Incentive is

boost for tourism

The government of Fiji provides a package of incentives to assist the tourist industry.

For example, under the Hotels Aid Ordinance a hotel owner may set off 55 per cent of his capital expenditure (less the cost of the land) against annual chargeable income stemming from the hotel or extension.

This can continue until the amount is claimed in full.

This investment allowance is in addition to any ordinary depreciation allowance the hotel owner may enjoy.

As an alternative, owners may opt for a cash subsidy of up to seven per cent of the approved capital expenditure.

The net expenditure after the set off of the subsidy may be entirely written off within 15 years.

Cruise operators can also qualify for government incen tives.

If an operator cannot have a suitable boat built locally, he may qualify for import duty concessions on any carft he brings in from overseas.

And where an operator does decide to build his boat locally, he may be able to set off 55 per cent of the construction cost against income from that craft or others or against income from other tourism facilities car ried out by the vessel’s owner.

Similar concessions can be granted, at the discretion of the

Minister of Finance, for imports of specialised furniture, air con ditioning units, fridges, cookers and other tourism require ments.

Investment allowances simi lar to those granted under the Hotels Aid Act above may also be available for projects allied with or supportive of the tour ism industry.

This applies particularly where the project expenditure is incurred in setting up a facility whereby Fiji’s natural flora, fauna and other natural char acteristics, or the history and culture of Fiji, are used to promote tourism.

In this case the taxpayer can qualify for a cost write off to the extent of 55 per cent against profit.

And really big spenders are able to negotiate special arrangements with the Fijian government.

Again, as a tourism incentive, the government channels funds through the FDB to be used as ’’seed money” for investment as equity and loans in major hotel development projects.

The FDB uses this allocation to borrow additionally, within its approved gearing guideliens, in order to create a larger pool of funds for this specific pur pose.

Government guarantees are available, where necessary, to the FDB to raise additional resources.

In addition, FNPF funding available for loans to the hotel industry would be channelled through the FDB in order to increase the amount of funding available from the FNFF for hotel construction.

In addition all contributions to the Fiji Visitors Bureau, which includes funds for co operative marketing, qualify for deductions equivalent to 150 per cent of the contributions against chargeable income.

The government, in general, recognises the vital role of pri vate investment both local and foreign and, in fact, makes no distinction between local and overseas investors in the awar ding of investment incentives.

The government is especially keen to encourage foreign in vestment where the capital re

'The government is especially keen to encourage foreign investment*

quirement is high and local technological and managerial skills are not yet available; and joint ventures between local and foreign interests, parti cualarly where the overseas involvement may lead to the penetration or expansion of export markets.

Overseas investment requires approval by the Business and Industrial Development Com mittee of Fiji (BIDC), a proce dure that need take no longer than four weeks to complete.

Also, key managerial posi tions may be filled by expatriate personnel without time limit.

However, the investor is ex pected to to make arrange ments to train Icoal staff mem bers with the ultimate aim of replacing expatriate expertise.

Work permits are normally granted for an initial period of three years. However, investors bringing in F 5200,000 or more may be granted seven year permits.

This kind of approach has helped the industry to an aver age growth rate of 20 per cent between 1960 and 1973, which, in turn, led to a boom in hotel construction financed mostly by foreign capital.

The international oil crisis which struck the whole world in 1973 had an adverse effect on growth, but by 1979, the record of 1973 had been surpassed.

In 1984 tourism generated Fsl6o million in foreign ex change earnings.