FSM Congress Urged To Act On Telecommunications Liberalization

Pacific Islands Development Program, East-West Center With Support From Center for Pacific Islands Studies, University of Hawai‘i

News Release

FSM Information Services PALIKIR, Pohnpei

April 1, 2014

Federated States of Micronesia President Manny Mori reminded Speaker Dohsis Halbert about the administration’s legislative priorities when the FSM Congress holds its third special session.

These are the telecommunication liberalization bill and the tax reform sunset clause in the FSM Revenue Administration Act.

"As you are aware," Mori said in his letter to Halbert, "our national government has been engaged in an on-going effort to improve our telecommunications connectivity throughout the FSM. Central to this effort is a proposed Joint fiber optic cable project connecting Palau and the State of Yap to Guam. This will greatly increase telecommunication capability and capacity, and has obvious positive impacts on both public and private sector development throughout the Micronesian Region."

Mori said the FSM is pursuing a financial package with the World Bank that is contingent upon the liberalization of the telecommunication sector to create an open service provider environment and potentially more service choices for consumers.

As for the "sunset clause" in the FSM Revenue Administration Act, Mori said it will be triggered if Congress does not act before the end of March.

Letting the "sunset clause" to take effect will nullify the tax reform initiative pursued by the FSM and the state governments for over 10 years, he added.

"As you are aware, the fiscal and economic situation facing us in 2023 [when U.S. funding assistance ends] is our major challenge. The FSM tax reform is necessary to improve the fiscal outlook for all of our governments, especially the state governments. The FSM tax reform also contains investment-friendly policies that will improve the business environment in the FSM.... I would strongly urge congressional action to repeal the sunset clause from the Revenue Administration Act so that we can move forward with implementation of the tax reform."

The ongoing session of the FSM Congress started on March 24 and will be continue for 10 days unless shortened or extended by its members.

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