Monday, November 29, 2010

Fiji Water Closes Down

Sai's Comments:

  • Well this is to be expected and the illegal regime has to take the full blame for it and the regressive impact on all those who will be affected.

  • It is another nail in the coffin for Fiji's ailing economy as Fiji Water represent more than F$130 million in export revenue for the country and employ nearly 400 people.

  • It is total lunacy on the part of the illegal and unelected regime to have brought this on the Fiji economy as a whole and specifically on the lives affected.

  • Fiji Water has been a cash cow for Fiji and it makes no economic sense to burden it with a tax hike flagged in the 20011 Budget. A more progressive tax regime or other forms of perhaps equity sharing in the long run could have been explored. Why sever the hand that feeds you? What now for Fiji?

  • Well the only options now would be to raise other forms of taxes, direct and indirect, which will further penalise Fijians as well as potential investors, who must be now be revising their plans as a result of the punitive action by the illegal regime. The removal of the regime is the only real solution to Fiji's ongoing problems.

FBC News - Monday, November 29, 2010

The number one leading water brand in North America - Fiji Water has closed down– effective today.

In a statement - John Cochran, President of Fiji Water says the 15 per cent Water Resource Tax imposed by government for 2011 is untenable and they are left with no choice but to close down the Fiji facility.

He labeled the tax as ‘discriminatory’ as Fiji Water - which currently pays one-third of a cent per liter, is the only bottled water producer in Fiji that will be affected.
Cochran says they are saddened that they have been forced to make a business decision that will result in hardship to hundreds of Fijians.

In addition – Fiji Water will be putting on hold several large construction contracts in Fiji worth millions. Cochran says Fiji Water will also be forced to cancel all contracted engineering and support services.

He also informed that all ongoing purchases from local suppliers will have to be canceled.
Fiji Water says they represent more than F$130 million in export revenue for the country and employ nearly 400 Fijians at their facility.

Cochran adds that Government's current action on the tax sends an unmistakable message to businesses operating in Fiji that the country is increasingly unstable, and is becoming a very risky place in which to invest.

However he says they are willing to work through the issue with the Fiji government. Attorney General Aiyaz Sayed-Khaiyum says the Prime Minister Commodore Voreqe Bainimarama will issue a statement later today.

Response by the Illegal Fiji Prime Minister

In response to the media statement by Fiji Water, the Prime Minister, Commodore Voreqe Bainimarama  has said that ‘The Fiji Government  remains firmly committed to both international and local investment in Fiji. However, if Fiji Water no longer wants to operate in Fiji, it must inform the Director of Lands and Yaqara Pastoral Company Limited from whom Fiji Water has leased lands.”

The Prime Minister said that “as usual Fiji Water has adopted tactics that demonstrate that Fiji Water does not care about Fiji or Fijians. They have made statements about supposed instability in Fiji and know it is not true, yet do so because they simply do not want to pay the new taxes.”

The Prime Minister  said that “Fiji Water has had a corporate tax holiday since its inception until only two years ago; it has paid less than a million dollars in total corporate tax and only in the past two years (2008 and 2009); it receives approximately $FJ 4-5 million in VAT refund annually given it is export- driven;  despite being a premium boutique water product, it declares the selling price of a carton of water  at $US4 when at the same time other relatively unknown brands from Fiji like Aqua Pacific declare their selling price to the US market at $US10 a carton; Fiji Water sells its water to a US sister company and therefore is engaged in transfer pricing.  These are the facts pertaining to Fiji Water.” 

The Prime Minister said that “the positive feedback from the recent Fiji-Australia, Australia-Fiji, NZ-Fiji and Fiji-NZ business councils meetings, the positive feedback on the Budget and the new investment inflows and interest is indicative of the affirmation of and confidence in Fiji and the Fijian economy by the private sector.”

 The Prime Minister  said that if Fiji Water is no longer interested in Fiji then the Fijian Government, following cancellation of the leases, “will call for international tenders from credible and reputable private sector companies to extract this valuable resource.” -- No:2032 /PMO.

Report by : Elenoa Osborne

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