SOLOMON Islands leads the region in the reform of its state-owned enterprises (SOEs), a forum heard yesterday.
Asian Development Bank (ADB) revealed this during a State Owned Enterprises (SOE) forum held in Honiara.
“The finding balance 2014: Benchmarking the performance of State Owned Enterprises in Islands countries ,shows that in the last five years the government of the Solomon Islands has overseen a 21% turnaround in return on equity from SOES, turning an average loss of 11% between 2002-2009 into an average return of 10% in 2010-2012,” the report released by ADB said.
“This improvement follows a program of increased privatization, public–private partnership (PPPS), financial restructuring and efforts to place SOEs on a sound commercial footing,’’ it added.
“The outcomes Solomon Islands has archived such as improve service delivery ,reduced costs ,and more opportunities for the private investment shows what these kinds of reforms could achieve for other Pacific countries in a relatively short time ,’’said Lauru Darcy, an SOE/PPP specialist and one of the report’s co-authors said.
“It also shows that reforms gain can quickly be lost without ongoing efforts to sustain them.’’
However, the report identified strategies to guide reforms of SOEs, highlighted the importance of finding the right balance between public and private sectors roles.
“It’s the fourth in the finding balance series produced by the Pacific Private Sector Development Initiatives, a regional technical assistance facility co-financed by the government of Australia, the New Zealand Government and ADB.”
The report’s finding and recommendations topped the agenda at yesterday’s forum.
It stated SOEs continue to exert a significant drain on the economies of the pacific region.
“Analysis of SOE performances across nine countries ,including six from the Pacific –Fiji ,The Marshall Island, PNG, Samoa, Solomon Islands and Tonga shows that while some countries have been able to make great gains, others have struggled to enact reforms.”
The report added that the turnaround in Solomon Islands has made its SOEs portfolio the most profitable in the Pacific in 2010-2012.
“The ADB has supported a number of the reforms that have contributed to this, including the privatisations of Sasape Marina, Home Finance Limited and Solomon Island Printers, and the implementations of a community service obligation framework as required by the SOE Act of 2007.
“PSDI is working with ADB’s 14 Pacific developing member countries to improve the enabling environmental for business and to supports inclusive, private sector leg economic growth.”
By DENVER NEWTER