PACIFIC PRIVATE

SECTOR DEVELOPMENT
INITIATIVE

The private sector contributes to

over 85% of GDP in most countries.
A dynamic private sector is
necessary for promoting inclusive
growth that leads to higher employment
and income earning opportunities,
which in turns results in a sustained
reduction in poverty and increased
prosperity.

WHY IS IT HARD TO DO BUSINESS IN THE PACIFIC?

BUSINESS LA

S
BUSINES
LAW

REGULATIONS

BUSINESS LAW

Important business laws do not

exist, making it risky to for overseas
and local companies to do business.

Business laws are outdated and

the cost of starting a business is
out of reach for many people.

There are too many complex

regulations which cost time and
money to comply with.

RI

VAT

E SECT

SOE

Restrictions on investment make it

difficult and risky for foreign investors
to bring capital and know-how.

SOE SOE
SOE

SAVINGS

SOE SOE SOE

INVESTMENT

SOE

Savings accounts are hard to open

due to complex paperwork and lack
of bank branches in rural areas.

Because it is risky for banks to

lend, businesses cannot access
finance to grow.

State-owned enterprises (SOEs)

crowd out the private sector, making it
hard for private competitors to grow.

FEDERATED STATES
OF MICRONESIA

PALAU

SOCIAL
SECTORS

Governments spend money

on SOEs that could be better
allocated to social sectors.

SOEs often own utilities that

are poorly managed and have a
negative impact on growth.

REPUBLIC OF THE
MARSHALL ISLANDS

PSDI responds to requests for assistance from governments

and private sector organizations in ADB's 14 Pacific developing
member countries.

KIRIBATI

NAURU
PAPUA NEW GUINEA
SOLOMON ISLANDS

TIMOR LESTE

SOEs drain key government

resources, while providing low
returns on investment.

PSDI WORKS TO REMOVE THE

CONSTRAINTS TO DOING BUSINESS
IN THE PACIFIC, ENCOURAGING
WIDESPREAD PROSPERITY THROUGH
INCLUSIVE ECONOMIC GROWTH.

GOVERNMENT FUNDS

SOEs

RETURN

SOE
R I SOE O
VAT
T
E SEC

Based on rigorous diagnostic work, a team of experts working in the

areas of business law reform, access to finance and financial services,
SOE reform and public-private partnerships provides a broad range of
technical assistance.

TUVALU
SAMOA

VANUATU

FIJI

PSDI provides policy support, assistance with legislative reforms,

program support, capacity building, advocacy, full implementation
support for reforms, and technology solutions to improve the business
environment in the Pacific.

COOK ISLANDS
TONGA

HOW DOES PSDI HELP THESE COUNTRIES?

MODERNIZING
OUTDATED
BUSINESS LAWS

IMPROVING ACCESS
TO FINANCE AND
FINANCIAL SERVICES

IMPROVING
THE EFFICIENCY
OF SOEs

Business law provides the foundation for

investment and business growth. PSDI
identifies outdated laws that make it difficult
for women, men, and companies to do
business in the Pacific. It tailors laws to
conform with the unique cultural
environments in the Pacific, and sees through
the implementation of those reforms after
they pass through parliament to maximize
development impact.

Without access to finance, businesses cannot

grow. Because lending is risky, most smaller
businesses cannot obtain loans to expand. Many
poorer people do not have access to financial
services that enable them to save, receive salary
payments or pay bills. PSDI helps improve the
legal basis for lending. It helps financial service
providers extend their reach to rural areas and
promotes mobile phone banking.

Through its Finding Balance studies, PSDI

identifies how the performance of SOEs
drags down the growth of Pacific island
economies. It helps governments improve the
legal framework in which SOEs operate and
promotes putting them on a commercial
footing. It assists governments identify
SOEs that can be privatized and provides
transactional support services.

AS A RESULT OF SECURED TRANSACTIONS

REFORMS, TIME TO APPROVE A LOAN HAS
SIGNIFICANTLY REDUCED IN SOLOMON ISLANDS

IN SOLOMON ISLANDS INCORPORATION OF

NEW COMPANIES DOUBLED SINCE ADB
ASSISTED WITH COMPANY LAW REFORMS
AND REGISTRY MODERNIZATION

PRE REFORM

360 (est)

POST REFORM

1 DAY

286
270
PRE-REFORM
2004

2005

2006

2008

2009

2010

2011

2012

SOLOMON ISLANDS MOVED UP 22 PLACES

IN THE WORLD BANK DOING BUSINESS
INDICATORS AS A RESULT OF THE COMPANIES
AND SECURED TRANSACTIONS REFORMS
74
81
96
2010

2011

2012

BUSINESSES ARE NOW CHOOSING TO BECOME

PART OF THE FORMAL SECTOR, WHICH IS A KEY
DRIVER OF ECONOMIC GROWTH
FORMAL SECTOR

This means reduced interest

rates. Lending is less risky
and loan processing costs
are lower because of
reduced legal fees. Financial
institutions broaden their
portfolios by lending to a
wider range of businesses.

POST-REFORM
2007

NEW SOE LAWS IMPLEMENTED

WITH PSDI SUPPORT IN

ECONOMY

Formal businesses can more easily access

credit, larger contracts, and import/export
markets, fuelling expansion, greater
employment, and higher contributions to
government revenue through taxation.

Pacific Liaison and Coordination Office

Level 18, 1 Margaret Street, Sydney NSW 2000, Australia
Tel +61 2 8270 9444 Fax +61 2 8270 9445 psdi@adb.org

28 DAYS

PAPUA NEW GUINEA

MARSHALL ISLANDS
SAMOA
TONGA
SOLOMON ISLANDS
PSDI ADVOCACY AND POLICY SUPPORT HAS LED TO
REDUCED POLITICAL DOMINATION ON BOARDS AND
IMPROVED ACCOUNTABILITY AND TRANSPARENCY
ACCOUNTS

THE NUMBER OF SAVINGS ACCOUNTS OPENED

HAS SIGNIFICANTLY GROWN IN A TIMOR-LESTE
BANK WITH ADB SUPPORT, LEADING TO SAFER
SAVINGS AND AN INVESTMENT CULTURE

18,000
2010

PSDI SUPPORT IN PRIVATIZING SASAPE

MARINA IN SOLOMON ISLANDS SAVED AN
INDUSTRY UNDER THREAT

57,408
2011

PRIVATIZATION OF MARINA

IN SOLOMON ISLANDS THERE WAS A SIGNIFICANT

INCREASE IN SECURITY INTEREST REGISTRATIONS,
REFLECTING ACTUAL COLLATERAL-BASED LOANS.

7,200 9,013
2009

2012

NEW INDUSTRY
ADDITIONAL EMPLOYMENT
REJUVENATED TOWN

The Pacific Private Sector Development Initiative

(PSDI) is jointly funded by the Asian Development Bank
and the Australian Agency for International Development.