state owned enterprise reform infographic

FREEING UP GOVERNMENT RESOURCES OPENING MARKET FOR GOVERNMENT PRINTING IMPROVING SERVICE QUALITY EMPLOYEE OWNED INCENTIVES CREATED TO OPERATE COMMERCIALLY MORE COMPETITION IN THE SECTOR PRIVATE SECTOR PAPUA NEW GUINEA THE THREE PRIMARY ISSUES WITH SOEs ARE WHAT IS PSDI DOING TO HELP IMPROVE SOE PERFORMANCE? 3. HELPING SOEs OPERATE AS COMMERCIAL BUSINESSES IN CONCLUSION % RELATIVE TO HEALTH BUDGET SPENT ON SOEs SOEs CROWD OUT THE PRIVATE SECTOR WITH THE BACKING OF GOVERNMENT FUNDING, LIMITING PRIVATE SECTOR OPPORTUNITIES GOVERNMENTS SPEND MONEY ON SOEs THAT COULD BE BETTER ALLOCATED TO SOCIAL SECTORS 1. REFORM OF POLICY AND LEGAL FRAMEWORK NEW AND AMENDED LAWS IN: 2. STRENGTHENING GOVERNANCE OF SOEs REDUCING POLITICAL DOMINATION OF BOARDS ENHANCING DIRECTORS’ SKILLS LEADING TO BETTER ACCOUNTABILITY TONGA MACHINERY SOLOMON ISLAND PRINTERS % OF ACCOUNTS SUBMITTED ON TIME % OF SOE DIRECTORS THAT ARE MINISTERS OR CIVIL SERVANTS IN SAMOA PROMOTING GENDER DIVERSITY OF BOARDS THE LAWS NOW PROMOTE EFFICIENT, COMMERCIALLY DRIVEN SOES, ENSURING BETTER CORPORATE PLANNING, FULFILLMENT OF COMMUNITY SERVICE OBLIGATIONS, AND GREATER INDEPENDENCE PSDI ADVOCATES REDUCED REPRESENTATION OF MINISTERS AND CIVIL SERVANTS ON SOE BOARDS, TRAINS UP POTENTIAL FUTURE DIRECTORS, INCLUDING WOMEN, AND ENCOURAGES TIMELY REPORTING TO IMPROVE CORPORATE GOVERNANCE GOVERNMENT BACKING SOEs TAX FUNDS TAX FUNDS SAMOA 250 DIRECTORS TRAINED IN CORPORATE GOVERNANCE TONGA MARSHALL ISLANDS SOLOMON ISLANDS 2010 2012 2007 2011 15% 49% 6% % OF DIRECTORS ON BOARDS THAT ARE WOMEN OVERALL, SOE REFORMS ARE REDUCING THE DRAIN ON PACIFIC ECONOMIES THROUGH 1. REDUCED GOVERNMENT FINANCIAL SUPPORT FOR SOEs 2. INCREASED PRIVATE SECTOR INVESTMENT 3. HELPING SOEs OPERATE AS COMMERCIAL BUSINESSES 65% 87% SASAPE MARINA ONLY 19 OUT OF 135 SOEs HAVE BENEFITED FROM ADB SUPPORT FOR PRIVATIZATION AND COMMERCIALIZATION 19 135 BUT SIGNIFICANT EFFORT TO REFORM SOEs IN THE PACIFIC IS STILL NEEDED FOR EVERY INVESTED BY GOVERNMENTS ON SOEs, GROSS DOMESTIC PRODUCT (GDP) IS ONLY IMPACTED BY: $1 $0.19 Fiji $0.21 Solomon Islands $0.13 Samoa $0.27 Tonga $0.04 Marshall Islands SOEs ARE UP TO 8X LESS PRODUCTIVE THAN THE PRIVATE SECTOR SOEs PRIVATE SECTOR LOW RETURNS ON INVESTMENT: ABSORBING LARGE AMOUNTS OF CAPITAL, BUT GENERATING LITTLE REVENUE Tonga 48% Samoa 60% Solomon Islands 42% Marshall Islands 33% CREATION OF AN INTERNATIONAL SHIP REPAIR FACILITY CREATION OF NEW JOBS REVITALIZATION OF THE TOWN REFORMING STATE-OWNED ENTERPRISES TELECOMS WATER PRINTING SHIPPING BANKING THEY ARE CREATED TO PROVIDE A SERVICE TO THE PUBLIC, BUT THEY MOSTLY HAVE A NEGATIVE IMPACT ON GROWTH AND SLOW THE ECONOMY DOWN State-owned enterprises (SOEs) are businesses owned in part or in full by Pacific governments. They generally operate in the areas of infrastructure, utilities, and banking. Because they are often inefficient, they place a significant strain on these small economies. Recently, these governments, together with the Asian Development Bank, have been working toward reform of SOEs to improve their performance and reduce the burden on Pacific Island countries. AVIATION POWER Pacific Liason and Coordination Office Level 18, 1 Margaret Street, Sydney NSW 2000, Australia Tel +61 2 8270 9444 Fax +61 2 8270 9445 [email protected] The Pacific Private Sector Development Initiative (PSDI) is jointly funded by the Asian Development Bank and the Australian Agency for International Development.

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Overview of PSDI's SOE reform activity in 2012.

TRANSCRIPT

FREEING UPGOVERNMENTRESOURCES

OPENING MARKET FOR GOVERNMENT PRINTING

IMPROVINGSERVICEQUALITY

EMPLOYEEOWNED

INCENTIVESCREATED TOOPERATECOMMERCIALLY

MORECOMPETITIONIN THE SECTOR

PRIVATE SECTOR

PAPUA NEW GUINEA

THE THREE PRIMARY ISSUES WITH SOEs ARE

WHAT IS PSDI DOING TO HELP IMPROVE SOE PERFORMANCE?

3. HELPING SOEs OPERATE AS COMMERCIAL BUSINESSES

IN CONCLUSION

% RELATIVE TO HEALTH BUDGET SPENT ON SOEs

SOEs CROWD OUT THE PRIVATE SECTOR WITH THE BACKING OF GOVERNMENT FUNDING, LIMITING PRIVATE SECTOROPPORTUNITIES

GOVERNMENTS SPEND MONEY ON SOEs THAT COULD BE BETTER ALLOCATED TO SOCIAL SECTORS

1. REFORM OF POLICY AND LEGAL FRAMEWORK

NEW AND AMENDED LAWS IN:

2. STRENGTHENING GOVERNANCE OF SOEs

REDUCING POLITICAL DOMINATION OF BOARDS

ENHANCING DIRECTORSSKILLS

LEADING TOBETTERACCOUNTABILITY

TONGA MACHINERY SOLOMON ISLANDPRINTERS

% OF ACCOUNTS SUBMITTED ON TIME

% OF SOE DIRECTORS THAT ARE MINISTERS OR CIVIL SERVANTS IN SAMOA

PROMOTINGGENDER DIVERSITYOF BOARDS

THE LAWS NOW PROMOTE EFFICIENT, COMMERCIALLY DRIVEN SOES, ENSURING BETTER CORPORATE PLANNING, FULFILLMENT OF COMMUNITY SERVICE OBLIGATIONS, AND GREATER INDEPENDENCE

PSDI ADVOCATES REDUCED REPRESENTATION OF MINISTERS AND CIVIL SERVANTS ON SOE BOARDS, TRAINS UP POTENTIAL FUTURE DIRECTORS, INCLUDING WOMEN, AND ENCOURAGES TIMELY REPORTING TO IMPROVE CORPORATE GOVERNANCE

GOVERNMENT BACKING SOEsTAX FUNDS

TAX FUNDS

SAMOA

250 DIRECTORS TRAINEDIN CORPORATE GOVERNANCE

TONGAMARSHALL ISLANDSSOLOMON ISLANDS

2010 2012 2007 2011 15%

49%

6 %

% OF DIRECTORS ON BOARDS THAT ARE WOMEN

OVERALL, SOE REFORMS ARE REDUCING THE DRAIN ON PACIFICECONOMIES THROUGH

1. REDUCED GOVERNMENT FINANCIAL SUPPORT FOR SOEs2. INCREASED PRIVATE SECTOR INVESTMENT3. HELPING SOEs OPERATE AS COMMERCIAL BUSINESSES

65% 87%

SASAPE MARINA

ONLY 19 OUT OF 135 SOEs HAVE BENEFITED FROM ADB SUPPORT FOR PRIVATIZATION ANDCOMMERCIALIZATION

19

135

BUT SIGNIFICANT EFFORT TO REFORMSOEs IN THE PACIFICIS STILL NEEDED

FOR EVERY

INVESTED BY GOVERNMENTS ON SOEs, GROSS DOMESTIC PRODUCT (GDP) IS ONLY

IMPACTED BY:

$1$0.19 Fiji

$0.21 SolomonIslands

$0.13 Samoa

$0.27 Tonga

$0.04Marshall Islands

SOEs ARE UP TO 8X LESS PRODUCTIVE THAN THE PRIVATE SECTOR

SOEs PRIVATE SECTOR

LOW RETURNS ON INVESTMENT: ABSORBING LARGE AMOUNTS OF CAPITAL, BUT GENERATING LITTLE REVENUE

Tonga48%

Samoa60%

Solomon Islands42%

Marshall Islands33%

CREATION OF ANINTERNATIONALSHIP REPAIRFACILITY

CREATION OFNEW JOBS

REVITALIZATIONOF THE TOWN

REFORMING STATE-OWNED ENTERPRISES

TELECOMS WATERPRINTING SHIPPINGBANKING

THEY ARE CREATED TO PROVIDE A SERVICE TO THE PUBLIC, BUT THEY MOSTLY HAVE A NEGATIVE IMPACT

ON GROWTH AND SLOW THE ECONOMY DOWN

State-owned enterprises (SOEs) are businesses owned in part or in full by Pacific governments. They generally operate in the areas of infrastructure, utilities, and banking. Because they are often inefficient, they place a significant strain on these small economies. Recently, these governments, together with the Asian Development Bank, have been working toward reform of SOEs to improve their performance and reduce the burden on Pacific Island countries.

AVIATION POWER

Pacific Liason and Coordination OfficeLevel 18, 1 Margaret Street, Sydney NSW 2000, AustraliaTel +61 2 8270 9444 Fax +61 2 8270 9445 [email protected]

The Pacific Private Sector Development Initiative (PSDI) is jointly funded by the Asian Development Bank and the Australian Agency for International Development.