In the wake of tourism freeze, Guam begins exploring new industries
When The Tsubaki Towers opened its doors on July 1, it became the first and largest hotel project to launch on Guam since 2015. Under normal circumstances, the opening of a 340-room luxury hotel signifies optimism, a promise of spiking arrival numbers.
But in the time of Covid-19 pandemic, The Tsubaki Towers-- and the rest of the hotels in Tumon, for that matter - epitomizes Guam's economy that is waiting for action while tourism is stuck in a holding pattern.
Along with the military, tourism is the pillar of Guam’s economy. It generates $1.4 billion annually, representing 60 percent of the island's annual business revenue. Hence the economy's collapse when the industry tumbles.
Over the years, tourism has seen its ups and downs, moved by factors beyond the island's control, such as natural disasters and the economic conditions of the source markets. The Covid-19 pandemic has further underscored the industry's vulnerability.
"The current economic crisis caused by Covid-19 has crippled our visitor industry with almost zero economic activity in the second and perhaps even the third quarter of 2020," said Catherine Castro, Chamber president. "Business closures associated with the pandemic have left thousands of our residents unemployed for the unforeseeable future."
Tourism employs over 18,000 island residents, or 31 percent of non-federal employment. Like the rest of displaced or furloughed workers in other sectors on Guam, tourism employees currently rely on federal unemployment assistance.
The government of Guam's recently released Consolidated Revenue/Expenditure Report showed a shortfall of $51 million in general fund revenues for the period ending May 31.
The uncertainties of Guam's current situation prods the government and the business sector to revisit the island's ticklish economic model and explore new industries that will capitalize on the island's existing strengths and encourage workforce to seek higher skill sets.
Gov. Lou Leon Guerrero said her administration is "taking strong steps to develop a dynamic roadmap that will kickstart Guam’s aquaculture industry."
She wrote to U.S. Secretary of Commerce Wilbur Ross seeking support for funding a 12-month aquaculture feasibility study that will determine market demand in this region of the world, growth opportunities, and needed investments.
“Natural disasters and Covid-19 have taught us that food security is just as important as economic security. If we can use the gifts of sea and soil to feed our families and strengthen our economy, we have an obligation to try,” Leon Guerrero said.
In her letter to Ross, the governor underscores the need for Guam to develop a viable secondary industry to complement an unpredictable tourism industry.
“Developing an aquaculture industry has always been a top priority for this administration and we’ve taken meaningful steps to reach that goal,” Leon Guerrero said. “But we are now seeing what the impacts of back to back disasters can have on our economy so we must act with more urgency.”
The government financial report indicates that corporate and individual tax shortfall is roughly $41 million.
"While we will need to wait until the July 2020 report to understand the true impact of these taxes on government revenue, the remaining $10 million shortage in collections which support the Government of Guam’s operations is concerning. In addition to general fund revenues, special revenue funds are also significantly behind as compared to prior year," the Chamber said in a press statement.
Castro said the Chamber has embarked on a mission to identify industries and ideas that can help with Guam’s economic recovery as the island works to rebound from the Covid-19 pandemic.
The Chamber has identified the following industries that Guam may pursue:
Alternative dispute resolution
Guam trust law
Relocation of high wealth individuals & Business from Asia
Pharmaceutical manufacturing relocation to US Territories
Construction, Ship Repair and Labor
Safe Haven Port
Silicon Village Initiative
"For a number of years the Guam Chamber of Commerce has recognized that industry diversification is vital to sustaining our local and regional economies in the Marianas and in Micronesia," Castro states in a letter to Chamber members. "As fruitful as tourism has been for Guam and our neighboring islands, the fragility of the industry has tested Guam and the region’s business community over the years through natural disasters and global crises."
She noted that the military buildup will continue to be a source of revenue for the government.
While we see a gradual return of tourism to our island, the focus of the Chamber's white paper is to look at industries outside of tourism to grow our economic base with the support of our public sector in the hopes of mitigating the vulnerabilities associated with travel restrictions, mandatory lock down measures or business closures.
Key to pushing many of the ideas forward is working with our local government to elevate Guam service levels by streamlining our government operations and processes. Further, a commitment from our government partners to work toward these goals collectively will determine how quickly we can attain them.