FOSTERING MORE ACCESSIBLE FINANCE

AND FINANCIAL SERVICES

Financial markets in the Pacic are generally underdeveloped, and many people, particularly women,
do not have access to even the most basic nancial services, especially in rural areas. Access to credit
remains a problem, despite excess liquidity across Pacic nancial systems and the increased availability
of savings products. Without access to nancial services, businesses cannot grow, entrepreneurship is
stied, and people on low incomes cannot save securely to invest, pay bills, or move beyond subsistence
living standards.
To address these issues, PSDI focuses on developing the linkages within the nancial system to deliver
better intermediation between savers and borrowers, so as to increase the availability of loans, securities
and other nancing instruments. Better nancial intermediation requires improving the integrity of
nancial systems; strengthening selected nancial institutions; designing and implementing new products
tailored to the realities and particular needs of Pacic island countries; and supporting nancial inclusion
throughout the Pacic. Finally, it means undertaking the analytical work to identify the institutional
constraints to access to nance, and advocating for appropriate policy responses.
The cornerstone of PSDIs work to achieve these aims has been the implementation of secured
transactions frameworks, which allow lenders to give credit against the security of movable assets. This
is important to the Pacic because most borrowers cannot ofer land and other real estate as collateral
for loans (land is mostly communally-owned in the Pacic). It also impacts signicantly on women who,
in most countries in the region, have little control over customary land.
PSDI assists Pacic governments with drafting the necessary legislation, ensuring awareness of the
reforms, and the procurement and deployment of online registries. Once the frameworks for improved
nancial intermediation are in place, PSDI works closely with lenders to develop nancial products that
will translate the opportunity into increased lending.
As secured transactions reforms take hold, PSDI is placing more emphasis on the role of provident
funds within the nancial system, the commercial sustainability of credit and other nancial service
providers, and regulatory frameworks. Provident funds are integral to the stability of Pacic nancial
systems, as well as the transformation of savings into longer-term investments. They will play a central
role in the development of capital markets in the region through investments in long-term bonds, equity
investments, and other nancing arrangements. To give impetus to the development of capital markets,
PSDI is developing a benchmarking study of Pacic provident funds, similar to the Finding Balance study
for SOEs, and investigating constraints to securities issuance.
The focus of PSDIs institutional strengthening activities is the commercial provision of nance, as this
underpins the objective of increasing access to nance and complements the nancial inclusion agenda.
In addition, PSDI works closely with central banks and other regulatory agencies to improve policy and
regulatory frameworks.
Pacic Private Sector Development Initiative
Pacic Liaison and Coordination Of ce
Level 20, 45 Clarence Street, Sydney NSW 2000, Australia
Tel +61 2 8270 9444Fax +61 2 8270 9445
Emailpsdi@adb.org Blog: www.adbpsdi.org
www.adb.org/plco/psdi
ASIAN DEVELOPMENT BANK
ACCESS TO FINANCE
ACTION UPDATE | JULY
Pacic
Private Sector
Development
Initiative
PSDI works with ADBs 14 Pacic developing member countries to improve
the enabling environment for business and address constraints to private
sector development in support of sustainable and inclusive economic growth.
PSDI is a regional technical assistance facility co-nanced by the Asian
Development Bank and the Governments of Australia and New Zealand.
FIJI
In 2012, PSDI published the results of micro insurance demand research in Fiji, in partnership with the
Pacic Financial Inclusion Programme (PFIP) and Australian Aid. The conclusions contributed to the
launch of the rst community based micro insurance scheme in the Pacic, targeted at Indo-Fijian
communities, in June 2012.
PSDI also contributed to a workshop for insurance regulators convened by the Pacic Islands Working
Group of Central Banks and organized by PFIP in 2012 and 2013. The workshop brought together insurance
supervisors from seven Pacic island countries to highlight the integral role that accessible insurance
services plays within wider nancial inclusion eforts and to build requisite regulatory capacity. The
workshops were held in Nadi, Fiji in June 2012 and August 2013.
ONGOING AND FUTURE PROJECTS: Discussions commenced in Q2 2014 on the nature of secured
transactions reform, with a view to building government support to implement the reforms.
MARSHALL ISLANDS
The Secured Transactions Act 2007 was enacted and an electronic registry was also installed in 2007, with
technical assistance from PSDI.
ONGOING AND FUTURE PROJECTS: An upgrade of the registry applications and review of the
outcomes of the secured transactions reforms are planned for 2014.
FEDERATED STATES OF MICRONESIA
In 20052006, ADB assisted the Government implement secured transactions reforms, with the
successful passage of the Secured Transactions Act and installation of an on-line registry.
ONGOING AND FUTURE PROJECTS: PSDI is supporting an upgrade of the secured transactions
registry, planned for Q2 2014. A review of outcomes of the secured transactions reforms is targeted for
2014.
NAURU
NAURU has been without a nancial institution capable of providing commercial banking services for
a decade. Based on an assessment of ancial requirements undertaken in 2012, PSDI supported the
preparation of an information memorandum, to identify an appropriate institution to provide these
services. Expressions of interest were submitted to the government in August 2013 and discussions
between the government and the preferred nancial institution are ongoing. PSDI also assisted the
government in reviewing the existing regulatory framework for nancial institutions and identifying
reforms. Policy recommendations for the regulation and supervision of nancial institutions were
submitted to the government in February 2014.
ONGOING AND FUTURE PROJECTS: The drafting of a Financial Institutions Bill is expected to
commence in Q3 2014.
Pacic Private Sector Development Initiative
Pacic Liaison and Coordination Of ce
Level 20, 45 Clarence Street, Sydney NSW 2000, Australia
Tel +61 2 8270 9444Fax +61 2 8270 9445
Emailpsdi@adb.org Blog: www.adbpsdi.org
www.adb.org/plco/psdi
ASIAN DEVELOPMENT BANK
ACCESS TO FINANCE
ACTION UPDATE | JULY
Pacic
Private Sector
Development
Initiative
PSDI works with ADBs 14 Pacic developing member countries to improve
the enabling environment for business and address constraints to private
sector development in support of sustainable and inclusive economic growth.
PSDI is a regional technical assistance facility co-nanced by the Asian
Development Bank and the Governments of Australia and New Zealand.
PALAU

PALAU undertook secured transactions reform with support from PSDI. The Secured Transactions Act
was passed in May 2012, and an electronic registry was launched in January 2013.
ONGOING AND FUTURE PROJECTS: PSDI will provide ongoing support in 2014 to increase lenders
uptake of the secured transactions framework.
PAPUA NEW GUINEA
PSDI provided technical assistance to Nationwide Microbank between 2011 and 2013 for the development
of an innovative mobile phone-linked bank account, MiCash. Support was provided for:
(i) a review of the MiCash pilot in West New Britain Province, completed in June 2012;
(ii) development of appropriate audit and risk management processes for MiCash, completed in April
2012; and
(iii) the development of a MiCash training program for staf and agents, completed in Mar 2013.
The Personal Property Security Act was passed in December 2011. The associated online registry is expected
to go live in Q3 2014.
PSDI also funded the design of the Micronance Expansion Project, a $24 million sector-wide program,
conanced by the governments of Australia and Papua New Guinea, with a focus on strengthening
institutions, nancial literacy and business development skills training, developing appropriate regulation
for and supervision of the sector, and establishing a risk share facility for partner institutions to promote
expansion of credit to micro and small enterprises. The project, approved in 2010 with implementation
starting in 2011, will run to 2017.
ONGOING AND FUTURE PROJECTS: PSDI is undertaking a nancial sector assessment in conjunction
with the private sector assessment. A detailed assessment of the legal framework for capital raisings will
commence in Q3 2014, with a view to providing recommendations for reform and exploring possible
legislative and institutional support. PSDI will continue to work with Nationwide Microbank, with future
support directed towards identifying business models that are suited to the continued expansion of
Nationwides operations and balance sheet.
SAMOA
PSDI supported the passage of the Personal Property Securities Act in February 2013. An amendment to the
Act is expected in Q3 2014. After it is passed, PSDI will assist in the procurement and establishment of the
registry.
ONGOING AND FUTURE PROJECTS: PSDI will provide support for the implementation of the secured
transactions framework through raising public awareness of the new law and the design and installation of
an electronic registry.
Pacic Private Sector Development Initiative
Pacic Liaison and Coordination Of ce
Level 20, 45 Clarence Street, Sydney NSW 2000, Australia
Tel +61 2 8270 9444Fax +61 2 8270 9445
Emailpsdi@adb.org Blog: www.adbpsdi.org
www.adb.org/plco/psdi
ASIAN DEVELOPMENT BANK
ACCESS TO FINANCE
ACTION UPDATE | JULY
Pacic
Private Sector
Development
Initiative
PSDI works with ADBs 14 Pacic developing member countries to improve
the enabling environment for business and address constraints to private
sector development in support of sustainable and inclusive economic growth.
PSDI is a regional technical assistance facility co-nanced by the Asian
Development Bank and the Governments of Australia and New Zealand.
SOLOMON ISLANDS
PSDI supported the passage of the Secured Transactions Act in 2008 and the establishment of an
electronic registry in 2009.
ONGOING AND FUTURE PROJECTS: In 2014, PSDI commenced secured transactions implementation
support, including designing nancial products to expand the use of the secured transactions framework.
A nancial sector assessment is being undertaken in conjunction with a broader Solomon Islands private
sector assessment. PSDI also continues to support the Central Bank of Solomon Islands and the Ministry
of Finance in developing credit union policy and legal reform, and is working with a commercial bank on
a pilot mobile banking project using coastal shipping vessels to service remote rural communities. The
Ministry of Finance and Treasury has requested PSDI support to draft new legislation for the Solomon
Islands National Provident Fund and PSDI has also commenced discussions with Solomon Islands
National Provident Fund and the Central Bank of Solomon Islands on benchmarking fund performance
and strengthening the regulatory framework.
TIMORLESTE
PSDI was instrumental in the transformation of the Micronance Institute of Timor-Leste (IMfTL) to the
National Commercial Bank of Timor-Leste (BNCTL), Timor-Lestes rst locally-owned commercial bank, in
2011. Since the transformation, PSDI has supported the institutional strengthening of BNCTLs insitutional
capacity.
In 2012, PSDI reviewed laws and policies afecting branchless banking operations for the Central Bank of
Timor-Leste and later assessed the potential for introducing a third-party provider for branchless banking
services, in partnership with the Inclusive Finance for the Under-Served Economy (INFUSE) Programme.
The report was presented to the Government in June 2013. PSDI has commenced work with government
agencies on the introduction of a secured transactions framework, and a legal diagnostic was completed
in Q2 2014.
ONGOING AND FUTURE PROJECTS: Following a review of the operations of BNCTL in 2013, PSDI
continues to support the evolution of BNCTL into a fully commercial nancial services provider. An
Operations Advisor and an Internal Audit advisor will be recruited in Q2 2014. In Q3 2014, to complete
a national risk assessment for Timor-Leste and prepare an Anti-Money Laundering/Combating the
Financing of Terrorism (AML/CFT) strategy, PSDI will work with the Central Bank of Timor-Leste to
support the National Commission for the Implementation of AML/CFT Measures. PSDI has commenced
work with government agencies and the private sector on the introduction of a secured transactions
framework. Further consultations on secured transactions reform will be undertaken in Q3 2014.
PSDI will also continue to support the Central Bank in developing the legal and regulatory framework for
branchless banking.
Pacic Private Sector Development Initiative
Pacic Liaison and Coordination Of ce
Level 20, 45 Clarence Street, Sydney NSW 2000, Australia
Tel +61 2 8270 9444Fax +61 2 8270 9445
Emailpsdi@adb.org Blog: www.adbpsdi.org
www.adb.org/plco/psdi
ASIAN DEVELOPMENT BANK
ACCESS TO FINANCE
ACTION UPDATE | JULY
Pacic
Private Sector
Development
Initiative
PSDI works with ADBs 14 Pacic developing member countries to improve
the enabling environment for business and address constraints to private
sector development in support of sustainable and inclusive economic growth.
PSDI is a regional technical assistance facility co-nanced by the Asian
Development Bank and the Governments of Australia and New Zealand.
TONGA
PSDI assistance to TONGA in access to nance has focused on secured transactions reform. The Personal
Property Securities Act was enacted in September 2010, and on-line registry went live in April 2011. PSDI
also supported amendments to the Act, which were passed in December 2012, as well as an upgrade of
the registry.
ONGOING AND FUTURE PROJECTS: PSDI will commence secured transactions implementation
support, including designing nancial products to expand the use of the secured transactions framework,
in 2014.
VANUATU
PSDI provided assistance to strengthen the institutional capacity of the Vanuatu Financial Services
Commission (VFSC), the main regulatory and supervisory body of the non-banking nancial services
industry (both ofshore and onshore). It also reviewed the structure and operation of the International
Financial Centre and provided recommendations for a corporate strategy.
PSDI supported the reform of the secured transactions framework through the drafting and passage of
the Personal Property Securities Act, which was passed in July 2008. An electronic registry was installed in
April 2009 to record the ling of security interests. An upgrade of the registry was completed in February
2012.
A diagnostic was prepared for the Reserve Bank of Vanuatu and the VFSC on the legislative framework
for micronance to ensure that unregulated micronance institutions that take deposits are adequately
regulated to protect the interests of deposit holders.
In 2012, PSDI provided assistance to the Vanuatu Womens Development Scheme (VANWODS) to
strengthen its strategy and governance through a series of workshops with the management and board,
and exposure to international micronance practices.
ONGOING AND FUTURE PROJECTS: PSDI is providing assistance to the Reserve Bank of Vanuatu
on improving the legal and regulatory framework for nance, including micronance. A nancial sector
assessment is being undertaken as part of the 2014 update of the Vanuatu private sector assessment. Early
discussions are ongoing with the Vanuatu National Provident Fund on possible assistance to strengthen
portfolio and investment management.
PSDI is assisting with the drafting of a new trustee bill to improve Vanuatus compliance with international
commitments and its reputation as an ofshore nancial center. PSDI is also in early discussions on a range
of issues related to the nancial action taskforce guidelines, and ensuring that the international companies
regime is in line with best practices. PSDI will commence secured transactions implementation support,
including designing nancial products to expand the use of the secured transactions framework, in 2014.

Pacic Private Sector Development Initiative
Pacic Liaison and Coordination Of ce
Level 20, 45 Clarence Street, Sydney NSW 2000, Australia
Tel +61 2 8270 9444Fax +61 2 8270 9445
Emailpsdi@adb.org Blog: www.adbpsdi.org
www.adb.org/plco/psdi
ASIAN DEVELOPMENT BANK
ACCESS TO FINANCE
ACTION UPDATE | JULY
Pacic
Private Sector
Development
Initiative
PSDI works with ADBs 14 Pacic developing member countries to improve
the enabling environment for business and address constraints to private
sector development in support of sustainable and inclusive economic growth.
PSDI is a regional technical assistance facility co-nanced by the Asian
Development Bank and the Governments of Australia and New Zealand.