
Dean Rudimch and the team from IR Motors.
By Maureen N. Maratita, reporting from Koror, Palau
Palau’s economy is highly dependent on outside income but is in growth mode.
Palau remains dependent on economic aid.
The latest Compact of Free Association between the U.S. and the country, guaranteed $889 million for Palau, 215% of the amount negotiated in 2020.
As of 31 Dec. 2023, the Asian Development Bank committed 26 public sector loans, grants, and technical assistance totaling $205 million to Palau. ADB’s current sovereign portfolio in Palau includes five loans and one grant worth $74.3 million.
Cumulative sovereign loan and grant disbursements to Palau amount to $168.86 million. These were financed by regular and concessional ordinary capital resources, the Asian Development Fund, and other special funds.
Palau also receives various funding from Taiwan, Japan and the Japan International Cooperation Agency and Australia. Programs – for example, in solar power and fiber optic cable are through joint partner financing. The Pacific Islands Small Business Development Center in Airai, offering training and development.
The country nurtures an entrepreneurial spirit.
As Palau recovered from the pandemic, more than 431 businesses were licensed to open in 2023, according to data from the Bureau of Revenue and Taxation at the Ministry of Finance, many of them small businesses.
IR Motors in Koror, a car sales and rental company, has about 60 vehicles for the rental market, and more. “We rent from small cars all the way to heavy equipment and boats, dump trucks and excavators,” Dean Rudimch, manager, says.
The company is “doing okay,” he says. “Our business has been good with the locals and tourists – mostly walk-ins.” Aside from residents, rental customers are Asian, European, Americans, and other international visitors. “We have had plenty of Australians,” he says. When the inventory is rented out, Rudimch says, “We refer them to other local rental cars. We try to work together.”
Rental vehicles are right-hand drive. “It’s cheaper. Insurance is expensive,” he says. “Fortunately, we’ve been stable – even during COVID time.” Aside from local support, Rudimch says, “The rate is good.”
The government of Palau is a welcome client. “If the government needs cars they usually reserve in advance,” he says.
Aside from attractive rates, the business offers service and trust, he says. “We trust that our customers won’t abuse the cars or run away.”

Mason N. Whipps, executive vice president and chief operating officer, Surangel & Sons Construction
Among the stable and largest of Palau’s construction companies is Surangel & Son’s Construction., founded in 1980. Mason N. Whipps, executive vice president and chief operating officer – also returning to politics as a senator in the 12th Olbiil era Kelulau, the country’s parliament; says Surangel & Sons Construction has a mix of work, describing the company as a small contractor, grossing more than $5 million.
“It’s been a combination of Palau government, military and private work.” Surangel’s has supported the U.S. military runway restoration in Peliliu, he says. “It’s mostly been logistics and material supply.” Similarly, the company has supported the Tactical Multi-Mission Over the Horizon Radar, which has seen some delays and may encounter funding issues, according to Glimpses Media files. “They’ve been having some challenges,” Whipps acknowledged. Of the receiver site, he says, “Angaur I understand is moving along. We’ve assisted with logistics, barging in some material.”
The planned expansion of the country’s airport runway may face challenges due to it’s hilly topography, but other projects may be easier, Whipps says. “The port is going to move forward. They want to make one pier 800 feet long to bring in larger vessels.” Dredging will also take place. Malakal Commercial Port has two piers, and handles on average 200 containers a month, rising to 400 containers at peak times.
Surangel’s has ongoing repair work on the Compact Road for sections varying from 10 feet to 50 feet. “It’s been a year and a half,” Whipps says. Work at the airport was also awarded to Surangel’s, but the government is still in negotiation with the project management company, KHLG & Associates Inc. of Guam.
If Surangel’s has a problem, it’s manpower. “The bigger emerging challenge I’m seeing is in the labor force. I’ve lost almost half a dozen Palauans,” Whipps says. The company has about 200 employees, including at its maritime operations and quarry, purchased from Hawaiian Rock Products in 2017. While the minimum wage will rise to $5 in October, workers are drawn to Guam, Saipan and the U.S. mainland, despite benefits. “We pay overtime; we have a 401(k),” Whipps says. In Airai, employees have daycare for children and a gym. “The other problem we’re having is contract labor coming in from the Philippines. They want top dollar,” Whipps says.
Despite challenges, he enjoys the construction industry, he says. “We didn’t get into government contracting until I returned from college in 1994. I like it. Every job has it’s own challenges.” Surangel’s has expanded and made a name in material supply, such as ready mixed concrete and more. At its new property at the Surangel’s Supercenter in Airai, the company also opene a 22,000 square foot hardware store. “It’s one of the reasons the construction office is here,” Whipps says.
An upcoming project at the Supercenter is the Toyota Service Center, to support the Atkins Kroll Toyota dealership.
“We’ve engaged with an architect – Neil Paynter [of Guam],” Whipps says. Other group work is planned. “We’re looking at refreshing our building downtown.”
It may be outside of Koror, but the Supercenter is bustling, and both the supermarket and retail store are well-stocked. The center currently offers one or two retail outlets for rent, and the food court has a ramen shop and a gelato restaurant.
Shallum Etpison, president of the NECO Group of Companies; and his wife, Mandy, have seen changing fortunes in some of their businesses.
NECO Marine Dive Center has seen less business. The minimum wage rise to $5 on Oct. 1 will increase costs. Mandy Etpison says, “By making it across the board, it’s very hard to survive. We don’t make money on diving anymore; we made our money in the 90s.”
Palau now has nine liveaboard boats, she says, with some of them Asian-managed with unregulated boats.
Nevertheless, Shallum Etpison says, “Our main business is still tourism.”

Shallum Etpison, president of the NECO Group of Companies; and Mandy Etpison.
NECO Yamaha Corp. is now an authorized dealer for engine parts, boating accessories, service, and repair. “Yamaha comes and trains us,” Shallum Etpison says. The business supplies most of the tour operators. “We can do both; parts and building boats,” he says. NECO Yamaha also supplies parts to Yap.
NECO Construction Inc. has increased work, boosted also by the earlier 2017 purchase of the True Value Hardware store, with both construction-related businesses in Airai. “We’ve been doing some construction work,” Shallum Etpison says. That included the import of prefabricated houses from China for local people. Other projects have included the new Health and Science Building at Palau Community College and the new Track and Field project to be used for the Mini Games in July. Costs have increased for the industry for freight and importation, with the cost of concrete increasing. “It’s close to $200 a square foot,” he says.
The group also renovated a property and converted it to 15 apartments rented out.
The Drop Off Bar and Grill continues to be a popular venue with locals and tourists, adjacent to the Cove Resort. Mandy Etpison says plans are to extend the roofing over the property. Other business units include the Etpison Museum in Koror, which houses its own collection and a gift shop.
“The company has grown quite a bit,” Shallum Etpison says, with about 300 staff.
Banks that do business in Palau include Asia Pacific Commercial Bank Inc., Bank of Guam, Bank of Hawaii, Bank Pacific Ltd., and the Palau Investment Bank Ltd.
U.S. bank branches remain dominant in the industry and altogether hold 98% of the sector’s assets as of March 31, 2024, according to the Financial Institutions Commission.

Ives Morei, assistant vice president and branch manager for Bank of Hawaii.
Ives Morei, assistant vice president and branch manager for Bank of Hawaii in Palau; confirmed that the bank holds a 75% market share. He attributes that to long term relations. “A lot of the big businesses bank with us,” he says. “They use our systems.”
Economically, he says, “People are finding it hard to adjust.” Palau’s minimum hourly wage rose from $3.50 to $4.25 on Oct. 1, 2024, and will rise to $5 per hour on Oct. 1 this year. “Hopefully that will help,” he says.
Morei says the economic picture may be brighter this year. “Hopefully 2025 will be the year of growth.” For tourism properties, he says, “All the projects that were on hold are now staring up again.” The economy has a way to go to reach pre-pandemic levels, he says. “Compared to pre-COVD, everything is slow.” As to account growth, he says, “New accounts are mostly for the works for new hotels that open up.” But he is optimistic at the president’s encouragement of economic growth. “He’s really gung ho in opening up the investment side.”
The bank has 13 staff, and ATMs at the Koror branch, in Surangel’s Supercenter in Airai, and in Melekeok.
Peter Gaymann, general manager for NECO Plaza Corp. and Triple J Five Star Wholesale Foods in Koror; has kept inventory in the Payless Supermarket in NECO Plaza high, despite the fact that he says, “We have some challenges with shipping delay.” That can affect more perishable items, he says. “It can be challenging with fruit and vegetable and dairy items.” When local produce is available, Gaymann is happy to have it. “We support local,” he says. Availability varies and can depend on the weather. Sometimes a glut is created, he says. “When they have cucumbers, everybody has tons of cucumbers and the same with egg plant.”
Gaymann would be interested in produce now that Qantas flies direct to Palau. “There’s talk for a long time. I would be interested in items from Australia. That would be air freight. But nobody is able to give me a price.”

Peter Gaymann is general manager of NECO Plaza Corp.
The 10% Palau Goods and Services Tax was introduced on Jan. 1, 2023, applying to most goods and services and other items. A Business Profits Tax replaced Gross Revenue Tax for those who register for PGST. Legislation also changed the income tax rate. Gaymann says the tax is “easy on businesses, but more difficult for the consumer.” Still, he says, “People adjusted themselves.”
The pandemic was difficult he said. Gaymann caught COVID. “Most of my staff had it,” he says. Business went up, however. “Then we got some aid from Uncle Sam and that helped the people. Now we’re getting to the point that we’ll be okay.”
Triple J’s wholesale business does well, he says. “It’s better than retail – maybe by half.” People are sensitive to certain increases when they happen, such as eggs, he says. “If they cost you $10 or more, you’re going to notice that. It’s not 10 cents or 20 cents on a pound of meat.” The supermarket has always offered a range of goods. “We have a generic brand, but we have brand items too.”
Palau has a population of roughly 18,000. About 5,000 of those are foreigners who work for local businesses, the government or are business partners with Palauans. Like other islands, the nation has faced a brain drain as young Palauans are drawn to higher-paying jobs and broader spectrum of opportunities in the U.S., as well as in Asia and Australia.
To that end, the Ministry of Education and Minister of Education Dale J. Jenkins have been working with local and international partners to expand learning opportunities for young Palauans, to prepare students for work in popular industries, to include the local marine industry as well as tourism.