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    Continuing Reforms to Stimulate Private Sector Investment: A Private Sector Assessment for Solomon Islands
    Continuing Reforms to Stimulate Private Sector Investment: A Private Sector Assessment for Solomon Islands
    Continuing Reforms to Stimulate Private Sector Investment: A Private Sector Assessment for Solomon Islands
    Ebook271 pages2 hours

    Continuing Reforms to Stimulate Private Sector Investment: A Private Sector Assessment for Solomon Islands

    By Asian Development Bank

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    About this ebook

    A business environment that supports private sector-led growth is the key to long-term sustainable poverty reduction. This has been recognized by successive Solomon Islands’ governments who have implemented fundamental reforms that have modernized the environment for doing business in the country with some far-reaching reforms. This private sector assessment (PSA) analyzes the reforms to date and suggests further policy actions and priorities in the areas of business law reform, promoting economic opportunities for women, infrastructure, state-owned enterprises, the tax system, and the financial system. The policy recommendations in the PSA provide the basis for discussions between the Government of Solomon Islands, the private sector, and other stakeholders regarding future reform priorities that will contribute to the country’s resources being used most productively. This PSA was produced by the Pacific Private Sector Development Initiative---a regional technical assistance facility cofinanced by the Asian Development Bank (ADB), the Government of Australia, and the Government of New Zealand.
    LanguageEnglish
    PublisherAsian Development Bank
    Release dateApr 1, 2016
    ISBN9789292573966
    Continuing Reforms to Stimulate Private Sector Investment: A Private Sector Assessment for Solomon Islands

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      Book preview

      Continuing Reforms to Stimulate Private Sector Investment - Asian Development Bank

      CONTINUING REFORMS TO STIMULATE PRIVATE SECTOR INVESTMENT

      A PRIVATE SECTOR ASSESSMENT FOR SOLOMON ISLANDS

      Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO)

      © 2016 Asian Development Bank

      6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines

      Tel +63 2 632 4444; Fax +63 2 636 2444

      www.adb.org; openaccess.adb.org

      Some rights reserved. Published in 2016.

      Printed in the Philippines.

      ISBN 978-92-9257-395-9 (Print), 978-92-9257-396-6 (e-ISBN)

      Publication Stock No. RPT167967-2

      Cataloging-In-Publication Data

      Asian Development Bank.

      Continuing reforms to stimulate private sector investment: A private sector assessment for Solomon Islands.

      Mandaluyong City, Philippines: Asian Development Bank, 2016.

      1. Private sector.      2. Solomon Islands.      I. Asian Development Bank.

      The views expressed in this publication are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent.

      ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. The mention of specific companies or products of manufacturers does not imply that they are endorsed or recommended by ADB in preference to others of a similar nature that are not mentioned.

      By making any designation of or reference to a particular territory or geographic area, or by using the term country in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area.

      This work is available under the Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) https://creativecommons.org/licenses/by/3.0/igo/. By using the content of this publication, you agree to be bound by the terms of said license as well as the Terms of Use of the ADB Open Access Repository at openaccess.adb.org/termsofuse

      This CC license does not apply to non-ADB copyright materials in this publication. If the material is attributed to another source, please contact the copyright owner or publisher of that source for permission to reproduce it. ADB cannot be held liable for any claims that arise as a result of your use of the material.

      Attribution—In acknowledging ADB as the source, please be sure to include all of the following information:

      Author. Year of publication. Title of the material. © Asian Development Bank [and/or Publisher]. https://openaccess.adb.org. Available under a CC BY 3.0 IGO license.

      Translations—Any translations you create should carry the following disclaimer:

      Originally published by the Asian Development Bank in English under the title [title] © [Year of publication] Asian Development Bank. All rights reserved. The quality of this translation and its coherence with the original text is the sole responsibility of the [translator]. The English original of this work is the only official version.

      Adaptations—Any adaptations you create should carry the following disclaimer:

      This is an adaptation of an original Work © Asian Development Bank [Year]. The views expressed here are those of the authors and do not necessarily reflect the views and policies of ADB or its Board of Governors or the governments they represent. ADB does not endorse this work or guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use.

      Please contact OARsupport@adb.org or publications@adb.org if you have questions or comments with respect to content, or if you wish to obtain copyright permission for your intended use that does not fall within these terms, or for permission to use the ADB logo.

      Note: In this publication, $ refers to United States dollars, unless otherwise stated.

      Photo credits: Cover photos from WaterFrame/Alamy and Luis Ascui.

      Pacific Liaison and Coordination Office

      Level 20, 45 Clarence Street

      Sydney, NSW 2000, Australia

      Tel + 612 8270 9444; Fax + 612 8270 9445

      www.adb.org/offices/pacific/pacific-private-sector-development-initiative

      This is a Pacific Private Sector Development Initiative (PSDI) report, with input from the Development Coordination Office of the Asian Development Bank (ADB) in Honiara, Solomon Islands. It was prepared under the supervision of ADB’s Pacific Liaison and Coordination Office in Sydney, Australia. PSDI is a regional technical assistance facility cofinanced by ADB, the Government of Australia, and the Government of New Zealand. This publication does not necessarily reflect the views and policies of either government.

      CONTENTS

      TABLES, FIGURES, AND BOXES

      Tables

      Figures

      Boxes

      ABBREVIATIONS

      FOREWORD

      This private sector assessment examines Solomon Islands’ potential to increase the rate of sustainable economic growth. It builds on a 2005 assessment prepared by the Asian Development Bank (ADB) by reviewing reforms implemented since then, and offering recommendations to address ongoing constraints to increased business activity and investment.

      Solomon Islands has seen steady growth since the cessation of the civil conflict in 2003, when the economy was near collapse. Yet, although national incomes have increased, the country continues to lag behind its neighbors in a number of areas as shown by its economic and social indicators. Logging has been one of the key drivers of recent growth, but it is becoming increasingly unsustainable. In addition, the economy has been heavily supported by foreign aid, which is expected to decline over the next decade. Moreover, the formal economy is small, with most of the population employed in informal or subsistence activities.

      Increased investment, particularly investment that will diversify the economy, is needed to grow the formal private sector in order to address Solomon Islands’ employment and income challenges. The government has an important role to play in establishing an attractive investment climate where entrepreneurs are encouraged and businesses can thrive.

      The current and previous governments of Solomon Islands have been committed to supporting private sector-led growth. Reforms implemented over the past decade, such as streamlining foreign investment processes, reforming business laws, and improving performance of state-owned enterprises (SOEs) have enhanced the business environment. More recent reforms—implemented with support from the Pacific Private Sector Development Initiative, which produced this assessment—include instituting commercially oriented management of SOEs and the creation of Solomon Islands’ electronic company registry.

      To make it easier for businesses to startup, innovate, and expand, a road map for further reforms is required. This private sector assessment provides proposals for improving the functioning of the financial system, modernizing the tax system, advancing gender equality, and establishing a framework that supports competition. In the past, the Government of Solomon Islands has proved to be one of the most active reformers in the region. While the recommendations in this assessment present a challenging agenda, I am confident the government will continue to pursue reform in a consultative and strategic way. Working with the private sector and other stakeholders, the government can use this report to stimulate discussion and develop targeted actions for growing private sector investment in Solomon Islands.

      I would like to thank our counterparts in government, representatives from development partner organizations and the private sector who contributed to this report.

      ADB is committed to working closely with the Government of Solomon Islands to deliver positive development outcomes. I am hopeful this will contribute meaningfully to that collaboration, which I look forward to supporting in the years to come.

      Xianbin Yao

      Director General

      Pacific Department

      Asian Development Bank

      EXECUTIVE SUMMARY

      The economy of Solomon Islands has recovered from a period of civil conflict that ended in 2003. Current and past governments of Solomon Islands have been committed to encouraging private sector-led growth, and over the past decade many positive reforms have been introduced. Significant challenges remain however, and increased levels of private sector investment are needed to accelerate economic growth and improve the quality of people’s livelihoods.

      This report provides a snapshot of Solomon Islands’ current business environment with a focus on key areas constraining private sector investment. It provides a useful starting point from which a reform road map can be developed and implemented.

      Given capacity constraints within the government and the business community, it is important to carefully review the recommendations in this report to identify the areas where the country’s limited available resources can be used most productively.

      For accessibility, the findings and recommendations of this reported are covered in the following 5 pages. Detailed supporting information on each of the topics discussed is presented in Appendixes A–K.

      Suggested Reform Priorities

      Table 1 identifies key reform priorities the government should focus on to continue improving the business climate and drive sustainable economic growth.

      Table 1: Reform Priorities

      Source: Pacific Private Sector Development Initiative.

      Recommended Reforms

      Table 2 contains the full list of recommendations contained in the report. Ideally, both the government and the private sector should review these recommendations to establish priorities and develop more detailed actions.

      Table 2: Key Challenges and Recommendations

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