COMMODORE JOSAIA VOREQE BAINIMARAMA, CF(Mil), OStJ, MSD, jssc, psc

Prime Minister and Minister for Finance, Strategic Planning, National Development and Statistics, Public Service, Peoples Charter for Change and Progress, Information, iTaukei Affairs, Provincial Development, Sugar Industry, Lands and Mineral Resources

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ADDRESS AT THE INAUGURAL MEETING OF THE MAHOGANY INDUSTRY COUNCIL

Vale ni Bose Complex, NASESE
Thurs. 15th Nov.,2012, 1430 Hours

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Members of the Mahogany Industry Council;

Chair & members of the Fiji Hardwood Corporation Ltd. Board;

My Fellow Fijians.


Bula vinaka and a very good afternoon to you all.

It’s my pleasure to welcome you to the Inaugural Meeting of the Mahogany Industry Council. The Council is the apex body established under the Mahogany Industry Development Decree. Its function is to supervise and direct the maintenance and development of the Mahogany Industry in Fiji.

As you are all fully aware, our mahogany resource was grossly mismanaged for many years. What existed could barely be described as an Industry at all. It was fragmented and lacked cohesion.

The process of felling trees was done with no real objective for value adding and the harvesting did not produce long term sustained benefits for our people. As some of you are aware, majority of the mahogany including sawn timber were exported in a very rudimentary form. Also, there was no organized programme for reforestation of mahogany trees.

The whole business conducted through FHCL and those who participated in it was prone to corruption - in the forest, in the sawmill, and in the offices. FHCL, the holder of the Mahogany Leases, was haemorrhaging financially. And both the nation and ordinary Fijians were being deprived of a suitable return and the non-realisation of the full potential of this most precious resource.

There was inefficiency, lack of knowledge, and antiquated and outmoded systems.

And there was a clear lack of responsibility and accountability on the part of the previous Management and the Boards of FHCL . There was a lack of willingness to make a paradigm shift. There was a lack of willingness to adopt modern practices and management in getting the maximum return through value-adding of one's own resources. While there was much talk of reform, there was little appetite or ability to actually design and implement reform.

It is a significant concern to my Government that over the years, FHCL has accumulated over 20 million dollars of Government-guaranteed debt. Apart from this debt, FHCL has received Government grants of over 25 million dollars since 1998, which will never be paid back. Furthermore, in the previous years there were unsatisfactory efforts to even service this debt.

Put simply, the system was broken. And my Government committed itself to fixing it. To build a modern and sustainable Industry. To introduce order, efficiency, and cohesion where none had existed previously.

We could not continue to allow a few people to continue to profit at the expense of ordinary Fijians.

We had to stop the rot. We had to create this Industry to realise the true potential of this valuable resource, to get the maximum returns for the Fijian economy and all Fijians including landowners.

As a result, my Government introduced two Decrees designed to implement international best practices in the management of our mahogany resources and to ensure landowners and all Fijians received greater benefits from this important Industry.

The first is the Mahogany Industry Development Decree 2010. This Decree instills the transparency and efficiency that was previously absent in the Industry.

It has the best interests of all stakeholders at heart – not just a privileged few – and provides a fairer deal for all.

With proper implementation, the Decree will result in landowners receiving a larger share of the proceeds from Mahogany timber sales. This is particularly so, as the Decree sets the framework for the restructure of the Industry including the formation of the Mahogany Industry Council and the redefining of the roles of Fiji Hardwood Corporation Limited and the Fiji Mahogany Trust.

The second Decree is the Mahogany Industry (Licensing and Branding) Decree 2011.

This establishes a comprehensive regime for the licensing and branding of Fijian mahogany. The Decree implements a distinct and exclusive Fiji mahogany brand, which will help us achieve premium pricing for our valuable resource. Branding of Fijian mahogany will also prevent unscrupulous overseas buyers from exploiting our Mahogany Industry by mixing and selling Fijian mahogany with illegally harvested mahogany from other parts of the world.

To date, the Council has lodged registration of Fiji Pure Mahogany brands in more than 19 countries including China, India, the United Kingdom, the United States of America, and the European Union, which includes France, Germany, Austria, Spain, Sweden, Portugal, Italy, Denmark, Belgium, Ireland and Netherlands, amongst others. I am pleased to report that registrations of the Fijian mahogany brand have been approved in most of these countries.

The main focus of these reforms is to ensure that there are a restricted number of operators licensed to purchase mahogany with key criteria being value-adding in Fiji and export of Fiji mahogany as a distinct product. Value-adding in the Mahogany Industry will produce many positive results for the stakeholders. It will generate private sector investments, raise the value of our mahogany exports, and generate more employment in the industry.

As you all know, Fiji has the largest mahogany plantations in the world. This is something for our nation to be hugely proud of and is all the more reason for us to get it right – to demand more from this Industry than we have in the past.

My Government changed the course of this Industry to make it more modern and responsive to the needs of ordinary Fijians. The proceeds of this precious resource are beginning to reach the grassroots. Within the next one to two years, the momentum of this reform will gain an even greater pace for the benefit of all.

One of the ways this is being done is to include more women in the Industry as we update equipment and rely less on brute strength for our workforce. There are many new employment opportunities emerging for women. And when women earn wages, more money stays at home.

On this note, I am pleased to note that SMI, the first company to be provided with a licence to purchase mahogany, has a substantial number of women working in the sawmil, operating state-of-the-art machines in making world-class guitar components out of Fijian mahogany – a clear example of value-adding and its benefits to the economy.

I urge all of you to support the Government’s effort to make this Industry more sustainable, more accountable and to finally achieve more equity in the system.

When it comes to reform, the Industry is a work-in-progress. But we are now on the right path. We must all work together – the public and private sectors – to make the most of this rare natural asset and increase its general contribution to the economy.

We urge the financial institutions to step up and contribute to the radical reforms that my Government is implementing. They need to seriously consider the ways in which they can assist landowners to establish new business ventures and provide funding and business advice.

For example, with appropriate financial assistance and on-going advice, landowners could enter into businesses that provide harvesting and log cartage services to FHCL.

My fellow Fijians, I am pleased to say that landowners and the people of Fiji will soon be seeing the results of my Government’s reforms in this very important Industry.

Thank you. Vinaka vakalevu.