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Unlocking State Assets

Transfering to State-Owned Company

“Corporatization is the descendent of industrialization.” — Serj Tankian —

- Republic of Fiji -

Challenge

Timber is Fiji's third-largest export commodity and the sector still has considerable growth potential. However, land-use conflicts arising from the pattern of state ownership of treesd and private land ownership has contributed to the degradation of the forest resource. The ownership conflicts are a major constraint to sustainable forestry management and economic return. With 55,000 hectares of plantation of the high-value species mahogany the Government's challenge was how to improve the governance and operation of this valuable resource.


Strategy

Our forestry and economic experts were brought in to help transfer the forestry operation then run by a government department into a new 100% state-owned company. This process is called corporatization, which explicitly separates political considerations (support of favored groups who vote or provide campaign funds for candidates) from economic considerations (involving the financial sustainability of the SOE and performance improvements). Our experts established a new entity that could operate as a forest grower, marketer of logs, and processor and marketer of sawn timber and value-added solid wood products. As part of this process, our experts developed strategic and functional business plans (marketing, operations, HR, financial and R&D), an external financing plan, capacity development plan and KPIs for senior management. A Cash Management Plan wasd then developed, and a review of geographic land information issues, including assessing data quality and adequacy, population on and abutting forestry land, detailing population densities, topographic and other prominent features, and land tenure and use.


Transformation

By vesting management authority into a new 100% state-owned, Fiji Hardwood Corporation, forestry planning was decentralized, and the new entity was able to reward success more effectively than government management. Additionally, the forestry and land use decision makers were more accountable for the risks they take. Further, responsiveness of the new entity to local environmental constraints and economic priorities was also improved. Managers were no longer subject to national quotas or directives, and were able to better take into account sustainable forestry management and “ESG” issues.

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