CNMI gets $1-M in foreign investments

The Northern Marianas is slowly regaining its image as a haven for investments in Micronesia in what could be a result of the ongoing discussions in the Legislature on proposals to eliminate restrictive and protectionist foreign investments policies.

The Department of Commerce yesterday disclosed six foreign investors, with promise to pour over $1 million into the local economy, have submitted applications for Business Certificate last year.

Acting Commerce Secretary David S. Palacios said each of the six applicants has provided the required security deposit of $100,000, which has been the subject of discussions in the government due to increasing clamor from the business community for its elimination.

Records obtained from the Foreign Investment Office of the commerce department disclosed 10 foreign investors, including the six who came in last year, pumped close to $3.5 million in fresh capital to the Northern Marianas economy since 1997.

The new investments translated into increased activities in the real estate, construction, computer consulting, wholesale, retail, furniture production and garment embroidery sectors.

Of all 10 companies, Transasian Corporation which is into condominium and apartment complex construction invested the largest amount at $2 million, while real estate developer Tejima International, Inc. infused $250,000 into the business community.

All the other eight companies pumped $150,000 each, the minimum initial capital required from foreign investors, into the Commonwealth economy.

Business leaders and legislators blame the Commonwealth’s restrictive local investment policy requiring investors to put up a $100,000 security deposit to the dramatic decline in the number of foreign investors coming into the islands.

Officials believe that the implementation of Public Law 10-44 or the Foreign Investment Act in 1997 paralyzed the entry of new investments into the Commonwealth, complicating economic impediments brought about by slowdown n the tourism industry.

Providing flexibility on the security deposit, which have turned off potential investors, is being eyed by both the Tenorio Administration and the Legislature in order to lure foreign businessmen into the CNMI.

Mr. Palacios said the commerce department has consistently endorsed the need to build a business and investment climate that is healthy and conducive to investors.

He stressed DOC strongly supports ongoing efforts in the legislative and executive branches of the CNMI government to update foreign investment policy and wide-ranging business regulations.

“It would appear because of the obvious change in the general business climate, that amendments to business policy should be expedited to ensure that the CNMI does not lag behind other investment destinations,” Mr. Palacios pointed out.

Officials said Northern Marianas has been losing potential foreign investors to the neighboring island of Guam, CNMI’s closest and fiercest competitor, where investors can get a greencard and U.S. citizenship in five years for just a minimum of $250,000 in total investments.

Aside from not requiring foreign investors to post a cash security deposit, Guam has also streamlined the business permit renewal process by making the licensing office perform all clearances.

In Guam, the renewal is simply mailed to the investors which makes it more comfortable and convenient since they need not leave their office. The island-territory is attracting many investors because of its non-protectionist laws that also offer benefits and incentives.

Foreign investment in the CNMI was frozen until 1973, and was opened when the foreign investment law was abolished after it became a Commonwealth of the United States in 1982.

The CNMI’s proximity to Asia and its distance from the United States mainland, coupled with its smallness, will always make its economy particularly susceptible to unforeseen external economic, political and social impacts.