Cook Islands | 10 October 2022

‘Holistic and dedicated’ PSDI support helped Cook Islands mitigate worst of COVID-19: study

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The Pacific Private Sector Development Initiative’s (PSDI) provision of critical support and resources to the Cook Islands helped bolster national resilience to shocks like COVID-19, an academic journal article has argued.

The article, Resilience building to COVID-19 in the Pacific: The case of the Cook Islands, published in 2021 in the University of Malta’s Small States and Territories journal, assessed the Cook Islands’ reform efforts to build resilience to shocks like COVID-19.

Prior to COVID-19, the Cook Islands government worked closely with PSDI to implement a package of business regulatory reforms, which improved economic efficiency, introduced competition, established independent regulatory oversight of monopoly service providers, and improved the business enabling environment. 

This package included the development and implementation of the Companies Act 2017 and Personal Property Securities Act 2017, and the development of a new online business and personal property securities registry. 

It also included the opening of the Cook Islands’ telecommunications market in 2019 under the supervision of a new regulator, facilitated by PSDI-supported legislation—the Competition and Regulatory Authority Act 2019 and the Telecommunications Act 2019. 

PSDI’s support helped the Cook Islands enact these business-enabling reformsboosting national resilience before COVID-19 and mitigating its effects when it arrived.

Avatiu Valley Power Station worker, Rarotonga.

The Small States and Territories article praised the PSDI operating model for technical assistance provision, saying its support “covers the entirety of the project in a more holistic and dedicated fashion. 

The authors noted that PSDI offers expertise in both policy and legislation—not only with drafting and developing policy, but also with legislation to give effect to policy. 

Further, the authors suggest the PSDI model as a potential solution to resourcing issues faced by all small island states, including in other policy sectors.  

While this was a successful model in the Cook Islands for the competition and business reforms, it has the potential to be extended to other public policy sectors such as social and environmental,” the article stated. 

ADB data reveals the Cook Islands economy contracted 5.2% in 2020 and 29.1% in 2021. However, the journal article argues the Cook Islands government’s allocation of NZ$72 million in direct COVID-19 support up to March 2021—enabled by its pre-COVID-19 focus on strong public financial management—averted a significantly worse economic outcome. 

Amid COVID-19, PSDI in 2020 also supported the Cook Islands government to pass the COVID-19 (Economic Response) Act, which assisted otherwise profitable and viable businesses to continue trading, preserve their economic value, and retain employees.

PSDI is an ADB technical assistance program undertaken in partnership with the Governments of Australia and New Zealand. PSDI supports ADB's 14 Pacific developing member countries to improve the enabling environment for business and to achieve inclusive, private sector-led economic growth.