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Analysis of Data
Christopher Russell
Pacific Update ConferenceSuva,
18-19 July 2016
Participating & Survey CountriesCountry Population GDP GDPperCapita GDPperCapita
Growth
2014Total 2014($million) ($) (Average2010–2014)
Fiji 886,450 4,069 4,590 5%
Jamaica 2,721,252 14,101 5,182 7%
Kiribati 110,470 167 1,509 2%
MarshallIslands 52,898 193 3,649 4%
Mauritius 1,260,934 13,082 10,375 6%
PapuaNewGuinea 7,463,577 18,874 2,529 13%
Samoa 191,845 823 4,288 3%
SolomonIslands 572,171 1,169 2,043 10%
Tonga 105,586 424 4,020 3%
Vanuatu 258,883 966 3,732 8%
New Zealand 4,509,700 191,585 42,483 4%
Singapore 5,469,700 307,937 56,299 7%
Benchmarking portfolios
Infr
astr
uctu
re S
OE
s
0%
20%
40%
60%
80%
100%
Fiji PNG RMI Samoa Solomons Tonga Jamaica Kiribati Vanuatu Mauritius NZ SG
% o
f To
tal A
ss
ets
20
14
Utilities Ports/AirportsCommunications Non Mutual Financial InstitutionOther Commercial
Average Return on Equity / Assets2010-2014
(15%)
(10%)
(5%)
-
5%
10%
15%
Average Return on Equity of all SOEs Average Return on Assets of all SOEs
SOE contribution to GDP vs Total Fixed Assets, 2014
-
10%
20%
30%
40%
50%
60%
70%
80%
-
5%
10%
15%
20%
25%
SOE Contribution to GDP (LHS) SOE % of Total Fixed Capital in Economy (LHS)Ratio Contribution:Fixed Asset (RHS)
Fiscal StrainGovernment transfers > SOE Net Profits in 5 of 10 countries
(1,500)
(1,250)
(1,000)
(750)
(500)
(250)
-
250
500
750
1,000
Fiji Tonga Solomons Kiribati Vanuatu Samoa RMI PNG Mauritius Jamaica SG
US
$ m
illi
on
Cumulative Net Profits After Tax 2010 - 14 Government Transfers to SOEs 2010-14
20,000
(12,000
)
Cumulative Government transfers to SOEs as a % of Total Health Expenditure 2010 - 2014
(40%)
(30%)
(20%)
(10%)
-
10%
20%
30%
40%
(55%)
Portfolio Return Assets 2002-2014
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Large Island Economies
Fiji PNG Mauritius Jamaica NZ SG
Portfolio Return Assets 2002-2014
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Small Island Economies
RMI Samoa Solomons Tonga Kiribati Vanuatu
SOE model is not sustainable
• Fundamental flaw
• Political and commercial risks
• Commercial risk can be managed in the short-term, but increasingly difficult in medium-term
• Political risk cannot be fully mitigated
Cracks in the SOE structure
Game playing
Undermine commercial mandate
• Politicians struggle to make commercial decisions with political cost
New Zealand SOE performanceReturn on Equity
RO
E
-20.00%
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
2000 2001 2002 2003 2004 2005 2006 2007 2009 2010 2011 2012 2013 2014
Singapore
0%
2%
4%
6%
8%
10%
12%
2009 2010 2011 2012 2013 2014
Singapore SOEs
ROE ROA
Singapore Gearing
SOE Debt to EquityAccounts Payable to
Equity
Debt & Accounts Payable
to Equity
Neptune Orient Lines 147.2% 49.1% 196.3%
Singapore Technologies 62.9% 116.9% 179.9%
Singapore Power 147.1% 21.3% 168.3%
STATS ChipPAC 93.2% 15.8% 109.0%
SMRT 48.2% 51.1% 99.3%
PSA International 61.4% 12.8% 74.3%
Singapore
Telecommunications33.1% 20.3% 53.4%
Mapletree Investments 36.9% 5.4% 42.3%
Singapore Airlines 9.6% 31.1% 40.7%
Private sector participation needed to lock in commercialization gains
SOE Commercialization
• Commercial mandate
• Accountability framework
• CSO delivery on commercial terms
• Professional boards
• Transparency / disclosure
• Competitive neutrality
Private Sector Participation
•Full Privatization
•Partial Privatization
•PPPs
•Contracting out
Competition
Finding Balance 2016: Benchmarking the Performance of State-owned Enterprises in Island Countries will be published and available in August 2016.
Please let me know if you would like a copy emailed
When published – copies available on ADB website
Limited draft advance copies are available at this conference upon request