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New Pacific bank has no customers after a year in business
10:44 pm GMT+12, 15/10/2019, Australia

Australian Prime Minister Scott Morrison’s $2 billion (US$1.3 billion) Pacific infrastructure bank has not approved any projects nearly one year after it was announced, as the business community calls on the government to engage in more open briefings about the facility.
 
The Department of Foreign Affairs and Trade (DFAT), which is running the bank despite concerns it lacks the expertise and skills to become a major development lender, has confirmed it was “actively assessing a range of infrastructure projects in the Pacific for financial support”.
 
But no grants or loans have been disbursed.
 
The Australian Infrastructure Financing Facility for the Pacific, which comprises $1.5billion (US$1 billion) in loans and $500milion (US$36 million) in grants, was announced last November and has been operational since July amid concerns over China’s rising influence and increased spending in the region.
 
The bank was one of the Prime Minister’s first major announcements under his Pacific “step up” strategy in his attempt to open a new chapter in strategic and economic relations.
 
Australia’s business community in the Pacific endorsed the bank but warned the devil would be in the detail of how it was managed and how the funds were distributed.
 
Frank Yourn, executive director of the Australia-Pacific Islands Business Council, said there had been ongoing discussions with DFAT about its operation but he wanted the government to engage with the sector and provide more open briefings about the facility.
 
The bank is being promoted in the region through meetings with Pacific governments and businesses and through Australia’s diplomatic missions but there has been no advertising.
 
“It must be an enforceable requirement that contractors under AIFFP engage with local business and create business sustainability and growth in Pacific businesses and create employment in the Pacific markets. Projects must leave behind more than just concrete,” Yourn said.
 
“Australian companies should have margin or preference for AIFFP contracts to encourage Australian businesses to re-­engage in the Pacific from which there has been some contraction in the last few years.”
 
Former minister for the Pacific Concetta Fierravanti-Wells said it did not surprise her to “see very little coming from DFAT’s Pacific bank”.
 
The Liberal senator, who wants a greater proportion of Australia’s aid spent in the Pacific on weatherproofing critical infrastructure such as schools and hospitals, has been outspoken against the bank and warned it could add to China’s “debt-trap diplomacy”.
 
“The Pacific already owes about $5.5billion (US$3.7 billion). The high external debt-to-GDP ratios of most Pacific countries means that debt sustainability and viability is a major issue. Any loan will need to be repaid, with interest,” the NSW senator said.
 
“Saddling our neighbours with $2billion (US$1.3 billion) more debt is not in the long-term interests of the Pacific and is hypocritical, given our criticism of Beijing’s debt-trap diplomacy.”
 
Yourn, who also heads Australia’s business councils in Papua New Guinea and Fiji, endorsed Australia’s export credit agency being involved in the process ­because it brought “a lot more experience” in dealing with international business financing.
 
The agency, Export Finance Australia, was given an extra $1billion (US$673 million) to support the Pacific bank and Australia’s renewed agenda in the region.
 
“DFAT’s main experience with business is through the aid programme which is quite different,” Yourn said.
 
“DFAT is in uncharted territory compared to what they’ve done in the past and the councils believe they can assist them achieve better outcomes.”
 
The 25th Australia-Fiji business forum will be held in Brisbane this week, with a keynote address from Fijian Prime Minister Frank Bainimarama

SOURCE: THE AUSTRALIAN/PACNEWS


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