Discriminatory Tax Forces Shut Down Fiji Water Factory
John Cochran, President and COO of FIJI Water made the
following statement from their Los Angeles, California
headquarters on November 28, 2010
In Friday’s budget (11.26.10), the Fiji Government announced that it will impose a 15-cent per liter tax on bottled water at locations where more than 3.5M liters per month are extracted. FIJI Water, which currently pays 1/3rd of a cent per liter, is the only bottled water producer in Fiji affected by the increased tax; bottlers who extract less than this monthly limit will continue to pay about 1/10th of a cent, or 10,000% less tax than FIJI Water.
This new tax is untenable and as a consequence, FIJI Water is left with no choice but to close our facility in Fiji, effective Monday Nov. 29, 2010. We are saddened that we have been forced to make a business decision that will result in hardship to hundreds of Fijians who will now be without work.
In addition, we will be putting on hold several large construction contracts in Fiji, including the renovation of the Drauniivi Primary School, a F$300,000 project and the resurfacing of the Naikabula Yard, worth F$1.6 million. FIJI Water will also be forced to cancel all contracted engineering and support services as well as our purchasing of cartons from Golden Manufacturers. Finally, all ongoing purchases from local suppliers will have to be canceled.
As a leading exporter, FIJI Water has contributed greatly to the Fijian economy. We represent more than F$130 million in export revenue for the country and employ nearly 400 Fijians at our facility. Our investment in Fiji has created millions of dollars in value through direct employment and with our supplier network. We currently pay millions of dollars in duties and income tax to the Government. We also contribute over F$1.8 million dollars annually in royalty payments to the Yaqara Pastoral Company Limited and another F$250,000 annually to a trust that supports the six local villages surrounding our facility.
In addition, our company and the FIJI Water Foundation have worked tirelessly to help improve the quality of life for the Fijian people, including an annual investment of F$1 million to bring clean water to local villages, improve education and provide access to health care services for those in need.
We consider the Government's current 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: the country is increasingly unstable, and is becoming a very risky place in which to invest.
FIJI Water remains willing to work through this issue with the Fiji Government, as it would be our preference to keep operating in Fiji.