ADB calls for more political will in Pacific SOE reforms

Transcript

The Asian Development Bank is calling on Pacific Leaders to put more support behind efforts to reform their poorly performing state owned enterprises.

The ADB has launched its Finding Balance 2014 report in Solomon Islands, saying it is the best performing country in the region.

The ADB's SOE reform specialist, Laure Darcy told Koroi Hawkins the report looked at the state of SOE reform in the region with the aim of providing feedback to Pacific countries on their performance.

LAURE DARCY: What we found certainly in the latest iteration, in particular as it relates to Solomon Islands is, you know, how quickly you can turn around the performance of State Owned Enterprises when you have some very strong political commitment to implement reforms. The Solomon Islands portfolio was the best performing in 2012 and 13. And has dramatically gone from a loss making portfolio to a profitable one in the span of about four years.

KOROI HAWKINS:  And why does the old model of State Owned Enterprises not work today?

LD: The truth is the State Owned Enterprises model was never intended to be a long term ownership model. Really the model was invented by the New Zealanders and it really was intended to be a transition from public ownership to increased delivery of services by the private sector. The problem with the SOE model is that there is an inherent conflict of interest when politicians own and manage SOEs. Because very often you have a tension between your political objectives and the commercial imperative of running a company. So those two things can be at odds. So you get the best performance from an SOE when it is actually placed under the same conditions as a private company. With the same pressures to perform, the same transparency the same accountability. And the users are better off if the SOEs are run more like private companies.

KH: And how are other countries in the region performing in their respective reforms?

LD: Um, you know some better than others. I think over, you know, we have been studying these SOE's for, I think about ten years now and so we, some countries were very aggressively reforming such as Tonga a number of years ago and then we saw a slowdown as a new government came into play which had different priorities. Samoa used to be a very aggressive reformer then had a period of slowdown in its reform efforts, we seem to be seeing that picking up again. So you know, Papua New Guinea also had a short period of important reforms it really depends on, I guess that underscores the importance of it being a political priority to really put the SOEs on a much more transparent and efficient footing.