FSM gears up for construction boom amid shortage of skilled labor

Updated: Nov 5, 2021

Contractors eye the Philippines as a source of manpower


From the waterfront to the school districts, projects are set in motion and cranes will soon accentuate the skylines of the Federated States of Micronesia. With multimillion-dollar foreign aid pouring in, dozens of infrastructure projects in the four states of the FSM are scheduled to start next year.


The unprecedented construction boom is bound to vitalize FSM’s $400-million economy, which has been stagnated by the Covid-triggered closure of its borders.


Last month, FSM President David Panuelo launched his administration’s $40 million Priority Road Improvement & Management Enhancements (PRIME) project, a World Bank-funded initiative to rehabilitate the nation’s deteriorating infrastructures.


The national undertaking was on top of the previously announced set of PRIME projects in Kosrae, such as the $12 million FSM Strategic Climate-Oriented Road Enhancements project, als funded by the World Bank, as well the $18 million Sustainable Road Infrastructure Investment project bankrolled by the Asian Development Bank.


Capital improvement projects worth approximately $400 million are in the pipeline.


The PRIME project is a key component of the government’s Pave the Nation program, comprising road and bridge repairs, school replacement projects and construction of renewable energy plants in all four states of Yap, Chuuk, Pohnpei and Kosrae.


“We are thankful that the PRIME Project will provide us with the planning tools to seek additional funding for the Pave the Nation initiative or program from other development partners, including the United States, China, Australia through its infrastructure financing facility, Japan and the Asian Development Bank," Panuelo said.


The president said the FSM’s request for financial support from ADB is in the final stages of negotiation, while the World Bank is preparing a second road project with funding expected to be approved early next year. The FSM has also received $16 million in donations from China, which Panuelo will tap as well to fund the infrastructure projects.


However, while the projects will generate hundreds of jobs, the FSM lacks skilled labor to match the high levels of investment.


“The FSM labor market will not be able to meet the demand resulting from the expected increase in construction work,” said Richard Clark, spokesman for the president.


The FSM has a population of 116,000, with an unemployment rate of 16.2 percent. The Micronesian nation’s activity consists largely of subsistence farming and fishing. The government employs two-thirds of the adult working population. More than half of its revenue comes from Compact of Free Association assistance provided by the United States.


From 1986 to 2001, the FSM received a total of $1.3 billion in grants under the terms of the original Compact. Each year, the FSM's economic outlook appears fragile because of its dependence on compact grants and other foreign assistance amid the lackluster performance of the nation's small and stagnant private sector. The potential for tourism is constrained by FSM's geographical isolation, compounded by a lack of adequate facilities and limited internal air and water transportation.


Due to limited job opportunities, the FSM has been experiencing a brain drain over the years. Migration becomes the safety valve for FSM citizens seeking to pursue more than a subsistence lifestyle.


"While the country benefits from substantial funding through the Compact, emigration is explained by the pressures of a growing population with poor economic development and investment prospects," the International Migration Organization said in a 2015 report.


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“There will be a need to import workers from outside the FSM, especially in the professional and skilled labor categories such as engineers, site supervisors, heavy equipment operators, electricians and mechanics,” Clark said.


The FSM government estimates that the projects will require 1,000 to 1,500 workers. Clark said at least 40 percent will need to be sourced from outside the FSM.


“This will depend on the volume of construction work being carried out at any given time,” Clark said. “Most of the projects will be labor intensive so that the demand for both unskilled and skilled workers will be substantial.”


The FSM is targeting skilled workers from the Philippines. “The FSM government is currently working with the Philippine government on an agreement to facilitate the importation of the needed skilled workers,” Clark said.


Among the major projects is the rehabilitation of the Okat Port in Kosrae, with design work to begin in 2022, and construction to take place in 2023.


Another project in Kosrae involves upgrades to the 50-year-old Lelu Causeway, which is very narrow, low and has insufficient drainage. The causeway is presently suffering from erosion and scouring from tidal action. The improvements should provide for significantly increased natural water-flow dynamics.


For Pohnpei, the project involves the replacement of the Awak Bridge. The 40-ft long concrete bridge is already considered to be unsafe, and in the event the bridge becomes unusable the practical effect would mean that outlying communities would be unable to access essential social services such as healthcare and education.


For Chuuk, the project includes the approximately one-mile extension of roads in Weno. At present, the road from the Chuuk Airport to the Pou Bay Bridge is barely passable due to never-ending chains of waterlogged potholes; yet, the road forms the primary access between


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Weno town proper, and the communities and facilities in Sapuk. The climate-resilient concretizing of the road, similar to the roads in Weno town proper, will result in profound quality-of-life improvements for FSM citizens residing in Chuuk.


For Yap, the Donoch and Tagaaniyal bridges—the two short-span steel and concrete composite bridges in Colonia, located right on the shoreline—presently considered to be abjectly unsafe, will be replaced.


Earlier this year, the FSM government and local contractors began to evaluate and find solutions to the local construction industry's handicaps including a manpower shortage.


During a meeting with Infrastructure Secretary Carlson D. Apis in March this year, Pohnpei contractors expressed concerns about their ability to compete with foreign contractors given their limitations such as a lack of necessary equipment, manpower, licenses, or cash reserves to take on major projects.


“Our government’s preference is really to have our own companies participate more in our projects,” Apis said at the meeting.


He suggested that FSM contractors consider partnerships with foreign construction firms to bridge the gap.


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