FHTA Tourism Talanoa: Investment Perspectives

FHTA, 13 April 2023 –?At the beginning of this article series last week, we highlighted the dominance of proudly locally owned tourism businesses, including hotels and resorts. This was to address the often-misconceived notion that Fiji’s tourism industry is primarily owned by foreigners and as such was responsible for revenue leaking out of the country.

On the contrary, more than 75% of tourism businesses are owned by Fijian nationals, even though they might be operated or managed by renowned international brands.

This week, and following on the heels of the recent Tourism Investment Summit where we were reminded once again of the urgent need for Fiji to review its current investment climate; we look at why we need to encourage and stimulate investments in infrastructure, agriculture, tourism and other industries.

The investment climate is a country’s socioeconomic and political landscape concerning how attractive it is towards investing and lending.

When a potential investor faces many hindrances, the investment climate may be deemed unfavourable, or even hostile.

Tourism undeniably brings with it benefits, the most significant of which is its huge potential to contribute to economic progress, creating job opportunities and supporting local communities. However, given the impact of the pandemic and its significant impact on tourism globally over the past three years, there is an urgent need to redefine tourism and what it will look like in the near- and long-term future. And this can be done by enabling sustainable investments in the sector.

The development of a sustainable tourism strategy is the first step towards enabling sustainable investment opportunities in tourism. In doing so, there should be a comprehensive assessment of the impacts of tourism on the environmental and social aspects of an area, including on communities, along with an analysis of its economic gains.

In the lead-up to this year’s Economic Summit that will be followed by the National Budget process and eventual announcement, the country is on the cusp of continuing its current pathway of revolutionary change by reviewing where it is now and making the necessary and perhaps painful decisions needed to navigate its way out of debt and into hopefully better fiscal freedom; or choose to continue along the lines of more the same old, in hopes that the economic ship might just right itself by some miracle if there were no cyclones, floods or other disasters for at least the next five years.

Whatever the choice, there is no doubt in anyone’s mind that new investments are required that will support economic growth and increase revenue collection opportunities.

We also know we need infrastructure development that will address improvements in water and power delivery, increase waste management services, fix roads and bridges and provide much-needed maintenance to public infrastructure generally.

These will ultimately provide the required support for any planned investment to take shape.

But to do all this requires driving economic growth that will produce more revenue generation, and simply increasing taxes and reducing spending will not be sufficiently given that only a small portion of the population pays taxes, and the industries that generate the most tax revenue are smaller still in number.

This is where the encouragement of private investments can be a powerful driver of economic development. Whether it’s building a new resort or extending an existing one, creating renewable energy options that can light up entire communities, developing innovative waste and recycling services or using nature to take visitor experiences to the next level – the opportunities are limitless.

Consider also that a formidable portion of more immediate investment also includes the ability for SMEs – usually, local entrepreneurs that are more likely than not to be women supporting families, to have access to concessional loans to start businesses that are part of supply chains in tourism and other industries.

Florists, drivers, fresh produce or staff meal suppliers, artisans making the many visitor-bought crafts and jewellery, designers, bakers and seamstresses.

But how do we convince local and foreign businesses to invest in Fiji?

Truth be told, we do not have the most conducive investment climate even though we’re working hard to address the identified challenges. And a quick search will show that investment incentives in countries similar to Fiji, or with a high reliance on tourism have far more attractive incentives to lure much-needed investments.

Through providing tax and other supportive incentives, governments can help encourage private companies to commit to investments that are aligned with their development goals. For tourism, this development needs to be sustainable – not just because these goals are preferred, but because we should be able to adequately show how the longer-term investment in sustainability will pay off for the business, as well as for Fiji.

The onerous responsibility of ensuring compliance and safety in Fiji’s tourism industry is currently reliant on a heavily regulated business environment; the complexity of which can make obtaining licenses, permits and approvals a challenge that commences from the initial paperwork required to simply open your first commercial bank account.

These processes are deemed critical for most investments or business start-ups, including compliance requirements across a host of public sector agencies involved with multiple regulations, including building codes, fire safety regulations, health and safety standards, and environmental regulations. Most of these require hard copies of the same documents as none of the regulatory agencies has bothered to include shared services or back-end interconnectivity despite claims of widespread digitization efforts.

Top of the list of areas for improvement therefore would include simplifying ease of business processes and at the very least, supportive websites or helpdesks that can provide new businesses or investors with a comprehensive list of “How To’s”.

How to – get a Tax Identification Number, open a bank account, apply for an EIA, access available land to lease or purchase, obtain an EFTPOS machine or a payment gateway, get a list of hotel-specific licenses and their fees, register your business on-line (in one sitting) and use your credit card to make overseas payments. Access to concessional loans for SMEs or specifically women. Among other things.

Despite the long list of compliance requirements, there are inevitable gaps between compliance and enforcement. As an example, only 221 out of 416 known properties in Fiji are currently licensed and registered, which means that just 53 percent of hotels are compliant and following regulations at this time, with enforcement lacking for the most part despite this information being known to regulating agencies.

Across other regulators, inspection requirements tend to be focused on already compliant segments of the industry, leaving the unlicensed and unregulated sectors open to shoddy service delivery, unacceptable health breaches and customer complaints.

Streamlining the regulatory processes and clarity around the enforcement of regulations have the obvious benefits of ensuring quality and safety as part of Destination Fiji’s service delivery consistency.

With tourism growth expected to continue based on positive trends, and a host of other encouraging signs that include increased route networks, flight schedules and fleet expansion by the national airline, as rising confidence within the industry to reinvest and expand existing services and footprints; this appears to be the opportune time for foreign investors to make some strategic investments given the right conditions.

To remain competitive, Fijian tourism must continuously innovate and develop new offerings to attract and retain visitors. Innovation can take many forms, from developing new experiences and activities to enhancing existing infrastructure and services.

Many countries around the world are investing heavily in their tourism industries to remain competitive. For instance, Singapore has invested heavily in its tourism infrastructure, including the development of world-class attractions such as Gardens by the Bay and Marina Bay Sands. Similarly, Dubai has invested in developing luxury hotels and world-class shopping experiences.

We might not have the same level playing field, but we have our unique product that is not just our pristine beaches, crystal-clear waters, incredible dive spots, forests and river gorges. Our people are our most unique gift to the world and with the right investment incentives, and a clear strategy outlining where we want to go and for how long, the industry can continue to grow and thrive, providing continued significant benefits to the local economy.

Whether it is being more open to sustainable tourism development, or considering investments that open up opportunities for education, sports, medical services, manufacturing, mining or business outsourcing – there is no such thing as a “one-stop shop” that will deliver everything that an investor requires to go from their dream to their opening.

Instead, we need to address those ease of business processes as a key priority, improve inter-agency working relationships and streamline what each is responsible for.

Then work on who is responsible for the provision of those “How To” lists. In our next article, we will delve into the intricate web of connections that exists within the tourism industry, explore the critical linkages between various segments such as transportation, accommodations, attractions, experiences and the local communities that deliver a long list of products and services that are so uniquely Fiji.

Fantasha Lockington – CEO,?FHTA?(Published in the Fiji Times on 13 April 2023)