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Unlocking State Assets

Transfering to State-Owned Company

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

- Republic of Fiji -

Challenge

The mahogany plantations in Fiji cover 55,000 hectares of land and produce a high-value timber that ranks as the country's third-largest export commodity. However, the forestry sector faces a major challenge in terms of governance and sustainability. The main problem is the mismatch between the state ownership of the trees and the private ownership of the land where they grow. This creates land-use conflicts and reduces the economic benefits for both the government and the landowners. To address this issue, the government needs to improve the management and operation of the mahogany resource and ensure a fair and transparent distribution of revenues and responsibilities among all stakeholders.


Strategy

We helped transform a government-run forestry operation into a new state-owned enterprise (SOE) that could compete in the market and improve its performance. This was done through a process of corporatization, which separates political and economic goals and allows the SOE to operate independently. We provided our expertise in forestry and economics to create a new entity that could grow, sell and process different types of wood products. We also helped the new SOE develop business plans, financing strategies, capacity building, performance indicators and cash management. Additionally, we conducted a review of land information issues, such as data quality, population, land features, tenure and use.


Transformation

The government of Fiji reformed its forestry sector by creating a new state-owned enterprise, Fiji Hardwood Corporation, with proper management and governance structures. It also devolved the forestry planning decisions to the local communities and landowners, who had more stake and voice in the use of their natural resources. The government abolished the national quotas or directives that had been imposed on the forestry sector, and instead adopted sustainable forestry management practices that integrated environmental, social and governance (ESG) principles. These changes improved the accountability and transparency of the forestry operations, and aligned them with the local environmental and economic needs.

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