FSM tourism industry sees temporary closures, layoffs due to coronavirus scare

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(PNC file photo)

The economic impact of the COVID-19 global outbreak has reached the Federated States of Micronesia with government leaders expressing concern over the loss of revenues to its tourism industry. 

As of this week, some of the tourism-related establishments in the FSM had to temporarily close or lay off employees. 

These concerns were raised during the fourth special session of the 21st FSM Congress on Thursday, March 5. The purpose of the meeting was to review the economic impacts of the COVID-19 on the nation, according to the Office of the FSM President.  

According to information from the Office of the FSM President, the executive branch is aware of formal and informal communications from the island’s hospitality industry regarding the impact of COVID-19-related travel restrictions. 

“To the knowledge of the President [David Panuelo], Blue Lagoon Resort in Chuuk State has temporarily closed down, and Manta Ray Resort in Yap State has needed to lay off 60 employees to remain financially solvent,” the FSM Office of the President reports as part of the session discussions. 

Rob Solomon, FSM’s macroeconomic advisor, was also quoted as saying: “Surveys are going out to all the hotels and travel operators to establish where we’re at,” He added: “One of the negative impacts will be a decline in tax revenue this year…tourism is about a $20 million industry in the FSM, and that revenue is being spent on people who live here and work here.”

Solomon said the government has to start fast-tracking public and priority projects. From an executive point of view, he said: “We’ve got to stimulate the internal economy.” 

“The President has asked [the Department of Finance & Administration] and [the Department of Transportation, Communication & Infrastructure] to get together and come up [with these plans]. The immediate thing we can do for the economy is move the projects and the things that we have on our books now so that there will be a big push on public projects and infrastructure—especially the projects that local contractors can get involved in so that it turns over money in the local economy,” Solomon said.

Another recommendation is to encourage the FSM government to hold its conferences and workshops within the FSM to encourage local travel and stimulate economic activity.

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