State of the Nation Address
by
His Excellency Emanuel Mori
President of the Federated States of Micronesia
May 13th, 2010 AT 10:00 A.M.
Welcome
Good morning everyone.
Ach kapongen fairo napanap mi fiti soufon me mennin ngeni samach Kot won nang Pwan ai kapong ngeni kemi chiechiach me atongach meinisin mi nonom ikei me kewe mei nonnomw towaw;
All the traditional Leaders from the four states;
Vice President Alik and Mrs. Alik;
Speaker Figir and Mrs. Figir
Honorable Members of the 16th FSM Congress and your spouses;
The First Lady, Emma Nelson-Mori;
Acting Chief Justice of the FSM Supreme Court-Martin Yinug;
Cabinet Members and their families;
Associate Justices
Governors, Speakers and Justices of the States
Dean and Members of the Diplomatic Corps
National and State Officials
International Development Partners
Members of the Clergy, Private Sector, and Civil Society
Representatives of the Media
Families and friends, and my fellow citizens
Introduction
As with each of the Presidents who have come before me, I too am humbled, by the constitutional mandate that requires me to address the Congress on the State of our Nation. Yet, as I stand before this august body, I am fully aware that it is not just you, the Senators and citizens assembled here in the Congressional Chamber in Palikir, to whom I am speaking. The eyes and ears of the whole nation are upon this proceeding.
This, then, is not just an address to those of us in the nation’s capital. It is a message to the people of the Federated States of Micronesia. It is an address about Yap, Kosrae, Chuuk and Pohnpei. It is an address about each of our communities, widely dispersed throughout our country. It is an address about all the villages in all the outer islands, extending from the northern-most to the southern-most latitudes of our nation.
On May 11, 2009, when I last appeared before Congress to deliver the State of the Nation address, the whole world was in a global crisis. Micronesia was no exception. In last year’s address I declared, [and I quote], “we now face a financial storm of unparalleled magnitude. It is therefore imperative that we examine and improve upon all existing opportunities, both internal and external, as envisioned under our strategic development plan, to enable us to respond to this crisis today and in the future.”[end of quote]
Today, one year later, our nation is still recovering from the ravages of that financial storm. In the face of such devastation, it is understandable that many of us have become pessimistic about the prospects of success in our nation’s voyage towards sustainable development. But I am not so inclined to be pessimistic. The worst of the tempest is over. Even the Asian Development Bank has recently issued a report forecasting brighter times for the FSM.
State of the Nation
Mr. Speaker, in its voyage through time, our country is now entering the second five years of the Amended Compact. Much economic development was expected to come from the implementation of the Amended Compact.
Yet, despite will-crafted legislations passed by this Congress and the continuous work of this Administration, our economy has continued to struggle. In point of fact, the FSM has experienced no real growth since 2004. Looking even further back, the FSM has not experienced a sustained period of economic expansion since the early 1990s.
How then, you may be asking yourselves, can the President voice optimism about the future?
My reply to that question is “optimism, yes, but cautious optimism, with emphasis on the word cautious.”
Although the overall economy has not grown over the past five years, there have been some measurable improvements, such as a reduced trade deficit, a balanced current account, and increased national disposable income.
My fellow citizens, if we are able to summon the courage and conviction required to build upon these promising signs of recovery, I do believe that we can indeed move our economy, and our country, forward.
Over the past 30 years, the FSM has undertaken numerous initiatives to improve our economy, from fisheries to agriculture to tourism. Similar attempts date all the way back to early Trust Territory times. These efforts all failed to reach their full potential, because, like constructing a home, building an economy requires a solid foundation.
A good foundation requires that we dig deep, and that is exactly what we should do in the days and months ahead. Let us all look deep within ourselves to find the necessary strength and determination to make the foundations of our economy both safe and secure.
Five-Year Compact Review
Since I stood at this podium on this same date last year, highlighting the perils of the global economic crisis that had reached our shores, we have undertaken the review to assess the economic performance of our nation during the course of the first five years of the Compact. The preliminary study is now complete and the results indicate that we need to do more. The review reveals that the Compact has continued to fuel consumption rather than investment. And while consumption may improve the welfare of the people in the short term, unfortunately, that same focus on consumption will slow our transition to a self-reliant economy in the long run.
Mr. Speaker, if we are to realize our full economic potential, we must re-evaluate the methods by which the Amended Compact operates, including many restrictive regulations that inhibit the efficient use of Compact sector grants. To this end, my Administration is developing detailed recommendations designed to re-align and strengthen the administration of the Compact, including all foreign financial assistance.
Building our Economy – Economic Symposium
Building strong economic foundations also requires us to use our own limited resources, beyond those of the Compact, to encourage development rather than consumption. We must plan for and use these limited resources wisely to build what I will call the four basic pillars of economic growth, namely; (1) manpower, (2) infrastructure, (3) user-friendly laws and regulations and (4) wise and equitable use of our available resources. These four pillars should support private sector development. From the combined strength of these four pillars of our developmental strategy, we will be able to reach out and broaden the dimensions of our economy. In so doing, we can raise the standard of living for our people. Otherwise, our people will continue to search for a better life elsewhere.
But, Mr. Speaker: --- Strong as our resolve may be, the future viability of our economy is complicated by the fact that the Compact Trust Fund was meant to provide adequate revenues at the end of the Amended Compact period, is significantly underfunded. In order to maintain the level of service and to improve our standard of living beyond 2023, we must explore all available avenues to increase contributions to the Trust Fund.
Even with these improvements, the Trust Fund can only be relied upon as a partial solution to meeting our future needs. A truly viable future can only exist if sustainable economic growth is driven by the private sector. In a vibrant economy, the Private Sector finances the public sector.
I therefore urge Congress to appropriate the necessary funding for the National Economic Symposium that will build on previous Economic Summits and focus solely on fostering private sector development. We cannot solve all of our economic challenges at once, but working to foster a climate that is friendly and open to business will start us on a path toward economic self-reliance.
Prior to the National Economic Symposium we will ask leaders at the state level to identify the unique economic challenges that they face.
Following this preparatory work, we will summon state leaders and business people, and we will invite our international partners, to the National Economic Symposium, where we will enter into frank discussions and decide upon clear strategies to effectively implement the basic pillars of our economy.
Enhanced Infrastructure Development
While many factors contribute to successful economic development, one of the most foundational is public infrastructure. I want to thank the state and national leaders for their commitment to infrastructure development and at the recent SNLC. I also want to thank Congress for approving the $9.2 million for design work and implementation of nearly $150 million worth of projects across the four states.
Moving forward on design, construction and --- most importantly --- completion of these long-awaited projects -- will not only open up new and enhanced public services; these projects will also provide the needed economic stimulus for our economy.
I would like to thank the States for working with the National Government in moving fifty such projects forward to the various stages of planning and implementation. Many projects are in the waiting stage, but one of the impediments to their implementation has been the acquisition of suitable locations. I therefore applaud the Chuuk State Government for recently amending their state law to facilitate a fair eminent domain process.
Through our partnership with the Federal Aviation Administration of the United States Government, we are completing airport improvements in each state. In Yap and Kosrae, the Aircraft Rescue and Fire Fighting buildings have been completed and turned over to the State Governments. In addition, in Pohnpei, materials are being mobilized for the runway expansion, generously funded through a Japanese grant.
In Chuuk construction on the road is underway using Compact funding. We have broken ground for new schools in Kosrae and Pohnpei, including the Kosrae High School, donated by the People’s Republic of China. A Early Childhood Education Center and hospital renovations are also underway in Yap. All told, these projects should generate over $7 million in tax revenues and provide jobs for as many as 2,500 workers.
Telecommunications infrastructure is another vital area to develop for any country that wishes to take part in the 21st century global economy. I would like to thank FSM Telcom for their hard work in getting the submarine fiber optic cable connected. This new link will provide high speed internet service to the nation’s capital as well as the governments, businesses and residents of Pohnpei. Extending these benefits to the remaining three states is still a priority of my Administration, and we will continue to vigorously explore funding sources to accomplish this goal.
But we must do more than lay cable. Our widely disbursed islands, over one million square miles, also require improved air and sea transportation. To achieve this, I have created two separate task forces on both Sea and Air Transportation to provide me with recommendations. I expect to receive recommendations from both of these task forces in the next few months -- these recommendations will provide practical solutions to the challenges we face in providing these vital services.
Guam Build-Up
My Administration continues to partner with state and local leaders to take advantage of the economic opportunities available to our people through the Guam build-up. Late last year I signed a new Alliance Agreement with the Micronesian Empowerment Center, on behalf of Chief Executives in our region. Through this agreement, groups of citizens from Chuuk and Kosrae have been sent for training, and the Kosraean group has completed the course and been placed in job sites.
On the domestic front, we must expand our capabilities in the areas of agriculture, fisheries and aquaculture to provide commodities to the expanding Guam population. By increasing production from our outer-islands and our state centers, we can serve the Guam market and fuel our economic growth. To maximize this opportunity, we must continue to work with our neighbors to improve our quarantine laws and allow the free flow of our products between the islands.
Tourism
The Guam Build-up can also serve as the fuel to propel our tourism industry in all our four states. Tourism is our best hope for long-term economic development, but it will not happen on its own. Tourism development is largely a state initiative, but my Administration will offer assistance whenever it can. Each state must encourage investment and management partnerships that can fund new restaurants, hotels and support services. The expanded runway will make Pohnpei the gateway to tourism in our nation, and I appeal to Pohnpei’s leaders to set the tone for a more open foreign investment regime to develop these tourism partnerships.
New National Business Initiatives
Mr. Speaker, I thank you and members of the FSM Congress for joining me in establishing the Captive Insurance Regime. This is truly a shared success between the Executive and Legislative Branches. I am pleased to report that the first two major captive insurance companies have been licensed and established in the FSM. The FSM has the potential to attract even more major profitable companies away from world class captive insurance domiciles. Along with the Corporate Registry Program, this new initiative can provide steady tax revenues and pave the way for future foreign investment by helping to establish the FSM as a progressive and transparent location in which to do business.
We are also working diligently to develop an International Open Ship Registry. If successful, this Registry is projected to provide the FSM with very significant revenues over the next 20 years.
These initiatives will help showcase the healthy business environment which we are creating in the FSM and attract additional private sector investment.
We must also continue to protect our fisheries resources in order to achieve our conservation objectives and at the same time maintain our current level of revenues from fishing licenses. We are grateful to the United States for allowing observers on their Coast Guard vessels and Australia for helping with the maintenance costs of the patrol boats. We must also improve our on-shore facilities to yield greater value from our marine resources.
Some of these anticipated revenues can be used to offset shortfalls in Social Security, MiCare, non-Compact Trust Fund, as well as other state and national priority programs.
I am also happy to report that the FSM has submitted a claim, with Papua New Guinea and the Solomon Islands, to the Commission on the Law of the Sea, for the extension of our continental shelf. This extension will ultimately expand our international waters and increase our marine resources.
Government Reform – Tax and Budget
I want to thank the hard working members of the Executive steering Committee on Tax Reforms, chaired by Vice President Alik, and its members including the state governors for their efforts in developing a modern comprehensive tax regime. The new system is designed to replace our out-of-date and inefficient national tax code with a modern Value-Added Tax, a Net Profits Tax, and a revamped Wage and Salary Tax. This modern tax system, which will also require the restructuring of the tax codes of the four states, will reduce costs for businesses and consumers by replacing the five separate tax administrations with a single country-wide tax administration.
Our people deserve a vote on this issue, and I urge the Congress and the state legislatures to pass the implementing legislation by the end of the calendar year.
I offer my gratitude to our budget officials who, working with international partners, are developing a budget system that ties budget allocations to performance. This new system is being used for the 2011 budget which will improve transparency and accountability in government.
In this year’s budget, I am pleased that the National Government has maintained its current budgetary levels, allowing for a small 2% inflationary increase and holding the line on salary and travel expenditures.
I applaud Pohnpei and Yap for maintaining fiscal responsibility, and I encourage Chuuk and Kosrae to continue taking tough measures to address financial imbalances.
Constitutional Changes
We are also proposing Constitutional amendments that will permit dual citizenship for our people and increase the terms of all members of Congress to four years. There is an increasing number of FSM children being born abroad. Rather than asking them to choose between the country of their birth and the country of their ancestors, we should recognize the reality that they have ties to both. This dual-citizenship has enjoyed broad-based support in the past, falling just short of the required 75% threshold needed to amend the Constitution.
The proposed amendment creating four-year terms for all members of Congress would cut costs significantly by requiring fewer elections, and allow our Senators to focus their attention on the business of long-term nation building.
We must also seriously consider lowering the required 75% threshold to a simple majority for passage of any constitutional amendments.
Education
In order to fully utilize opportunities presented by improved infrastructure and laws, our children must be properly equipped to deal with realities of the 21st century economy. This is why education remains the largest recipient of government funding. And while I want to thank the many teachers and administrators that work so hard and sacrifice so much, to help our children learn and grow, the simple truth is that, upon graduation, a good number of our students are not prepared to move to the next level.
We cannot continue to accept second best outcomes in education, because the 21st century economy demands a dynamic and educated workforce. In order to achieve this goal we must continue to work to develop a world class education system. Teachers and students must also be fully trained to use 21st century technology. We are therefore committed to the advanced training of our educators and increased investments in information and communications technologies which will enhance the effectiveness of our teachers and improve the marketable skills of our young people.
Improving student performance outcomes requires that we do a better job of running our schools. I therefore challenge every parent to once again take ownership and pride in your schools and to hold teachers and your children accountable for their performances.
At the managerial level, audits will soon be completed in all four states. These audits will provide a full picture of the accomplishments and failures of the educational system. The Asian Development Bank has generously responded to my request for assistance in addressing the educational crises in Chuuk. This June, an ADB consultant will arrive in the FSM to build on previous work by the ADB and the Chuuk Multi-Agency Task Force and develop an action plan that will turn objectives into measurable outcomes in the Chuuk Educational system.
Health
An educated work force is only useful if it is healthy. As with education, the quality of our health care is primarily a state mandated obligation, as supported by the National Government. Through this cooperative health system, we have developed a program for newborn hearing screening, cancer and HIV/AIDS education and the TB prevention program, and a tobacco cessation effort to emphasize the importance of preventative health care.
Our citizens have increasingly been traveling to Guam, Hawaii and the U.S. Mainland in order to find quality health care. In order to limit this exodus, we are working closely with the states to modernize our medical facilities. I am proud to announce that we will soon be receiving new dialysis equipment units - generously donated by the Government of Israel.
We are also working with the states to implement three new initiatives to improve our citizen’s health. First, the Community Health Assessment will enable us to bring services closer to the people by keeping dispensaries stocked and up to date. Second, the Improvement of Environmental Health will raise health standards by ensuring clean and safe living conditions. And third, the Health Care Standards will provide quality assurance for health care no matter where it is dispensed.
Ultimately, individual citizens must take primary responsibility for their own health and well being.
International Assistance
While we continue to work to improve the well-being of our citizens, we are also working with our development partners expand their assistance to our citizens. The United States remains our primary donor, and we thank them for their continued support as we work through our transition into a self-reliant state.
Mr. Speaker, our relationship with the United States is unique, and I commend the young men and women of our country who have volunteered to serve in the United States Armed Forces. Per capita, the numbers of our youth enlisting in the U.S. Armed Forces exceeds the ratio of enlistments in the United States. Our gratitude for the sacrifices that our young people have made in the mutual defense of our two nations and in support of world peace that can never be over emphasized.
At this juncture I would also like to acknowledge and thank all our development partners, especially Japan, the People’s Republic of China, Australia, and the European Union.
Japan’s assistance in extending the Pohnpei State airport runway reflects their understanding of our need to ignite private sector development.
Likewise, we are grateful to the People’s Republic of China for increasing their support and for the completion of the Pohnpei State Administration Building.
Negotiations with the Australian government over a new “Pacific Partnership for Development” are well underway and promise to increase assistance for budgetary reform, development coordination and environmental management.
We are also encouraged by the European Union’s continued commitment to support the development of renewable energy resources in the FSM.
Finally, we are increasing interaction with our neighbors, the Republic of Palau and the Republic of the Marshall Islands, as well as Guam and the Northern Marianas, through meetings of the Micronesia Chief Executives Summits. As the Secretary of the Micronesia Center for a Sustainable Future, I am working with international partners to identify new funding sources to enhance our regional development efforts.
External Threats
Despite the very significant assistance that we receive from our international partners, our nation is still faced with numerous external threats that require constant attention. While the outcomes of the most recent Climate Change Conference in Copenhagen failed to live up to the expectations of the FSM and island nations throughout the world, I am directing our own Foreign Affairs Department and the Office of Environment and Emergency Management to continue to fight for international initiatives that will lower green house gasses. I will also continue to demand funding from those parties abroad who have been most responsible for emitting these green house gasses for adaptation that will allow all of our people to respond to the already noticeable impacts of global warming.
While food and fuel prices have fallen from their highs in 2008, they are still high. The National Food Summit addressed these issues and concluded that these unpredictable and external price changes reduce the welfare of the people and hinder private sector development. We must therefore continue to encourage the production and consumption of local foods, both to improve the health of our people and to reduce our household expenditures and our dependency on imported of food.
We are too dependent on oil. Oil prices increase the cost of food and its usage affects our environment. We must therefore decrease our reliance on oil. Hydro-electric, ocean technology and solar energy will decrease our dependence on oil and will protect our environment. I am calling on the FSM to attain at least a 20% share of total power generation coming from renewable energy sources, and to improve overall energy efficiency by 50%, before the year-end of 2020. If successful, we will trim at least $6 million per year from our energy bill.
Conclusion
Mr. Speaker and honorable members of Congress, no one has ever proclaimed that our journey towards economic independence would be swift and easy. Thankfully, we have weathered the hard times of the recession. Now is the time for stronger determination. Now is the time for DEVELOPMENT.
But development, and by using the term development I mean real, sustainable development, can only be achieved through the bold, determined and cooperative action of all of our leaders at all levels of government --- national, state and local.
But why should we stop at a challenge just to the country’s leadership. This is a challenge to our nation as a whole. Our people are our nation. Without our people, the FSM would not be. Their voices should be our command.
We can no longer make decisions based on short-term political interests, because these decisions should no longer be about you, about me, about any of us in this chamber. They should be about the little children in the shanty classrooms in many rural villages across the FSM who do not have enough books, but who are eager to learn. They should be about the young student at the College of Micronesia-FSM who dreams of entering the FSM workforce but has no promise of a career awaiting him or her upon graduation. They should be about the disease stricken mother who has no choice but to leave her children behind in the FSM to seek better and more advanced medical care abroad. They should be about the people, the people who have placed their trust in us to make this nation a better place to live -- the people who share the dream that our forefathers once had for this nation and who have prayed to see that dream come true.
It is now our responsibly to do the best we can to move this nation forward towards making that dream come true.
Life, like any voyage to a far destination, has its share of adversity. But I can promise you that if we remain true to our course, together, we will ultimately reach the far shore, and find it to be a land of peace and economic prosperity.
Kalahngan,
Kulo mulalap,
Kammagar,
Kinisou Chapur;
God bless the FSM,
God bless you all and thank you.
