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Lolo blames federal policies for ASG's debt status

Cites cabotage policy, fishing restrictions, and minimum wage hike as examples

While the US Government Accountability Office (GAO) conducts a review of ASG’s public debt status, Gov. Lolo Matalasi Moliga has shared with the investigative arm of the US Congress, that the territory’s economy is defined by just one industry - the cannery - and efforts to develop and diversify the local economy has been “stymied and stifled” by federal policies.

Lolo’s view is outlined in an Aug. 15th letter to GAO’s Budget Analysis Strategic Issues director Dr. Susan J. Irving, whose team is collaborating with the Governor’s staff in carrying out a Congressional directive, which calls for compiling a “comprehensive final report on the public debt status of the American Samoa Government.”


The comprehensive review is mandated under provision of the federal Puerto Rico Oversight, Management, and Economic Stability Act, in which the US Congress requires GAO to look at public debt in five U.S. territories - Puerto Rico, American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, and the US Virgin Islands, according to Charles Young, GAO's Public Affairs managing director.

“For each of the territories, GAO will report on trends in public debt and revenue for fiscal years 2005-2015. GAO will also look at the major reported drivers of the debt and what is known about the territories’ ability to repay,” Young said yesterday from Washington D.C in response to Samoa News questions.

As to when the GAO work will be completed, Young said, “my understanding is that we expect to complete that work in September or October. The report will be posted to our website as soon as it is released.”


In his letter to Irving, the governor appeared disappointed that other information pertinent to American Samoa’s economy may not be included in the final GAO report or during discussions between the Governor’s staff and Irving’s team.

“The objective inherent in the reporting parameters of factual information and the brevity of such information precluded discussions of issues compelling” ASG to utilize private sector options to access additional capital to finance its critical economic projects as it receives only $10 million annually from US Interior Department “to meet social and economic development infrastructure needs,” the governor wrote.

(Under the American Samoa Economic Development Authority, ASG sold bonds with revenues collected earmarked to address specific social and economic development needs.)

According to the governor, the ASG since the transfer of administrative responsibilities from the Department of the Navy to DOI in 1951 “has had its efforts to develop its economy stymied and stifled by prohibitive federal policies.”

Lolo pointed out that American Samoa’s economy is defined by just one industry engaged in the production of canned tuna fish and other fish related products for the US market.

Withdrawal of federal incentives, automatic imposition of federal minimum wage hikes of 40-cents per hour every three years, prohibition of fishing in the high seas by the National Oceanic and Atmospheric Administration, reduction of fishing grounds by US Presidential ocean monuments expansion, grossly insensitive enforcement of US Coast Guard rules and regulations, and stiff competition from foreign low wage canned tuna fish producing countries, “severely threaten the continued viability of this industry,” the governor explained.

He noted that StarKist Samoa is the only remaining cannery after the closure last December of Tri Marine International’s Samoa Tuna Processors Inc.

COS Samoa Packing closed its local cannery operations in 2009.

“American Samoa’s economy is still going through recovery, and the potential eminent loss of StarKist Samoa attributed to the above enumerated factors will cause the Territory emulate the financial crisis experienced by Puerto Rico and the US Virgin Islands,” Lolo said. “American Samoa will be at the federal government’s doorsteps requesting a bailout if... StarKist is forced to relocate its facility to a low wage canned tuna fish production country.”

With American Samoa’s total vulnerability due to its dependence on one industry, and in this case, “one company”, the territory emphasizes the absolute need for economic diversification, Lolo continued, adding that many Pacific islands are aggressively pushing tourism development.

American Samoa “has struggled for a very long time” to diversify its economy by developing its tourism industry; however, these efforts “have been exercised in futility because the basic component of tourism infrastructure system is air transportation,” he explained.

“Regrettably, the federal ‘cabotage policy’ created a monopolistic air transportation environment and placed American Samoa in a hostage situation subjecting visitors and residents alike to the payment of exorbitant airfares with only two flights a week except for the summer and Christmas holidays,” said the governor referring to Hawaiian Airlines — which was not identified by name in the letter — but operates the only passenger commercial flights between Honolulu and Pago Pago.

Lolo informed Irving that these factors “impelled” ASG “to explore other options including the bond issuance pathway,” which is “also difficult to access because of our weak economy.”

Furthermore, attraction of investment capital is effectively preempted by the presence of impeding federal policies, again, compelling ASG to increase its debt service structure.

“The American Samoa Government’s Debt Structure is the direct result of limited options available to access venture capital to build our economic development infrastructure,” the governor noted. “These factors should be considered in alignment with the debt service position of American Samoa as well as other territories of the United States.”

Copies of the governor’s letter were also sent to US Secretary of Interior, Ryan Zinke, Congresswoman Aumua Amata, and DOI’s Acting Assistant Secretary for Insular Affairs, Nikolao Pula.