Dionisia Tabureguci  



The Asian Development Bank (ADB) has singled out Vanuatu as the Pacific economy that will do well this year.
  In its Pacific Economic Monitor released this month, the ADB said economic growth across the Pacific islands this year should pick up, as they should benefit from better prospects in the global economy.
  “The Pacific islands are expected to expand by a small 0.5 percent in 2010, after contracting by an estimated 1.3 percent in 2009. Vanuatu is expected to remain the best performing Pacific Islands economy, bolstered by the benefits of its recent improvements to economic policy. 
  Only the Fiji Islands and Palau are expected to contract in 2010, an improvement on the contraction of five Pacific Islands economies in 2009. Building on better prospects for the global economy, most islands economies are expected to perform slightly better in 2010 than in 2009,” the ADB said.
  Against ADB’s overall outlook of predominantly low growth across the Pacific, the Vanuatu economy is set to enjoy a 4.6 percent growth this year, “driven by continued strength in tourism and construction”.
  “Vanuatu is estimated to have grown by 3.8 percent in 2009, an unprecedented 7th consecutive year of growth. This growth however was well down on the average 6.5 percent growth experienced in the previous 5 years. Growth in 2009 was driven mainly by tourism services and construction. Agriculture and retail were relatively weak,” ADB said.
  But Vanuatu’s growth still compares well with resource-rich Papua New Guinea, whose government is forecasting an eight percent growth this year on the back of LNG gas projects, although the ADB has taken a conservative stand to forecast PNG’s growth at 5.5 percent this year.
  It compares well too with Timor-Leste, whose seven percent (non-petroleum related) growth this year will be driven by own-funded government expenditure programs, according to ADB.
  Timor Leste is also strongly backed by its Petroleum Fund, which the country invests in US treasuries and which had reached US$5.4 billion by the end of last year.
  The vibrant performance by the three countries, however, will not be a Pacific-wide phenomenon.
  Other economies around the region are projected to generally struggle with growth—Fiji and Palau will experience negative growth of 0.5 percent and one percent respectively, while the rest will manage minimal progress of between zero and two percent.
  As all countries in the region have been reeling and are slowly recovering from the global economic crisis, the poor are still going to be hit the hardest.
  “Analysis of the Pacific labour market suggests the “working poor” are the most exposed to the effects of the global economic crisis. Starting from a position of vulnerability, their incomes are likely to have declined where construction, manufacturing and retail and wholesale activity weakened,” the ADB monitor said.
  “Low income families dependent on overseas remittances are also likely to have been among those hit hardest by the global economic crisis.”
  The ADB also expects tourism to slow this year as growth eases in outbound travel from Australia and New Zealand, suppliers to most Pacific tourist destinations.

BSP reviews Colonial Fiji businesses - Robert Matau Most Colonial Fiji’s joint partnerships and its life insurance business will come under review in March by Bank South Pacific, its new owner.   New BSP Fiji Manager Kevin McCarthy confirmed this saying the BSP board will review all Colonial’s business interests following the purchase of the Commonwealth Bank of Australia shares in Colonial Fiji bank and Life insurance.   “We have just had our first BSP board meeting in February, which is the first one since the acquisition was completed.   “The board would like to see a strategy paper on the options it has for all the businesses here in Fiji.   “This will inform them how strategic it would be to continue the business on the ground to the best they can,” he said.   “We are gathering information for that paper which will go before the board in March or April and that will set out the strategic options we have.”   BSP has retained the services of former Colonial Fiji Managing Director Laurie Melsop to continue to run the life and health business, and also a number of existing health insurance executives to maintain the operations.   On the performance of insurance companies in Fiji, McCarthy said it was a tough market particularly now that the economy has not been that good and as a result it was harder to get new products out.   On the banking side, liquidity has also been of some concern to the banks including Colonial.   “There’s been issues around liquidity. It has been low from time to time within the economy and there is pressure on the interest rates spread we have in the banks which has had an effect on the banks’ profits,” McCarthy told ISLANDS BUSINESS.   Fiji’s Reserve Bank Fiji had required banks to keep their interest rates spread at 4% or below when it announced its 20% devaluation measure in April last year.   It lifted this measure in January after liquidity improved to adequate level.   “At the end of the day, we will try and operate in the environment here and we will try and operate as efficiently as we can, as well as invest heavily within the bank. As I said, our aim is to be the best bank.”   On Colonial Fiji’s downsizing its top level management, McCarthy said they had a different approach to doing business.   “BSP will need all the good people and the right people. We will promote people and bring new people to refresh it and help it grow.   “If the skills are not available locally, we would then broaden the search internationally to attract the skills we need.   “We made that commitment to the staff and our situation is that we need more staff and we intend to grow the business and we are actively in the market hiring more positions.   “Clearly, we are the best and over the next 12 months you will see a lot of new products coming out of BSP,” he said.