I am pleased to have been given the opportunity to speak to all of you today, as well as represent the private sector of the Marshall Islands. My country, just as many others, is an evolving entity, one which has grown considerably in the last decades of this century. When I first arrived there nearly 30 years ago, Majuro was a simple place – quiet, slow-paced, low key. Today, it is the bustling center of business for the country as well as the local community. The Majuro Chamber of Commerce includes about 60 to 70% of the big, established businesses and about 20% of all business, right down to the smallest roadside vendor.

The successful growth of the private sector in Majuro continues to rely heavily on the collaboration between the private sector and government. The relationship between the two can be compared to that of a ship at sea. The private sector is the engine – the energy that moves the vessel. The elected body of government steers the ship, and the appointees are at the controls. If our vessel is moving in the right direction, we can pick up speed and move consistently forward. If occasionally we veer a little off course, we can slow down and take steps to correct our path. If we are too far off course, we must stop and take measures to correct our course before losing our way. We must take care not to have to reverse our direction for then we take the risk of working against each other.

As we all know, and most of us have likely experienced, problems can arise that will clog the engine, causing us to be stranded, or as in the case of a ship at sea – set adrift. Without prompt attention and repairs, both mechanically and functionally, we would not be able to progress. We may also find components in our vessel that may have deteriorated or been corrupted – as is the case of white-collar crime. If that happens, we must stop our ship and take care to replace those components. Finally, as in all reliable equipment, maintenance is of utmost importance. Thomas Edison once said, "Opportunity is missed by most people because it is dressed in overalls and looks like work." Well, if everyone involved pulls on their overalls and works hard at keeping our vessel in prime working order, many opportunities can be recognized. We must pay close and constant attention to each part to ensure the smooth functioning of our vessel.

With all this in mind, we should put into practice a theory that a famous American, Will Rogers, once offered. "Even if you're on the right track, you'll get run over if you just sit there." So we must continually push our vessel to continue progressing and not mire ourselves in complacency.

Marshall Islands Yesterday

Just look at the Republic of the Marshall Islands 20 years ago. There was no private sector infrastructure to speak of. We had poor electrical facilities, inadequate water supply, and poor roads. Service to the outer islands was provided by vessels that were government owned. What communication tools we had were insignificant at best. There was a small, inadequate harbor of only 250 feet, and 90% of our construction materials were imported by the government and resold to the private sector.

Marshall Islands Today

As you look around the Marshall Islands today, that situation has clearly changed. The business community in the Marshalls has grown quickly. We now have a good sewer system and electrical facilities. The nearly completed upgrade will double the plant's power output. We have a direct water supply that runs over half the length of our atoll. We have excellent harbor facilities and anchorage in our beautiful lagoon. We are on the cutting edge of communication in the Marshall Islands with access to the latest technology and on-line services. Our community is filled with a great variety of skilled professionals and we have many small and mid-sized businesses selling goods and services. And, oh yes, now 90% of our construction materials are imported by the private sector and used for government supplies and requirements! The majority of all government projects are done by local contractors, ranging from basic construction to medical and school facilities, transportation and other service requirements.

As we zero in on individual areas of the private sector, our constant push for growth and improvement are clearly evident. Our private sector works diligently along with the government to increase and improve foreign investment and trade in our country.

Airport improvement and renovation were undertaken with the construction of a new hanger facility. A terminal building is projected for the near future. Promotion of tourism is a joint effort of the government and private sector, and has great potential benefits to both parties. The joint efforts of the private sector and government to build new hotel facilities on outer islands will allow visitors to enjoy excellent fishing and diving locations. The recent acquisition of garbage collection equipment will help make our island a preferred destination for travelers world wide.

Our local farms collaborate with government departments to maintain and expand their operations in an effort to keep our communities fed and healthy.

It has been said, "There is no limit to what a man can do or how far he can go if he doesn't mind who gets the credit." –Robert Woodruff

Examples of Collaboration in the Business Community

This philosophy is demonstrated by the joint efforts of the government and private sector to continue making improvements to the business community. Early this year our Ministry of Finance was able to pass a bill with the help of the private sector that significantly reduced taxes. Chamber members were instrumental in research and discussions involved in the preparation of this bill.

The private sector also assisted in the Amnesty Law that allows businesses that have not paid taxes in recent years to begin to do so without penalty. The effects of the law have been increasing membership of the Chamber, prevention of smuggling, and an increase in government taxes they may not have received without legal action.

Another fine example of the success of government collaborating with the private sector is the acquisition of Taiwanese investment in our country. On the surface it appeared that it was entirely the government who was responsible for acquiring their monetary support to purchase garbage collection equipment. In reality, the private sector did a lot of work to bring that negotiation to a close, proving to be extremely beneficial to the RMI.

Our community in Majuro is currently enjoying the comfort of newly paved roads. This is another improvement the government coordinated with the private sector to bring to our community. Also, because of concern for pedestrians as well as drivers on this more efficient, public thoroughfare, safety is an issue being addressed by local businesses.

That same concern prompts the private sector to look at our lagoon and the potential pollution problems that could arise with the increased number of vessels anchored there. Private forces joining with the government to prevent damaging a valuable natural resource will help to ensure success.

The teamwork between government and private sector has also helped provide community playgrounds and sports and cultural events. The government provided land while the private sector built recreation equipment. The government contributed to community events while the private sector sponsored them.

All of this is an example of what the famous philosopher Aristotle meant when he said, "Quality is not an act. It's a habit." All our initiatives are more successful when the parties involved cooperate and incorporate that ethic as the standard instead of an exception.

In the past, any international programs and opportunities that arrived in Majuro were taken care of by the government without any private sector assistance or collaboration. Now the Foreign Affairs Ministry advises and requests the aid of the private sector with regards to the visits, workshops, and proposals it receives. It is clear that what makes our island prosperous is a healthy private sector, and an interactive government.

A real challenge came to our country a year ago when we fell upon hard economic times that called for immediate action. The government called on the private sector to assist them in coming up with ways to get past the difficulties. Committees were set up and a plan of action was developed.

Before solving a problem, the reasons for the difficulties must be ascertained. One that immediately came to mind was high taxes, which resulted in reluctance to file, not paying at all, and cheating. Due to government layoffs during this period, there were no officers available to police the import tax, and this lead to an increase in smuggling.

With the cooperation of the local Chamber of Commerce, the Ministry of Finance formed a committee that developed a fair tax structure that worked out for both sides as well as the community and country in general. After only three sessions together, the National Government passed new tax laws within six weeks that incorporated 100% of the committee's recommendations. Import taxes were lowered to 5% on the majority of items, most of which were previously taxed at 12%. Tax on TV's and VCR's fell to 5% from 25%, and sugar dropped from 50%. Soft drink taxes plummeted from 125% to 5%. Taxes were completely eliminated from staples such as rice, flour, and sugar.

At one time our country had four ships that took care of outer island shipping but due to a number of reasons, there are now none. The government looked to the private sector for bids on the shipping operation, and the first privately owned vessel arrived in Majuro last month. It will serve the northern islands, while a second ship is expected before Christmas. Hopefully, a third will arrive by the beginning of the new year. The outer islands will once again have much needed regular shipping service, which the government couldn't manage on their own. The private sector can take care of this with the help of government subsidies.

The RMI government, upon realizing they were having problems in services they were providing, including the copra processing plant, water and sewer company, the energy company, and the national airline, are becoming more reliable and profitable after utilizing the decision-making and management experience of the private sector. Three of those companies are now chaired by private businessmen.

Examples of Collaboration in the Utilities Sector

I believe a perfect model of government and private sector cooperation is the story of the growth of Majuro's power company. A huge loan was acquired by the government in 1981 to commission a 13 megawatt power plant. A management team was hired from the company that arranged the loan, but in 1986, that company went bankrupt, leading the RMI government to establish the Marshalls Energy Company, Incorporated (MEC). Consequently, a board of directors was formed that included two ministers, a representative from local government and four members of the private sector. The government now had direct control of the corporation with its own bank account, allowing them to make decisions that would affect the operation and future of the company based on direction from the board.

In 1993, the government still controlled the energy company through subsidies, but the board of directors prompted a decision to cease the monetary support on the condition that ALL government billings would be paid. This helped to increase MEC's revenue and made the government departments budget for their yearly power consumption, leading them to be more conscious of that consumption, and helping to cut down their costs.

Now, with nearly total management of the energy company by the board of directors, and very little by the government, a decision was made to upgrade the distribution system. The operation itself made it more attractive for the private sector to make improvements to their own facilities, taking advantage of the enhanced service.

From 1993 to the present, MEC growth rate stands at 8% and their improved efficiency has lead to the need to increase capacity yet again.

Pacific Forum countries have looked into the Marshalls Energy Company's successful operation and have used it as a role model. In 1993 other Pacific power companies got together to form what is known today as the Pacific Power Association. Seventeen member countries including American Samoa take turns hosting a yearly meeting where they can address problems and assist each other with potential solutions.

From a small, government-owned 13-megawatt power plant, MEC now has its own private sector management and board of directors, no longer requires subsidies to operate, and has doubled its original output. All this success was a direct result of good management and private sector development. A "powerful" example of government and private sector cooperation.

Because of this success story the Port Authority, Civil Aviation Authority and Marshall Islands Visitors Authority are all under consideration by the government for the same structural changes.

A similar scenario played out with the telephone company. Originally being 100% government owned, it required the assistance of the private sector to acquire an $18 million loan to get state-of-the-art service. All but one of the directors, as well as the chairman of the board, are now from the private sector, with 50% of company stock put up for sale by the government, and of which 27% has been bought to date.

The point I am trying to make is that many other Pacific governments can do the same. They don't have to privatize all services, but they can diversify and invite the private sector to play a part in the infrastructure of the community to benefit everyone involved from the consumer, to the businessman, to the government.

Another important role the private sector plays in its relationship with the government is in making policy. The RMI's Foreign Affairs and Trade division works closely with the private sector, notifying us in advance about visiting dignitaries and directors, and seminars that are planned. This collaboration utilizes the efforts of the private sector to help develop format, organization, and communication for these events.

For the last three years, the Republic of the Marshall Islands have been sending representatives from the private sector to various forum meetings. Chamber of Commerce members, as well as myself, have attended such meetings. But we found that other countries do not send private sector participants, even though the majority of discussions at these meetings and seminars are directly related to the private sector.

Our private sector sits on many government committees, plays a tremendous role in the national census and government functions pertaining to visiting heads of state and seminars, and is often involved in day-to-day policy making. Every three months our President and various Ministers attend a Chamber of Commerce meeting for open discussion, which is broadcast to the rest of the nation on the radio.

Truthfully, strong government does not make for a healthy private sector. Constructive input and assistance from the private sector makes for a healthy, strong government. When the government is strong, it tends to avoid the private sector and corresponding high taxes discourages the private sector. This situation comes dangerously close to dictatorship. The Pacific region will remain strong with the combination of a parliamentary system, a democratic system, and its traditional system, which it must not forget.

CONCLUSION

Finally, all entities in any successful country put the education, health, and welfare of their citizens as a top priority. Collaboration in these areas between the private sector and government cannot fail to produce a healthy, vibrant society.

I believe that the collaboration of private sector and government has a great vision of things that can be accomplished for both by coordinating their efforts. "Vision without action is merely a dream. Action without vision is merely passing time." We must NOT merely pass the time, we must continuously try to work together to kick start our visions.

"I'm looking for a lot of men who have an infinite capacity to NOT know what CAN'T be done."

Henry Ford made this statement that we would all do well to remember. We cannot be certain of what the future will bring, but we can accomplish much if we put our minds to it. Let's keep our hearts confident and our minds open so that at the end of the day, we will be satisfied and pleased with the efforts we make to keep ongoing collaboration between private sector and government a reality.