FSM
Slow Going For Business
Moving Beyond Rhetoric
| An
irony of the attempt to develop the private sector in the FSM is that in the first
Compact of Free Association, the United States provided substantial funding to
the national development bank that an unsophisticated private sector could access,
but was ill equipped to utilize. "Twenty years ago, it was mostly subsistence
agriculture and fishing," says Larry Adams, whose family owns Ace Hardware stores
in four islands. "Now we have the education and know-how, but no capital." He
and other local business people view the government focus on "foreign investment"
with skepticism because of the key need to develop the local private sector. "There's
money for government infrastructure, but not for private sector infrastructure,"
he adds. In the FSM, the governments-national and state-remain by far the largest employers. And islanders prefer working for government because salaries and benefits, particularly at entry levels, are far higher than in local businesses. But with reduced Compact grant funding from the U.S., the governments are looking to the private sector as a means to generate money to sustain continued government operations and to "privatize" work that it can no longer afford to do. This may be missing the point on two levels. "The government isn't really putting resources and technical assistance into the private sector to develop it," says business consultant James Movick, who heads a recently formed regional association of tuna fishing companies. "It's a withdrawal without the resources to enable the private sector to take over." Adams comments that the state and national governments are too big. "The private sector can never feed them," he says. "Our private sector is built around support for the government. But it should be the opposite, as is happening in some other South Pacific islands." Pohnpei business people are watching with a nervous eye the increasing Chinese and Taiwan take-over of the business sector in neighboring Majuro. "For international donor agencies, foreign investment is a sacred cow," says Movick. "But we need to assess, is it working on the ground? Look at Majuro, where foreign investors are taking over the retail sector. This is a concern right through the Pacific." Reed Oliver who heads the Lions Club and Adams see the government paying more attention to local businesses in recent months. "I'm beginning to see a light at the end of the tunnel," says Adams. But the constraint of limited resources remains. Adams would like to see the U.S. channel funds into the local private sector. "Everyone focuses on foreign investment, but the key is developing local private sector capacity," he says, adding that a critical need is skilled carpenters, electricians and machinists. "All education here is focused on academic subjects. Students come out of the College of Micronesia and want a government job, and rightly or wrongly, the government is trying to accommodate them." Having a technical skills training center is essential. "Then people can earn their own living and money circulates in the economy," he says. |
