1 December 2013

ADB backs SOE reforms by the Government of Palau

ADB SOE expert, Laure Darcy presents at
the Palau Economic Symposium in November.
NEWoperating principles guiding state-owned enterprises (SOEs) announced by the Government of Palau have been welcomed as an import milestone in the economic reform process for the small island state. The SOE policy principles were presented at an Economic Symposium in Koror on Nov 21st, where a commitment was made by the Minister of Finance, the Honorable Elbuchel Sadang, to receive public comments and then prepare a draft law for submission to Congress. The key principles are:

  1. The primary objective of all SOEs is to operate as successful businesses (full cost recovery, including cost of capital) with community service obligations (CSOs) to be contracted on a commercial basis.
  2. The Minister of Finance shall be responsible for safeguarding the state’s investment in the SOEs, supported by an SOE monitoring unit 
  3. SOEs will adopt a robust director selection, appointment and performance evaluation process. 
  4. SOEs will have robust corporate planning and disclosure requirements. 
The proposed policy was developed with the assistance of the Asian Development Bank's (ADB) Private Sector Development Initiative (PSDI), which is cofinanced by ADB and the Governments of Australia and New Zealand. Palau's new commitment was welcomed by Laure Darcy, SOE reform adviser for ADB-PSDI:
"If embraced by all stakeholders and adopted in practice, these principles will drive improved SOE performance and support private sector development and economic growth. Eļ¬ƒcient, commercially-run SOEs make the private sector more competitive."
Ms Darcy also chaired a session on Transparency & Accountability at the Symposium, and led discussion on the Government's proposed SOE policy.

Palau Chamber of Commerce, which jointly organized the Symposium with the Ministry of Finance, supports the Government's efforts to promote an Enabling Business Environment in Palau.

The Symposium was well-attended by over 100 senior government officials and private business owners and could become the country's principle forum for public-private dialogue.

Palua President Tommy Remnengesau Junior told the gathering in his opening remarks he hoped it would become an annual event.