Palau map showing Ngardmau State where Palau's only Free Trade Zone is situated.

A bill being introduced at Palau’s national congress seeks to abolish a portion of the Free Trade Zone Act of 2003, a law that placed a part of Ngardmau State as a tax-free zone.

Senate Bill 10-159, which was introduced by Senator Frank Kyota on June 19, 2019, states that it wants to repeal a part of the Free Trade Zone law to “promote economic development, streamline bureaucracy, and eliminate redundant spending.”

The bill says that restrictions on the use of land under the Free Trade Zone law “pose an undue burden.” The proposed legislation cited that citizens of Ngardmau have signed a petition asking for the removal of the free trade zone. There is, however, no statistics or specific number of Ngardmau citizens cited in the bill.

“The Olbiil Era Kelulau is aware that the citizens of Ngardmau have a strong desire to invest and develop the area surrounding the harbor. However, this current method is not achieving the expected results detailed in RPPL 6-40, and is, in fact, impeding the use of land for other development,” the bill states.

The bill seeks to repeal Section 1 through Section 28 of RPPL 6-40 and retain only, among others, the part that established Ngardmau Dock as one of the official ports of entry of Palau.

The Free Trade Zone Act was passed in 2003 for the purpose of fostering growth in the country through the establishment of a tax-free zone which seeks to incentivize development in Ngardmau state.

The proposed legislation states that the “lofty goals” set for the Ngardmau Free Trade Zone is left unrealized even after 16 years that passed since its passage despite having an annual funding that ranges between $25,000 to $40,000.

“Restricting the rights of private landowners was only an acceptable means, in 2003, if this ensured the successful realization of the goals of RPPL 6-40. That progress has not been made, and it is time for the Republic to consider other options for our economic development and future prosperity. (Rhealyn C. Pojas)