Study says Palau will achieve benefits of standards of living if MTDS can be implemented

Dr. John Fallon, Team leader for the Facility for Economic and Infrastructure, in his report on Achieving higher standards of living, Goals, Priorities, Binding Constraints and Key policies said that to achieve these goals, there must be a consensus for change and one has to see the need for changes to be made in attitudes to the role and functions of government and responsibility for the cost of government and the need to improve the performance of government and government entities.Fallon in his report said that one has to look at the Palau’s national government to see the problem.Fallon said Palau has a national budget that can only finance around 60 percent of current expenditures and no capital expenditures.Fallon said the study disclosed that the “expectation that someone else should pay for a wide array of government services and responsibilities leading to subsidy dependence or an entitlement mentality and conflicts of interest” were the binding constraints in making national decision.Fallon said “elected officials voting on or discussing matters that directly or indirectly affect businesses where they have a direct or indirect interest” are common in the government.The report also said,“foreign investment regime in Palau is highly restrictive, protective, anti-competitive and open to abuse.”He said “long list of criteria for evaluation of applications and discretion in the approval process provides scope for abuse of the system.”Fallon said the main potential in terms of sustainable national development must come from tourism.The Facility for Economic and Infrastructure Management study was sponsored by the Asian Development Bank and the Palau government.A near complete draft of Medium Term Development Strategy will be available in mid of July this year.