While there are positive signs of a brighter economic future for American Samoa, with new job opportunities through the new canneries and a proposed food processing operation, Gov. Lolo Matalasi Moliga says the territory’s “economic prognosis” hinges on Congressional action pertaining to the federally mandated minimum wage hikes — with the next set for Sept. 30 this year.

The governor made the observation and prediction in his 22-page executive summary of the fiscal year 2016 budget submitted to the Fono this week. The final FY 2016 budget for ASG totals $417.85 million, a 2% decrease from the current fiscal year budget of $424.48 million. (see yesterday’s edition for more information).

In the annual budget submission, the sitting governor has always included in the cover letter, the territory’s “Economic Outlook” for the next fiscal year as well as other pertinent information, such as the administration’s prediction for the next 12 months.

For the current administration, Lolo said that the “economic prognosis for American Samoa hinges principally on the resolution” of the minimum wage issue. He predicts that if Congress extends the current minimum wage moratorium, “the territory’s economic forecast will be bright”.

However, if it’s not extended and the minimum wage escalation clause continues, the territory’s “economic outlook is bleak”, the governor said, adding that while “our economic development policies have taken root in expanding our economy, evidenced by noted increases in overall consumption, termination of the [wage] moratorium will thwart efforts to grow our economy.”

According to the governor, the ASG revenue forecast for FY 2016 assumes that the wage moratorium will be extended, but if this assumption is incorrect, projected revenues will have to be revisited and the government’s financial plan will have to be amended to align with revised revenue.

Despite the concerns with the minimum wage issue, the governor said the “positive economic signs” which provide encouragement to the government, are the number of new jobs that have been established with the opening of Tri Marine International’s Samoa Tuna Processor Inc. cannery, along with the expansions being undertaken by StarKist Samoa.

(The governor didn’t provide the specific number of new jobs at the canneries, but Tri Marine said last month that the company has almost 700 employees. It’s unclear as to how many new workers are being hired for StarKist Samoa’s expansion.)

Moreover, AVM Bernardo Engineering — the Philippines based company proposing to invest $106 million for a multi-line food processing plant — is about ready to start its operations, which will provide a minimum of 700 new jobs.

(Commerce Department director Keniseli Lafaele told Samoa News in June that the month being targeted to start construction for AVM is September this year, if not earlier. See June 16 edition of Samoa News for details.)

The governor also says that telecommunication jobs will increase with the establishment of Call Centers — but he did not provide any other details, although Datamatics Global Services Ltd. is proposing a local Business Process Outsourcing (BPO) operation, which is similar to a call center.

Lolo revealed that a Request For Proposal for construction of a new hotel will be out by the middle of August this year. He also says that he recently met with Hawaiian Airlines chief executive officer, who was “supportive of our economic development programs aimed to expand travel demand.”

Under the FY 2016 Special Programs category, which is overseen by the Governor’s Office, a total of $100,000 is allocated for Rainmaker Site Beautification. It says that funding allocation will provide financial assistance to the Rainmaker Hotel Task Force which is working on developing a plan for the site. It also says that the hotel demolition project is complete.

On the issue of fisheries, the governor says the local fisheries-based economy has created a convoluted predicament that continues to be debated constantly. He acknowledged that the fisheries industry has sustained the territory’s economy for over 50 years but wages have been suppressed specifically to maintain the competitive advantage of the local canneries.

However, the “dilemma is magnified” with drastic changes in dynamics of the industry evidenced by the South Pacific Tuna Treaty (which was negotiated this week in Australia but reached only an interim agreement for 2016) and the threat of losing fishing grounds for the local fishing fleet which supplies the local canneries.

“From an economic perspective, the existence of the canneries means approximately 3,000 jobs, exclusive of residual benefits generated from supply re-provisioning, ship repairs, entertainment, transportation, and many others,” he said.

While there is an absolute economic necessity to maintain the canneries competitive advantage, “as leaders we could not turn a deaf ear to the cry of the people regarding their inability to meet basic living costs with their current salaries,” he said.

Furthermore, yearly inflation continues to erode purchasing power of each dollar, thus in real time their wages have actually declined. “We as leaders must collaborate with the canneries and the private sector to fashion a ‘win-win’ scenario for all parties concerned,” Lolo pointed out.

The governor declared that the “[US] Congress created this dilemma and pretty much forced the Territory towards economic collapse.” He said the economic impact studies on the effects of minimum wage confirmed the fact that there is a significant economic devastation caused by federally mandated minimum wage hikes.

And if Congress elects to terminate the minimum wage moratorium, then it’s only equitable to provide the means for companies operating in the territory to compete electively with their counterparts operating in the very low wage countries.

“Specifically, it is our hope that Congress will provide tax credits and other economic incentives to our companies to remain in American Samoa,” Lolo said.

(See Samoa News edition July 20 for the government’s latest position on the minimum wage issue, with a presentation by Lafaele during a cabinet meeting.)