Fiji's Foreign Investment law reforms set to commence
Fiji has recently introduced a range of new legislative and regulatory reforms targeted at promoting greater foreign investment in Fiji and clarifying the rights, duties and responsibilities of domestic and foreign investors.
The enactment of the Investment Act 2021 (New Act) on 3 June 2021 marked the start of the reforms. It repealed the Foreign Investment Act 1999 (as amended).
The New Act promotes investment in Fiji by introducing a broader range of treatment and protection guarantees for foreign investors and removing the requirement for foreign investors to obtain a Foreign Investment Registration Certificate (FIRC). The Fiji Government has announced that the New Act will commence on 1 August 2022.
Fiji has also recently enacted the Investment Fiji Act 2022 (Investment Act), which aims to realign the mandate and functions of Investment Fiji.
The Investment (Reserved and Restricted Activities) Regulations 2022 (Regulations) have been introduced under the Investment Act. The Regulations impose a minimum foreign investment threshold of FJ$300,000 across most industries in Fiji.
Historically, “doing business” in Fiji has been difficult. This was mainly a result of Fiji’s cumbersome foreign investment framework and the lack of digitisation of many Government services, coupled with antiquated legislation.
However, over the last few years Fiji has made significant legal advancements, including the introduction of the Companies Act 2015, the passing of the Personal Property Securities Act 2017 and the gradual roll-out of the digitisation of Government services.
Arguably the biggest reform set to occur is the commencement of the New Act on 1 August 2022. The New Act will overhaul Fiji’s existing foreign investment law and is aimed at promoting greater investment in Fiji through reducing some of the ‘red tape’ that previously existed for foreign investors.
How will the reforms change foreign investment rules in Fiji?
The commencement of the New Act, the Investment Act and the Regulations will overhaul the existing foreign investment regime in Fiji, in the following ways:
changing the role of Investment Fiji from a regulator of foreign investors in Fiji to an Investment Promotion Authority that attracts both foreign and domestic investors;
removing the requirement, in most situations, to obtain foreign investment approval from Investment Fiji prior to establishing operations in Fiji;
foreign investors may require Ministerial approval if the investment is against national security interests;
abolishing the requirement for foreign investors to obtain a Foreign Investment Registration Certificate (FIRC). Foreign investors will only need to comply with the registration requirements under the Companies Act 2015 (and any other Fijian laws and regulations relevant to their business and operations);
introducing a list of “reserved” activities, investment in an industry reserved for domestic investors only, and “restricted” activities, investment in an industry restricted for foreign investments; and
introducing a minimum investment threshold of FJ$300,000 (and in some cases, where the industry is “restricted”, a higher threshold).
What are the new minimum investment thresholds?
Under the Regulations a minimum investment threshold of FJ$300,000 will now be applied to all foreign investments in Fiji. This contribution will need to be invested in Fiji within three months of commencing operations.
The minimum investment threshold may be higher in some industries which are considered “restricted”. The list of “restricted” categories is extensive and includes:
The introduction of the minimum investment thresholds encourages “higher-value” investments.
There is an exception under the Regulations which allows the Minister to waive the minimum investment threshold of a foreign investor based on an economic analysis or assessment of skills.
When will the changes take effect?
The New Act is set to commence on 1 August 2022.
What do I need to do as an existing foreign investor?
All foreign investors who hold a FIRC will still need to comply with the requirements set out in the FIRC.
However, unlike the previous regime under the Foreign Investment Act 1999 which required onerous approvals for changes in shareholding and ownership, the New Act moves towards a reporting requirement which involves foreign investors reporting and updating information. This does not exempt the foreign investor from reporting requirements under any other Fijian laws. In saying this, foreign investors will still need to obtain approvals from the Reserve Bank of Fiji and will also need to file the changes in shareholding with the Companies Office in Fiji.
The reforms outlined above will create a more efficient process for foreign investment in Fiji.
While the Regulations impose minimum investment thresholds, exceptions exist under the Regulations to enable the Minister to grant waivers in some circumstances.
In conjunction with various reforms over the last few years, it is hoped that the recent Acts and Regulations will make it easier to “do business in Fiji” and in turn attract greater foreign investment - which is an important aspect of Fiji’s post-COVID economic recovery.