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Economy hit as Guam waits for US marines

Updated: 2012-03-01 07:59
By Mar-Vic Cagurangan ( China Daily)

HAGATNA, Guam - Row upon row of dormitories lie empty at the Ukudu housing complex in northern Guam amid uncertainty over US plans to relocate thousands of marines from Japan to the Pacific island nation.

Work on the project began two years ago, in anticipation of an economic boom in Guam following a 2006 agreement between Washington and Tokyo to transfer 8,000 US marines and 9,000 dependents from the Japanese island of Okinawa.

Economy hit as Guam waits for US marines

Construction materials have been left abandoned next to the Ukudu Workforce Housing Village in Dededo. The Pacific island nation of Guam faces uncertainty over US plans to relocate thousands of marines from Tokyo, but in the meantime it is hoping to boost its tourism industry. [Jonathan Abella / AFP]

Designed to accommodate up to 18,000 temporary workers needed to service the United States military's increased presence, the $200-million complex includes space for a fire station, medical clinic, transport hub and police station.

The vast majority of its buildings stand empty, however, a symbol of the lengthy delays and constant changes to the marine transfer plan that have cast a pall of uncertainty over Guam's economy.

Ukudu's developer, South Korean-owned Younex International Enterprises, said it has adjusted its business plan and is now leasing what space it can in the vast complex to workers who were not linked to the military buildup.

"There are existing construction projects that are already in progress. These projects may not be related to the military buildup but they require care (accommodation) for workers," Younex Vice-President David Tydingco said.

Guam, a US territory, already houses US navy and air forces bases, with US military spending accounting for about a quarter of its GDP in 2010, according to the US Department of Interior.

The department predicted last year that the military buildup would boost Guam's 180,000-strong population by 20 percent and usher in "robust expansion" for the economy. But deadlines for the transfer have continually changed in recent years and the latest agreement between the US and Japan will reportedly involve only 4,700 marines moving to Guam.

The scale-down comes against the backdrop of a drastic reduction in the US defense budget and protracted talks between Washington and Tokyo over how the cost of the move from Okinawa will be split.

Real estate analyst Nicholas Captain said the prospect of the marines' presence being slashed was a massive shock to a market already weakened by years of speculation about the military's intentions.

"Many recent investments designed to capitalize on the buildup, especially worker housing and industrial property, have suffered from weak demand," he said, adding that real estate sales in Guam "tanked" late last year.

Some foreign investors have pulled out of projects and Guam Chamber of Commerce President David Leddy said local businesses were tightening their belts as they assessed the situation. He suggested that companies concentrate on Guam's other major economic driver tourism rather than wait for a windfall from the military's plans.

But Guam's tourism market relies on Japan for 70 percent of its visitors and has slowed since the earthquake and tsunami disasters last March, despite attempts to attract more Chinese and Russian tourists.

James Martinez, president of the Guam Contractors Association, said businesses "knew the risks" surrounding the ever-changing military plan but added that he is hopeful investment will pick up once the marines finally began arriving.

"Companies that were here mainly to avail themselves of the military buildup may have pulled out of Guam with the intent to return once they see that military construction is back on track," he said.