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Fiji 2019-2020 Budget Announcement

Fiji 2019-2020 Budget Announcement

By Vijay Narayan
Saturday 08/06/2019

The 2019/2020 National Budget has been announced with many initiatives focusing on protecting our environment, expansion of ECAL or the Environmental and Climate Adaptation Levy on goods including vehicles, increased duty on new and used hybrid and non-hybrid vehicles, targeted assistance for people, reduced government expenditure and a target of economic growth for straight 11 years.

The good news is that the $30,000 income tax threshold remains, and VAT and corporate taxes will not go up.

To curb the issues of traffic congestion, 10 percent ECAL will be imposed on all new and used hybrid vehicles and all new and used non hybrid vehicles.

The 10 percent ECAL will also be levied on the import of smart phones, air conditioners, freezers/refrigerators, television, washing machines, dryers, dishwashers, electric stoves, microwaves and electric lawn mowers.

120 million dollars has been collected through ECAL so far this year.

Import Duty has also been increased for used hybrid vehicles - the new duty for used hybrid vehicles that are less than 1500cc will be $4,000 from the current $2,000 per unit, $5,000 duty for 1500cc to 2500cc used hybrid vehicles, $6,000 duty per unit for 2500 to 3000cc used hybrid vehicles and $13,000 duty per unit for those used hybrid vehicles exceeding 3000cc.

The Import Duty on new non-hybrid vehicles that are less than 1000cc will increase from 5 percent to 15 percent. Used non-hybrid vehicles in this category will have a duty of 32 percent or $7,000 per unit. Duty has also been increased for all other new and used non-hybrid vehicles.

While delivering the 2019/2020 National Budget, Aiyaz Sayed-Khaiyum confirmed that the plastic bags that are normally used at supermarkets will be banned from January 1st, 2020.

Plastic levy will be increased from 20 cents to 50 cents on low density plastic bags. This will be effective from 1st January, 2020.

Styrofoam containers will also be phased out by 1st January, 2021.

Import Duty on children's clothing has been reduced from 32 percent to 5 percent.

Import Excise Duty will increase from 0 percent to 10 percent for imported chickens. This is to encourage the consumption of local chickens.

There will be no increase in the prices of cigarettes and alcohol as there is no duty or tax increases.

100 percent of employer contribution to FNPF will now be tax deducted.

Zero percent duty has been announced for new trucks.

Duty for new buses has been reduced from 5 percent to 0 percent.

Sayed-Khaiyum says the message to the bus industry is to get the older and dirtier buses off the roads after duty reductions.

The customs and import duties will be effective from midnight tonight.

The Minister for Economy has also confirmed that no new vehicles will be allowed in Fiji if they are not Euro 4 compliant.

A 200 percent tax deduction has been offered for film production companies to set up in Fiji.

There will be a 50 percent investment allowance for building warehouses.

Sayed-Khaiyum says 30 million dollars has been allocated to subsidise the guaranteed cane price of $85 per tonne.

Laws will also come in to have collection centres around the country for PET bottles and people will be compensated for bringing in the PET bottles.

Sayed-Khaiyum also says that Fiji needs a local Fijian waste management company. Naboro will be made a tax free zone for the set up of waste management companies.

It has also been announced that businesses and organisations will  adopt highways and clean up these areas and they will be allowed to put up signages.

The Minister for Economy says Fiji aims to recover it’s oceans and will issue Blue Bonds and build a Blue Fiji.

$300,000 has been allocated to build resilient informal settlements.

The Nadi River Flood Alleviation Project will start next year. This is to widen the Nadi River. $7.95 million has been allocated for this.

A National Gardening Competition will start in all Fijian schools from next year.

Sayed-Khaiyum says they will be reinstilling the culture of gardening by rewarding school communities who look after their school gardens.

$200,000 has been allocated to have National Youth Awards.

The Young Entrepreneurship Program or the YES Program will continue. $500,000 has been allocated for this.

Over 800 million dollars allocated to the Education Sector.

It was also confirmed that students under the Tertiary Education Loan Scheme TELS should be going to universities offering their chosen courses near their homes rather than moving to the city to do the same program. Sayed-Khaiyum says it has been noticed that some students are using more tax dollars by moving away from their homes to do courses that are available near their homes.

TELS will no longer be allowed for USP Technical Colleges as they do not allow for cross transfers. FNU allows cross transfers so TELS will continue to fund students going for that.

The Free Milk for Year 1 students will now only be for students in rural and maritime regions. This follows reports of students playing with boxes of milk and stomping on them. The program will be monitored in the rural and maritime areas.

Sayed-Khaiyum says the free bus fare scheme for students will also have some changes as it has been noticed that truancy is rising amongst students and there has been abuse of the free bus fare scheme. It has also been highlighted that some parents have been abusing their children's bus cards.

The Minister for Economy says they will now restrict travel to subsidised students under the free bus fare scheme. They can only travel from home to school and back and cards can only be used upto 4.30pm.

Students from foundation level will longer qualify for the  National Toppers Scholarships.

The Ministry of Education, Heritage and Arts is allocated a total of $467.7 million in the 2019-2020 National Budget.

The Ministry’s capital expenditures has decreased following the completion of cyclone related rehabilitation.

The Ministry is currently undergoing an organisational restructure that will streamline its systems - the restructure will be complemented by a comprehensive review of Fiji’s national curriculum.

Government loans and scholarships will continue for tertiary students.      

Allocations for school meal allowance for government schools is going up to $6 per meal.

Existing initiatives like Free Education Year 1 to Year 13, Tuition Grants for TVET, Early Childhood Care and Education, Transport Assistance and Free Textbook Scheme will continue.

An allocation of $12.7million is dedicated to the major health infrastructure projects in the 2019-2020 National Budget.

This includes an ongoing major extension to the Colonial War Memorial Hospital Maternity Unit and the completion of the new sub-divisional regional hospital in Navosa. Also included are preliminary works on the Labasa Hospital and sub-divisional hospitals in Nausori, Korovou and Valelevu.

Concurrently, another $3.2million is planned in investment towards refurbishing the emergency department at the Colonial War Memorial Hospital and Nausori Health Centre.

The upgrade and extension of Rotuma Hospital is also part of this funding in addition to the specialized Tamavua Subdivisional Hospital.

$4 million has been allocated for sporting tours. Funding has been confirmed for the 15s World Cup and for the Tokyo Olympics. $650,000 will go to our 15s side to fund preparations for the Rugby World Cup year. $2.1 million will go towards our men’s and women’s Rugby Sevens teams for the Olympics.

Some initiatives in the housing sector that have been announced in the 2019-2020 budget.

These include assisting informal settlements by drafting proper tenancy agreement and improving basic infrastructure through formalizing and regularisation of informal settlements.

Another initiative is the restructure of the First Home Purchase programme which has already assisted more then 300 Fijians to purchase or construct their homes.

$2.0 million is allocated for eligible households with a combined annual income below $50,000 to receive a grant of $10,000 if they buy a house or $15,000 if they build a house.

The Social Housing Assistance continues with an allocation of $1 million. This is for the construction of homes in the rural and maritime areas on a cost-sharing basis.

The PRB subsidy continues with an allocation of $1.6 million.

The Ministry of Housing and Community Development have been allocated $17.2 million.

A new program of cadetship for incoming civil servants will also be implemented.

$6.9 million has been allocated to move technical colleges to the Fiji National University.

FCCC is looking at monopolistic fibre networks.

FCCC has also reviewed mobile termination rates. Rates will reduce from 8 cents a minute to 5 cents a minute.

Digital Fiji App will have faster birth registration. Electronic payment option will be introduced for government services under the Digital Fiji App.

E‑Passports will be coming in for a more secure Fiji. Fijians travelling to other countries can use E‑Passport gates.

There will be reforms of Immigration laws. Spouses of diplomats and spouses of people on work permits will be allowed to work in Fiji.

From June 14th, 24/7 services will be available for Registrar of Companies on Digital Fiji App.

Digital Fiji App will create a people hub. When someone applies for government services, people's basic information can be checked and they no longer have to go to the Births Deaths and Marriages Office if they qualify for Social Welfare Assistance.

For business registrations, streamlining processes will be undertaken.

From 10th of July, a new Biz Fiji Portal will be launched on the requirements to start a new business.

Plans are underway for a National ID Card.

The National ID Card system will be implemented by December 2021.

10 million dollars has been allocated for Transportation Assistance.

E‑Transport for mini buses will start from the next year.

Day Care Centres will be established in major hubs of the country.

Plans in place to pay all workers electronically, not in cash.

A major initiative in the tourism sector that was announced in the 2019/2020 budget is the Tourism Fiji Marketing Grant.

$29.8 million was allocated to Tourism Fiji to continue global branding initiative in target markets to ensure that Fiji remains a top holiday destination and maintains its growth in the tourism sector.

New centralised bus stands planned in Nakasi and Nasinu.

$400,000 allocated to construct public restrooms along highways.

$4.1 million allocated to complete swimming pool in Lautoka.

Floodlights to be installed at Churchill Park.

$250,000 allocated to build mini markets.

$900,000 allocated for agri‑business.

$4.5 million allocated for National Agriculture Census.

Nasinu Court will have 4 new court rooms.

The Judiciary will develop an e‑filing system.

$54.4 million allocated to the Judiciary.

FCCC to charge fees to companies who hire them.

Aiyaz Sayed-Khaiyum says redundancies and waste are being rooted out in the civil service.

He says there is a big push being made towards multi tasking in the civil service.

Sayed-Khaiyum says this is based on increase in civil service salaries over the past years. Salaries stood at 620 million dollars in 2013 while the salaries stood at 1 billion dollars last year.

First Home Buyers Assistance will continue.

$180,000 allocated to fund Fiji's 50th Independence Day celebrations next year.

Families with an annual household income of $50,000 or less can receive loans of an extremely concessional nature ‑ with a maximum interest rate of 5% over a maximum term of five years.

To support pharmaceutical manufacturers in Fiji, the import on ethanol will now carry zero duty and the government is granting a 13‑year tax holiday for investments towards the setup of pharmaceutical manufacturing.

The threshold to qualify for the 150% tax deductions for corporates who sponsor sports teams will be lowered from $50,000 to $15,000.

The Total Government Revenue is expected at 3.491 billion dollars in the next financial year.

The projected expenditure is expected at 3.84 billion dollars.

The debt to GDP ratio will be down by 6 percent compared to the last budget. It is projected to be 47.1 percent.

The Minister for Economy Aiyaz Sayed-Khaiyum also says that the Asian Development Bank and the World Bank are stepping in to assist by refinancing Fiji’s loan obligations with policy based loan support that is contingent on the progress for the reforms.

Sayed-Khaiyum says the Fijian government intends to use this funding support to redeem the US$200 million dollar global bond due in October 2020.

He says they will be accessing the loan in two tranches, and based on government’s progress so far the first tranch is already available.

Sayed-Khaiyum says they will access this financing in this financial year and keep it in an offshore account until the global bond is due next year.

He says by accessing these funds now, they are ensured that they are on track to access the full extent of this policy based support well in advance for the October 2020 deadline.

Sayed-Khaiyum says this will be a temporary increase in headline debt in this financial year but that will go down at the moment to redeem global bond in the 2020-2021 fiscal year.

He says the National Budget announcement is almost like a national dialogue.

There were over 50,000 engagements on facebook as part of the budget consultations.

He says this has become the most participatory budget consultation in the history of the country.

Sayed-Khaiyum says this budget paves the way towards greater triumph.

He says the economy has been stable in an economic boom decade which people are calling the Bainimarama boom.

The Minister for Economy says the Bainimarama Boom is a boom for everyone.

He also says that the Bainimarama government inherited a debt level of 53 percent of GDP in 2006.

He says money at the time was borrowed by previous governments to fund operating expenditure not to focus on capital expenditure.

Sayed-Khaiyum says $500 million was thrown down the drain through reckless spending and through the collapse of the NBF under the Rabuka government.

He says Rabuka has not taken any lessons through his disastrous economic blunders.

Sayed-Khaiyum says Rabuka should realize that his false accusations on the economy are dangerous.

He says our young people do not want to be intimidated by fear mongering by Rabuka.

He also says that global growth is softening according to the World Bank however the Fijian economy can outperform our trading partners in the new financial year.

Sayed-Khaiyum says this government has had 10 years of resilient economic growth.

He also says that a strong economy keeps the lights on and keeps the water running.                                                         

Minister of Economy:

Minister for Economy Aiyaz Sayed-Khaiyum says just because the budget for a ministry has dropped does not mean they will not perform to what they were doing.

Sayed-Khaiyum says it means working smarter with less.

He says the reductions have happened as some of the re-build programs have been completed.

The Minister adds some of the capital projects have finished.

He says whenever they find any opportunities to strengthen the system they will do it.

Sayed-Khaiyum says they found that the free milk initiative and the bus fare subsidy for students was being abused and they have strengthened it.

He says the Environmental Climate Adaptation Levy is on the White Goods such as Smart Phones, Washing Machines, TV, Electric Stove and Kettle, Dryer and Toaster which use a lot of electricity.

Sayed-Khaiyum adds this is one way they can get funds that can  help in projects such as moving villages to higher ground.

Onto reactions:

Opposition Leader Sitiveni Rabuka says he does not like the 2019/2020 National Budget because the government is not reducing taxes.

He also says that they wanted government to focus on reducing expenditure.

National Federation Party Leader Biman Prasad says it is obvious that expenditure has been reduced.

He also mentioned that for 2 and half hours Minister for Economy has been talking about the good things they have been doing in the past and at the same time trying to also admit the failures in the implementation of the policies and how people might have misused those policies.

Transport Minister Jone Usamate says it is good that people will now use e-transport cards for mini buses from next year.

He says it is really important to find out how much is circulating in the mini bus industry.

Deputy Police Commissioner ACP Rusiate Tudravu says the funds allocated to them is more than enough to combat the rising issue of drugs in the country.

Tudravu says the 995 constables that are being regularised is part of the second phase of their 5 year restructure.

The Police Force is allocated $800,000 to combat drug trafficking, with dedicated staff tasked with finding and rooting out networks of hard and synthetic drug dealers and suppliers.

Fiji Hotels and Tourism Association President, Dixon Seeto says they are glad that tax on ECAL has broadened and also paid by other industries.

However, Seeto says they were hoping for the ECAL rate to be dropped.

Seeto says there should have been a larger allocation for Tourism Fiji.

To curb the issues of traffic congestion, 10 percent ECAL will be imposed on all new and used hybrid vehicles and all new and used non hybrid vehicles.

The 10 percent ECAL will also be levied on the import of smart phones, air conditioners, freezers/refrigerators, television, washing machines, dryers, dishwashers, electric stoves, microwaves and electric lawn mowers.

120 million dollars has been collected through ECAL so far this year.

Fiji Chamber of Commerce President Doctor Nur Bano Ali says that this budget will ease processes for businesses through digitization and enhanced services.

She is happy with the initiatives announced.

Health Minister Dr Ifereimi Waqainabete says upgrade works for the Emergency Department will be undertaken in the new financial year while upgrade works on the Colonial War Memorial Hospital maternity ward continues.

He says Health is a continuously changing sector and new initiatives will be undertaken as necessary.


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