Business
Foreign Investment Board approval and sectors reserved to citizens
Companies register under the Palau National Code, and foreign investors need a Foreign Investment Approval Certificate. Several activities are reserved wholly to Palauan citizens.
Key rules
- Jurisdiction — National registration and foreign investment approval, with state-level business permits and land arrangements in the state where the activity occurs.
Governing law
- Palau National Code, title 12corporations and partnerships
- Foreign Investment ActPNC title 28
- Business licence provisions, PNC title 40
- Financial Institutions Act 2001
In practice
Foreign investment requires a Foreign Investment Approval Certificate from the Foreign Investment Board, granted against criteria including economic benefit and citizen employment, and certain activities are reserved exclusively to citizens, including small-scale retail and some tourism services. The recurring structural issue is land: because only Palauan citizens may own land, foreign-owned ventures operate on leases, and a lease of land held by a matrilineal clan requires the consent of the clan's decision-makers, which is the step most likely to delay or defeat a project. Tourism dominates the private economy and is heavily regulated by environmental controls, so permitting under the environmental regime often matters more than corporate formalities. The US dollar is legal tender and there are no exchange controls.