Business Briefs
Business Briefs
American Samoa, Samoa, Kosrae, Marshall Islands, Northern Marianas
American Samoa
Two U.S. federal regulatory agencies have given their approval to the proposed purchase of the Amerika Samoa Bank (ASB) by Australia New Zealand Bank (ANZ Bank). The sale is now expected in early 2001. "It’s a long process involved with federal regulatory agencies," said ASB president Brant Judy in November. Judy said ASB has recently secured the approval of the Federal Depository Insurance Corporation (FDIC) and the U.S. Federal Reserve, and is awaiting the approval of the U.S. Security and Exchange Commission. When the sale goes through, ASB stockholders who want to sell their stocks can do so, while those who wish to exchange their ASB stock for ANZ stock will have that option. There are approximately 256,000 ASB shares, and — at $35-$40 value — the value of the transaction could reach $10 million.
The American Samoa Government began releasing in early December more than $9 million to over 60 vendors as a result of the "tobacco loan" from the U.S. government. The territory opted to give up its $29 million share of the master tobacco settlement in return for an $18.6 million loan from the U.S. Of the $18.6 million, $14.3 goes toward paying off outstanding debts incurred before April 15, 1999 and $4.3 million for fiscal reforms that should balance the government’s budget by 2003. Health care and utility bills — along with any firms willing to accept 75 percent of the total due — topped the list of required payments in the U.S. legislation authorizing the loan. If local vendors want funds immediately, the government said they must agree to settle for 70 percent. Agreement has been reached with over 60 vendors for $6.09 million, a savings of about $2.5 million on the original debts.
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The California Court of Appeals recently denied a motion by Affiliated FM insurance to reconsider a decision upholding a $47.9 million award to the American Samoa Government. Affiliated FM lodged an appeal with the California Supreme Court. Jack Kachmarik of the territorial government said it’s very unlikely that the Supreme Court will agree to take up the case because it does not involve important legal issues. The award is for actual damages in a lawsuit filed against the insurance company after it rejected damage claims following Hurricane Val in 1991. Most of the $47.9 million will go toward attorney fees and to repay U.S. federal government disaster advances.
Samoa
A Samoa company has produced a local version of chocolate candy to compete with M&M’s. Produced by Wilex Inc. of Samoa, the chocolate snacks called "WW Choconuts" are being promoted as a product that offers "real" and "pure chocolate" coatings. "This product will enable us to enhance and increase our chocolate export capacity. It is competitive in price and is made to suit the warmer climates of the Pacific region, which will be our primary target," said Wilex’s Managing Director Eddie Wilson. The company also produces soap, kava products, liqueur and handicrafts for local and overseas markets.
Exports from Samoa to the United States have been granted duty-free access. However, the Samoa Chamber of Commerce is looking into U.S. President Clinton’s Executive Order issued in November to identify what specific types of exports are allowed. The Executive Order officially changed the country’s name from the former "Western Samoa" to "Samoa" in the list of developing countries, and designated Samoa as a least-developed beneficiary developing country. Neighboring American Samoa, enjoys duty free export access to the United States. The duty free exemption with no quota limitation on exports coupled with the Made-in-USA label is among several advantages attracting foreign investment into the territory.
Kosrae
Kosrae Phoenix Resort has just started serving customers with the opening of nine rooms and a temporary restaurant. Two additional rooms are underway overlooking the beach, while a plan for a Japanese restaurant and lounge is being drawn up. Four of the rooms are in island-style bungalows with thatched roofs. Japanese-owned Phoenix of Micronesia has expanded from its diving and marine sports focus to include hotel operations, adding hiking, sightseeing, and canoeing to its portfolio of visitor activities.
Kosrae Visitors Bureau recently published its first official map and guide to Kosrae with information on cultural, natural and historical sites complete with color photos. Aimed at visitors, the back of the map includes travel tips and a variety of helpful information.
Marshall Islands
Marshall Islands businesses and government agencies owe Social Security an estimated $7 million in unpaid tax contributions, money that the agency intends to collect, administrator Saane K. Aho said. Restructuring at Social Security includes a major push to collect past due taxes. In December, Social Security filed suits worth more than $1.7 million against about a dozen local governments, and a handful of local companies.
Social Security statistics show that in fiscal year 1997, retirement fund collections reached $7.6 million. By FY99, they had dropped dramatically to $4.5 million. In FY2000 (which ended September 30), the collections rebounded slightly to $5.2 million. But payments to retirees totaled $7.5 million, which required the withdrawal of money from the agency’s Wall Street investment fund to meet the $2.3 million deficit, Aho said.
Northern Marianas
A survey conducted by a Tokyo-based marketing firm revealed that only 32.2 percent of 1,000 Japanese surveyed are aware of the existence of the Saipanda campaign promoting the Northern Marianas in Japan. Of this, 65.8 percent learned about it through television commercials, 34.2 percent through newspapers and magazines and 16.1 percent through flyers/travel pamphlets. Tokyo-based advertising firm Dentsu 10 created the Saipanda mascot, a character which resemble a panda bear with a rhinoceros horn nose, symbolizing the Japanese male traveler who is a repeat visitor and crazy about Saipan.
Indicating a strong financial structure in the Northern Marianas, the banking industry surpassed the $600 million asset mark, posting a strong growth of 11 percent in the third quarter of 2000. Bank assets jumped to $631.024 million by the end of September 2000 compared to $571.85 million recorded during the same period in 1999. Meanwhile, banks reduced lending in the third quarter of 2000 by as much as 15 percent. Overall amount of loans approved by eight commercial and savings banks in the Northern Marianas shrunk by $44.5 million to $255.7 million in the third quarter of the year from the year ago of the same period’s $300.2 million. Lending to the CNMI government, however, increased.
Fresh capital is expected to flow into the economy with the establishment of the Bank of the Federated States of Micronesia. While the bank is initially opening its doors strictly to engage in lending activities, BFSM President Thomas Riefe said future plans include providing full service banking on Saipan depending on the turnout of the loan production office’s operation over the next two years. Riefe pointed out BFSM is the only non-United States banking institution in the world insured by the Federal Deposit Insurance Corporation, which makes it highly qualified to secure a full service bank license in the Commonwealth. The decision to come to Saipan was made primarily because it is estimated 3,000-to-4,000 FSM citizens live there.
The United States government is extending another public housing program to the Northern Marianas to increase home ownership among moderate-income families. The Guaranteed Rural Housing (GRH) Loan Program will be implemented in the CNMI through Rural Development of the U.S. Department of Agriculture. The Bank of Hawaii has been approved to initially process $1 million worth of guaranteed loans for Saipan. Residents whose annual income falls within the limit set for the Commonwealth are eligible for credit for the purchase or construction of a modest house in a rural area.
Papua New Guinea
The government is getting behind a joint venture to boost the impact of the Small Industries Center through a "business incubator system." PNG Trade and Industry Minister John Tekwie said the center was already producing quality goods — ranging from furniture to water pumps — but had not had recognition from previous governments. National Capital District city manager Bernard Kipit has pledged K50,000 for the joint venture to provide assistance not only to small businesses, but also to school leavers and unemployed youth keen to acquire marketable skills. The JV kicked off in January.
