The government's fiscal year 2014 budget includes funding allocation Gov. Lolo Matalasi Moliga says will boost economic development, create jobs and bring more prosperity to the lives of local residents.

According to the governor, the ASG financial plan — the budget — is an economic development stimulant strategy, aimed to bolster the local economy.

“It includes the injection of needed capital to stimulate economic activity with the expected subsequent generation of jobs,” he said in the FY 2014 budget summary. “If our people don’t have jobs, our efforts to improve the qualify of their lives will continue to be mere rhetoric.”

DEVELOPMENT BANK

Among the programs to boost economic development which will help the private sector, is $1 million allocated to the Development Bank of American Samoa. The governor says the current restrictive lending policies of the commercial banks have limited the ability of local people to participate in their own economic development.

“This perpetuates the current trend of foreign dominance of the private sector,” he said. “In order to accelerate the creation of jobs and to increase local ownership of businesses, local entrepreneurs need to access venture capital.”

The governor said the fund earmarks attempts to stimulate economic activity in the private sector by making venture capital finance loans available through DBAS. “This will increase DBAS’ capacity to issue loans to locally owned businesses,” he added.

Lolo’s move to fund loans for local businesses was first revealed in his address to lawmakers in January during his State of the Territory speech.

“I aim to aggressively promote the concept of local entrepreneurship. Starting a business reflects an alternative... in our community instead of depending on government for a job,” he said at the time. “This is only possible if they have access to a source of venture capital.”

Asked for a reaction to the governor’s proposal, Chamber of Commerce chairman David Robinson pointed out that in a number of economic development discussions and proposals in the past, the Chamber has advocated more funding be allocated to DBAS so loans could be provided to local businesses for expansion and development.

He said the Chamber applauds the governor’s proposal to allocate a million dollars to DBAS, which “does not have very much money to loan. New loan funds tend to be made from payments of existing loans and therefore loans of up to $25,000 are generally considered to be optimal.”

Robinson also noted that DBAS has mandatory and strict documentation requirements, but it has the advantage over the retail banks of being able to make loan decisions locally.

At a time when the economy and many businesses are struggling and there is only one retail bank making loans, the Chamber hopes the Fono will endorse the governor’s budget submission, he said.

COLLEGE GRADUATES

Another program allocated $1 million is under the ‘Economic Development/Private Sector Initiative’, which the governor says entails the placement of college degree holders into private sector jobs. The funds will provide an incentive to the private sector participant to place the candidate in an entry level management position reflective of the aspiration of the college graduate.

A full compensation subsidy period will be set at six months, and the following six months would see the subsidy gradually lessen, until it reaches zero at the end of the 12th month. Thereafter, the participant company will assume the full cost of the candidate’s salary — if the company decides to keep the candidate employed.

The governor wrote that economic development is assigned a top priority given its impact on the lives of local residents, especially as reflected in the creation of new jobs. He said more jobs allow more people to generate income to purchase goods and services which elevate the quality of their lives.

Lolo also noted, this initiative “is to prevent our best and brightest young people from migrating offshore forcing us to rely on expatriates for technical and management skills.”

“It will encourage our college graduates to return home to lend their special skills to the development of our territory,” said Governor Lolo, who first revealed this initiative during the July 11 cabinet meeting.

“So far, the Chamber executive has not received any feedback from the membership regarding the proposal,” said the chairman of the Chamber, since Samoa News reported on this initiative following the cabinet meeting.

Robinson said the Chamber is generally supportive of any initiative that is going to lower the present high rate of unemployment, particularly among the younger generation.

“However, at present some companies will no doubt find it difficult to find places in their businesses for the more higher paid staff even with a subsidy, and it may be that jobs for college graduates are difficult to identify at the present time,” he told Samoa News yesterday.

“The Chamber hopes that all the new initiatives being proposed and implemented by the Administration will start to turn the economy around and it will do all it can to encourage its members to take advantage of these new initiatives wherever possible and wherever practical when improvements start to appear and businesses start to rebound,” the Chamber chairman said.

FARM AND FISHERY SUBSIDY

To further assist in economic development, the governor is also proposing $150,000 each in subsidies for the fishing and farm programs.

For fishing, the governor says the subsidy is intended to provide assistance to serious fishermen who engage in commercial fishing. The government and the Fishermen’s Cooperative will collaborate to define the type of needs which will support a subsidy and appropriate policies and procedures will be developed jointly by fishery stakeholders.

“Self sufficiency and import substitution reflect the economic goals the government is pursuing,” he said. “Importation of fish from outside continues to contribute to the leakage of funds needed for the territory.”

For the farm program, Lolo says this subsidy is an incentive scheme to encourage more people to farm different types of produce in order to reduce dependency on imported goods.

“From an economic and financial perspective, funds spent to import fish and agricultural products will stay on island to stimulate economic expansion,” he said. “Farmers and the government will collaborate to define agricultural activities eligible to receive subsidies.”