Palau is recognized by marine scientists as the number one of the world's seven underwater wonders. Its vibrant, life-filled underwater ecosystem draws a steady stream of global visitors every year to this dazzling gem of an island in the Pacific Ocean. Palau is a remarkable country — bordering the Philippines, it carries the laid-back rhythm of Austronesian life, yet the official currency is the US dollar. Prices, driven by near-total reliance on imports, effectively mirror those in the United States. Add to that a relatively strict immigration policy and foreign investment laws, and overseas operators who make the leap to open a business in Palau find themselves facing a gauntlet of challenges.
For this edition of the BlueTrend Lounge, we invited not only Lance from LT Dive — a fully licensed water-sports operator established in Palau — but also internationally renowned underwater photographer Yorko Summer, affectionately known as "the Sunglasses Uncle," to share the untold story of running a dive shop in Palau.
The LT Dive team shares with us just how hard it is to run a shop in Palau
Diving in Palau — Interview Recording EP1
Operating Legally and Compliantly in Palau: The First Step
Is the Operator You Found Legitimate?
Online, it's easy to search Facebook or Instagram and find dive operators offering Palau diving services — but the Editor urges you not to be instantly swept away by their gorgeous photos and sign up on the spot. Ask the operator to provide their official business registration permit issued in Palau, confirming that they hold a legitimate license to operate there. Failing to do so, at best, fuels a race to the bottom that squeezes out law-abiding operators who bear the full cost of compliance; at worst, if an accident occurs, you may find yourself with no legal recourse whatsoever.
LT DIVE Tourism Operations Permit
LT Dive Business Registration
As with other island nations in Southeast Asia, running a compliant and legitimate dive-tourism business in Palau requires operators to complete a range of business registrations — including a basic business registration, a dive shop permit, a tourism operations permit, a guesthouse license, and more. Only after securing this full suite of approvals does an operator truly fulfill their basic obligations: maintaining a compliant premises and paying taxes lawfully.
Sadly, as in the diving industries of other countries, you'll find in Palau that some unscrupulous operators solicit clients online under a personal identity, then partner with local boat owners to run trips after bookings come in. They bear no shop operating costs and dodge tax obligations in both Taiwan and Palau. If an accident happens and a cross-border claim is needed, victims may very well find themselves with nowhere to turn.
Furthermore, to protect the competitiveness of locals, the Palau government requires that — unless the investment is at a conglomerate-level scale — general operators must partner with Palauan nationals to open a business. Certain specific professions are reserved exclusively for Palauans. As a result, most small foreign investors operate through a "front business" arrangement, with a local acting as the nominal owner. These hidden communication and legal costs invisibly drive up the expense of establishing a small foreign-invested business in Palau.
Choosing an operator with a physical storefront gives you greater peace of mind when travelling
Are the Instructors You'll Be Diving With Qualified?
When the beauty of Palau's waters has you thrilled and you plunge right in, have you stopped to consider whether your dive guide is actually qualified? As in any other country, dive operators should employ staff with credentials that meet local regulations, and those staff should be thoroughly familiar with local currents and topography so that everyone returns safely.
As freediving continues to grow in popularity, more and more people are planning trips to Palau specifically for freediving. Always confirm with your operator whether the accompanying guide holds a freediving instructor certification or an equivalent qualification.
Every guide at our shop is either a scuba diving instructor or a freediving instructor. We want everyone to experience Palau with safety as the top priority.
LT Dive Lance
Beyond qualifications, legal work status is also a critical factor. To work legally in Palau, you need a work visa — an application process that is both complicated and subject to eligibility requirements. Before you decide to head to Palau to live and work surrounded by the ocean, always confirm the operator's employees' work authorization status.
Diving in Palau — Interview Recording EP2
Various Taxes Drive Up the Cost of Diving in Palau
Palau's government fishing ban has led to a dramatic reduction in the "fishing access fees" previously paid by international fishing vessels. To plug the resulting budget gap, Palau has correspondingly introduced or raised a range of environmental taxes. (Related: Palau Marine Conservation: Global Influence Rooted in Bul — Interview with Ambassador to Palau Jessica Lee)
If you're visiting Koror State in Palau and planning water activities today, you'll need to pay a US$50 marine permit fee. If you add a Jellyfish Lake trip, that's an additional US$50. If you plan to conduct water activities in the waters of Peleliu State, you'll need to pay a separate local marine permit there as well.
Yorko Summer holds up the Koror State marine permit
From what I vaguely recall, the Koror State marine tax was around US$10 twenty years ago. By 2024 it had reached US$100. The cost of diving in Palau is truly staggering.
Internationally renowned underwater photographer Yorko Summer
Many visitors don't realize that from January 1, 2018 onwards, a Pristine Paradise Environmental Fee (PPEF) of US$100 is collected directly through your airline ticket. This fee was also raised that year from US$50 to US$100.
In other words, the moment you set foot in Palau, be prepared to pay roughly US$200 in environmental protection fees to the Palauan government. As the US dollar has strengthened, this sum has become an increasingly significant burden for travelers planning their itineraries.
Prices Are Like an Ex Who's Moved On — They're Not Coming Back
The price of a flame-grilled burger has surged dramatically in recent years, symbolizing the sheer scale of price inflation
Soaring prices in Palau are a sore point for just about every operator who has opened a business there. Take the flame-grilled burger recommended by Yorko Summer as an example: 20 years ago it cost around US$2.75; when LT Dive's Lance first visited Palau seven years ago, it was about US$5.50; and on this trip in 2024, that same burger had reached a jaw-dropping US$7.25 — a truly remarkable rate of inflation.
Beyond the impact of global inflation in recent years, Palau's use of the US dollar as its official currency means that the greenback's strong appreciation has made visitors from non-dollar economies feel the pinch of inflation even more acutely.
To cut costs, I even obtained an importer's license so I could bring goods in directly from Taiwan or other countries myself. Otherwise, the pressure is just immense.
LT Dive Lance
The Taiwanese produce section inside a Palau supermarket — prices are 3 to 4 times those in Taiwan
Another reason prices in Palau remain stubbornly high is that the country has no manufacturing industry of its own — the vast majority of produce and all consumer goods depend on imports. In local supermarkets you can find dedicated sections for Taiwanese fruits and vegetables, priced at roughly 3 to 4 times what you'd pay in Taiwan, which dramatically amplifies the effects of imported inflation.
It was precisely for this reason that when Lance was planning the construction of LT Dive, he went so far as to obtain an importer's license, making it easier to import needed building materials directly from Taiwan or other countries. Lance laughed as he put it: "Don't you think the Coke you're drinking is something special? Every single can of Coke you drink out on the boat every day was specially imported from overseas with a luxury tax attached."
The Road Is Full of Thorns — So Why Did LT Dive Open Anyway?
During the interview, we casually asked Lance: "With so many obstacles in the way, why did you still choose to come back to Palau and open a shop?"
There's a dream in my heart that hasn't come true yet. Because of a seed that Yorko Summer unknowingly planted 15 years ago, I should let it take root and grow here in Palau.
LT Dive Lance
Lance and Yorko Summer — brought together by Palau
Fifteen years ago, Lance fell deeply in love with Palau after reading Yorko Summer's book Alii! Palau: The Azure Sea Forgotten by the Tides of Time. As the years passed, Lance went from a complete diving novice all the way to dive instructor, working as an instructor across Taiwan's five major dive sites, Australia's Great Barrier Reef, and the Maldives, and also exploring waters throughout Southeast Asia — before ultimately choosing to settle in Palau. As Lance put it: "Palau's soil has a way of holding onto you. It's like some kind of magic that just keeps you there."
Twenty years ago, Yorko Summer was one of the earliest Taiwanese pioneers in Palau. Twenty years on, Lance let the seed quietly take root in his heart — and right here on this land called Palau, it has slowly begun to grow.
ROC Ambassador to Palau Jessica Lee (center) attends the LT Dive opening ceremony
References:
- Ministry of Economic Affairs, R.O.C. — Overseas Investment Series: Investment Environment Guide for the Republic of Palau
- Embassy of the Republic of China (Taiwan) in Palau
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