public enterprises would ensure that: the
(as amended in 1998) and the Commerce Act 1998. Government achieves higher returns on investment; the
regulatory framework is effective; privatisation focuses
More specifically, the Commission is guided by the towards achieving economy-wide gains; public monopolies
following three objectives: do not become private monopolies; and that ownership of
• to promote effective competition in the interests of wealth and the benefits of privatisation are spread equitably
consumers and producers; among the population. There are four key principles of
• to facilitate and approximate balance between efficiency, public enterprise reform as follows:
and environmental and social considerations; and
• to ensure non-discriminatory access to monopoly and • Principle 1 - Clarity of objectives;
near-monopoly infrastructure and services. • Principle 2 - Management autonomy and authority;
• Principle 3 - Strict accountability for performance; and
Ministry of Public Enterprises and Public Sector Reform • Principle 4 - Level playing field.
The Ministry of Public Enterprises and Public Sector
Reform administers the Public Enterprise Act. With the In undertaking the reform processes, the Ministry, first of
enactment of the Public Enterprise Act in December 1996, all, commercialises whichever government enterprise is
considerable progress has been made in the implementation undergoing reform. It is after this first stage that the
of public enterprise reforms, and improving their Ministry would further consider the option of
operational efficiency through restructuring and corporatisation or privatisation (wholly or partly). It will
introduction of competition, in areas where they operate. take the best option of reform, appropriate for the specific
government enterprise, to avoid duplication of roles and
The Government currently engages in commercial wastage of resources.
activities, either through government department
Fiji 45
Consumer Protection • providing policy advice to the Minister of Commerce
The Department of Fair Trading and Consumer Affairs on issues relating to consumer interest, and technical
(DFTCA) was established in 1993. The DFTCA, formed support in the areas of fair trading, legal metrology,
by a merger of the Trade Measurement Division (formally competition law, standards development, quality control,
known as weights and measures) and the Standards and etc;
Quality Control Division, has the role of enforcing the • carrying out research and reviewing commercial
National and Trade Measurement Decree 1992, the Fair activities undertaken in the market place;
Trading Decree 1992, the Sale of Goods Act 1979 and the • providing for the examination and testing of products
Dumping and Countervailing Duties Act 1998. The that are the subject of complaints; and
Department is also required to provide the necessary • representing the department in various national and
infrastructure for standardisation, quality assurance, international forums in the areas of consumer affairs,
research and reliability of Fiji – made products and prevent legal metrology, standards development, competition
inferior, unsafe products from entering the domestic law, etc.
markets.
Box 9.1: A Merger of Two Photographic
The Department for Fair Trading is comprised of five sub- Companies Allowed
divisions, some of which are noted below:
1 Fair Trading Unit: This unit is specifically responsible The Commission received an application in relation
for investigating alleged breaches under the Fair Trading to two companies operating in the photography
Decree, Dumping Countervailing Duties Act, and the market. The Commission conducted a market inquiry.
Consumer Credit Act. It revealed that there would be an increase in market
2 Standards Unit: This unit is solely responsible for the shares for the merged parties, but only a minimal
enforcement of the Trade Standards and Quality Control one. Apart form this factor, the inquiry found that
Decree. One of the major roles of the unit is to monitor barriers to entry were low and that there was little or
the quality of the goods and services in the marketplace, no competition from imports.
and ensure that the standards comply with the Fiji Island
specifications. Furthermore, the applicant demonstrated to the
3 Trade Measurement and Standard Unit (Weights and Commission that the aim of the merger was to bail
Measures Division): This division is responsible for out a player that was intending to close down due to
the administration of the National and Trade inefficient running. After much consideration, the
Measurement Decree, which ensures the accuracy of Commission decided that there was little likelihood
all weighing and measuring instruments used for trade of the merged parties obtaining a monopolistic or
purposes. The unit also monitors the markings on all generally dominant position in the photography
packaged and pre-packed articles to ensure that they market, on entry. Therefore, the Commission allowed
comply with the Packaging and Labelling requirements. the merger to go ahead, on the grounds that it would
4 National Measurement Laboratory: This unit is not breach Section 49 of the Fair Trading Decree.
responsible for the maintenance of Fiji’s primary,
secondary, and reference standards of measurement.
5 Commerce Commission: (as detailed above) exists to Public Utility Sectors and Essential Infrastructure
promote competition in the Fijian Islands market Until 1997, the Government owned a total of 32 enterprises
through effective enforcement of the competition in commercial activities. These included six fully owned
provisions of the Fair Trading Decree (Part III as companies, five majority-owned, four minority-owned,
amended in 1998) and the Commerce Act (1998). eight statutory authorities, and eight government
departments.
The Department of Fair Trading and Consumer Affairs is
responsible for: The Ministry of Public Enterprise & Reform manages 16
• conducting investigations into alleged fraudulent and of these enterprises, all fully owned by the Government,
deceptive practices, into matters that affect consumer 11 of which are Government Commercial Entities, and five
interests; Commercial Statutory Authorities.
• collecting, examining, and disseminating information
with respect to matters affecting consumer interests; All public utilities (power, water), and essential services
• receiving and considering complaints lodged with the (telecommunications, ports and airport services) were
Department; owned by the Government.
• advising and assisting persons seeking information on
guidance on matters affecting consumer interest; The Public Enterprise Act provided the legal framework
• educating members of the public on their rights and for the implementation of public enterprise reform through
responsibilities under the various legislation reorganisation and corporatisation. Public enterprises
administered by the Department; would be privatised in accordance with the Government’s
46 Competition Regimes in the World – A Civil Society Report
policy, to divest those functions best performed by the Whilst new players should be encouraged into areas where
private sector. The objective of the public enterprise reform public enterprises operate, given the difficulty of
is to induce operational efficiency, transparency and duplicating the infrastructure for provision of utilities and
improve accountability. services in such a small market; the Government must
provide for access into existing infrastructure.
Since the enactment of the Public Enterprise Act, the
following public sector enterprises have undergone Eventually, reformed enterprises should operate on a level
reforms: playing field, with other operators in the industry, and
become subject to the competition rules. The Government,
Reorganisation - Civil Aviation Authority of Fiji; as the regulator, will establish the ground rules in terms of
Fiji Broadcasting Commission; technical standards and where there is a lack of competition
Fiji Electricity Authority; to regulate prices and set performance standards.
Government Supplies
Department; Maritime & Ports Proposal for Competition Policy
Authority of Fiji; Public Trustee Principles
Office; and Hardwood The development and implementation of competition
Corporation Ltd. policy and law in Fiji should be guided by the following
principles:
Corporatisation - Post Fiji Limited, Telecom Fiji
Limited. 1. Promoting market forces: Competition in markets
should be left to market forces, which will create
Privatisation - Air Pacific Limited; competitive pressures. This will induce lower costs, and
Amalgamated Telecom innovation for new products, resulting in the efficient
Holdings; Fiji Shipbuilding Ltd. use of resources.
2. Promoting contestability: Entry barriers must be
An integral part of inducing operational efficiency is to eliminated, and agents must be free to enter and exit
allow access for competition once public enterprises have the market.
been corporatised or privatised. Two critical issues need 3. Preventing economic market concentration: Economic
to be borne in mind when introducing competition in the concentration contributes to restrictive trade practices
public enterprise reform process. and anticompetitive behaviour in two areas, i.e. conduct
and structure. Market dominance by one firm, or
First, is the separation of the Government’s social/ concentration in the hands of a few firms, results in
regulatory role from the commercial function of the monopoly power arising.
enterprise, before corporatisation or privatisation. The 4. Promoting fair competition: Firms have a strong
regulatory role is transferred back to the Government to tendency to engage in unfair trade practices, or conduct,
prevent the unethical scenario where a player also becomes that enable them to gain, or maintain, market shares as
the regulator. Second, is to ensure that public monopolies competition intensifies in competitive markets.
do not become private monopolies.
Table 9.2: Ministry of Public Enterprise & Reform Managed Enterprises
Government Commercial Companies Commercial Statutory Authorities
1. Airports Fiji Limited 1. Fiji Electricity Authority
2. Fiji Broadcasting Corporation Limited 2. Civil Aviation Authority of Fiji
3. Fiji Hardwood Corporation Limited 3. Housing Authority of Fiji
4. Fiji Ships & Heavy Industries Limited
(formerly Fiji Shipbuilding Corporation Limited) 4. Maritime and Ports Authority of Fiji
5. National Trading Corporation Limited 5. Public Rental Board
6. Post Fiji Limited
7. Ports Terminal Limited
8. Rewa Rice Limited
9. Unit Trust of Fiji (Management) Limited
10. Viti Corps Limited
11. Yaqara Pastoral Company Limited
Fiji 47
5. Reducing government intervention: Competition should competition policies and strategies, which include the
be left to the market with minimum government following suggestions:
intervention as a general rule. The Government’s • The Government needs to consolidate monopoly
intervention should be limited to setting and enforcing regulation and investigation under the Commerce
the ground rules and performance standards, and in Commission;
cases of market failure. • The Government should guarantee adherence to the
Competition Decrees and Act, in addition to committing
Scope itself to maintaining strong competition and consumer
The competition policy and law in Fiji should cover all legislation; and
goods and services. A few exemptions are applied, in • The Government should promote deregulation in the
relation to: capital and labour markets, and public enterprise reforms,
as well as addressing the need to remove current and
a) The State: This is consistent with Section 5 of the Fair new exclusive licences.
Trading Amendment Act, which states that nothing in
the decree renders the State liable to a pecuniary In the already planned moves, the Government is to review
penalty, or to be prosecuted for an offence; and strengthen the current competition rules. The
b) Trade Unions: With reference to Section 31 (6) of the Government is also to strengthen existing remedies for the
Fair Trading Decree 1992, which states that anyone abuse of market dominant position, including a continuous
engaged in activities relating to remuneration, review of penalties; regulatory contestability in court; firm
conditions of employment, hours of work, or break up; and the Commerce Commission to be given
termination of work does not contravene the Act; and powers to enforce court rulings. The Government is set to
c) Intellectual Property Rights (IPRs): Consistent with continue its reform process, to ensure that public
Section 3(3) e of the Commerce Act, which covers enterprises operate in a fully commercial manner and
provisions on the exclusion of IPRs under the provide better quality, through progressive corporatisation
definition of ‘access regime’. and eventual privatisation.
Concluding Observations and Future Scenario The Government’s commitment to the above would ensure
The competition policy in Fiji is still in a progressive the success and effectiveness of the various competition
development stage, in relation to the Commerce and the policies in the country for the future.
Public Enterprise Act. There are a number of proposed
Ruci Dakunimata is currently working with the University of South Pacific. Earlier, she was a Senior Researcher on
Consumer Information, currently employed by the Consumer Council of Fiji, for the last three years.
After completing her BA in Geography/Population Studies and Demography, in 1997, at the University of the South
Pacific, Suva, Fiji, she went on to study for a Postgraduate Diploma in Development Studies at the same institution.
Prior to joining the Consumer Council of Fiji, Dakunimata was involved in various research assistant jobs with private
consultants and lecturers at the University of the South Pacific. She also taught Geography as part of the pre-degree studies
programme at the Fiji Centre, in 2002.
Dakunimata’s research interests mainly lie in development issues and their potential impacts on consumers. She has
conducted various research projects for the Council in issues, such as food and product labelling; and also represents the
Consumer Council of Fiji, on both national and international fora.
48 Competition Regimes in the World – A Civil Society Report
