Samoa’s Robust SOE Framework a Model for the Pacific ADB Report
APIA, SAMOA (22 March 2023)—Samoa’s prioritization of state-owned enterprise (SOE) reform over the past 8 years has provided a platform for more efficient service delivery, according to a new Asian Development Bank (ADB) report.
Finding Balance 2023: Benchmarking Performance and Building Climate Resilience in Pacific State-Owned Enterprises compares the performance of SOEs in nine Pacific island countries—Fiji, Kiribati, Republic of the Marshall Islands, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, and Vanuatu—and tracks the progress of SOE commercialization in the region.
The report’s findings were considered and discussed by government, business, and civil society representatives at a Finding Balance 2023 launch event today in Apia.
“Samoa’s State-Owned Enterprise (SOE) Act establishes an effective SOE governance and monitoring framework, which has been a priority reform focus since 2015,” ADB Pacific Liaison and Coordination Office’s Officer-in-Charge Matt Hodge said. “The Government of Samoa should continue to pursue opportunities to incorporate private sector participation into SOE service provision.”
Finding Balance 2023, produced by the Pacific Private Sector Development Initiative (PSDI), also has a special focus on the risks posed by climate change, and how Pacific governments and state-owned utilities can manage its effects and build resilience.
The report, which focuses on the period 2015–2022, finds that state-owned utilities that are more commercialized may be more inclined to respond to incentives to decarbonize and invest in protecting their assets. It also shows that SOEs in the Pacific have improved their returns, but are still failing to cover their cost of capital.
Average returns among Samoa’s 14 surveyed SOEs for Finding Balance 2023 improved slightly in the period 2010–2019, before deteriorating amid COVID-19. Aviation sector SOEs were particularly hard hit by Samoa’s 2018–2020 measles epidemic and COVID-19 travel restrictions.
The average return on equity and return on assets for Samoa’s SOEs from 2010–2015 were negative, but increased to 1% and 0.5% respectively over the period
FINDING BALANCE 2023 KEY FINDINGS—SAMOA:
• Number of SOEs: 14
• Dominant industries: Power, water, aviation, ports, banking
• Book value of assets (2020): ST1.8 billion
• Average portfolio contribution to GDP (2010–2020): 3%
• Average return on assets (2015–2020): 0.4%
• Average return on equity (2015–2020): 0.8%
SAMOA SOE REFORM HIGHLIGHTS, 2015–2022:
• Amendments to the SOE Act in 2015 which created an SOE minister responsible for all SOEs and established a Ministry of Public Enterprises, facilitating improved SOE monitoring, transparency, accountability, and financial performance;
• Five-year public-private partnerships signed by the Samoa Ports Authority in 2019 to contract out stevedoring under performance-based agreements;
• The privatization of the Agricultural Stores Corporation, completed in 2016; and
• Four independent power producer contracts signed with Electric Power Corporation for solar power generation.
PSDI is ADB technical assistance program undertaken in partnership with the Governments of Australia and New Zealand. PSDI supports ADB’s 14 Pacific developing member countries to improve the enabling environment for business and to achieve inclusive, private sector-led economic growth.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.