Policy and reform

Understanding the Private Sector Small Medium Enterprises (PSME) context is essential both at the design stage and during implementation. A detailed assessment of SME policy and institutional, political, and social context is required, with ADB engagement as part of a coordinated program of support by development partners for SME reform. As achieved under the PSME2, it is important that the supported policy actions focus on a limited number of sequenced, high-impact reforms that lead to development outcomes that are clearly defined and reflected in the DMF.

Collaboration with development partners is essential to build consensus for reforms. Donor consensus and support for critical reforms, backed by a policy-based loan and plan to subsequently complement by project-level funding, contributed to the success of this program. Continued long-term engagement on reforms supported by investments is necessary for sustainability.

Early engagement with stakeholders and design of subsidy programs responsive to the needs of vulnerable groups could expedite the implementation of complex policy reforms. The success of this program highlights the importance of the government's continuing commitment in improving the performance and sustainability of the Palau Public Utilities Corporation.

Continued advisory support is required to sustain the momentum of reforms in Palau's energy sector. ADB provided substantial advisory support through ADB staff and by engaging experts through technical assistance operations to help the Palau Public Utilities Corporation (PPUC) implement the agreed policy actions and prepare background studies for both subprograms.

When designing results frameworks, the use of policy actions as results indicators should be minimized. If the indicator measures the reform success by the completion of the policy actions, it provides little information on the success of that policy action and undermines the relevance of the policy action for no result is achieved other than itself.

Projects supporting educational reforms such as improving the school dormitory system require a well-defined development plan and multi-faceted approach. Greater support for financial, human and physical resources, and capacity building, specifically support for policy and educational regulatory reforms, helps in improving project sustainability and in turn promotes better access to education.

Public financial management reforms require a long-term perspective to achieve the intended objectives, which are only likely to be achieved gradually.

While the reforms were implemented in stages, many key areas were implemented simultaneously and involved the buy-in of many stakeholders, including government line ministries.

The use of technical assistance loans should be carefully deliberated to ensure strong and sustained government commitment at the design stage.

Some achievements are initial gains which need further deepening and sustaining. These include revenue mobilization; the financial management information system; budget integration, particularly integration and management ofpublic investment management and asset management; and budget transparency and performance accountability.