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Tuvalu Forum Economic Ministers Statement

Friday: June 10, 2005

Forum Economic Ministers recognised the private sector as the engine for creating growth, and that countries must support its development. This includes addressing issues of collateral, access to credit, enforcement of contracts and making it easier for people to start a business. One target is to work towards halving, by FEMM 2007, the time it takes to start a business, the cost of registration, the time to go through insolvency and the cost of enforcing contracts. This follows the 9th Forum Economic Ministers Meeting held in Funafuti, Tuvalu on 8-9 June.

2. Forum Economic Ministers identified stronger regional economic integration, starting with trade, as a key element for engendering economic growth and building a relationship with the rest of the world.

3. Seven Principles for the Governance and Management of Public Enterprises were adopted as central to improving public enterprises in the region.

4. Ministers noted the availability of Australian and other development partner funding to pursue transport reforms in Forum Island Countries. Australia urged FICs to sign and ratify the Pacific Islands Air Services Agreement (PIASA) and is working with the Association of South Pacific Airlines and the Forum Secretariat on a study to assess the national impacts of PIASA.

5. Future FEMM will include a standing agenda item on regional economic integration to tie more closely the work of Economic Ministers to the development of the Pacific Plan. Ministers agreed that higher economic returns could be created from natural resources, especially fisheries, and that more of those returns could be retained in the region through greater regional cooperation.

6. Ministers called upon governments, bilateral and multilateral development partners to work with the newly created Regional Private Sector Organisation, which attended FEMM 2005 as an Observer.

7. FEMM was attended by Ministers and Heads of Delegation from Australia, Cook Islands, Federated States of Micronesia, Fiji, Kiribati, Nauru, New Zealand, Niue, Palau, Papua New Guinea, and Republic of the Marshall Islands, Solomon Islands, Samoa, Tonga, Tuvalu and Vanuatu. Observers comprised representatives from the Asian Development Bank (ADB), Foreign Investment Advisory Service (FIAS), International Monetary Fund (IMF), Pacific Financial and Technical Advisory Centre (PFTAC), United Nations Development Programme (UNDP), United Nations Fund for Women (UNIFEM), University of the South Pacific (USP), and the World Bank.

Principles for the Governance and Management of Public Enterprises

1. Develop a coherent and holistic public enterprises policy.

This policy should include objectives in ownership and management, community service obligations, regulation, performance monitoring, and impact assessment of reforms, amongst others.

2. Strengthen adherence to principles of good corporate governance.

This would include clearly stated roles and responsibilities for shareholders, boards and management. These corporate governance principles could be supported through capacity building of skill levels of Board members.

The usage of OECD and PECC guidelines of corporate governance was encouraged by FEMM 2003 and these could provide models.

3. A transparent approach to identifying and funding community service obligations (non-commercial functions) demanded of public enterprises should be developed to ensure public enterprises operate on a sustainable commercial basis.

This should be inclusive of their identification, costing, and transparent funding by government including, where possible, separating commercial and non-commercial activities.

4. There should be a clear separation of the ownership role of Government from its regulatory role.

Recognizing the limited skilled human resources the regulatory role could be centralised nationally or even (sub) regionally.

5. Increase the contestability of the market to promote ownership systems suitable to the objectives of the public enterprise and to improve efficiency.

Mechanisms such as performance benchmarking/contracts, transparent and competitive bidding processes, etc, could be used.

6. Competitive neutrality should be maintained between state owned companies and the private sector.

This would need to encompass equitable treatment of the public sector and private sector through avoiding discriminatory tax regimes, provision of subsidised capital and procurement restrictions.

7. The monitoring of both financial performance and service quality should, wherever possible, be against appropriate national and international benchmarks.

--Forum Secretariat

 

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