Please leave comments

January 26, 2008 at 6:30 am 13 comments

Not an article to scare you.

I see this site receives quite a few visitors per day. The days in Fiji are sad, lonely and despairing.

But the light of my day is to see your comments and insights when I log on daily. It really does make my day and that of a lot of people who visit this blog.

So if you visit, please leave comments. It definately keeps me going everyday. And it will show those in power that some of us are brave and courageous enough to keep fighting on.

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Entry filed under: Uncategorized.

Chiefly system may be removed – but how? Stay safe people

13 Comments Add your own

  • 1. Linus  |  January 26, 2008 at 9:18 am

    I understand yr point, however I was once told that if U have nothing constructive to say beyond “I agree”; then say nothing.. So sory for my silence.!!

    I have on several occaisions commented that; to my understanding and knowledge of worldly systems; 2 or more nations of say more than 10% of the total population each, [AS IN FIJI… 57%Taukei, 35% Indian] cannot exist harmoniously together, 1 Nation WILL dominate and the other become subservient!!!

    This result will occur in Fiji Also… We JUST NEED TO ENSURE THAT THE TAUKEI DOMINATE!!!

  • 2. Save the Sheep  |  January 26, 2008 at 10:39 am

    We are with you and I for one always enjoy seeing you put up another article to consider.

    Even if there is silence be sure to know that the contributions of the Freedom Bloggers keep a whole lot of people going from day to day in this depressing time in Fiji.

  • 3. Indian  |  January 26, 2008 at 10:58 am

    This is great site. It, and Solivakasama the spirit going and I look forward to your articles each day.

  • 4. bai kei viti  |  January 26, 2008 at 6:50 pm

    bula tard watch..here is a good article about Fiji Water.

    press x to close
    Fiji Times OnlineFiji Time (GMT +12)
    The time in Fiji is 7:24 PM.
    Site is updated as news comes to hand Home Fiji News Sport Classifieds World Features Letters Business Editorial Weather Archives Galleries • Comment?
    / Front page / Archives » Article Index

    The true cost of water
    Sukhdev Shah
    Thursday, January 24, 2008

    It may merely be a coincidence but I recall a conversation, early in December, with a consultant concerning the feasibility of establishing a water-bottling plant in my home country of Nepal.

    I elaborated to the consultant, who happens to be a world-renowned expert on water-bottling plant, he told me he had helped set-up seven of such plants in different countries, that the site had an aquifer potential, sourced to its Himalayan origin, from which water can be extracted and processed at a fraction of normal production cost elsewhere, and can easily be marketed domestically as well as exported to regional markets, yielding a handsome profit.

    The consultant replied that such a venture would be extremely viable and immensely profitable if what I said was true but, in that case, I should not look to domestic or regional markets for earning the highest amount of profit but target the rich country markets, in America and Europe, where the Himalayan brand name can be sold at a premium.

    To impress me of the fact that water export from Nepal can become an extremely profitable enterprise, he illustrated the case of Fiji Water which, he told me, was bottling water in Fiji at a mere $US4 cost per case, including shipping cost to Los Angeles, but was sold in US supermarkets at $US50 per case.

    He did not elaborate if the difference represented Fiji Water’s net profit but he remarked that Fiji was not benefiting at all from its water export “much of the export earnings sat overseas and Fiji was getting practically nothing.”

    I did not pursue this point further, choosing instead to use my maximum time available with the consultant, who warned me that this session was free but further sessions would cost me $1000 a day, I focused on learning about the feasibility of one such plant getting established in my home country.

    The consultant told me if I am serious about getting into the water bottling business primarily for exporting, I must choose the best technology available, and I have a fully-automated plant, like the one Fiji Water had at Yaqara.

    Building a similar size plant equipped with the most developed technology and fully automated features would cost me about $F20million which, he contended, was not a staggering sum given the profit outlook.

    With the arithmetic in place, initial investment in this project can be recouped in no more than a couple of years.

    He later added because of its automatic features, the plant would run by itself, needing no more than 30 people as operating staff.

    As an economist, and also having some concern for general welfare, I was not much happy about what I had learned about the project. If I actually decided to go ahead with the project, I needed capital and arrange with the government an attractive incentive package,which, normally, most Third World Governments will consent to, especially if the project has export potential, there is a future to earn an unimaginable amount of money. But what for the society or the country what will they get out of it?

    Coming back to the case of Fiji Water and its current row with the interim Government on proper valuation of its consignments of bottled water for sales in the US markets the figures quoted in the media reported “landed cost in Los Angeles of $US4 per case and sale price of $US50 per case” just confirms what the consultant had told me some two months ago.

    Unless there is evidence of otherwise which Fiji Water, as of now, has not come up with it wouldn’t be unreasonable to use this information for getting a perspective on the issues involved and indicate a just solution.

    In this connection, some pertinent points can be advanced as the following:

    Assuming that figures in dispute are correct, Fiji Water must be a very profitable operation. Profit margin suggested by production cost and sale pricewhich comes to be $US46 per caseis indeed staggering and unlikely to be matched by returns elsewhere and in any other business.

    Priced at $US4 per case, Fiji Water says Fiji is losing some $F3 million per week from the stoppage of its shipment to US markets. Weekly export at $3 million would imply total export of roughly F$160 million on an annual basis. If brought to Fiji, this would add an equivalent amount to country’s foreign exchange reserves

    If, however, exports were priced at US$50 per case rather $4 per case, export earning would at least be 10 times this amount or F$1.6billion per year.

    It is expected that Fiji Water continues to enjoy a tax-free status it may have received as an incentive for establishing its plant in Fiji. If this actually is the case, there should be no reason for complaint or regrets on the part of Fiji Government for not being able to share this windfall with Fiji Water. Under international law, any such agreement with a foreign investment company would be binding on both parties and is enforced under international laws applying to investment disputes.

    Another issue is the “loss” of foreign exchange to Fiji from the underpricing of water export, as claimed by Government, but such loss can be no more than marginal. First, if reported difference between landed and sale price indeed represents profit, Fiji Water would be entitled to repatriate most, or all of it, to its overseas parent company, keeping in Fiji only that part of proceeds it needs for current operation and, may be, for capital expansion.

    However, aside from the profit part, it would be incumbent on Fiji Water to bring back all its export proceeds to Fiji and exchange it for Fiji dollars, which ultimately will flow into foreign reserves held at The Reserve Bank of Fiji (RBF). If, indeed, Fiji Water behaved in this manner, loss to Fiji would then represent the difference between interest rate Fiji Water gets on its deposit with Fiji banks and what RBF earns on foreign assets in which it holds most of its foreign reserves. Certainly, the difference, in favour of Fiji, will not be as staggering as suggested by reported difference between the cost and export price of water exported by Fiji Water.

    Such a benign view of loss to Fiji as measured from interest rate differential will not be correct if we take into account benefits that would have accrued to Fiji economy from the inflow of water export earnings, of the level claimed by Government. This would have helped ease foreign exchange constraints on the conduct of monetary policy and, broadly, helped keep domestic interest rates at more modest levels than they recently have been. Both would have contributed to economic growth.

    Transfer pricing
    Normally, as observed around the world, the ethics of transfer pricing remains very contentious.

    Multinational companies as represented by Fiji Water are capable of spreading their risks across countries where they do business. They do this by shifting most of its profits and asset holdings to their affiliates in low-tax countries that are also considered safe. Given a choice between US and Fiji, Fiji Water would definitely take a bet on US-partly for the reason of lower tax obligation but mostly because it can be a safe-haven.

    The company, then, has every incentive to minimise its earnings and asset holdings in Fiji, and moving most of it to its US parent company.

    One obvious way of accomplishing this task is through what is called transfer pricing’.

    This is defined as the overpricing or underpricing of products in the international trade of multi-national corporations in an attempt to shift income and profits from high to low-tax nations. According to this practice and there is nothing illegal about it under existing international laws – Fiji Water would be entitled to keep all its earnings and profits with its parent company in US, rather than keeping them in Fiji.

    Obviously, if it is underpricing its exports to US or anywhere else, this would be consistent with international laws and practices.

    Whether the production cost (including shipping) of $US4 per case is reasonable or not, it cannot be deemed outrageous if this actually represents actual cost incurred by Fiji Water at its bottling plant at Yaqara.

    This is so because such production represents the exploitation of the gift of nature, something like fossil oil or any other easily recoverable mineral resource for which “production cost” would normally be a fraction of its market value.

    The reason is the difference between what economists call “private cost” and “social cost”.

    Private cost comprises the cost of labour and capital and normal profits, while social cost would include “externalities” that yield a market value to private businesses but, normally, no payment can be assessed-an instance of “market failure” as known to economists.

    In the case of Fiji Water, externality comprises its access to fine quality water reservoir almost free-of-cost, after its initial investments, and it incurs only minimum amount in other costs, labour and material inputs, for readying the product for the market. Just like the case of pumping oil, for example, out of oilwells in Saudi Arabia, water extraction from reserves at Yaqara site in Fiji will be costing the company no more than a small percentage of its market value, after taking into account processing and shipping costs.

    Taxation vs. royalty
    Because of the “exploitation of natural resource” type of activity Fiji Water is engaged in at Yaqara, its bottling operation at this site should not have been treated,for government revenue purposes, any differently than in the case of other natural resource such as mining, forestry, and fishery. Because the exploitation of these resources represents a depletion of “irreplaceable reserve,” there are economic and environmental reasons for treating them differently than from other activities where the bulk of value-added comprises labour and capital costs and very little of natural resource input.

    In these “other cases,” it would be less difficult to get at the normal cost and pricing of product, assessment of a reasonable of profit margin, and their related tax obligation.

    Of course, Fiji Water does not fit the latter case.

    It would have been more sensible for the government of the time to opt for royalty instead of negotiating with Fiji Water and not looking at tax receipts or export earnings, as it is doing now.

    Probably, with an agreement in place, the government’s position appears weak on both these counts and, as noted, under the international law, Fiji Water would be entitled to its side of the bargain however ridiculous and unreasonable this may look to the government and the people of Fiji. In retrospect, it may appear that, in negotiations with Fiji Water at the beginning of this venture, government had very little understanding of this deal: it may just have wanted foreign investment to come to Fiji, especially if this involved a multinational company of repute, and helped exploitation of natural resource.

  • 5. natewaprince  |  January 26, 2008 at 7:30 pm

    I agree,hahaha.

  • 6. butterscotch  |  January 27, 2008 at 1:03 am

    Hi TWF! I was absolutely delighted when I first ventured on to yr blog, particularly given the facts that we’ve lost the others along the way (temporarily I hope!). Like Soli, u’re doin a fantastic job keeping the spirit and fight alive for the many thousands of anti-coup and military junta dissidents!

    You may not see as many comments as u’d like but the fact that a greater number of people log on to your weblog daily is testament to the growing desire in many to find alternative viewpoints to the daily propaganda dished out by the junta; and to KNOW that there’s at least someone like YOU out there who shares their views, concerns and inner thoughts about what’s going on around them. And of course, we can always depend on our good ‘ol NP to vent out some of our unspeakable frustrations 🙂

    Keep up your fantastic blog and we’ll keep visiting and hopefully, our silent bloggers will eventually find the courage to open up and post one or two lines about what they’re really thinking about our situation, no matter how trivial it may sound to their ears. Reminds me of that adage : “The great thing about having an opinion is that they’re YOURS”. But whilst no one can take that away from you, I like keeping an open mind and am always ready to persuaded by a better alternative. Vinaka!

  • 7. natewaprince  |  January 27, 2008 at 4:20 pm

    Very true BS,

    TWF ,if you were to do something about the size of the print for the comments column,I guarantee you’d get more responces to your comments.

  • 8. Anonee  |  January 28, 2008 at 4:22 am

    NP, au kerea mo lai cakava mada ga na nomu i tavi me dua na nodatou blogroll se waraki tikoga mai vei Soli gonei.. 🙂

  • 9. Corruption Fighter  |  January 28, 2008 at 6:02 am

    Fiji live have reported that Fiji police are still awaiting word from Interpol on their investigation into the military’s claim against ousted Prime Minister Laisenia Qarase. What a joke! What a mockery of proper process.

    Fiji Live report that Fiji police chief Commodore Ketepoka Teleni said if there is no response from the Australia Federal Police then they will just have to make do with whatever ‘information’ they have. In other words, they will try to nail him with media reports of the words of former PM Howard. It will be interesting to see what the DPP makes of this police effort.

    What does King Keystone Kop expect Interpol to say? I wonder if he realizes that Commissioner Hughes was a former member of the board of Interpol. Maybe Interpol will seek evidence from Hughes on the events of December 2006.

    Traitors chasing evidence of treason by others is a joke. but what this bullshit does to the professionalism of the Fiji Police Force is no laughing matter.

  • 10. Dauvavana  |  January 28, 2008 at 1:55 pm

    They are trying all the best to nail something on LQ andmake him not contest the election. the challenge is on the SDL people to be on their toes and be vigilant to any conspiracy (drummed up) that this people will try on him.

    They must learn from what is currently happening with Ballu and the Qaranivalu.

    Kua na vakawelewele vei ratou na veivutu ratou liutaki keda vakailoa tiko qo!!

  • 11. Keep The Faith  |  January 29, 2008 at 8:49 am

    Personally not a fan of Sukhdev Shah. He’s shown his hand and willingness to be a coup apologist (http://www.fijitimes.com/story.aspx?id=61033).

    Perhaps the lights switched on for the man and he realised that his academic career depends on his ability to enrich the learning of future Pacific leaders as opposed to his “enriching” us with personal political worldviews aka “who’s democracy” etc etc

    Perhaps if he also spent less time worrying about democracy in Nepal and ceasing to use his USP email responding to discussion forums about it, USP would be getting its value for money on his worth.

    Keep the flame burning TWF…we’re behind you all the way!

  • 12. kaiwai  |  January 30, 2008 at 2:43 am

    Keep it up, it’s a great site.

  • 13. Tui  |  February 5, 2008 at 4:36 am

    Bula TWF. Apologies for not leaving any comments, just that we have been visiting Solivakasama a lot and he seems to be the one who is up to date with the goings on in la la land.. But after visiting your site, I will try to contribute to the discussions here. Anyway, did anyone find out about the bomb threat at the Holiday Inn. It looks like the trade mark of this boci army. Bunch of bullies and lamulamu! Don’t have anything good to do but ruin this country. The article by Sukdev was very informative, alas he is still a coup apologist.
    Keep on fighting and we will get there soon. Bless!

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