A proposed bill in the House is requiring foreign investors to make security deposits at the National Development Bank of Palau (NDBP) to give it its needed capital.

House Bill 11-07-10 states that an increase in NDBP capital from which to make loans for housing, agriculture and aquaculture is important for the economic development. 

“To increase the amount of available funds infused into the NDBP and to ensure that foreign investors keep an adequate amount of funds in the Republic in order to pay for outstanding creditors, fees and fines. 

It noted that foreign investors holding Foreign Investment Approval Certificates (FIAC) should be required to make security deposits to NDBP.  Currently the law requires FIAC holders to place security deposits in any licensed bank in Palau.

The interest made from those security deposits, according to the bill, will be then transferred to the National Treasury. 

Foreign Investment Act mandates investors to deposit a percentage of their proposed investment into a licensed bank in Palau under the name of the company and Foreign Investment Board.  Should the company choose to close business in Palau, the security deposit will be used to pay any unpaid liabilities.  If there are no liabilities, the funds will be released to the investor.

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