Minister of Finance, Brenson S. Wase advises that the Asian Development Bank’s support for Public Financial Management Reform, and the creation of the Reform Coordination Unit (RCU) within the Ministry of Finance has recently taken on a new dimension, with the commencement of work to support SOE reforms, focusing on the implementation of the SOE Act, 2015 (as amended).
Mr David Drake arrived on island in late February, as an SOE Expert and has assisted in the establishment of an SOE monitoring unit (SOEMU) within the Ministry of Finance to be headed by Ms Tokiko Kabua, reporting to Finance Secretary.
Even in comparison with other Pacific economies, the RMI’s SOE sector is one of the weakest performers. The RMI has 11 active SOEs; as of 2014, the SOE sector owned around 17%–20% of the total capital stock in the RMI economy but contributed only about 5.3% to GDP. The average return on assets in the period 2002-2014 was -5.0%. A significant contributor to the SOEs’ poor financial performance are informal non-commercial outputs (commonly referred to as community service obligations (CSOs) that are not formally mandated or properly costed. RMI’s SOEs are sustained by a high level of government transfers – $43.9 million in 2010-2014 – and access to discounted debt.
The SOE Act, 2015 (as amended) identifies specific requirements and time-lines for SOEs to prepare formal business plans, issue statements of corporate intent, to fully cost approved CSO’s and to publish annual report summaries, as well as directing matters of SOE governance and performance. Under the Act, all SOEs primary objective is “to be a successful business and, to this end, to be at least as profitable and efficient as comparable businesses; and to maximize the net worth of the public investment in the State-Owned enterprise.”
Mr Drake has commenced a programme of meeting’s with SOEs, discussing issues of CSOs and business planning with some of the SOEs and developing the processes and monitoring mechanisms for SOEMU. He will commence a series of training workshops to explain the implications of the SOE Act for all stakeholders and will supervise the SOEMU in its monitoring of SOE compliance and performance during the next 9 – 12 months.
Secretary of Finance, Maybelline A. Bing hopes to provide regular updates to the Journal on the subject of SOE Reform progress.
MINISTRY OF FINANCE
STATE OWNED ENTERPRISE MONITORING UNIT
Training on Implementation of the State-Owned Enterprise Act, 2015 (as amended)
The State-Owned Enterprise Monitoring Unit (SOEMU) of the Ministry of Finance, with the support of Asian Development Bank (ADB) plans to present a series of informal training sessions on the implementation of the SOE Act, 2015 (as amended).
The Training Sessions will run each Wednesday morning from 10 am to 12 noon as advertised, at the Ministry of Finance conference room (2nd floor, Finance Building).
Sessions in the coming weeks are:
Wednesday 11 April The SOE Act, what it means?
Wednesday 18 April SOE Business Planning & Statements of Corporate Intent
Wednesday 25 April Community Service Obligations (CSOs)
Wednesday 2 May Appointment to, and Role of SOE Boards
Wednesday 9 May Effective SOE Governance / Code of Conduct
Further sessions will be advised in due course.
These sessions will feature approximately 1½ hour presentation and 30 minutes for discussions and questions. Management of SOEs, Board of Directors, interested parties and other stakeholders are invited to attend. Please register your interest for each session by 4pm Tuesday prior, through email to: Erica Peter, email@example.com or Tokiko Kabua, firstname.lastname@example.org.
SOEMU welcomes you and looks forward to seeing you on Wednesday mornings.
Categorised in: Division of Accounting and Administration
This post was written by RMI MOF