Low investment rates and uncertain property rights were significant long-term economic problems inherited by Qarase. In response to investor doubts he relaxed work permit requirements and made investment laws more advantageous to business. But political instability had clearly eroded investor confidence in Fiji, and also hurt tourism. Fiji's sugar industry had enjoyed preferential price and access arrangements with the European Union (EU), and its garment industry received preferential treatment from Australia. If under Qarase there was a return to a racially biased constitution, such favors could be withdrawn.
The sugar industry encountered further problems in 2002 from a series of land disputes. Native land leases were expiring, and crown land was returning to native ownership. The shake-up of land ownership, in addition to Australia's challenge of EU sugar subsidies to Fiji and other producers, threw the sugar industry into disarray.
From his earliest appointment as head of state, the prime minister said the government must move quickly to arrest the decline in the economy. "The crucial thing now is to restore confidence in the economy. Without confidence, consumers will not spend, investors will not invest, tourists will not come, and other countries will not buy our goods."
Equally important was the need for the Qarase government to ease the tensions among Fiji's various ethnic groups, particularly the indigenous Fijians and the Indo-Fijians. When the new government was sworn in 10 September 2001, the Department of National Reconciliation outlined a mission to promote harmony and social cohesion among the diverse communities of the nation and create a united Fiji in which all communities live in peace. The focus of the department included providing relief and rehabilitation for affected families along with equal opportunities and correction of development disparities. In addition, the department promoted social and political unity at all levels of government and hoped to foster greater patriotism and national allegiance.