Hanging On, Moving On

Over the past 50 years the basic structure of the economy of American Samoa hasn't changed much. The government of territory still relies heavily on the two tuna canneries, federal grants, personal income taxes, customs fees, petroleum surtax and various immigration fees.

But, said Department of Commerce Director Aliimau Scanlan, Jr., the makeup of the territory's economic base could change in the future.

"We are trying very hard in one thing -diversification," Scanlan says.

For the past several years that has meant developing hiking trails, camping areas, bed and breakfasts and cleaning up the territory to attract more tourism. The American Samoa Government has also discussed bringing in more manufacturing jobs, as well as e-commerce.

Scanlan says there's a good economic outlook for the territory.

Source: The Territorial Planning Commission and Department of Commerce

"In 1994 the government had a US$33 million deficit," Scanlan says. "For years the government struggled to bring the deficit under control. Since then financial conditions of the government have gone up and down and there's been a shortfall in customs collections, but the government has finally gone into the black by controlling salary increases, raises and government purchases. And with the tobacco settlement and the insurance company settlement expected soon, things should get even better."

The ever-growing population of American Samoa has also helped the territory's bottom line. Over the past 20 years the population has literally doubled due to immigration and to American Samoans returning home to retire from the U.S. military.

But American Samoa has a higher percentage of the population on the government payroll (38.2 percent) than anywhere in the Pacific. For comparison, Kiribati, with 33.3 percent of its 96,000 population in government employ, is the only country close to American Samoa's percentage. A few miles away, independent Samoa has only 9.6 percent of its population working for the government. Papua New Guinea is at 9.3 percent.

Asked about this, Scanlan says, "American Samoa has been for the last 20 years trying to attract foreign investments and diversify the economy. Guam and the Northern Marianas don't have as difficult a time in attracting foreign investments because of their proximity to major traditional markets, such as Asia. Investments in American Samoa are hard to do. We're out there all the time trying to bring in investments and we're turning our attention to tourism-related investments."

Scanlan added that American Samoa is also asking the U.S. Congress for an extension of Internal Revenue Code 936, "a tax deduction program that benefits American companies," as he put it. [For more on 936, see our interview with Gov. Togiola on p. 28 of this issue.]

Yet there is optimism in the private sector.

"Things are going well," says Avamua Dave O. Haleck, president and CEO of Haleck Enterprises, Inc., which oversees several local businesses, including Cost-U-Less, Haleck's Island Beverage, Makesi's Ace Hardware, and the Quality Inn Tradewinds Hotel, to name a few. "We see a lot more vehicles on the road. Home loans are doing well and the airlines are doing well."

But, Haleck says, "There's room for other businesses to come here and start up." He admits there's always been a fear of the tuna canneries leaving American Samoa, which would put roughly 60 percent of the territory's workforce out of a job.

However, Alfonso Pete Galeai, human resources manager at COS Samoa Packing Company, doesn't believe that this will happen.

Galeai acknowledges that it's becoming increasingly difficult for COS Samoa Packing to remain competitive with other canneries around the world, but he says the company is still able to keep wages reasonable. Other factors that will keep the cannery in business, he says, are tax incentives from the federal and local governments.

COS Samoa Packing and StarKist are two of the largest canneries in the world. They represent the last of the domestic U.S. producing canneries, and are the territory's primary industry, kicking in $40 million to $50 million to the local economy-$20 million of which comes from wages and salaries. Approximately 2,200 of the territory's population of roughly 60,000 work at COS Samoa Packing. StarKist employs about 2,800.

"Our objective is to maximize production days for us and our people," Galeai says. But a month after that statement, Samoa Packing laid off 70 workers, citing a downturn in consumer demand for canned tuna.

But this downturn is of recent vintage, and the canneries continue to be the territory's largest exporters. Christopher John King, assistant director of port operations for the American Samoa Government's Department of Port Administration, says the canneries ship out on average 500 containers per month loaded with tuna-that's more containers than any other industry in the territory uses. Household goods make up less than 2 percent of exported and imported containers each month.

DPA Director Seugogo H.B. Schirmer, who left the territory in the late 1960s to seek work off island, came back in 2001 to find a number of changes.

"If you look around, the number of homes and businesses have increased," Schirmer says. "I think the economy is healthy. Demands from the community are steady, and that's across the board in all areas, from construction materials to food supply to general merchandise, and then also with the canneries."

As a result of the healthy economy, the port has grown by leaps and bounds, as has the Pago Pago International Airport. The extension of the runway at the airport by 10,000 feet was completed about a year ago to accommodate larger aircraft, and the port has also seen its share of improvements. In 1998 the piles and the surface of the main dock were strengthened, and shortly after, the docks and wharf were completely refurbished. Now, the dock is getting port utility hookups for sewage, oily waste, potable water and communications. And there are more plans for the port in the future. A master plan consisting of 19 total projects will take the American Samoa port to 2020.

But it's e-commerce that so many people are hoping will push the territory into the 21st century. The new E-Commerce Development Corporation was formed at the end of last year to examine what the development of e-commerce would bring to American Samoa.

Carl Sene, American Samoa Telecommunications Authority Internet engineering manager, sees a lot of potential. "I think if the third world countries can do it, I think we can do it as a U.S. territory," he says.

Elvis Patea, ASTCA's legal council, says the development of e-commerce in the territory would keep people in American Samoa.

Patea adds that the territory is losing many of its young people to the military. "With e-commerce," he says, "kids will stay here."

But the e-commerce project is hardly off the ground yet. "They have to secure some funding," says Aleki Sene, ASTCA executive director. "There's no way to go any further without securing funds." But neither the governor (see our interview, p. 28), nor Patea seem able to say specifically how e-commerce is going to bring diversity to the territorial economy, or what e-business models would work there. For now, beefing up tourism, holding on to the canneries and hoping for more U.S. grant largesse are the strategies of choice.