IMF raises concerns on Commerce Commission
Tuesday, November 01, 2011
The International Monetary Fund (IMF) has raised concerns on the Fiji Commerce Commission control of basic food items, hardware and essential drugs.
The IMF suggests instead of price control, the government can adopt targeted means of assisting the poor.
A team from the Fund is currently in Fiji, meeting with various people and organisations.
The Commission responds that it would be disastrous to adopt such an approach without first getting the prices right.
The IMF is also worried about the Commerce Commission imposing a freeze on rent for the residential sector.
The Commission says while it took full note of the concerns raised by IMF and the World Bank, both parties do not have full and relevant information.
Report by: Christopher Chand
IMF applauds Fiji Commerce Commission
Publish date/time: 31/10/2011 [16:50]
The International Monetary Fund has applauded the Fiji Commerce Commission’s efforts in stabilizing the economy and ensuring that firms do not undertake unfair trading practices and engage in anti-competitive behaviour.
However, at the meeting between IMF, the World Bank and the Fiji Commerce Commission, IMF raised concerns on the imposition of freeze on rent for the residential sector and the control of price for basic food, hardware and essential drugs.
The Commission told IMF that when a tenant vacates any rented premises, the landowner can test the market and can charge the rent if they have done any improvement on the premises, however it was not wise to raise rent because of inflation in the economy.
The IMF also suggested during the meeting that the rent freeze should be lifted to allow the market to set the rent to which the Commission replied that while there wasn’t a competitive market to allow this, there were several government projects which would push a large number of flats and houses into the market next year which would then allow the market to set reasonable rents after which the freeze can be lifted.
The IMF also raised concern on the commission’s approach of controlling prices thus not taking into account the business model of individual firms.
In response to this, the IMF and World Bank team has been told that prices were set for each firm taking into account their cost structure and not an industry wide price.
The IMF has suggested that instead of controlling prices, the government could adopt targeted means of assisting the poor however the commission believes it would be disastrous to adopt this approach without first getting the prices right.
The Commission said that while it takes full note of concerns raised by the IMF and the World Bank, both parties do not have full and relevant information of the inherent features of a small state economy which made standard text book solution redundant.
According to the Commission, it will be happy to do regular briefings and updates to both institutions at their request.
Story by: Sneh Chaudhry