President Tommy Remenegsau Jr. yesterday signed a new law aimed at capturing wealthy foreign investors to open new and high-end accommodations in the island nation.
“These amendments provide clear guidance and direction to the Foreign Investment Board, letting it know exactly what kind of foreign investment should be prioritized in order to encourage and attract high-quality investments into the Republic,” Remengesau stated in his signing statement to the Olbiil Era Kelulau (OEK) leaders.
RPPL 10-20 will attract foreign investments by giving a tax credit to foreign investors who will come in with their own designed water treatment system, power backups, and renewable energy sources to lessen the strain to the environment and existing infrastructure of the country.
Under the new law, foreign investors investing in high -end accommodations be given a tax credit of up to 40 percent.
The Foreign Investment Board (FIB) is given more teeth to directly incentivize the projects, adopt and publicly endorse reputable classification and rating systems for different forms of accommodations, from luxury resort hotels to eco-lodges.
The new law also discourages or prohibit foreign investment in low-quality facilities, budget facilities, or facilities which would likely only qualify for a low rating under reputable and independent accommodation rating systems.
“This will help send a clear message to high-end investors and developers that Palau welcomes their business,” Remengesau stated.
The law will only cover foreign investors and Palauan businessmen wanting to open up new hotel or accommodations will not have to go through the FIB process.
The bill also clarifies the definitions of “owner,” “part-owner,” and “short-term lodging facility,” which ensures that simple language issues are clarified to ensure that the foreign investment approval certificate (FIAC) process works as intended.
It also clarifies the penalties for violating the statute by explaining that in addition to any criminal penalties, violators of this law will be subject to a fine of up to $25,000.
Remengesau said this is an important bill, which he hopes will attract “quality” visitors.
Palau only has a few five-star resorts on the island, most are in the most populous state of Koror.
Earlier Remengesau said that Palau wants to attract fewer tourists who spend more which equates to more tax dollars. (Bernadette H. Carreon/Contributor)