From the 7/4/08 issue of the Marshall Islands Journal

No quick solution to RMI’s fuel crisis

By SUZANNE CHUTARO

Discussions at Friday’s business and government forum emphasized the point that there is no easy short-term solution to the country’s fuel woes.

While government officials and private businesses floated a number of mid- and long-term possible solutions for tackling Majuro and Ebeye’s energy crisis and food security issues, what was missing is a plan to address MEC’s urgent need for $8.5 million to pay for fuel by a July 10 deadline.

The questions arising out of the forum were best summed up by Pacific International Inc’s. CEO Jerry Kramer who asked: “What’s our strategic plan?” Foreign Minister Tony deBrum took the lead for the government saying that President Litokwa Tomeing was scheduled to declare a state of emergency over the weekend — the Cabinet approved a state of emergency last Thursday, but the President’s announcement had not materialized as of Wednesday evening this week.

At the forum, deBrum said once a state of emergency over MEC’s fuel situation is declared “a lot of things will be triggered” and the RMI along with other donor countries who choose to respond have a 30-day window to come up with solutions. In the event nothing is solved, the government would extend it for another 30 days.

In the meantime, deBrum said President Tomeing has instructed the government to “send out feelers to Taiwan and Japan” for immediate help with the nation’s current energy crisis. He also said that Australia is sending an alternative energy consultant to work with the government.

“RMI has requested solar power companies in the US and USDA for solar energy packages to bring to RMI,” added deBrum. But plans for alternative solar, wind or ocean thermal energy conversion (OTEC) are solutions that won’t meet the current energy crisis.

“We need an interim solution for power,” admitted deBrum. “We can’t afford to have power shut down. We don’t even have a plan for sewage (treatment in the urban centers if power is disrupted).” deBrum acknowledged that sewage is an immediate worry that needs to be considered.

He alluded to possibilities of loans or an advance from the government of Taiwan but nothing was definite.

What the Cabinet members attending the meeting were able to confirm is that their immediate areas of focus for power needs are now Majuro, Ebeye, Jaluit, Wotje, Kili and Rongelap.

Without electricity everything will come to a standstill

The government is facing its biggest challenge to raise enough money to buy shipments of fuel to keep power running in the two urban centers in the face of skyrocketing world prices, Finance Minister Jack Ading told an Asian Development Bank/RMI government review meeting Monday.

But, said Ading, “without electricity everything will come to a standstill.”

This was an essential point to stay focused on as the ADB and the RMI work to align policies that address the problem.

“The adverse effects of this global fuel crisis, its intensity and severity, are even more acute and destabilizing on small island states like the Marshall Islands with practically no means to protect itself from external pressures and shocks,” Ading said Monday.

“The high costs of fuel and food around the world have already begun to severely hurt our government as well as the people of the Marshall Islands.”

The most “frightening concern” is how the rising prices for food and fuel are hurting “people at the grassroots level, those with less financial means, the most disadvantaged and most vulnerable among us.”

The RMI government is struggling to fund fuel shipments, he said.

“Our ability to find enough cash to continue to pay incoming shipments of fuel has been shown to be severely limited as the price of fuel continues to go up,” he said, adding there is one simple truth about the current situation: “without electricity everything will come to a standstill (causing) a national disaster of unimaginable proportions and magnitude.”

Ading expressed grave concern about schools and hospitals not being able to function, and the possibility of outbreaks of disease if water and sewer systems stop working for lack of power.

Businesses on Majuro and Ebeye will suffer large losses on perishable foods if electricity is cut off, which would have the unfortunate result of increasing the price of food, worsening the already high prices that have been caused by world market problems.

If power in Majuro and Ebeye is rationed, it will “increase hardship and poverty in our community.”

But, Ading said, there is a “window of opportunity for our government to take bold measures in preventing the impending crisis from happening.”

Reducing dependence on diesel fuel is one way to help, he said.

He also blamed earlier governments for the RMI’s inability to address the current problems.

“Our country would have been able to insulate itself against this energy shock but because of our lack of action over the years, although we have been informed many times in the past by the ADB, International Monetary Fund, Government Accountability Office and others that we need to implement structural reforms, and cut our government expenditures to maintain a sustainable fiscal situation, we did not take those recommendations seriously,” he said. This has resulted “in the situation that is facing us now. We simply cannot respond adequately to these global shocks.

“If we had taken that advice seriously two to four years ago and followed them by implementing necessary reforms, by now the RMI would have been able to withstand these external shocks that are coming from the ongoing global fuel and food crisis.”

The meeting this week between ADB and RMI officials “is an excellent opportunity for (us) to see how we can align the Bank’s current program in this country, and how we can align its future assistance,” he said.

The meeting is timely and it fits with ADB’s commitment to make itself become a “client-oriented development bank, so as to respond to diverse needs in a proper and efficient manner.”

Kiyoshi Nakamitsu, an education specialist and the RMI desk officer at the ADB, is in Majuro for the meetings this week.

From the 6/27/08 issue of the Marshall Islands Journal

Digicel ready to pay  $17 million

By GIFF JOHNSON

Digicel Pacific, the region’s fast growing mobile phone network, says it is ready to invest $17 million in the Marshall Islands if the government will open the telecommunications sector to competition.

For Digicel to operate here, the RMI government must amend laws that establish the National Telecommunications Authority as a monopoly in the telecommunications field.

Digicel Pacific applied Friday for a license to operate mobile phone service in the Marshall Islands, its first north Pacific initiative after establishing business operations in Samoa, Papua New Guinea and Tonga since 2006.

Digicel Pacific director of business development David Borrill said the company will launch service in Vanuatu this week and expects its new mobile network to be ready for service in Fiji by October, bringing to five the number of South Pacific countries where Digicel is active.

“We’ve proposed a direct investment of $17 million for the Marshall Islands,” Borrill told the Marshall Islands Chamber of Commerce Friday after briefing the Cabinet. “We want to establish a mobile phone network that will provide 80 percent coverage of the population from launch.” If it happens, it would expand coverage for remote outer islanders than is presently offered by the National Telecommunications Authority.

Borrill indicated that “eight to 10 islands” would be covered for mobile phone and related services if the Marshall Islands gives the company the nod to conduct business in the country. He said that the company’s policy is to provide cell phone coverage to 80 percent of the population on start up and then increase coverage to more customers over time.

“We don’t penalize customers for living away from the center,” he said. Currently, only four islands outside of Majuro and Ebeye have mobile phone and Internet access.

Borrill is based in Nadi, Fiji. He said he believes the government is supportive of opening telecommunications to competition.

Borrill’s visit to Majuro follows a visit to Digicel Samoa headquarters earlier this year by Marshall Islands Transportation and Communications Minister Dennis Momotaro, who is also a member of the National Telecommunications Authority board of directors, and Minister in Assistance to the President Christopher Loeak. Digicel paid for their visit.

Digicel now has more than 500,000 mobile phone users in Samoa, Papua New Guinea and Tonga, Borrill said, adding that this number will increase substantially as Vanuatu and then Fiji come on line this year.

Before launching operations in Samoa two years ago, Digicel established itself in the Caribbean and Central America in the early 2000s and now provides mobile phone services in 26 countries in that region. 

“The Pacific looks like the Caribbean did six years ago,” Borrill said. “There are a lot of monopoly (telecommunications) companies.”

“Competition is good for monopolies,” Borrill said. “None (in the Pacific) have failed because of competition and all have grown. It’s an opportunity to change the way they do business. And people are looking for other options.”

Borrill also confirmed that Digicel Pacific has held talks with officials in both the Federated States of Micronesia and Palau, but has yet to file for a license to operate in these two other United States-affiliated islands in the north Pacific.

A critical issue for the Marshall Islands, FSM and Palau is that their government-owned telecom companies are saddled with multi-million dollar debts to the US government that were obtained in the early 1990s to fund telecommunications infrastructure. The large loan debts are a driving force behind the three governments protecting their telecommunications companies against competition. NTA owes about $14 million to the US Rural Utilities Services.

“The only way we’d get involved in the loans is if we purchase the National Telecommunications Authority,” Borrill said. “But we haven’t discussed that.” He also said Digicel Pacific prefers to establish its own facilities and compete with existing firms.

Streetlight hurt our hip pocket

Majuro’s streetlights are costing MEC more than $200,000 a year to operate — so in this energy crisis period, should they all be turned off?

That’s a question that MEC has wrestled with, since Majuro Atoll Local Government hasn’t been actively looking to take on new expenses.

“We’ve talked to Public Safety about the concern for crime increasing if the lights are turned off,” MEC General Manager Billy Roberts told the Chamber last week.

As an alternative option, the MEC board has now approved hiring a grant writer to seek funding for solar-powered streetlights, he said. These will not just be for Majuro, but also for Ebeye, Wotje and Jaluit.

Diesel usage ‘insane’

The proposed state of emergency over fuel problems “is the only way to wake everyone up to the fact that diesel is not a sustainable source of power in the long run,” MEC board member and Ambassador Ben Graham told the Chamber of Commerce Friday.

Graham pointed out that MEC and KAJUR together will spend more than $30 million on diesel fuel to run Majuro and Ebeye power plants this year. “That’s 30 percent of the RMI’s gross domestic product,” he said. “It’s insane.”

In the outer islands, many homes now have solar. “But we need to get really serious about other alternative energy options,” Graham said.

The state of emergency recommendation from the RMI Disaster Committee is “calling policy attention to a situation we and most of the world are in,” he said.

From the 6/20/08 issue of the Marshall Islands Journal

8.5 million crisis

By GIFF JOHNSON

The RMI Disaster Committee on Monday approved a recommendation to Cabinet that it declare a national state of emergency because of an impending crisis in the energy sector. The Cabinet was expected to meet on the recommendation Wednesday or Thursday.

The state of emergency recommendation is based on Majuro and Ebeye’s utility companies being on the verge of financial collapse, and without a big injection of funding are expected to suffer an $18 million shortfall this year.

A nine-page report issued late last week by the MEC board of directors to government presents a sobering view of the financial problems facing the Marshalls Energy Company and Kwajalein Atoll Joint Utilities Resources (KAJUR) as a result of the continuing rise in fuel prices globally.

The report also says that MEC/KAJUR are facing a July 10 deadline for payment of $6.5 million for the fuel delivered earlier this month from SK Networks.

Snapshots of the problem were provided by the board:

• In 2004, MEC spent a total of $6.1 million on diesel fuel and lubricants. But spending on fuel is expected to top $32 million this year — a more than five-fold increase.

• Fuel used to account for just half of MEC’s total expenses every year. In 2008, fuel accounted for 82 percent of MEC’s total spending, putting the “entire RMI energy sector in a very precarious and risky position.”

• From 2004 to 2007, MEC expenses increased by 52 percent but revenues only went up by 11 percent, rendering the government utility “nearly insolvent” (almost bankrupt).

• MEC has raised electric rates, but actual power use has gone down.

• MEC generates about $1.1 million per month from electricity billings and fuel sales to fishing boats, but is spending $2.2 million each month on fuel, debt service to banks and operating expenses. Based on the price of fuel in April, “this translates into a shortfall (for 2008) of around $13.7 million.”

• The Ebeye power company, KAJUR, operated at a loss of $325,280 in April, which would mean it will lose $3.9 million this year.

The MEC paper recommended that government address energy needs through a combination of funding and off-setting measures, such as tax exemptions.

Specifically, MEC is asking the RMI government for $8.5 million by July 10 in order to pay for the 1.5 million gallons of diesel fuel that arrived on June 6, and to provide a down-payment for the next fuel shipment needed by early August. MEC is proposing to increase the fuel order to two million gallons, an increase of half a million gallons over the June 6 order, “allowing MEC to sell the extra supply of fuel” to increase revenues.

MEC is also asking for an exclusive tax holiday for gross revenue and import taxes, which it estimates will reduce MEC expenses by $1 million a year and allow MEC to become competitive for fuel sales and to supply less costly fuel for outer island shipping service.

MEC is asking the Cabinet for action to defer its loan payments to the US Rural Utility Service, which amount to about $1 million annually, to provide MEC and KAJUR with protection as the sole suppliers of grid electricity within their areas of operation, and to protect and expand MEC’s fuel sales operations.

In the longer-term, the RMI government must “vigorously pursue alternative and more sustainable energy sources” so the country can “reduce its dependence on imported fossil fuel energy.”

MEC said bluntly that without a cash injection to meet the July 10 deadline, “power rationing will immediately come into effect to conserve fuel stocks for power generation.” The MEC board paper noted that it will be able only to supply power to Majuro with present fuel stocks and on a rationed basis until early August.

A consequence of the problems MEC is facing is that “various fuel suppliers will advance the RMI fuel stocks in return for RMI assets (fuel storage tanks, etc.) at garage sale prices,” the MEC board said. “These actions will place undue hardship upon the RMI and its people.” MEC’s board said that the “ability within the combined utilities to resolve these issues has been exhausted. The situation in the coming months is clear. We need immediate assistance to ensure survivability of our communities…into the future.”

A state of emergency is expected to allow government to tap emergency funding as well as make policy or legislative changes needed to reduce taxes and other costs to MEC and KAJUR to keep them afloat.

President, Cabinet to get credit cards

The Ministry of Finance is in the process of setting up credit card accounts for President Litokwa Tomeing and all members of the Cabinet.

The Cabinet recently approved a measure to open a new credit card account with First Hawaiian Bank in the amount of $80,000 in order to provide a corporate credit card for the President and each of the 10 Cabinet members.

The Cabinet has authorized a maximum card limit of $55,000 for the President and $2,500 limit for each Cabinet minister. “The policy for a government credit card for the use of the President as head of state and government was approved many years ago,” said a Cabinet paper prepared by Finance Minister Jack Ading in April that was approved recently. “The credit card makes it easier for the President to pay for official expenses especially when traveling and as stipulated in the card regulations including air ticket costs, hotel, meals, laundry and miscellaneous expenses as determined by the President.”

Individual Cabinet members will have “sub-accounts” under the corporate card, and separate billings and accounts are to be set up by the Ministry of Finance.

An existing credit card for the President with First Hawaiian Bank was established with a “reimbursable account” in which the Ministry of Finance deposited $55,000 and the bank deducted funds each month to pay for card charges.

Cabinet approval for a new corporate account was needed for two reasons:

• The Cabinet paper explains that it has not been possible to get original receipts and card charges of former President Kessai Note and “unless and until card charges and receipts are found and reconciled, the Ministry of Finance is unable to replenish the current account.” The Cabinet paper said that it “would be totally unjust for the current President to be denied the privileges due his office by and on account of action by others.”

• The plan to expand the credit card account to provide for individual members of the Cabinet.

The Ministry of Finance is now setting up internal procedures for use of the credit cards and talking with First Hawaiian Bank officials for issuance of the credit cards.

From the 6/13/08 issue of the Marshall Islands Journal

Price Crisis

If “middle class” urban islanders in Majuro — that is, households earnings $10,000-$15,000 a year — are increasingly hard-pressed to put food on the table in Majuro, let alone use the luxury of air conditioners or refrigerators, where does this leave people who are making just $2 an hour — or are unemployed?

Skyrocketing costs in Majuro and Ebeye, coupled with job layoffs by the Army and its contractors, are forcing everyone to make lifestyle changes that reduce comforts that once made the urban centers the envy of islanders living on outer islands without electricity, running water or vehicles. The increasing hardships in Majuro and Ebeye may add a surge to a major trend of the 2000s — heavy out-migration to the United States.

Electricity rates for homes have risen 78 percent since November last year, rising from 23 cents a kilowatt hour to 41 cents as of June 1. Businesses, which pass their costs on to customers, are now paying 47 cents per kilowatt hour, a 62 percent jump since last November.

The government statistics office reported in late May that inflation made its first-ever double digit jump in the first quarter of 2008, as prices increased over 10 percent — more than double the 4.4 percent inflation for all of 2007 — and there has been no relief this quarter.

Word of wisdom for JHS graduates

Last Saturday about 80 students graduated from Jaluit High School. Senior class valedictorian Mimi-Darlin Alex used the opportunity in her remarks to remind not only her classmates but the hundreds of guest and parents that today’s Marshall Islands is facing many challenges.

Challenges, which she says are not insurmountable so long as individuals pursue their education.

“Remember the cost of living in the Marshall Islands has risen four-fold since we all started high school,” said Alex to her fellow JHS graduates. “We must also understand that our country’s population continues to grow and it’s not going to reduce anytime soon. Let us also remember that salaries in our country are very low and they won’t be enough to provide for our families needs.

“What is the solution to these problems?” she asks. “There is no question that the correct answer is: seek higher education.

“Remember without an education, you will not get a job, without a job you will have no money, without money you can not pay for the things you need.”

From the 5/30/08 issue of the Marshall Islands Journal

Jaluit goes back in time

Jaluit, which just a year ago, seemed to be heading boldly into the 21^st century has now reverted back to the 1980s — though one businessman described it as more like the 19^th century.

With power rationing imposed by the Marshalls Energy Company beginning two weeks ago, businesses have suffered losses in frozen goods, bank services have been curtailed, and cell phone and Internet services have been disconnected.

MEC is rationing power to just 10 hours daily: from 6-10 am and in the evening from 4-10 pm. MEC has operated Jaluit’s power plant since the mid-1990s, providing 24-hour power to the community at Jabor Island. But MEC said it can’t afford to buy fuel from ALRO, the fuel company managing the former Mobil tank farm on Jabor, forcing MEC to ration power until it can arrange for alternative sources of fuel.

NTA pulled the plug on its telecommunications services because of the threat of damage to its equipment as a result of power turning on and off. Jaluit is now like most outer islands in that it can only communicate to Majuro via high frequency radios, and is no longer able communicate with the world.

Jaluit business people told the Journal they are now scrambling to get generators down to Jaluit to power their freezers and refrigerators around the clock.

Bank of Marshall Islands has been offering daily banking services at its Jabor branch since 2007, with two staff using Internet connections to transact business for local customers, including deposits, loans, wire transfers, and MoneyGram.

That’s stopped as of two weeks ago.

BOMI will begin this coming Monday to offer banking services every other week by sending a staff person from Majuro on Air Marshall Islands on Mondays who will return Friday. Services will be available while the BOMI staff is on island.

BOMI President Patrick Chen said it will be difficult for the bank to provide these services without the benefit of Internet access. “But we’ll do it through radio,” he said.

He expects the current situation will be temporary and once power is back to normal on Jaluit, BOMI will return to its regular daily banking service.

Power bill hurts pocket book

Everyone in the Marshall Islands is feeling the heat of rising electricity and gas costs.

The Journal calculated a comparison of what percentage of their salaries people were paying for fuel and electricity in 2004 as compared to now.

But it’s going to get worse the beginning of June, when MEC will raise rates again, possibly by nine cents per kilowatt hour across the board.

In 2004 MEC was charging 11 cents per kilowatt hour for lifeline (under 500 KW hours) and 12 cents for regular residential (500 and up).

In April and May 2008, the costs had nearly tripled, with MEC charging 31 cents and 33 cents, respectively, for lifeline and residential.

In 2004, the average salary for private sector workers was $4,322, for RMI government workers $13,221 and for local government workers $7,188.

In 2007, those average salaries changed to $5,052, $12,410 and $6,840, respectively.

How much of those salaries that fuel and electricity ate up in 2004 and are eating up today are listed below.

Lifeline rates:

• Private sector workers in 2004 paid 15 percent of their salaries for lifeline power use at the maximum level of 499 KW hours per month. At the 2008 rates, the percentage paid for lifeline jumped to 37 percent of annual wages.

• Government workers in 2004 were paying an average of five percent of their salaries at lifeline rates. That number jumped to 15 percent of wages last month.

• Local government workers paid eight percent of their salaries for power in 2004. That leaped to 27 percent this year.

However, if you are like hundreds of residents and use an air conditioner, chances are that you cannot keep your power use under 500 KW a month, so you’re paying the higher residential rate.

If you used 750 KW hours of power ($247.50) in April and May, and you are: a private sector worker, then you were paying 59 percent of your salary for power (based on the average 2007 salary levels); an RMI worker, you paid 24 percent of your salary for power; and a local government worker, you paid 43 percent of your salary for power.

If you live in Laura, gas is killing you

The Journal estimated the percentage of people’s salaries that are going toward buying gas today at $6 a gallon compared to 2004, when the price was under $3.

If you live in the DUD area of Majuro, and are not wasting gas by jamboing around town, but instead drive just 15 miles per day (to school, work, lunch, etc.), six days a week, that comes out to 90 miles a week.

At an estimated 20 miles to the gallon, you’ll need four-and-a-half-gallons per week to run your car.

At $6 per gallon, that’s $27 a week or $1,404 for a year.

If you’re in the private sector (average wage last year $5,052), the $1,404 for gas amounts to 28 percent of your salary; an RMI worker (average salary $12,410) is paying 11 percent; and a local government worker (average salary $6,840) is paying 21 percent of their salary for gas.

If you live in Long Island and drive your car 120 miles a week, that’s six gallons per week, costing you $36. On a yearly basis, you’re paying $1,872.

If you’re in the private sector the $1,872 for gas amounts to 37 percent of your salary; an RMI worker is paying 15 percent; and a local government worker is paying 27 percent of their salary for gas.

If you live in Laura, you’ve definitely got a problem.  You’re going to average a minimum of 65 miles a day or 390 for the week. That’s going to take you 19.5 gallons per week, and cost you $6,084 annually.

If you’re in the private sector that’s more than you make on average in a year; for an RMI worker, it’s half their salary; and a local government worker is paying 89 percent of their salary for gas if they live in Laura.

From the 5/23/08 issue of the Marshall Islands Journal

EPA approves GFB fish farm project

The proposed fish-farming business for Majuro’s lagoon has received partial approval from the RMI Environmental Protection Authority (EPA) board, which issued a long-awaited decision Wednesday.

The EPA board has given the okay to Good Fortune Bay (GFB) RMI’s commercial fish-farming plan for every species listed in GFB’s environmental impact assessment except for “cobia” — which was given conditional, small-scale approval for cobia during a 12-month review period.

“Because of the controversial claims of its existence in the area and its unknown potential impacts on the lagoon environment and also on the native species should there be escapees in the lagoon, RMI EPA recommended that this species, cobia, be allowed to be cultured in the lagoon under a pilot scale project with limited production that may not exceed 2 percent (1,000 tons) of the proposed total project’s production of 50,000 tons,” the EPA said in a release. “This pilot project of the cobia will be enforced for 12 months. Upon completion of this trial period and with full satisfaction of RMI EPA that the pilot project has proved not detrimental to the RMI environment and all the (mitigation) conditions have been met, the EPA will then allow for commercial operation of this species.”

On the other fish species, RMI EPA said it is satisfied that such species are reported to be present in the country. “The humpback grouper, although rare, is known to have been caught by local fishermen in isolated cases.”

In approving the EIA report, RMI EPA is reviewing and revising the Environmental Management Plan to ensure that the project will not only be safe for the environment but also bring benefit to the nation.

EPA said among the conditions is insurance coverage of the company’s operation for any unforeseen environmental damages,  and covering the cost of monitoring.

Hundreds apply for US hotel jobs

Hundreds of hopeful job seekers are vying for job openings at three hotels in the US.

Earlier this month recruiters representing Practical Employee Solutions and Imperial Palace Casino Resort flew into Majuro to interview potential employees.

Over the past months Russell Langrine of Majuro Man Power, a local employment agency owned and operated by Langrine, has been coordinating efforts to prepare job seekers with resumes, medical checks and interview tips. The weekend prior to the arrival of the two recruiters, Langrine conducted a final group meeting at Majuro Middle School with job seekers answering questions and giving a pep-talk about living in the US and what is expected.

“You’re going to America,” Langrine told a room full of job seekers, “You will live by their laws. You will struggle for now but in the future your children will succeed.”

Interviews were held earlier this month with the recruiters.

While in Majuro the recruiters met with Justice Minister David Kramer, the Chamber of Commerce and Continental Airlines to discuss a possible charter to fly out all the successful job seekers.

From the 5/16/08 issue of the Marshall Islands Journal

Fuel price leads to power cuts

Jabor, Jaluit residents are facing power rationing as MEC announced Tuesday that power will be limited to 10 hours per day because of high prices from ALRO’s Jaluit bulk plant.

Prices for diesel bought from ALRO at Jaluit leaped from $5.13 per gallon to $6.97, MEC said Tuesday.

“The MEC power plant (on Jabor) has very limited fuel tank storage capacity and has always relied upon getting its fuel from the old Mobil bulk plant, which is now operated by ALRO,” MEC said in a public announcement. “Negotiations with ALRO have so far not been able to lower the price from $6.97 per gallon to a workable level.”

MEC said it is responding to these costs by expanding storage capacity of the Jaluit power plant tanks. The Majuro power company can supply fuel directly from its Majuro storage facility to Jaluit, the same as it supplies the Wotje power plant.

MEC said its cost to get fuel to Wotje is less than $5 per gallon.  Jabor power will be on from 6am to 10am, and then again from 4 pm to 10 pm daily.

“These new hours of operation will remain in effect until the new tanks are installed and may be further adjusted to suit the supply and cost of fuel to Jaluit,” MEC said. Hours of operation at the Wotje power plant are unchanged.   With the increase in fuel price, Jaluit’s monthly fuel bill is running at about $60,000, with collections from local residents, businesses and Jaluit High School amounting to less than half this amount, according to MEC.

Why on how to clean up town

Waste problems such as littering and the bad habit of tossing rubbish in the lagoon are not due to a lack of awareness about waste, contends a Majuro Atoll Waste Company board member. “It’s not because people lack awareness,” MAWC board member Steve Why told the Chamber of Commerce Friday. “It’s a lack of infrastructure.”

With only about 11 of the large red bins still usable, people from Rita to the airport do not have waste bins located conveniently near them anymore.

To underline his point, Why asked the 50 or so people at the meeting if they were to promote awareness in the community, what would the message be? The response: “Throw your trash in the dumpsters.”

But, said Why, “there aren’t many dumpsters left.”

MAWC has developed plans and is ready to improve collection in Majuro — including to Laura, which currently has no government service — but needs donor assistance to make it happen.

Why made two important points:

• Donors are standing by, with funding ready, to support various MAWC waste improvement projects.

• These requests simply need national government approval and endorsement.

“There will be an emergency here in a few months, with trash piling up in the streets and in the lagoon (because of a lack of equipment),” Why said. “Beaches? What beaches? They are all full of trash.”

MAWC is already developing recycling programs that pay for themselves. “We can sell steel in Australia and earn $2,000 per container load,” Why said. Because of the high fuel prices, Asian countries will buy all our PET plastic bottles, he said. But MAWC needs $150,000 for a bailing machine to make it commercially viable to ship these plastics off-island.

“The solutions are all there,” he said. “It just comes down to political will.”

From the 5/9/08 issue of the Marshall Islands Journal

Digicel courts RMI T&C

Digicel Pacific Limited, a mobile telecommunications network based in the Caribbean, invited RMI officials to visit Samoa Digicel, one of the countries in the region in which Digicel is operating. The site fact-finding trip was a follow-up to several meetings with and presentations by Digicel to the RMI government that started in early 2007. 

Minister of Transportation and Communications Dennis Momotaro led a RMI delegation that included Minister in Assistance to the President Christopher Loeak, Anono Loeak, Daisy Alik-Momotaro, Assistant Secretary of T&C Wallace E. Peter, and Nixon Elisa, representing government-owned radio V7AB. The trip was sponsored and funded by Digicel Pacific Limited, including the airfare, accommodation and other incidentals required during the trip, according to a release from the Ministry of T&C.

The visit to Apia, Samoa included a tour of Digicel Samoa’s main operation center and the equipment control facility. Digicel told the RMI group its goal is to develop a state of the art telecommunications network, provide world class service in emerging telecommunications markets and to provide coverage, care, choice and value for money.

“The presentation showed that Digicel has positively impacted the lives of the people of Samoa,” the T&C release said. “The calling rates in Samoa are very low as a result of open competition by two main local telecommunications service providers.”

Digicel now covers up to 95 percent of Samoa, including the rural areas, which had no previous telecommunication services. The government-owned telecommunication network Samoa Tel also increased its subscriber and profits since the launching of Digicel Samoa. A meeting with Samoa Prime Minister Tuilaepa Lupesoliai Sailele Mailelegaoi showed government support for the services provided by Digicel, T&C said. “The Prime Minister stated that since the launch of Digicel in Samoa, there has been great improvement in communication services throughout Samoa.  He also noted that Digicel has contributed to Samoa’s economic development.”

The PM said in an interview with the local newspaper, the Samoa Observer during the launching of Samoa Digicel in November 2006 that “Samoa is now the envy of Pacific neighbors” due to its economic growth. The development of the private sector and open competition among service providers are key elements to economic growth in Samoa and the Pacific, the release said.

Fiber optic cable deal ready to be design

The US Army and its prime contractor, TKC Technology Solutions LLC, could sign an agreement this month to officially launch the multi-million dollar submarine fiber optic cable project to Kwajalein.

Although the US Embassy in Majuro told the Journal that the agreement signing could be as early as Thursday this week, National Telecommunications Authority General Manager Tony Muller said he’s doubtful the Army and TKC will sign this quickly “based on the current discussions” between the two parties.

Still, dates aside, once the agreement is signed, “it will be a positive and significant milestone indicating the military truly is moving forward,” Muller told the Journal. “It will also enable NTA to finally wrap up everything, in terms of its participation.”

Kwajalein Commander Col. Stevenson Reed told the Journal earlier this year that the Army expects the fiber optic cable to be in operation in fiscal year 2010.

“NTA will need to finalize arrangements shortly after TKC and the Army conclude their negotiations and execute a contract,” Muller said.

“The signing of contracts by all of the different parties does not need to be a simultaneous event,” said the deputy chief of mission Doug Morris. “FSM Telecommunications Corporation and Marshall Islands National Telecommunications Authority have been talking to the prime contractor for many months and have negotiated draft contracts, which is standard operating procedure.”  Neither FSMTC nor NTA can finalize anything until after the Army actually awards a contract.

Once a contract is awarded, “all sides will need to firm up their drafts and funding and sign formal contracts for their parts of this project,” Morris said.

“Our understanding is that FSMTC is all lined up to do what is needed at this point —the RMI and NTA are going to have to make some decisions and move forward in a timely fashion in order to be included.” The Majuro and Ebeye portions of the cable are estimated at about $16 million.

At last month’s Chamber of Commerce meeting, NTA board member David Strauss expressed serious concerns about the costs of the fiber optic cable project.

From the 5/2/08 issue of the Marshall Islands Journal

General Fund deficit balloons to $2.7 million

The Marshall Islands General Fund deficit ballooned in fiscal year 2007, more than doubling over FY2006, according to preliminary figures issued in the RMI government’s FY2007 Compact report to US President George W. Bush.

Tax and fishing revenues fell far short of projections and while the government reduced spending by about $200,000 from the budgeted amount, the government ended the year with a nearly $2.7 million deficit (shortfall) in the General Fund. This deficit was for the financial year that ended September 30 last year.

The RMI government has run a deficit in its General Fund for the past three years, accumulating debt of more than $5.5 million since FY2005. In 2006, the deficit was $1.2 million and in FY2005 it was nearly $1.6 million.

Revenues in FY2007 were $2.9 million under what was expected for the year by RMI budget planners, according to the report issued last week.

The RMI government blamed the shortfall on “poor revenue forecasts (and) also the under-performance of items such as fishing licenses and fuel taxes.” The RMI said it has reviewed how it forecasts next year’s budget to improve accuracy and avoid the shortfall that occurred last year.

All types of tax revenue — income, import, gross revenue, fuel — fell short of predictions, while fishing rights income only produced $1.25 million, half a million dollars less than expected. Only the ship registry and past due tax collections as a result of Finance audits produced significantly more than expected, with $583,000 and $660,613 more coming from these two, respectively.

Meanwhile, the government’s budget was hard hit by fuel costs for the Marshalls Energy Company, costing $1.7 million more than planned.

Meanwhile, other over budget items included utilities ($854,685), land leases payments ($531,713) and travel ($432,673).

“The government again experienced difficulties in FY2007 due to a continuation of the problems from the previous year resulting from increased energy costs and the corresponding impact on MEC,” the government’s report said. “These difficulties required the government to continue to support MEC’s financial position and placed substantial pressure on the General Fund.”

Training phase at loining plant

Pan Pacific Foods loining plant is up and running, with 234 Marshallese workers now in training in various parts of the plant.

Zuliang Zhang, president of the company, told the Journal that the plant currently has only a small amount of fish that is being used to train the new staff. Operations are expected to step up significantly later in May with the arrival of a purse seiner shipment of skipjack tuna, and to further increase in June and July as the plant moves toward its goal of running a day and night shift.

Zhang and field technician Mimi Taboada gave the Journal a tour of the now-operating plant earlier this week.

From the 4/25/08 issue of the Marshall Islands Journal

AMI re-links the outer islands to the world

Air Marshall Islands flew its first commercial revenue-generating flights Tuesday afternoon, bringing passengers in from Jaluit and Kili.

“We had a full flight inbound,” said an obviously delighted AMI general manager Dan Fitzpatrick.

AMI’s Dash-8 conducted a successful test flight on Monday, followed by flights to Kili, Jaluit and Namdrik on Tuesday to inspect runways.

Fitzpatrick said the Kili and Jaluit runways checked out fine, allowing the plane to transport passengers on the flight back from these two islands.

On Wednesday, the Dash-8 was to fly to the other four outer island runways in question for inspections: Wotje, Likiep, Elenak (Mejatto, Kwajalein) and Aerok (Ailinglaplap).

Fitzpatrick said the plan is to fly to Kiribati on Thursday.

The Jaluit/Kili return flight, and the planned Kiribati service are the Dash-8’s first commercial flights since October 10 — more than six months with no service.

“The test flight went really well,” Fitzpatrick said. “Things are looking good.”

All outer island runway checks should be done by Friday, which is the day that the Dash-8 will return fully to scheduled service.

Currently, only captains Albon Jelke and Jason Langidrik can fly the plane.

Two more AMI pilots will leave Majuro at the end of next week for flight training in Seattle, Washington to fly the Dash-8, Fitzpatrick said.

Pilots Lorak Lorak and Miles Watak will both train to be first officers on the Dash.

The training is expected to take one month, and will give AMI four pilots who can fly the Dash-8.

“In the meantime, I’m trying to get one more Dash-8 pilot” on a short-term contract as a backup until Lorak and Watak make it back from their training, he said.

RMI doesn’t use all its Compact grant money

Since Compact II started four years ago, every year the RMI government has had leftover money that was returned to the US government. But all of the “carryover” funds have been re-granted to the RMI for use in later fiscal years, Interior Department grant program specialist Alan Fowler told the Journal.

FY2007 — which ended September 30 last year — produced the largest level of unused funding since Compact II started in FY2004, with $1,385,690 unspent by the RMI government, mainly the Ministries of Education and Health.

“These unused Compact funds are not taken away from the RMI,” Fowler said.

“They become ‘carryover funds’ and are re-granted to the RMI government in the following fiscal year.” 

The $256,091 unused in FY2004, for example, was re-granted to the RMI in FY2005, Fowler said.

“Since Compact funds are a permanent appropriation, these funds do not lapse and the RMI does not lose these funds,” he said.

Generally Compact funding unspent by one sector — such as health or education — will automatically return to the same sector, though Fowler said the RMI government can request Interior approval of reprogramming to other areas. 

Compact infrastructure funding is treated separately from Compact grant funds, Fowler said. The infrastructure money remains “available from year to year until used and therefore is not part of the carryover process,” he said.  Since Compact funds are a permanent appropriation, these funds do not lapse and the GRMI does not lose these funds.

The “carryover” amounts for the past four years: FY 2004 — $256,091, FY 2005 — $739,897, FY 2006 — $573,768, and FY 2007 — $1,385,690.

From the 4/18/08 issue of the Marshall Islands Journal

All Shipping Corporation ships in port

An unusual sight witnessed at Uliga Dock this week has brought to reality the vulnerability of the RMI to external conditions. The sight of all Shipping Corporation ships in port is a sign of the times. The problem, however simple, runs like many stories of late — rising fuel cost compounded by a government cash flow crunch.

An official with the Shipping Corporation told the Journal that they have been trying to negotiate a lower fuel price with Marshalls Energy Company but the terms of that deal which will give the Shipping Corporation a price break if it buys bulk is still out of reach.

Meanwhile, the Shipping Corporation receives a subsidy from the national government of $200,000 a quarter. For this quarter starting April 1, however, it’s only received $20,000.

This is not a story of finger pointing, it’s merely the reality of the situation, according to officials from both the Shipping Corporation and the Ministry of Finance.

Secretary of Finance Jefferson Barton said the government does its best to meet its obligations and is hopeful that before the end of the quarter it will pay its full obligation to the Shipping Corporation. The challenge is juggling payments for government subsidies, which are all due at the same time, for government agencies, authorities and corporations.

“It’s the same situation every year,” said Barton. “But the issue of meeting (government expenses) is becoming more challenging. Cost of operations are going up yet resources and revenue haven’t changed therefore there will be a slowness in providing services.”

Barton said the problem hurting government budget is rising fuel costs. “We can’t continue with the ‘business as usual attitude’ with fuel prices rising,” he said. “We need a strategic approach.”

Another hurdle for the Shipping Corporation is that all its vessels are long overdue for repairs and maintenance in the dry-dock. It has been unable to secure a scheduled time with PII for the dry-dock.

Despite these multiple problems, however, the Shipping Corporation official said it’s working to maintain the schedule. The Lañdrik, which needed a replacement generator, had a standby generator installed to make its rescheduled Wednesday departure.

Aemman is scheduled to depart on Thursday this week but it doesn’t have money to buy fuel following a large payment to MISSA for its 80 employees.

Members query phone policy

The view on NTA’s cell phone billing policy appears to be split.

Despite questions opposing the current system of making the caller pay the 10 cents per minute charge, several speakers said they favor the current “sharing” system.

Kirt Pinho said being out on Rong Rong when he runs out of minutes on his cell phone, he’s happy that he can still receive incoming calls so he can talk to the outside world instead of having to get in a boat and riding 30 miles back to town to buy a new card.

The current system charges whoever is making the call to or from a cell phone.

Carlos Domnick also voiced support of the current system, saying “I don’t want to pay for others’ calls.”

NTA general manager Tony Muller explained the 10-cent charge as a fee “to access the wireless network.” He said the board of directors can take the matter up for consideration.

Bill Weza asked why charge landlines additional to call cell phones when they are already paying a monthly fee for their service?

David Strauss, who was emceeing the forum and is also an NTA board member, said “we’ll think about it” in response to Weza’s query.

From the 4/11/08 issue of the Marshall Islands Journal

The Rice Crisis

By SUZANNE CHUTARO

The cost of living in the RMI is about to go up another notch as fuel surcharges, freight rates and world prices on essential staple foods such as rice and flour are skyrocketing.

Local importers and wholesalers, who keep a close eye on world prices of food, warn that these external factors compounded with the recent domestic price rise in fuel and power are going to further burden residents.

According to Pacific Basin’s Robbie Chutaro, rice prices were relatively stable until February when wholesalers noticed a 35 cent price spike in the cost of a 20 pound bag. Since then the price of rice has steadily increased with every shipment into Majuro.

The latest shipment of rice will likely jump to $8.10 a bag at wholesale  — a 15 cent increase from the last shipment.

Chutaro warns, however, that the sharpest increase in prices is still to come in May. Based on rice prices out of Australia, Chutaro says by May, the Majuro wholesale price for rice will likely be $9.30 a bag — this does not include the local government’s four percent tax or the additional mark up local retailers will add.

“Australian rice prices have risen drastically,” confirms Payless Supermarket manager Ray Bandy, adding that the wheat market has also been “volatile” adding pressure to the price of flour.

Bandy says his company has seen the price of flour rise by $4.23 per 10kg bag in a six-month period.

“I’ve been doing this (grocery business) for 38 years,” said Bandy. “The last two years is the worst I have ever seen.” And it’s not getting better.

On Friday, BBC reported that many rice producing countries have “stopped export completely,” safeguarding stocks for their own citizens. Meanwhile, countries like China have imposed export quotas.

Local wholesalers say they have been searching the world for a supply of affordable rice. Most recently Majuro has seen the introduction of Pearl Rice, a Chinese brand sold out of the Philippines. It has been selling at $6.45 a bag but is expected to increase. 

“Doesn’t matter where you go to buy rice now,” said Bandy. “It’s all increased.”

ROC helps AMI with rescue grant funding

Taiwan Ambassador Bruce J. D. Linghu presented a check for $600,000 to Foreign Minister Tony deBrum and assistant secretary of Finance Jemi Nashion Tuesday this week.

It’s a special grant from the Republic of China (Taiwan) to the RMI government for the restoration of Air Marshall Islands (AMI) flight services. The Ceremony was witnessed by Acting Secretary Kino Kabua and a representative of AMI.

“Over the years, bilateral relations between RMI and Taiwan have been further strengthened through many joint efforts,” Linghu said. “In response to the financial assistance need for the AMI’s recovery plan, the government of the Republic of China acknowledged the importance of the airline to RMI’s infrastructure as it provides essential services for transportation, health, education and welfare as well as economic development in the communities of the outer islands.”

Taiwan provided a $1 million check for AMI on January 18.

From the 4/4/08 issue of the Marshall Islands Journal

AMI woes

As soon as Air Marshall Islands fixes one problem with the Dash-8, another crops up.

The latest is the uncertainty caused by the unannounced departure from Majuro of one of only two local pilots currently certified to fly the Dash-8, forcing AMI general manager Dan Fitzpatrick to attempt to hire at least one qualified pilot from outside on a short term contract until AMI can send out additional local pilots to be re-certified at the Seattle-based facility.

Parts to fix the exhaust pipes on the 34-seater Dash were expected to arrive Wednesday night this week, and Fitzpatrick told the Journal this is expected to take just a few minutes to install, meaning that the airline aims to have flight testing of the plane starting from later this week — but that depends on having two pilots to fly the plane.

One of the two Marshallese pilots who was recertified in February at a cost to AMI of $9,000 refused to sign an agreement that would require his service to AMI, according to both Fitzpatrick and board members. Then last week, this pilot left the islands without communicating with airline management, which had earlier expected to begin flight-testing on Monday this week.

Fitzpatrick told the Journal on Wednesday that he has 14 possible options with certified pilots who may be candidates to be brought in quickly to fill pilot positions.

He said the aim is to send more Marshallese pilots to be re-certified, but the first available slots available at the Seattle flight facility are early May and the airline can’t wait that long to get the Dash-8 flying.

Meanwhile, the delayed part situation and continued grounding of the Dash-8 is wreaking havoc on the Bikini dive program.

A group of 12 divers arrived in Majuro Tuesday from England with paid-for plans to fly to Bikini on Wednesday to scuba dive for a week — a plan that is, of course, not happening, much to their unhappiness.

Niedenthal said “we’ve begun discussion about pulling the plug on the Bikini dive program.”

Bikini’s concern is not just to see the Dash-8 flying, but to have assurance that there will be a flight every week. The problem with only one plane in operation is that if it breaks down on an outer island — or even in Majuro — the divers and other passengers on outer islands may be stranded for an unknown length of time.

Migration hurdles

By GIFF JOHNSON

What is different about the current situation of heavy out-migration of Marshallese and Micronesians to the US is that leaders in the freely associated states are now engaging with Hawaii state officials to address the many issues that have largely been ignored until recently.

That is the view of Hawaii state Senator Kalani English, who spent the weekend in Majuro to meet with American Samoa Congressman Eni Faleomavaega, US Ambassador Clyde Bishop and RMI officials.

“Our side is open and willing, and now the Marshalls side is, too,” English told the Journal. “Good progress between Hawaii and the Marshall Islands can get results and it will be difficult for the federal government not to support it.”

The three freely associated states (RMI, Palau, Federated State of Micronesia) and Hawaii “are on the same page and now (Congressman) Eni is on the page,” English said. “I’m excited because things are lining up. Our combined forces are much greater than one alone.” English said his aim is to create a situation where “we have measurable outcomes. It will give more ammunition for the Hawaii (Congressional) delegation.”

English and the Hawaii delegation are pushing to get the federal government to eliminate the $30 million cap on Compact impact funding so that the federal government begins picking up the tab of the Compact, which it approved with the freely associated states.

Asked about attitudes of people in Hawaii toward Marshallese and Micronesians with recent media coverage of homeless islanders, English said attitudes “are still open. That’s why it’s important for Marshallese/Micronesians to engage.”

He noted that at least one Samoan-run church in the Waipahu area has been very active in providing services to Marshallese, which he sees as a good sign. “It’s one immigrant group helping another,” he said. “Everyone in Hawaii was an immigrant at one time.”

He said he wants to see Marshallese and Micronesians integrate well into Hawaii, and is keen to see more get job training so that they can climb up the ladder. He noted that the five-star Four Seasons Hotel in Kona and Lanai has been actively hiring Kosraeans because of their good work ethic.

“The business community recognizes the potential of Micronesians,” he said.

From the 3/28/08 issue of the Marshall Islands Journal

RMI Average Wages

Average individual wages in the RMI declined very slightly in FY2007 compared to FY06, according to a new EPPSO report. The report shows that the average wage in RMI in FY07 was $9,544, compared to the slightly higher $9,654 in FY06.

The report demonstrates that based on average annual salaries, the banking sector pays the highest average at $17,353 in FY07, up about two percent over the previous year.

Next highest average wages are paid to workers at Kwajalein, who earned an average of $15,818 in FY07 — also down from FY06 level of $16,262.

National government agencies paid $14,696 on average in FY07, down from a record high of $15,731 in FY06. Foreign embassies paid the next best at an average of $13,181.

The RMI national government came in at $12,606, up very slightly over FY06. RMI public enterprises paid an average of $11,765 to their workers, down from $12,154 in FY06. Local governments paid an average of $7,876 in FY07, compared to $7,694 in FY06.

Private sector paid an average wage of $5,078 in FY07 — its highest since FY01, the last time that the private sector’s average wage topped $5,000 per year. Non-governmental organizations paid their staff an average of $5,058 per year in FY07, up a bit on the $4,996 in FY06.

Kwajalein Wages Crash by 6.5%

Salaries for Marshallese working at Kwajalein declined by 6.5 percent in fiscal year 2007, according to the RMI government.

An employment statistics report issued by the Economic Policy, Planning and Statistics Office (EPPSO) shows that total wages earned by Marshallese at Kwajalein declined to $18.7 million FY2007 from a record high of $20.1 million in FY2006.

The drop in Kwajalein salaries went against a national trend of a slight overall increase in wage earnings in the RMI. EPPSO said that total salaries rose to $96.8 million in FY2007, up 1.2 percent from FY06’s $95.7 million. The 1.2 percent increase was the smallest salary increase since salary levels actually dropped by one percent in FY98. Since FY99, salaries increased from as little as 2.5 percent (FY03 and FY05) to 8.3 percent (FY00), the EPPSO report showed.

Overall, total employment was up by just over two percent in FY07, which was not as good as FY06 when the number of jobs in the RMI increased 3.5 percent. The 2.3 percent job increase in FY07 meant 231 new jobs, of which 171 were in the private sector. All told, there were 10,149 people employed in the RMI in FY2007 — the highest total ever.

The breakdown of the 10,149 jobs in FY07:

• Private sector, 38.5 percent.

• National government, 23.5 percent.

• Government public enterprises, 7.2 percent.

• Government agencies, 4.5 percent.

• Local governments,10.5 percent.

• Kwajalein base, 11.7 percent.

• NGOs, 3.9 percent.

• Foreign embassies, 0.2 percent.

The 10,149 jobs reported in FY07 is an all-time record, with the last highest record year being FY04, when 10,070 people were employed.

The EPPSO report noted that there was a four percent drop in Kwajalein jobs in FY07 — 49 jobs were lost between October 2006 and September 2007 — leaving the total Marshallese workforce at Kwajalein at 1,187 on September 30 last year.

From the 3/14/08 issue of the Marshall Islands Journal

MITA’s Ambitious Plans for Tourism

Details of the Marshall Islands Visitors Authority’s new four-year tourism action plan for the RMI were disclosed at the first national tourism symposium that kicked off Monday in Majuro as part of National Tourism Week.

“Tourism is vital to the nation’s economic growth,” said R&D Minister Fred Muller at the event. The Minister urged tourism industry people to ensure that the plan is focused on fostering development that “puts the needs of Marshallese first.”

He also acknowledged that tourism has “not received a fair share of the (government’s) budget,” and pledged to change that in the future so “as tourism grows, so will government support to MIVA.”

Dr. John Salas, who teaches international tourism and hospitality management at the University of Guam, said there is a huge opportunity for tourism growth in the Micronesian area. But the essential — and at the moment missing — element is solid regional cooperation promoting a “Magnificent Micronesia” theme that pools the small resources of each country into strength, and lower costs, for overseas marketing. He said that the Micronesian chapter of the Pacific Asia Travel Association — in which the RMI is a member — is playing an increasingly important role in promoting the region. “Like in a canoe, we need to row together,” Salas said to encourage greater Micronesian cooperation.

Salas also said that each destination has to identify what it has to offer visitors that is different from what they can get elsewhere. “We need to create global awareness (of the islands) and be different from other destinations,” Salas said.

MIVA consultant Ben Graham then described the basics of the MIVA four-year plan, and a new ABC — Awareness, Beautification and Cleanup — campaign to be led by a consortium of local groups, including MIVA, Marshall Islands Tourism Association, Majuro Atoll Waste Company and Marshall Islands Conservation Society.

Graham described the new tourism plan as “the first national level tourism plan that is homegrown.” The four-year plan is specifically timed for the political cycle of elected leaders, he said, adding that once finalized in the next few days, it will be submitted by Minister Muller for Cabinet blessing.

“Tourism is a way to harness growth and generate development,” he said. It is estimated that visitors to the RMI now spend between $4 and $5 million a year, with about 300 jobs catering to visitors in local hotels, restaurants and diver operations.

Three key elements of the plan are to:

• Develop Majuro as an attractive gateway to the rest of the country, operating as an effective hub.

• Develop Kwajalein as a destination and a hub for nearby islands.

• Facilitate outer island tourism by improving transportation and infrastructure.

“It’s an ambitious plan,” he Graham. “We’ve identified many areas and problems that need to be addressed.”

NTA Increases Channels

NTA has increased the number of cell phone channels and improved coverage in the Laura and Ajeltake areas.

In response to questions from the Journal about problems with the cell phone system in recent weeks, NTA general manager Tony Muller provided a rundown on developments in the past several weeks.

“With the arrival of equipment and an engineer, we’ve replaced our old OMC server with the new one in Majuro,” Muller said. “We encountered a bit of a link problem but have resolved it. This discrepancy would have caused drop calls in the DUD area” at the end of February. This, too, was resolved, Muller said.

Laura’s upgrade was to test omni-antenna coverage with more capacity. But during the tests, “coverage deteriorated with this setup, so we reverted back to sectorized coverage,” Muller said.

This means that Laura and Ajeltake have both gone from 14 to 21 sectorized channels.

From the 3/7/08 issue of the Marshall Islands Journal

Money Moving Big Biz

Workers in the Marshall Islands sent $22 million overseas in 2007, according to the chief executive officer of Media Communications, James Matayoshi.

“And that’s just through the registered operations,” Matayoshi told the Journal. On the flip side, Matayoshi said that just $400,000 makes its way into the Marshall Islands.

These figures are key to the mayor of Rongelap Atoll Local Government because of his new partnership with the Levinia family and their remittance and Visa debit card company, which is located above Payless Supermarket near the Women United Together in the Marshall Islands office.

The new company was set up a couple of months ago, but is now “officially open” and being run by secretary and manager Lenny Laviña.

“We are networked with Kwik Remittance Hawaii LLC,” said Matayoshi. “They provided us with the platform to deal with remittances. Compared to Western Union, our rates are 40 percent less.”

Using the remittance system, people can send money to, for example, the Hawaiian islands, Australian, Hong Kong, and Singapore. “We also have a link with Taiwan, which will be great for our students over there,” he said.

The Delap company also provides customers with Visa debit cards. “There’s no minimum balance,” he said. “You put $100 in, you spend $100. I use mine to buy groceries.”

Matayoshi believes the new service will be of benefit to all Micronesians. “We will be opening offices in Kosrae, Chuuk, and Pohnpei,” he said.

Currently, the company is logging movement of about $20,000 a week, mostly from Filipinos, with the hope that this will rise to $50,000 to $60,000 in remittances a week. 

Paul Allen's Jet Denied Access to Kwaj

Although the US Army turned down Paul Allen’s request to briefly transit Kwajalein on his way to Bikini last Friday, the billionaire computer mogul showed “where there’s a will, there’s a way.”

His 414-foot mega-yacht Octopus, which had been at Bikini Atoll since last Thursday, moved to within helicopter range of Majuro, dispatching one of its two helicopters to Majuro Saturday. The helicopter was positioned at Amata

Kabua International Airport overnight Saturday, and Allen’s private jet flew him into Majuro Sunday.

He was then whisked by helicopter to his waiting yacht, arriving Bikini Sunday.

US Army Kwajalein Atoll public affairs official Marcos Morales told the Journal that “the US Army Aeronautical Services Agency in Washington denied

Allen’s request (to have his plane and helicopter land at Kwajalein) last Friday.”

The Octopus arrived in Majuro late afternoon last Tuesday, spent about four hours here, and then headed out to Bikini.

Allen is the third richest American, having made his fortune in computers as an early partner with Bill Gates at Microsoft.

From the 2/29/08 issue of the Marshall Islands Journal

Strauss, Obeketang on Revamped NTA Board

A new-look board was appointed for the RMI National Telecommunications Authority Tuesday night at its annual general meeting.

Significant developments of the new board include only one elected official, Transportation and Communications Minister Dennis Momotaro, and new business sector members including Marshall Islands Chamber of Commerce President Hirobo Obeketang and outspoken private attorney David Strauss. The RMI government controls NTA’s board appointments because it owns a majority of NTA stock.

Other new NTA board members include Hilda Heine, Lynn Milne and Sheldon Anjain. Continuing members rounding out the eight-member board are Bank of Marshall Islands President Patrick Chen and RMI Taiwan Ambassador Alex Bing, who has been NTA’s chairman for many years.

Other developments on the NTA front include Bank of Marshall Islands plan to purchase $240,000 worth of NTA stock later this week.

Chen told the Journal that the BOMI board approved the stock purchase at its board meeting Wednesday.

Our Airline Again???

Foreign Ministers from the Marshall Islands and Nauru signed an air service agreement last Thursday that is part of an effort to resume flights into Fiji by Nauru’s Our Airline.

The signing Thursday in Taipei by the Ministers Tony deBrum and Kieren Keke also highlighted the multi-million dollar aid that Taiwan has supplied to national airlines of both nations.

Taiwan in 2006 bought Our Airline’s Boeing-737 at an undisclosed cost, and has injected $3 million into Air Marshall Islands for the purchase of a 34-seat Dash-8 and maintenance.

Up to the end of 2005, Nauru linked four western Pacific nations with Australia and Fiji. But when Air Nauru’s single Boeing-737 was repossessed for lack of lease payments in December that year, Fiji’s national carrier Air Pacific stepped into the lucrative Nadi, Fiji-Tarawa, Kiribati route and has been operating two flights each week since.

Last year, Fiji rebuffed efforts by Nauru’s new carrier, Our Airline, to resume service to Fiji, said Keke.

The business that Our Airline could generate from the Fiji route is critical to the economic survival of the struggling new carrier, airline officials say.

Keke said Our Airline is covering its costs largely because of charter services it operates in Australia.

The Marshall Islands, however, has an air service agreement with Fiji, which it hasn’t used since halting flights to the South Pacific by Air Marshall Islands in the late 1990s.

The aim is to have Our Airline provide the service to Fiji for Air Marshall Islands, Keke said.

The Marshall Islands last month submitted a request to the Fiji government to revive its air service agreement utilizing Our Airline, but has not received a response, officials here say.

“It is usually a regulatory formality to apply for the license to operate once you are ready to take up use of the rights,” Keke said.

But a return of Our Airline to servicing Fiji and Kiribati threatens to cut into Air Pacific’s monopoly on the Fiji-Kiribati route. Still, Marshall Islands and Nauru officials expressed optimism that the new service will get the okay from Fiji.

“The memorandum (signed Thursday in Taipei) will see the pooling of air service rights with the right aircraft types, in commercial code share agreements between Nauru’s and the Marshall Islands’ airlines,” Keke said at the ceremony in a prepared statement.

“This high level of cooperation will result in an expansion of air services in our region again linking several of Taiwan’s allies together and with more destinations.”

Our Airline currently flies from Brisbane, Australia, to Tarawa, Kiribati, with stops in Honiara, Solomon Islands and Nauru enroute twice a week. Mounting losses forced it to halt service to Majuro in mid-2007.

From the 2/15/08 issue of the Marshall Islands Journal

MALGOV Told Not to Harass Mobil

By GIFF JOHNSON

The High Court ordered MALGov not to issue fines or take any punitive action against Mobil Oil Micronesia in the ongoing dispute over MALGov debt to the Marshall Islands Social Security Administration.

Mobil filed suit Friday against MALGov and High Court-appointed receiver Philip Okney, asking the court to prevent the fuel company from being caught in the middle of a battle over who should get the monthly sales tax payments.

In November, the High Court appointed Okney as receiver to sort out MALGov’s multi-million dollar debt to MISSA.

In January, Okney obtained sales tax payments directly from Mobil and two other businesses, paying $131,000 to MISSA and returning the balance of $19,000 to MALGov.

But MALGov is objecting to Okney’s action, and last month sent letters to Mobil and other tax payers threatening them that failure to pay taxes directly to MALGov is “a violation of MALGov ordinances (and) is a ground for reconsideration and where necessary revocation of licenses.”

MALGov has appealed the issue to the Supreme Court and argues that until the Supreme Court resolves the matter, tax payments should continue as in the past — directly to MALGov.

Mobil filed suit to get court action in advance of this week Thursday’s monthly tax payment deadline.

On Tuesday, Mobil received the response it was requesting from Chief Justice Carl Ingram, who ordered MALGov and Okney not to take any punitive action against Mobil until the matter is resolved.

He specifically told MALGov not to send any letters, “threatening or otherwise,” to Mobil.

On Wednesday, after attorneys for the parties had agreed, Ingram directed Mobil to pay its MALGov sales taxes directly to receiver Okney, and Okney is to pay MISSA what it is due and turn the balance over to MALGov, which is restrained from penalizing Mobil.

Airline Back by March

Air Marshall Islands is expected to back in the air by early March but that doesn’t necessarily mean air services will return to the way they’ve been in the past.

AMI general manager Dan Fitzpatrick, while unwilling to declare an actual date the national carrier will be back in the air, told members of the Marshall Islands Tourism Association at their general monthly meeting last Thursday that it’s possible the Dash-8 will be back in service sometime between the end of this month and early March.

But not all outer island destinations should expect service even after the planes are flying again, the AMI GM said. “AMI will focus on commercially viable routes and rebuild itself that way,” said Fitzpatrick.

While there is a schedule for the Dash-8, Fitzpatrick indicates that getting the Dornier operating will “be a challenge.” The Dash can only service the bigger runways, while the Dorner services the smaller outer island runways, He said AMI is considering to send both Dorniers off island for maintenance.

“The (Dorniers’ age) are less than half-life,” he said. “They should be sent off Island to extend their longevity.”

Meanwhile, as a result of the ROC/Taiwan $1 million grant received in early January, Fitzpatrick reports that parts for the Dash-8 have already been ordered, pilots were scheduled to depart Majuro over the weekend for re-training and AMI is now advertising vacancies for engineers and mechanics.

From the 2/8/08 issue of the Marshall Islands Journal

AUDIT:  MEC at Risk

The dire financial condition of the Marshalls Energy Company in the 2005 and 2006 period prompted Deloitte and Touche auditors to raise questions about its ability to continue in business.

“MEC’s recurring losses from operations and net deficiency raise substantial doubt about its ability to continue as a going concern,” said the fiscal year 2006 audit presented to Nitijela last week.

Even MEC’s own overview statement included with the audit makes the point that “an increase in net assets over time normally indicates an improvement in financial condition” — and in the next item shows that MEC plunged from positive net asset worth of nearly $4 million in 2004 to minus (deficit) net assets of $3.2 million in 2006.

That’s a loss of $7.2 million over two years.

The 2005-06 period was marked by several major financial developments:

• Skyrocketing world market prices for fuel that pushed utility costs from $11.8 million in 2004 to $17.1 million in 2006.

• Increasing revenue from electrical customers, as MEC hiked its rates substantially. Utility revenue rose from $8.6 million in 2004 to $11.5 million in 2006.

• A reduction in revenues from fuel sales, as MEC was forced to halt sales to fishing vessels — sales that previously helped to subsidize costs of electricity. Revenue from fuel sales dropped from $14 million in 2005 to $9.8 million in 2006.

The audit shows that MEC was owed more than $4.3 million in 2006, of which the auditors said $2.1 million is “uncollectible accounts.”

“MEC has sustained substantial operating losses in recent years,” the audit said. “Management acknowledges that it is currently dependent on RepMar and its ability to pay for actual services rendered in order to maintain MEC as a going concern.”

If the government chose not to continue subsidizing MEC, the utility may need to consider raising electricity and fuel rates “to maintain MEC as a going concern.”

The audit noted that MEC received a $12 million bank loan on May 25, 2007, after the period of the audit.

The loan was guaranteed by the RMI government.

The report also noted that in October 2006 and March 2007 — after the audit period for FY 2006 — the RMI provided money advances of $1 million and $1.7 million, respectively.

The Chamber Plays the Mnopoly Game

 How much power do monopolies have in Majuro? This question comes to mind as efforts to accommodate the busy schedules of business people is proving to be more of a challenge than the Marshall Islands Chamber of Commerce bargained for.

A mini-survey taken in January to find a suitable time to host monthly chamber meetings resulted in a can of worms with complaints from members whizzing their way through the world wide web to Chamber secretary Jim McLean on why such and such a day is not suitable.

Take Continental Airlines and its monopoly over our international air access. Turns out Continental’s Salome Andrike, who is an executive member of the Chamber, can’t make the Tuesday meetings because it conflicts with flight schedules. So to accommodate that, several members decided Wednesday would be appropriate. But then this day conflicts with the Journal’s monopoly over producing the RMI’s only weekly dose of the “world’s worst news.”

The reply sent to the Chamber: “If you want us to cover stories on your activities then it ain’t gonna happen because Wednesday its production day!”

Back to the drawing board.

Mondays don’t work simply because of ‘blue Monday’. Tuesday and Wednesday are already out, that leaves Thursday but still that conflicts with Continental’s schedule and it seems to be another popular day for other meetings of other organizations. That leaves Friday.

“Provided it doesn’t eat into my T.G.I.F happy-hour time, I got no problem with it,” said ace reporter Mary Robinson. “You know how these chamber meetings have a way of dragging late into the afternoon.”

Technically, it appears all except Mary seem okay with this new Friday Chamber meeting schedule.

According to new Chamber President Hirobo Obeketang, the Friday, February 15 meeting will be held at the Melele room. It will feature, much to Mary’s delight, the young men’s group Antoone 2020.

From the 2/1/08 issue of the Marshall Islands Journal

JAL Halts March Charter

By SUZANNE CHUTARO

Japan Airlines has cancelled its only scheduled charter flight for 2008, prompting many locals to wonder if this is the end of the direct Japan-Marshall Islands JAL service.

But Marshall Islands Tours’ President Satoshi Yoshii says the cancellation is due to a lack of lead time to sell seats on the direct charter. The joint decision by leading wholesaler Marshall Islands Tours and Japan Airline executives was made earlier in January in the interest of ensuring the future sustainability of the direct Japan-Marshall Islands charter.

Yoshii told the Journal last Thursday that both parties agreed to cancel the flight to avoid failure.

“If we fail (now) then we have to reset the market,” said Yoshii. “It will be difficult to keep interest in the charter.”

According to Yoshii the decision was necessary as travel wholesale companies like MIT, JALPAK and the five other smaller wholesalers who sell block seats on the JAL charter say they need at least six months to successfully sell the Marshall Islands as a destination.

“Customers are interested in coming but giving notice of a charter only two-to-three months ahead is not enough lead time for planning,” said Yoshii. “(Japanese) customers tend to make their plans six-months in advance” plus wholesalers need to create flyers and other promotional materials to compete for customers in Japan’s hotly sought after travel market.

Knowing this problem, however, raises the question of why Japan Airlines has been announcing its charters only two-to-three months in advance.

The solution, although simple, is technical said Yoshii.

Since JAL started its direct charter flights into Majuro, Yoshii said there has been discussion with the Ports Authority and then Transportation Minister Michael Konelios on JAL’s need of turning lights at the end of the runway.

According to Yoshii the JAL charter flight is a 767 series aircraft and because of its wider body, the turning path is “just enough” to make its turn at the end of the Amata Kabua International Airport runway in day light.

Ideally though, he said, JAL would prefer night time arrivals and departures. JAL flights are already scheduled to handle their regular day time schedules, Yoshii said adding that JAL can only schedule a charter if one of its regular daily flights are cancelled or if there’s an opening.

“If JAL can arrive and depart at night then they can schedule the flights half-a-year in advance,” said Yoshii.

During the first two JAL charters, all 200 seats were booked solid because wholesalers had a five month lead time to sell the flights but after that, the passenger numbers started to lag bringing in between 150 and 180 passenger in the last four charters.

“JAL is  okay with the the last six charters,” said Yoshii, but he adds: “they’d like to do better. We want to get back up to 200 passengers. We’re looking at scheduling proposal of eight to 10 charter flights flights between July and December this year,” he said.

This, of course, is all dependent on the Marshall Islands installing turning lights at the end of the runway.  According to Yoshii, JAL executives told him they are keen on seeing the Marshall Islands become the next Palau.

“They want to see this succeed,” said Yoshii. “JAL would like to develop a strong relationship with the Marshall Islands.

“I believe that if we have the turning lights, it will be no problem for JAL to make its (charter) schedule decision — JAL’s  policies require 100 percent safety and they need these lights to operate at night.” On Friday Yoshii, the Marshall Islands Visitors Authority and Marshall Islands Tourism Association’s Chairman Ben Graham, met with newly elected Transportation Minister Dennis Momotaro to inform him of this issues.

Airline Adds Bonus Flight

Continental Micronesia has added an additional one-stop Island Hopper flight connecting Majuro with Guam and Japan for the peak summer months.

The one-stop Island Hopper will operate twice a week on Tuesdays and Saturdays during peak period: The one-stop will operate on Tuesdays beginning June 10 and ending August 12, and on Saturdays beginning June 14 and ending August 16.  The current Saturday one-stop flight will end on June 7, 2008 and re-start on August 23.

“The new timing on the one-stop will continue to let passengers make their connections onward to US mainland cities, and in some cases, the timings allow for better connections,” said Continental Micronesia Asia and Micronesia Director for Sales and Marketing David Kendell, who is based in Guam. The flight will operate twice a week on Tuesdays and Saturdays during peak season, and once a week during off peak season on Saturdays.

From the 1/25/08 issue of the Marshall Islands Journal

Cabinet Tackles Cars

President Litokwa Tomeing’s new administration has hit the ground running announcing on Monday two new Cabinet approved policies to cut government expenses.

The first announced by Minister in Assistance Christopher Loeak was a complete ban on government funds paying for alcohol at government functions or parties.

“Government money will not be used to buy alcohol,” said Loeak.

“All government functions will have a no-host bar and individuals can buy their own (alcoholic) drinks.”

The second policy he announced regarded government paid-for vehicles for the ministers.

Highlighting a lack of government funds and need to reduce expenses Loeak clarified that Cabinet ministers will be provided with vehicles to use while they are in office, but once they are out of office they have the option to purchase the vehicle or return the asset back to the government.

“If (the outgoing Ministers) don’t want to buy their vehicle then return them (to the government),” he said.

“This policy applies to all Ministers, Speaker and the Vice-Speaker who are provided with a government vehicle.” Following on from Loeak’s policy announcement, Minister of Finance Jack Ading asked for the former ministers under Kessai Note’s administration to return their vehicles which were issued to them. On Tuesday, it became evident that not all vehicles for ministers had been returned to the government.

Minister of Foreign Affairs Tony deBrum who was responding to a slew of questions by members of the UDP who wanted to know status of RMI’s foreign policy with respect to the Republic of China-Taiwan said that policy issues would be addressed after a proper review by the government of the nation’s current situation but he added the new ministers didn’t even have the basic tools such as computers in their offices or vehicles to carry out their day-to-day operations.

Former president Note then questioned this vehicle policy saying that the past practice has been for former Ministers to keep their vehicles.

“Some former ministers still have their vehicles, they never returned them,” said Note.

“But if this is your new policy then well see.”

Taiwan Helps AMI with $ 1Million

Taiwan Ambassador Bruce Linghu presented a check for $1 million to RMI Ministers Jack Ading, Dennis Momotaro and Tony deBrum last Friday.

The funding is to assist Air Marshall Islands to get its planes back in the air after more than three months with no service.

Linghu told the ministers that after he informed Taipei about AMI’s situation, he received a quick response, with President Chen Shui-bian promising funds to help. It took just over a week from Chen’s promise to the delivery of the funding.

DeBrum thanked the ambassador, saying he knew that it took significant “bureaucratic know how” to get the funding issued so quickly.

The airline is “developing a full recovery plan, which will be provided to the Embassy, so you can see that you are not throwing good money after bad,” deBrum said.

“You can count on our commitment and partnership,” Linghu said.

In a release, the Embassy said that “Taiwan attaches great importance to this cooperative and mutually beneficial relationship with the people and government of the RMI.”

From the 1/18/08 issue of the Marshall Islands Journal

Silver Shadow Coming to Town

A first big event kicking off the New Year for the local tourism industry is next month’s visit to Majuro of the Silver Shadow, a cruise ship run by the Silver Seas cruise line.

Its more than 300 passengers and 300 crew will hit town Saturday February 16 for a five-to-six hour visit that is expected to provide a shot in the arm for local businesses.

The cruise ship will anchor in the lagoon, and use RRE’s Shoreline for a staging area, company representative Bill Thayer told the Journal last week. He has been in town meeting with various officials in preparation for the first visit by this cruise ship company to Majuro.

Various handicraft and other local vendors are expected to set up booths for the arrival next month.

Majuro Marine’s Bori Ysawa is agent for the cruise liner.

Thayer explained that the number of passengers is small because this is a “high end” group on board, with an almost one-to-one crew-to-passenger ratio.

He’s hoping that this initial visit will stimulate more port calls by the company in the future.

“This region is poised for increased interest in cruise ship port calls,” Thayer said.

Majuro will be the vessel’s first port call in the Micronesian area. After Majuro it heads onto Pohnpei, Guam and Saipan, and then to the South Pacific and Asia.

Tony to Taiwan:  We’re Still Pals

By GIFF JOHNSON 

Marshall Islands Foreign Minister Tony deBrum last Friday reassured a visiting Taiwan government envoy of the new government’s support for relations with Taiwan. It is the strongest sign of support for links with Taiwan issued since the new government took over on January 7.

Although the relationship was called into question with the election of President Litokwa Tomeing, who before the vote had called for shifting recognition to the People’s Republic of China, deBrum, speaking for Tomeing Friday night, told Taiwan Vice Minister of Foreign Affairs Elizabeth Y.F. Chu that the Marshall Islands “cherishes the relationship” with her country.

Tomeing and most of his Cabinet turned out to welcome Chu Friday at a reception at the RRE compound hosted by the Taiwan Embassy in Majuro. Chu arrived in Majuro Thursday to meet the new President, and was to depart Saturday, but extended her visit through Monday to attend Monday’s inauguration for Tomeing. The two countries have had diplomatic ties for 10 years.

Taiwan President Chen Shui-bian in a telephone call to Tomeing Wednesday promised “all help” for the government’s ailing national airline, whose two planes have been grounded for more than three months. Chu confirmed Taiwan’s plans to inject a multi-million grant for the airline, and objected to this funding being labeled “checkbook diplomacy.”

Getting the planes flying again is “urgently needed for medical care because people (on remote islands) cannot get to hospital,” she told the Journal in an interview. “We come to help. It shouldn’t be criticized as so-called checkbook diplomacy.”

Taiwan Ambassador Bruce J.D. Linghu said Saturday that he expected the urgently needed funding to begin arriving this week. The funding will “take care of the costs to repair both planes and to cover airline bills that need to be paid,” Linghu said.

“We promise to repair Air Marshall Islands planes,” Chu said at Friday’s reception, sparking applause from the gathering of government and business leaders, including President Tomeing. “This is the most urgent need for everyone.”

At least one child from a remote rural island died late last year with no planes available to evacuate patients to the hospital in the capital, and the country’s flagship tourism business — scuba diving on the World War II fleet of warships sunk in Bikini Atoll’s lagoon — is in danger of being closed without the airline.

An airline official indicated that Taiwan had committed to providing $2 million needed to pay for parts and repairs of the 34-seat Dash-8 and 19-seat Dornier 228 aircraft. The airline official said they should be able to get the Dash-8 back in service within about three weeks from receipt of funds.

Linghu confirmed that the funding for the airline is outside the normal $10 million annual grant provided to the Marshall Islands. Taiwan is the second biggest aid donor to the Marshall Islands behind the United States.

From the 1/11/08 issue of the Marshall Islands Journal

Airlines Ready to Fill in for AMI

Three private airlines are interested in providing service in the Marshall Islands, the Marshall Islands Chamber of Commerce was told Tuesday at the Marshall Islands Resort.

But none can come in without the approval of the government. And Air Marshall Islands’ situation only complicates matters, with no quick fix in sight for its two grounded aircraft.

The current limbo of domestic air services prompted the Chamber to agree that it will await the appointment of the new Minister of Transportation and invite the new Minister to the next meeting to discuss possible options available to improve domestic air service.

Two weeks ago, the Cabinet approved a $1 million guarantee for AMI to seek a bank loan to resolve problems with both planes — but with a new government just taking over, the earlier government guarantee will have to be reviewed. Ben Chutaro questioned putting further money into AMI in its current status because the airline should be privatized, otherwise continuing to inject money is a waste of resources. Jerry Kramer said that Island Air, Cape Air and Freedom Air all have expressed interest in servicing the domestic market. “The government has to say ‘we’re out of the airline business’ to get a private airline in,” Kramer said.

Bikini Atoll Dive chief Jack Niedenthal said that the lack of AMI service is about to start costing the Bikinians large sums of money. “By the end of this week, I’ll have to cancel February’s dive schedule,” he said. “That will cost us about $60,000 in refunds.”

RMI Losing $8 million a Year

The Marshall Islands could be collecting $8 million to $10 million more in local revenues every year if it enforced tax laws already on the books.

That’s the conclusion of Ministry of Finance and International Monetary Fund (IMF) officials.

IMF official Raphael W.K. Lam estimates that 30-to-40 percent of available tax money is not being collected. “The potential loss (of revenue) is huge,” he said in a presentation to RMI government officials last month in Majuro.

He said there is a need to step-up tax compliance so tax collection is fair. But he also said that there are policies in the current system that need to be fixed, including such problems as the gross revenue tax being an unfair tax that favors low-turnover, high-profit businesses. He also pointed out that the duplication of tax collection and auditing by both national and local governments needs to be changed and simplified.

Lam commented on the unfairness of the present tax non-compliance level, the income and gross revenue taxes, and taxes withheld at the employer level but never filed or paid.

“Some tax policies contain inequities and distort incentives,” he said. “Import duties encounter difficulties in classification and valuation, GRT on revenue instead of net profit favors the business with a low turnover but a high profit margin, income tax is neither progressive nor regressive, and the deductible allowances are not applicable to every employee.”

Lam said that because of the weaknesses in the tax system there are a number of things that the government should keep in mind when designing tax reform.

He recognized that the government, “especially the customs, tax and revenue division, has undertaken some key steps in improving the tax system. To extend and multiply their positive efforts, we think there are certain key principles to follow in designing the future tax system.”

These boil down to simplicity and fairness, with the recommendation for one tax schedule, one collection authority, and simple but effective audit.

Four specific recommendations were offered by Lam:

• Continue the improvements in tax administration, which is the key to the proposed tax reform (especially on the non-compliance issue and duplicate efforts across revenue collection agencies).

• Involve key stakeholders for an open discussion of tax issues, addressing the major concerns and difficulties. Keep it transparent and circulate proposals among everyone involved.

• Harmonize tax collection by eliminating duplicate and dual efforts at the national and local levels, establish a sound and easy-to-manage sharing system to avoid arrears, develop effective auditing and collection, and enhance cooperation in compliance. Solve the tax debt that is owed between the national and local governments.

• Penalize repeated cases of non-compliance. Concentrate efforts on tracing the repeated and severe cases. This can be done by establishing and communicating to the public and business that the authorities are taking serious efforts to get businesses paying their required taxes. Share and learn from the success stories in MISSA. Show strong determination that the authorities are active for tax reform.