Palau is recognized by marine scientists as the number one of the world's seven underwater wonders. Its teeming, life-filled underwater ecosystem draws a steady stream of global visitors every year to this brilliant jewel of an island in the Pacific Ocean. Palau is a remarkable country — bordering the Philippines, it carries the laid-back rhythm of an Austronesian lifestyle, yet its official currency is the US dollar. Prices, driven almost entirely by imported goods, seem to mirror American price levels directly. Add to that a relatively strict immigration policy and foreign investment laws, and foreign operators who venture to Palau to open a business face a gauntlet of challenges.
For this edition of the BlueTrend Lounge, we invited Lance of LT Dive — a fully licensed professional water-activities operator registered in Palau — as well as internationally renowned underwater photographer Yorko Summer, affectionately known to everyone as "the uncle with the shades," to share with us the untold stories behind running a dive shop in Palau.
The LT Dive team shares with us the hardships of running a shop in Palau
Diving in Palau Is Pricey! Interview Recording EP1
Going Legal and Compliant: The First Step for Diving in Palau
Is the Operator You're Booking With Licensed?
Online, you can easily find information about Palau diving operators with a quick search on Facebook or Instagram — but the Editor urges you not to be swept away by their beautiful photos and sign up immediately. You should ask them to provide their official Palau business registration permit, which proves whether they hold a legitimate, government-issued license to operate in Palau. Failing to do so, at best, helps bad actors drive out honest operators who have paid the real cost of compliance; at worst, if an accident occurs, you may find yourself with no legal recourse.
LT DIVE Tourism Operator Permit
LT Dive Business Registration
As with other island nations in Southeast Asia, running a compliant and legal dive tourism business in Palau requires operators to complete a range of business registrations — including basic business registration, a dive shop permit, a tourism operator permit, and a guesthouse license, among others. Only after obtaining this full set of permits can an operator truly be said to fulfill the basic obligations of a legitimate business: operating in a compliant space and paying taxes.
Unfortunately, as in the diving industry elsewhere in the world, you will find in Palau that some unscrupulous operators solicit clients online under a personal capacity, then collaborate with local boat owners to run trips. They bear none of the costs of running a physical shop, and they evade their tax obligations in both Taiwan and Palau. Should an accident occur, pursuing a cross-border legal claim could easily leave the affected party with no avenue for compensation.
Beyond that, to protect the competitiveness of locals, the Palauan government requires that most businesses — unless involving major investment at the conglomerate level — partner with local Palauans to open up. Certain specific occupations may only be operated by Palauan nationals. As a result, most small-scale foreign investors open up in the form of a "front business," with a local serving as the nominal owner. These hidden costs of communication and legal structuring invisibly inflate the cost for small foreign investors to set up shop in Palau.
Choosing operators with a physical storefront offers travelers greater peace of mind
Is the Instructor You're Diving With Certified?
When you're thrilled by Palau's stunning waters and jump right in, are you aware of whether the dive guide beside you is actually qualified? As in any other country, those working in the diving industry should hold credentials that meet local regulatory requirements, and should be thoroughly familiar with local water conditions and topography, so that everyone can return safely.
As freediving grows increasingly popular, more and more people plan trips to Palau specifically for freediving. Be sure to confirm with the operator whether the guide accompanying you holds a freediving instructor certification or equivalent qualification.
Every guide in our shop is either a scuba diving instructor or a freediving instructor. We want everyone to experience Palau with safety first.
LT Dive Lance
Beyond qualifications, legal status is also a factor. To work legally in Palau, you must obtain a work visa — a process that is both complicated and subject to eligibility requirements. If you're considering heading to Palau to work in an ocean-embraced environment, be sure to clarify your work status with the operator first.
Diving in Palau Is Pricey! Interview Recording EP2
A Multitude of Taxes Drive Up the Cost of Diving in Palau
Because of Palau's fishing ban policy, the "fishing access fees" previously paid by international fishing vessels have dropped sharply. To fill the resulting budget gap, Palau has correspondingly introduced or raised various environmental levies. (Related link: Palau Marine Conservation: The Global Impact Born from Bul — Interview with R.O.C. Ambassador to Palau Jessica Lee)
If you visit Koror State in Palau today and arrange water activities, you will need to pay a US$50 marine permit fee. If you plan to visit Jellyfish Lake, there is an additional US$50 charge. If you plan to conduct water activities in the waters of Peleliu State, you will also need to purchase a separate local marine permit.
Yorko Summer holding the Koror State marine permit
Going off a fuzzy memory, 20 years ago the Koror State marine fee was around US$10. By 2024 it had reached US$100. The cost of diving in Palau is truly staggering.
Internationally renowned underwater photographer Yorko Summer
Many visitors are unaware that starting January 1, 2018, a Pristine Paradise Environmental Fee (PPEF) of US$100 is collected directly in your airfare. This fee was also raised from US$50 to US$100 that same year.
In other words, the moment you set foot in Palau, you should expect to pay roughly US$200 in environmental protection fees to the Palauan government. As the US dollar strengthens, this amount has become an increasingly significant burden for travelers planning their itineraries.
Prices Are Like an Ex Who's Moved On — They're Never Coming Back
The flame-grilled burger, whose price has surged dramatically in recent years, has become a symbol of just how sharply costs have risen
Soaring prices in Palau are a sore point for every operator who has opened a business there. Take the flame-grilled burger recommended by Yorko Summer as an example: 20 years ago, one burger cost around US$2.75; when LT Dive's Lance visited Palau seven years ago, it was around US$5.50; on this trip in 2024, that same burger had reached a jaw-dropping US$7.25. The pace of price increases is truly remarkable.
Beyond the impact of global inflation in recent years, Palau uses the US dollar as its local currency, which means visitors from non-dollar countries feel the sting of inflation even more acutely as the dollar strengthens.
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 really overwhelming.
LT Dive Lance
The Taiwanese produce section of a Palau supermarket — prices are 3–4 times what you'd pay in Taiwan
Another reason prices in Palau remain persistently high is that Palau has no manufacturing industry of its own. In fact, most produce and virtually all everyday consumer goods are imported. In local supermarkets you can find dedicated sections for Taiwanese fruits and vegetables, priced at around 3–4 times what they would cost in Taiwan — a significant driver of import-led 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 to make it easier to import the necessary building materials directly from Taiwan or other countries. Lance joked: "Don't you think the Coke you're drinking tastes a little special? Every can you drink out on the water was imported from abroad with a luxury tax tacked on."
The Road Is Full of Thorns — So Why Did LT Dive Open Anyway?
During the interview, we casually asked Lance: "With so many difficulties, why did you still choose to come back to Palau and open a shop?"
There is a dream in my heart that hasn't come true yet. Because of a seed that Yorko Summer unknowingly planted 15 years ago, I felt I should let it take root and grow in Palau.
LT Dive Lance
Lance and Yorko Summer — a friendship that was born in Palau
15 years ago, Lance fell deeply in love with Palau after reading the book Alii! Palau: The Azure Sea Forgotten by Time by Yorko Summer. As time passed, Lance progressed from a complete beginner all the way to dive instructor, working as an instructor across Taiwan's five major dive regions, at the Great Barrier Reef in Australia, and in the Maldives, while also surveying dive sites across Southeast Asia — yet in the end, he chose to return to Palau. Lance said: "Palau's soil has a way of holding on to you. It's like some kind of magic that just keeps you here."
Twenty years ago, Yorko Summer was one of the early Taiwanese pioneers blazing a trail in Palau. Twenty years later, Lance let the seed in his heart quietly begin to sprout — right here, on this land in Palau, slowly taking root and growing.
R.O.C. Ambassador to Palau Jessica Lee (center) at the LT Dive opening ceremony
References:
- R.O.C. Ministry of Economic Affairs Overseas Investment Series — Introduction to the Investment Environment of the Republic of Palau
- Embassy of the Republic of China (Taiwan) in Palau
Related Links
More Palau Content
Further Reading
Frequently Asked Questions
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