The Australia Fiji Business Council says the row between the Fiji interim government and the US company, Fiji Water, is undermining confidence.
On Monday, Fiji Water shut its bottling plant because of a tax hike from next year while the interim regime says it plans to put the resource out to international tender once the lease is available.
The president of the Australia Fiji Business Council, Brian Anderson, says the US company has taken a tough decision.
"And I guess the government has come out just as strongly and said if they don't want to be there they are quite happy to have someone else run it, which actually all it does is erode confidence even more."
Brian Anderson of the Australia Fiji Business Council
The Fiji New Zealand Business Council says it has no comment on the impact of the closure of Fiji Water.