A proposed development in the Federated States of Micronesia (FSM) by a Chinese company could be a legal disaster in waiting, a lawyer from the country says.
The Hong-Kong based Unique Eminent is planning to build a 50-room resort, as well as homes and infrastructure on Yap island.
In May, a memorandum of understanding (MoU) was signed by Yap government officials and Bruno Tharngan, the chief of Ma’ap where the project is planned.
The agreement grants exclusive development rights but is non-binding because developers first have to get local land-owner and leader consent.
Clement Yow Mulalap, who is a lawyer from Yap based in New York, said investors could be getting the wrong idea.
“My understanding of the law and practice in China is that MoUs are generally legally binding and so if you have developers coming in from China, they could be under the impression that an MoU is legally binding when they enter into it in Yap.”
“There’s a potential for a dissimilarity in views which could lead to a legal controversy,” Mr Yow Mulalap said.
Documents reviewed by RNZ Pacific show the MoU grants Unique Eminent a one year gross revenue tax break and waives all import levies for building supplies.
In return for development rights, Unique Eminent has promised the Ma’ap community a typhoon shelter, paved roads, a water system upgrade, new street lights, an agriculture programme and restoration of the men’s house and cultural sites in the municipality, the MoU stated.
Unique Eminent will also prioritise the employment of Ma’ap residents for any projects and provide salaries that are “2-3 times prevailing rates”.
As well, the company has agreed that before any work starts it will provide residential units “complete with modern appliances and vehicles for those landowners who may be affected by the development” along with a new community, emergency and sports centre.
A consultant with Unique Eminent, Roel Bruysters said the company had faced misinformation spread about the Ma’ap project by Yapese opposed to foreign investment.
“It is fascinating to me that some local people are so dead set against us and anyone else from abroad,” he said.
“Yap will benefit greatly if and when the right developer is given a green light.”
The company would only communicate with landowners directly to request consent for development and believed it was unlikely to obtain any land at this point, Mr Bruysters said.
Chief Tharngan and the director of Yap’s Department of Resources and Development, James Lukan, who also signed the MoU, did not respond to requests for comment.
Although the MoU was signed in August, it was only been circulated this month on social media and to landowners in Ma’ap, sparking outrage and questions from the Yap community.
The proposed development has also become a fiery element in the upcoming Yap general election on November 6.
Henry Falan, an opposition candidate running for Governor said he was dismayed to hear about the MoU, according to the Pacific Island Times, which first reported on the proposed development on Tuesday.
“If we are elected, I and my running mate, Jesse John Salalu, pledge to all Yap citizens to open the doors and windows of Yap State Government and let in the fresh air of transparency and honesty in all matters,” Mr Falan said.
Tony Ganngiyan, the Governor of Yap, and who is running for re-election next week, could not be reached for comment.
Source: Google News : https://www.radionz.co.nz/international/pacific-news/369919/proposed-hotel-in-fsm-sparks-questions-over-foreign-investment