Tuesday, November 30, 2010

[pima.nius] US owned "Fiji Water" shuts down

10:50 AM |

US owned "Fiji Water" shuts down

Updated November 29, 2010 18:09:41

The US owned bottled water company "Fiji Water" has shut down its Fijian operations.

It is one of the most popular brands of bottled water in the world, often seen being sipped by politicians and movies stars.

But in a statement the President of the US owned company, John Cochran, says last week's decision by the military backed regime in power to increase taxes on major exports of bottled water means it cannot operate and it shut down its Fijian operations and laid off its staff.

In his statement Mr Cochran also says, the company considers the Government's 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 that the country is increasingly unstable, and is becoming a very risky place in which to invest.

In last Friday's budget the Fiji Government announced that it will impose a 15-cent per litter tax on bottled water at locations where more than three and a half million litters per month are extracted, and FIJI Water, is the only bottled water producer in Fiji affected by the increased tax.

As well this conflict comes less than a fortnight since the Head of Fiji Water's operations in Fiji David Roth was deported after it was alleged he had been interfering in national affairs, a deportation which also resulted in the resignation of the interim immigration minister Ratu Epeli Ganilau.

Mahendra Chaudhry is a former Prime Minister of Fiji and was the first interim Finance Minister in Commodore Frank Bainimamara's regime, holding the position for nearly 18 months before resigning in 2008.

Mr Chaudhry says the American company had successfully lobbied against a tax hike imposed by the interim government during his time in office.

He says there seem to be a clear political angle to the stand-off between the water bottler and the interim government.

Presenter: Campbell Cooney
Speaker: Fiji's former interim Finance Minister Mahendra Chaudhry

CHAUDHRY: We've seen in the last couple of weeks the relations between the company and certain members of the government have not been very good to say the least, and as a result the senior executive of the company was deported, and I think this tax coming so soon after this incident, it does raise question.

COONEY: This time Fiji Water has been at loggerheads with Fiji's government over taxation. In 2009 it was involved in legal action over questions about what it was claiming to have earnt from its water exports, legal action which came to nothing after the scrapping of the constitution that year, which meant the sacking of the judiciary. As well Mr Chaudhry points out that he tried to put a higher tax on the company's exports was vetoed.

CHAUDHRY: A similar tax was imposed two and a half years back when I was interim finance minister, and that tax was then reversed as a result of lobbying by the company, it was reduced from 20 cents a litre to just point-zero-zero-one cent a litre, the government reversed the decision. And that was also under threat that if a tax was not removed then they would close shop and leave. So two and a half years we've got this tax back on again, it will be interesting to see how the government reacts to this particular ultimatum, which the company has now given that they cannot operate with this tax, and therefore they would leave. The tax was announced as a budget measure last Friday, and we'll have to now wait and see because the company's announcement has come just a while ago, and to see whether the government stands by its decision or whether it's going to negotiate again.

Fiji's interim Prime Minister Commodore Bainimarama is expected to comment some time today on the threatened pull out of one of the country's most successful exporters.

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aotearoa, new zealand
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