MANILA, PHILIPPINES - The Asian Development Bank (ADB) and the Government of Australia today announced a US$12 million grant package which aims to improve the business environment and stimulate private sector investment in the Pacific region.The package, comprising grants of around $9 million from the Australian Government, and $3 million from ADB's Technical Assistance Special Fund, will improve access to financial services, increase private investment opportunities through stateowned enterprise (SOE) reform and public-private partnerships, and facilitate expansion of the private sector through reform of business laws.
The co-financed grant package is an extension of the Private Sector Development Initiative (PSDI), established by ADB in 2006 with funding from the Australian Government's aid program.
"When Pacific Islands Forum Leaders met in August this year in Cairns, they recognized that broad-based, private sector-led growth was essential to achieving faster development progress and urged donors to encourage the private sector," said Australia's Parliamentary Secretary for International Development Assistance, Mr Bob McMullan, MP. "Australian Government funding for this flagship program builds on longstanding engagement on these issues through our aid program, and is further evidence of our support for partner country efforts to achieve sustainable economic growth."
Over the past three years, PSDI has helped to develop and enact seven modern commercial laws in the Pacific region, with nine more Bills under preparation. These range from innovative company laws - which will make it easier for entrepreneurs to form, grow and close companies - to the development of secured transactions laws, facilitating better access to credit for entrepreneurs. The initiative has also supported the strengthening of business laws to encourage competition and ensure consumer protection in small island states.
"PSDI provides an innovative mechanism that can rapidly respond to reform initiatives in the Pacific Islands," said ADB Vice-President C. Lawrence Greenwood Jr.
Under the first phase of PSDI, ADB has been implementing microfinance and financial inclusion programs in Vanuatu, Papua New Guinea, Samoa and Timor-Leste, and developing new secured transactions laws in the Solomon Islands, Palau, Tonga, Republic of Marshall Islands, and Vanuatu. New technologies are also providing opportunities to expand traditional banking in remote or rural areas in the Pacific, increasing access to modern banking services through branchless banking using mobile phones or smart cards.
ADB has programs in Samoa, Tonga and the Solomon Islands to reform stateowned enterprises, with similar programs planned for Vanuatu and Papua New Guinea. Tonga's rapid progress in restructuring state-owned enterprises to allow greater private sector participation is a powerful testament to how quickly reforms can be achieved. ADB has also been working with the Government of Papua New Guinea to establish a policy, legal and institutional environment for public-private partnerships, designed to facilitate private investment in infrastructure. This should be operational in 2010.
ADB, based in Manila, is dedicated to reducing poverty in the Asia and Pacific region through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members - 48 from the region. In 2008, it approved $10.5 billion of loans, $811.4 million of grant projects, and technical assistance amounting to $274.5 million.