SOE's strain Pacific economies

Transcript

A recent report released by the Asian Development Bank has found that State-owned enterprises or SOE's continue to strain economies in the Pacific.

Pacific countries covered in the report included Fiji, Solomon Islands, Samoa, Papua New Guinea, the Marshall Islands and Tonga.

Its author, Lore Darcy, told Indira Moala corruption and lack of transparency have partly influenced the performance of the SOE's.

TRANSCRIPT:

LORE DARCY: A lot of the work that these various countries are doing involve much more disclosure around not only their financial performance but also how they are appointing Directors to the board and we have seen some improvement with Directors now been appointed on a merit basis. So when you start doing that and making that information public, the scope for corruption is reduced considerably.

INDIRA MOALA: Were you surprised at all by how much corruption or the lack of transparency that did exist in these island countries?

LD: Well you know, it is difficult when you don't have the staff available in the SOE's to produce quality accounts. We have to recognise that in some cases that is the reason why the accounts haven't been produced. In other cases, it's rather inexcusable where capacity exists but there seems to have been a desire not to put this information out in public domains.

IM: The report did say that the state-owned enterprises were straining the economies in the Pacific. Is that because of these issues?

LD: I can't say that that has nothing to do with it but I think the problems are much broader. There's never been an expectation that they should recover their costs of capital. It's only recent that there has been an expectation and a legal requirement in most countries for them to operate successful businesses. So, it's hard to change old practises but we do see it happening.

IM: Out of the Pacific Island countries that were studied, which countries gave the best SOE results and which countries gave the poorest?

LD: If you look maybe over the last two or three years, an outstanding performer has been Solomon Islands and its turn around from being one of the poorest performing portfolios to one of the best performing is really remarkable and there's lessons that we can all learn from what they've done. Politicians have shown a sustained will to see this happen and it's delivered results. On the lower end, you know, the poor performers - Marshall Islands continues to struggle and then you've got Samoa and Fiji which have essentially been returning zero on equity and on assets for some time now.