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The Japanese have landed Guam rocks to the power of the Yen

By David North

THE development dreams of the re cession-ridden 1970 s have become frightening realities of the boom 1980 s on the island of Guam. The Japanese-driven transformation is gener ating unprecedented economic expan sion in the United States territory, but also causing frustration, anger and fear, especially among the indigenous Cha morros, as an insatiable tourism industry gobbles up land, labour and, many local leaders fear, economic control of the 210-square mile island.

Alienation of large land tracts to Japanese investors, soaring property values that are pricing Guamanians out of the housing market and the “inva sion” of the placid lifestyle of Guam’s southern villages have created a wave of resentment and grass-roots anti development sentiment that could carry former Governor Ricardo J. Bordallo, convicted in a Japanese payoff scheme and facing a prison sentence, back into power in 1990.

Tourism, by far the leading sector in Guam’s development boom, has ex ceeded all expectations. With 600,000 visitors annually (and a million by 1993), 10 major hotels running at year-round 90 percent occupancy, and another dozen hotels either under construction or on the drawing boards, US$5OO mil lion in hotel construction is underway, and US$l.5 billion in the pipeline.

But infrastructure development has not kept pace. Water, power and road systems have been overburdened and the cost of expanding these has fallen pri marily on the local taxpayers who com plain they are subsidising the tourist in dustry. Many of the hotels were given

substantial tax holidays as investment incentives.

Eighty-five per cent of the visitors are from Japan, and they spend about US$6OO million annually, providing the lifeblood of an industry that has been growing by 20 per cent annually and provides in direct payments and multiplier effect activities about 50 percent of the US$3OO million in the government tax revenue collected last year. Total government revenues should top US$4OO million this year and one legislalive proposal calls for sharing the wealth with a 25 per cent government pay raise.

For the past decade, the industry had been confined primarily to a picturesque, 700-acre area along Turnon Bay on the island northwest coast. But hotel and resort development has spilled over into

adjoining Agana Bay, the commercial and government center, and spread into north and central Guam which have seen a dozen multi-million dollar golf courses sprout up in a few years, The Reagan (and now Bush) policy of not supporting the weak dollar, leading to a substantially stronger yen, provided a strong impetus to Japanese tourism and real estate investment on Guam, That forced land values, especially in Turnon, to triple and quadruple, contri buting to the breakout from the bay.

Turnon land can sell for as much as US$lOOO a square meter. There are more than 100 new millionaires in Guam as a result of land sales in the 1980 s and new ones are being created every week, Yet the middle class and especially low-income families on Guam find it ex

Chamorros: fear in a booming tourism industry.

ceptionally difficult, if not impossible, to buy land or housing, whose value have doubled and tripled over the past five years. Building costs have increased dra

matically as residential development

competes with the demand for hotels, resorts and condominiums. The average price of a three-bedroom home on Guam in 1980 was about $55,000. Today that average is just under $lOO,OOO.

The smaller but steady growth in the island’s other major industry defense pumps in an average of $3O million in construction annually and an estimated $lOO million in local purchases and sales.

Washington also provides about $lOO million to the local government in grants while another $7O million goes directly to individuals in welfare payments, federal pensions, and social security.

These yen and dollar-driven pistons have cranked up phenomenal overall

economic growth. Analysts place Guam’s

Gross Island Product at well over $1 bil lion annually and estimate the Gross Territorial Income as high as $2.5 bil lion. Gross Business Receipts topped $l.l billion in 1988, up dramatically from the $600,000 level of 1981. Real growth rate figures are unavailable, but some economists say last year’s inflation adjusted growth was about 19 per cent.

The white-hot economy has lowered unemployment to 3.8 per cent which business leaders believe means the local labour force is virtually tapped out, leav ing the island with what they regard as a severe labour crunch. Tourism growth alone will need 6700 additional workers in the next five years, creating a demand for more foreign labour which further worries Chamorro leaders who fear mas sive importation of alien workers will further dilute their political control. The Chamorros are already outnumbered de mographically (about 42 per cent of the 130,000 population), but have been able to maintain control of the government

by exceptionally high voter turnouts, be

tween 70 and 80 per cent for general elections.

Former Governor Bordallo, who has announced his candidacy for a third term, is positioning himself in the van guard of the grass-roots movement

coalescing against full-throttle growth. In

village meetings, public speeches and let

ters to the editor, he warns that a “mas sive uncontrolled economic monster . . . has invaded our island”, and accuses the incumbent governor, Republican Joe Ada, of “allowing foreign firms to cir cumvent regulations (which is) turning our island into an unorganised concrete jungle”. Tapping the vein of resentment, Bordallo laments “our people can no longer afford to purchase land or build homes for their families. We are losing our pride and tranquility. We are losing control.”

The former governor, who recently lost a US Supreme Court appeal on his

jury tampering and obstruction of justice

convictions, faces sentencing in the Federal Court on Guam in the next several months. But he vows to run and, if elected, to serve, even if sent to jail.

He was convicted by a Guam jury in connection with a payoff from a Japanese company seeking special treat ment. Eight of the 10 counts were over turned when an appeals court ruled the Federal bribery and extortion laws under which he was convicted didn’t apply to Guam.

The Ada administration, sensing the volatility of the situation and the political implications of apprehensive or resentful voters, has attempted to defuse the issue.

New investment incentive rules require Japanese or other foreign hoteLresort developers to enter joint ventures with local residents. Only if the company is 51 per cent locally owned meaning US citizens who reside on Guam can it qualify for the substantial tax holiday programmes.

Ada has also urged Chamorros not to sell their land outright, but to negotiate leases, long-term if necessary. But be cause the Governor had already sold his villa overlooking Pago Bay to Japanese buyers, his admonition rang hollow to many landowners faced with million dol-

Clam farming hope GOOD survival and growth rates have resulted from trials with giant clam farming in the Solomon Islands. The tests are being conducted to find the best ways in which rural people can farm

baby giant clams. They are initially

grown in cages placed in sheltered reef waters; after two years the clams are transferred to open sea farms.

lar offers not just for beach-front prop erty but also for interior grasslands for

golf courses.

In conjunction with the Guam Legisla ture, Ada launched an infrastructure

cost-sharing programme that requires

major developers to fund all the associ ated road, water and power needs for their developments as well as requiring them to develop public park and other recreational facilities. Ada has taken another tack on the highly emotional issue by increasing pressure on the US military to release excess Federal land for schools and other public uses, includ ing a request to consolidate the Naval Air Station with the Air Force (Andersen) base in the north. If that is ever done, and it is very doubtful given the Philippine base negotiations and the need for a fallback position, it would free up several thousand acres in the congested north-central Guam and allow the international airport to expand to meet expected increases in tourism avia tion activities.

The return of about 3500 acres of military lands declared excess several years ago remains stalled in Congress.

Other Chamorro leaders have proposed buy-back land banks, with individuals donating money to a corporation which would buy land from Japanese or others and develop it in trust. The Guam Com-

Rats hit crops SAIPAN farmers are having their crops ruined by a plague of rats on the island.

The rodents are eating beans, peanuts, watermelons and other food crops as well as attacking small livestock such as newly-hatched chickens. Estimates are that farmers are losing about a quarter to a half of their crops through the rat plague.

monwealth Bill, which seeks greater poli tical autonomy from the US government, also calls for a Chamorro Land Trust to be made up of unspecified excess Feder al lands. The US government holds ab out 30 per cent of Guam’s land, the local government about 20 per cent while 50 per cent is privately owned.

The short-term impact of the develop ment backlash has already halted a Japanese proposal to construct a $1 bil lion Taotao Resort on the southeast coast of the island not far from the village of Inarajan, a small, old lifestyle enclave quite different from the bustling, crowded urbanised northern part of the 30-mile long island. Several other major resort and condominium projects in cen tral and southern Guam have also been

stalled by mounting public opinion.

The 982-acre Taotao project en visioned four hotels, 4200 condomi niums, three golf courses, six shopping districts, a marine, and a major league baseball stadium (Japanese baseball teams come to Guam for ‘spring train ing’). The development would need 9000 employees, use more water and power than all three southern villages, and dou ble the road traffic.

At public hearings on the developers’ request for rezoning, several hundred

residents vehemently protested against

the development. Bordallo warned that “the billion-dollar development in south-

Timber royalties LANDOWNERS in West New Britain province will receive K 23 million in royalties over 25 years from the Japanes owned Stettin Bay Lumber Company which has received a permit to go ahead with the giant Ania-Fullerborn timber project. About 116,000 hectares will be logged. The company will also spend K2O million on a reafforestation.

ern Guam would swallow two villages”.

Saying his administration’s “economic rearmament programme of 1983 called for infrastructure first, development second,” the would-be governor charged “the current administration has lost all control . . . and fallen into the hands of big business”. A former Bordallo cabinet officer, now a professor at the University of Guam, has chosen as the theme for the 10th Annual Island Conference, Is land Development and the Future of Guam: How much is too much? Bordal lo, as well as Ada, are expected to speak at the November 16 conference.

Ada responded to the challenge by freezing all action on the resort and asking the FBI to investigate the Japanese president of the development company, Kizo Matsumoto, who Ada said was stripped of his US visa in Hawaii for failure to report a 30-year old criminal record in Japan.

Observers expect no action on Taotao or the other projects until after next year’s election. Even then, Japanese driven development will remain a viscer al issue as the outnumbered Chamorros, awash in a sea of visitors’ yen and de fense dollars (as well as wartime memor ies of Japan’s brutal occupation), attempt to chart a course that can assure them not only of economic security, but also political autonomy and control of their

destiny. □

Fiji’s imports up FIJI’S imports rose 48.2 per cent in the first six months of 1989, compared with the same period last year. The largest increase was recorded for the import of road vehicles which went up 471.1 per cent from F 55.2 million to $29.7 million.

The visible trade deficit stood at F 5217.4 million, up 104 per cent on the 1988

figure.

Debt danger for the islands THE former Governor of Fiji’s central bank, Savenaca Siwatibau, has warned that Pacific Island nations are in danger of falling into the debt trap which has engulfed many Third World countries.

Speaking in Honiara, he said similar trends to those seen in Africa and Latin America were beginning to emerge in the region.