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By Fili Sagapolutele

PAGO PAGO, American Samoa, (Samoa News, Feb. 28) - Governor Togiola Tulafono testified before the U.S. House Resources subcommittee on Insular Areas yesterday about the status of American Samoa's economy, challenges it faces and programs being pursued to diversify the local economy.

Speaking at the hearing on the Department of Interior's FY 2008 budget of US$403.8 million for the Office of Insular Affairs, Togiola also requested that the committee maintain the current system of having a Special Industry Committee review local minimum wages every two years.

The governor said in a prepared statement that it's the position of his administration that these special industry committees, which are appointed by the US Secretary of Labor, work for the territory.

"They are responsive and they take into account the unique factors presented by American Samoa's fledgling economy," he said.

The next minimum wage hearing is set for June this year.

Regarding economic development conditions in the territory, the governor said that although American Samoa has essentially become self-governing under the Interior Department, "we have a very long way to go" citing for example "our per capita income is only about one-fifth the U.S. average, and poverty levels in American Samoa are almost six times the national average."

Togiola underscored the need for economic development efforts to correlate to long term budget planning, minimum wage structure in the territory and federal tax incentives in order to best plan government operations into the future.

"Working on these efforts in piecemeal fashion is not getting the job done. Economic development does not occur in a vacuum," he said. "Sufficient infrastructure must be in place to support it; federal tax incentives must be in place to encourage it, and appropriate efforts to keep costs low for investors must be in place in order to make economic development endure."

The governor noted that our relationship with the federal government has provided benefits and special advantages and these advantages were largely responsible for the territory's ability to retain the tuna cannery industry. He said a loss of these benefits threatens to cause our cannery industry to seek lower cost locations elsewhere.

"Much of our success to date has been based upon these benefits which are now rapidly disappearing or threatened. There is nothing on the horizon or in the offing to replace these benefits," he said. "The departure of the canneries from American Samoa would wipe out one-half of the total jobs in American Samoa directly and indirectly. This would be a catastrophe for any economy, but it would be worse for a small isolated area like American Samoa."

And if this does happen, he warned the committee that the federal government would likely be petitioned for assistance to deal with very serious and protracted problems including unemployment, re-training, relocation assistance, business failures, plummeting local revenues for essential public services and other needs.

He said there are also "pressures now to equalize US and American Samoa minimum wage rates" including talks of bringing American Samoa under US Immigration, possibly even under US Customs.

"These are the characteristics that have helped us to succeed in economic development," he said. "If we lose these special conditions, American Samoa could face insurmountable economic development barriers in the future."

The governor also relayed to the committee some of the projects ASG and OIA are working on, such as federal tax incentives for businesses willing to invest in American Samoa.

He said ASG is also pursuing a number of complementary initiatives such as streamlining the business permitting and licensing process in order to make the investment climate more business friendly. Through technical assistance funding from the Office of Insular Affairs, ASG will make the process of attaining a business license much simpler through electronic means, he said.

This would include ASG doing away with the inefficient waiting periods that are caused by multiple agencies having to sign off on permits, by consolidating hearings and allowing for a "one-window" approach to electronically applied for licenses and permits through the internet.

Another new program being pursued is a Low Income Housing Tax Credit Program, which he said has the potential to infuse eighteen million grant-like dollars into the local economy and help foster our private construction sector. "Through technical assistance funding, we hope to bring this program into reality within the next two years."

Additionally, he said other economic development projects and proposals being pursued are a local fish processing facility, co-ops for local fishermen and farmers, and numerous niche markets within the Tourism industry.

He also said there are current efforts to diversify the local industries by targeting for development of e-Commerce which depends on skilled workers and well-developed internet-based communication systems.

DOI's deputy assistant secretary for Insular Areas Papali'i David B. Cohen testified at the hearing and said that of the total OIA budget, the second largest budget activity is the US$22.9 million allocated for ASG operations as part of OIA discretionary funding.

Togiola said the funding is "absolutely vital to the well being of our people." He noted that this subsidy has not had a significant increase for over two decades, while the local population has doubled, and the cost of living has increased approximately sixty percent.

Regarding the US$10.5 million in CIP funding for American Samoa, the governor recommends to the committee that this "specific program be continued at its current level, and if possible, expanded to increase the funding of additional necessary infrastructure in the islands."

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