Another confounding problem with Palau it's an island in the Pacific. In the US, if you need to patch the road, you just send a couple of catepillar machines in an oversized truck down the interstate along with tar and whatever else to your small town. I mean, of course someone has the catepillars and tar lying around, but that's at least how it got there. For Palau, you need to get the tar, caterpillars, and fuel and everything else and send it on a cargo ship, whilst burning more fuel and putting it into the air. Just the sheer distance and isolation adds a huge cost to repair for everything that sort stretches the analogy with small town America for example.
The curious thing is the cost of living isn't that terrible for things like land and food (which can be grown on the island). Of course, anything else including gas is expensive.