Weakness in investment confines the economy to a low-growth path. Public and private investment combined is estimated to have fallen to 14% of GDP in 2010, from an average of 18% in 2000–2005. Private investment is estimated at the low level of 3% of GDP.
The return of significant donor assistance for infrastructure and other
projects, largely withheld since the 2006 coup, depends on new elections.
The government is adamant, however, that it will not call them until 2014.
Investor concerns include an opaque and uncertain regulatory environment, as illustrated by foreign exchange controls, price controls, and unpredictable policy decisions. For example, a government decree in 2010 required media organizations to ensure that their directors and 90% of the beneficial shareholders are Fijian citizens permanently residing in the country, which forced a divestment by a foreign firm.
Deficiencies in infrastructure and the poor performance of government-owned enterprises also hurt the investment climate. The need to spur growth is pressing in light of rising poverty, estimated to affect 35%–40% of the population. The authorities have provided some targeted social welfare and have expanded price controls. But the sustainable remedy to poverty—
job creation—is unlikely without higher rates of investment.