Meet investment target for growth: Academic

By RACHNA LAL and RANOBA BAOA In order to achieve the long-term targeted economic growth of five per cent, Fiji needs meet the investment target of 25 per cent. This
03 Oct 2012 12:30


In order to achieve the long-term targeted economic growth of five per cent, Fiji needs meet the investment target of 25 per cent. This was the view expressed by the University of the South Pacific’s senior lecturer in the School of Economics, Dr Sunil Kumar. Dr Kumar was speaking during the Fiji Economy Update 2012 yesterday held at the Holiday Inn Suva organised by USP. “The targeted economic growth is five per cent and I think that is an excellent figure and quite achievable in the medium to long run,” he said. But Dr Kumar questioned how this would be achieved when our projected growth for this year was 2.7 per cent and next year 2.9 per cent. “Investment target for Government is 25 per cent but at the moment we are making it 16 to 17 per cent – probably we will be hitting 18 per cent this year,” he said. “But that will not be good enough to hit an economic growth of about five per cent which we are targeting. We would certainly need beyond 25 per cent investment rate,” he said. Responding to Dr Kumar, Ministry of National Planning chief economic planning officer, Luke Koroisave, said the investment target of 25 per cent had not been achieved since 1981. He said: “The total investment has been declining over the last three decades since 1977. “There was a significant reduction in private investment in 2011 to four per cent from 13.7 per cent in 1981. “This has resulted in Government taking an expansionary fiscal approach in increasing its capital budget in recent years to stimulate growth and investment prospects.” Mr Koroisave said there was a nneed to increase private sector participation in the economy. “We believe the 2012 growth outlook is positive, supported by moderate growth in key markets, positive impact of the Budget, rebuilding after recent floods, recent positive developments,” he said. Foreign investment Dr Kumar believes Fiji has a lot of investment potential especially with its strategic location and used data relating to foreign direct investment (FDI) flows into Fiji and Mauritius to illustrate this point. “Foreign direct investment flows into Fiji has remained above that of Mauritius,” he said. “Fiji lies at a very strategic point in the Pacific and we are surrounded by very significant economies such as China, Japan, Hong Kong, Singapore, Malaysia, USA – that is the reason FDI flows have been so high.” He however indicated that the problem was when there was political instability which led to lack of confidence in the economy as illustrated by the data available which showed that FDI took a nose dive after 2006. But Dr Kumar stressed that Fiji was once again coming up with positive investment environment with the constitution consultation process going on right now. FNFP funds Dr Kumar also revealed that the funds from the Fiji National Provident Fund (FNPF) were doing better now as per figures from 2011. He highlighted that the employer numbers had increased along with the number of members and their asset portfolios. “Also now there is a law in place where FNPF will be able to invest more abroad in more productive portfolios,” he said. Construction sector Dr Kumar further noted a downslide in construction activity – which he said was not a good sign. “Any economy which is faced with this situation, is in trouble,” he said. “This means the households and firms are not putting in money and resources to build real estate.”

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