Economic integration of the region with larger economies such as Australia is essential for sustainable economic growth. In line with Australia's new Aid for Trade Strategy, the Pacific Regional Program will help increase Pacific trade, tourism and investment by developing strong and resilient regional economic frameworks and supporting the Pacific Agreement on Closer Economic Relations (PACER) Plus trade negotiations. Australia will look for opportunities for the region to benefit fully from PACER Plus, when finalised. We will promote trade, tourism and investment through Pacific Islands Trade and Invest, and further the development of key productive sectors including cruise tourism and agribusiness.
Through Australia's Seasonal Worker Programme and other regional labour mobility initiatives, we will increase the quantity and capacity of workers coming to Australia, thereby increasing opportunities for remittances. We will work to reduce the cost of remittances, including through our commitments in the G20.
Responding to the Strategy for Australia's Aid Investments in Private Sector Development and the Ministerial Statement on Engaging the Private Sector in Aid and Development, we will work with corporate and multilateral partners to increase access to finance for individuals, businesses and infrastructure projects. We will help remove obstacles to increase economic activity and improve the business environment, bringing innovative approaches to enterprise development. We will also improve regional infrastructure, with a focus on supporting transport networks where partner commitment is demonstrated.
We will work with Pacific countries, regional organisations and the multilateral development banks to extract greater long run income streams from fisheries and agriculture by improving market access and value chain development. We will help Pacific farmers improve the quality of their produce and meet the biosecurity requirements and standards of Australia and other importing countries.
As the Pacific Regional Program increases its focus on aid-for-trade to achieve the Australian Aid Program target of at least 20 percent of the value of all investments, we will ensure gender is fully integrated into our economic investments.
Pacific Private Sector Development Initiative (PSDI)
Up to $34.0 million, 2013-2019
The Pacific Private Sector Development Initiative (PSDI) is working to reduce barriers to investment and entrepreneurship that raise transaction costs, discourage investment, and hinder the formation and growth of businesses in the Pacific. It is a technical assistance facility established by the Asian Development Bank and co-financed by Australia and New Zealand. The initiative works across 13 Pacific island countries and Timor-Leste.
PSDI commenced in 2006 and is now in its third phase (2013–2019). The first two phases focused on business law reform, improving access to financial services, and reforms for state-owned enterprise and public-private partnerships. Phase III is expanding its focus to address a growing demand for assistance in competition policy and the economic empowerment of women.
PSDI Phase III has five main objectives:
- businesses and households in selected Pacific island countries have improved access to financial services
- selected business laws in Pacific island countries promote inclusive business formation, investment, entrepreneurship, and trade
- the delivery of infrastructure services will be made more efficient and cost-effective
- selected Pacific island countries' governments establish a framework that promotes competition
- successful pilot initiatives promoting the economic empowerment of women are implemented in selected Pacific island countries.
With the aim of demonstrating innovative approaches to involving women in business activities, PSDI has designed pilot programs in Papua New Guinea (PNG), Solomon Islands, and Tonga.
- In PNG, PSDI is helping women in the informal sector to formalize their businesses, by providing finance for growth, plus skills and product development training.
- In Solomon Islands four pilots have been underway, which aim to boost women's technical skills, improve inclusive governance, mentor women in business and reduce barriers to women in the informal sector. The program to boost women's technical skills through engaging in solar maintenance has now been completed and is being replicated.
- In Tonga PSDI developed a program on business leadership for women, which aims to transfer knowledge, build resilience and encourage women into business leadership positions. The Women's Business Leadership Program is now being run in Fiji as well, with 30 participants from 20 companies and government departments.
Pacific Business Investment Facility
Up to $15.0 million, 2015-2019
The Pacific Business Investment Facility (PBIF) provides technical assistance to help Pacific businesses access commercial finance for growth, diversification or consolidation. It is co-financed by Australia and the Asian Development Bank and operates in the 13 Pacific member countries of the ADB. PBIF's team of experienced professionals work with eligible businesses to provide:
- tailored business advisory services
- guidance and assistance in securing commercial finance
- access to experts with industry experience to assess and refine business plans
- marketing and financial management support
- specialized technical skills for product development, certification, and export.
A particular focus of PBIF is increasing access to finance for women-led businesses, a constraint that has been identified as a particular challenge in the Pacific. PBIF aims to ensure at least 20 percent of all businesses they assist are led by women.
The Facility raised AUD7.3 million (USD 5.26 million) in finance for ten companies. The PBIF team meets with hundreds of companies working in agribusiness, manufacturing, tourism and the services sectors, across 6 countries. Strong portfolios have been built in Fiji, Solomon Islands and Tonga, with Vanuatu and PNG in the building phase. Scoping work will increase in Samoa and Kiribati during 2017.
International Finance Corporation (IFC) Pacific Partnership
Up to $29 million, 2012-2017
The IFC Pacific Partnership, co-funded by New Zealand, combines advisory services with investments to generate private sector activity and economic growth in Pacific Island countries. IFC's work is aimed at improving domestic business opportunities, and accessing and creating new markets. IFC's focus to improve policies, provide build sustainable business environments, reform the regulatory environment, eliminate discrimination, provide alternative dispute resolution and improve access to finance will increase opportunities for trade and improve economic prosperity in the Pacific.
A key focus is increasing women's economic empowerment, particularly by leveraging opportunities and addressing challenges to women's employment and leadership in the workforce, supply chain, customer base and leadership of companies to produce better business and development results.
Program data indicate that the Pacific Partnership has leveraged over USD 388 million in new private sector investments and improved economic opportunities for over 24,000 people through the provision of direct investment, small and medium enterprise lending, support for Public Private Partnerships and advisory services. Refer to the "More than Profit" publication below for case stories.
Pacific Readiness for Investment in Social Enterprise
Up to $4.7 million, 2016-2019
Impact investors seek social as well as financial returns from their investments. In 2015 DFAT began an innovative pilot to test impact investment business development models in the Pacific, with the aim of developing "investment ready" enterprises that could attract private capital. The trial helped a Samoan coconut oil factory secure equity financing from interested social investors to expand its operations, benefiting the factory and over 200 coconut farmers.
Following on from the pilot, a new initiative, the Pacific Readiness for Investing in Social Enterprises Facility (PacificRISE) commenced in mid-2016 to support increased impact investment in the region. The facility funds technical assistance for enterprises based in or serving Pacific Island countries. It also works closely with impact investors to promote investment that improves economic and social outcomes. The facility aims to secure up to 20 investment deals, attracting $5 million private capital into the Pacific. It aims to ensure at least 50 per cent of enterprises assisted are female-led or focus on those sectors where women's employment and participation are high. The program is also pioneering a "gender lens investing" approach that incorporates gender analysis into financial analysis and investment decisions.
The Australian Government is partnering with the private sector to improve business and development outcomes in the Pacific. Existing partnerships with Carnival Australia, Westpac Bank and ANZ Bank draw on the resources and networks of the respective partners to increase economic activity in the region and improve opportunities for Pacific communities and businesses.
DFAT and Carnival Australia signed a partnership Memorandum of Understanding (MOU) in 2013. The partnership focuses on technical and vocational education, tourism and hospitality training, infrastructure, health and business development. As a result, P&O's Pacific Cruises fleet now sources bottled water and coffee from Vanuatu. P&O Pacific Cruises also display local handicrafts that are pre-approved to pass Australian quarantine laws, providing vital revenue streams for small producers. Carnival Australia, the International Finance Corporation and DFAT have produced an economic impact report, which estimates an additional $30 million in benefits could be leveraged through improved cruise tourism services.
On 8 September 2014, Minister Bishop signed a Memorandum of Understanding (MOU) with Westpac, jointly committing to increase access to finance and to support private sector development in the region, with a particular focus on Papua New Guinea and Fiji. Increasing Pacific women's access to finance is a key aspect of the MOU.
Westpac and DFAT will work together to substantially improve livelihoods by:
- embracing innovative solutions for increasing financial inclusion through channels, products and services including mobile phone banking and value-added services
- exploring key infrastructure projects via commercial loans and grant funding
- developing a range of initiatives to support the economic empowerment of women
- evaluating avenues to extend microfinance to local businesses, and ]
- leveraging commercial finance for formal sector businesses through the Pacific Business Investment Facility.
Minister Bishop signed a MOU with ANZ on 18 February 2015. The partnership aims to enhance economic growth in the Pacific region, and to promote gender equality and the empowerment of women.
The agreement outlines priority areas for joint cooperation between DFAT and ANZ in the Pacific, including:
- financial inclusion, literacy and the economic empowerment of women
- innovative approaches to finance for small to medium businesses
- opportunities for joint financing of infrastructure projects, and
- more effective and timely communication on disaster and crisis relief.
Pacific Financial Inclusion Program
Up to $24.15 million, 2009-2017
The Pacific Financial Inclusion Program (PFIP) aims to increase access to financial services among low income and rural households through activities such as designing financial literacy programs, capacity development of financial service providers and regulatory bodies and giving performance-based grants to financial service providers to develop and implement pro poor financial services.
The PFIP is a multi-donor fund program – EU, UNDP, UNCDF, DFAT (Australia), NZAid – and is jointly implemented by United Nations Development Program (UNDP) and the United Nations Capital Development Fund (UNCDF). Australia provided around $10m or 68 percent of total funding for Phase 1 which ended in June 2014. Phase 2 of PFIP commenced from July 2014 with total DFAT funding of $14.15 million (50 per cent contribution).
Key achievements in Phase 1 include:
- providing financial access to nearly 600,000 previously unbanked people, including 250,000 women
- developing Financial Inclusion and Financial Literacy strategies for PNG, Fiji, Solomon Islands and Vanuatu and a National Financial Literacy strategy for Samoa
- establishing national finance inclusion taskforce in PNG, Solomon Islands, Vanuatu and Fiji
- establishing financial competency baselines for PNG, Fiji, Samoa, Solomon Islands
- mainstreaming financial education program into the core curriculum in schools (Fiji and Samoa)
- effective dissemination of information to scale through training, workshops and publications.
Phase 2 expected end-of-programs outcomes are:
- Additional 500,000 people, including at least 50 per cent women, gain access to an appropriate, affordable financial service
- Additional 150,000 previously unbanked people, of whom at least 50 per cent are women, gain access to a formal savings account
- 15 per cent of PFIP supported branchless banking clients are active
- An average savings balance of USD10 in active savings accounts/mobile accounts
- Four additional PICs have national financial inclusion strategies
- Three additional PICs offer financial education through core curricula in schools.
PACER Plus Support
Up to $17.7 million, 2007-2018
Australia has provided support to the Pacific Island countries to negotiate the Pacific Agreement on Closer Economic Relations (PACER) Plus trade agreement, which was signed by ten participating countries (Australia, Cook Islands, Kiribati, Nauru, New Zealand, Niue, Samoa, Solomon Islands, Tonga and Tuvalu) on 14 June 2017 in Nuku’alofa, Tonga. Australia provided Forum Island Countries (FICs) with assistance throughout the negotiation phase, conscious of the negotiating capacity constraints faced by FICs, and has committed to providing them with appropriate capacity building and support. This assistance included funding for:
- the Office of the Chief Trade Adviser to provide independent support and advice to FICs during the negotiations
- independent research on PACER Plus for each FIC
- training of FIC trade officials to participate more effectively in the negotiations
- attendance of FIC officials at the officials meetings and intersessional meetings.
On 26 August 2016, the Minister for Trade, Tourism and Investment Steven Ciobo, announced a joint Australia-New Zealand funded PACER Plus Readiness Package to help FICs make the legal changes necessary for implementation and to invest in modern customs and clearance systems necessary to engage in global trade. Australia will contribute up to $4 million over two years to this package for:
- support for domestic ratification processes, including legislative reviews
- assistance with transposing and implementing up-to-date tariff codes at the border
- training on notification requirements under PACER Plus
- support for tax reform efforts to shift away from tariffs, and
- support for communications activities, including stakeholder engagement, to promote PACER Plus and build support for its implementation.
Pacific Horticultural and Agricultural Market Access (PHAMA)
Up to $31.5 million, 2009-2017
Australia established and is supporting the Pacific Horticultural and Agricultural Market Access Program (PHAMA) from 2009 to 2017. New Zealand has also partnered to co-fund selected market access activities in the region. PHAMA is designed to provide practical and targeted assistance to help Pacific island countries manage regulatory aspects associated with exporting primary products, including fresh and processed plant and animal products. This includes gaining access for their products, such as fresh coconuts and chilies, into new markets, and helping to manage issues associated with maintaining and improving existing trade. Australia and New Zealand are markets of major interest, along with export markets beyond the Pacific. Countries assisted through PHAMA include Papua New Guinea, Fiji, Tonga, Samoa, Vanuatu and Solomon Islands. PHAMA also provides assistance to other Pacific island countries through the Secretariat of the Pacific Community's (SPC's) Land Resources Division.
Send Money Pacific (SMP)
Remittances represent a source of income for millions of families and businesses globally, and are an important avenue to greater financial inclusion. Remittances are particularly important in the Pacific, where they help reduce poverty and can cushion the effects of shocks such as economic downturns and natural disasters. As of November 2016, the average cost of transferring remittances from Australia to the Pacific was 12.93 per cent, compared with a global average cost of 7.4 per cent.
The Send Money Pacific (SMP) initiative is a remittance price comparison website allowing users to compare the cost of sending remittances from Australia and New Zealand to eight Pacific countries (Fiji, Kiribati, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu). SMP also allows users to compare the cost of sending remittances from the US to Fiji, Samoa and Tonga. Since the launch of the website in 2009, the average total cost of sending $200 through a money transfer operator from Australia to a Pacific Island country has decreased by 20.57 per cent.
Pacific Islands Trade & Invest
$1.5 million per annum
Pacific Islands Trade & Invest (PT&I) is the international trade and investment promotion agency of the Pacific Islands Forum Secretariat and has offices in Auckland, Beijing, Sydney, Tokyo and Geneva. The network's role is to develop, grow and promote businesses in the region with the aim of improving livelihoods of people in the Pacific by working with the private sector to build a better future through more sustainable communities and greater prosperity. PT&I's areas of focus are export, investment, tourism promotion and creative arts. Australia's support for PT&I funds the operation of the Sydney office.
Labour Mobility Assistance Program
Up to $6.3 million, 2015-2018
The DFAT funded Labour Mobility Assistance Program (LMAP) helps seasonal workers from the Pacific islands and Timor-Leste benefit from Australia's Seasonal Worker Programme (SWP). LMAP aims to improve the supply and quality of seasonal workers, strengthen linkages with Australian employers and maximise development impacts of the program. It also seeks to increase the participation of women and disadvantaged groups.
The SWP commenced as a permanent program on 1 July 2012, following a successful three-year pilot. Its objective is to contribute to the economic development of participating Pacific Island countries and Timor-Leste while addressing labour shortages in Australia. Outcomes are driven by employer demand for seasonal labour and workers' employment experience, skills acquired and remittances.
The SWP provides access to work opportunities in the Australian agriculture sector, accommodation sector in selected locations and tourism sector (Northern Australia tourism pilot). It allows workers from participating countries to undertake six to nine month placements with Australian employers who can demonstrate an unmet demand for low-skilled labour. In 2016-17, over 6,000 visas were granted to workers, this includes over 800 females.
According to World Bank estimates, the average SWP worker remits around $5,000 per year. This money is spent on housing, education, healthcare and household consumption. Based on SWP participation in 2016-17, this is equivalent to $30 million in remittances to the Pacific.
For further information on the SWP, please visit the Department of Employment’s website.
Pacific Microstates – Northern Australia Worker Pilot Program
Up to $1.5 million, 2016-2018
The Pacific Microstates-Northern Australia Worker Pilot Program is a key initiative arising from the Developing Northern Australia White Paper. The Pilot is available for up to 250 workers from Kiribati, Nauru and Tuvalu to work in Northern Australia in selected sectors for periods up to three years in lower skilled occupations. The Pilot has demonstrated its potential as a model for longer-term, non-seasonal employment opportunities for Pacific workers with 31 workers employed to date in northern Queensland, with further recruitments expected in late 2017.
A particular feature of the Pilot is the pre-departure and on-arrival assistance to incoming workers, provided on the Australian Government’s behalf by Palladium International Pty Ltd. Feedback from employers and workers has been overwhelmingly positive. The Government is now exploring opportunities to increase uptake in the food and accommodation and healthcare and social assistance sectors, where there is projected employment demand.