Although Toribiong and the House versions of the bill wants to abolish the existing Foreign Investment Board (FIB), the Senate version found it unnecessary to dissolve the board.
The Senate disagreed with the President and the House that the board should be abolished and its administrative responsibilities be placed with Registrar of Corporations within the Attorney General’s Office.The Senate Committee on Resources, Trade and Development in its committee report said that “ the Foreign Investment Board is a valuable regulatory body that is able to competently oversee foreign investment activity in Palau. But with that, the Committee understands the need to reform the current application procedures for foreign investment approval.”Instead the Senate proposed the creation of a new Foreign Investment Authority.While the Registrar of Corporations will still be responsible for issuing corporate charters for foreign-owned corporations, the authority will have the finally approval power for these foreign businesses.The authority’s regulatory powers however shall be restricted. President Toribiong told reporters that the aim of the measure is to establish a less restrictive foreign investment licensing procedure, allowing foreign investors to move quickly through the approval process that to be administered by the Registrar of Corporations. He said that an existence of a board will make the investment licensing “discretionary.”“If it is discretionary then it becomes political,” Toribiong said.The Senate version also allows non-citizen professionals ply their trade in Palau, but they must organize under some form of business enterprise. Furthermore, these professionals must comply with all other reporting requirements of this bill, but they will only need to show an investment in the Republic of Palau of $25,000.Another modification in the bill is that the Senate believes that there should be substantial protection for Palau-owned business operations.The Senate version listed wholly foreign owned industries which may engage only in the following business activities in Palau:(1) Airlines, Shipping, Development of condominiums or hotels with 50 or more rooms, Commercial fishing for highly migratory species; Canneries, Garment factories, Pharmaceutical development, Automobile manufacturing or assembly, Banking or other institutions regulated by the Financial Institutions Commission, Oil exploration, Wholesale or retail distribution of petroleum and petroleum-based products, but not including the development of gas stations or other businesses that sell gasoline to the general public. It added that handicraft and gift shops; provided, however, that handicraft or gift shops located on the premises of hotels or at the Palau International Airport are exempt from the requirements of this section and may be wholly foreign-owned.Toribiong however said that his version of the bill has been misread and that his measure will protect Palauan owned businesses.He said under the current law businesses that are supposedly reserved for Palauan citizens only are actually owned by foreigners.He said his bill actually allows infusion of capital to businesses and will do away with front businesses.The Senate version also encourages those businesses operating in violation of the current foreign investment laws to apply for foreign investment approval under this new bill. To do this, a temporary amnesty program should be included with this legislation. Therefore, the Committee has amended the bill to give those businesses three months to apply for approval from the authority.
