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Media Center > Speeches > HON PM BAINIMARAMA REMARKS AT THE PRESENTATION OF THE NEW MAHOGANY LICENCES

HON PM BAINIMARAMA REMARKS AT THE PRESENTATION OF THE NEW MAHOGANY LICENCES

9/1/2017
The Chairman, Fiji Mahogany Trust,
Chairman, Fiji Hardwood Corporation Limited,
Council Members,
Ladies and Gentlemen.

Bula vinaka and a good day to all of you.

Welcome, everyone. And I especially want to welcome the representatives of the 13 new licence holders, who are entering this market at a very promising time, thanks to the continuing process of reform and recalibration we have been managing since 2010.

I don’t want to spend a lot of time rehashing what our mahogany industry looked like before we set about to modernise it and instil greater transparency, accountability, and sustainability, as well as modern business practises. But what I will say is that it was barely an industry eight years ago that is now thriving. Gone are the days of mahogany licences being granted under the table or through unscrupulous means.

My Government through the Mahogany Industry Development Act 2010 and the Mahogany Industry (Licensing and Branding) Act 2011 changed the course of the mahogany industry where it made it more responsive to the needs of ordinary Fijians and placed it in a position to not only promote the brand Fiji Pure Mahogany worldwide which attracts premium pricing but ensures sustainability of the industry through its reforestation measures. These laws mandated a comprehensive licensing and branding regime and inculcated transparency and efficiency which was non-existent previously.

Fiji Pure Mahogany enjoys a strong international reputation. Fiji Pure Mahogany is a strong brand, and Fiji is considered a good place to do business in sustainable hardwoods. The proof is that Fiji Pure Mahogany brand has been registered in over 20 countries. The proof is here today, with 13 new licensees. Now we can say with pride that we have accomplished a great deal and over such a short period.
We have the infrastructure and the legal and organisational framework to deal with emerging challenges that affect this industry.

And we are now in a position where we can make adjustments to respond to market forces, environmental challenges, or financial pressures because we have solved the big problems.

In our reform, we had set out seven key objectives: sustainability, value-adding, fair return to landowners, upholding the interests of Fiji, quality assurance, certification and branding.

We have been faithful to those guiding objectives since we began the reform process in March 2010, and we are reaping the rewards.

I am happy to note that FHCL, as a result of these reforms, has been able to successfully reduce its debt from over $20 million in 2008 to about $6 million now.

We have made replanting a priority, including the establishment of the new nursery project at Nukurua. Indeed, we have the largest planted mahogany forest and reforestation is the hallmark of our sustainable industry. As we harvest, we must plant more and more.

We have improved entitlements for landowners. We did this by increasing lease payments and premium by 19%, and stumpage rates by approximately 10% to 12%, beginning in 2016. And I am happy to say that there is now a special allocation of 5,000 cubic metres for landowner-based, forest-based companies who had applied through the transparent procedure established in the law.

The landowners themselves will administer this scheme through the Fiji Mahogany Trust. It is an excellent way to broaden participation in the Mahogany Industry and invite citizens to become entrepreneurs.

All this has been possible because we have maintained an open and inclusive process that respected the interests of all stakeholders in the Mahogany Industry—the licensees, the landowners, the contractors, the financial institutions and government. We approached the reform of the mahogany industry as we did with other industries—Fiji Sugar, Fiji Airways and Fiji Ports, for example—as an area that needed practical reform based on objective, business-based analysis rather than political mud wrestling.

Having said that, there is still a great deal of untapped potential in the mahogany industry, so we must redouble our commitment to partnership and collaboration. That is why we need to continually recalibrate.

We need to take an objective look at inconsistencies, obstacles to efficiency and outmoded practises. Most of all, we need to listen to each other. We have a common objective: We want to get the most out of our mahogany sector—in revenue, in quality, in value-added products, and in a respected brand.

In a sense, we are here today thanks to the wisdom of the Council, which took a hard look at the lessons learned from the licences issued in 2011, 2013 and 2014 and from the ongoing improvements within the Mahogany Industry.

With these new licences, FHCL has the flexibility it needs. If a licence holder is unable to purchase his or her allocated quota within 24 hours, the allocation is offered to the other licence holders according to their ranking. It is a fair and transparent system, and it serves everyone’s interests. This is what I mean by the need to be open to practical, business-based solutions.

The new system also ensures that at least two licence holders share each of the five log grades. So no one company will have exclusive rights to any grades, as in the past. This works with the flexibility to transfer quota, because it ends the stove-piping of our system and allows greater access to more wood by more licensees.

We also expect an increase in value-adding activity within the Mahogany Industry and greater participation by landowners, especially in downstream processing.

I want to congratulate the 13 licensees that have been awarded the new mahogany licences, and I offer this advice to ensure that all parties continue to benefit from the mahogany trade and Fiji’s Mahogany Industry continues to grow and thrive and attract premium pricing.

Everyone must follow the transparent licensing processes under the law. Make sure you commit to full compliance and adherence to the licence conditions, because there are many others standing in the wings if there are breaches or if you can’t perform as promised. There is no room for corruption. There is no room for unscrupulous behaviour such as backroom deals or enticing landowners with so –called sweet deals but that will ultimately be at the detriment of the landowners and the industry itself. Sadly, some still try to do this. Just know that these people will face the full brunt of the law.

Maintain regular, open and honest communication with FHCL so that logs flow and operations are uninterrupted. If you have problems or anticipate problems, bring them forward for discussion. A partnership works best when all parties trust each other, respect each other, and communicate honestly. I think I speak for FHCL when I say that we promise that kind of communication from our side.

Again, congratulations to you all, and I look forward to a profitable and productive relationship—for all of us.

Vinaka vakalevu, and thank you very much.
 
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