Economist praises Samoa

The relationship between the private sector and government has been praised by the Asian Development Bank (A.D.B).

Dr. Paul Holden, Lead Economist with A.D.B.’s Pacific Private Sector Development Initiative, hailed Samoa during the launch of ‘Reform Renewed; A Private Sector Assessment of Samoa report,” yesterday. The event took place at the Ministry of Commerce, Industry and Labour (MC.I.L.).

The relationship was referred to as a “renewed" and "quite a remarkable" commitment to reform.

This was reflected in the depth of private sector and public sector consultation in Samoa that carried a renewed understanding of both sides on the problems they face.

This, Dr Holden said, is not common in the countries he has visited.

“Normally, the attitude from the private sector is that the government doesn’t understand us and doesn’t know what its doing,” he said.

“And the public sector says, we’ve done all of these reforms and the private sector aren’t responding. That’s really very typical, but that is not the case in Samoa.”

The installation of a new electronic company registry at M.C.I.L. has put Samoa among world leaders in this area.

At the annual World Corporate Register’s Forum, three years ago, Samoa presented its company registry and afterwards, was inundated with requests to install something similar in other countries in Asia, Eastern Europe and Latin America.

“Samoa clearly showed that it was among the world leaders in terms of simplicity of registration, access to information about companies and generally in terms of functioning of its company office,” Dr. Holden said.

Samoa has passed the Personal Properties Securities Act and is the seventh country in the region to have done so.

It will install an electronic registry towards this, early next year.

Dr. Holden said the government has proved itself visionary in its commitment to land reforms, leading the discussion on land and the need to be able to securely lease land for the purpose of investment.

That includes agriculture that continues to be an underdeveloped sector in the economy. Then there is the government’s commitment to the State Owned Enterprises (S.O.Es) reform. Like many countries in the region, a very large proportion of the capital in Samoa is tied up in S.O.Es.

“If that sector is not operating efficiently, then generating growth in the economy is particularly difficult,” Dr. Holden said.

Periodically, an analysis is done on S.O.Es. around the region and they show Samoa’s S.O.Es have not performed well, he said. In a study of productivity, Samoa’s S.O.E.s are again the same.

Contrasted against this, Dr. Holden said, is a path breaking reform that is an example to any country in the world. This came with the development and evolution of the Land Transport Authority (L.T.A.) in terms of road construction, road maintenance and road building which is contracted out and is one of the success stories of the Pacific.

“It’s not without problems. The improvement and productivity and the generation of new jobs through contracting out these activities has really been quite striking.

“I think that it’s important to distinguish between ownership of these assets which the State deems to be essential and the management and running of these assets and it’s quite possible to maintain ownership but at the same time, improve productivity by involving the private sector. And this is something we really would recommend.”

In terms of a competition policy is seen as a really important aspect of this as it will bring S.O.E.s under the umbrella of competition framework that requires they operate efficiently and produce financial statements. An example used was the Samoa Airport Authority produced its first financial statements in 2011, after more than 15 years in operation.

“What I’m seeing now is a new commitment in moving forward. Samoa has shown in the past that its one of the leaders in the Pacific. And the fact that the private sector and the public sector are talking to each pother is extremely encouraging.”

An export survey by Pacific Trade and Invest last year surveyed export performances of different companies around the region. The number of Samoan companies identified as performing well, increasing exports and using online capabilities to export their products were impressive. What Dr. Holden also found striking about the Samoan component was the number of women involved.

The report launched yesterday, identifies some of the barriers that women need to overcome. Women are one of the great untapped resources in the Pacific.

“I have to say that whenever I have met either Samoan women in government or Samoan women in business, I have been extremely impressed by their capability, by their energy and by their foresight and willingness to work very hard to advance the tasks they are undertaking.”

However, overall, Dr. Holden said, there is still a lot of work to be done. Simply passing a law and installing a registry is not sufficient to ensure they work properly.

Business licensing, is an enormous problem here as it takes place by function and not by business.

If a business takes place in a range of activities, it has to have a license for each one.

However, Dr. Holden said, it should be a license by business with specific business activities reserved where public health or safety may be at risk.

As for S.O.E.s, while there is a commitment to reform, instructions from government often conflict with commercial mandate.

A number have been targeted for privatization, efficiency upgrades, and Dr. Holden warned that this needs to continue.

“The need for a competition policy will not end with the passage of legislation. Beyond that, an enormous task awaits as the whole institutional structure of the constitutional framework needs to be set up. On the whole, I feel extremely optimistic about Samoa.

Dr. Holden said that these things are ongoing and require support, which they will provide. “What we are seeing is a commitment on the part of Samoa to make the necessary changes that will result in the resumption of growth, in improved opportunities and a brighter future.”