Governor responds to GAO’s recent US Territories Public Debt Outlook report

Pago Pago, AMERICAN SAMOA — With business opportunities in the pipeline, as the territory moves forward with diversifying its economy, Gov. Lemanu P. S. Mauga says that American Samoa is “now working towards formalizing a Public-Private framework” which would allow investment by the territory’s businesses in local development.

Lemanu made the statement while discussing the local economy in his June 05, comment letter to the U.S Government Accountability Office (GAO), which sought the governor’s response to the section of the US Territories Public Debt Outlook 2023 Update report — pertaining to American Samoa.

Lemanu and governors of the other territories were given a draft of the report for their response before it was finalized and released last Thursday to the US Congress and also made public.

GAO said in its report that American Samoa’s economy is stable but continues to depend almost entirely on activity generated by the StarKist Samoa Co. tuna cannery and government employment.

“Prospects for economic growth outside of these areas face challenges,” GAO pointed out and noted the territory’s efforts in the past to diversify its economy.

ECONOMY

In his letter to GAO, the governor noted that efforts to diversity the local economy include recent participant in the SelectUSA Investment Summit hosted by the U.S Commerce Department where over 4,000 participants from across the U.S and its territories met first-hand with potential foreign direct investors who wish to do business in the United States.

And with the soon-to-be-available federally funded Small Business Credit Initiative (SSBCI), the governor said, local businesses will have more access to capital prioritizing and encouraging manufacturing.

“At the SelectUSA Summit, we engaged in discussions on ways small communities like American Samoa can play a role in advanced manufacturing industries like semiconductors and food and beverage,” the governor explained.

Furthermore, American Samoa is working towards developing the Broadband industry and plans to build an Innovation and Technology Park or campus to attract IT businesses to utilize the territory’s 200GB broadband capacity.

Moreover, plans to design and construct a new hospital and Medical Plaza facility are underway “as American Samoa strives to not only be the tech hub in the South Pacific region,” but also as a future medical hub with specialized and affordable health care services.

The governor shared with GAO that the “booming” construction industry in the territory, with ten specific projects lined up under the Downtown Revitalization Masterplan. This effort, said Lemanu, upgrades and improves the critical infrastructure in downtown area from Utulei to Pago Pago villages.

According to the governor, one of the key projects in that space includes a commercial boardwalk for more business opportunities on island.

“Given all these opportunities we have in the pipeline, we are now working towards formalizing a Public-Private Partnership framework to allow for local businesses to invest in our local economy,” the governor declared. “These are prime examples of ways we are strategically diversifying American Samoa’s economy.”

On StarKist cannery, the governor tells GAO that his administration is committed to preserve the successful operations of the cannery and its evident by the collaborative working relations.

For example, the guest worker program has been effective in processing workers from Samoa to support cannery workforce and production expansion. Additionally, the ASG Tax Exemption Board recently approved and extended StarKist’s Tax Exemption Certificate for another 10-years.

The governor acknowledged that 100% of products made in American Samoa are exported to the U.S. but pointed out that “tuna production is a very volatile industry and depends on many external factors.” Several factors, he said, are federal policies that have local ramifications and include: increases in federal minimum wage, expiration of federal 30A tax credit, and federal oversight of U.S fishing waters.

“All these have a significant impact on the industry,” the governor said. “These challenges continue to erode the competitiveness of the American Samoa made tuna product.”

The governor went on to express appreciation for the continued support of Congresswoman Uifa’atali Amata and her colleagues in the U.S House Ways and Means Committee and their staff reviewing a broader tax package that would include a tax extender for the various entities across the country, including StarKist.

And American Samoa is hopeful and looks forward a positive outcome of these issues in Congress.

GOVERNMENT FINANCIAL ACCOUNTABILITY

Lemanu tells GAO that the American Samoa Economic Development Authority (ASEDA), as an extension of ASG, “has fulfilled its mandate to ensure 100% compliance of our bond covenants to investors.”

“Since the FY 2020 audit, there has been an increase in a positive balance to $34 million and an improvement of the funded retirement fund status up to 48.24%,” Lemanu said. “The reduction of audit findings reflects sound financial management, the positive fund balance has steadily improved over years.”

According to the governor, increased general fund revenues from $108 million in 2020 to $147 million in 2022, represents an improvement of over 36%. “Despite the border closure [during COVID-19], rising inflation, commerce imports and exports are robust and have increased revenue collections,” the governor declared.

Lemanu also informed GAO that maintaining the integrity of the government is a key component in budgetary compliance. He noted that in 2021, ASG instituted a pay salary raise and adjustment across the government, incorporating the federal minimum wage, ensuring skillsets are appropriately compensated to include teachers, engineers, lawyers and health care workers.

(Samoa News notes that ASG increased its minimum wage to $7.50 per hour, which is higher than the mandated federal minimum wage for government employees.)

“We are confident that the structural and fiscal reforms in place will pave the way for a government that is more responsive, equitable and transparent,” he claimed.

“We believe the infrastructure of our debt-management policies and legislation allows our administration the flexibility while maintaining the controls necessary to ensure sound financial stewardship of our government debt,” he added.

According to GAO, American Samoa's total debt outstanding, as of Sept. 30, 2021, was $162.2 million, or about 23 percent of the Gross Domestic Product (GDP) - of $710.8 million. (See Samoa News edition last Friday for details.)