Teno okays creation of free trade zones

Gov. Pedro P. Tenorio on Friday finally gave his approval to an ambitious plan to create free trade zones in the CNMI in a bid to lift the sagging economy, but urged the Legislature to correct several provisions he has found troubling.

This is the second time such concern was raised which the governor pointed out early this year when he vetoed the first proposal.

Mr. Tenorio said he signed Public Law 12-20, or the “NMI Free Trade Zone Act of 2000,” citing the need to diversify the local economy and the two-year effort by both his administration and the private sector to lay down the plan.

The new law is the centerpiece of the Economic Recovery and Revitalization Task Force which he formed after assuming office in 1998 in the wake of the economic difficulties confronting the islands.

It aims to entice potential investors in other industries other than tourism and garment manufacturing, who will be encouraged to set up their business in especially-designated economic sites with such perks as tax incentives and lower land lease fees.

Based on projections by the government, these free trade zones will expand the economy through a multiplier effect which will contribute additional revenues to local coffers, according to the governor.

“However, as I indicated in my message vetoing the predecessor legislation, I am seriously troubled by several provisions of the bill,” he said in his message to presiding officers of the Legislature.

He said he remains concerned about the allocation of 60 hectares of public lands to the mayors of Tinian and Rota for use for any municipal or commercial purpose.

That provision placing control of public lands other than the Board of Public Lands was inserted at the last-minute by the Senate after the House of Representatives cleared the second legislation which was patterned after the proposal drafted by the administration.

“This grant of authority is entirely unrelated and unnecessary to the establishment of Free Trade Zones,” Mr. Tenorio explained. “Moreover, it may raise constitutional question.”

But he noted the potential legal problem on Rota and Tinian mayors’ lands does not pose any conflict with the lands designated by the new law.

These lands include the Commonwealth Ports Authority property located at the Saipan airport as well as those to be identified by respective legislative delegations on the three islands.

“Whatever the outcome may be with respect to [mayors’ lands], the status and validity of the Free Trade Zones in unaffected thereby,” said Mr. Tenorio, adding the implementation can move forward free from any uncertainty from such concern.

In another call for amendment, he maintained the Department of Finance should be given a role in determining the amount of tax incentives to be given to investors, not just the Free Trade Zones Authority that will be set up under the law.

Absence of DOF’s input may result to “fragmenting the economic policy making function of the Commonwealth” as well as to inconsistent and unreliable planning, he said.

“I urge that the Legislature consider these concerns seriously and work cooperatively with the administration to remedy these matters,” added the governor.