Cherelle Jackson interviews Vice President of the World Bank, East Asia Pacific Region James W. Adams about the Samoan economy.
Reporter: Can you speak briefly about the reason of your visit to Samoa?
Adams: Samoa is one of the countries that’s in the East Asia region of the World Bank which I provide leadership for, and this was a trip to focus on some of the small island problems. So last week I was in the Solomon Islands, we also visited New Zealand and Australia because these are two very important donors in the region.
Reporter: Adams, can you elaborate on some of the small island issues or problems you have had to deal with on this trip.
Adams: Well, there are some areas in which Samoa is doing very well, it has a strong reform programme, it has made a lot of progress with respect to the overall status of the economy, the stability of the economy. But there are also many challenges as a Pacific Island, so some of the things we talked about were the question on how to mobilize more private sector interest, more private sector investment in Samoa, how to strengthen some of the sectoral programmes and how we can work more effectively with the Ministries to strengthen those programmes. We talked about the transport challenge and some of the ideas that could be more effectively addressed, and we talked about the existing bank portfolio, the areas that we are presently working with the Government on. We have an infrastructure project, we have a project that focuses on telecommunicaitons, we hope to proceed very shortly with a project to help the health sector, so overall it’s a fairly ambitious programme and my job is to make sure that we are doing as well as we can to work effectively with the Government of Samoa on those programmes.
Reporter: In the East Asia region, where is Samoa ranked?
Adams: Well we have everything. China is in the region, Indonesia and Vietnam, we have many big countries but in the region there are 11 small island countries, 10 of whom are in the Pacific, one of which is Timor-Leste. One of the challenges I have to address is that obviously the problems facing these large countries are very different, the opportunity is very different. I think one of the special challenges is that a number of Pacific Islands are obviously not as doing as well as Samoa and how can we work more effectively with those islands to improve the development performance.
Reporter: In the World Bank Governance Matters, survey, Samoas performance under Government Effectiveness has continued to decline, what can you say about this?
Adams: Two things, one is, that is a relative measure and what it may reflect primarily is some other countries have improved. By our internal assessment we do not feel the performance has declined. Now having said that ,we are working very hard with the Government to improve both the quality of Governance and the quality of Government interaction. So for instance in the health sector we are working with the Government of Australia and News Zealand on putting together a health sector programme which hopefully will improve the performance of the health sector. One of the areas the Government does well internationally is with respect to the budget process, the discipline in the budget process. I think this is a real strength in Samoa but we still work with the Ministry of Finance on how that can be strengthened further.
Reporter: Adams, with the current sluggish state of the world economy, dictated in part by the uncertain future of the US economy, how do you think small economies like Samoa can deal with the possible repercussions of such trends?
Adams: Well there are a couple of observations on that, one is that, because the Pacific is in an area that is still doing very well in terms of growth, I think that is the biggest source of protection, that it uses its presence in the Pacific region to more effectively build on their trade links, build on their interactions and in fact benefit from the continued and very rapid growth in China. While we think the Chinese growth will fall a bit we still think it is going to remain exceptional by international standard, we are still predicting this year in 2008 that China will grow by over 9% similarly Vietnam, similarly Cambodia. There is a dynamism in this region that I think is important to take advantage of. Couple of other things, I think the macro economic fundamentalism remain pretty strong, I think by the way that is broadly true of the region, so I think the region is much better positioned to deal with some of the problems in the US than it was in the late nineties and during the dot com crisis in 2000. What it should be doing though is pushing exactly on those areas of comparative advantage, a couple of special issues that we are concerned about and were doing some analytical work on is clearly the continuing high price of oil is a challenge, and there we discussed with the Government the importance of increasing use of renewable energy, finding ways to increase efficiencies of level if consumption of petroleum goes down. I think those are the areas where the Government can and should be doing something. The second area of concern which actually Samoa is pretty protected against is the food crop increases. One of the consequences of the increased use of bio-fuel particularly in the US is the dramatic increase in the price of key grain, maize corn. So this is one of the areas we talked to the Government how we can manage that in a way that it doesn’t result in increased economic problems or reduced growth.
Reporter: What are your thoughts on the future of the Samoan economy?
Adams: I am quite optimistic. I think the performance will continue to be solid, I think the big challenge is the one that the Government effectively is addressing and thinking through and working on. That big challenge is, how does the Government mobilize additional investment from the private sector, both foreign and domestic, what policies can improve that. We have talked to the Government about various ways we can help. One of the instruments that I hope to use is the private sector arm of the World Bank, the International Finance Corporation, IFC. There are two things in particular I expect to work on with IFC, one is they have actually put an investment officer in Sydney in our regional office. This is the first time an investment officer is there, so he will be traveling around the islands talking to Governments about where there are opportunities to invest, how can he get the interest of potential investors in the islands. The second is thinking through whether we can do some investment promotion work that will help the Government in this area.
Reporter: How much has the World Bank invested in Samoa in the past five years?
Adams: We are not one of the biggest investors in Samoa but we average a little over five million dollars a year in investment. We expect to be able to increase that in the next replenishment. We try to do approximately one investment every year, and we will try to maintain that base. So I would describe it as a modest but a commited investor in Samoa. I think the other thing that is important is by working together with other donors what we hope to be able to do is to increase the overall level of investments in Samoa and particularly to ensure that those investments are implemented quickly and effectively and I think by working together with the Government and the donor community hopefully we can make a contribution in various ways.
Reporter: Would you like to make any further comments?
Adams: It’s my first time in Samoa. We have been extremely well received by the Government, we have seen some of the key stakeholders in the private sector, civil society and everybody has been very supportive in encouraging a stronger bank role in Samoa. So I think that is our challenge now is to deliver on that.
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