The private sector development strategy for the Pacific examined some of the factors underpinning its disappointing economic growth. Some of the reasons were (i) the pervasive role of the state in all aspects of economic activity, (ii) an inadequate commercial and legal framework for modern business transactions, (iii) ongoing land tenure issues that remain significant barriers to new investment, and (iv) failure of financial markets to intermediate efficiently between savers and borrowers. Addressing these challenges requires a substantial commitment to re-orienting government activities that contribute to the high costs of doing business in the region.
ADB is committed to continued support of private sector development in the Pacific as a matter of priority. The newly established Pacific Liaison and Coordination Office in Sydney, Australia will be instrumental for promoting the reform agenda, both vis-à-vis Pacific developing member countries (DMCs) and in coordination with other development partners.
In 2004, Pacific DMCs made some progress in formulating and implementing the private sector development reform agenda. Initiatives dealing with the productive and economic uses of land are ongoing in Federated States of Micronesia, Fiji Islands, Marshall Islands, Samoa, and Vanuatu. Fiji Islands, Marshall Islands, and Solomon Islands are initiating reforms of their legal business environments. Samoa and Tonga are pursuing the rationalization of their respective state-owned enterprise portfolios, and other DMCs are considering similar steps. Continued efforts can be expected in 2005 and beyond.