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Vice President Respond to Kosrae Governor on FSM Customs Regulations

PALIKIR, Pohnpei (FSM Information Service): September 19, 1997 - Vice President Leo A. Falcam, on September 15, 1997, responded to Governor of Kosrae Moses Mackwelung's concerns contained in his letter of September 5, 1997, regarding the implementation of the FSM Customs Regulations, Public Law No. 9-139, and Public Law 10-10, how such public enterprises as the Micronesian Petroleum Corporation will be adversely affected.

Falcam reminded Mackwelung that he advanced the same arguments in the last May's State and National Leadership Conference when the bill was being considered by the Congress and it subsequently passed by Congress and signed by the President and became law. "Apparently, Congress was not persuaded then, and it is probably to soon to reopen the whole issue," Falcam said adding, "Let us gain some practical experience with the new Customs Act before we attempt any more fine tuning."

"[...] the effect on MPC should not be as great as you fear," Falcam said adding that the import tax on fuel is .05 per gallon, and that 80 percent of it is returned to the state where it is collected pursuant to Section 801 (1) of title 54 of the FSM Code. Therefore, the net loss to Kosrae State is only one cent per gallon, Falcam said adding, "The success of MPC could hardly depend on this small sum. Moreover, this still leaves you with a cost advantage vis-a-vis Mobil, for whom the net cost per gallon was (and elsewhere in the FSM still is) the full five cents per gallon."

Falcom using Mackwelung's own words said, "If we are to fulfill our duty to create and sustain an independent nation, [...] we must focus on the need to increase the local generation of government revenues and remove the barriers that have traditionally favored public businesses over private ones." The Vice President concluded his response by assuring the Governor that, " the new Customs Act is a balanced attempt to promote these ends. Let us give it a chance to work."