NEWSLETTER
June 2007

The effects of the imposition on the territory of the minimum wage hike are already starting to have an adverse impact on the local labor market. One of the canneries has started to lay off workers, a shipping company is reportedly planning to raise freight rates, and commercial companies are planning to scale down employment numbers and reduce overtime. The Senate President announced that his office will commence a study into the impact of the minimum wage hike on local businesses and government departments, and a study is underway by an independent consultant to assess the impact on the economy if both canneries were to relocate their operations. All in all a pretty gloomy picture which reinforces the need for all local companies to be prepared for a downturn in their business and to prepare a strategy for their company that will enable them to survive. Companies who neglect to do this are asking for trouble. Those companies who need help with the preparation of such a strategy can ask the Chamber to assist.

A recent report released by the Department of Commerce revealed price hikes in every industry sector pushing inflation to 3.1% in the second quarter from 0.5% in the first quarter. The Transportation group had the largest increase due to rising gasoline prices of up to $3.34 a gallon. Essential items such as kerosene and electricity both increased and certain foodstuffs increased in price by as much as 50%.

All this bad news highlights the vulnerability of our economy and the urgent need to find new investment and development projects that will provide jobs and export opportunities to try to maintain the frequency of our international shipping services and to try to cap the freight rates. The Chamber has been doing it's part as it continues to progress the five potential new investment projects that it has generated. Three out of the five now have local companies as potential joint venture partners. The Governor is reported to be pursuing funding to revive the famous Mt Alava cable car that was previously such a tourist attraction, and plans are well underway to reorganise the current office of tourism to give strength to the task of tourist development and attraction. It is hoped that more funds than are allocated in the present budget will be made available for the new entity.

The Department of Commerce has appointed a liasion officer to work with the Chamber to share information about it's work and particularly to assist the Chamber with it's project development work and provide advice on regulatory matters affecting these projects. The Chamber welcomes this initiative as it moves forward with plans that will help to strengthen the economy.

The Chamber understands that documentation is nearing completion for the undersea fibre optic cable to be installed, and that an MOU for the proposed call center project is awaiting signature once the cable documents have been signed off by the government, very positive steps and good news for the economy.

The Department of the Interior has scheduled the 2007 Islands Business Opportunities conference for 8-9 October in Guam. More information will be circulated to members and to the commercial sector as it becomes available.

David Robinson
President