Remarks by ADB Vice-President Stephen P. Groff on 29 August 2012 in Rarotonga, Cook Islands
Chair, Secretary General, excellencies, distinguished guests, ladies and gentlemen – Kia Orana. It is a great privilege for me to join you here today. I would like to thank the Pacific Islands Forum for giving me this opportunity to share ADB's perspectives with you.
Many of you would have gathered in another seaside location two months ago for Rio+20, hosted by Brazil. The international attention focused on reconciling the global community's economic and environmental goals was a timely reminder 20 years after the first Earth Summit. The need to balance environmental needs and economic demands is perhaps nowhere more apparent than in the Pacific where people's everyday lives remain closely intertwined with nature.
The Pacific region is defined by its ocean, but it is also isolated by that same ocean. Small land areas and isolation are major contributors to fragility in the region. Transport, energy and communication costs in the Pacific are among the highest in the world. Natural resources, be these in the ocean or on the land, are the principle economic drivers in the region – supporting tourism, agriculture, and the world's richest fisheries.
The cost of isolation has been reduced rates of growth over the long term. And private sector opportunities have been constrained. On average, the non-resource rich Pacific developing member countries of the ADB have grown at around 1% per annum over the past decade, far less than population growth rates.
The cost of isolation has also been reduced access to basic services. The costs to governments of providing small, disperse populations with basic health, education, energy, water supply and sanitation services are high. In an environment where sources of economic growth are not readily available, slow growing revenue flows to government further restrict service provision.
But this stands to change. We are at the beginning of a new era for the Pacific region, and ADB is optimistic about future development opportunities.
Rapid advances in technology are increasingly making physical distance less an obstacle to development. In particular, information and communication technology, such as submarine fiber optic cables and advances in mobile telephony, will reduce the constraints imposed by geography and has the potential to change the economic landscape if these technologies are applied appropriately.
Last year, ADB approved the Tonga-Fiji Submarine Cable Project. Infrastructure development under this project will be complemented by the World Bank as well as an AusAID-financed technical assistance to improve the regulatory framework and develop the regulator's capacity. We are currently preparing another submarine cable project, to provide greater and more economical internet access to the Solomon Islands. Economic diversification supported by the private sector is essential; therefore, we are also looking into other submarine cable projects elsewhere in the Pacific.
We believe these projects are extremely important for the future of Pacific countries, as better connectivity could address a fundamental constraint – the 'remoteness'of these nations. Improved connectivity will allow Pacific countries to explore many new opportunities, and also enable more effective delivery of social services, such as education and health. ADB is working to ensure countries gain the development advantages offered by such technology.
The Pacific's macroeconomic weakness is partly due to the high cost of power generation, the result of widespread use of imported diesel fuel. However the global threat of climate change, nowhere more so felt than in the Pacific, has driven astonishing advances in renewable energy technology. The Pacific has been adopting renewable energy at a remarkable pace in recent years – contributing to addressing the issue of climate change and improving economic stability by reducing reliance on imported fuel. Renewable energy is a win-win outcome and one ADB is excited to be helping implement in eight Pacific countries and counting.
While we work in a wide range of sectors, poverty reduction remains ADB's overarching objective, and the direct poverty reduction opportunities provided by wider access to affordable energy and communications are significant, particularly when accompanied by stronger macroeconomic performance.
But just recognizing these opportunities is not enough. I want to focus on three key areas critical for enabling Pacific nations to turn potential into advantage. These areas are human resource development, private sector development, and regional cooperation and integration.
As a starting point, strengthened human resource development is essential. ADB is working alongside Pacific governments to lift the quality of human resources, including through a sharpened focus on technical and vocational education and training. Earlier this year the ADB board approved our first loan to a regional university – the University of the South Pacific. ADB will be supporting the USP over a number of years to implement its strategic plan – in particular ensuring improved outreach through ICT to regional students - thus addressing the region's geographic challenges and a critical shortage of skilled human resources.
Addressing constraints in the environment in which the private sector operates is a second area that can enhance the economic resilience of a country. The Pacific Private Sector Development Initiative (PSDI), established by ADB with co-financing from AusAID, assists countries in the Pacific to reform their business environments, increasing access to finance and making it easier for the private sector to conduct business, grow, and create jobs. Additionally, its efforts to reform state-owned enterprises provide improved delivery of basic services to more people, including those in rural areas.
Finally, greater regional cooperation and integration is integral to the future of the Pacific, offering potential to provide economies of scale and development benefits.
Yet in practice, regional integration in the Pacific is far less visible than in the Mekong region or in Central Asia where ADB-supported cooperation has flourished. ADB has seen elsewhere that successful regional cooperation and integration must be led by the countries themselves. The potential for Pacific nations to join together and create an attractive single market should not be discounted. This requires cooperation in areas such as investment policy and business law.
Regional cooperation can also enable collective action against global challenges, such as climate change. ADB is working with governments and other stakeholders in the Pacific to advance the climate and development financing agenda, by combining policy actions, capacity development and investment financing for inclusive and sustainable development. As there are many financial resources available globally to address the issue of climate change, ADB focuses on increasing access by Pacific countries to these 'climate funds'. We are also supporting the Finance Ministers of Pacific countries who have formed a working group to enhance access to climate financing.
In closing, this Pacific Leaders' meeting provides a timely opportunity to discuss all these important issues and take action to hasten the achievement of all your development goals – goals that we at the ADB aspire to support.
I thank you again and offer my best wishes for a productive meeting.