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Fiji Water closes the tap and leaves Fiji

Fiji Water has left Fiji – at least for now.

In a brief, but pointed quarrel with Fiji's government, the US-based premium water distributor that makes up 20 percent of Fiji’s exports has decided to cease operations here and cancel outstanding development projects. On Monday, November 29, the company laid-off nearly 400 people at its bottling plant in the mostly rural Ra Province in Western Viti Levu, Fiji’s largest island. A reporter for the Fiji Times estimates the closure could affect 4,000 people.

Photo from Flickr by swanksalot

The public skirmish started on November 18 with the deportation of Fiji Water's local representative, whom the government later claimed interfered in the country’s internal affairs. Then on November 26, Fiji’s government released its 2011 budget, announcing a new Water Resources Tax, which increases the .11 cent per liter levy to 15 cents per liter for any company extracting more than 3.5 million liters per month. The company called the tax “discriminatory” and “untenable” because it singles out Fiji Water. Per the new code, those companies not hitting 3.5 million liter montly quota will continue paying .11 cents per liter. Presently Fiji Water presently pays 1/3 of a cent per liter, according to news reports.

This is not the first time the two parties disagreed over taxes. The company, founded in 1996, was given 12 years of tax free status. When that ended in 2008, Fiji's government tried to levy a 15 cent per liter tax on all water bottlers. Fiji Water, along with local bottlers, fought against the tax and the company temporarily shut down its bottling plant. The government eventually backed off the plan.

If Fiji Water does in fact shut down its operations, it will be the second international corporation to leave FIji in 2010. In June, the government decreed that 90 percent of media outlets must be held in local hands, forcing Rupert Murdoch's News Corp. to disinvest from the country's largest and oldest newspaper, the Fiji Times.

Monday's news became a battle of statements to the press. John Cochran, President and COO of FIJI Water began:

We consider the Government's current action as a taking of our business, and one that sends a clear and unmistakable message to businesses operating in Fiji or looking to invest there: the country is increasingly unstable, and is becoming a very risky place in which to invest.

He did, however, hold out support for finding a solution with the government.

In a statement, Fiji’s Frank Bainimarama countered:

The Prime Minister said that “as usual Fiji Water has adopted tactics that demonstrate that Fiji Water does not care about Fiji or Fijians. They have made statements about supposed instability in Fiji and know it is not true, yet do so because they simply do not want to pay the new taxes.”

…The Prime Minister said that if Fiji Water is no longer interested in Fiji then the Fijian Government, following cancellation of the leases, “will call for international tenders from credible and reputable private sector companies to extract this valuable resource.”

Crosbie Walsh, writing in Fiji: The Way it is, Was and Can Be worries about the path the two parties are taking:

The news that Fiji Water will withdrawn from Fiji is more than a disappointment. It is a major blow to the workers in Ra province and the Fiji economy.

I am encouraged by their comment that they are “willing to work through the Water Resource Tax issue with the government as it would be their preference to keep operating in the country” but find their comment on Fiji being “an increasingly unstable country” extraordinary.

At this stage it would appear the company and the Government are both calling each other's bluff. Not always a wise move when so much is at stake for both parties.

In a comment to the above post, Wai ni mate said:

It's amazing, Croz, how many people here are siding with the capitalist running dogs of Fiji Water when they use their power to trash the country's reputation and deprive us of a fair share of a natural resource that arguably belongs to all. What's wrong with you guys? Wake up! Never mind the odd community project in Ra. Does anyone ask how much tax these guys are paying on their international sales beyond the country's shores? Where are those profits going? Luxembourg? The Cayman Islands? You can bet your bottom dollar the [ Fiji Water owners Stewart and Lynda]Resnick's have sophisticated tax minimisation schemes to sequester their global profits from the US tax authorities as well. These guys have tried to call Frank's bluff but they're about to get a rude shock. He isn't going to cave in, especially to bullies who insult his country and damage its economy. The Resnicks seem to think they can sell water from their operation in New Zealand under the Fiji Water brand. Go for it. They evidently don't just regard Fijians as stupid but every other bastard in the world with a bottled water fetish. Time to show these LA thugs the door.

From the blog Discombobulated Bubu:

With a regime that likes nothing better than to bully the populace and kindly investors that really do care about providing jobs and community support to the Fijian people, we will also say goodbye to the amazing image of Fiji that the brand that was Fiji Water provided gratis to the world. Not to mention the tax that this company paid that used to help our economy.

Anonymous commented in the blot Coup 4.5:

Thats exactly the right kind of response to an ill thought, money grabbing policy made by the idiots in the military regime. That's what happens when you bankrupt the country and try and steal from private enterprises through unfair taxes. What a nice message this sends to potential investors in Fiji….come and invest so we can tax the hell out of your profits. Good on John Cochran for making a stand although rather belatedly….I guess you only take action when they come for you!

Another comment from the blog had an idea for the future of Fiji Water.

Finance it for people of Ra to own the resource, the business and all the money

Photo from the Flickr page of Seth Anderson used under CC License

  • Ryan B Trollin

    I think it’s about time that Fiji water has pulled the plug on that god forsaken patch of lava. I mean come on! It will be under the sea in the next 50 years and salt water can’t be bottled and sold.

  • Moriah Arnold

    I believe that the Fijian government caused this poor outcome on themselves. The country of Fiji is going to loose another huge exporter and will suffer from that by loosing money, loosing jobs, and other negative effects through publicity and the economy.
    However, I think that Fiji water is taking the easy way out instead of talking with the Fijian government. If they were to leave, they would relocate to New Zealand and Fiji water can’t be FIJI water in New Zealand…

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