New Digital Project to Connect Federated States of Micronesia to Global Economic Opportunities

US$30.8 million project will provide access for FSM to world-class broadband and digital services

WASHINGTON, D.C., March 27, 2020 – The World Bank’s Board of Executive Directors today approved a US$30.8 million grant to improve the digital connectivity of the Federated States of Micronesia (FSM). The Digital Federated States of Micronesia project will support the rollout of terrestrial fiber infrastructure, connect outer islands to basic broadband services, establish the critical foundations for digital government services, and strengthen the legal and regulatory enabling environment for the digital economy to thrive in FSM.

One of the most remote and geographically-dispersed countries in the world, FSM is highly dependent on digital technologies to connect people across its 600 islands, which are scattered over 2.6 million square kilometers of ocean. To date, there has been no competition in the country’s telecommunications sector, and internet and mobile data prices remain high, services constrained and options available to users limited. The mobile penetration rate – of 21 percent – is the lowest in the Pacific region.

However, FSM’s National Government has recognized that reliable and cost-effective digital connectivity services are essential to deliver public services and create new income-generating opportunities for the country’s 112,000 citizens. At least 41 percent of FSM’s population struggles to meet basic needs and 10 percent live below the food poverty line. Digital connectivity is especially important for people living on outer islands where reliable communications and remote access to essential services is a critical lifeline.

The Hon. Eugene Amor, Secretary of the FSM Department of Finance & Administration, reinforced the nation’s commitment to telecommunication sector reform. “The FSM is deeply excited about this opportunity and we look forward to inviting operators to be part of the movement that the FSM is doing, and that is to get our citizens connected to the rest of the world.”

“Reliable and secure digital services are vital for everyday life in FSM – particularly for extremely vulnerable communities on the outer islands before, during and after disasters,” said Michel Kerf, Country Director for the World Bank in Papua New Guinea and the Pacific Islands. “We know that typhoons are happening with increasing frequency and intensity due to the changing climate. We are seeing movements across the world restricted in efforts to stop the spread of COVID-19. These developments show just how critical digital connectivity is for FSM and the wider Pacific region.”

The Digital Federated States of Micronesia project builds on the existing World Bank FSM Connectivity Project that financed submarine fiber optic cable systems for FSM’s Yap State (mid-2018), Chuuk State (mid-2019) and the East Micronesia Cable system, which will connect Kosrae State, Kiribati and Nauru by mid-2021. The project will ensure fiber optic cabling is rolled out nationwide, delivering access to world-class broadband for the people of FSM. For the first time, remote outer islands communities will also be connected to basic broadband services using wireless technology.

“The true beneficiaries of this project will be the people of the FSM,” said the Hon. Carlson Apis, Secretary of the FSM Department of Transportation, Communication & Infrastructure. “As cheaper, faster, and more reliable internet will connect them to global resources that will significantly improve public services such as health and education.”

However, the project is not just about infrastructure. It also includes support for legal and regulatory reforms that will bolster the rollout of digital government services and help to build trust in the digital economy. New policies will also be developed to ensure women can better access, engage and benefit from digital connectivity opportunities, and that online safety – particularly for women and underage girls – is given priority. Other priority focus areas will include data protection, privacy, cybercrime, cybersecurity and the regulation of harmful digital communications.

The Digital Federated States of Micronesia project is funded through the International Development Association (IDA), the World Bank’s fund for the world’s most in-need countries. The World Bank works in partnership with 12 countries across the Pacific Islands and Papua New Guinea, supporting 83 projects totaling US$1.8 billion in commitments in sectors including agriculture, aviation and transport, climate resilience and adaptation, economic policy, education and employment, energy, fisheries, health, rural development, telecommunications and tourism.

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