FHTA, 06 July 2023 – The Fiji Hotel and Tourism Association (FHTA) approaches the 2023/24 National Budget from what we consider is a positive perspective, based on the Government’s indications to the nation for driving more positive change, subscribing to supportive policies for longer-term sustainable growth in the economy, and noble if not aspirational efforts to reduce our highest ever debt levels.
Budgets, like governments, cannot please everyone simultaneously. However, it is commendable that the recent budget acknowledges the mitigative factors discussed by the tourism industry that requires support to continue delivering the high yields it does while reviewing policies that could make Fiji’s investment climate more conducive to building up other industries to shoulder some of this economic responsibility.
So, we will take what’s offered and work with it, while navigating what it all really means.
Given tourism’s current significance as the primary earner alongside the now hefty inward-bound cash flow of remittances; we can see that a more collaborative role as an industry can provide better support and delivery of regulatory policies that could more positively address fiscal recession, while also providing valuable, real-time feedback on the negatives of said policies.
There is, for example, warranted concern about the potential impact of the increased corporate income tax rates as this might discourage investment in tourism-related companies due to perceived higher risks and reduced returns. Investors want to see quick wins after all, and be able to predict some level of positive returns within a specific timeframe.
But the difficult question is always how investments are encouraged and whether governments should only provide incentives for specific industries if they want to see growth and major developments. How exponential this industry development can be is usually dependent on just how supportive these incentives and industry-supportive policies are, as well as how long they last. It has been said before, that the tourism industry’s growth has been because of supportive incentive policies like these, but we know this has only been part of the reason.
The ability to remain consistently resilient (meaning you keep getting up every single time you get knocked down) in the face of challenges that are common to Pacific Island Countries (PICs) like Fiji; and sheer perseverance through passion, belief in the industry and hard work, have played the biggest roles.
As a PIC, isolated locations mean most everything you need and rely on is going to be imported at a higher cost, because while we have plenty of resources – we are historically poor deliverers of value-adding. As a result, PICs are generally higher importers and far lower exporters.
Weather plays the most critical role in tourism’s success factor can quite often be its most difficult antagonist, especially when partnered closely with climate change by wiping out pristine beachfront and creating more frequent tidal surges that destroy protective seawalls and damage beachside infrastructure including roads and bridges.
Factor in long spells of drought or heavier than usual rainfall levels and it can mean “feast or famine” for tourism operators trying to balance bank loans with the urgent need to purchase expensive new equipment, replace skilled staff who have answered the tempting call to work overseas, all while placating the bridal party because the beach they saw in the marketing pictures no longer exists.
Marketing these elements that can promote a resilient and special side of Fiji as a destination therefore can be challenging enough, without an understanding of how critical it is to have sufficient budgets that allow a small PIC to stand alongside giants like Hawaii and Indonesia vying for the same markets. But with the creative initiatives of the national tourism office, Fiji has been able to proudly showcase what can be so outstandingly distinctive about this particular little PIC so it stands out strongly.
These take into account what makes us so different – our people, our colourful heritages, our enduring cultures and the proximity to nature in all the most spectacular diverse forms it can have when you have over 330 islands (plus 540 islets) scattered over 3 million square kilometres of ocean.
This year’s annual budget, therefore, delivered post some of the most collaborative consultation efforts seen for many years, probably marks the beginning of a few years of changes that we can expect will be phased in to better prepare businesses. Some changes have been warmly welcomed especially those that directly address poverty and social program support. Other areas where policy support did not benefit the large majority, have been or are being overturned in favour of increasing much-needed revenue collection for Government.
The decision to extend the Capital Gains Tax (CGT) exemption on residential property gains, for example, is seen as encouraging the development of family-owned accommodation and rental properties; enhancing much-needed accommodation options and therefore the opportunities to attract more visitors.
The simplified dual-VAT rate system may progress eventually to a single rate option. The change will streamline the tax system, reduce complexity, and is a step in the widely called-for direction for creating more efficient environments for businesses.
For tourism, other factors such as continued high market demand in response to improved infrastructure development – more specifically accessibility to water, power, waste recycling systems, durable roads and bridges and higher confidence in our medical services, also play crucial roles in determining industry success.
Increasing the Airport Departure Tax albeit gradually, might raise some concerns that travel costs go up, but perhaps sharing the importance of these collections for this and other PICs that need the revenue would also create wider understanding. Revenue that along with increasing costs of alcohol and cigarettes, VAT and other non-tax collections rendered collectively, is essential for paying for the very things that will encourage wider investments and support higher tourism demand.
Conversely, the Association acknowledges the government’s efforts to address fiscal challenges through other avenues such as the water resource tax increase.
Fiji’s water supply rates are among the region’s lowest, and it makes economic sense that we all pay more for water so that we can address the critical and long overdue replacement of very old infrastructure, as well as enable better accessibility for people that often have to do without water for long periods.
We have advocated strongly for the introduction of wider education and awareness on the importance of sustainable water management practices, recycling and promoting the reduction of wastage. Not just to the public sector, but to the general population.
Businesses should prioritize water conservation efforts if they do not already do this and adopt innovative technologies to minimize water consumption. Government support, in the form of incentives or tax breaks, can encourage other industries to invest in sustainable water management systems.
Collaboration between the government, tourism industry stakeholders, and environmental organizations is essential in developing comprehensive water resource management strategies as part of broader efforts to maintain our resilience as a sustainable country.
It might be a big ask, but we can all collectively support efforts to bring down that debt-to-GDP ratio.
By working together, Fiji can overcome the financial recession and harness the resilience and potential we are always proud of sharing, to uplift the entire country’s economy.
By collectively implementing strategies such as promoting investment, enhancing tourism experiences, and advocating for sustainable practices, we can continue to stand alongside those big marketing giants and still strengthen our position as a premier tourist destination.
As a PIC struggling with the usual PIC challenges, Fiji can show its strengths in areas like tourism – an industry that will continue to evolve; but that is a testament to the resilience and adaptability of its stakeholders to play a central role in revitalizing the economy. With a unified commitment to working collaboratively with the government and other stakeholders, we can ensure that tourism not only fully recovers, but thrives; bringing what we hope will be longer-term prosperity to Fiji and its people.
This calls for us to work together.
Fantasha Lockington – CEO, FHTA (Published in the Fiji Times on 06 July 2023)
