MICRONESIA – Plans to build a Chinese “mega-resort” on a remote Micronesian island have local politicians fearing residents will be shunted from their homes and “reduced to just doing cultural dances” for tourists.

Yap, one of four main islands that make up the Federated States of Micronesia (FSM), is the next regional island being targeted for a big surge in Chinese tourism investment.

The FSM are eastern neighbours of the Philippines, which along with other countries bordering the South China Sea, have witnessed the aggressive territorial expansion of China as Beijing attempts to limit the military presence of the US and other nations.

But Yap is in for a different type of incursion, with plans for a mega resort of up to 1500 rooms – a big footprint on the pristine sands of the small island.

Yap and its atolls are populated by 7000 people and the island has a land area of only 100 square kilometres. There are around 5000 visitors a year.

Originally, Chinese company Entertainment and Travel Group (ECG) planned to build a 10,000-room complex but it was scaled back significantly.

But even the abridged proposal has divided the island’s chiefs and legislators.

“It seems to me that the plan is to move all us Yapese onto a “native” reservation somewhere on our island and we will be reduced to just doing cultural dances for their tourists,” said local Senator Clement Mulalap.

Senator Nick Fajir is also concerned and said nearly a quarter of Yap’s main island has now been leased to ETG.

“Our local people have had no access to lawyers or land valuers and they don’t know what they are signing in these contracts,” Senator Fajir said.

Yap’s Governor Tony Ganngiyan said he supports anyone who wants to develop the island’s economy.

“One of the big problems that we have for development is that we need accommodation facilities and we expect that to happen first before we improve air services to this area,” he said.

“So anybody who would propose to support us or work as a development partner, especially the high end tourist facilities, that’s what we would like to see happening in Yap.”

The FSM is the only Micronesian nation that recognises China instead of Taiwan.

Despite the diplomatic link with Beijing, the nation has a long-standing Compact of Free Association with the US, which provides funding and looks after all defence matters.

But Yap is reliant on tourism and now there is frustration over delayed compact payments, stalled by wrangling in the US Congress.

Additionally, Washington’s money cannot be used for economic development, only basics such as health, education and government salaries.

Transport also remains an issue, with United Airlines holding a virtual monopoly in the region. Yap only has two very expensive inbound flights per week.

So when ETG came calling with offers to start a regular, direct airline service from China, hoteliers Al Ganang and his brother Bruno signed land leases with the Chinese.

Their Village View hotel on the north-east coast of Yap is a lovely strip of wooden bungalows, white sand beach and old canoes heaved on shore.

But with so few tourists around, the brothers have battled to repay a bank loan advanced to them after the resort was devastated by a cyclone.

“They were threatening to foreclose on us,” Al said.

“When the Chinese came they were very friendly, very sympathetic and they offered to pay off the loan for us and do a deal.”

Governor Ganngiyan said if the US was unwilling to help develop Yap then he is open to China, confirming that $12 million from the Chinese Government is coming to Yap for infrastructure projects.

He is also hoping for a further share of the US$150 million being offered to the FSM as part of China’s regional fund of $2 billion for Pacific nations that recognise Beijing instead of Taiwan. Planning for Yap’s mega resort has been underway for some years, with ETG now installing a local representative, Yang Gang, to advance the case for the development.

Gang said the company wanted to build hotels, conference and sports facilities as well as infrastructure projects like roads.

He said ETG has no links to the Chinese government or military.

“Any Chinese company or enterprise that invests overseas, there is a certain procedure the Chinese government has to approve,” he said.

“This is the only connection with the Chinese government, we don’t have any extra connection with the Government. And also, no contacts with the military.”

Don Evans, an American who has lived on Yap for 40 years and owns O’Keefe’s Waterfront Inn, is general manager of the island’s visitors’ bureau.

“Nothing has been given to the bureau in terms of their plans or how we can assist them at all,” he said.

“I think we have to be careful that we don’t ruin the quality of life for the Yapese who live here.”

Evans said what has happened in neighbouring Palau, visited by 87,000 Chinese tourists last year, should be a warning. Palau also has a compact with the US.

“The Chinese have really sort of taken over Palau. I guess the word is ‘economic neo-colonialism’,” he said.

“They have purchased a lot of the hotels, if not most of them, and apartments, so now Palauans are having a difficult time finding places to stay on Koror (Palau’s main island).

“And locals are having a difficult time finding jobs because even the boat drivers and people in the tourist industry are from China because they speak the language.”

- ABC