The 2019 passage of state-owned enterprise (SOE) legislation in Fiji has improved the country’s SOE governance and commercial framework but room exists for further improvement in reporting and transparency, a new Asian Development Bank (ADB) report has found.

Finding Balance 2023: Benchmarking Performance and Building Climate Resilience in Pacific State-Owned Enterprises compares the performance of SOEs in nine Pacific island countries—Fiji, Kiribati, the Marshall Islands, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, and Vanuatu—and tracks the progress of SOE commercialisation in the region.

The report’s findings were discussed by government, business, and civil society representatives at a Finding Balance 2023 launch event today in Suva.

“Fiji’s SOE portfolio was among the best performers in the region over the period 2015–2020,” ADB Regional Director for the South Pacific Subregional Office Aaron Batten said. “The 2019 Public Enterprise Act improved Fiji’s SOE governance and commercial framework, and the recent reestablishment of the Ministry of Public Enterprises should further facilitate its implementation.”

The Public Enterprise Act makes a single minister responsible for the ownership interest in the SOEs which it covers, provides detailed director duties and governance practices, streamlines the definition and legal forms of SOEs, and clarifies community service obligation processes.

But the Act applies to only 13 SOEs, accounting for less than 20 percent of SOE assets controlled by the government in 2020. The Act also contains gaps in specifying due dates for SOE account submissions to the responsible minister, and does not compel the tabling of these accounts in Parliament. Legal reforms could play an important role in further improving the effectiveness of the Act.

The average return on equity for Fiji’s SOEs from 2010–2021 was 4 percent per annum, while the average return on assets was 2.1 percent over the same period.

Finding Balance 2023, produced by the Pacific Private Sector Development Initiative (PSDI), has a special focus on the risks posed by climate change, and how Pacific governments and state-owned utilities can manage its effects and build resilience.

The report finds that state-owned utilities that are more commercialised may be more inclined to respond to incentives to decarbonise and invest in protecting their assets. It also shows that SOEs in the Pacific have improved their returns, but are still failing to cover their cost of capital.