ADB report highlights need for SOE reforms

Business

THE Asian Development Bank says continued efforts are needed to further reform State-owned enterprises in the Pacific region.
This is highlighted in a report titled, Finding Balance 2016: Benchmarking the Performance of State-owned Enterprises, which compares the financial performance of SOEs in Fiji, Kiribati, Marshall Islands, Papua New Guinea, Samoa, Solomon Islands, Tonga, and Vanuatu, as well as Jamaica and Mauritius.
The report was launched in Port Moresby yesterday.
The report finds that productivity levels of SOEs tend to be well below developed country benchmarks.
The report nonetheless finds many countries have made significant progress through commercially-oriented reforms. The Solomon Islands SOEs return on equity jumped from -11 per cent between 2002 to 2009 to 10 per cent between 2010 to 2014.
In Tonga, portfolio returns increased to 6 percent from a low of 0 percent in 2009. Overall, seven of the 10 countries examined have seen improved SOE profitability since 2010.
“Although improvements in SOE performance have been achieved in many countries, sustaining them has proven difficult,” Laure Darcy, from the ADB’s pacific private sector development initiative which produced the report, said.
“Committing to a reform agenda that increases private sector participation in SOEs and service delivery is the effective way to lock in gains.”

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