ADB commends Vanuatu for strong private sector reform
Updated
The Asian Development Bank says Vanuatu is a stand-out performer in the Pacific for improving conditions for the private sector, creating the region's most business friendly environment. Vanuatu's Finance Minister, Sela Molissa and the Bank's Sydney-based Regional Director, Eugene Zhukov, launched the ADB's latest private sector assessment in Port Vila on Friday. Mr Zhukov says the global economic crisis makes private sector reforms even more important because they help to positon countries to recover faster and more comprehensively once the international situation improves.
Presenter Jemima Garrett
Speaker: Regional Director of the Asian Development Bank's Sydney office Eugene Zhukov
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EUGENE ZHUKOV: One is increased competition in the airline industry. The second important policy was increased competition in telecommunications. Third is strengthened regulation of exisiting monopolies, especially with the recent utility regulatory authority act and also the ongoing extensive commercial law reform.
JEMIMA GARRETT: To what extent have these improved conditions for the private sector contributed to Vanuatu's very strong economic growth over the last five years.
EUGENE ZHUKOV: I think these reforms which have been implemented and are still being implemented, I think the country will be substantially higher performance although of course one has to mention as well the favourable external environment.
JEMIMA GARRETT: What initiatives has Vanuatu implemented to assist the private sector that may be useful for other Pacific Island countries?
EUGENE ZHUKOV: As I mentioned, what I think would help other countries is increased competition in the airline industry, for example, with the entrance of Pacific Blue in the Vanuatu market facilitated substantially the increase of tourism to the country.
JEMIMA GARRETT: And that has been really quite significant, hasn't it?
EUGENE ZHUKOV: Quite significant. If you take into account the ongoing global economic crisis, you'd expect the numbers to start going down yet in January of this year we noticed that tourism to Vanuatu actually increased by over 30% over a similar period last year.
JEMIMA GARRETT: Well that brings me to my next question, to what extent can these initiatives to improve conditions for the private sector help countries face up to the global economic crisis and also the regional political instability we're seeing with Fiji.
EUGENE ZHUKOV: I think I would say that Vanuatu and some other countries like Samoa have actually benefited from the misfortunes of Fiji and we suspect that a substantial amount of tourist traffic has been diverted from Fiji to Vanuatu and Samoa, for example, because of the recent political instability in Fiji and the recent floods.
JEMIMA GARRETT: Your report recommends a host of additional initiatives that Vanuatu could implement to create a more business friendly environment. What are the top priorities?
EUGENE ZHUKOV: I think the number of initiatives that need to be implemented, but if I were to rank them, I would first mention the upgrading of the infrastructure in the country that is needed to sustain long-term economic growth. Because what happened over the last few years is that as the Government began to bring the fiscal affairs in order, at the same time the investment and infrastructure suffered. Now this needs to be addressed if the economic growth becomes sustainable. Second, as I mentioned, is the country needs to start thinking about rationalising its SOE, state owned enterprises portfolio. Vanuatu has about 20 enterprises and with the exception of a few, these are not a very efficient entities so I think the next step should be for the government to take a look at what's the way forward for its SOE portfolio.
