Wednesday, 25 April 2007

MELEKEOK, Republic of Palau − The Senate of the Seventh Olbiil Era Kelulau held the First Day of the Twenty-fifth Special Session on Tuesday, April 24 with Acting President Mlib Tmetuchl presiding and a quorum of eight members. The focal point of the Session was the review of the Supplemental Budget Act on first reading, the Amendments to the Financial Institutions Act on second reading, and a Bill amending legislation on the Palau Public Land Authority (PPLA) on its third and final reading.

Senate Bill No. 7-187

The Senate passed, on first reading, Senate Bill No. 7-187, introduced by President Tommy E. Remengesau, Jr. to authorize and appropriate additional funds for Palau's general operations budget for the fiscal year ending September 30, 2007.

In his April 20 letter to the Senate, President Remengesau explained that the supplemental budget is meant to expand financial assistance for certain programs to cover anticipated costs and obligations, establishes a revolving fund for the sale for codes and other legal publications, and establishes a line of credit of $3 million to facilitate cash flow capacity. In the event that year-end local revenues do not meet required levels and cover the expanded budget, the supplemental Bill permits the use of Compact Section 213 revenues to meet additional obligations.

The Supplemental budget appropriates an additional $44,000 for the Drug Dog Detector Program of the Bureau of Revenue, Customs and Taxation, which, since inception, has been funded by external funding sources that can no longer be extended. The Bill also appropriates $43,000 to the Bureau of Domestic Affairs to cover the costs of the 'Palau Law Project' which updates the Palau National Code in hard copy and on CDs, a program that was previously funded by external grants and currently lacks any funding. The President hopes that, in the future, a revolving fund for the sale of codes and associated materials will pay for the program.

The Bill also appropriates an additional $49,000 to the Passport Office to cover the balance of printed passports from 2006, while an additional $218,000 is requested to cover Palau's obligations to international organizations such as the United Nations. A further $295,000 is also requested to cover the anticipated costs associated with water and sewer operations, and an additional $250,000 is requested to cover anticipated electricity and maintenance costs of the Palau National Capitol. Finally, SB7-187 requests the appropriation of $250,000 for Palau's participation in the 2007 Pacific Games in Samoa.

In addition to additional financial requests, SB7-187 also includes provisions to permit the Ministry of Finance to enhance Palau's cash flow through the establishment of a line or credit loan of $3 million, as local revenues are not immediately available to cover expenditure requirements. The line of credit aims to ensure that the government has sufficient cash-on-hand to meet obligations, to allow the timely procurement of goods and services, and to provide uninterrupted government services.

Senate Bill No. 7-25, SD1

The Senate passed, on second reading, Senate Bill No. 7-25 to amend the Financial Institutions Act (FIA) despite the reservations of some Members. An important issue raised was the 'retroactive' effect the Bill would have on financial institutions currently under receivership. Senate Floor Leader Alan R. Seid, Chairman of the Committee on Ways and Means and Financial Matters (WMFM), reviewed the proposed amendments to the FIA, pointing out that the Committee solicited comments on the Bill from various sources, including the Financial Institutions Commission (FIC), the International Monetary Fund, and all licensed banks in Palau. In addition, the Committee conducted a hearing with representatives of the FIC and representatives of six banks in Palau.

Among the amendments proposed under SB7-25 is that 100% Palauan-owned banks have a minimum capital requirement of $500,000, while banks that are less than 100% Palauan-owned must meet a minimum capital requirement of $1 million. Foreign-owned banks and their subsidiaries currently licensed in Palau will remain at the current minimum capital level. The Bill also raises the license application fee for financial instituions seeking a license in Palau from $500 to $2,500.

As requested by the FIC, the Committee also removed from SB7-25 language referring to money laundering, as such provisions are already covered in separate Anti-Money Laundering legislation currently pending in the House of Delegates. The Bill further proposes to regulate the Board of the FIC by ensuring National and State Government officials are ineligible to serve on the board to reduce the risk of political interference, as well as stating that members of the board may not be the executive officer or principal shareholder of a financial institution, or a persons within two degrees of blood relation. Further, the Bill specifically states that the President may not appoint a blood relation, within two degrees, to the FIC.

SB7-162, HD1, PD1

On third and final reading, the Senate passed Senate Bill No. 7-162, HD1, PD1 amending legislation regarding the Palau Public Land Authority (PPLA). Foremost, the Bill reduces the membership of the Palau Public Land Authority Board of Trustees from 16 to 7, a move greatly supported to increase efficiency. Further, the Bill transfers the authority on public lands from the President to the PPLA Board of Trustees and also expands the PPLA's scope to include public land outside of Palau.

The next Session of the Senate is scheduled for 10:00am on Wednesday, April 25, 2007.

For news and up-to-date information from the Senate of the Seventh Olbiil Era Kelulau, visit our website at http://senate.palauoek.net or contact Obichang Ongklungel, Assistant Public Information Officer, at telephone 767-2455 or via E-Mail at senatepio@gmail.com.

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