New Zealand High Commission Honiara, Solomon Islands

“KEEPING THE COUNTRY AFLOAT”: High Commissioner's speech to Solomon Islands Chamber of Commerce luncheon

Mike Hemmer, Chair of the Chamber
Calvin Ziru, CEO
Members and friends

Tankiu tumas for the opportunity to come along and speak with you today. I hope you are enjoying your lunch as well. I’m told we’re paying for some of it – I hope that’s true or we’ll all be washing dishes!

The theme of the lunch is “Keeping Solomon Islands Afloat”. Many of you will recall the metaphor of a small boat featured in Central Bank Governor Denton Rarawa’s launch of the Bank’s 2009 report a couple of weeks back.

Denton is undoubtedly better placed to talk about macroeconomic trends in Solomon Islands than I am. And both of our roles bestow constraints about the sorts of things we can talk about, particularly in relation to politics here.

Today I wanted to take a quick look at where Solomon Islands is in economic terms, and talk a little about New Zealand’s role in Solomon Islands. But mostly I would like to hear your views on what we are doing, and what we could do better. So I’ll keep it short.

First let me anticipate a question: why is New Zealand so interested in the economic fate of Solomon Islands? Our interest arises from two areas. The Pacific is a small but useful export destination for New Zealand; we have large Pacific communities in New Zealand and the connections between New Zealand and Pacific Islands countries are growing. New Zealand’s economic destiny is, to some extent, intertwined with that of our region. There are, after all, few wealthy countries surrounded by poor and unstable ones.

The other reason New Zealand has such a large stake in Solomon Islands is really about our identity as New Zealanders. We see ourselves as part of the Pacific; helping neighbours in need sits well with that identity.

Those two factors – each a mix realism and altruism – explain New Zealand’s commitment to Solomon Islands. We contribute a significant number of personnel – police, military and civilian – to RAMSI. At NZ$36 m per annum, our aid programme to Solomon Islands is New Zealand’s largest. These are big investments and we have a very real interest in things going well here.

With the general elections looming, many of you will be taking the time to reflect on the state of the nation. The CNURA government has undertaken a programme of reform with support from RAMSI and donors. In some cases, the results of that reform will be clearly visible – for example, in the entry – we hope soon – of a second mobile telecoms provider. In other cases the benefits of reform may not be visible to the general public for some time – if ever. Perhaps the anti-money laundering legislation falls into that category.

Solomon Islands has experienced significantly lower levels of growth over the last decade than neighbours like Vanuatu or Samoa. That low growth track has created some problems – for example high levels of unemployment – and has exacerbated others. Low growth– along with what we often call “capacity constraints” - has made it hard for Government to provide adequate levels of basic services.

Things may be looking a little more positive. The Central Bank is predicting 5% GDP growth this year on the back of improvements primarily in the productive sector. Perhaps, the foundation for a better growth track has been laid. There are real potential sources of growth in both industrial and small-holder agriculture, fisheries, mining, tourism and, I think, also labour mobility. After sailing on bare sticks through the last period of strong regional growth, this time around Solomon Islands has some canvas up. But a lot will depend upon the new government’s ability to continue – and to deepen – reform to improve Solomon Islands’ international competitiveness.

So where do we want to be? We hear all the time about “projects” which will develop this region or that region. But – and I might be unpopular in some quarters for saying this – aid-driven “projects” alone are not going to generate the scale of sustainable economic activity and job growth that Solomon Islands wants and needs. That can only come from greatly enhanced private sector-led growth. While it is up to the government – with support from donors – to improve the conditions for that, only the private sector can deliver the ultimate outcomes.

A couple of words about competition. Solomon Islands is a small and relatively remote country, attributes which are seen as handicaps to competitiveness under traditional trade models. However, it is possible that traditional economies of scale at the firm level may have become less vital for overall competitiveness, not least due to the information revolution.

For example, small to medium scale tourism developments may be more viable that they were a decade ago, thanks to opportunities for marketing via the internet. It is quite possible to imagine a virtuous circle of improving tourism infrastructure, increasing arrival numbers, improving service, decreasing costs and improved revenues. I use tourism as an example given the potential for job creation both in the sector itself and in ancillary industries.

So perhaps smallness and distance are not the barriers they once were.

After a little over half a year here, if I were asked to express my view of Solomon Islanders’ development vision in a single sentence, it would be something like “maintaining a strong traditional culture, with emphasis on land, ples and family, but with increased economic opportunities, more chances for formal work, and better government services.” That to me is an eminently achievable vision – one that is well within the reach of this country. It would be an evolutionary rather than revolutionary change.

To achieve it requires clear-headed and corruption-free leadership. One of the challenges future leaders will need to face is to help Solomon Islands communities articulate their own version of a development vision. Nowhere is that more important than in dealing with land issues, where all too often the narrow interests of a small minority undermine initiatives with the potential to benefit many of their wantoks, and the country as a whole.

So where does New Zealand fit into this picture? Our aid is heavily concentrated on support for basic education. We see this as having clear links to growth, given the strong global correlation between poor economic performance and low levels of literacy and numeracy. We are also deeply invested in economic infrastructure via support for the Solomon Islands Roading Improvement Programme, and we are currently looking at options to support the upgrading of the Munda runway to support more reliable operations by larger domestic aircraft. Given Solomon Islands recent history we cannot ignore the security sector.

As announced by Prime Minister Key at the 2009 Pacific Islands Forum Leaders meeting, New Zealand has also commenced a major new initiative, the Pacific Business Mentoring Programme (PBMP), delivered by Business Mentoring New Zealand (BMNZ). The programme will provide mentor support and advice to small-medium Pacific enterprises to manage and grow their businesses in a way that supports sustained increases in production and employment over time. Pacific-based mentors will be trained to ensure sustainability and ownership. Pilot countries in 2010 will include Cook Islands, Tonga and Samoa, with roll out over the next three years to eleven other PICs including Solomon Islands. We will stay in close contact with the Chamber as this programme develops.

On the broader economic relationship, two-way trade and investment between Solomon Islands and New Zealand remains small – but is heading the in right direction. Part of our role in the High Commission is to encourage this. In November last year we launched “SoloBis”, a bimonthly newsletter on business and economic developments in Solomon Islands targeted at the New Zealand business community. SoloBis is mailed out to about 150 businesses and business organisations in New Zealand; it is also available on our website (www.nzembassy.com/Solomon-Islands). If you have news which you think would be of interest to businesses in New Zealand, we’d be happy to hear about it.

Lastly a word about the work of the Chamber. Part of the reason we were so keen to sponsor this lunch is in recognition of the role that Chambers of Commerce play in boosting domestic private sector activity. Competition theory guru Professor Michael Porter emphasises the role of business organisations in cluster development, and has written extensively about their importance in fostering both collaboration and, importantly, competition – driving up standards and driving down prices. SICCI clearly has a role in that space.

Porter also emphasises the role of leadership – and I’ll leave the last word to him:

“Leaders believe in change; they energise their organisations to innovate continuously; they recognise the importance of their home country as integral to their competitive success and work to upgrade it.”

Tankiu tumas.

(Honiara, 9 June 2010)
 

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