impact stories from the pacific region: breaking down the barriers to business - more private sector...

7/30/2019 Impact Stories from the Pacific Region: Breaking Down the Barriers to Business - More Private Sector Reform Stories

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Breaking Down theBarriers to BusinessMore Private Sector Reform Stories

Impact Stories from the Pacic Region


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Contents

1 Foreword2 Banking the UnbankedA widow and small-time cofee grower in remote Papua New Guinea province is one o thousands o

customers beneting rom a successul microbank ocused on the needs o the poor.

6 Network Rollout Puts a Nation in TouchAter a long wait, telecommunications services are becoming available to even the remotest regions inPapua New Guinea, supported by a private-sector loan project.

12 Adapting to Climate Change and Generating IncomesLashed by rain, Solomon Islands are rolling out climate-prooed transportation inrastructure that willacilitate local trade and provide long-term construction and maintenance employment.

16 Loans In a DaySweeping business reorms assisted by ADB are making it easier to raise money and do business.20 Rebirth o a MarinaThe sale and rehabilitation o Sasape Marina, ormerly a state-owned enterprise, highlights some o

the real benets that can result rom privatization.

26 Loans You Can Bank OnADB assistance has helped the Institute o Micronance Timor-Leste (IMTL) become the countrys rstlocally owned commercial bank to provide loans to individuals and small businesses in urban and

rural areas.

The views expressed in this publication are those o the authors and do not necessarily reect the views and policies o the Asian Development Bank(ADB) or its Board o Governors or the governments they represent. Accounts presented here are anecdotal and do not represent comprehensive

impacts o projects or programs.

ADB does not guarantee the accuracy o the data included in this publication and accepts no responsibility or any consequence o their use.

By making any designation o or reerence to a particular territory or geographic area, or by using the term country in this publication, ADB does notintend to make any judgments as to the legal or other status o any territory or area.

ADB encourages printing or copying inormation exclusively or personal and noncommercial use with proper acknowledgment o ADB. Users arerestricted rom reselling, redistributing, or creating derivative works or commercial purposes without the express, written consent o ADB.

Note: In this publication, $ reers to US dollars.

PHOTO CREDITS:Cover: Kiosk owner Marquita dos Santos benetted rom ADB supported micronance projects. Photo by Luis Ascui; Loans You Can Bank On-Photosby Luis Ascui; Network Rollout Puts a Nation in Touch-Photos o phone towers by Digicel, Peter Anjo and Lucy Bonai. Photo by Digicel; Banking theUnbanked in Papua New Guinea-Photos by Nationwide Microbank; All other photos by ADB.


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o r e w o

r d

Through the Pacic Private Sector

Development Initiative (PSDI), ADB ishelping countries in the Pacic region

reorm their business environments to make iteasier or the private sector to conduct business,

grow, and create jobs. A vibrant private sector iscritical to sustained growth in the Pacic and canplay an innovative role in overcoming obstacles

to development. PSDIs initiatives are demand-and need-structured, so the benets o economic

growth are spread throughout the economies inthe region.

Established by ADB in 2006 with conancingrom the Australian government, PSDI is a

knowledge hub with a team o technical experts

that ocuses on business law reorm, accessto nancial services, state-owned enterprisereorm, and publicprivate partnerships.

Through their reorm activities, the PSDI team,in partnership with the governments o Pacicdeveloping member countries (DMCs) and other

development organizations, is liting the barriersto business and are working toward helping the

region become a less risky, more cost-efectiveplace to do business.

PSDI has many major achievements. It has

helped develop modern commercial laws in

seven Pacic countries. For example, in SolomonIslands, PSDI assisted the government with

drating a new law that simplies the legalrequirements or establishing and operating

companies. Beore the reorm, orming acompany could take as long as 2 months.

Ater the reorm, a company may be createdin 12 days at the cost o no more than $100.In 2012, the World Banks Doing Business

Indicators Reportlisted Solomon Islands asbeing among the top 12 countries surveyed that

demonstrated signicant business law reorm.The report, which measures the ease o doing

business, showed Solomon Islands ranked74 out o 183 economies, a huge improvementrom just 2 years ago when it ranked 106th.

This conrms Solomon Islands is becoming aneasier place to conduct business.

Nationwide Microbank in Papua New Guinea

(PNG) has established branches in rural areas. Itnow has 100,000 clients with a savings account.

With help rom the PSDI, bank clients can nowaccess their accounts through their mobile

phones. PSDI also helped Solomon Islandsgovernment sell Sasape Marina in Tulagi, whichsaved the business and will create up to 150 jobs.

Many o these PSDI reorms have had a major

impact on promoting the entry o women intoormal business. The second and current phase

o PSDI has boosted womens access to nancialservices, by expanding the rural outreach oexisting micronance institutions in PNG, Timor-

Leste, and Vanuatu. PSDI continues to help

governments o the Pacic DMCs revise businesslaws to enhance womens business opportunities.

In addition to PSDI assistance in the Pacic,ADB supported inrastructure projects inthe region which are rehabilitating roads

and bridges. These projects include labor-based maintenance components that are

providing employment and income-generatingopportunities or local communities.

This booklet eatures the stories o

entrepreneurial Pacic women and men who

explain how their lives have been changed orthe better through ADB-supported PSDI reorms

and inrastructure assistance in the region.

I would like to thank our Pacic governmentcounterparts or their enthusiasm in helping lay the

oundations or private sectorled growth in theircountries. There is still much to do to help makethe Pacic a more business-riendly region, and

governments o the Pacic DMCs and developmentpartners are working tirelessly toward this end.

We appreciate the Australian Agency or

International Developments (AusAID) strongsupport o PSDI, and look orward to workingclosely with Australia and other development

partners to urther extend and develop thisinnovative, exible, and rapid response initiative.

Xianbin Yao

Director General, Pacic DepartmentAsian Development Bank

1

FOREWORD


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Banking the

UnbankedA widow and small-time cofee grower in remote Papua NewGuinea province is one o thousands o customers beneting roma successul microbank ocused on the needs o the poor.

PAPUA NEW GUINEA


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Port Moresby, Papua New GuineaIt took almosthal a century or Tommie Seriate to open her rstbank account. Prior to walking into a branch o

Nationwide Microbank in May 2011, this 49-year-old subsistence armer rom the rural Eastern

Highlands Province o Papua New Guinea kept herearnings buried in the ashes o the replace where

she cooked ood or her amily. Saving proveddicult. A widow with our children and eightgrandchildren, Ms. Seriate was oten tempted to

dig up the hearth to meet amily needs. Then oneday she heard a presentation given by Nationwide

Microbank representatives in the local market.Ms. Seriate had tried in the past to open bank

accounts with other commercial banks but oundtheir account opening process too dicult. Butwhat she heard that day in the marketplace

encouraged her to try again.

The message was loud and clear. It was simple orpeople at village level to open a savings accountwith Nationwide, she said.

Stories like Ms. Seriates are becoming increasingly

common in rural Papua New Guinea. In openingher bank account she became Nationwides

100,000th customer, a number that speaks to thesuccess o a project that began in 2002 to expandaccess to nancial services in rural communities

and is now helping to generate jobs and boosteconomic growth in some o the countrys poorest

and most isolated regions.

Nationwide Microbank (ormerly Wau Microbank)was established as part o the Micronance andEmployment Project, which ran or 8 years rom

2002 to 2010. The projectwhich was supported

B a n k i n g t h e n b a n k e d i n a p u a N e w

G u i n

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t100,000 customers and counting. Tommie Seriate, center,a 49-year-old widow and mother o our, receives her landmarkaccount book rom the staf o Nationwide Microbank inGoroka. Credit: Nationwide Microbank


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4

with a $9.6 million ADB concessional loan to

the Government o Papua New Guinea and a$909,000 grant rom the Australian Agency or

International Development (AusAID)helpedlay the oundations or the micronance sector in

Papua New Guinea through extensive training ostaf and the development o nancial productstailored to a rural clientele. In 2004, the project

provided capital and technical advice or apilot microbanking program, Wau Microbank,

which quickly expanded to the towns o Bulolo,Kainantu, Lae, Madang, and Wewak. In 2008,

the central bank issued the institution witha ull banking license and the bank renameditsel Nationwide Microbank to better reect its

geographical aspirations. It now has 14 branchesthroughout the country.

Nationwide Microbank continues its eforts to

ensure that the people o Papua New Guineahave access to relevant and afordable nancialservices, said Tony Westaway, Managing Director

o Nationwide Microbank in Port Moresby.We are banking the unbanked, an achievement

that would not have been possible without

the ongoing support rom ADB and the PacicFinancial Inclusion Programme (PFIP). PFIP is a

multi-donor acility whose mission is to increasethe number o Pacic islanders who have on-

going access to quality and afordable nancialservices and nancial education.

Lack o access to nance is a major constraint torural development in Papua New Guinea. ADB

estimates that only about 15% o the populationhas access to ormal and inormal banking

acilities, and many parts o the country still use anon-monetary barter system or transactions.

In late 2010, ADB and the Government oAustralia announced a new conanced project

to help urther expand access to nancialservices in rural communities. The $24 million

Micronance Expansion Project is buildingon the experiences o the Micronance andEmployment Project and aims to boost growth

and reduce poverty in some o Papua NewGuineas most isolated regions.

The message was loud and clear. It was simple or people

at village level to open a savings account with Nationwide.

Tommie Seriate, subsistence armer and 100,000th

customer o Nationwide Microbank

t Nationwide Microbank MiCash Agentoperating a desk phone tNationwide Microbank staf opening accounts at Boera Village

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5

The new project aims to strengthen industry

regulation and increase the capacity o lendersto deliver a wider range o nancial services and

products in rural areas, with a ocus on lendingto micro and small enterprises, and especially to

women, who struggle to access credit and income-generating opportunities. The project also has a

substantial nancial literacy component targeting

more than 120,000 people living in remote areas,at least 40% o whom will be women, to allow

potential clients to better determine what productsthey need and i they can aford them.

Making nancial services more accessible to

people in rural areas will allow them to savemoney in a more secure way. It provides themwith an ecient means o transerring unds, and

allows them to borrow to start up or expand abusiness, or to give their children a better start in

lie, said Andrea Iand, Regional Director o ADBsPacic Liaison and Coordination Oce in Australia.

Increasing access to nancial services is one othe key ocus areas o ADBs Pacic Private Sector

Development Initiative, which started in 2006with conancing rom the Australian government.

The initiative supports eforts by developingmember countries in the Pacic to encourage

private sectorled, sustainable economic growth.In particular, it supports micronance institutions,especially in Papua New Guinea, Timor-Leste, and

Vanuatu, to develop nancial products suitableor the rural population, and new technologies to

lower the cost o extending rural nancial access.

Meanwhile, Nationwide Microbank is developing

a branchless banking strategy, with support romPFIP and ADB, which will ofer nancial services

through the use o mobile phones and otherwireless technology. The aim o the service is

to enable clients to access their bank accounts

without having to travel to a bank branch,a journey that can be both costly and

time-consuming.

This will be welcome news or clients like Ms.Seriate, whose closest bank branch is located in

the provincial capital Goroka, a 2 hour trip by bus.Soon she may able to do her banking by pressinga ew buttons on her mobile phone.

I made the right decision to open a bank account,

said Ms. Seriate. She plans to pay orward her goodortune. Her savings will cover her grandchildrens

school ees.

Project Inormation

Project Name: Papua New Guinea Micronance

Expansion Project

Financing: $24.06 million, $13.00 million Fund (ADB);

$6.00 million, Government o Australia as well as

contribution rom Papua New Guinea government

B a n k i n g t h e n b a n k e d i n a p u a N e w

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tWomen waiting to open accounts at Boera VillagetStaf serving customers at the Goroka branch


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Network RolloutPuts a Nation in Touch

Ater a long wait, telecommunications services are becomingavailable to even the remotest regions in Papua New Guinea,supported by a private-sector loan project.

PAPUA NEW GUINEA


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Alotau, Papua New GuineaWarren Dipole is

the owner and manager o Ulumani TreetopsLodgea remote and environmentally riendlyvacation destination. Dipole needs a good, reliable

mobile phone network to carry out his business,but that was elusive until recently.

The mobile phone signal used to be very

inconsistent. Sometimes it would disappear ordays, sometimes months at a time, says Dipole.

Things changed or the better when the privatetelecommunications company Digicel (PNG) built

two mobile base stations in the Alotau district.An ADB $25 million loan unded the construction

o the mobile phone towers, as well as phonetowers in other remote locations acrossPapua New Guinea.

As soon as the towers were built and operational,

Dipole was able to set up his now successul eco-lodge business, which employs 10 people andhas visitors all year round.

My business could not survive without a reliable

mobile phone service. I need to be able to contacteco-lodge guests, staf, and suppliers, says Dipole.

Alotau is in Milne Bay, a maritime province around360 kilometers (km) east o the capital, Port

Moresby, and where people make their living romshing and working on boats.

The towers have denitely improved

communications and people here carry mobilephones or saety when they are out in their boats,says Dipole. Dipole is not only a ather o two,

t Cell phone tower in Kiunga in Western Province

7

N e t w o r k o l l o u t u t s a N a t i o n i n T o u c h


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but he is also responsible or a urther 20

dependents. Having a mobile phone makesit possible or him to keep in touch with his

extended amily.

Bridging the communication gap

Beore 2007, telecommunications in Papua New

Guineathe largest economy in the Pacic region,with a population o 7 millionwere dominated

by the state-owned company, Telikom PNG. Theresult was xed-line communications o around

just 1% and mobile penetration o less than 5%.

Now, Papua New Guinea is joining a wave

o Pacic island countries liberalizing theirtelecommunications industries and developing

the private sector. The ADB Digicel MobileTelecommunication Expansion Project, launchedin 2009, is at the oreront o those eforts.

The project is helping the privately ownedtelecom company Digicel to expand network

capacity and coverage.

The partnership between ADB and Digicel in theDigicel Mobile Telecommunication ExpansionProject has resulted in remote centers in PNG

including Manus, Fergus Island, Trobriand Islands,

tUlumani Treetops Lodge owner Warren Dipole says business is good thanks to themobile phone network provided by Digicel and supported by ADB

t Ulumani Treetops Lodge

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Kerema, and Alotaubeing connected to therest o the world via mobile phone, says Charles

Punaha, chie executive ocer o the NationalInormation and Communications TechnologyAuthority, the governments telecommunications

regulator. This new connectivity has many time-and money-saving implications. People in remote

areas can even receive weather alerts via mobilephones, which can be lie saving.

Networks or emergencies

Marcelo Minc, country director o ADBsPapua New Guinea Resident Mission, says

improved telecommunications via Digicelsnetwork will help residents o remote areas

have better access to inormation.

Villagers will soon be able to use mobile phones

to access their bank accounts, and shermen and

armers will be able to check market prices ortheir produce, he says.

But Peo Luke, liaison ocer at the Tawali DiveResort in Milne Bay, points to more immediatebenets that are already in place. She says lie at

the remote resort has become a lot saer sincethe mobile phone towers were built at Alotau,

enabling mobile phone reception or the rst time.

Reliable phone signals ensure we can reactquickly i one o our guests or staf is hurt or sick,

he says. Now we can communicate without

having to travel long distances by boat.

Meanwhile, landowner Josiah Fegani, who lives inSakita, in Milne Bays neighboring Oro Province,

says he is impressed with Digicels networkcoverage, particularly in remote areas.

9


My business could not survive without a reliable mobile

phone service. I need to be able to contact eco-lodgeguests, staf, and suppliers.

Warren Dipole, owner and manager o Ulumani

Treetops Lodge

tThis cell phone tower in Kiunga in Western Province,Papua New Guinea evidences the spread o mobilepenetration in the country, which Digicel says hasquadrupled since the technology arrived, due toincreased network coverage supported by ADB.


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In my community, Digicels services havebeneted us greatly, especially in times o

emergency, he says. We use the service to assistwith pregnant mothers when they need help, anduse it to call or ambulances, seek medical advice,

or to just phone a riend who is ar away, living onthe other side o the country.

Dial Digicel or jobs

The priority or the project is providing anexpansion o afordable telecom services or

low-income users countrywideand not onlyor providing inormation and making it easier to

react to emergencies.

Communication is a basic human right, and ADB

helped us make this right a reality or the peopleo Papua New Guinea, many o whom had never

had access to communication services, saysDigicel Pacic CEO Vanessa Slowey.

Digicel says that mobile penetration hasquadrupled since it arrived in PNG, due to

Villagers will soon be able to use mobile phones to access

their bank accounts, and shermen and armers will be

able to check market prices or their produce.

Marcelo Minc, ADB country director orPapua New Guinea

t Peter Anjo and Lucy Bonai


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1

increased network coverage in urban and rural

areas. It says 4.5 million people or 75% o thecountrys population now have access to mobile

phone services through Digicel.

In remote Milne Bay, Monica Jacob, principal

o Wagohuhu School, says that lie is better sincethe mobile phone towers were installed

in Alotau.

The phone signal is now good, and we no longerhave to rely on our relatives to send us phonecredits rom town, as we now have people here

selling phone credits, says Jacob.

Meanwhile, mother o our Lucy Bonai earns aliving selling betel nut, cigarettes, home-cooked

ood, and, now, mobile phone top-up cards.

Beore Digicel came here, mobile phones

seemed only or big shots, Bonai says. Now,with Digicel, communication is afordable and I

can phone my relatives back at home in LaigamDistrict, Wabag, which is very ar rom here.

Project Inormation

Digicel Mobile Telecommunication Expansion

Project (2009)

Financing: $25 million, private sector loan (ADB)

Communication is a basic

human right, and ADB

helped us make this righta reality or the people o

Papua New Guinea...

Vanessa Slowey,

Digicel Pacic CEO

tPius Yubirago

tCell phone tower in Kiunga in Western Province



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Adapting toClimate Change andGenerating IncomesLashed by rain, Solomon Islands are rolling out climate-prooed

transportation inrastructure that will acilitate local trade andprovide long-term construction and maintenance employment.

t New high-level bridge in the village o Maepua on the island o Makira

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SOLOMON ISLANDS


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Makira, Solomon IslandsNoelyn Masuraa, tribalelder o the Kaonasugu Community on MakiraIsland, just east o the main island o Guadalcanal,

is happy about the benets a road projecthas brought.

This project will soon connect our villages to the

hospital and the market with new and all-weatherroads and bridges, she says.

A more immediate benet or communitymembers is employment opportunities.

Women o the Kaonasugu community, or

example, were engaged to make gabionbasketswire cages lled with rocksthatare assembled to prevent erosion and provide

support to road embankments. The women apply

their weaving skills to the wire rames. A team otwo women can assemble a single gabion basketin about 15 minutes.

We enjoy the work and the money we earnallows us to pay school ees or our children, sayscommunity member Gloria Talo. The extra income

also helps buy essential items such as kitchensupplies, sugar, and kerosene.

Climate-prooed bridges and roads

The changes taking place on Makira Island arepart o Solomon Islands Road Improvement(Sector) Project, which is underway and nanced

by the Government o Solomon Islands, ADB,Government o Australia, and Government o

New Zealand. The project will rehabilitate 100kilometers (km) o provincial and secondary roads

and bridges, with maintenance arrangements thatwill provide long-term employment and incomegenerating opportunities or local communities.

Makira Island is one o the rainiest places on Earth.A primary aim o the project is to climate proo thetransport inrastructure against the wet conditions

A d a p t i n g t o C l i m a t e C h a n g e a n d G e n e r a t i

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and against urther climate change. The projectwill replace or upgrade 30 water crossings(bridges, culverts, and wet crossings), so that they

can withstand extreme weather events that areconsidered likely to become more severe and

requent as a result o climate change.

The climate change analysis completed under theproject showed an urgent need to strengthen andprotect inrastructure to better withstand uture

extreme weather events, says ADB project team

leader Rishi Adhar, who describes climate proongas an integral component o the project.

Inrastructure climate proong includes theconstruction o watercourse crossings that

can cope with high ooding and river debris,strengthened bridges, stronger protection onbridge approaches, and sealed roads.

A newly completed high-level bridge at Maepua,

or example, has changed lie or the betterby providing much needed connectivity

to communities around Makira. The islandsrst high-level bridge is open to pedestriansand trac, and communities on either side

are now connected or the rst time in years,

allowing access to clinics, markets,and schools. A similar bridge was built overthe Magoha River on Makira and was opened

in early 2012.

14

tWomen doing road maintenance as part o Solomon Islands

Road Improvement Project in Sasamunga, Choiseul Provincein Solomon Islands

tNoelyn Masuraa, Tribal Elder rom the KaonasuguCommunity in Makira

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The project allows some women to be able to participate

in Solomon Islands economy or the rst time, and this is

very good news.

Seth Gukuna, Minister o Inrastructure Development


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Maintenance work

The project provides opportunities or ruralcommunities to earn cash incomes through

labor-based road maintenance. Communitygroups and unemployed youth use simple tools

and equipment, rather than large machines, tocarry out basic road maintenance such as pothole

patching or vegetation clearing.

One o the big strengths o the project is

the income-earning opportunities it generatesor communities who live in areas where the

project is being done, says Seth Gukuna,Minister o Inrastructure Development.

The project allows women to participate inSolomon Islands economy or the rst time,and this is very good news.

An example is the Kakabona community in

West Guadalcanal, where the project ofers roadmaintenance work skills training or both men and

women. Workers get paid about SI$800 per km.Some community groups have joint contracts,using the money or investments that benet the

entire community.

tWomen rom Makira earn extra by making gabion basketsthat provide support or the new roads

tDavid Tanavalu cutting grass, Gizo, Solomon Islands

1

Its great to have the extra money or school

ees or our ve children, says Evelyn Kona oKakabona. We also buy rice with the extra money

and household items we cant normally aford.

Meanwhile, ather o our Raymond Kasa oWestern Province, has been hired by the project

to help build culverts, mix cement, and lay downgravel on the road that runs by his village.

Working with the community is good work. Iteels like we own the road and a good road brings

pride to our village, he says.

Project Inormation

Solomon Islands Road Improvement (Sector)

Project (2006)

Financing: $350,000, Asian Development

Fund (ADB); $6.10 million, Asian Tsunami

Fund Australian Technical Assistance Grant;

$9.75 million, Asian Tsunami Fund New Zealand

Technical Assistance Grant

A d a p t i n g t o C l i m a t e C h a n g e a n d G e n e r a t i

n g n c o m e s


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LoansIn a DaySweeping business reorms assisted by ADB are making it easierto raise money and do business.

t Business owner, Hudson Wakio

SOLOMON ISLANDS


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Honiara, Solomon IslandsHudson Wakio,managing director o Advanced Technologies,which sells computers, printers, photocopiers,

and oce supplies, is expanding his business.When he recently applied or a loan rom local

lender Credit Corporation or a delivery truck, tohis surprise, approval took place ar aster than he

had ever imagined.

I thought loan approval would take months;

instead it only took 1 day. Within an hour the ormswere processed, and by the end o the day I had

the truck. I couldnt believe it, says Wakio.

Loan approval within a day is just one o thebenets o the introduction o the new Secured

Transactions and Companies Acts.

The Secured Transactions Act, which hassimplied all aspects o lending, was passedby Solomon Islands Parliament in 2008. ADB

assisted the government with its drating, makingit easier or people to get business loans using

movable assets such as boats, cars, or armequipment as collateral.

Tony Langston, country head o CreditCorporations Solomon Islands Oce, the biggest

non-bank provider o nancial services, says boththe secured transactions and the company law

reorms have had a positive impact on lending.

Prior to the reorms, when Credit Corporationwanted to provide a loan or a customer to buy,say, a car, a bill o sale agreement would have to be

tFrom let, Tony Langston, Head o Credit CorporationSolomon Islands Oce pictured with his team

o a n s i n a a y


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written up and then submitted to the governmentor approval. This process could take up to 2

months, according to Langston.

Under the new Secured Transactions Act, were

now able to approve a loan within a day, he says.

Clearing roadblocks

The establishment o an electronic secured

transactions registry in Solomon Islands withADB support has also boosted access tonancial services.

Access to nance is a major constraint to

economic growth in Solomon Islands, saysShadrach Fanega, permanent secretary o the

Ministry o Finance and Treasury. These businesslaw reorms are lowering lending risks andbringing down transactions costs, improving

access to nancial services in Solomon Islands.

ADB also assisted the Government o SolomonIslands with the drating o the new, modernized

Companies Act, which makes it easier to register anew company, among other things.

Part o the reorm o the Companies Act in 2010 isthe new electronic companies registry, Company

Haus. ADB assisted in its implementation, enablingast online registration o companies.

The user-riendly registry allows people to registera new company in 1 to 2 days, when previously this

process would take up to 3 months, says JamesApato, acting registrar o Company Haus.

The online registry enables users anywhere in theworld to search or inormation by a company

name, shareholder, or director with instantaneousresults, ree o charge. On average over 3,200

searches are undertaken every day on the registry.

Boosting business

The business law reorms in Solomon Islandsare boosting the ease o doing business there,

says Andrea Iand, regional director o ADBs

Pacic Liaison and Coordination Oce in Sydney,Australia. The company and secured transactionsregistries are also helping reduce the cost o doing

business, encouraging compliance, and ensuringair trading and consumer protection throughappropriate regulation.

I thought loan approval would take months; instead it only

took 1 day. Within an hour the orms were processed, and by

the end o the day I had the truck. I couldnt believe it,says Wakio

t Hudson Wakio outside his Advanced Technologies oce


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o a d i n

t o

t h e

t Solomon Sedo with his cocoa trees

Since the Companies Act became efective, nearly1,200 companies have re-registered, and 611 new

companies have registered.

Cocoa export and trading company Solomon

Komoditi (Solkom) Ltd. is a newly incorporatedbusiness. It is unique in that it represents several

thousand cocoa producers in several provincesthrough principal buyers who each own a stake in

it. The company ormed to enter the internationalcocoa export market. As a limited liabilitycompany, it is able to more easily sign contracts

with serious players in the cocoa business.

Andrew Sale, a marketing and supply-chainadviser with the AusAID-unded Cocoa Livelihoods

Improvement Project, works with the company andused Company Haus Registry to register Solkom.

I submitted the application online, and wentout or lunch, says Sale. By the time I came back,

I had an email conrming our registration wassuccessul. It was that quick.

Solomon Sedo o Pitukoli Village is one o thedirectors and shareholders o Solkom and is a

principal buyer in Guadalcanal. He works with

several hundred cocoa armers who exported arecord 50 tons o cocoa to Malaysia in October 2011.

Sedo says that the plantations are managed byamilies, and women make up 50% o the armers.

The increased income, he says, is used or thingssuch as school ees, access to clinics, and buildings

in the community.

It is here, in the rural areas, that we can really seethe impact o the company law reorms, says Sedo.Solkom has negotiated a better price or armers,

and demand or cocoa is increasing. The armersare busier and earning more income.

Project Inormation

Pacic Private Sector Development Initiative

Financing: $1.1 million, Technical Assistance Special

Fund (ADB); $8.74 million, Government

o Australia

Pacic Private Sector Development Initiative Phase II

Financing: $3 million, Technical Assistance Special

Fund (ADB); $9 million, Government o Australia

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Rebirth ofa MarinaThe sale and rehabilitation o Sasape Marina, ormerly a state-

owned enterprise, highlights some o the real benets that canresult rom privatization.

tNew slipway at Sasape Marina under construction

SOLOMON ISLANDS


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Sasape Marina was an attractive prospect or us, as there were no

operating large slipways in the region and there was high demand or one

Glenn Bennett, CEO, Silentworld

The new owners have invested an estimatedSI$21 million ($3 million) to date, and will employ

over 100 workers now that the rehabilitated siteis ully operational, as o July 2012. Eventually,the site will employ 150 workers, and be capable

o repairs and servicing or vessels o up to750 tons or Solomon Islands shipping industry,

and rom neighboring Pacic island countriessuch as Vanuatu.

Sasape Marina was an attractive prospect orus, as there were no operating large slipways in

the region and there was high demand or one,

says Glenn Bennett, chie executive ocer oSilentworld. The closest one was in Papua NewGuinea, so efectively there was nowhere to

maintain large vessels.

With the proceeds o the sale, the governmentwas able to make severance payments or all staf

and repay Sasape Marinas debts. The companyrecruited workers to help with the modernizationo the slipway acilities. Since most o the workers

come rom Tulagi, Sasape Marina is the largestprivate sector employers on the small island o just

1,200 people.

Benefts o privatization

Isaiah Vitore is one o the new recruits, and ismanager o the marinas stores department.

The work is enjoyable and the good salary hasmade it easier or me to support my amily,says Vitore.

t Isaiah Vitore, manager o the marinas stores department at work

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Sasape Marina is a good example o the realbenets o state-owned enterprise (SOE) reorm

and privatization.

As SOE reorm initiatives come to ruition, the

oundation or private sectorled growth inSolomon Islands continues to strengthen, says

the Prime Minister o Solomon Islands, GordonDarcy Lilo. The government has made some

important progress toward placing SOEs on a morecommercial ooting, and we will continue to work

tirelessly to pursue this goal.

Our ocus on SOE reorm is part o the

governments rm commitment toward improvingthe overall business environment and increasing

the ease o doing business in Solomon Islands, thePrime Minister adds.

It is a commitment that appears to be paying of.SOE reorm and other business reorm eforts over

the past year have resulted in an improvement inSolomon Islands global ranking in the 2012 Doing

Business Indicators Report: the country ranked74th in 2012, compared with 81st in 2011, and

106th in 2010.

e b i r t h

o f a M a r i n a

tStores Department and theAdministration Oce

t Workers on the slipway at Sasape Marina

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Project Inormation



Fund (ADB); $8.74 million, Government o Australia




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Senior SOE expert to PSDI, Laure Darcy, says,

The best perorming SOEs are those thatoperate with private sector discipline and under

competitive market pressures. This approach orcesSOEs to ocus on their core mandate o operating

as successul businesses and delivering publicservices on a commercial basis. When this ocusis lost and SOEs are not held accountable or

results, perormance deteriorates, as it did atSasape Marina.

The rehabilitation o the 500-ton slipway at

Sasape is now complete with plans to build asecond, 750-ton slipway that will be able to handlelarger vessels.

The benets o the new rehabilitated Marina

are many, says Silentworlds Glenn Bennett. It

has created employment in Tulagi and economic

activity on the island is picking up.

Sasape Marina store manager Isaiah Vitore agrees.There is condence about jobs and uture

prospects here, he says.

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LoansYou Can Bank OnADB assistance has helped the Institute o MicronanceTimor-Leste (IMTL) become the countrys rst locallyowned commercial bank to provide loans to individualsand small businesses in urban and rural areas.

Gleno, Timor-LesteIn a bustling market place ina rural cofee-growing village about 45 kilometers

rom Dili, Marquita dos Santos oversees a kioskselling sweets, shampoos and lotions, soap,

stationary items, and canned goods.

In 2006, 40-year-old dos Santos set up a muchsmaller kiosk in Gleno, nanced by her ownsavings. In no time business ourished and dos

Santos set her sights on expansion. Over thenext ew years she approached the Institute o

Micronance Timor-Leste (IMTL) and successullygained three loans. Dos Santos is gradually paying

of her latest loan o $2,000 in weekly installmentso $45.20. She has just six to go.

A mother o eight, the extra money dos Santos ismaking rom her expanded business is paying or

her two eldest childrens tuition at university.

My children are studying architecture at theDili Institute o Technology, and industry

at the University o Peace in Dili, she says. I amvery proud.

The Birth o a Bank

IMTL was established in 2001 under the Asian

Development Bank (ADB) managed MicronanceDevelopment Project. It was originally owned

by the Foundation or Poverty Reduction (FPR),which was created by the Government o

TIMOR-LESTE

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Timor-Leste with the support o developmentpartners including ADB.

On 11 July 2011, at a special inauguration ceremony,

IMTL ocially became Banco Nacional Comrciode Timor-Lestethe National Commercial Banko Timor-Leste (BNCTL) the countrys rst locally

owned commercial bank. The President o ADBHaruhiko Kuroda participated in the ceremony.

The Minister or Economy and Development, Joao

Goncalves, on behal o the Government o Timor-Leste, was instrumental in helping transorm IMTLinto the countrys rst ully edged bank.

Seeing IMTL become Timor-Lestes rstcommercial bank serving rural and urban areas

was a dream come true or me, said MinisterGoncalves at the launch event. We appreciate

ADBs assistance with the transormation process.

President Kuroda added: The role o the nance

sector is to channel savings into productiveinvestment. Increasing access to nance spreads

investment and business beyond urban centersand helps make economic growth more balanced,

inclusive, and sustainable. BNCTL has madean important contribution toward achievingthese aims.

tThe expansion o banking services in Timor-Lesteis helping women access credit.

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Visiting the banks Dili branch a ew days aterthe inauguration ceremony, the President o

Timor-Leste, Jos Ramos-Horta, said he would

like to see Timor-Lestes rst local, commercialbank expand its operations and improve the lives

o East Timorese. Now is the time to build onits strengths, manage it well, and expand rural

outreach, he said.

BNCTL now has 12 branches, almost 10,020borrowers, and 45,066 depositors with about$7.5 million in savings. It has also provided

$9.4 million in loans, 40% o which are held bywomen. Micronance accounts or 30% o the

banks portolio.

Making Dreams PossibleGleno restaurant owner, 34-year-old LourencaIswandy is just one o the many women beneting

rom loans rom BNCTL. She established her roadsiderestaurant 11 years ago with her own capital, and

today Iswandy describes her main customers ashungry travelers who stop by her restaurant to

sample her sh, chicken, and rice dishes.

Iswandy received her rst loan o $300 romthe bank (when it was still IMTL) in 2008. More

recently, she was provided a loan o $5,000, the

maximum. An aspiring entrepreneur, she set aboutdiversiying her business, establishing sidelines in

cofee and a photocopy service.

My daily income helps eed my children andpay or their education, says Iswandy, who

employs most o her extended amily o nine inher businesses.

Since the Gleno branch o the Commercial Banko Timor-Leste opened its doors in 2002, it has

secured 1,000 savings clients and 1,500 borrowers,and disbursed $900,000 in loans.

According to Gleno Branch Manager ManuelAntonio da Luz, despite challenges such as

the civil unrest that occurred in 2006 and cropailures over the past 9 years, ewer than 2% o

borrowers have deaulted on their loans. This smallpercentage o loan deaults is shared by all 12 o

the banks branches.

t Gleno restaurant owner Lourenca Iswandybeneted rom the ADB-supportedmicronance program.

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Olivio Borges Moniz, branch manager o BNCTLsinaugural branch in Mandarin, Dili, credits ADBs

assistance in helping keep the deault rate low.

We had a good experience working with ADB as

IMTL transormed into a commercial bank. Theysupported us with a good business plan, reviewed

all our procedures, and still support our staftraining, says Moniz.

Zelia dos Santos, 27, and her husband Jose Leitehave a clothing business in Dilis Halilaran Market.

Since they established the business 11 years ago,they have received a market vendor loan and a

business loan. She says business has doubled withthe help o IMTL.

Were able to comortably support our our sonsand pay back the loans at the same time,

says dos Santos.

Some o IMTLs customers are now earning $100to $200 per day because they used loans to build

their businesses, says Craig Sugden, ADB residentrepresentative in Timor Leste.

The banks general manager, Sergio Spirito Santo,conrms that, along with three more branches soon

to open (in the districts o Liquisa, Manatutu, and

Lospalos), there are also plans to extend mobilebanking into rural areas in 2012. This will enable

people to access nancial services without havingto leave their villages to make withdrawals or

deposits, or pay bills.

ADB stands ready to build on the successultransition o IMTL to the National CommercialBank o Timor-Leste with urther support or

the nancial sector. We will continue to help thesector nd innovative ways to ensure that all East

Timorese have access to nance, says Sugden.

t Business owner Zelia dos Santos received lorom the National Commercial Bank o TimoLeste which has helped boost her clothingbusiness at Dilis Halilaran Market.

Project Inormation



Fund (ADB); $8.74 million, Government o Australia





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tBusiness woman at work at the Tais Market in Dili, Timor-Leste.


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Private Sector Development Initiative

The Private Sector Development Initiative, spearheaded by the Asian Development Bank (ADB)in 2006 and cofinanced by the Government of Australia, supports efforts by ADB Pacificdeveloping member countries to encourage private sectorled, sustainable economic growth.This initiative focuses on the following key reform areas: state-owned enterprise reform

and publicprivate partnerships (PPPs), finance sector reform to promote access to financialservices, and reform of the legal and business regulatory environments in the region.

About the Asian Development Bank

ADBs vision is an Asia and Pacific region free of poverty. Its mission is to help its developingmember countries reduce poverty and improve the quality of life of their people. Despite theregions many successes, it remains home to two-thirds of the worlds poor: 1.8 billion peoplewho live on less than $2 a day, with 903 million struggling on less than $1.25 a day. ADB iscommitted to reducing poverty through inclusive economic growth, environmentallysustainable growth, and regional integration.

Based in Manila, ADB is owned by 67 members, including 48 from the region. Its main

instruments for helping its developing member countries are policy dialogue, loans, equityinvestments, guarantees, grants, and technical assistance.

Asian Development Bank6 ADB Avenue, Mandaluyong City1550 Metro Manila, Philippineswww.adb.orgPublication Stock No. ARM124915

July 2012

impact stories from the pacific region: breaking down the barriers to business - more private sector...

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