WENO, Chuuk—On January 26th, 2022, the 3rd day of the 2nd Resources & Development Conference included dialogue and debate on the FSM’s trade and investment sector, the FSM Fisheries Investment Plan, and the FSM’s Marine Resources Sector.
Regarding accomplishments as related to foreign investment into the FSM, it was described that the National Government has established a Competent Authority for aquaculture exports into the European Union; that Chuuk State has established new foreign investment regulations, and successfully recruited a foreign investment inspector; that Pohnpei State has passed two foreign investment legal amendments, one in 2018 and one in 2021; that Yap State has established foreign investment regulations; and that Kosrae State has issued a foreign investment permit to Da Yang Seafood Ltd., a Memorandum of Understanding with Australian investors to revitalize the operation of the former Kosrae Tropical Water, Inc., and the successful recruitment of a foreign investment officer.
Regarding ongoing projects as related to foreign investment into the FSM, it was described that the National Government has reviewed and recommended the establishment of Intellectual Property & Traditional Knowledge Law, as a means of strengthening the FSM’s reliability and trustworthiness with foreign investors. (It is the lack of intellectual property law, for example, that allows for businesses to legally sell pirated copies of films on DVD across the FSM). For the State of Chuuk, it was described that the State continues to work with the Pacific Centre in Tokyo to revitalize the CFTI dock for transshipment purposes. For the State of Pohnpei, it was described that the State continues the development of a consolidated foreign investment regulations package, as well as continued efforts to develop a Pohnpei Business Registry. For the States of Yap and Kosrae, it was described that both continue to review their own foreign investment laws, regulations, and forms.
Regarding pending projects in the pipeline, it was described that the National Government will establish a Foreign Investment Data Management System, and hire a Trade Advisor. It was described that the State of Chuuk will propose an amendment to its current foreign investment law. It was described that the State of Pohnpei will increase public awareness on foreign investment compliance. It was further described that the State of Kosrae will update its foreign investment laws, and develop a Foreign Investment Database.
A lengthy breakout session followed with the aims of having participants answer the following questions: “What are the current issues and challenges of the private sector?”; “How can the FSM trade and investment support or address these challenges?”; and “Does the Conference recommend harmonizing the Nation’s laws and regulations pertaining to foreign investment?”
Challenges facing the private sector were suggested to be voluminous in number and wide in scope. Frequently cited challenges included a lack of development on necessary infrastructures, such as roads and docks; a lack of human capital, made worse by brain-drain/out-migration and a continuing labor ban imposed from the Republic of the Philippines; and a lack of regular consultation from the Government.
Participants suggested that the private sector can be supported through a State & National task force inclusive of private sector membership, and designed to respond to issues facing the private sector; that the Government ought to negotiate with foreign shipping entities to ensure fair and consistent prices; that the Government ought to improve awareness and education on foreign investment laws, regulations, and policies, to include a discussion on what makes a law, regulation, or policy distinct from each other; and that the Government ought to provide subsidies where possible and appropriate, so to ensure the viability of private sector entities when engaged in unforeseen circumstances beyond their control, such as the COVID-19 Pandemic.
Considering that the very first Committee to Wait on the President of the 21st FSM Congress held on May 11th 2019 discussed precisely the same topics as the first Committee to Wait on the President of the 22nd FSM Congress on May 11th 2021—the proposed Foreign Investment Law, which the Executive Branch endorses, and which President Panuelo has requested for Congress’ consideration—citizens will be interested to know if there was agreement in the Conference, or not, towards harmonizing the Nation’s foreign investment laws and regulations. While there was not unanimous endorsement among the ten groups, there was a supermajority agreement for this harmonization to occur, albeit several endorsements came with caveats such as respecting an individual state’s foreign investment desires.
The relevant presentations for the trade and investment sector can be found here: https://gov.fm/files/RD_Conf_-_Trade_Presentation_v01-25.pdf as well as here: https://gov.fm/files/RD_Conference_National_Investment_Presentation.pdf
The next session of the day was with regards to the proposed Fisheries Investment Policy. This is the same policy submitted by President Panuelo to the FSM Congress on September 16th, 2021, formally entitled as the “National Oceanic Fisheries Investment Policy for the FSM 2021-2026: A Policy to Maximize Value of Participatory Rights under the Vessel Day Scheme” which can be found here: https://gov.fm/files/FSM_NATIONAL_OCEANIC_FISHERIES_INVESTMENT_POLICY_2021-026_final_draft_as_of_9_1_2021.pdf
The Fisheries Investment Policy signals a shift in focus for the FSM to ensure its fisheries sector generates more economic activities that can themselves contribute to economic growth. It is the FSM National Government’s intention for the Policy to galvanize all stakeholders to commit to actions in harmonizing and improving the fisheries investment climate in the FSM.
The strategic objectives of the Policy include to maintain and enhance resource sustainability; to secure and strengthen fisheries’ contribution to economic growth; to encourage and promote tradable export of fish in a processed and value-added format; to facilitate and support the growth of the fisheries sector; to safeguard profitability of the offshore fishery; to encourage effective collaboration and partnership between the National and State Governments; to identify and secure capital to stimulate investment in targeted economic development infrastructure and commercial projects; to encourage and attract Foreign Direct Investment to drive commercial development; to encourage and promote policies and reforms underpinning a conducive investment environment; to build human resource capital to effectively facilitate growth impacts of investment capital flows; and to leverage the FSM’s Party Allowable Effort to encourage the development of the domestic tuna industry. On the last item stated, the Government, through NORMA, is developing a long-term partnership with the Nation’s biggest and longest-residing partner in the fisheries sector, Liangcheng, to utilize the Nation’s large longline Party Allowable Effort that will translate into transshipment in all four FSM States.
The relevant presentation for this session can be found here: https://gov.fm/files/Final_NORMA_Policy_Implementation_01_26_22.pdf
In the discussions that followed the presentation, participants were asked questions such as “What incentives should a state contribute to encourage onshore investment, and in what form?” and “Do you support the Fisheries Investment Policy?”
There was common agreement that direct flights to major markets, timely resolution of legal issues, incentives to limit the cost of doing business, and to either remove fines and penalties or—at least— to ensure they are not excessive. There was common agreement that incentives should broadly be increased in number and scope across the FSM, though what those incentives might be varied amongst the groups and the various FSM States.
With regards to whether or not there was support for the Fisheries Investment Policy, while a supermajority of attendees and their respective groups advised of their support, it was often couched by persons representing the States of Yap and Pohnpei with suggestions that further review for such a Policy may be necessary, or that individual states should determine their support for the Policy, or lack thereof, through their own internal processes.
The next session of the day was an overview of the FSM’s Marine Resources Sector.
At the national level, the Division of Marine Resources at the Department of Resources & Development described various accomplishments, such as the passage of the Protected Area Network Policy and Country Program Strategy, the previously discussed Pacific Regional Oceanscape Project (PROP) from Day 2, the launch of the Blue Prosperity Micronesia program, the FSM Aquaculture Management & Development Plan, and the National Seabed Resources Act of 2014. Several of these accomplishments are also ongoing in some form or capacity.
Projects pending and/or otherwise in the pipeline at the national level were described to include the Regional Island 2 Island (i2i) project concept, in development with SPREP, the previously discussed Pacific Regional Oceanscape Project—Economic Resilience/Recovery (PROPER) from Day 2, the development of a Coastal Fisheries Policy, and the framework development for the National Seabed Resources Act.
The State of Yap described that recent accomplishments for their Marine Resource Sector included acquiring a marine specialist and several certified divers, and—in part due to assistance from the U.S. National Oceanic & Atmospheric Administration (NOAA) and the Micronesia Conservation Trust—annual coral reef monitoring work has continued.
Ongoing projects in the State of Yap were advised to include data collection efforts in support of Blue Prosperity Micronesia, data analysis for coral reef monitoring, and supporting Blue Prosperity Micronesia on marine spatial planning and sustainable fisheries.
Concerns and issues for the State of Yap were described to include a lack of technical assistance (e.g., there is no marine biologist at the Division of Marine Resources), and that the completion of the Division’s building is slower than preferred and previously projected.
The State of Pohnpei described that recent accomplishments included the identification and designation of 13 and 14 mangrove protected areas and marine protected areas respectively, that the delineation and demarcation of the Pohnpei Watershed had been completed in all municipalities except for Nett, and that the regulations pertaining to the size of fish were updated.
Pending projects for the State of Pohnpei were advised to include an assessment of the cumulative impact of coral dredging and sand mining in Pohnpei State, as well as the identification and designation of aquaculture sites.
Consistent with other states across the FSM, challenges and issues as viewed by the State of Pohnpei included the decline in the average size of fish and numerical catch of fish, as well as overlapping mandates and responsibilities in various government offices and agencies.
The State of Kosrae described its accomplishments in the Marine Resources Sector as including the development of relevant legislation and policies, resource management and conservation programs,
and coastal fisheries infrastructure development projects.
Ongoing projects in Kosrae were advised to include a fisheries extension and support service provided to local fishers, as well as aquaculture development projects, and a Fisheries Enhancement Project.
Pending projects for Kosrae were presented as comprising an establishment of sustainable nearshore fishing aggregation devices (commonly referred to as FADs), the establishment of a clam meat processing facility, and a fisheries stock enhancement project for trochus and clam spawning and reseeding.
Challenges for Kosrae were noted to consist of a broad decline in fishing stocks, the enforcement (or lack thereof) of existent fisheries-related laws and regulations, a lack of funding from the FSM National Government to implement priority projects, and the 2017 Joint Economic Committee (JEMCO) Resolution for Small Sector Grants which have restricted funding for recurrent personnel costs and other routine expenditures.
Recommendations from Kosrae on moving forward focused on the frequently cited request for strengthened National-State cooperation, but also included a broad, non-specific request for the National Government to transfer “major assets” to be used in Kosrae to implement priority projects.
The State of Chuuk’s list of accomplishments since the 1st Resources & Development Conference were significant and numerous, including the Chuuk Coastal Fisheries legislation, the Chuuk Protected Area legislation, shark finning legislation, legislation to protect Kuop atoll, the Chuuk Strategic Development Plan, the Chuuk Biodiversity Strategic Action Plan, and a Search & Rescue & Environmental Impact assessment. Additionally, Chuuk established five marine protected areas and one terrestrial protected area, completed significant coral reef monitoring, hired a Chuuk State protected area network coordinator, and engaged in clam aquaculture training for various public servants, among others.
Ongoing projects in Chuuk State are similar to other states, including Blue Prosperity Micronesia, clam aquaculture in two marine protected areas, and the oil removal program with Japan’s JMAS team.
In Chuuk State’s project pipeline include projects on tackling alien invasive species and sustainable land management.
The relevant presentation for this session can be found here: https://gov.fm/files/RD_Conference_Marine_Overview_26JAN2022_FINAL_PRESENTED.pdf
In the breakout session that followed, participants were asked the following questions: “How do we best improve communications and coordination between FSM R&D and state counterparts?”; “How can FSM R&D best support your coastal fisheries and aquaculture priorities at the state and community level?”; “What fisheries policies and content are needed at the national level to aid in state/local level coastal fisheries management?”; and “How can we best support Micronesia Challenge 2030—given its new targets—and the FSM Protected Area Network implementation at the state and community level?”
There was broadly common agreement that if FSM R&D generated more frequent and formalized communications, that such communications would be an act of service to the states, such as monthly reports on programs, projects, activities, and information relating to donor partners. There was common agreement that legal and technical advice would be appreciated. It was discussed in some groups that they don’t know what they don’t know, and so proactive offers of assistance that could be confirmed or denied would be superior to the alternative of radio silence.
The 2nd Resources & Development Conference will continue until the end of January 28th, 2022. Stakeholders interested in the most-detailed reporting after the Conference will wish to be aware that the Department will develop such a report in early February, releasable as a public document.