FOCUS AREA OVERVIEWS AUGUST 2016 Pacific Private Sector Development Initiative ASIAN DEVELOPMENT BANK
PSDI is a regional technical assistance facility co-financed by the Asian Development Bank, the Government of Australia, and the Government of New Zealand.
The Pacific Private Sector Development Initiative (PSDI) helps ADB’s 14 Pacific developing member countries achieve sustainable economic growth through business environment reform. Since 2007, PSDI has worked to alleviate poverty and promote growth in the Pacific region through reforms that encourage private sector investment and entrepreneurship. PSDI assists governments and private sector actors to improve the business environment in the Pacific. Underpinned by a rigorous diagnostic approach that includes regular private sector assessments of the business environments in Pacific island countries, and the landmark Finding Balance benchmarking studies, PSDI’s team of experts provides a range of technical assistance that promotes private sector development in the region. This includes specialized support in the areas of business law reform, access to finance, reforming state-owned enterprises, establishing public-private partnerships, the economic empowerment of women, and promoting competition. PSDI currently focuses on promoting a better business environment through technical expertise that includes assistance with policy, legislative reforms, advocacy, full implementation support for reforms, and technology-based solutions.
PSDI works in five core focus areas
Financing Growth Business Law Reform State-owned Enterprise Reform and Public-Private Partnerships Advancing Economic Empowerment of Women Competition Policy and Consumer Protection
PSDI core reforms
Secured transactions frameworks established Commercial law regime reforms underway SOE/PPP policy and legal reform undertaken
Economic empowerment of women pilot project initiated Competition policy development underway
PACIFIC PRIVATE SECTOR DEVELOPMENT INITIATIVE
FINANCING GROWTH
FOCUS AREA OVERVIEW | AUGUST 2016
FOSTERING MORE ACCESSIBLE FINANCE AND FINANCIAL SERVICES Financial markets in the Pacific are generally underdeveloped, and many people, particularly women, do not have access to even the most basic financial services, especially in rural areas. Access to credit remains a problem, despite excess liquidity across Pacific financial systems and the increased availability of savings products. Without access to financial services, businesses cannot grow, entrepreneurship is stifled, and people on low incomes cannot save securely to invest, pay bills, or move beyond subsistence living standards.
OVERVIEW
To address these issues, PSDI focuses on developing the linkages within financial system to deliver better intermediation between savers and borrowers, so as to increase the availability of loans, securities and other financing instruments. Better financial intermediation requires improving the integrity of financial systems; strengthening selected financial institutions; designing and implementing new products tailored to the realities and particular needs of Pacific island countries; and supporting financial inclusion throughout the Pacific. Finally, it means undertaking the analytical work to identify the institutional constraints to access to finance, and advocating for appropriate policy responses. The cornerstone of PSDI’s work to achieve these aims has been the implementation of secured transactions frameworks, which allow lenders to give credit against the security of “movable assets”. This is important to the Pacific because most borrowers cannot offer land and other real estate as collateral for loans (land is mostly communally-owned in the Pacific). It also impacts significantly on women who, in most countries in the region, have little control over customary land. PSDI assists Pacific governments with formulating the policy, drafting the necessary legislation, ensuring awareness of the reforms, and the creation and activation of online registries. Once the frameworks for improved financial intermediation are in place, PSDI works closely with lenders to develop financial products that will use the frameworks to increase lending. As secured transactions reforms are completed in more Pacific countries, PSDI is placing more emphasis on the role of provident funds within the financial system, the commercial sustainability of credit and other financial service providers, and regulatory frameworks. Provident funds are integral to the stability of Pacific financial systems, as well as the transformation of savings into longer-term investments. They will play a central role in the development of capital markets in the region through investments in long-term bonds, equity investments, and other financing arrangements. To give impetus to the development of capital markets, PSDI is developing a benchmarking study of Pacific provident funds, similar to its Finding Balance study of SOEs, and investigating constraints to securities issuance. The focus of PSDI’s institutional strengthening activities is the commercial provision of finance, as this underpins the objective of increasing access to finance and complements the financial inclusion agenda. In addition, PSDI works closely with central banks and other regulatory agencies to improve policy and regulatory frameworks. The analytical underpinnings of PSDI’s support for secured transactions is provided in the 2014 publication Unlocking Finance for Growth: Secured Transactions Reform in Pacific Island Economies. More recently, Digitial Financial Services in the Pacific: Experiences and Regulatory Issues looked at the challenges of and opportunities of mobile-phone banking in the Pacific, and Credit Guarantees: Challenging their Role in Improving Access to Finance in the Pacific Region critiqued this often-attempted approach to increasing access to finance. A report examining the role of development banks in the Pacific will be published in 2017.
CURRENT AND FUTURE PROJECTS
COOK ISLANDS Discussions commenced with the Government of Cook Islands in 2014 on secured transactions reform. In 2015 PSDI assisted the Bank of the Cook Islands (BCI) to introduce a new liquidity risk management policy, consistent with the Prudential Statement on Liquidity Risk Management issued by the Cook Islands Financial Supervisory Commission (FSC) and integrated with BCI’s overall funds management policy. In 2016, PSDI is extending this support to assist BCI to identify and assess the impact of operational risks and then draft a policy for the management of operational risk consistent with the FSC prudential statement.
ASIAN DEVELOPMENT BANK Pacific Private Sector Development Initiative Pacific Liaison and Coordination Office Level 20, 45 Clarence Street, Sydney, Australia
Tel +61 2 8270 9444 • Fax +61 2 8270 9445
[email protected] • @ADB_Sydney_PSDI www.adbpsdi.org • www.adb.org/plco/psdi
PSDI works with ADB’s 14 Pacific developing member countries to improve the enabling environment for business and address constraints to private sector development in support of sustainable and inclusive economic growth.
PSDI is a regional technical assistance facility co-financed by the Asian Development Bank, the Government of Australia, and the Government of New Zealand.
PACIFIC PRIVATE SECTOR DEVELOPMENT INITIATIVE
FINANCING GROWTH
FOCUS AREA OVERVIEW | AUGUST 2016
CURRENT AND FUTURE PROJECTS
FIJI Discussions with the Government of Fiji on secured transactions reform commenced in 2014. Subsequently, PSDI assisted with the establishment of the Fiji Secured Transactions Task Force, which met for the first time in February 2015, and supported the task force to develop a policy paper to guide the reform and prepare draft legislation. The resulting bill is expected to be presented to parliament in late-2016. PSDI has also been working closely with Fijian financial institutions, including Fiji Development Bank (FDB), to raise awareness of what the effect of the reform will be and the opportunities it will provide for movable property financing. Product concepts for the agricultural application of movable property financing are being developed and additional work is being undertaken to strengthen FDB’s commercial orientation and clarify its role as a development finance institution. PSDI is also supporting the Reserve Bank of Fiji, in its role as secretariat for the Capital Markets Development Task Force, to further the development of Fijian capital markets. An initial diagnostic has been completed and a report on the existing legal framework for capital raising and the potential for new capital money products has been presented.
CURRENT AND FUTURE PROJECTS
OUTCOMES AND RESULTS
REPUBLIC OF MARSHALL ISLANDS The Secured Transactions Act 2007 was enacted and an electronic registry installed in 2007 with technical assistance from PSDI. Lenders in the Marshall Islands have been active registry users, with more than 8,000 loans made as of mid-2015. Many loans are secured by future land rent proceeds from the military base of the Government of the United States on Kwajalein Atoll. An upgrade of the registry was completed in late 2014.
PSDI is providing ongoing support to increase lenders’ update of the secured transactions framework.
CURRENT AND FUTURE PROJECTS
OUTCOMES AND RESULTS
FEDERATED STATES OF MICRONESIA (FSM) The secured transactions regime in FSM is the longest running in the Pacific. It was established through the Secured Transactions Act 2006 and the creation of an online registry after the ADB assisted the government to implement secured transactions reforms in 2005-2006. The new framework saw a large number of initial registrations, a lull between 2008– 2009, then increased registrations between 2011–2015 representing new loans. PSDI is supporting an upgrade of the secured transactions registry, a review of secured transactions reform outcomes, and efforts to increase lenders’ use of the secured transactions framework. PSDI has also commenced discussions with FSM Development Bank on assisting with the preparation of a strategic plan to guide the future direction of the bank.
OUTCOMES AND RESULTS
NAURU Since the early 2000s, Nauru had been without a financial institution capable of providing commercial banking services. In 2012, PSDI undertook an assessment of the Nauruan people’s financial requirements, which it then used to help the government prepare an information memorandum to identify an appropriate institution to provide these services. Expressions of interest were submitted to the government in August 2013, and Bendigo-Adelaide Bank opened an agency in Nauru in May 2015. PSDI also assisted the government in reviewing the existing regulatory framework for financial institutions and, in February 2014, submitted policy recommendations for the regulation and supervision of financial institutions.
PACIFIC PRIVATE SECTOR DEVELOPMENT INITIATIVE
FINANCING GROWTH
FOCUS AREA OVERVIEW | AUGUST 2016
CURRENT AND FUTURE PROJECTS
PALAU Following PSDI-supported secured transactions reform support, the Secured Transactions Act was passed in May 2012 and an electronic registry was launched in January 2013. Although relatively small, the number of secured loans per capita ranks Palau’s secured transactions filings in the top half of those in use in the Pacific. PSDI is providing ongoing support to lenders to increase their uptake of the secured transactions framework. PSDI is supporting the commercial strengthening of the National Development Bank of Palau in line with the regulatory requirements of the Palau Financial Institutions Commission. A review of bank policies has commenced and operational assistance may follow this review.
CURRENT AND FUTURE PROJECTS
OUTCOMES AND RESULTS
PAPUA NEW GUINEA (PNG) PSDI provided technical assistance to MiBank (formerly Nationwide Microbank) between 2011 and 2013 to develop an innovative mobile telephone-linked bank account, MiCash. PSDI supported development of appropriate audit and risk management processes for MiCash, which were completed in April 2012; a review of the MiCash pilot in West New Britain Province, which was completed in June 2012; and the development of a MiCash training program for staff and agents, which was completed in March 2013. PSDI continued its support for MiBank through 2015-2016, focusing on the development of a business model to increase its regional presence, should it decide to do so. PSDI funded the design of the Microfinance Expansion Project (MEP), a $24 million sector-wide program cofinanced by the governments of Australia and PNG. The MEP focuses on strengthening institutions; financial literacy and business development skills training; developing appropriate regulation for and supervision of the microfinance sector; and establishing a risk share facility for partner institutions to promote credit expansion to micro- and small-enterprises. Implementation began in 2011 and will run to 2017. The Personal Property Security Act was passed in December 2011 and an online registry was launched in January 2016 and activated in May 2016. PSDI’s ongoing assistance will focus on working with lenders to make them aware of the impact of the reform and the opportunities the reform provides for the use of movables finance products. PSDI undertook a financial sector assessment in conjunction with the private sector assessment that was released in May 2015. It also conducted a review of draft capital markets legislation for the Securities Commission of PNG. Through the second half of 2015, PSDI worked closely with Bank PNG to improve the stability of PNG’s financial system. An assessment of the regulatory regime applying to investment managers and an assessment of financial sector interconnectedness have been completed and their policy implications are currently being discussed with Bank PNG.
CURRENT AND FUTURE PROJECTS
SAMOA PSDI supported the passage of the Personal Property Securities Act in February 2013. Subsequent to an amendment to the act in 2015, PSDI commenced procurement of a registry and is supporting registry design and implementation. The registry is expected to be launched in the second half of 2016. Alongside this support, PSDI is working to train stakeholders and raise awareness of the reform and its impact on lenders. Discussions have also been undertaken with Samoan authorities on possible PSDI assistance to improve the operating performance of the Development Bank of Samoa and the Samoa National Provident Fund.
CURRENT AND FUTURE PROJECTS
SOLOMON ISLANDS PSDI supported the passage of the Secured Transactions Act in 2008, through which an electronic registry was launched in 2009, making Solomon Islands the fourth country that PSDI has helped to establish a secured transactions framework. While Solomon Islands’ biggest finance company has embraced the framework and increased its loan assets considerably, banks are yet to take full advantage of the opportunity the reform gives to take movable assets as collateral. In response, PSDI is working to increase lenders’ uptake of the framework, with a particular focus on supply chain financing for agriculture. In 2015, PSDI supported the development of a pre-shipment financing facility for cocoa exporters.
PACIFIC PRIVATE SECTOR DEVELOPMENT INITIATIVE
FINANCING GROWTH
FOCUS AREA OVERVIEW | AUGUST 2016
CURRENT AND FUTURE PROJECTS
SOLOMON ISLANDS (CONT’D) Throughout 2014–2016, PSDI supported the Central Bank of Solomon Islands (CBSI) and the Ministry of Finance and Treasury (MOFT) to undertake public consultations and develop a credit union policy, as preparation for new credit union legislation. PSDI also worked closely with CBSI and MOFT to provide drafting instructions for legislation to reform the Solomon Islands National Provident Fund. Both pieces of work have been submitted for cabinet approval.
OUTCOMES AND RESULTS
TIMOR-LESTE In 2012, PSDI reviewed laws and policies affecting branchless banking operations for the Central Bank of TimorLeste and assessed the potential for introducing providers of branchless banking services. In collaboration with the Inclusive Finance for the Under-Served Economy program, PSDI produced a report and presented it to the government in June 2013.
CURRENT AND FUTURE PROJECTS
In 2015, PSDI provided momentum for lending environment reforms through a legal and policy review of laws governing collateral. Through a consultative process incorporating inputs from government, private sector, and other stakeholders, a policy paper proposing a secured transactions law was completed. The next phase of the secured transactions reform will involve finalization of a draft law, completing consultations on the law, and obtaining parliamentary support for its enactment. This is anticipated by early 2017. PSDI was instrumental in transforming the Microfinance Institute of Timor-Leste into the National Commercial Bank of Timor-Leste (BNCTL) in 2011. Since the change, PSDI has supported BNCTL’s institutional capacity strengthening through targeted advisory support to its board, human resource development, risk management, and strengthened accounting frameworks and audit function. The bulk of ADB’s assistance to BNCTL is now provided under a technical assistance project administered by ADB’s Pacific Liaison and Coordination Office. Within this broader assistance, PSDI is supporting the development of BNCTL’s internal audit capability. This work commenced in May 2015. In line with the emphasis it places on institutions, PSDI has been working closely with the Central Bank of Timor-Leste (BCTL) since mid-2014 in several areas. One of these was support to BCTL’s Financial Information Unit to prepare a national risk assessment and anti-money laundering/combating the financing of terrorism (AML/CFT) strategy. This work is part of the broader mandate of the National Commission for the Implementation of the AML/CFT, which was established in 2014. The strategy was approved by the Council of Ministers in June 2016. PSDI support to BCTL has also included assistance with the development of the legal and regulatory framework for digital financial services. PSDI consultants worked with BCTL to prepare draft regulations and a policy paper on the use of agents in branchless banking, issues relating to consumer protection, and protecting the e-money float. PSDI is working with BCTL to review of its offsite banking supervision system.
CURRENT AND FUTURE PROJECTS
OUTCOMES AND RESULTS
TONGA The Personal Property Securities Act was enacted in September 2010 and an online registry went live in April 2011. PSDI also supported amendments to the act, passed in December 2012, and a registry upgrade.
While the secured transactions framework is being used, it is not yet fulfilling its potential. PSDI continues to engage with Tongan lenders to increase their uptake of the secured transactions framework and, since mid-2014, has been working closely with Tonga Development Bank and key actors in the vanilla industry to develop a supply chain financing product for the industry. The objective is to launch a pilot financing facility, which could be extended to a wider range of borrowers in the vanilla industry and other agricultural sectors at a later stage. Since mid-2014, PSDI has also been working to strengthen Tonga’s pension fund industry. A review of the policies of the Retirement Fund Board was undertaken in late-2015. Further work to develop a statement of investment beliefs and to improve investment due-process for each asset class has been built on to the initial review. The National Reserve Bank of Tonga has requested PSDI assistance to reform the legal and regulatory framework for pension funds. This assistance will commence in the second half of 2016.
PACIFIC PRIVATE SECTOR DEVELOPMENT INITIATIVE
FINANCING GROWTH
FOCUS AREA OVERVIEW | AUGUST 2016
VANUATU
OUTCOMES AND RESULTS
PSDI provided assistance to strengthen the capacity of the Vanuatu Financial Services Commission (VFSC), Vanuatu’s main nonbank regulatory and supervisory body (both off- and on-shore). PSDI also reviewed the International Financial Centre’s structure and operations, and recommended actions for its corporate strategy. PSDI supported the creation of Vanuatu’s secured transactions framework reform through the drafting and passage of the Personal Property Securities Act, which the Government of Vanuatu passed in July 2008. Through PSDI, an electronic registry was installed in April 2009 to record the filing of security interests. PSDI also supported a registry upgrade in February 2012. Lenders are using the new framework, but further support to identify applications of movables finance is necessary to maximize its benefits. Initially, the most active users of the new framework were wholesaler businesses, which have increased their credit limits tenfold by securing their loans. Lately, banks have made greater use of the framework, especially in taking general security interests. In 2012, PSDI completed a diagnostic for the Reserve Bank of Vanuatu and VFSC on the legislative framework for microfinance. The diagnostic identified legal provisions to ensure that unregulated microfinance institutions taking deposits are adequately regulated to protect the interests of deposit holders.
CURRENT AND FUTURE PROJECTS
In 2012, PSDI assisted the Vanuatu Women’s Development Scheme to strengthen its strategy and governance. PSDI facilitated workshops with the management and board, and introduced the organization to international microfinance practices. Since mid-2014, PSDI has been assisting with the drafting of a new trustee bill to improve Vanuatu’s compliance with international commitments and its reputation as an off-shore financial center. PSDI is also working with VFSC on issues related to the Financial Action Task Force guidelines—standards for anti-money laundering and countering terrorism financing—to ensure the international companies regime is best practice. Also in mid-2014 PSDI began working more closely with lenders to increase their use of the secured transactions framework. This includes identifying transactions where movable assets could be used as collateral, such as financing civil construction contractors using accounts receivable as collateral.
PACIFIC PRIVATE SECTOR DEVELOPMENT INITIATIVE
BUSINESS LAW REFORM FOCUS AREA OVERVIEW | AUGUST 2016
SIMPLIFIED, MODERN, CUSTOMISED PACIFIC BUSINESS LAWS Pacific economies are constrained by outdated and inappropriate laws and regulations.
OVERVIEW
In many cases, laws are simply absent. The key legal areas of business formation, contracting, dispute resolution, and insolvency present a common theme in all of ADB’s Pacific developing member countries—they are uncertain, poorly enforced, increase the transactions costs for business, and do very little to provide the legal platform necessary to support a robust and developing private sector. These laws have little impact and are not accessible to the majority of the population and do not foster economic activity by community groups, women, small farmers, or local entrepreneurs. PSDI is working with Pacific governments to reform their business law frameworks to be more inclusive and accessible to poorer people, women engaged in business activity, and residents of rural and remote communities. Examples of PSDI supported reform include: • enabling businesses to incorporate a company quickly, locally, and for a relatively small cost; • making formality far simpler for small businesses to achieve through the introduction of single shareholder/single director companies; and, • providing a form of corporation for village and community businesses that is easy to establish and that provides a superior vehicle for the receipt of profits or revenues from royalties. Other priority action areas for PSDI include the establishment of online business registries, new laws on insolvency and trusteeships, further reforms of companies acts, and improvements in foreign investment regimes. An assessment of PSDI’s support for business law reform initiatives, The Impact of Company Law Reform, will be published as part of the PSDI Knowledge Series in 2017.
CURRENT AND FUTURE PROJECTS
COOK ISLANDS PSDI, with joint funding from the Government of New Zealand, is supporting company law and registry reform. A review of the existing act was completed in 2014 and a request received from the government to prepare a new companies bill for consideration by Parliament in 2016. Drafting of the bill has commenced and policy consultations are ongoing. Once the bill has been passed, PSDI, together with the NZ Companies Office, will help implement an electronic company registry.
CURRENT AND FUTURE PROJECTS
OUTCOMES AND RESULTS
FIJI PSDI supported the development of electronic transactions laws in 2008 to facilitate the use of electronic payments.
Opportunities for business law reform are being explored as part of PSDI’s comprehensive review of its Fiji work program. PSDI, together with New Zealand Companies Office, prepared a diagnostic of Fiji’s company registry with a view toward providing support to the Government of Fiji in the implementation of an online registry. As part of this work, broader support for the implementation of the Companies Act 2015 could be considered.
ASIAN DEVELOPMENT BANK Pacific Private Sector Development Initiative Pacific Liaison and Coordination Office Level 20, 45 Clarence Street, Sydney, Australia
Tel +61 2 8270 9444 • Fax +61 2 8270 9445
[email protected] • @ADB_Sydney_PSDI www.adbpsdi.org • www.adb.org/plco/psdi
PSDI works with ADB’s 14 Pacific developing member countries to improve the enabling environment for business and address constraints to private sector development in support of sustainable and inclusive economic growth.
PSDI is a regional technical assistance facility co-financed by the Asian Development Bank, the Government of Australia, and the Government of New Zealand.
PACIFIC PRIVATE SECTOR DEVELOPMENT INITIATIVE
BUSINESS LAW REFORM FOCUS AREA OVERVIEW | AUGUST 2016
CURRENT AND FUTURE PROJECTS
KIRIBATI A company law and registry diagnostic was completed in late June 2014. In August 2016, PSDI delivered a legal diagnostic of the company and business names laws and a review of registry elements of legislation for other entities, including credit unions and co-operatives. PSDI will support the development of a new policy and legislative framework in 2016 and 2017. PSDI is also reviewing designs for an electronic business registry that is appropriate to the volume of registrations and business activity in Kiribati.
OUTCOMES AND RESULTS
PSDI completed a diagnostic of the Company Law and the existing company registry in late 2013. It found the private sector in Palau is severely constrained by an outdated company law and an almost dysfunctional paper based registry. PSDI has provided input into the new Company Law Bill but unfortunately the current Government of Palau does not see its reform as a priority.
CURRENT AND FUTURE PROJECTS
PALAU
In 2016, the government requested PSDI lead a reform of the company registry, which will include the drafting of a companies bill and the development of an online company registry.
CURRENT AND FUTURE PROJECTS
OUTCOMES AND RESULTS
SAMOA After updating the Companies Act Regulations in early 2013, PSDI assisted with the procurement and installation of a new electronic registry. Together with the New Zealand Companies Office, PSDI has carried out significant public awareness activities and capacity building for the new registry. Implementation has revealed that various elements of company law would benefit from an amendment. PSDI has been asked to provide drafting and policy support for those legislative changes. In 2014, PSDI surveyed company administrators and business services providers to evaluate the Samoa company registry one year after its launch. The survey found that: • the new company registration rate had doubled by the end of 2013; • the cost had fallen dramatically; • registering and maintaining companies was significantly easier; • online company information searches saved large amounts of time and money; and, • the ease of access to information had lowered the costs of company administration, accounting, and auditing. To further simplify the environment for doing business and to attract foreign investment, PSDI has been asked to consider introducing a business names framework to enable small businesses to formalise, review foreign investment processes, and to include other registered entities into the electronic registry. Using the company registry as a pilot, PSDI is also supporting the promotion of e-payment facilities with the government.
OUTCOMES AND RESULTS
SOLOMON ISLANDS PSDI has supported extensive business law reform activity in Solomon Islands. PSDI assistance and extended advocacy saw the Companies Act passed in 2010 and an online company registry, Company Haus, launched. As a result of the registry: • it is cheaper and faster for new businesses to incorporate; • ministerial approval of company names is no longer required; • company seals are no longer required; and, • there is no need to travel to the capital, Honiara. The average time to form a company has been reduced from nearly 3 months to less than 36 hours. On average, 292 new companies have incorporated annually between 2010 and mid-2015, more than double the pre-reform average. The new company laws also allow single shareholder companies, giving entrepreneurs maximum flexibility to start and manage a business without external ownership influences, and allowing women to start a business without a male co-director.
PACIFIC PRIVATE SECTOR DEVELOPMENT INITIATIVE
BUSINESS LAW REFORM FOCUS AREA OVERVIEW | AUGUST 2016
CURRENT AND FUTURE PROJECTS
OUTCOMES AND RESULTS
SOLOMON ISLANDS (CONT’D) The community company structure, also introduced under the new company laws, offers a more transparent and accountable alternative to communities operating businesses informally or through trusts or cooperatives. It has great potential for managing resource royalties and customary land lease payments. By 2016, 33 community companies had been incorporated in Solomon Islands. PSDI also identified a complementary reform to the company law reform: simplifying the business names registration system. Business names are a form of license used extensively by small and medium enterprises across Solomon Islands. The successful implementation of the reform to business names will: • significantly reduce the time taken in processing the 1,300 new license requests per year; • save small business owners significant time and money; • enable small business owners to register online, removing the need to travel large distances; and, • streamline license processing, operating costs, and payment procedures through an interface with the existing Company Haus. PSDI’s ongoing policy guidance and support in drafting the Business Names Act 2014 saw it passed through Parliament into law in August 2014. PSDI is continuing to support the act’s implementation through ongoing policy advice and advocacy and will see business names included within the online registry in November 2016. PSDI undertook a diagnostic on building an online foreign investment registry. This resulted in a project to build a common online platform encompassing foreign investment registrations, company registrations, and business name registrations, thereby creating an integrated, streamlined investment start-up process. This new online registry is due to be launched in November 2016. PSDI is also assisting the government to create a modernized customs and excise regime. The reform will promote faster clearing procedures, improve revenue collections, reduce process informality, improve border protection, and facilitate trade. Extensive technical consultations on the bill were completed in 2015. Cabinet has now approved the draft bill to be vetted by the Attorney General’s Chambers.
CURRENT AND FUTURE PROJECTS
TIMOR-LESTE On request of the government, PSDI provided a review of the company laws in Timor-Leste in 2015. The review makes recommendations to simplify and modernize the laws to bring the companies framework up to global standards and provide greater access to the formal sector. In early 2016, PSDI supported a consultative public-private reform taskforce to review amendments to Timor-Leste’s company laws. Many of the recommendations were incorporated into a new draft company law, which received Council of Ministers’ support in April 2016 and is expected to be presented to Parliament later this year. PSDI also provided a legal diagnostic and policy framework of Timor-Leste’s insolvency laws, which are currently nonfunctioning and are a hindrance to the growth of the financial sector. The legal diagnostic forms the basis of broader recommendations for insolvency reform. Reforming the insolvency framework is a highly technical process. PSDI conducted an in-country analysis in the first half of 2016 and is working on the insolvency policy framework.
TONGA
OUTCOMES AND RESULTS
In 2009, PSDI assisted in preparing the Companies (Amendment) Act. Approved by Cabinet and the Legislative Assembly in September 2009, the Act streamlines the Companies Act 1995 and provides for an electronic registry. A hybrid paper/electronic registry went live in December 2009. In 2012, the government requested PSDI undertake design and implementation of a fully electronic company registry. Procurement began in 2014 and in December 2014 Tonga’s innovative online registry went live, allowing users to file and access company records, business names and business licenses all from the one integrated resource, a first in the Pacific Islands. PSDI’s 2012 private sector assessment identified business licensing laws as one of the private sector’s most significant constraints. PSDI subsequently assisted the government with business licensing reform, completing a diagnostic and drafting amendments to the Business License Act. Parliament passed the amendments in late 2012, simplifying the entire licensing regime and reducing transaction costs for business. PSDI also drafted regulations and assisted with advocacy.
PACIFIC PRIVATE SECTOR DEVELOPMENT INITIATIVE
BUSINESS LAW REFORM FOCUS AREA OVERVIEW | AUGUST 2016
CURRENT AND FUTURE PROJECTS
TONGA PSDI supported policy design and drafting of a Receiverships Bill, which was passed by Parliament in 2016 but is yet to commence. Policy consultations and drafting of a Bankruptcy Bill will also be finalized and tabled in Parliament in 2016. PSDI supported consultations on the Foreign Investment Policy and has drafted the the Foreign Investment Act, which will be considered by Parliament in 2016.
OUTCOMES AND RESULTS
VANUATU PSDI supported a comprehensive reform to foundational business laws in partnership with the Vanuatu Financial Services Commission and the State Law Office. A new Companies Act was passed by Parliament in September 2012 and the Companies (Insolvency and Receiverships) Act and Insolvency (Cross Border) Act was passed by Parliament in 2013. PSDI support for the implementation of these acts culminated in the launch of an online companies, business names, and charitable associations registry in August 2015. The multiple-entity registry has reduced the average time for company and other business entity registrations from more than three weeks to less than three days, and made payments and other regulatory requirements simpler and more convenient.
CURRENT AND FUTURE PROJECTS
While PSDI supported the drafting of a Personal Insolvency Bill as part of an insolvency reform package, the government indicated in 2014 that this had become a lower priority. PSDI stands ready to re-engage when government priorities change. PSDI will undertake a review of the registry implementation to ensure the transition to an online service is progressing smoothly. It is anticipated that further work on the reform of trustee laws will continue through 2016, along with support for PSDI’s financing growth work in the development of a capital markets reform agenda.
PACIFIC PRIVATE SECTOR DEVELOPMENT INITIATIVE
SOE REFORM AND PPPs
FOCUS AREA OVERVIEW | AUGUST 2016
STATE-OWNED ENTERPRISE REFORM AND PUBLIC-PRIVATE PARTNERSHIPS State-owned enterprise (SOE) reform is crucial to private sector development. SOEs continue to play an important role in many Pacific island countries. Many absorb large amounts of scarce capital on which they provide very low returns. While some provide essential public services, many others operate as purely commercial ventures and crowd out the private sector.
OVERVIEW
Reforming SOEs and implementing public-private partnerships (PPPs) creates opportunities for private investment, reduces the costs of doing business and improves basic services by introducing private sector discipline and competitive market pressures into the SOE sector. Through a combination of legal, regulatory, governance, and monitoring reforms and the introduction of increased private sector participation, the performance of SOEs and infrastructure service delivery is improving in the Pacific. PPPs expand the capacity of SOEs to deliver infrastructure and related services and also allow governments to contract directly with the private sector without the involvement of SOEs. ADB has been working with Pacific island countries on SOE reform and PPPs for more than a decade. Key in driving this agenda has been the publication of PSDI’s Finding Balance series. Each edition of Finding Balance offers in-depth analysis that tracks the challenges, achievements and best practices in SOE reform in ADB’s Pacific developing member countries, providing a unique benchmark with which to measure progress and share lessons learned. Four editions of Finding Balance have now been published and a fifth will be released in September 2016. Each study drew on the insights provided at regional SOE leaders seminars convened by PSDI. In late 2016, PSDI will publish three case studies examining the operations of different Pacific SOE sectors. The case studies will look at water, wastewater and sewage; solid waste management; and franchise shipping.
OUTCOMES AND RESULTS
COOK ISLANDS In November 2011, PSDI reviewed the legislative, governance, and monitoring framework for Cook Islands’ SOEs. In July 2012, the Government of Cook Islands endorsed the resulting gap analysis recommendations. In March 2013, implementation was suspended as the government sought to clarify several issues. After a further review in July 2013, updated recommendations were submitted to the government in August 2013. PSDI remains ready to support implementation.
OUTCOMES AND RESULTS
PSDI has provided ongoing support for SOE reform activities in Fiji since 2007. Fiji has participated in all five of PSDI’s Finding Balance SOE benchmarking studies. PSDI provided peer review and implementation support to an ADB technical assistance project on SOE reform that ran from 2012–2013 and supported SOE restructuring and outsourcing, and capacity building of monitoring agencies.
CURRENT AND FUTURE PROJECTS
FIJI
Following the national elections in September 2014, PSDI has been supporting the Ministry of Public Enterprises in assessing partial divestment options for several SOEs, including Fiji Electricity Authority and Airports Fiji Limited. In both cases, regulatory implications and the impact of community service obligations are important considerations for structuring the planned divestments, which are expected to be transacted in 2016-2017. In 2015, the ministry also asked PSDI for support in developing an SOE policy framework and in reviewing the Public Enterprise Act and Public-Private Partnership Act. This work is ongoing and part of a larger collaboration with the Government of Fiji to develop SOE restructuring, divestiture and PPP programs.
ASIAN DEVELOPMENT BANK Pacific Private Sector Development Initiative Pacific Liaison and Coordination Office Level 20, 45 Clarence Street, Sydney, Australia
Tel +61 2 8270 9444 • Fax +61 2 8270 9445
[email protected] • @ADB_Sydney_PSDI www.adbpsdi.org • www.adb.org/plco/psdi
PSDI works with ADB’s 14 Pacific developing member countries to improve the enabling environment for business and address constraints to private sector development in support of sustainable and inclusive economic growth.
PSDI is a regional technical assistance facility co-financed by the Asian Development Bank, the Government of Australia, and the Government of New Zealand.
PACIFIC PRIVATE SECTOR DEVELOPMENT INITIATIVE
SOE REFORM AND PPPs
FOCUS AREA OVERVIEW | AUGUST 2016
CURRENT AND FUTURE PROJECTS
KIRIBATI PSDI has continued to provide peer review and support for the Government of Kiribati’s SOE reform program. In June 2014, under a separate ADB technical assistance project, PSDI participated in a multi-donor mission to review SOE reform progress and plan deliverables. In 2015-2016, Kiribati participated in PSDI’s Finding Balance benchmarking study for the first time since the biennial exercise began in 2009.
OUTCOMES AND RESULTS
REPUBLIC OF THE MARSHALL ISLANDS PSDI supported the development of an SOE reform policy, which Cabinet endorsed in April 2012. Based on the policy, the SOE Bill was drafted with substantial PSDI advice and input. The bill is designed to strengthen SOE governance and commercial orientation and support government efforts to improve SOE performance. It was passed by Parliament in 2015. PSDI will support the implementation of the bill. The Marshall Islands has participated in the 2011, 2012, 2014, and 2016 Finding Balance studies on the comparative country performance of SOEs. The studies have raised awareness of the fiscal cost of the SOE sector in the Marshall Islands and will support the Government of Marshall Islands’ implementation of the SOE Act.
OUTCOMES AND RESULTS
FEDERATED STATES OF MICRONESIA On request from Pohnpei Utilities Corporation (PUC), PSDI undertook an analysis of PUC’s options for outsourcing its power, water, and wastewater operations. The analysis included PPP opportunities. PSDI presented the analysis to PUC management in June 2014, which was endorsed by the board in late 2014. Implementation assistance is now being considered by ADB as part of its broader country partnership strategy.
OUTCOMES AND RESULTS
NAURU PSDI provided technical assistance to the government to restructure the Republic of Nauru Phosphate Corporation’s senior executive management. This included assistance with recruiting a new chief executive officer (CEO) who began in October 2011. PSDI also supported the development of a new organization structure for senior management and board of the Nauru Utilities Corporation (NUC) and Nauru Rehabilitation Corporation (NRC), including assistance with new CEO and other senior management recruitment. NUC’s new CEO took up his position in June 2012. Followup performance review assistance for the NUC CEO, and recruitment of a new NRC CEO, was provided under separate ADB funding. NRC’s new CEO was appointed in November 2013.
CURRENT AND FUTURE PROJECTS
PALAU PSDI continues to support Palau’s development and implementation of an SOE policy. The first public consultation on the draft SOE policy was held in November 2013 and the second in April 2014, and the policy was endorsed by the President in late 2014. It calls for the commercial operation of all three of Palau’s SOEs, the establishment of a contracting framework for community service obligations, and the removal of elected officials from SOE boards. In 2016, PSDI has been providing technical support to review options for private investment and operation of the Koror airport through a PPP mechanism. With the Palau Chamber of Commerce, PSDI has developed a corporate governance strengthening program. This began in April 2014 and is ongoing. PSDI also assisted the newly merged power and water utility with their articles of incorporation and CEO selection process.
CURRENT AND FUTURE PROJECTS
PAPUA NEW GUINEA (PNG) In September 2014, Parliament passed the PPP Act, which was developed with PSDI support. The act will allow a PPP program to form, enable PPP transactions to be prepared in a transparent and predictable manner, and reduce risks to private sector participation. Since its passage, PSDI has developed an implementation strategy, a PPP project pipeline, a business plan for a PPP Centre, position descriptions, a project development facility concept note, and supported the development of regulations. These efforts are aimed at operationalizing the supporting institutions necessary for the implementation of the act before its gazettal.
PACIFIC PRIVATE SECTOR DEVELOPMENT INITIATIVE
SOE REFORM AND PPPs
FOCUS AREA OVERVIEW | AUGUST 2016
PAPUA NEW GUINEA (PNG) (CONT’D)
CURRENT AND FUTURE PROJECTS
PSDI presented updated Port Moresby and Lae Airport PPP assessments to the National Airports Corporation in November 2013, and completed a detailed PPP options study for the new Lae Port in May 2014. Since the Lae Port analysis was completed, ADB’s new Office of Public-Private Partnership has been in discussions with the government to offer transaction support. PSDI will continue to provide input into ADB infrastructure project designs to identify potential PPP opportunities and ensure their consistency with PNG’s Community Service Obligation (CSO) Policy for SOEs. The CSO Policy for SOEs, which was developed with PSDI support, was approved by the National Executive Council (NEC) in December 2013. The Policy requires full transparency in identifying, costing, contracting, and financing CSOs. The NEC directed the policy to be piloted in three SOEs, work which PSDI has been supporting since mid-2014 in collaboration with an interdepartmental working group. Of the three SOEs selected for the pilot, one—National Airports Corporation—has been able to provide the necessary data to develop detailed CSO cost estimates and a CSO contract was prepared in the fourth quarter of 2015. The CSO working group intends to use the first successful CSO contract and underlying methodology to expand the application of the policy to additional SOEs in 2016. Since January 2016, PSDI has been collaborating with PNG Power to introduce renewable energy in isolated diesel centers on a PPP basis. This work builds upon a call for expressions of interest launched by PNG Power in early 2015 and aims to conclude PPP agreements using solar energy in selected sites. PNG participated in the 2012, 2014, and 2016 Finding Balance SOE benchmarking studies. The October 2014 launch of the study in Port Moresby generated substantial press coverage and public debate around the role of SOEs in the economy. PSDI is engaged in ongoing dialog with PNG’s Department of Public Enterprises to define measures that could strengthen the legal and regulatory framework for SOEs.
SAMOA
OUTCOMES AND RESULTS
Samoa has participated in all five of the Finding Balance studies. The studies have raised awareness of the poor performance of Samoa’s SOEs and led to an increase in SOE reform impetus. The enactment of the Composition Act in early 2012 triggered the restructuring of all SOE boards to remove elected officials. This reduced the number of public servants and elected officials serving as SOE directors; in 2010, almost 50% of SOE directors were either ministers or public servants, by 2013 only 11% were public servants and none elected officials. The June 2015 round of SOE director appointments saw 188 persons apply for 102 vacancies. The move to professional boards will reduce political influence, strengthening SOEs’ ability to implement their commercial mandate. In 2012, the Government of Samoa requested PSDI support for the privatization of three SOEs: Agriculture Stores Corporation (ASC), Polynesian Airlines (Investment) Limited (PAIL), and Samoan Shipping Services. Cabinet approved PSDI’s recommended sales strategy for ASC but the Privatization Committee, appointed by Cabinet, opted for a more complex sales process. The sale of ASC was completed in April 2016. PSDI’s privatization scoping paper for PAIL was submitted in October 2012, but the transaction has not proceeded. In April 2014, an SOE Minister was appointed. PSDI had long advocated for the creation of this position. PSDI provided advice to the new minister and the Ministry of Finance on how best to undertake the responsibilities of this new role. PSDI also provided advice on changes required to the SOE Act to support the SOE Minister’s role and tighten transparency and accountability. The amendments were enacted in January 2015. In June 2014, PSDI prepared an SOE ownership, performance, and divestment policy update, which was endorsed by Cabinet in January 2015. In the first half of 2015, support was also provided to the SOE Monitoring Division to strengthen the selection and appointment of directors and to develop a director performance evaluation tool. PSDI provided policy support for the new Ministry of Public Enterprises, which commenced operations in July 2015.
CURRENT AND FUTURE PROJECTS
SAMOA At the request of the government, a privatization options paper was prepared for Public Trust Office, Samoa Post, and Samoa Housing Corporation. The paper was submitted in September 2015 and the ministry is reviewing its recommendations and the need for any amendments to the SOEs’ establishing acts to facilitate their sale. At the request of the ministry, PSDI undertook a review of proposed amendments to the Public Bodies Act. PSDI submitted its recommendations in August 2016. PSDI is also supporting the development of a public-private partnerships program. At the request of the ministry PSDI reviewed proposed amendments to the Public Bodies Act and submitted its recommendations in August 2016.
PACIFIC PRIVATE SECTOR DEVELOPMENT INITIATIVE
SOE REFORM AND PPPs
FOCUS AREA OVERVIEW | AUGUST 2016
OUTCOMES AND RESULTS
SOLOMON ISLANDS Solomon Islands’ SOE portfolio has undergone a remarkable turnaround over the past six years. Rates of return on both assets and equity, which were negative from 2002-2009, are now positive, demonstrating what can be achieved with strong government commitment to SOE reform. Solomon Islands participated in Finding Balance, PSDI’s comparative study on Pacific SOEs performance, in 2011, 2012, 2014, and 2016. PSDI supported the Solomon Islands SOE monitoring unit in implementing a CSO framework and drafting CSO contracts for selected SOEs from 2011 to 2015. These have been instrumental in improving the financial performance of the SOEs. Their implementation has required ongoing training of SOE and Ministry of Finance officials responsible for SOE monitoring. PSDI also supported the development of statements of corporate objectives by SOEs, shared accounting services for the smaller SOEs and several privatizations (Solomon Island Printers in 2012, Sasape Marina in 2010 and Home Finance in 2008).
CURRENT AND FUTURE PROJECTS
In June 2016, PSDI released a regional benchmarking study on port tariffs and productivity, which revealed recent tariff hikes and productivity losses at Solomon Islands Port Authority had made it one of the poorest performers in the region. The study served to inform a national debate on port commercialization. PSDI continues to provide assistance toward the implementation of the SOE Act and supporting regulations and the development of individual SOE restructuring strategies. The current government, elected in 2014, has yet to endorse a program of SOE reform, but will develop an SOE capitalization policy. PSDI has been providing input to this policy, which could formalize the government’s views on SOE performance, restructuring and privatization, including through PPPs. An evaluation of the community service obligation framework for SOEs in Solomon Islands was published in July 2016.
CURRENT AND FUTURE PROJECTS
OUTCOMES AND RESULTS
TIMOR-LESTE PSDI supported the preparation of a PPP policy and laws, with the first decree law approved by the Council of Ministers and promulgated in 2012. The amendment to the first decree law and the second decree law were both approved by the Council of Ministers in 2013 and both were promulgated in early 2014.
Since early 2014, PSDI has been assisting the government with implementation of the PPP policy and legal framework. In 2012–2013, PSDI financed a PPP pre-feasibility analysis for the Dili Water Supply System, which concluded that a PPP could be structured to improve service delivery. The government endorsed the recommendations in early 2014 and is now funding a full PPP feasibility study. PSDI has been supporting the Dili Water Supply System’s PPP Unit in managing the study, which will be completed in the third quarter of 2016, and is expected to set up a competitive tender for a PPP contract in 2017. This work is being undertaken in parallel with ADB’s Urban Water Supply and Sanitation Enhancement Sector Project and the Directorate of Water and Sanitation’s ongoing system upgrade planning. In addition to the onthe-job training provided through this PPP project, PSDI developed detailed procedures and guidelines for the PPP Unit and is supporting its evaluation of other potential PPP opportunities, in particular in the power sector.
OUTCOMES AND RESULTS
TONGA PSDI has supported a broad based SOE reform program affecting all of Tonga’s SOEs. This included: • preparing an amended SOE Act and providing governance training; • developing a director performance appraisal system and a skills based director selection process; • developing and implementing community service obligation guidelines; and, • providing training to assist with implementing the amended SOE Act. Tonga is the first of ADB’s Pacific developing member countries to publish SOE financial and operational performance information in the local press.
PACIFIC PRIVATE SECTOR DEVELOPMENT INITIATIVE
SOE REFORM AND PPPs
FOCUS AREA OVERVIEW | AUGUST 2016
TONGA (CONT’D)
OUTCOMES AND RESULTS
PSDI supported the partial liquidation of Tonga Print Limited in October 2013. PSDI also assisted with the corporatization and commercialization process of the Small Industries Centre, which was commercialized in September 2012, and TEQM Limited, which is expected to be commercialized in 2016. PSDI developed restructuring recommendations for Tonga Communications Corporation, which Cabinet approved in August 2013, but has not implemented. In the first quarter of 2014, at the request of Tonga Water Board, PSDI undertook an outsourcing scoping study, the implementation of which was completed in 2015. PSDI funded the placement of an SOE expert within the Ministry of Public Enterprises for three months at the end of 2014 to provide transactional support and capacity building, to advise on Tonga Forest Products Limited’s financial restructuring and privatization options, and to assist Tonga Broadcasting Commission to identify and cost community service obligations (CSOs). With PSDI’s assistance, Tonga has become the first country in the Pacific to develop SOEspecific financial targets based on the ministry’s assessment of risk and required return. PSDI also supported the development of a SOE Ownership, Divestment, and Reform Policy, that was adopted by Cabinet in 2014. PSDI has also worked closely with ADB and donor partners to design SOE reform policy actions for inclusion in joint donor program based grants. Through ongoing policy dialogue with PSDI, Tonga agreed in 2015 to undertake further SOE restructuring and governance reforms. PSDI drafted an SOE ownership and divestment policy that identifies seven high priority divestments and includes reform plans for the balance of the SOEs. Cabinet endorsed the policy in the third quarter of 2015. PSDI has also supported the government’s governance reforms and provided policy advice in the development of shared SOE boards. Throughout 2015–2016, PSDI provided advice on privatization options for Tonga Forest Products Limited, culminating in the government’s agreement in May 2016 to enter into a 50-year concession contract with private sector interests to invest in, manage, harvest, and replant the SOE’s forestry assets. Tonga has participated in all five Finding Balance studies.
OUTCOMES AND RESULTS
TUVALU In 2012 and 2013, PSDI provided peer review and high level support to ADB’s Pacific Subregional Office (SPSO) with the development of a management contract for the government-owned Vaiaku Lagi Hotel. PSDI also supported SPSO on the merger of the Tuvalu Philatelic Bureau, Tuvalu Post Office, and Tuvalu Ticketing Office into one entity.
VANUATU
CURRENT AND FUTURE PROJECTS
PSDI supported preparation of an SOE reform policy, which was approved by Cabinet in October 2013. The policy has guided the development of an SOE bill that will place SOEs on a firm commercial footing and enhance governance, monitoring, and accountability frameworks. The bill has been drafted with substantial PSDI input and oversight. It was considered by Cabinet and the Government plans to introduce the bill to Parliament in November 2016. Throughout 2014, PSDI supported a separate ADB technical assistance (TA) project on SOE reform in Vanuatu. The project concentrated on eight SOEs identified as reform priorities, for which it developed restructuring proposals, assisted in bringing audited accounts up-to-date, and identified and costed community service obligations. On completion of the project, four of the SOEs were selected for either liquidation or partial privatisation. Cabinet papers were prepared and in some cases approved by Cabinet, but following the change of Prime Minister and Minister of Finance in June 2015 Cabinet determined to reconsider all recent decisions. PSDI is now working with the Ministry of Finance to progress the privatization/liquidation of two of the SOEs. It is expected that the transactions will be complete in 2016-2017. In collaboration with the ADB TA, PSDI provided governance training for SOE directors, capacity building for the SOE Monitoring Unit, and the development of an SOE director performance assessment tool. At the government’s request, PSDI completed a public-private partnership assessment for a proposed new slipway in Q4 2014. The study confirmed that no public investment in slipway facilities was required as private investors were already expanding existing infrastructure and competition existed in the sector.
PACIFIC PRIVATE SECTOR DEVELOPMENT INITIATIVE
ECONOMIC EMPOWERMENT OF WOMEN FOCUS AREA OVERVIEW | AUGUST 2016
REFORMS AND PILOT PROJECTS TO EMPOWER WOMEN AND ENHANCE PROSPERITY
OVERVIEW
Women in the Pacific, like in other less-developed regions, face two sets of challenges to realizing their economic potential. They share the hardships stemming from geography, limited infrastructure and services, and a dearth of economic opportunities that hinder economic development throughout the region. Meanwhile, women must also contend with an additional series of barriers—cultural, legal, and institutional—that compound these challenges and prevent women’s full economic contribution. These include laws that do not allow them to directly own land or goods or register companies, limited access to courts and lending institutions, a lack of opportunities to develop professional or marketable skills, as well as deep-seated cultural practices. Taken together, these challenges can severely limit women’s participation in the formal economy and exclude them from entrepreneurial activity. This confines many women to the informal sector, operating home-based businesses where comingled personal and business resources prevent business investment, resulting in low productivity and labor returns, and perpetuating poverty. The effect of this is not only felt directly by women—who work more for less—and the families they spend much of their incomes on; women’s economic exclusion also carries enormous financial costs as national and regional economies miss out on a key local resource: the true potential of one half of the population. To lower the barriers to Pacific women’s participation in the private sector, a multipronged approach is needed. Broader initiatives to ease the constraints to doing business in the Pacific should, where appropriate, include provisions to accommodate the specific needs of women to ensure them equal access and benefit.20 Meanwhile, dedicated projects are needed to confront the skills and training shortcomings that limit women’s opportunities in the formal and professional sectors. This is the approach of PSDI and its economic empowerment of women activities. Across each of its focus areas and, critically, throughout its analyses and recommendations, PSDI works to see reforms implemented that improve women’s economic opportunities individually while strengthening national and regional economic conditions generally. Alongside this, PSDI has initiated a series of pilot projects designed to demonstrate different approaches to building the skills women need to participate equally in a variety of private sector contexts. PSDI’s approach recognizes the immense contribution gender-equal access to the private sector would make at both the macroeconomic and microeconomic levels. Not only is this assistance to both countries and individuals producing tangible outcomes, it is also providing a model of engagement for the economic empowerment of Pacific women that is much needed and sorely wanted. PSDI’s gender strategy is articulated in more detail in Empowering the Other Half Women and Private Sector Growth in the Pacific. A comprehensive analysis of the constraints to Pacific women’s economic empowerment will be provided in PSDI’s upcoming book Women in Business in the Pacific, which will be published in 2017.
CURRENT AND FUTURE PROJECTS
FIJI A pilot project called the Women’s Business Leadership Program was launched in Fiji in April 2016. It works with women employees from more than 15 large businesses and statutary bodies to: promote cultural change and make workplaces women friendly; engage male advocates in these businesses who advocate for the economic empowerment of women; and provide pathways for women to senior roles via individually tailored training and support. The project also pairs participants with mentors from Australia, New Zealand, and other Pacific countries.
ASIAN DEVELOPMENT BANK Pacific Private Sector Development Initiative Pacific Liaison and Coordination Office Level 20, 45 Clarence Street, Sydney, Australia
Tel +61 2 8270 9444 • Fax +61 2 8270 9445
[email protected] • @ADB_Sydney_PSDI www.adbpsdi.org • www.adb.org/plco/psdi
PSDI works with ADB’s 14 Pacific developing member countries to improve the enabling environment for business and address constraints to private sector development in support of sustainable and inclusive economic growth.
PSDI is a regional technical assistance facility co-financed by the Asian Development Bank, the Government of Australia, and the Government of New Zealand.
PACIFIC PRIVATE SECTOR DEVELOPMENT INITIATIVE
ECONOMIC EMPOWERMENT OF WOMEN FOCUS AREA OVERVIEW | AUGUST 2016
OUTCOMES AND RESULTS
NAURU Together with the ADB, PSDI assisted with a review of discriminatory laws and practices in Nauru in 2013-2014 and with development of the National Gender Action Plan.
CURRENT AND FUTURE PROJECTS
PAPUA NEW GUINEA (PNG) PSDI is implementing a pilot project that helps business women operating in the informal sector—in this instance, fisherwomen—formalize their businesses by providing finance for growth plus relevant training. The project also facilitates greater access to markets for women operating small-to–medium-sized businesses by helping them access finance to grow their operations. A memorandum of understanding was signed with Nationwide Microbank (now MiBank) in July 2014 to provide finance and financial skills training. Other training on product development and organizational governance will be provided by PSDI throughout 2016 to strengthen the ability of these women entrepreneurs to operate sustainable businesses over the long term. PSDI is also working with local organizations to promote the participation of rural women in agricultural production by providing training in agricultural production methods, helping them access finance through the secured transactions framework, assisting with access to markets, and supporting accountable governance of local organizations. By creating these supportive institutional frameworks PSDI expects to improve the lives of more than 6000 rural women, assisting in their transition from subsistence activities to active participants in the private sector. The PSDI-supported Competition and Consumer Review in PNG recognizes the need for policies, laws and institutions to be responsive to the needs of women as producers, consumers, and employees. One of the review’s issues papers, Consumer Protection and Economic Empowerment of Women, assessed how such laws affect women and made recommendations for how legal reforms could economically empower women and facilitate their role in the private sector. This work will continue through 2016.
SOLOMON ISLANDS
CURRENT AND FUTURE PROJECTS
In 2014, PSDI analyzed the constraints to women’s economic empowerment in Solomon Islands and initiated the following pilot project to help devise responses to them: • Boosting women’s technical skills. PSDI worked with the West Are’Are Rokotanikeni Association, the Ministry of Mines, Energy and Rural Electrification, community organizations, and government agencies to train women on solar panel maintenance. The pilot project has empowered rural women by teaching technical and income-generating skills that have enabled them to open bank accounts, create formal businesses and earn income. Following requests from community leaders the project was replicated in Choiseul Province. The project has also attracted significant interest from other organizations, and its strategy of training rural women in infrastructure maintenance is being replicated within the ADB’s forthcoming $15.8 million Solar Power Development Project. Onsite training has continued in 2016 along with ongoing monitoring and evaluation. • Improving inclusive governance. In collaboration with the Solomon Islands Chamber of Commerce and Industry (SICCI), PSDI delivered a gender-sensitive training program on corporate governance. The women-targeted program aimed to create ‘promotion-ready’ employees equipped with the skills for senior management positions, while a module of the training focused specifically on SOEs prepared participants for roles on SOE boards. The training was held over three, two-day sessions in July and October 2014 and February 2015 with women comprising 70% of participants. Two local trainers who were taught how to deliver the training did so for the first time in November 2015. PSDI helped SICCI develop a Corporate Governance Manual and is supporting the creation of a database of graduates. An evaluation of the project was undertaken in late 2015. • Collaborating with large businesses to encourage women’s entrepreneurship. In 2015 PSDI collaborated with Guadalcanal Plains Palm Oil company to assist female family members of the company’s male employees to develop a small, sustainable, formal business. The women created a successful clothing and uniform manufacturing business, which is now turning a profit. The aim of the pilot project was to demonstrate an approach for creating small businesses on the margins of big ones, and for the inclusion of women dependents in the formal economy.
PACIFIC PRIVATE SECTOR DEVELOPMENT INITIATIVE
ECONOMIC EMPOWERMENT OF WOMEN FOCUS AREA OVERVIEW | AUGUST 2016
CURRENT AND FUTURE PROJECTS
SOLOMON ISLANDS (CONT’D) In partnership with UN Women, PSDI undertook a review of how business law reforms have affected women, and of the effectiveness of women’s business associations in Solomon Islands. PSDI is working with Company Haus, the Solomon Islands company registry, to create women-friendly business support materials, as well as partnering with NGOs to raise awareness among women of the benefits and ease of formalizing their businesses and using personal assets to apply for business loans. PSDI also proposed amendments to Solomon Islands National Provident Fund legislation and Business Names legislation that remove discriminatory provisions, and called for a gender inclusive approach to the drafting of new credit union legislation.
CURRENT AND FUTURE PROJECTS
OUTCOMES AND RESULTS
TONGA PSDI designed and implemented a women’s business leadership program to move women towards leadership positions by: • Providing training on leadership and management, including corporate governance, media management and business networking; • Obtaining commitment from Tongan businesses to increase the participation and promotion of women employees, thereby instituting a change in business culture and commitment to the professional advancement of women; and, • Establishing links between Australian and Tongan businesswomen for theirs and their businesses’ mutual development. The project was enthusiastically embraced by leading Tongan companies and government organizations. Three two-day training sessions were held: in August and November 2015 and February 2016. Another pilot project launched by PSDI in 2016 will increase women vanilla farmer’s access to supply chain financing, raise their awareness of business law reforms, and evaluate ways for them to access concessional financing.
CURRENT AND FUTURE PROJECTS
VANUATU In partnership with UN Women and the Vanuatu Financial Services Commission, PSDI will be working with women’s groups to increase awareness of the opportunities for, and benefits of, business formalization, and how to access finance using the secured transactions framework. PSDI, with VFSC, will also provide training to women working in corporate settings or for government bodies on corporate and SOE governance.
PACIFIC PRIVATE SECTOR DEVELOPMENT INITIATIVE
COMPETITION AND CONSUMER PROTECTION FOCUS AREA OVERVIEW | AUGUST 2016
PROMOTING COMPETITION, PROTECTING CONSUMERS
OVERVIEW
Competition is an essential mechanism for promoting economic efficiency and unleashing innovation and entrepreneurship for the benefit of the consumer. For developing in the economies in the Pacific, effective competition policy can deliver tangible economic benefits by facilitating entry of businesses to markets, by encouraging efficiency in the production of goods and services, and by ensuring that suppliers in less-competitive markets are nevertheless held to high operating standards and reasonable pricing behavior. Consumer protection law also has a critical role to play in the development of competition and reinforces the effect of competition law in promoting and maintaining competitive markets. The small market size of Pacific island countries leads to a small number of providers of products and services, which are often inefficient and anti-competitive. PSDI member countries are at different stages in the development of competitive markets and their needs differ widely. Following several requests, from 2013 PSDI has been working with Pacific island governments to establish policy and legislative frameworks that promote competition and protect consumers. PSDI helps Pacific government to strengthen competition frameworks through developing and/or reforming competition laws, establishing regulatory offices and improving the capacity of regulators.
CURRENT AND FUTURE PROJECTS
OUTCOMES AND RESULTS
COOK ISLANDS PSDI undertook an assessment of Cook Islands’ competition law and policy requirements in 2009.
In 2014, PSDI commenced a review of Cook Islands’ competition law and policy requirements. This was halted later that year when the government requested prioritization of an analysis of telecommunications liberalization instead. The telecommunications review was then halted when the government entered negotiations with potential purchasers of Telecom Cook Islands (TCI). Following the acquisition of 60% of TCI by the Bluesky Group early in 2015, the Government of Cook Islands is again considering reform to liberalize the telecommunications market. PSDI is in discussions with the government regarding the form and extent of possible support.
FIJI The Government of Fiji has requested support for competition policy reform and strengthening the Fiji Commerce Commission, which PSDI will commence in the latter half of 2016.
CURRENT AND FUTURE PROJECTS
PAPUA NEW GUINEA PSDI began the comprehensive Consumer and Competition Framework Review at the request of the Department of Treasury in late 2014. The review has a broad scope, encompassing the industry regulation, price control, and productivity review functions of the Independent Consumer and Competition Commission (ICCC), as well as its general competition law and consumer protection responsibilities. Extensive stakeholder consultation has been carried out, including interviews, public workshops, and consumer focus groups. PSDI anticipates the review will lead to recommendations for legislative reforms, capacity building within the ICCC, and changes in administrative and regulatory practice.
ASIAN DEVELOPMENT BANK Pacific Private Sector Development Initiative Pacific Liaison and Coordination Office Level 20, 45 Clarence Street, Sydney, Australia
Tel +61 2 8270 9444 • Fax +61 2 8270 9445
[email protected] • @ADB_Sydney_PSDI www.adbpsdi.org • www.adb.org/plco/psdi
PSDI works with ADB’s 14 Pacific developing member countries to improve the enabling environment for business and address constraints to private sector development in support of sustainable and inclusive economic growth.
PSDI is a regional technical assistance facility co-financed by the Asian Development Bank, the Government of Australia, and the Government of New Zealand.
PACIFIC PRIVATE SECTOR DEVELOPMENT INITIATIVE
COMPETITION AND CONSUMER PROTECTION FOCUS AREA OVERVIEW | AUGUST 2016
CURRENT AND FUTURE PROJECTS
PAPUA NEW GUINEA (CONT’D) In mid-2015, Australia’s Department of Foreign Affairs and Trade requested PSDI manage Australia’s financial support to the ICCC. PSDI has agreed to do so for three years and is currently supporting the ICCC in its ongoing competition, consumer protection, regulatory, price control, and productivity review functions, and in necessary capacity building, including its capacities to investigate violations and prosecute enforcement actions.
CURRENT AND FUTURE PROJECTS
SAMOA At the request of the Government of Samoa, PSDI supported a review of the country’s consumer protection and competition policy and law needs. PSDI then supported the development of a draft National Competition Policy, which was adopted by Cabinet in 2013. PSDI then assisted in the drafting of a Competition and Consumer Bill and with public consultations on it. The bill was vetted by the Attorney General’s office in late 2014 and enacted by Parliament in January 2015. PSDI is currently planning to support the government in the implementation of the Competition and Consumer Act.
CURRENT AND FUTURE PROJECTS
SOLOMON ISLANDS At the request of the Government of Solomon Islands, PSDI commenced a review of the country’s competition policy and law requirements in mid-2015. An issues paper produced in December 2015 recommended the government consider a multi-year phased implementation of any reforms and substantial capacity building to provide the necessary skills base for administration of consumer and competition safeguards.
CURRENT AND FUTURE PROJECTS
TIMOR-LESTE PSDI received a request from the Government of Timor-Leste during 2015 to undertake a review of the country’s competition law and policy requirements. This work commenced in September 2015 and an options paper for the government’s consideration was delivered in June 2016.
CURRENT AND FUTURE PROJECTS
TONGA PSDI commenced a review of Tonga’s competition framework in 2013. In 2014, the Government of Tonga requested priority be given to the establishment of a multi-sector regulator, which PSDI agreed to support. Issues and options for a multi-sector regulator have been discussed with the government and a proposal for a coordinated approach to regulatory and competition reform was provided to the government in the latter half of 2015. The government has also requested support for competition policy reform, which PSDI will provide in the latter half of 2016.
CURRENT AND FUTURE PROJECTS
VANUATU Following a request from the Government of Vanuatu, PSDI commenced a review of the country’s competition law and policy requirements in August 2015. An issues paper titled Competition Policy and Law for Vanuatu was delivered to the government in early 2016 and a workshop with government representatives will be held in late-2016.
PACIFIC PRIVATE SECTOR DEVELOPMENT INITIATIVE
ANALYTICAL WORK
FOCUS AREA OVERVIEW | AUGUST 2016
OVERVIEW
IN-DEPTH ANALYSIS OF THE PACIFIC BUSINESS ENVIRONMENT PSDI experts identify business constraints and opportunities and publish independent, peer-reviewed analysis, ranging from regional and country-level private sector assessments to sectoral and thematic research, policy briefs, and reports. Our evidence-based approach feeds into a policy dialogue with both government and the private sector, resulting in policies targeted at overcoming challenges and improving the business climate to support inclusive economic growth.
REGIONAL PUBLICATIONS PSDI’s foundational report, 2004’s Swimming Against the Tide? An Assessment of the Private Sector in the Pacific, analyzed the issues inhibiting private sector development in the Pacific and identified options to address them, which were considered in the design of PSDI. A follow-up analysis, Riding the Wave, will be published in 2017. Since its inception, PSDI has published 12 private sector assessments (PSAs) that analyze constraints to private sector led growth and suggest priorities for reform. These publications have been influential in setting the reform agenda in the region. More than half of the key recommendations have been adopted in the countries in which PSAs have been presented and launched and they continue to play a substantial role in policy dialogue. PSDI has published numerous other pieces of analytical work, including: • The Finding Balance series, which provides a comparative analysis of state-owned enterprise (SOE) performance in the Pacific and assesses options to improve SOE returns and efficiency. First published in early 2009, four editions of the series have now been released and the fifth will be published in September 2016.
OUTCOMES AND RESULTS
• In 2009, PSDI published Reforming Pacific Contract Law, a report on the contracting environment in Papua New Guinea (PNG), Solomon Islands, Tonga, and Vanuatu, which recommended the drafting of a Pacific Contract Code to make contract law more accessible and efficient, thereby promoting formal private sector development. • In early 2011, PSDI published Breaking Down the Barriers to Business in the Pacific: Private Sector Reform Stories, a booklet of nine feature stories relaying the on-the-ground outcomes of initiatives supported by PSDI in PNG, Solomon Islands, Timor-Leste, and Vanuatu. This was followed up in mid-2012 with Breaking Down the Barriers to Business: More Private Sector Reform Stories. • PSDI published Unlocking Finance for Growth: Secured Transaction Reform in Pacific Island Countries in late 2014. The report articulates the rationale underpinning PSDI’s support for ‘movable property’ financing and its potential for extending access to finance in Pacific island economies. • A booklet explaining PSDI’s gender strategy, Empowering the Other Half: Women and Private Sector Growth in the Pacific, was published in February 2016. A comprehensive analysis of the constraints to Pacific women’s economic empowerment will be provided in PSDI’s upcoming book Women in Business in the Pacific, which will be published in 2017. • The PSDI Knowledge Series is a suite of short reports offering insight and analysis on private sector-oriented reforms in the Pacific. The first in the series, Digital Financial Services in the Pacific: Experiences and Regulatory Issues, published in April 2016, examines the use, challenges, and potential of mobile banking in the region. The second in the series, Credit Guarantees: Challenging their Role in Improving Access to Finance in the Pacific Region, to be published in September 2016, critiques this often-attempted approach to increasing access to finance. Upcoming Knowledge Series publications include a report assessing the suitability of the World Bank’s “‘Doing Business Indicators”’ in the Pacific and a report on the role of development banks in the Pacific. • Case studies that highlight issues and reforms affecting the business environment in the Pacific. An assessment of Samoa’s success in contracting out road building and maintenance will soon be published as Creating Jobs in Samoa through Public-Private Partnerships. PSDI will also soon publish three case studies examining the operations of different Pacific SOE sectors: water, wastewater, and sewage; solid waste management; and franchise shipping.
OUTCOMES AND RESULTS
COOK ISLANDS A private sector assessment entitled The Cook Islands: Stronger Investment Climate for Sustainable Growth was published in October 2015.
PACIFIC PRIVATE SECTOR DEVELOPMENT INITIATIVE
ANALYTICAL WORK
FOCUS AREA OVERVIEW | AUGUST 2016
OUTCOMES AND RESULTS
FIJI PSDI undertook an in-depth analysis of the constraints to private sector development, published as Reinvigorating Private Sector Investment: A Private Sector Assessment for Fiji, in 2013. An update to the 2013 private sector assessment was prepared for the incoming government in November 2014.
CURRENT AND FUTURE PROJECTS
MARSHALL ISLANDS The Government of Marshall Islands has requested a private sector assessment, which is likely to be published in early 2017.
CURRENT AND FUTURE PROJECTS
PALAU A private sector assessment for Palau has been written and is due to be published in early 2017.
OUTCOMES AND RESULTS
PAPUA NEW GUINEA Foundation for the Future: A Private Sector Assessment for Papua New Guinea, was published in 2008, as was a booklet on the findings of a survey undertaken for the PSA, The Challenges of Doing Business in Papua New Guinea: An Analytical Summary of the 2007 Business Environment Survey by the Institute of National Affairs. A second private sector assessment, Building a Dynamic Pacific Economy: Strengthening the Private Sector in Papua New Guinea, was published in April 2015. The survey it drew from, The Challenges of Doing Business in Papua New Guinea, was published in 2014.
OUTCOMES AND RESULTS
PSDI has produced two private sector assessments for Samoa: 2008’s Consolidating Reform for Faster Growth and Reform Renewed: A Private Sector Assessment for Samoa, published in October 2015.
CURRENT AND FUTURE PROJECTS
SAMOA
A case study of Samoa’s contracting out program for public works, Creating Jobs in Samoa Through Public-Private Partnerships, will be published in September 2016.
A case study by PSDI on business law and registration reforms in Samoa was included in Enhancing SME Access to Finance: Case Studies, a book published by the Global Partnership for Financial Inclusion in June 2015.
An evaluation of the Companies Act reform in Samoa will be published in 2016.
OUTCOMES AND RESULTS
SOLOMON ISLANDS Solomon Islands features as a case study in PSDI’s 2014 publication Unlocking Finance for Growth: Secured Transactions Reform in Pacific Island Economies. Two other PSDI case studies on Solomon Islands—one also on secured transactions reform and one on business law and registration reforms—were included in Enhancing SME Access to Finance: Case Studies, a book published by the Global Partnership for Financial Inclusion in June 2015. Continuing Reform to Stimulate Private Investment: A Private Sector Assessment for Solomon Islands was published in May 2016. An evaluation of the community service obligation framework for SOEs in Solomon Islands was published in September 2016.
PACIFIC PRIVATE SECTOR DEVELOPMENT INITIATIVE
ANALYTICAL WORK
FOCUS AREA OVERVIEW | AUGUST 2016
CURRENT AND FUTURE PROJECTS
SOLOMON ISLANDS Evaluations of PSDI’s Women’s Corporate Governance Training pilot project in Solomon Islands and of the Companies Act reform in will be published in 2017.
OUTCOMES AND RESULTS
TIMOR-LESTE A private sector assessment for Timor-Leste, Building the Non-Oil Economy, was published in July 2015 and translated into Tetum.
OUTCOMES AND RESULTS
In 2008, PSDI published Transforming Tonga: A Private Sector Assessment, triggering a significant range of reform measures, including company law reform, secured transactions reform, engagement on microfinance, and various initiatives supporting private sector growth. In 2011, PSDI prepared an update to the 2008 assessment. The update’s findings were presented and discussed at a Central Bank sponsored summit in March 2012, and a final report, Continuing Reform to Promote Growth: An Update of the Private Sector Assessment for Tonga, was published in December 2012.
CURRENT AND FUTURE PROJECTS
TONGA
A brief, private sector strategy for Tonga will be drafted in late 2016 and published in 2017.
CURRENT AND FUTURE PROJECTS
OUTCOMES AND RESULTS
VANUATU PSDI published Sustaining Growth: A Private Sector Assessment for Vanuatu in 2009. Vanuatu features as a case study in PSDI’s 2014 publication Unlocking Finance for Growth: Secured Transactions Reform in Pacific Island Economies. Another case study by PSDI on secured transaction reform in Vanuatu was included in Enhancing SME Access to Finance: Case Studies, a book published by the Global Partnership for Financial Inclusion in June 2015. A new private sector assessment for Vanuatu, including a financial sector assessment, is scheduled to be published in late-2016.
PSDI is a regional technical assistance facility co-financed by the Asian Development Bank, the Government of Australia, and the Government of New Zealand.
