Australia to Provide $14 Million, ADB $2 Million for Private Sector Initiative in the Pacific
SYDNEY, AUSTRALIA (16 December 2019) — The Government of Australia is providing $14 million in additional funding to the Pacific Private Sector Development Initiative (PSDI), with the Asian Development Bank (ADB) also contributing $2 million, to help continue efforts to make it easier for people in the Pacific start and grow their businesses.
Australia and ADB’s new financing for PSDI, established in 2007, will help fund the initiative’s operations from 2020 to 2024. To date, PSDI has received $49.8 million from the Government of Australia, $6.1 million from ADB, and $4.9 million from the Government of New Zealand, which became a PSDI partner in 2014. Additional funding from Australia, New Zealand, and the European Union is expected to be announced early next year.
“A robust and vibrant private sector is pivotal to improved livelihoods and poverty reduction, yet business activity is often constrained in the Pacific,” said the Regional Director of ADB’s Pacific Liaison and Coordination Office Ms. Lotte Schou-Zibell. “So, Australia’s support here is crucial. It will enable PSDI to continue helping ADB’s Pacific developing member countries to improve their enabling environments for business and pursue inclusive, private sector-led economic growth.”
PSDI works with ADB member countries in the Pacific to remove constraints to doing business and encourage entrepreneurship and investment through reforms to business laws, the finance sector, state-owned enterprises, and competition frameworks. It also supports women’s economic empowerment.
The program has a flexible and responsive structure that allows Pacific countries to promptly draw support from its pool of experts when needed, and to slow down, or postpone, reforms when practical or political considerations require. This approach, coupled with its longevity, has enabled PSDI to support more than 300 reforms over the past 13 years, resulting in extensive improvements to the business environment in the Pacific.
New company laws and online business registries established by PSDI in countries such as Solomon Islands, Tonga, and Vanuatu have increased company formation rates by dramatically reducing the time required to register a business—from around 20 days to less than 2 days—and the associated costs. Meanwhile, simplified business structures have made it easier, especially for women, to establish formal businesses, while foreign investment reforms have increased transparency and access to knowledge, labor, and capital.
Legal frameworks and online registries established by PSDI in nine countries, including the Marshall Islands, Papua New Guinea, and Tonga, have made it easier for individuals and businesses to borrow using assets other than land and buildings as collateral. This has facilitated the registration of more than 105,000 items of non-land collateral to underpin loans, while spurring the development of new loan products. PSDI is also helping government-owned banks and provident funds provide business finance, while working with governments and regulators to develop alternative capital-raising platforms, such as peer-to-peer financing and equity crowdfunding.
PSDI-supported reforms to state-owned enterprises have more than doubled their profitability in five countries, including Fiji, Samoa, and Solomon Islands, and facilitated public–private partnerships and, where appropriate, privatizations.
To ensure markets benefit consumers and traders at all levels of the economy, PSDI has also helped establish or improve competition and consumer protection agencies and prepared competition policies.
All reforms supported by PSDI give particular consideration to how they can remedy women’s economic marginalization by improving women’s access to finance, and to opportunities to develop and formally register their businesses. PSDI has also implemented projects demonstrating ways to help women develop business skills and access senior professional roles.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. In 2018, it made commitments of new loans and grants amounting to $21.6 billion. Established in 1966, it is owned by 68 members—49 from the region.