Front businesses thrive due to loopholes in the law

Front businesses, are businesses owned by a foreigner but it is registered under a Palauan citizen’s name.The present law requires investment of $500,000 from foreign investors and there are select businesses that are reserved only for Palauan owners and are not open to foreign investments.“Once and for all the issue of front is in existence because there is no law to prevent them. The law has loopholes that allow foreigners establish businesses under Palauan name,” Remengesau said.The president said there were instances that the government has run after suspected front businesses but has not prospered in court because the government cannot intrude into a commercial contract made between two people.In the United States Government Accountability Office (GAO) report, the issue of front businesses was cited.He said there should be a law that defines the role of the Palauan owner.The transactions he said allows “foreign owners” to pay a customary monthly fee to Palauan owners which can be as low as $100  a month.He said that there are pending measures before the Olbiil Era Kelulau that will make foreign investment climate in Palau “investment friendly” thus avoiding  proliferation of front businesses.