Fiji and PNG trade growth could affect Forum influence | Pacific Beat

Fiji and PNG trade growth could affect Forum influence

Fiji and PNG trade growth could affect Forum influence

Updated 28 November 2012, 11:40 AEST

The trade relationship between Fiji and PNG is set to prosper with both countries looking to have more companies invest in each others country.

Another winner in the developing relationship is the Melanaisan Spearhead Group with its two major partners becoming more prominent in the regions trade. But, the collateral damage in all of this is may be the Forum Secretariat which could lose its pre-eminence in the Pacific as a regional organisation. A recent report into the Forum was not favourable and suggests the Forum is in need of a major overhaul.

Presenter: Geraldine Coutts

Waden Narsey, former professor of economics, University of the South Pacific


NARSEY: Well I think you can call it that, because we had this regional trade agreements around for ten years now, PICTA, and also had the MSG, the Melanesian Spearhead Group agreement has been in place, but nothing much was happening when the economists designed this picture, they were all talking about this hugely increased market. There is nine million people, there is seven million people in PNG, but there's no great interest shown in PNG by people elsewhere in the Pacific and when I did some work for Forum Secretariat, I was rather dismayed to find for instance that PNG manufacturers were very, very protectionist about their own market. There is a boom now and it's largely been driven by the very large financial flows being generated by the LNG investment and the amount of flows is so big, that I think that the PNG manufacturers themselves are unable to cope with those stores. So I think PNG is welcoming investment from outside of PNG. Of course, it has to be on their own terms, but as you will have seen from your own report, there are a lot of companies from Fiji who are very interested investing in PNG, in many big ways.
COUTTS: I'm guessing that this is because of the rise in importance now in the region of the MSG, the Melanesian Spearhead Group?
NARSEY: Well, it is partly that. I mean they felt that PNG people are also investing in the Pacific. You may have seen that they are trying to store up of good revenues into trust funds and things for future benefit for the PNG generations and the problem is always going to be a way to invest that money. So, of course, they will be investing very naturally in Australian stock markets and things, but they're afraid of stockmarkets crashing as occurred a few years ago, but they're looking around the Pacific and in Fiji, they have bought up hotels, they're going into a trade venture with GP Grand Pacific Hotel. They've bought out a large hotel down the coast. It used to be called the Beachcomber It keeps changing its name. But these are very, very large investment by PNG. When you look at why there is such a healthy relationship, you're right, that the MSG is taking on a greater prominence. I think because PNG is very comfortable with Fiji, I think there also is a bit of an admiration for Fiji, because well, PNG has received a lot of aid from Australia, there is sort of a little bit of a not exactly an equal relationship in what the PNG government sees. The Fiji government for whatever reason, I think we all know what their reasons are, being extremely aggressive and truculent with Australia and New Zealand and in their Melanesian world I think they kind of admire this kind of upmanship.
COUTTS: The flow of business, is it two-way, PNG investments in Fiji and Fiji investments in PNG?
NARSEY: Yes, it is, it definitely is. I think the Fijians at the moment, well, they've got the Bank of South Pacific here in a big way. They bought out the Colonial Bank, which is used to be the National Bank of Fiji. So there is tourism, they're in the banking business and I'm sure they'll be looking at more investments.
Fiji investors in PNG, I suspect that they will be a lot more comfortable in PNG than maybe other Australian and New Zealand investment, because the PNG environment in some ways is very similar to the environment in Fiji, to Solomons and Vanuatu. So I suspect the companies that have done well in Melanesia, in Fiji, Vanuatu and Solomons. They all will probably tend to do well in PNG. 
COUTTS: Will the Forum Secretariat wind up as collateral damage in this and in damage of losing its pre-eminence in the Pacific as a regional organisation?
NARSEY: I think that is happening to some extent. Right for the last three decades or so, there used to be a sort of cold attention between the Polynesian countries and the Melanesian countries and I suspect because the Polynesian countries have been a lot more advanced in modern terms than the Melanesian countries, especially Solomons and Vanuatu. I think there's been a certain degree of condescension and paternalism by these Polynesian countries towards the Melanesian countries and that has always been sort of resented. Fiji has been kind of half this and half that. Eastern Fiji, of course, is quite heavily Polynesian with the Tongan influence. So the fact that in Polynesian countries, while they may have a very big voice in Forum and they do genuinely have a big voice. I mean there small countries, they all have the same vote as the Solomons, Fiji, Vanuatu and PNG, although in terms of population, the ratio is probably about 30 from Melanesia to one in Polynesia. Their markets are very, very small and with the rising pre-eminence of the MSG market, then really all the reasonable agreements like PICTA, are not going to be focused on eastern Pacific. They're going to be still focused on Melanesia. So the Melanesian Spearhead Group meeting is definitely is becoming far more important. They've got their own Secretariat, which is in Vanuatu, and I think that's sponsored by China and there, of course, is another source of tension, because the Melanesian countries believe that the Polynesian countries are far to heavily influenced by Australia and New Zealand and they, of course, have new partnership with China, with whom they have quite a different kind of relationship. So the Forum Secretariat is very seriously in danger of being marginalised in the Pacific and I think to some extent when you look at the recent readmission of Fiji to the Pacific-ACP negotiations, in a way that is a symptom of the fact that the Melanesian countries are not going to allow one of their partners to be marginalised from a regional and international trade negotiations in which Fiji is seen as quite central.
I think the Forum Secretariat has recently had a review done of what they were doing and I think the review was quite critical. So it's probably a bit of a wake up call for them. They have to do far more in terms of how well they serve the Pacific countries and all of them than they're perceived to have done in the past. 
I notice that a similar sentiments don't seem to have affected the other very large regional organisations the SPC, but it may get to get to that as well. The SPC also, of course, has very many internal tension. Other regional organisations, well I think it's interesting that I think USP and Fiji National University have both been conducting talks in Papua New Guinea and they are talking about establishing branches there. Fiji National University has also been talking with Solomon Islands and I think Vanuatu is on their agenda as well. So the regional universities in the Pacific, in Fiji, they are also thinking of extending their campuses from beyond the normal countries in the Pacific to Papua New Guinea and possibly to Timor Leste,

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