By: L.N. Reklai
October 19, 2016 (Ngerulmud) House of Delegates in their 16th Regular session adopted its Committee’s report on the bill to update the foreign investment act. The bill has passed both houses of OEK and was sent to President Remengesau who referred it back with recommendations.
House bill 9-196, introduced in January by President Remengesau Jr., seeks to give teeth to the current foreign investment policy, by clearly defining what “front business” is, identifying certain characteristics of what would be a front operation. This would for the first time that a “front business” is defined by law as an illegal act with penalties.
The bill also seeks to streamline the foreign investment process by setting specific criteria to be met, timelines for approval and clear procedure for raising and resolving claims.
The President’s version does not differ too much from the final version passed by both houses in content but seeks to reformat the bill for greater readability and easier applicability.
PDI restores minimum investment back to $500,000 for investment with exception of hotels and lodgings which was raised to $5million.
The bill also restricts transfer of shares of the company within the first 12 months.
House removed the language in the President’s version which gives Attorney General investigatory subpoena power. It also includes Grandfather Clause to incorporate existing business to remain as they are until their business license expires before they comply with the new policies.
During the last presidential debate, the issue of protecting local businesses by improving the foreign investment act, was one of the questions posed to the presidential candidates. Surangel Whipps Jr. stated that the current FIB law has no teeth. He said that one way to address the issue is to have greater transparency by having the investor apply online so that he would face more scrutiny.
Remengesau replied citing the above proposed bill, which he stated would provide clear definitions and stiffer penalties. [/restrict]