January 15, 2009

What’s the Damage?

So. The IIG have pegged the cost of infrastructure damage at FJD$20mill. That is staggering when one realises that that’s only for infrastructure and that it currently stands as a conservative estimate.

Let’s give DISMAL DISMAC a hand and premilinarily assess that against national costs to Government and what it will mean for the inevitable diaohrrea that our wallets are going to have.

Starting with what the 09 budget forecasted (too bad the Met Director isn't involved as extensively as he should be--one would now surmise in '09 hindsight--in the budget process):

Overview: 2009

1.29 The Fiji economy is forecast to grow by 2.4 percent in 2009. All sectors of the economy are forecast to contribute to this growth. The key factors underpinning this positive growth relate to projected increases in operating and capital expenditure by Government.

1.30 Projected growth in the sugarcane industry, coupled with an envisaged expansion in the forestry, other crops, livestock and fishing industries is forecast to contribute to a 4.6 percent rise in the agriculture, forestry, fishing & subsistence sector.

1.31 A projected increase in tourist arrivals is anticipated to provide the impetus for positive performances in the transport & communication and wholesale & retail trade and hotels & restaurants sectors. In addition, the land transport, water transport and communication industries are also forecast to underpin growth in the in transport & communication sector.

1.32 Forecast growth within the sugar, other food, beverage & tobacco and other non-food industries is expected to drive a 2.4 percent growth in the manufacturing sector.

1.33 Growth in the electricity & water sector is forecast at 2.3 percent while the finance, insurance, real estate & business services and building & construction sectors are both forecast to grow marginally by 0.4 percent.

We would not be wrong to suggest that the document now needs a major reality-checked overhaul.

It is also safe to say that the superlative-laden response's to the budget from folks such as Motibhai’s Mr Mahendra Patel, (I)FNPF Chairman Felix Anthony, (I)FTIB Chief Annie Rogers, Ernst & Youngs Francis Chung, CMDA's Mereia Volavola, Hari Punja, and Ro Teimumu Kepa could do with some better qualifying adjectives.

Sugar, which according to the latest budget contributes “approximately 6% of total GDP, 25% of total domestic exports, and employing 40,500 people” is in big trouble. The Sun reports that the growers are reeling at the total damages that could run into the tens of millions. This does not include the individual townships of the sugar centres that have mills, and who primarily service this industry: Lautoka, Nadi, Tavua, Ba and the Rarawai Mill.

The tourism sector will not be left unscathed in the short to medium term unless Fiji can assure visitors of their safety in addition to the bona fide holiday experience. Australian tourists, our safety net of tourist arrivals are up in arms that the Rudd government is not doing enough to evacuate them, which translates to the racking up alot of already hard-to-come-by "Fiji Me" marketing money to repair. The gateway of Narewa to Fiji’s 5-Star hot-spot in Denarau was affected. All airports are now open and international flights are going but mostly carrying outbound passengers. Domestic flights remain erratic. Many hotels are still presumably operating with skeleton staff. Outlying settlement areas in Nadi who could have tourism workers are also affected. Travel insurance niggles could also pose as a deterrent.

Fiji’s forestry exports, even if negligible will probably also take a nose-dive after loggers were advised to ease off. Today’s Daily Post editorial has some good advice on this which is very appropriate when set against ’09 budget plans for the mahogany resource.

In the construction sector, even though 2008 statistics show an increase in the 3rd quarter of 2008, it is inevitable that there will be next to zero growth in this department for at least the first 2 quarters of 2009 until the economy is stimulated or injected to create/meet this demand.

In the mining sector, gold production is still inching for more/better concessions and it appears that negotiations are on-going.

For the domestic agricultural sector which contributes (as at 2007), 11.6% of our GDP, the IIG had anticipated that it would be “demand driven” in approach. How true. It will be in demand, but supply is stricken and restricted to water-logged crops across agricultural centres. Farmers are being advised to harvest their crops now and plant (if and when they can) agricultural root-crops that are quick to mature. Any export promotion of agricultural products is going to have to be removed in order to service the domestic food security needs first. And we’d be far better off redirecting the said $50mill for biofuel production towards this.

Retailers are becoming agitated at the slow pace of assistance to them.

For essential services:

Electricity supply to some affected areas is still undergoing work.

Clean running water, a basic survival need is also affected. Notably in Sigatoka.

Telecommunications a core link in any disaster was hampered drastically, with slow restorations todate. Although collectively they are attempting to offer some communications relief to the nation: Telecom, Digicel and Vodafone. Radio broadcasts of pivotal safety advisories out to the rural populace is a must particularly when the main feed services the AM frequency and in the vernacular. It is no wonder that many were caught unaware.

Health services must be immediately prioritized after disaster relief. Already there is a broken sewer in Sigatoka, the mortuary is full, disease outbreaks a distinct possibility, the water-borne diseases reality, and to top it off the blood bank is low on blood. The safe and hygienic disposal of all waterlogged goods/products/homeware/dead animals/debris will also need to be overseen. The last thing we need is an epidemic.

In terms of immediate disaster relief. There appears to be still a severe lack of coordination by DISMAC, and the steady filling up of evacuation centres needs close management. Any and all hands still need to be expeditiously reaching out to stem the rising tide of hunger that is out there.

So what’s the outlook for us everyday fullahs?

Spiked inflation especially on the everyday staples. That’s your groceries, such as milk/butter. For those in the rural centres, because of the extensive infrastructure damage to roads, getting food in will be challenging. Imported rice is already very costly. Tinned goods need to be vigorously checked against use-by dates, pricing and dents. The price of flour remains stable for the moment.

Fresh fruit n vegetables, root crops and fish supplies will dwindle which jacks up these prices.

Depending on how steady the global oil prices stay, fuel prices should remain the same and therefore so should bus-fares and electricity bills. We’ll be damned if FEA gives us any more tales about the Monasavu Dam. Gas and kerosene prices should remain the same also.

The price of back-to-school needs for schooling crew should not increase but spare a thought for those who may have lost already purchased materials during the floods.

The cost of drugs and antibiotics will also need watching.

Concessions or assistance with building materials such as roofing iron, cement, timber, bricks, louvres etc would be very handy for those with housing damage. The same applies for clothing/shoes and household essentials like bedding, pots/pans, cutlery, digging spades/forks, cane knives etc.

The Prices and Income Board overseen by the Consumer Council will need to be out there policing price hikes expeditiously especially in the rural outposts.

What does all this mean for the IIG?

For starters they need to kill all low-priority expenditure. Low priority for the next couple of months means anything that does not involve disaster rehabilitation, essential services (most especially health), mandatory infrastructural maintenance and education. Everything else is unnecessary in the bigger scheme of things.

The Charter malarkey which is costed at $2.4mill is a start.

Today’s 2 new appointments in the AGs Office can be next as well as any other additions to the IIG cabinet, constitutional offices or civil service posts.

The carrot dangling tax rebate means that we will not meet the tax revenue of $1.331 bill for next years budget as outlined in the IIPM’s budget speech. In fact some unscrupulous entities could end up making a profit on this offer, if left unchecked.

The departure tax increase has kicked in and Tourism Fiji’s Patrick Wong's assertions in November last year that it was a soft tax easily cushioned could be haunting him now. The IIG need to make up their mind as to whether they really want tourism dollars or not. Adding any new costs to visitors is not the greatest of idea's.

The insidious road use levy also needs rescinding. Uhhh yeah…what roads? For heavy duty vehicles that are apparently being targetted, it's hard to see any reason why they will be tearing up and down the highways now.

The new bottled water tax has been gazetted and it is supposed to be in line with the projected income of $1.5mill. The IIG will need to think that one through again as there are not many other industries that can prop up the economy right now. Therefore they need to be keeping those still kicking verrrry happy.

As noted earlier before the $50mill earmarked for biofuels will come in very handy for more pressing priorities of disaster rehab.

The bottom-line is that we have a very bleak outlook with minimal options to fund the many, many, many pressing needs. Ultimately it's not a good time to be II PM Minister cum II Sugar Minister cum II Finance Minister. All this can change in an instant Mr Bainimarama if you step down and call for elections.

In case we still carry a torch of the pipe-dream that China is our knight in shining armour, spare a thought for what’s happening in Papua New Guinea.

Folks, please continue to keep your eyes peeled on the weather updates and spread the word




To view pictures of the recent natural disaster damages, click on the galleries below as hosted by the appropriate organisations:








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