Government of the Federated States of Micronesia

2nd Chief Executive Conference reviews nation's progress

Palikir, POHNPEI (FSM Information Services): July 28, 2006 - The Second Chief Executives' Conference (CEC) of the Federated States of Micronesia recently convened in Palikir to decide on the course for issues of pressing concern to the Nation.

To that extend, a communiqué has been issued with the decisions agreed to by the Chief Executives', along with the identified course of directions for the various national issues and development programs discussed at the conference.

The Communiqué issued at the end of the Conference noted that key decisions and action issues endorsed by the 2nd CEC. While the Communiqué does not reflect the discussions on the National Tax Reform, the CEC had however been briefed on its ongoing efforts. The Chief Executives encouraged the task force to continue in its current direction.

The Communiqué in its entirety is as follows:

Communiqué

Chief Executive Conference
July 17-20, 2006

The Second Meeting of the Chief Executives of the Federated States of Micronesia in 2006, comprising of the President, Vice President and the Governors of the four FSM States, was convened in Palikir, Pohnpei from the 17th to 20th of July 2006.

The purpose of the meeting was to be briefed on ongoing and new development programs, to discuss and give direction on pending important issues facing the nation.

The meeting was presented with briefings and updates on all the items listed on its agenda as well as on other related important issues. These are included in the minutes of the meeting and are part of Chief Executive Conference record.

This communiqué reflects the actions and decisions made by the Chief Executives at this meeting.

Action Issues/Decisions:

1. MOMI Fuel Supply Agreement

The Chief Executives were briefed by the Chairman of the Fuel Task Force on areas the Task force is concentrating on with regards to the Fuel Supply Agreement and were presented with some recommendations for endorsement on how to move the negotiations forward.

The Chief Executives, in their letter of July 18, 2006 letter, endorsed the recommendations and further provided guidelines in progressing the negotiations with MOMI.

2. Infrastructure Development Plan (IDP)

The Chief Executives heard presentations by the Secretary of the Department of Transportation, Communication and Infrastructure (TC&I) and the Director of the Office of Compact Management, updating them on the status if implementation of the FSM Infrastructure Development Projects and the issues affecting such implementation. Accordingly, the Chief Executives agreed in the following course of action:

a. That Secretary of DTC&I proceed, as soon as possible, to utilize authorized funding for the Project Management Unit to hire qualified professional engineers to be posted, one each, at the DTC&I and in the FSM States. Such hiring shall be part of the effort to achieve the necessary capacity of the respective governments to be able to carry out services now being contracted out, as soon as possible.

b. That the Chief Executives support the recommendation to establish an FSM Infrastructure Planning and Implementation Council (FSM-IPIC) and the attendant Secretariat, as contained in the Interim FSM-IPIC Resolution 2006-1 of May 15, 2006. The Chief Executives further decided to direct such Council to undertake, as soon as possible, the task of coming up with suggestions on standards to be used with facilities to be constructed under the FSM Infrastructure Development Plan. Such recommendations shall be available for review and decision by the Chief Executives during its next meeting.

3. MICARE

Information was provided on the current fiscal status and services provide by MICARE. The plan showed an accurate deficit of approximately $1,500,000 which annually operates under an approximate $400,000 deficit. Information on premiums received and services paid. MICARE is currently seeking Congressional assistance in either a lump sum appropriation to bring the plan current or an annual subsidy to cover operational losses. Additionally, the Administrator is seeking MICARE Board approval to raise premiums to increase cash flow and improve liquidity.

It was agreed that the government will exert support to the President's initiatives that are pending in Congress.

4. Development Programs and Trade

a. World Park Scheme

The meeting was briefed by the Department of Economic Affairs on the National Government's recommendation that each of the states to have the option to pursue their individual participation in this scheme without the National Government's involvement. The states were urged to further examine the various activities proposed to be undertaken under this scheme as compared with what each of them already has ongoing with respect to tourism promotion and marketing. It was noted that there is currently pending with the Congress a Tourism Marketing Plan for the whole nation.

b. PICTA

An update in the status of the Pacific Island Countries Trade Agreement (PICTA) was presented and the CEC noted that the FSM signed the Treaty in April 2006. The CEC noted several trade related activities currently being undertaken in the absence of a Trade Policy. The CEC expressed a desire to have a Trade Policy for the nation to guide and facilitate trade. The CEC agreed and directed relevant State and National Government entities to collaborate in this area.

5. Foreign Aid

The Department of Foreign Affairs briefed the meeting on multiple grant and/or aid possibilities with, for example, China, Japan, and France. The CEC directed the Department to continue working with the donor countries to obtain procedures and methodologies in accessing funds under these aid possibilities. These shall be passed on to the States as the are received.

6. Submarine Fiber Optic Cable

The Assistant General Manager of the FSM Telecom briefed the meeting on progress that has been made on this undertaking as of the mid of June 2006. It was noted that the two studies of Environmental Impact Assessment and Marine Survey have been completed and submitted in May with no negative findings on environmental impacts and deviations from original proposed routing.

Through the discussions it was noted that the project has experienced delays due to US Department of Defense shifts in "priorities". Chuuk observed these delays as opportunities to repackage the whole project in order to allow earlier implementation of its second phase and thereby urged the FSMTC, DCT&I and DFA to further look into this possibility.

It was agreed during the luncheon meeting between the principals that the above agencies will look into the above with the inclusion of the fuel storage facilities for possible funding under the grant aids earlier discussed at this conference.

7. Maritime Boundary Delimitation Treaties

NORMA provided information for ongoing studies and treaties on issues relating to land masses, continental shelves, seabed, maritime zones and water column rights. NORMA is debating whether to allocate resources to make the continental shelf claim on several areas south of the FSM which may grant the FSM seabed rights. Sources of assistance are being pursued to assist the FSM. However, if the claims are prepared, presented and denied, the funds spent would be lost.

The CEC has pledged that it will support efforts to seek assistance, funding and submission of the continental shelf claim to the United Nations.

8. FSM Games

At their luncheon meeting, the Chief Executives agreed to Pohnpei State's recommendation to hold the next FSM Games in Pohnpei during the summer of 2007. They also agreed to Kosrae State's offer to host the games in 2009 and be followed by Chuuk State in 2013.

For funding, they noted that there is already the $300,000 that the Congress has appropriated in FY 2005, and that each of the three other states will be responsible for bringing their athletes to Pohnpei. It was agreed that they will jointly pursue the funding of the development and rehabilitation of sport facilities in the states from the development and donor partners.

9. Transfer of Vehicles to the State Governments

The Governors were briefed by the President on the issues relative to the used and abused of vehicles purchased through grants being administered by the National Government agencies and currently used in the states, such as those for the Health and Education programs. It was then agreed that these vehicles, as well as those purchased in the future, will be placed under the respective states' custody and will be regulated under their respective vehicle policies. This custodial transfer will be done as soon as the Departments of Justice and Finance and Administration have completed the necessary paperwork.

These vehicles do not include those used by the National Government agencies in the states.

It was also agreed that the National Government will initiate the review of possible transfer of other assets to the states in the future.

10. Constitutional Amendments

In considering the justifications on the need to amend the constitutional provision on the terms of members in the Congress, the CEC has agreed to support the pending bill in Congress submitted by the President to make all Congressional seats four year terms.

11. Extradition Treaty

The Department of Justice briefed the CEC on the RMI/Palau/FSM Treaty which was signed in Majuro in July 2006.

The States asked for copies of the treaty as well updates on the foreigners currently illegally in each state. Chuuk State requested information on the ability to repatriate and transfer prisoners between the US and FSM- and responsibilities for costs. Justice committed to follow up on these issues.

12. Update on FSM/State Investment

The Department of Finance presented issues, changes, and updates to the FSM Master Investment Policy (MIP). Changes to the MIP were submitted to the CEC for approval.

Additionally, the Department of Finance provided updates to the investment portfolios by State and year.

The Office of Compact Management provided further information on the developments with OIA and the US authorities regarding the FSM's integration into investment decisions on the FSM Trust Fund and other investments.

The CEC expressed concern that the US has failed the FSM in quick, proactive and prudent investment decisions for the FSM Trust Fund. The CEC will further consider preparation of correspondence to JEMCO outlining concerns, requests and future requirements for investment policy, daily information for the FSM and more immediate abilities to implement sound FSM Trust Fund investment.

13. EU Renewable Energy Grant

A status report was presented by the National Authorizing Committee (NAC). The FSM is actively working on this project and seeks approval from the CEC on the moving current proposed projects forward, and the use of funds under the 10th EDF for continuation of the project. Both approvals were granted.

The foregoing issues and decisions are affirmed this 20th day of July 2006.

Signatories to the Communiqué from the 2nd Chief Executive Conference are:

H.E. Joseph J. Urusemal
President

Hon. Rensley Sigrah
Governor, Kosrae State
Chairman, 2nd CEC

Hon. Wesley Simina
Governor, Chuuk State

Hon. Jack Yakana
Lt. Governor, Pohnpei State

Hon. Joseph Habuchmai
Lt. Governor, Yap State


For further information on this release, please contact:

FSM Office of the President
Public Information: Press, Radio, Video
P.O Box 34
Palikir Station, Pohnpei, FM 96941
Tel.: (691) 320-2548/2092
Fax.: (691) 320-4356
e-mail: fsmpio@mail.fm
http://www.fsmpio.fm/