MANILA, PHILIPPINES - Strengthening governance and creating economic opportunities are the two challenges that Pacific Islands Forum leaders must prioritize when they meet in Port Moresby, Papua New Guinea, later this month, according to a senior ADB official.

"Pacific Islands Forum leaders need to prioritize the long list of initiatives in the final draft Pacific Plan when they meet in Port Moresby later this month," said Philip Erquiaga, Director General of ADB's Pacific Department. "The greatest benefits from the Pacific Plan will come from a strong focus on the two key challenges - strengthening governance and creating economic opportunities."

He was announcing the publication of a joint ADB and Commonwealth Secretariat report to the Pacific Islands Forum Secretariat, Toward a New Pacific Regionalism, which was released on Friday. The report gives an overview of the issues and options for Pacific regionalism, and studies the potential costs and benefits of strengthening regional cooperation and integration under the Pacific Plan.

"The study highlights the high cost to the region of weak economic growth over the past 20 years or so - estimated at US$75 billion in lost gross domestic product (GDP) since independence for just four of ADB's Pacific developing member countries - Papua New Guinea, Fiji Islands, Solomon Islands and Nauru," Mr. Erquiaga added.

The report suggests that if regional organizations provide analysis, audit services, and technical support, this can significantly boost economic governance in individual Pacific developing countries. Strengthened regional bodies can provide both the type of expertise that is hard to retain in individual countries, and arms-length advice on complex governance challenges.

"Increased market integration can also create real benefits for Pacific Islanders," Mr. Erquiaga said. "Our report highlights the positive welfare impacts for all Forum members of increasing labor market access between members."

However the report also points out that much can be done regionally to address high costs in two key markets for the remote Pacific Islands that constrain economic growth - transport and communications. It highlights that further regional work on fisheries access arrangements could deliver significant income for the Pacific Islands.

A final draft of the Pacific Plan will be considered by leaders at the annual Pacific Islands Forum from 25 to 27 October. Pacific leaders, in their 2004 Auckland Declaration, decided to create a Pacific Plan for Strengthening Regional Cooperation and Integration to assist the region to meet the Forum goals of economic growth, sustainable development, good governance, and security.

"It is very important for the Pacific Plan to start with a few initiatives that will have the greatest long term benefits for the people of the region," said Bill Costello, Policy and Regional Cooperation Specialist at ADB. "Pacific regionalism involves high costs due to the isolation of the island countries, small economies of scale, and because the region has only limited capacity to develop and deliver new initiatives."

Under its Charter, ADB is committed to supporting regional cooperation. "Toward a New Pacific Regionalism" arose out of discussions with the Forum Secretariat on how it could support the development of the Pacific Plan.

"Toward a New Pacific Regionalism talks about the practical challenges of implementing a complex agreement such as the Pacific Plan," said Mr. Costello. "It recommends a two track approach involving confidence building measures such as priority initiatives for governance and economic growth, along with addressing the market integration issues by commencing negotiations of an expanded Pacific Agreement on Closer Economic Relations - known in the region as PACER."

Toward a New Pacific Regionalism is available on ADB's website (www.adb.org) and at www.pacificplan.org. The third volume of the report includes a series of 18 working papers on specific issues and proposed Pacific Plan initiatives commissioned from regional experts for this report.