An increased engagement of local businesses (e.g., consultants, contractors, and/or suppliers), referred to as local content, in the delivery of infrastructure on a commercial basis can support economic recovery from natural disasters and the Covid-19 pandemic as well as contributing to general economic development more broadly. 

The recent PRIF study “Enhancing Procurement Practice and Local Content in Pacific Infrastructure“ assessed the scope for local content in infrastructure projects and the potential benefits and costs to the domestic economy associated with such content. 

The potential benefits of using local content include increases in employment, capacity building for contractors and the domestic workforce, economic multipliers (as earnings circulate and contribute to the output of other sectors of the economy), application of appropriate technologies, technology transfer, and more effective maintenance. 

The study identified a number of barriers that inhibit the incorporation of local content into the procurement of infrastructure projects in Pacific Island countries. 

For consultants, contractors, and suppliers, there is a lack of visibility and analysis of Pacific-based capacity that restricts the tailoring of projects to available local content. Relevant professional and umbrella organisations, such as professional associations and chambers of commerce, are generally limited to provide the visibility and advocacy required on behalf of their members. The exception appears to be Samoa, which reportedly provides good representation for members. 

Consultants, contractors, and suppliers (particularly small or emerging entities) may not fully understand the challenges of meeting the specified financial and technical capacity requirements to bid and may not possess appropriate skill sets, including estimating, tendering, and contract management. 

Consultants, contractors, and suppliers often lack access to capital to support both bidding (bid security, performance security, cash flow financing) and investment (in equipment and facilities). In addition, trade and professional skills are limited at the local level and may not be to international standards. 

External barriers arise when comparing the business-enabling environments of Pacific Island countries to those in other regions of the world. There are multiple and persistent constraints on private sector development in the Pacific, including wide geographic dispersion, distance from major markets, limited economic capacity, complex legislation, weak policy, human and institutional capacity constraints, and limited access to financial services. These constraints are compounded by exposure to natural disasters that frequently result in significant economic disruption.

On the positive side, this study identified initiatives explicitly designed to lift local content levels. The study detailed strong evidence of the economic and social benefits of using local content for example a locally targeted road maintenance program in Tonga created 200 jobs. A schools reconstruction project in Vanuatu provided much-needed disaster recovery and economic stimulus, while enhancing maintenance of infrastructure at the local level. 

The development of a local content policy and strategy for roads infrastructure in Fiji has resulted in an increase of contract awards to local companies, with corresponding increases in employment. The Parliament House of Samoa was completed in 2019, built by Samoans for Samoans. Such examples have led to calls for greater input from the private sector within countries to help deliver local content in infrastructure projects.

The study proposes key considerations to enhance local content in the Pacific:

(i)    Developing local content policies and/or enabling environments

(ii)    Incorporating local content as early as possible into projects

(iii)    Strengthening promotion and awareness of infrastructure pipelines

(iv)    Embedding local content indicators into infrastructure project monitoring and evaluation requirements and post-project reviews

(v)    Using procurement mechanisms that facilitate local content

(vi)    Establishing procurement competency frameworks and related training programs

(vii)    Creating pathways for skills development and recognition for local workers within infrastructure programs

(viii)    Researching the quantifiable costs and benefits of local content to facilitate objective project decision-making

(ix)    Establishing a local content infrastructure development fund

(x)    Strengthening the capacity of professional associations and chambers of commerce to provide representation for local content providers.

In partnership with the Samoa Chamber of Commerce and Industry, PRIF welcomes registrations for PRIF Week 2022 “Enhancing Private Sector and Local Participation in Pacific Infrastructure”. 

The objectives of PRIF Week are to:

• Provide a platform for Pacific contractors, governments, development partners, international contractors and others to discuss the opportunities for improving Pacific-based participation in infrastructure development in the post COVID-19 economic recovery
• Enhance awareness of emerging infrastructure priorities and publicly available pipelines of upcoming work for contractors in the Pacific
• Provide visibility of Pacific based contractors working in infrastructure in PRIF member countries, and
• Facilitate networking opportunities

PRIF Week 2022 is a unique opportunity for Pacific infrastructure stakeholders to interact, share views, promote their respective services, access business opportunities, and support private sector participation in Pacific infrastructure. Held virtually from 17 to 21 October 2022, PRIF Week program includes:

• Sharing of information about upcoming infrastructure projects and project profiles by developing partners and Pacific Island country governments.
• Virtual exhibition stands by local and international contractors active in the region.
• Presentations and deep dive discussions into infrastructure sector issues.
• Information sessions on project procurement for local contractors.

Register to participate in the plenary sessions and discussions with opportunities to ask questions and actively participate in the conversations. 

Register to Exhibit. The exhibition is a virtual webpage that allows businesses to promote and market their company to all attendees at PRIF Week. Businesses are encouraged to register for both and take full advantage of the PRIF Week 2022 program.

PRIF is a multi partner coordination and technical assistance facility for better infrastructure in the Pacific. PRIF partners include the Asian Development Bank, Australian Department of Foreign Affairs and Trade, European Union, European Investment Bank, Japan International Cooperation Agency, New Zealand Ministry for Foreign Affairs and Trade, United States Department of State and the World Bank Group.

• Sean O’Sullivan is the Team Leader of the PRIF Coordination Office and is based in Sydney, Australia.