GUAM: BILL FOR FOREIGN INVESTMENT TAX RATE SIGNED

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By Brenda Sommer Pacific Daily News

HAGÅTÑA, Guam (August 26, 2002 – Pacific Daily News)---President George Bush signed a bill over the weekend allowing Guam to tax foreign investors at the same rates as other states and territories.

All foreign investment here now is taxed at 30 percent, as required by federal law. U.S. treaties with some countries set much lower rates, including 10 percent for Japanese investment. Other territories already have equalized the investment tax issue.

Foreign investment -- especially from Japan, South Korea and Taiwan -- funds 75 percent of Guam's commercial development.

"To begin with, I'm really happy," said Guam Delegate Robert Underwood, who wrote the Guam Foreign Investment Equity Act that Bush signed. Underwood is a Democratic candidate for governor.

"This should dramatically enhance the investment climate in Guam," he said. "It allows us to be treated like the rest of America, in terms of investment."

Carl Peterson, Guam Chamber of Commerce president, said the signing of the new law is "fantastic."

"I think that's wonderful news," he said. "This will stimulate foreign investment to Guam. Capital ... will go where there's a friendly environment and the potential to make a profit."

However, Peterson tempered his enthusiasm with concerns about the island's utilities.

"There's always (investment) money, but the question is ... are we the opportunity?" he asked. "We must solve the basic necessities of life before we can expect to attract substantial investment. We can no longer put this off and blame each other. We must find a way to do what every other country in the world has done ... and that is privatize the utilities."

Underwood said more than 15 investors and investment houses have contacted his office about the issue in the years since he first introduced the bill, "So we know there's a lot of interest," he said, noting Japanese companies continue to inquire about the bill.

He first introduced the act more than two years ago, but Clinton administration officials feared it would allow foreign investors to take advantage of other Guam tax rebates. The bill Bush signed prevents such double tax breaks.

Underwood reintroduced the bill early last year, which he said was supported from the start by the Bush administration, Gov. Carl Gutierrez and the Guam Legislature.

"I want to give credit in particular to Sen. (Vicente) Ben Pangelinan, who has been working with us since the very beginning on this legislation," the delegate said.

For additional reports from the Pacific Daily News, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/Pacific Daily News (Guam).

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