NEWSLETTER
MAY 2007

At the beginning of the month the Chamber welcomed the New Zealand Trade Commissioner for the Pacific region based in Fiji. He spent some time examining the current tax structure as it would impact on New Zealand companies who have expressed interest in exploring the possibility of setting up manufacturing operations in the territory. His conclusion mirrors the Chamber’s view that unless the government changes the current structure, there is no real incentive for non US companies to contemplate investing here as the tax penalties are too harsh, particularly the inclusion of a 30% withholding tax in addition to the corporate tax up to 44% based on a sliding scale of earnings. The government is aware of the situation and it is likely that changes will be made in the not too distant future. The Commissioner has agreed to assist the Chamber with identifying potential investors from New Zealand, and this assistance plus our regular dialogue with the NZ Pacific Business Council which is also providing assistance should give strength to our push to provide a stimulus to economy and provide much needed jobs.

The Chamber has sent a letter to the Governor recommending that a draft Executive Order to reorganize the Office of Tourism be reactivated with some modifications, and then implemented thereby turning over the office to a private sector run Board. We are waiting to hear further from the government regarding the proposal.

Early in the month the President met with the executive of the Samoa Association of manufacturers and Exporters in Apia to discuss ways that our respective organizations could work together to improve two way trade between the two Samoas. A draft  Closer Economic Relationship document is being drawn up which will be a working document to be signed by both organizations outlining real objectives in such industry sectors as tourism, agriculture, fisheries and general trade where trade improvements can be made. It is planned that the two organizations meet at least once every six months to progress trade matters with the next meeting being held here, this will give the Samoan side a chance to try and retake the inaugural golf trophy which was won by American Samoa after the first meeting.

Many local businesses are quite rightly worried about the impact of the $0.50 cents wage hike in a Bill approved into law by the US President recently and including in it American Samoa and an escalation clause for an eight year period to bring our minimum wages up to the US mainland level. The fact that politicians in Washington would consider that a tiny island economy in the middle of the pacific ocean should have the same wage structure as the world’s largest economy defies all belief and it appears that our fragile economy is shortly to suffer the consequences of  politicians playing political games to further their own self interests rather than think rationally about the dire consequences on our economy of their ill conceived actions in promoting this Bill. It is probably the two tuna canneries, who have been the back bone of this economy for the past fifty years, who will feel the effects most, and at the time of writing we have not heard their positions through any official statements as to  the future of their activities in the short and medium term.

The wage hike potential adverse impacts have exposed our economy and emphasized the need for immediate action to encourage new investment which would enable unemployed workers to relocate to new companies, so projects such as the undersea fibre optic cable, the call center, the meat processing plant, the harbour marina development and other projects in the pipeline should be encouraged and expedited with the minimum amount of bureaucratic red tape for the benefit of the livelihood of our present and future generations.

David Robinson
President