SUSTAINABLE AND INCLUSIVE GROWTH

Pacific Perspective

Mr Felix ANTHONY

National Secretary

Fiji Trades Union Congress

Sustainable and Inclusive Growth – Pacific Perspective

Background

The Pacific is a very diverse region with Island Countries scattered far apart and isolated from major industrialised countries. These countries are small in size both in land area and population and vary in cultures and traditions. This creates a major challenge for the Island states for sustainable development. The main industries in the region are tourism, fisheries, forestry and agriculture and more recently human resources.

The region is made up of 14 small island developing states (SIDS). These are the Federated States of Micronesia, Papua New Guinea, Palau, Solomon Islands, Nauru, Tuvalu, Samoa, Fiji, Vanuatu, Tonga, Kiribati, Republic of Marshal Islands, CookIsland and Niue. Of these island states, Kiribati, Samoa, Solomon IslandTuvalu and Vanuatu are classified as least developed Countries. (LDC’s)

Main Economic Activities of PacificIsland Countries

Country / Industries
Cook Islands / Fruit-processing, Tourism, Finance, Copra, Citrus fruit, Clothing, Coffee, Fish, Pearls and pearl shells, Mining,
Handicrafts.
FSM / Tourism, Construction, Fish processing, Craft items (shell, wood, pearls), Garments, Bananas, Black pepper.
Fiji / Sugar, Tourism, Copra, Gold, Silver, Clothing, Timber, Fish processing, Cottage industries
Kiribati / Fishing, Handicrafts, Copra
Marshall Islands / Copra, Fish, Tourism, Craft items (shell, wood, pearls), Offshore banking (embryonic), Coconut oil, Trochus
shells
Nauru / Phosphate mining, Financial services, Coconut products
Niue / Tourism, Handicrafts, Food processing, Finance, Coconut cream.
Palau / Tourism, Craft items (shell, wood, pearl), Commercial fishing, Agriculture.
PNG / Copra crushing, Palm oil processing, Plywood production, Wood chip production, Mining of gold, silver, and
copper, Crude oil production, Construction, Tourism, Timber, Coffee, Cocoa, Seafood.
Samoa / Timber, Tourism, Food processing, Fishing, Coconut oil and cream, Copra, Beer
Solomon Is. / Timber, Fish, Palm oil, Cocoa, Copra
Tonga / Tourism, Fishing, Squash, Fish, Vanilla, Root crops, Coconut oil
Tuvalu / Fishing, Tourism, Copra; Stamps/coins.
Vanuatu / Fishing, Offshore financial services, Tourism, Food and fish freezing, Wood processing, Meat canning;
Coconuts, Cocoa, Coffee.

Source: ADB Annual Reports, ABC World Fact Finder, SPC Pocket Statistical Summary (1998)

The Mauritius Strategy

An International Meeting on Small Island Developing States (SIDS) was held in Mauritius in January 2005. This Strategy is the current UN sustainable development strategy for Small Island States for the period 2005-2015. The strategy was adopted for the small island states by all members of the UN, including donors. This strategy recognized the special situation and vulnerabilities in relation to the intensity and frequency of natural and environmental disasters and their impact on the SIDS. These countries face disproportionately high economic, social and environmental consequences. The strategy comprises of the following priorities that needed to be addressed by the individual states and through regional cooperation.

  1. Climate change and sea level rise.
  2. Natural and environmental disasters
  3. Management of waste
  4. Coastal and marine resources
  5. Freshwater resources
  6. Land resources
  7. Energy resources
  8. Tourism resources
  9. Land resources
  10. Transport and communication
  11. Science and technology
  12. Improve status from least developed states
  13. Trade – globalization and liberalization
  14. Sustainable capacity – development and education
  15. Sustainable production and consumption
  16. National and regional enabling environment
  17. Health
  18. Knowledge management and information
  19. Culture
  20. Implementation

( stratergy.pdf)

The special situations that were recognized in the formulation of the strategy included the remoteness of the island states, vulnerability to natural disasters and climate change. The strategy is a broad aiming at inclusive economic growth and is forward looking. The priorities identified were in the strategy were key challenges that needed attention to ensuring sustainable growth and development with the states and the region as a whole.

The region witnessed reasonable progress on the strategy and the implementation is work in progress. However, much assistance is needed by the SIDS in terms of capacity building and resources.

The critical requirement in the implementation of the Mauritius Strategy was to ensure that enabling governance structures were developed together with planning and regional cooperation. The Pacific Island Forum Leaders committed themselves to the development of National Sustainable Development Strategies (NSDS) within their respective countries. Each Country had different timeframes for their implementation programs. This ranged from 2years to 10years. (2006-2015). Some Countries had 2 year plans, others had 4-5 year plans and a few like Tuvalu and Vanuatu had 10 year plans. There is no doubt that these SIDS are committed to their sustainable development plans but lack the resources and capacity to fully address the priorities. Assistance has been sought in many cases from international organisations in the implementation.

The Pacific Forum Island Leader also adopted a Pacific Plan at around the same time as the Mauritius Strategy. This plan was to compliment the Mauritius strategy for the PICs. The objective of the plan was summerised in the four main goals that was identified as:

  1. Enhance and stimulate economic growth
  1. Increased sustainable trade (including services), and investment.
  2. Improved efficiency and effectiveness of infrastructure development and associated service delivery.
  3. Increased private sector participation in, and contribution to, development.
  1. Sustainable Development
  1. Reduced poverty
  2. Improved natural resource and environmental management
  3. Improved health
  4. Improved education and training
  5. Improved gender equality
  6. Enhanced involvement of youth
  7. Increased levels of participation and achievement in sports
  8. Recognized and protected cultural values, identities and traditional knowledge
  1. Good Governance
  1. Improved transparency, accountability, equity and efficiency in the management and use of resources in the Pacific
  1. Security for Pacific Countries through regionalism.
  1. Improved political and social conditions for stability and safety

Reviews on progress on the plan are done periodically and reports prepared on a six monthly basis. Additionally, an independent comprehensive review of progress will be conducted every 3 years. The plan has a general time frame of 10 years but may be reviewed by leaders for its relevance. The last review was conducted in 2009 for the cycle period ending in 2012

The 2010 progress report on the Pacific Plan is built around five themes and priorities set for the years 2010-2012.

  1. Fostering economic development and promoting opportunities for broad based growth.

i)On Trade, support continued to Member States to facilitate their domestic readiness to trade under the Pacific Island Countries Trade Agreement (PICTA) and the Pacific Agreement on Closer Economic Relations (PACER). The process to establish the Office of Chief Trade Advisor (OCTA) commenced with the aim to provide Member States with greater access to advice on PACER Plus.

ii)Infrastructure was addressed through the Regional Maritime Programme focusing on the integration of port development.

iii)Fisheries- the Pacific Island Forum Fisheries Agency (FFA) AND the secretariat of the Pacific Community (SPC) were strengthened and their strategic and working relationship to ensure effective fisheries sector assistance to countries.

iv)There were also development within the energy sector, tourism, transport and information and communication technology (ICT)

  1. Improving the livelihoods and well being of the Pacificpeoples.

Efforts were mainly focused in this area in food security, health mainly in the area on non communicable disease and HIV/AIDS, education reform (Pacific Education Development Framework), gender-based violence by strengthening legal frameworks and public advocacy and addressing the needs of people living with disabilities.

  1. Addressing impact of climate change

Advocacy for the plight of SIDS at the Copenhagen Summit (2009) to tackle the impact of climate change including the rise in sea levels that threaten the very existence of some member states. SIDS will continue its efforts to find a long term solution.

  1. Achieving stronger national development through better governance

The Cairns Compact in 2009 reflected the leaders renewed determination to lift economic and development performance of the region and to achieve real progress against the Millennium Development Goals. FIC’s started the process of reporting on their national plans, development partners reported on their efforts to reduce aid fragmentation and improve on its effectiveness.MDG Tracking Report was developed together with the road map on strengthening public finance management. Other areas complementing these efforts were the strengthening of the collection of statistics for better informed national policy, improvement of access to official information, strengthen accountability and integrity of institutions and addressing corruption

  1. Ensuring improved social, political and legal conditions for stability, safety and security.

Greater coordination was achieved by law enforcement agencies on Pacific Transnational Crime Assessment. A working group on terrorism was convened. Discussions were held with CSO’s on conflict, peace and security issues. A human rights adviser was appointed in 2010 to coordinate the implementation of the human rights objectives of the Pacific Plan.

The 2011 Progress report on the Pacific Plan noted:

i) That in the fisheries sector, regional maritime surveillance operations were conducted to detect illegal, unreported and unregulated fishing.

ii) In the area of climate change, the establishment of the Council of Regional Organisation of the Pacific (CROP) subcommittee on climate change to coordinate efforts of regional agencies. A major study on options to improve access to and management of climate change financing was completed by the Forum Secretariat. A region wide consultation was held in March 2011 in Niue at the Pacific Climate Change Roundtable to identify more effective ways to tackle climate change. Agreement was reached at the meeting on coordinating regional responses by establishing working groups on mitigation, adaptation and mainstreaming climate change resources, and climate change information and knowledge management.

iii)The Education Ministers endorsed the implementation strategy for the Pacific Education Development Framework. This was aimed at strengthening the quality and relevance of education across the region. Work commenced on a baseline survey to obtain accurate information on the status and requirements of education systems in the Forum Island Countries.

iv)Holding peer reviews In Vanuatu, Niue and Tuvalu in 2011 as part of the implementation of the Forum Compact and Strengthening Development Coordination for the Pacific. A key outcome of the reviews was on concrete actions to improve development coordination. The review was also an important tool for sharing experience in the region.

v)Regional accountability was strengthened through the Pacific Regional Audit Initiative (PRAI) and the Pacific Ombudsman Alliance.

vi)Completion of the majority of the Regional Institutional Reforms that had been underway since 2005. This included the merger of Pacific Islands Applied GeoScience Commission and the South Pacific Board for Educational Assessment into the Secretariat of the Pacific Community. (SPC).

While there have been progress under the Pacific Plan in 2010 and 2011, major challenges remain. Negotiations on trade agreements under the Pacific Islands Countries Trade Agreement (PICTA), Pacific Agreement on Closer Economic Relations (PACER Plus) and the Economic Partnership Agreements with the European Union (EU EPA) remain difficult and complex.

The Pacific Plan has played a key role in creating an environment needed to achieve sustainable development goals and this was recognized in the 5 year review of the Mauritius Strategy. It is however important to recognize the impact of the global economic meltdown and its impact on the SIDS. Most SIDS experienced a lower economic growth during the period 2009-2011 as the crises worsened. The direct impact was felt through:

  1. Lower Commodity prices and demand for exports
  2. Fall in remittances and off-shore demand for labour
  3. Decline in tourism numbers
  4. Decline in private investments
  5. Decline in aid

PacificIsland Countries and EU Coorporation

At the core of EU-Pacific partnership in cooperation on climate change; the single greatest threat to the region. Since the EU and the Pacific Islands Forum adopted the Joint Declaration on Climate Change in November 2008, EU-Pacific cooperation on climate change has substantially, both politically and financially.

The EU and its MemberStates are the largest donor worldwide and the second in the region, after Australia.

EU development cooperation with Pacific ACP countries and OCTSs (Overseas Countries and Territories) managed by the Commission is estimated at 750 million Euros for 2008-2013. EU aid is funding bilateral assistance programmes as well as Regional Programmes managed by Pacific Regional Organisations.

On top of resources for development and climate change initially allocated to the Pacific, ACP countries for the period 2008-2013, the EU has made available a financial package of 110 million Euros in additional climate related resources committed by the Commission since 2008.(see annex EC Memo / 12/435)

REGIONAL ECONOMIC UPDATE

1. Although the current economic crisis has reduced growth prospects for most leading economies, at this stage the consensus view suggests that the Pacific region will experience less significant impacts. In part, this is due to relatively optimistic Australian and New Zealand economic prospects. However, growing inflationary pressures as well as indirect effects from the economic crisis will contribute to downside risks to the region.

2. According to the December 2011 edition of the ADB Pacific Economic Monitor, growth projections for most FICs in 2011 and 2012 are expected to be weak. However, some relatively positive performances are expected to come from PNG, Solomon Islands, Nauru and Vanuatu (See Figure 1).

GDP Growth for FICs / 2011 / 2012 / Inflation prospects for FICs / 2011 / 2012
PNG
PNG
Solomon Is. / Fiji
Nauru / Kiribati
Vanuatu / Palau
Samoa / FSM
Palau / Vanuatu
Kiribati / Solomon Is.
Fiji / RMI
Cook Is. / Samoa
FSM / Cook Is.
RMI / Tonga
Tonga / Nauru
Tuvalu / Tuvalu
2 / 4 / 6 / 8 / 10 / 2 / 4 / 6 / 8 / 10
0 / 0
Figure 1 Source: ADB Pacific Economic Monitor / Figure 2 Source: ADB Pacific Economic Monitor
  1. With a projected growth rate of 8.5 percent in 2011 and 6.5 percent in 2012, the strong growth forecast for PNG stems from construction associated with the LNG project which will reach its peak in 2012, along with the resumption of nickel and cobalt mining.4
  1. Favorable commodities prices coupled with strong commodity exports, particularly logging, and the resumption of gold production also secures a better outlook for the Solomon Islands with 7.5 percent growth expected in 2011 and 4 percent in 2012.
  1. Growth prospects are also better for Nauru on the back of improved global demand

for its phosphate exports, with its economy expected to grow 4 percent in 2011 and 2012.

  1. An economic growth outlook of 3 percent in 2011 and 4 percent in 2012 for Vanuatu is expected to be driven mainly by increased tourist arrivals, with contribution also coming from growth in its construction sector.
  1. Samoa’s economy is expected to grow by 2.1 percent in 2011, and 3 percent in 2012 reflecting strong growth in the construction sector as a result of the post-tsunami reconstruction, as well as improvement in remittances and modest growth in tourism related activities.
  1. The Kiribati economy is expected to grow by 2 percent in 2011 and 2012 primarily as a result of donor-financed infrastructure investments.
  1. Palau’s economy is expected to grow by 2 percent growth in 2011 reflecting a recovery in tourist arrivals. However in 2012 growth for Palau is expected to slow to 1.5 percent suggesting a reflection of weaker outlook in the country’s main tourism source countries.
  1. Fiji’s economy is expected to grow by of 1.2 percent for 2011 and 2012, however recent investments linked to the mining sector could improve its prospects going into 2012.
  1. The Cook Islands economy is expected to grow by 1.1 percent in 2011. However, an expected strong resurgence in tourist arrivals for 2012 from NZ and Australia are expected to improve its growth prospects to 3.3 percent.
  1. For the other FICs, growth prospects are expected to remain low for 2011 and 2012.
  1. Driven by high fuel and food prices, an average inflation rate of about 4 percent is expected across all FICs in 2011 (see Figure 2), increasing inflationary pressures and contributing to downside risks for the region. Effects of the global economic crisis although limited at this stage, could also affect growth prospects for the region indirectly, through trade and investment linkages between the EU and the Pacific’s economic partners, declining

values of Pacific trust funds, and possible declines in tourism and remittance flows from other markets such as the US and Japan.5

  1. However, the robust outlook over the short term in the major FIC trading partner economies of Australia and NZ support an anticipated increase in tourism to the Pacific. Tourist numbers from Australia and New Zealand have increased substantially since the first quarter of 2011. The number of Australian tourists increased for most Pacific destinations and was strongest in Samoa at 24 percent and in Fiji with 13 percent. The number of New Zealand tourists to Samoa and Vanuatu declined over the same period, but this was more than offset by higher departures to the Cook Islands, Fiji, and Tonga.

Source: PacificIsland Forum: Update Series on Current Economic Issues

Civil Society and Sustainable Development

Civil society is active at the local and regional level in the region. These organizations vary in size, capacities, competencies etc. These are mostly Trade Unions, NGO’s, community based organizations, and faith based organizations. The Pacific Island Forum has granted consultative status to a wide range of CSO’s. They are South Pacific Oceania Council of Trade Unions (SPOCTU), Council of Pacific Education (COPE), Pacific Disability Forum (PDF), Foundation of the People of the South Pacific (FSPI), Greenpeace, Pacific Foundation for Advancement of Women (PACFAW), Pacific Concerns Resource Centre (PCRC), Pacific Islands Association of NGO’s (PIANGO), Pacific Island News Association (PINA), Pacific Conference of Churches (PCC), World Wildlife Fund South Pacific Program (WWF-SP) and Pacific Network on Globalisation (PANG) . These CSO’s take part in regular consultations with the Forum. The Pacific Island Private Sector Organisation (PIPSO), formed in 2005, whose members comprise of national private sector organisations.