Government of the Federated States of Micronesia

Vice President Respond to Kosrae Governor on FSM Customs Regulations

PALIKIR, Pohnpei (FSM Information Service): September 19,
1997 – Vice President Leo A. Falcam, on September 15, 1997,
responded to Governor of Kosrae Moses Mackwelung’s concerns contained
in his letter of September 5, 1997, regarding the implementation of
the FSM Customs Regulations, Public Law No. 9-139, and Public Law
10-10, how such public enterprises as the Micronesian Petroleum
Corporation will be adversely affected.

Falcam reminded Mackwelung that he advanced the same arguments in
the last May’s State and National Leadership Conference when the bill
was being considered by the Congress and it subsequently passed by
Congress and signed by the President and became law. “Apparently,
Congress was not persuaded then, and it is probably to soon to reopen
the whole issue,” Falcam said adding, “Let us gain some practical
experience with the new Customs Act before we attempt any more fine
tuning.”

“[…] the effect on MPC should not be as great as you fear,” Falcam
said adding that the import tax on fuel is .05 per gallon, and that
80 percent of it is returned to the state where it is collected
pursuant to Section 801 (1) of title 54 of the FSM Code. Therefore,
the net loss to Kosrae State is only one cent per gallon, Falcam said
adding, “The success of MPC could hardly depend on this small sum.
Moreover, this still leaves you with a cost advantage vis-a-vis
Mobil, for whom the net cost per gallon was (and elsewhere in the FSM
still is) the full five cents per gallon.”

Falcom using Mackwelung’s own words said, “If we are to fulfill
our duty to create and sustain an independent nation, […] we must
focus on the need to increase the local generation of government
revenues and remove the barriers that have traditionally favored
public businesses over private ones.” The Vice President concluded
his response by assuring the Governor that, ” the new Customs Act is
a balanced attempt to promote these ends. Let us give it a chance to
work.”