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Private Sector Reforms Can Boost Development in Pacific - ADB Report
MANILA, PHILIPPINES – Reforming state-owned enterprises (SOEs) and improving the business environment and women’s economic empowerment are critical to building a vibrant private sector in the Pacific region, according to the latest edition of the Asian Development Bank’s (ADB) Pacific Economic Monitor.
“Building the private sector is key to ensuring that growth in the Pacific is inclusive,” said Xianbin Yao, Director General of the ADB’s Pacific Department. “By removing barriers and building the right conditions, Pacific policy makers can help develop a strong and dynamic private sector.”
Listen to Monitor author Christopher Edmonds talk about growth prospects for the region, and how the eurozone crisis has effected Pacific economies.
The July 2012 edition of the report, a tri-annual economic review of 14 Pacific island countries, includes three articles on private sector development efforts as the theme of its section covering economic policy and management in the region. One article highlights recent SOE reform efforts in Kiribati. It illustrates that with proper assessment, governments can identify and manage opportunities for reform of poorly performing SOEs that drain public resources, damage growth prospects, and create a cycle of costly and inefficient productivity. In the case study of the Kiribati Supply Company Limited, the enterprise found new life as a profitable privately-held business.
The second article examines efforts to improve access to finance in the Pacific through secured transactions, or loans backed by movable assets such as boats, cars, or farm equipment. Secured transaction legislation, presently in use in the Republic of Marshall Islands, Federated States of Micronesia, Palau, Papua New Guinea, Solomon Islands, Tonga and Vanuatu, can reduce the cost of arranging credit and increase accessibility of credit.
The last article also focuses on women’s economic empowerment, assessing key constraints that women face with regard to business laws. The article recommends reforms to overcome constraints. Adjustments in legislation and regulations that promote women’s participation in the private sector can help reduce poverty in the Pacific. Automating business processes (such as business licensing and registration) and reforming business ownership regulations can reduce opportunities for bias or discrimination and free women from the obligation of having male business partners or loan co-signers.
Much of the work discussed in the Monitor was carried out by ADB’s Pacific private sector development initiative (PSDI), established in 2006 with co-financing from Australian Agency for International Development (AusAID). The PSDI is a knowledge hub with a team of technical experts focusing on business law reform, access to financial services, SOE reform, and public-private partnerships.