2014 Forum Economic Ministers Action Plan

Heritage Park Hotel
Honiara, Solomon Islands
The eighteenth meeting of the Forum Economic Ministers was held in Honiara, Solomon Islands on 10 July, 2014. This was preceded by Forum Economic Officials Meeting on 8-9 July, 2014. The Forum Economic Ministers Meeting (FEMM) was officially opened by the Prime Minister of the Solomon Islands, Honourable Gordon Darcy Lilo.
2. The following Forum Member Countries were represented: Australia, Cook Islands, Federated States of Micronesia, Kiribati, Nauru, New Zealand, Niue, Palau, Papua New Guinea, Republic of the Marshall Islands, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu. FEMM Observer representatives were from the Asian Development Bank, European Union, Food and Agriculture Organisation, Pacific Financial Technical Assistance Centre, Pacific Islands Private Sector Organisation, Secretariat of the Pacific Community, South Pacific Tourism Organisation, United Nations Development Programme, University of the South Pacific, and the World Bank Group.
3. Ministers noted the important role of FEMM in realising the opportunities for progressing economic development through strengthening sectoral linkages. The theme of the 2014 FEMM was “Strengthening Economic Linkages”.
State of the Region
4. Ministers noted the short to medium term economic growth prospects of the region and the update and progress of the Pacific Plan Review and its possible implications for consideration of Economic Ministers.
5. Ministers noted the update provided by Samoa on the upcoming SIDS meeting in September this year and the update from Australia on the G20 issues and Australia’s Presidency in 2014 focussing on promoting strong sustainable and balanced global growth and making the global economy more resilient. Furthermore, Ministers considered the promotion of the private sector, especially SMEs, in the global economy.
Options for Improving Tourism and Agriculture Linkages
6. Ministers tasked South Pacific Tourism Organisation (SPTO) to work with relevant CROP agencies and the private sector to develop a multi-country tourist package for FICs to promote regional benefits.
7. Ministers supported a regional marketing initiative highlighting tourism operators offering truly Pacific ‘cuisine experiences’ and training of chefs to develop menus that incorporate more local ingredients.
8. Ministers called for the introduction of low interest loan products and risk reduction mechanisms to facilitate investment in labour saving and off-season production technologies to improve supply, consistency and quality of local agricultural and fisheries sector that would improve the cuisine experience associated with FIC tourism.
9. Ministers considered product development (including marketing and feasibility studies) and related capacity building for the tourism and cruise-ship industry in FICs.
10. Ministers agreed to implement during 2014 and/or early 2015 regional collaboration mechanisms to increase local content in the cruise ship tourism sector, such as purchase of locally produced food, beverages and handicrafts items and maximising economic benefits by supporting the development of a harmonised regional cruise ship policy and regulatory framework.
Economic Empowerment of Women Initiatives and Opportunities in the Tourism Sector
11. Ministers agreed to implement policies that support the Pacific Leaders Gender Equality Declaration, and national plans on women’s economic empowerment and specifically in relation to tourism, and committed to:
i. Removing barriers to women’s employment including discriminatory pay and conditions;
ii. Supporting the improvement of facilities and governance of local markets to improve the safety of women entrepreneurs;
iii. Targeting support for women entrepreneurs through improved access to financial services and productive resources; and
iv. Supporting measures that promote women’s professional development in non-stereotyped work such as management, engineering, ICT, resource management.
12. Ministers supported the 2013 Women’s Ministerial Recommendation which “urged FEMM to identify investment opportunities for women’s employment and women SMEs and entrepreneurs in all regional and national tourism strategies and plans, and called on PICTs, with support from development partners, to invest in these areas.”
13. Ministers agreed to continue supporting improved legislation for the protection of women migrant workers, the prevention of the sexual exploitation of women, and the removal of discriminatory practices such as unequal wage and sexual harassment and called on the SPTO and relevant development partners to undertake detailed national research into the gender dimensions of the tourism industry, including sourcing relevant gender statistics, with a view to documenting the key opportunities and challenges, including discriminatory barriers facing women working and participating as entrepreneurs in the sector, and making recommendations for the mainstreaming of gender into tourism development.
Climate Change Financing
14. Ministers encouraged development partners to support the implementation of key recommendations from the Climate Change Finance Assessment of the Republic of the Marshall Islands and requested donors and development partners to support the Forum Secretariat with additional resources, in collaboration with other CROP agencies and partners, to undertake similar national climate change finance assessments in other Forum Island Countries.
15. Ministers tasked the Forum Secretariat to coordinate with the Green Climate Fund Secretariat on implementation of the readiness activities, in collaboration with relevant CROP agencies, and facilitate member country nominations for national designated authorities to access Green Climate Fund readiness support.
16. Ministers requested that the Forum Secretariat in conjunction with other partners continue to explore further the feasibility of facilitating private sector investment in climate change projects in the Pacific and report to relevant fora including the next FEMM.
17. Ministers reiterated that Climate Change Finance be considered in financial management and development effectiveness assessment and strengthening processes, aligned with agreed bilateral/multilateral priorities, such as the Forum Compact process and the development of medium term fiscal frameworks; and urged donors to detail their climate change finance pledges and means of disbursement to Forum Island Countries to ensure predictability for FICs in planning and accessing these funding. It may be included through the Annual Reporting by Development Partners under the Forum Compact where appropriate.
18. Ministers encouraged donors and development partners to support the ongoing joint CROP efforts in supporting countries to effectively access climate change financing and reiterated Forum Island Countries’ preference for using national systems and modalities for the disbursement of Climate Change Finance.
19. Ministers supported the national development of a prospectus of prioritised projects to facilitate in accessing Climate Change Funds and tasked PIFS in collaboration with ADB to coordinate this.
Pacific Catastrophe Risk Insurance Pilot
20. Ministers endorsed the continuation of the Pacific Disaster Risk Financing and Insurance Programme with due regard to national priorities and called on the World Bank to review and urgently look at ways and means for concessional financing to support the continuation of the Pacific Disaster Risk Financing and Insurance Programme, particularly using regional IDA funds to support this initiative and proposing options for high-income countries in the region.
21. Ministers requested the World Bank, in collaboration with insurance companies, to re-consider the specific payment triggers of the Pacific Disaster Risk Financing and Insurance Programme, in particular to increase flexibility of payments triggers to improve accessibility of FICs to payouts in event of high economic impact of natural disasters.
22. Ministers requested the World Bank to continue and strengthen a post-Disaster Finance Facility for FICs through the Pacific Resilience Programme if the Pacific Disaster Risk Financing and Insurance Pilot Programme is discontinued.
Private Sector Development Issues
23. Ministers welcomed the enhanced Private Sector Dialogue involving Economic Officials, Ministers and Leaders and requested the Forum Secretariat to develop a process in consultation with members for effective engagement at both meetings.
24. Ministers requested the Forum Secretariat to work with Private Sector Representatives and members to develop a robust monitoring and evaluation mechanism that can track the success of the dialogue with FEMM and Forum Leaders.
25. Ministers encouraged countries to discuss with their Private Sector measures to address delayed payments.
26. Ministers urged FICs to undertake broader public administration reforms to introduce efficiency in the payment, compliance and refunds processes.
27. Ministers considered a review of the investment and business development incentives to make them more attractive and comprehensive, with transparent, targeted and time bound incentives schemes. Such schemes should be monitored to ensure that they contribute directly to economic growth and to avoid abuses.
28. Ministers considered developing policies aimed at supporting exporters and further strengthening the Pacific Islands Trade & Investment network to improve effective marketing of Pacific islands products and services overseas.
29. Given the seriousness of Non-Communicable Diseases (NCDs) in the region, and their consequences on the private sector, Ministers urged to invest in effective mechanisms that seek behavioural changes, through awareness campaigns and public education.
30. Ministers encouraged development partners to utilise procurement mechanisms that provide increased opportunities for local private sector operators.
31. Ministers encouraged member countries to exchange private sector knowledge and expertise on strengthening economic development, particularly with regards to tourism.
Access to Finance and Financial Infrastructure Development
32. Ministers expressed grave concern on the closure of Money Transfer Operators (MTOs) and called for action by relevant institutions to resolve this issue. Ministers noted that the competition from MTOs has brought about a considerable reduction in the cost of remittances after much effort, and it would be of concern if a reduction in competition resulted in an increase in the cost of remittances.
33. Ministers supported the current work of Pacific Central Bank Governors, supported by the Pacific Financial Technical Assistance Centre and Pacific Financial Inclusion Programme.
34. Ministers requested Australia and New Zealand to consider ways to address the Anti-Money Laundering and Counter-Terrorism Financing Acts’ unintended negative effects on remittances, and the direct impact they is having on the people across the Pacific.
35. Ministers called on the World Bank to raise this crucial issue with the Ministers of Finance of the G20 in collaboration with the Australian Presidency of G20, and identify innovative solutions to tackle this issue for the FICs.
36. Ministers requested Australia to stringently enforce the Anti-Money Laundering and Counter-Terrorism Financing Acts without contributing to the closure of MTOs which are an important source of low-cost remittance inflows for the FICs.
37. Ministers supported the work of New Zealand’s cross-government agencies working group which is looking at the closure of the Money Transfer Operators and encourage FICs to furnish information to this working group in relation to the closure of MTOs.
38. Ministers noted the possible impacts on remittance flows caused by the recent closures of MTO bank accounts. While anti-money laundering and counter-terrorism financing (AML/CTF) regulations appear to be one factor contributing to this problem. In addition, Ministers also noted that other factors have also been identified by the Global Partnership for Financial Inclusion.
39. Ministers noted that Australia highlighted that this is a serious issue for Pacific island countries, and that it is working through a number of approaches to gain a better understanding of what is causing the MTO account closures. These include: working with the G20 Development Working Group; progressing Australia’s review of its AML/CTF regime (to be completed in 2015); and participating in the Financial Action Task Force’s mutual evaluation of Australia’s AML/CTF regime. New Zealand also noted that it is looking at this issue as the incoming Chair of the Asia/Pacific Group on Money Laundering.
40. Ministers agreed to engage with the relevant institutions on banking and financial matters. Ministers requested that the outcomes of the Annual meeting of South Pacific Central Bank Governors be tabled at FEMM for the information of Ministers.
Public Financial Management
41. Ministers endorsed the Pacific Financial Technical Assistance Centre’s approach for greater PIC staff involvement in preparing and owning Public Expenditure and Financial Accountability Assessment and Public Financial Management Roadmaps.
42. Ministers encouraged the Pacific Financial Technical Assistance Centre to continue supporting and assisting countries with ongoing tax and non-tax reforms.
43. Ministers supported development and implementation of the Tax Administration Diagnostic Assessment Tool and future Tax Administration Reform Roadmaps that may subsequently be developed taking into account country-specific context.
Forum Compact and Development Cooperation
44. Ministers noted the key highlights of the 2014 Pacific Regional Millennium Development Goals (MDGs) Tracking Report and supported the proposed SDG goal on economic growth and the issues covered in the proposed targets but called for the consolidation of targets to ensure effective implementation in tracking progress, particularly for FICs with limited resources and capacity constraints, including in the area of statistics.
45. Ministers acknowledged the supportive role and efforts of Forum Leaders, FIC Government Officials and Development Partners in the successful completion of all FIC Peer Reviews by November 2013 and pledged to continue to take an active role and collaborate with development partners in supporting coherent implementation of Peer Review recommendations to further improve development coordination efforts in the region.
46. Ministers welcomed the initiative by Australia and New Zealand to be peer reviewed and encouraged other development partners to volunteer and/or participate in the peer review processes for development partners, and directed the Secretariat to expedite the peer review process of development partners and report back on results of the first development partner peer reviews at the next meeting of FEMM.
47. Ministers supported the ongoing South-South Attachment programme amongst FICs for practical learning and support for the implementation of peer review recommendations.
48. Ministers recognised and supported the role of the National Sustainable Development Strategy (NSDS) Partnership group in assisting countries address the integrated nature of national sustainable development planning to ensure effective linkages between national development plans, sector and Ministry business plans, budgets, aid and performance management systems, and requested a report at the next FEMM on the key outputs of the NSDS Partnership group.
Regional Statistics Initiative
49. Ministers noted the progress SPC has made on the compilation of international merchandise trade statistics and agreed to support the new Pacific Trade database by the upgrading of the Information Technology Systems used by Customs Departments and the electronic link between Customs Departments and National Statistical Offices for data transfer.
50. Ministers supported actions to improve coordination between Technical Assistance providers and users of statistics.
51. Ministers requested SPC to improve time between survey data collection and drafting of final reports in coordination with National Statistics Offices, such as Household and Income Expenditure Survey, and to build capacity of National Statistics Offices on interpreting and analysing data for economic policy analysis.
Update on the Pacific Aviation Safety Office (PASO)
52. Australia emphasised the need for continued support for the Pacific Aviation Safety Office (PASO) to ensure that the organisation becomes a sustainable and viable aviation safety and security regulatory body in the Pacific. Australia highlighted the progress made since the 2013 FEMM to strengthen the operations of PASO, including the appointment of Roy Barnett as PASO Manager and Senior Technical Coordinator. So as to put PASO on a more financially sustainable footing, Australia encouraged member states to make their annual subscription payments and resolve the backlog of payments owing to PASO.
Proposal for a Pacific Economic Forum and Arrangements for 2015 FEMM
53. Ministers noted and supported the Forum Leaders’ decision at their Special Leaders’ Retreat on 5 May for options to be identified for rationalising the number of Forum-related meetings to ensure that the time and resources of regional officials and Ministers are optimised. Ministers agreed that the proposal for a Pacific Economic Forum should be considered in the context of the rationalisation of regional meetings.
54. Ministers considered the frequency of FEMM and agreed that FEMM should be convened annually.
55. Ministers endorsed the restructuring of the 2015 FEMM to focus on two or three key issues and promote deeper technical discussion on economic and fiscal issues and supported the theme for 2015 FEMM to be based on the development of and engagement with the Private Sector.
56. Ministers thanked the Government and the People of Solomon Islands for the excellent arrangements for the 2014 FEMM.
57. Ministers noted that the next FEMM will be held in Cook Islands in 2015, at a date to be determined. The 2016 FEMM will be held in Tuvalu.
58. Ministers acknowledged with gratitude the contribution and support of the Secretary General, Tuiloma Neroni Slade, to the FEMM during his tenure. They wished him well in his future endeavours.
Pacific Islands Forum Secretariat
Honiara, Solomon Islands
10 July 2014

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