ASIAN-OWNED BUSINESSES TAKING OVER RMI

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OPINION

By Giff Johnson

MAJURO, Marshall Islands (August 9, 2002 – The Marshall Islands Journal)---Local Marshallese businesses have been taking a beating since the late 1990s as a result of the heavy influx of Asians who have opened businesses.

And the feeling of a number of local business people is that the recent imports are soon to drown out the Marshallese businesses.

Nearly five years ago, Charles Domnick predicted -- in a story that we ran on the front page of the Journal -- that in 10 years time Asian business people would be running Majuro and most local companies would be out of business.

Five years on, that’s certainly what’s happening, with Asians increasingly dominating local takeouts, groceries, auto shops and sales.

A number of local people have commented to us that they see many Marshallese customers turning to the foreign owned shops instead of patronizing the Marshallese stores -- because of lower prices.

Apparently well financed Asian businesses either have access to cheaper goods or the money to keep prices down: the net effect is that it will increasingly drive locally-owned businesses out of the market.

Customers say they shop at the Asian-owned businesses because they’re cheaper. Local business people, who bring a good deal of product from the U.S. -- which means higher price and higher quality -- say that people buying at the Asian owned businesses may not realize that often they are trading low price for lousy quality.

Still, reality is that the influx of Asians has already put some once-locally owned businesses out of business, and is threatening others -- even relatively large ones -- with closure or at least drastic counter measures.

"The government should do something about it," is something we frequently hear. The government, back in the mid-1990s, created the current situation by selling many passports.

One of the problems today with addressing "alien" business ventures, at least with some of the Asian business people arrived in the past five years, is that a number of them are Marshallese citizens. So the usual controls such as foreign investment permits, visas, etc. don’t apply.

But there are two things about which the government does essentially nothing, which makes a seriously uneven playing field even more uneven for most local businesses attempting to compete with well-financed and hard-working Asian business people:

(1) Are all the Asian businesses, including the small shops, paying required import taxes, gross revenue tax, income tax and retirement/health fund taxes?

If they’re not, and everyone knows that tax compliance is not the Ministry of Finance’s strong point, then that puts the tax paying local businesses at a serious cost and competitive disadvantage.

(2) During 2001, a list of development/business areas "reserved" for Marshallese only companies was approved by the RMI government. What is being done to enforce it to reduce outside competition in businesses such as taxis, bakeries, restaurants, etc.?

The strong and growing Asian business presence is now an established fact of life.

If Majuro wants to maintain business control over a good number of businesses -- say 50 percent or more -- then the government is going to have to help to even the playing field (as noted above) and local businesses are going to have to go head-to-head with their Asian counterparts to compete effectively.

The Marshall Islands Journal, Box 14, Majuro, Marshall Islands 96960 E-mail: journal@ntamar.com  Subscriptions (weekly): 1 year US $87.00; international $213.00 (air mail).

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