Minister of Foreign Affairs Chen Chien-jen (
Palau is the most recent of five countries in the region to establish diplomatic relations with Taipei, and Chen said formalizing ties with Koror has been an on-going process for over a decade.
"We began to have government-to-government contact with Palau in 1983, but it was a US territory then and did not have the right to conduct diplomatic affairs," Chen told reporters.
A letter of intent to establish diplomatic relations was signed when Vice President Lien Chan (連戰) was foreign minister, he said.
Palau gained independence from the US in 1994 and joined the UN the same year. It is currently the head of the 16-member Pacific Island Forum (PIF), formerly known as the South Pacific Forum -- of which Taiwan is a dialogue partner.
"Palau has really made a genuine effort to institutionalize Taiwan's participation in the PIF," said Chen.
"It is a strategic move to establish relations with Palau," he added, citing the South Pacific island's proximity to Taiwan and the formation of a "regional bloc" with Taiwan's other allies in the region.
Palauan President Kuniwo Nakamura, who will be stepping down in November after two terms in office, established ties with Taiwan on Dec. 29 last year.
Chen said President Nakamura is hoping to attract Taiwanese investment, tourism and fishery business to the resource rich island.
"With its proximity and the special tax arrangements Palau has with the US, it should be an attractive place for Taiwanese investment," said Chen.
He added a group of private businessmen, who came with the delegation, is interested in setting up a Free Trade Zone on the South Pacific island. In a joint statement between Taiwan's foreign ministry and countries participating in the South Pacific Forum last year, Taiwan pledged an estimated US$1 million in assistance to the region.
The KMT's Business Management Committee has also put down US$10 million in the Palsia Hotel Palau that opened in 1998.
However, Taiwan's local media has reported that the KMT is considering selling the hotel after the party pledged to cut its business ties. According to Chen, of the 75,000 visitors to the fauna rich island last year, approximately half were from Taiwan.
Taiwanese and Japanese tourist make up the bulk of the visitors to the island. Koror is approximately three and half hours by direct flight from Kaohsiung.
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