More reform urged for Samoa so business can flourish

Transcript

Samoa is being urged to privatise more state-owned enterprises and review its regulations around foreign investment.

A regional economist says the country has a model system for the private sector in many areas but more reforms are necessary to ensure the country's long-term prosperity.

Paul Holden is the lead economist with the Pacific Private Sector Development Initiative of the Asian Development Bank.

He told Sally Round says there's renewed commitment in Samoa to reforming conditions for businesses to flourish.

PAUL HOLDEN: What has happened is that the ability to form companies has improved markedly. At the same time the PM of Samoa realised that having boards of state owned enterprises heavily populated with politicians and government officials was really not very good for their performance. Because state owned enterprises would be directed towards the district of the board member or the project of the board member and were not being adequately compensated. So he basically ordered civil servants and politicians to resign and to a very large extent this has happened. And this has proved to be a very prescient step. At the same time one of the key factors that we see in promoting reform generally directed towards the private sector is having some good understanding between government and business. I mean typically, in many of the countries we go to the government will say well we've done all these reforms and the private sector hasn't responded. And the private sector will say the government doesn't understand us and doesn't do anything we ask. This is not the case in Samoa. In fact the contacts and understanding are really very close. And as a result a number of further initiatives are moving forward. Personal Properties Securities Act has been passed in Samoa to promote greater access to credit in the country. This plus a number of other reforms for example in the area of competition policy should move the economy forward and allow it to achieve its potential.

SALLY ROUND: And what does the ADB think could be done further to improve the private sector in Samoa?

PH: I must emphasise I don't speak for the ADB. I can only make policy recommendations on behalf of myself and the team. We view the forthcoming reforms as being exactly in the right direction. We are looking at promoting better licensing. We are strongly urging privatisation of some of the state owned enterprises. In fact the government has committed to doing this. We are recommending improved internet connections. And one of the things that is happening is the new fibre optic cable is being laid and will become operational in Samoa in the not too distant future which will improve their communications. In general our message to countries in the region is that governments are not good at running businesses. And there are a number of options. Only one is obviously outright sale, but there are others in terms of which the state might retain ownership of the assets. But the running of the company or of the entity is put out to the private sector. And in this regard Samoa is really quite an inspiring example in the way that the Ministry of Public Works contracted out road maintenance and building. And it was done in a very visionary way which we think is an example not only for the region but for countries anywhere in the world.