I. REVIEW OF ENVIRONMENTAL AND DEVELOPMENT TRENDS RELATED TO URBANIZATION
B. Economic activities in the Suva areaIndustrialization in Fiji started with a very narrow range of activities which included a sugar mill and coconut oil mill. The sugar mill did not survive into the twentieth century, and the copra mill closed in the 1970s. Today, Suva accommodates an impressive variety of commercial and industrial activities, including food processing, garment manufacturing, furniture making, boat-building and produce exporting facilities.
Significant economic development in Suva began after the Second World War. However, active government promotion of the manufacturing industry came with independence in 1970 when the government began to actively promote import substitution industries through high tariff protection, licensing and quotas. Joint ventures with overseas investors were encouraged and tax concessions were provided as an incentive to establish industrial activity. The import substitution industries which were set up as a result of those policies were mostly concentrated in Suva which provided the best infrastructure and offered an immediate market. Under the umbrella of a high effective rate of protection the Suva area saw a proliferation of a wide range of manufacturing enterprises, including flour milling, beef and fish canning, plastic product assembly, biscuits, beer, soft drinks, cigarettes, steel roofing, paints, cement, matches and soap. To facilitate that expansion several industrial areas were provided to supplement the original Walu Bay industrial estate. The Lami and Vatuwaqa industrial subdivisions were established in the early 1970s, and Kalabu and Laucala Beach were completed in the early 1980s.
In the 1970s Fiji enjoyed a period of remarkable economic growth driven by the expansion of the sugar industry and, to a lesser extent, tourism. Thus job creation more than kept pace with the increasing workforce, while the balance of payments was healthy, the internal balance was maintained and foreign debt was low. Social services continued to improve and the government initiated major infrastructure projects, particularly in the area of hydroelectricity, water supply, and roads. The economy was able to absorb the cost of highly protected inefficient import substitution industries.
By the early 1980s the inherent fragility of the industrial sector in Fiji became apparent as growth in the sugar industry began to falter following a series of natural disasters and depressed world prices. A concerted push was made to encourage import substitution manufacturing and agriculture through high tariffs and quotas. The high rates of effective protection afforded import substitution manufacturing and agriculture compounded the contraction in the economy.
The economic climate changed dramatically with the coups of 1987. The economy plunged into an unprecedented financial crisis. There was an immediate outflow of capital, tourists arrivals plummeted and sugar production fell sharply. The Reserve Bank of Fiji took decisive action and the economy was successfully stabilized by the implementation of policies of fiscal adjustment, currency depreciation and foreign exchange constraints. The political events of 1987 not only precipitated an economic crisis but also marked a radical reorientation of economic policy. Government policy moved from import substitution to export-led growth, with particular emphasis on encouraging the expansion of the private sector as a means of achieving economic development. The large currency depreciation was accompanied by strong restrictions on nominal wage movements and the promotion of a tax-free factory (TFF) scheme. The latter coincided with significant changes in the rules of origin provisions of the South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA) that were favourable to garments and other products manufactured in Fiji. A policy of deregulation was introduced which replaced import licensing with a streamlined tariff system that allowed a progressive reduction from a maximum of 50 per cent to 20 per cent.
Garment manufacturers in Australia and New Zealand, and later from Asia, responded quickly to the combination of incentives and improved market access. In the three years following the introduction of the TFF scheme, over 100 export manufacturing enterprises were established of which 70 per cent were in the garment sector. The majority of those businesses were in the Suva area. The Fiji garment industry operates on a "cut and trim" basis whereby raw material and patterns are supplied by the buyer who is often a joint venture partner with a local investor. The expansion in garment exports was extremely rapid, increasing in value terms from F$ 100,000 in 1988 to F$ 123 million in 1990 (in 1995 the value of garment exports stood at F$ 185 million). Garments are now the second largest export earner for Fiji after sugar. There was a rapid growth in employment in manufacturing. By 1989 manufacturing employment exceeded 18,000, compared with a constant employment of around 12,500 for the decade, leading up to the introduction of the TFF scheme. In 1986, employment in garments was less than 2,000, rising to 10,040 in 1996 (table 3). The largest percentage increase over the period occurred in footwear manufacture, as a result of exports, with an increase from 64 to 1,100.
Garments, and other assembly manufacturing attracted by the TFF scheme are generally not regarded as highly polluting in nature. However, the diversification of industry has further taxed already inadequate pollution controls. The rapid expansion of the low-income, labour-intensive industries has accelerated urban drift and increased pressure on already inadequate urban infrastructure (housing, water and sewerage).
In the past few years the implementation of deregulation policies has
begun to falter and in some areas has actually been reversed, at a time
when the value of trade preferences offered under SPARTECA are being eroded.
The result has been the undermining of the viability of many tax-free factories
in Fiji, particularly in the garment sector. A declining garment industry
brings with it the prospect of increased unemployment and poverty in the
Suva area and adverse socio-economic and environmental impacts.