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The land boom: bonanza or time bomb? [The Fiji Times, 29 June 2005]

28/03/2012

In a few selectFijilocations, some people are very quietly, getting very rich.

Fuelled largely by expatriate investment and helped by scarcity, the prices of freehold and crown land have shot up by hundreds of percent.

Those who own these appreciating assets are no doubt on cloud nine.   But the assets sold to foreigners are probably out of the reach of locals forever.

And if the trend of rising land prices continues, a whole class of poor landless Fiji citizens are unlikely to ever own their own home-site.

The irony is that while indigenous Fijians own more than 90 percent of all land inFiji, many indigenous Fijians are also investing in the freehold or crown leases rather than their own mataqali land.

But NLTB’s proactive initiative in putting up for tender, a number of native leases in Kadavu for tourism ventures, may provide useful pointers for future development.

The real question is, can NLTB bring the bulk of native land also into the market while safeguarding indigenous Fijian ownership?

Can NLTB structure the native leases to ensure that the land-owners themselves are encouraged to lease the land as productive users, in addition to otherFijicitizens?

Can they use some cunning strategies to enhance the market value of Fijian mataqali land?

Is there a win-win situation where the returns to Fijian land-owners can be increased, the landless poor can have greater access to home sites, while the booming land market is moderated?

The NLTB experiment

   NLTB recently has been taking quite a pro-active role in the development of the native land under their management, while reducing their commission.

Their initiative in putting ideal tourism locations in Kadavu up for tender through secure long-term native leases is clearly a step in the right direction.

They will almost certainly get extremely high financial bids.  But as with the freehold and crown lease land being sold to foreigners, these tourism leases are also likely to end up with foreign enterprises.

There will no doubt be substantial benefits such as jobs and rental incomes, both up-front and recurrent.

But can this NLTB initiative be generalized throughoutFiji, given that NLTB has a limited number of personnel and cannot micro-manage all Fijian mataqali land?

Can the initiative be generalized to encourage Fijians themselves to be the managers and also end-users of the leases?

Reluctance over native titles

   It is well known many entrepreneurial Fijians themselves are also reluctant to invest their capital on their own mataqali land.  They also seek the legal security of commercial leases, which are currently largely available on freehold and crown land.

Today’s Fijian entrepreneurs are clearly willing to be entrepreneurial and hard-working, provided that they have total legal control over their assets, and the benefits of their hard work go to their own families.

It seems clear that private household ownership is a more most successful motivator of enterprise, than communal ownership and use.

It would seem that were mataqali land to be converted into individual household titles, the households would become far more pro-active at using their own land or maximizing rental incomes, than they are at the moment.

Private sector surveying companies could well be the catalysts for developing these  household titles.

These titles would not be freehold titles.  They would continue to be native lease titles, which would be inalienable as currently.

To provide a degree of protection, a proportion of the individual household’s land could be designated as non-commercial- ie only available for the household’s own use.

The remaining proportion could have secure long leases (say for 99 years) which would provide security for potential lessees, just as the current NLTB initiative is attempting for the tourism leases.

The overall supply of commercially available land be increased thereby moderating the current land boom.

And landowners could examine a number of strategies to enhance the market value of their mataqali land.

 

The strategic grant method

   One is the strategic grant method, which could help the Housing Authority.   There is the story of an old colonial who owned large tracts of unserviced freehold land (not too far fromSuva).  The savvy colonial supposedly donated a portion to government  to build a school,  but the donated land was right at the end of his land holdings.

To build the school, government had to build roads and other infrastructure right through the rest of the colonial’s land which also came into commercial use (and escalated in value).

All overFiji, Housing Authority is struggling to obtain land for low cost housing, but it  can no longer afford the escalating land prices.

Just outside most urban areas are native lands which are lying idle with owners not having the capital to develop them.

What scope is there for native land-owners to donate strategic parts of their land to Housing Authority, in return for government developing the roads, electricity, sewerage and other infrastructure which would commercialise the rest of their land holdings?

Alternative use of prime locations

   All overFiji (just drive along the coast fromSuva to Nadi) there are Fijian villages sitting on prime locations.  Some are right on the water-front, on spits of land, or mountain ridges overlooking beautiful bays and vistas.

Many locations are of great commercial value – for tourist resorts, budget accommodation or retirement villas – even if the villagers themselves may not particularly value (except for traditional burial grounds).

Some villages could be easily converted into budget accommodation for tourists. Some houses would need minor renovation, whose costs would be a fraction of the costs of building budget tourist accommodation from scratch.

Villagers could easily re-locate themselves elsewhere on their own land, probably in basic bures built at minimum cost.  These could be their temporary homes until the cash flow from the alternative use of their current sites build up enough to build their own comfortable modern house.

They would be commercialising their own existing assets, with minimal dependence on outside financing agencies who normally require collateral that the villagers do not have.

Of course, in some situations, the whole village may need to be part of the scheme to make it workable.  Tourists would not want to be living in the middle of a typical village, and  many villagers may not wish their families to be living in close proximity to tourists.

Chiefly challenges

 

   The Great Council of Chiefs would have to take a leading role in any restructuring of the use of mataqali land.

 

The enormous difficulty is that there will be an impact on the chiefs’ share of rental incomes.

 

Historians know that the British colonial authorities created a financial incentive for chiefs to make available the required tracts of land for sugar, gold and copra, by giving them a large share of the resulting rental incomes.

 

While this was never an indigenous Fijian tradition, one unfortunate outcome today is the numerous conflicts over Fijian titles.

 

So continued access to these rental incomes may be a significant incentive for chiefs to oppose the conversion of mataqali land into commercial leases managed by individual Fijian households.  This is a problem of massive proportions which the chiefs themselves will have to handle.

 

But any progress by Fijian leaders in this direction, would be a major step forward in the economic development of ordinary indigenous Fijians and other communities.

 

There is need for urgent action, if the current land boom is not to have more damaging consequences.

 

It is a pity therefore that the energies of Fijian leaders are continually being diverted into coping with other transient and transitory political crises, which have little to do with the economic development and betterment of ordinary Fijians.

 

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