International Trade in the F.S. of Micronesia

News Related to International Trade in the F.S. of Micronesia

• IL&FS Transportation Networks Board re-appoints K Ramchand as MD - May 13, 2013

  The Board of Directors of IL&FS Transportation Networks Ltd have re-appointed Mr. K. Ramchand, Managing Director and. Mr. Mukund Sapre, Executive Director of the Company for a further period of 5 years

  Source: Congoo

Business outline for the F.S. of Micronesia

Economic Overview

During the last recent years, the Micronesian economy's performance has been poor. Due to an increase in the price of goods, an unfavorable business climite and difficulties in disbursing the funds of the American help, Micronesia has gone through five years of recession. An growth rate of  0.5% is expected in 2010 and the medium term perspectives are not favorable. 

The priorities of the Micronesian government are to control the effects of the global economic crisis, to establish the required measures to reduce its budget deficit and to try to set free from its dependence on American aid which will expire in 2023. Structural reforms to stimulate the private sector and to improve the business environment are currently taking place. 

Unemployment affects more than one fifth of the population and more than 20% of the population is living below the poverty line.

FDI in Figures

The foreign investments into the country have been increasing, although at a very slow rhythm. Nevertheless, the slowdown of the global economy has posed a limit their strenght. 

The tourism sector offers good business potential. The usage of the US dollar as the national currency protects the investors against unexpected currency fluctuations. Moreover, corporate taxes in Micronesia are low. However, geographical isolation, as well as inadequate airline connections and infrastructures are an impediment to the FDI influx.

The fishing sector (which includes license fees for the right to extract halieutic resources from the territorial waters of the country) attracts most of the investors. The main investing countries are the United States and Japan.

Foreign Trade Overview

Micronesia is open to foreign trade. The country's trade policy aims at establishing international economic relations for a global development of foreign trade, especially with the support of the United States.

Custom duties are generally low (with the exception of luxury items) and the country does not have any major trade barriers. All exports of products as well as re-exports of imported products are tax free. The government provides subsidized water and electrical services to all four states of the nation. Moreover, the labor force is young and relatively inexpensive. Micronesia's easy access by air and sea to major foreign markets such as the Pacific coast of the United States, New Zealand, Australia, and Guam is an advantage for the development of foreign trade.

Micronesia imports more than it exports, resulting in a chronic and large trade deficit, a situation which is not expected to change in the next few years. 

Micronesia's main trading partners are Australia, New Zealand and the United States.