Guam is facing the advent of the best of times yet remains fettered by enormous challenges. It’s as if massive anchors are holding us back as the world economy is pushes us forward. Nonetheless the future portends not just an economic rebound but a long term growth prognosis that will be shaped by political and economic forces beyond Guam’s control but influenced by what we do on Guam.
First the good news.
The military build-up now aptly nicknamed “military build-up lite “” will still bring significant growth. The installations that will be built signal not only long term federal employment opportunities but a real commitment for a military realignment that will permanently place Guam at the center of America’s presence in Asia. That means people cash and long term revenue and income at about a third of the original proposal.
But given original estimates of nearly $10 billion in investment even a third is a whopping positive for the economy. Some $3.3 billion delivered over a five to ten year period represents the potential for creating double-digit growth on its own.
Once installed the military commitment is intended to be stable. The marines are making a 50-year commitment to Guam and its region. Given our economic vulnerability to forces out of our control natural or manmade stability is crucial to our investment climate and the economic future.
The second pillar of our long term growth will be the historic economic shift towards consumer spending underway in Asia. Leisure overseas travel is going to continue to grow. Just the news of the potential availability of eased travel by Chinese travelers to Guam is attracting investment. Hotel management contracts and retail concessions are drawing investment in advance of what is viewed as inevitable: the relaxation of Chinese travel to Guam.
If approved this year the announcement will prompt a flurry of Asian investment likely to spur the development of hotels to accommodate a conservatively estimated 200 000 visitor arrival increase in five years. In Guam expenditures alone it represents a $100 million increase in revenue. That is on top of the estimated continued growth of Korean and Japanese travel albeit at a slower pace. That represents another $3 billion to $5 billion in investment.
So add the military to what should happen in tourism and Guam is going to move to another level of development not unlike what took us from the Guam of the 1980’s to Guam today. More people more jobs more income and a better standard of living.
The anchors are of our own design and those placed upon us. Federal mandates that we are unable fend off will require that we either pay $500 million in EPA fines for air pollution or invest an equal amount in mitigation or shifting to a new form of fuel for our power LNG. Mandates for cleaner water are going to cost as much as $200 million.
The problem is exacerbated by the fact that Affordable Care Act is going to cost the community an additional $60 million just to meet federal requirements. In the meantime a third generation of people in our community that now make up one in four adults depend on public assistance at a cost the community cannot afford.
In the face of so much growth we continue to struggle with many in our community who are failing to become a part of it. That above all will define how we emerge in the next ten years. It will be a matter of whether we seize and capitalize on what should be a bright future or whether we simply sit back and let it happen to us. For some that may mean trying to stop growth for fear of change. The fact is we have no real choice but to embrace it. Public finances are such that to deny growth now means bankruptcy and federal receivership. That is our fate; if we fail to shape growth in ways to build the community. How well we elect leaders and perform our businesses to achieve that will determine if the next ten years will be better than the last.
– Jay R. Merrill is the chairman of Market Research & Development Inc. He can be reached at [email protected] guam.net.