Venue: Aliz Pacific Suva Office ,Level 8, BSP Life Centre,
Members of the Executive Committee;
Invited Guests;
Ladies and Gentlemen.
Bula Vinaka and a very good evening to all of you.
I am delighted to be here this evening to officiate at the Aliz Pacific Small and Medium Enterprises (SME) Division Launch. A very happy day indeed and I am grateful that you are all here today to celebrate this very important milestone.
Ladies and Gentlemen,
Small businesses and in more recent times SMEs, small and medium enterprises, have been looked at as engines of growth. A lot has been said on the macro and micro economic policies designed to enable SME growth and participation. Yet we find at the end of the day, that many of them fail to thrive beyond the micro or the small business stage.
As the Minister responsible for the Micro and Small Business Grant (MSBG) Facility, which is an initiative of the Fijian Government designed to provide grants for start-ups for micro and small businesses as well as assistance to existing micro and small businesses, it is perhaps also best to address fundamental issues of business and financial literacy, understand the social context under which different cultures operate. And at the same time, bearing in mind always, that no one enters into enterprise for the express purpose of failing, it is the failure to plan, understand market conditions and properly manage finances and resources that are the likeliest contributors to an early demise for many start-ups. On that note, I am happy to mention that in its effort to grow the SME sector and keeping them regulatory compliant at the same time, Aliz Pacific is already providing business advisory, accounting and tax related services. This is truly encouraging and commendable indeed.
Ladies and Gentlemen
The MSBG Facility is part of Fijian Government’s overall commitment to reducing poverty, through capital injection for micro and small businesses; and business and entrepreneurial skills development. Furthermore, it is a noble initiative and its success is contingent on a number of factors, such as, its effective utilization; sustainability and success of the businesses assisted; the number of businesses that graduate from micro to small businesses; and, the number of small businesses that are able to access finance from commercial institutions to expand their operations.
Initiative such as these, provide each and every Fijian the opportunity to utilize the grant assistance wisely and hard in terms of running our own businesses. This will contribute positively to uplifting the MSME sector of the Fijian economy and at the same time improve the standard of living of our people. And I am happy to say that Government will continue to focus its development towards the SME sector in the coming years.
Ladies and Gentlemen
The current registered number of MSMEs in Fiji provided by various institutions indicates that there are at least 20,580 formal MSMEs in Fiji. The extent of informal MSMEs is yet to be determined, however, the long term goal will be to graduate more MSMEs into the formal sector.
Fiji Bureau of Statistics reports that the MSME sector makes up 97 per cent of total establishments in Fiji and is dominated by the service sector, with MSMEs contributing 72 per cent towards Fiji’s Gross Domestic Product (GDP) and 91 per cent of towards MSME establishments. This is followed by the manufacturing sector, with MSMEs contributing 23 per cent towards our GDP, and 9 per cent of MSME establishments.
The MSME sector is a very important sector in the Fijian Government’s policy objectives. The MSMEs in Fiji represent approximately 18 percent of Fiji’s GDP. Furthermore, MSMEs are the drivers of inclusive economic growth, regional development, employment generation and poverty alleviation. The Fijian Government strongly believes that through the growth of MSMEs, we will be able to create a robust and resilient economy by having a strong and competitive MSME sector.
The Fiji National Provident Fund has estimated that 53,855 people are formally employed in the MSME sector and this accounts for 37% of the formal labor force in Fiji.
Ladies and Gentlemen
MSMEs in Fiji continue to face various obstacles in terms of sustainability, expansion and development of their products and services. Access to finance remains a key challenge for our MSMEs and is a reflection of the lack of an effective support framework to enable information flow to financial service providers. There are also limited financial products tailored for MSMEs available with financial institutions.
The current regulatory environment, particularly with regard to business licencing requirements, is not conducive for MSMEs as well. MSMEs are facing difficulty getting information on procedures to register a business and also face delays in obtaining a business licence or approvals from relevant agencies in order to facilitate commencement of business.
Currently, there is a Business Licencing Act in place that states that “in respect of municipalities, the council thereof; and in respect of all other areas in Fiji, the permanent secretary responsible for industry and trade”, are mandated to be Licencing Authorities.
The Business Licencing Act also provides for a standardized rule in terms of business licencing. However, the different municipalities are using their own requirements and procedures.
Therefore, to assist MSMEs, it is important that entrepreneurs are readily assisted when ready to formally venture into business and these layers of ambiguity are removed and the compliance cost in obtaining a licence reduced.
Ladies and Gentlemen
Various stakeholders have been involved in numerous initiatives to either assist the MSMEs directly, build the infrastructure to support the MSMEs, or provide access to capital. In the absence of an overarching national MSME framework to mainstream MSME development, the implementation of MSME initiatives over the years has not been well coordinated, resulting in duplication of work and wastage of resources by Government and non-state actors.
The Fijian Government has therefore recognized the need to institutionalize an appropriate national MSME Framework which is similar to the Malaysian model, given the latter’s effectiveness in guiding the development of its MSME sector.
The first element of this Framework that has to be put in place is the National MSME Development Council, to provide strategic and policy leadership for the development of the MSME Sector in Fiji. And I am happy to say that the Terms of Reference of the National MSME Development Council was endorsed by Cabinet in 2016.
The other key elements of the Framework are: a new law to strengthen the delivery of MSME services; an MSME Master Plan; and fully operationalizing the MSME CCA. In the interim, while the law is being drafted and the Master Plan developed, the MSME CCA will be temporarily located in the Ministry of Industry, Trade and Tourism to deliver key services that MSMEs are in dire need of.
Ladies and Gentlemen
The Fijian Government’s role is to promote an efficient, effective and sound financial support capable of providing a wide range of demand-driven goods and services including financing requirements of the SME sector development.
In the 2017-2018 National Budget, Government had announced new initiatives to ignite grassroots entrepreneurship, such as, by making the process of starting a business easier and faster. Furthermore, these initiatives will be focused on encouraging young entrepreneurs with innovative ideas to go into business.
With the Micro and Small Business Grant having an impact on the livelihoods of more than 45,000 ordinary Fijians, Government will continue its support for the development of the MSME sector.
Ladies and Gentlemen
Coming back to tonight’s event, I can assure you that the Ministry is looking forward to working with you and assisting you in the development of the SME sector, especially in having a focused approach given its enormous potential and ability to contribute to our economic growth.
I once again congratulate Aliz Pacific for the great achievement. Congratulations for a well-deserved success.
Ladies and Gentlemen
With those words, it gives me great pleasure to officially launch the Aliz Pacific SME Division.
Vinaka Vakalevu. Thank You.