Planning and reporting is required by all state owned enterprises (SOEs) in the RMI, said Finance Minister Brenson Wase last week in addressing needed reforms to SOE representatives. The SOE Act, which was adopted by Nitijela in 2015, lists these requirements. “I’ll read every report submitted,” said the Minister in response to questions from a gathering of SOE directors last week.
But SOE directors expressed concern at the effort needed to complete effective business plans and annual reports.
Secretary of Finance May Bing said work on SOE reform in the Marshall Islands has progressed well in recent months, even though there is still much work.
The Asian Development Bank (ADB) provided support for SOE reform as a component of the wider Public Financial Management Reform project that commenced in January 2018 within the Ministry of Finance. An SOE monitoring unit (SOEMU) was established and it has focused on developing monitoring tools and templates to assist in the compilation of information from SOEs as required under the law.
RMI has 11 active SOEs. In 2014, the SOE sector owned around about 20 percent of the total capital stock in the RMI economy but contributed only about 5.3 percent to gross development product. The average return on assets from 2002-2014 was minus five percent. Although more recent results show an improvement, SOE performance continues to be hindered by informal community service obligations (CSOs) that are not formally mandated or properly costed and are supported by government subsidies.
The program of reform aims to establish SOEMU capacity to assist SOEs in complying with the law. A series of training programs and manuals have been developed concerning the major components of the Act, including business planning, CSO costing, governance, and annual reporting.
Currently, SOEs are completing their first business plans and statements of corporate intent as required under the law. Minister Wase confirmed that effectiveness in SOE reporting and reform is an important government initiative. Acting on government priorities assists in building confidence and support from development partners, he added.
Read more about this in the October 5, 2018 edition of the Marshall Islands Journal.