The Vanuatu National Provident Fund (VNPF), General Manager, Parmod Achary, answers questions raised by VNPF member, Levi Tarosa.
1. Why Fiji government refused to allow VNPF to invest in property development (student accommodation) a few years ago, yet this year VNPF is permitted to invest in Fiji through Unit Trust of Fiji (UTOF)?
i. Fiji government has never stopped purchase of student accommodation or building accommodation.
ii. In fact, there are two projects, student accommodation and funding the Chancery. The Chancery is going to be built on the Fiji government land which is given to Vanuatu free of charge and we are now in the process of getting the drawings sorted out where VNPF will finance the building of Chancery in Suva.
iii. Fiji government has not stopped VNPF from building the students accommodation, we stopped it ourselves because of the lack of the right area to invest. In Suva there’s a big shortage of land near USP, it’s all occupied, there’s lots of private hostels, so we can’t just buy without feasibility study. We have asked our High commission to talk to USP and see if there is any possibility of using USP land and going as joint venture with USP.
iv. It’s a high risk project because if we don’t have enough Ni-Van students, who will occupy. We must do lots of thinking before we go into this project. We are doing the feasibility study and we are still looking at the impact of the future forecast of students wanting to go to Fiji.
v. You should get your facts right, Fiji government has not stopped, it’s our government who will need to give us the permission
vi. We will also run through The Reserve Bank of Vanuatu (RBV) before we venture into this
2. Did VNPF consider the option of using this 200 million vatu to build the student accommodation in Suva?
Refer question 1
i. There is no relationship with UTOF and the student building. I have worked with the High Commissioner in Suva. We are still negotiating for the land. If we get the land, we will build. If we don’t get the land, we can’t do much, but it is very hard to get the land close to University.
3. Did the Unit Trust of Fiji submit any prospectus or investment options to the VNPF Board that convinced VNPF to invest in UTOF?
i. UTOF submitted a lot of confidential documents which I am bound by legislation not to disclose. Please get a written permission from UTOF for me to release these information. I have signed a non disclosure agreement
ii. For prospectus you can download from UTOF website
4. What guarantee did UTOF give that will assure VNPF that it will pay 6% return on this initial Vt200 million capital investment?
i. There is no capital investment, and there is no need for any guarantee. We want to get more than 6%, and we look at Unit Trust as one of the options.
ii. And if you look at their investments, they have very powerful investments, like ATH and now new tug boat. These are the things that we don’t have here in Vanuatu that is why we are investing elsewhere. We want to replicate these investments.
iii. And remember that we have about 3 billion in Call Account which is our liquidity. We can keep another 200 million in liquidity but will not earn any money, may be less than 1%, so Unit Trust is a safe investment, low risks, and any time we find that Fiji is in political problem, we just withdraw our money.
5. How long will it take to get our money back – the 200 million invested in UTOF?
i. Firstly I don’t think this is a relevant question.
ii. It depends when you want to get your money back. If the Board tells me today to get the money back, we’ll get it back.
iii. That money is not given as capital expenditure, it’s invested like the bank.
iv. The capital expenditure and bank investments are 2 different things.
v. Please don’t confuse members. When we need the money we will withdraw our deposits.
vi. So you clarify what you actually want to know in this one.
6. I have not read the COI report, but I understand as here, COI report says something about new investments. Can you tell me what is recommended in the report with regards to VNPF new investments?
I. I can’t talk about COI because I wasn’t involved, I don’t have mandate, I don’t have the authority to talk about COI, but for new investment,
II. I am guided by VNPF Act, COI i was done for the failed investments, and the right person is Minister for Justice and the Department of Justice who can give you the answers to this.
III. New investments that we are doing are very safe investments.
IV. I will be presenting the budget to Board and will be putting new strategies into places for revenue generation and collection of contributions
7. Has VNPF considered any other investment portfolio options to invest Vt200 million in, either Vanuatu or other countries, example in Australia, and what are the rate of return in those investment options are there to consider?
I. What I am trying to do is diversify, don’t put all investments into one basket. This is the basic rule on investment.
II. I am now focusing on utilities and I’ve already purchased UNELCO. We will be looking at other utilities. For members they must know that our focus is on utilities, why utilities, let me make it clear, why utilities? Utilities because first, will gain the return, second, members will be using these utilities, and it will be assisting members in both ways, first providing them with decent electricity, for example in UNELCO, and secondly the returns come from UNELCO will improve your interest rate.
8. Prior to making UTOF investment, did VNPF undertake a detail cost and benefit analysis or a net present value analysis of this UTOF investment, if it did can you provide us with the copy of this analysis?
I. Go to UTOF website and download their Annual reports. I can’t provide you with a copy of analysis because these are confidential reports.
II. And under the Act I am not allowed to disclose information which I am handling regarding this kind of appraisals and I’ll be charged for breach of Act.
III. We have signed NDA (Non Dis-closure Agreement) with all the other parties and there are some agreements which we are working on, is confidential, it’s between VNPF and the applicant.
IV. For you, as a member, I can tell you how much your money is, where is it invested and all those things, but you can look at the Annual Report and find out where the investments are.
9. What is the difference between Unit Trust of Fiji and Yumi Trust? Why talk about Yumi Trust, then inject money to another overseas entity of similar nature?
I. Unit Trust is investment managers in Fiji. In Unit Trust we provide our money to them to invest
II. Whereas Yumi Trust is investment vehicle in Vanuatu. This is where Ni Vans can invest their money, and Yumi Trust will invest in local company.
III. These are two different institutions. Yumi Trust is a separate local entity out of VNPF which is where we invest, just like we invested in UNELCO,
IV. Yumi Trust is a business which will be registered in Vanuatu. I would suggest if you can read through some of the establishment of Unit Trust – what is Unit Trust, what is the purpose, and then you will understand. It is similar to Credit Union, but Credit Union, you borrow your own money, but in Unit Trust, you invest at any time and the Yumi Trust will invest for you.
10. I understand the tender for affordable housing design was closed on 7th of November, can you tell us what the next step is with regards to VNPF housing program?
Please read the advertisement and you will understand.
And the second thing, you should look at VNPF Act, 15% is required to be invested in offshore investments.