Despite its remoteness and small market size, the FSM presents a number of truly remarkable competitive and comparative advantages for potential investors; and this explains why American, Australian, Chinese, European, Japanese, Filipino, South Korean, and other nationalities have chosen the FSM investment destination.
Some of the main reasons for investing in the FSM include:
- warm, friendly, and hospitable people with rich and preserved cultures and traditions;
- low and simplified tax system with no export taxes;
- wide range of fiscal and non-fiscal incentives;
- possibility for long-term lease contracts for land;
- flexible labor market conditions and young labor force;
- modern economic infrastructure;
- state of the art telecommunication infrastructure providing links to the rest of the world through fibre optic cable connections and satellites;
- duty free access to the US market for a wide range of products and preferential access to the European Union, Australia and New Zealand, and neighboring Pacific Island Countries markets;
- young domestic private sector open to joint venture and partnership;
- use of US dollar as local currency;
- special relationship with the US providing protection and defense;
- stable constitutional government modeled after the US;
- English is the official language of government and business;
- abundant fisheries and aquaculture resources and niche agriculture produce in a clean and sustainable environment;
- unique historical and archeological sites and protected areas including the 12th Century Nan Madol ruins;
- world-class diving, surfing, and snorkeling spots as well as climbing and hiking sites; tropical climate with green and luxuriant vegetation and savannah grasslands; and
- not affected by typhoons, thus enabling any type of businesses to operate year round without disruption.
Several untapped investment opportunities available
1. tourism development
The best business opportunities in this sector are in accommodation for mid and high end customers, eco-tourism, meeting industry, tourism attraction and product development, duty free shops, certified scuba diving, and surfing shops.
2. fisheries and aquaculture development
The best opportunities in this sector lie in tuna processing, supporting services for tuna transshipment, and production of niche aquaculture products (there are great investment opportunities in the production of black pearl, mangrove crab, sea cucumber, sponges, and ornamental fish).
3. agriculture production and agro-processing
There is a domestic market for import substitution of approximately $42 million for potential investors interested in agri-business. The best opportunities lie in the production of import substitutable products, niche agriculture products, and agro-processing (the best investment opportunities in this sector lie in the processing of taro, breadfruit, yam, mango, coconut, and papaya into intermediate goods (flour, juice and oil) and further sophisticated products (biscuit, chips, cookies, soap, jam,…).
National and State Governments actively encourage manufacturing targeted goods such as of handicrafts, local clothing, bottled water, which have the potential for growth to support the tourism industry.
5. Untapped woodworking industry
The best investment opportunities are in the production of coconut and mahogany timber for construction and household furniture.
6. Metal recycling industry
7. Renewable energy
There are investment opportunities in the production and sale of renewable energy to State utilities.
8. Captive insurance
9. telecommunication and related sectors
The liberalization of the FSM telecommunication sector represents a great potential for investment and growth
The best investment opportunities in transportation lie in international and inter-State air services, ferry services, and transit point for airlines flying from Central Asia to Australia and New Zealand, as well as shipping to and from Australia and New Zealand