The Marshall Islands Environmental Protection Authority has turned down a Taiwanese company's plan to set up a nearly 20 million US dollar floating dry-dock.
The Authority says the location is not appropriate.
The ruling is a major blow to Ching Fu Shipbuilding of Taiwan, which had picked the location as the most suitable for a facility to service the large number of Taiwanese and other purse seine fishing vessels in the region.
It was the biggest-ever foreign investment proposed for the Marshalls and was expected to generate more than 11 million dollars in revenues to the country each year.
The government's port authority had already signed a land lease, giving Ching Fu access to land next to the proposed location.
The project was opposed by hotel operators and residents who argued against it being located in the urban and commercial center of Majuro.