Revenues from garment industry down 3 percent

Revenues generated by the CNMI government from the apparel manufacturing industry fell three percent in 2000 from the previous year, indicating a dramatic slowdown in the volume of orders from mainland buyers.

This does not come as a surprise though, since industry players have projected that fewer garment products will be exported by Saipan manufacturers to the mainland United States due to pressures from the Clinton Administration and the billion-dollar class action suit.

Official government records, quoted by a report prepared by the Department of Commerce, disclosed quarterly revenues generated from garment certification fee dropped to $9.6 million last year from $9.825 million in 1999.

User fee collection from apparel exports in the first three quarters of 2000 totaled $28.7 million lower by 2.3 percent from the previous year of the same period’s $29.4 million, according to the DOC report.

This was a product of declining apparel exports to the mainland United States, which dropped three percent to a quarterly average of $259 million worth of garment products last year from 1999’s $266 million.

Volume of apparel products exported by over 30 garment manufacturing companies on Saipan amounted $776 million in the January-September 2000 period, lower by 1.3 percent from the previous year’s $786.3 million.

Government records showed garment exports to the mainland US dipped 10 percent in the first quarter of the financial year 2000 to $238.92 million from the quarterly average $265.55 million worth of outbound apparel products in 1999.

A report submitted by the finance department for the Quarterly Economic Review of the commerce department’s Central Statistics Division, disclosed an unusual fluctuating pattern in apparel exports since the third quarter of FY 1999.

Prior to the third quarter of FY 1999, the apparel manufacturing sector has consistently shown growth amid slump in the CNMI’s other biggest revenue-generating economic activity — the tourism industry.

In the April-June 1999 period, the volume of garment exports to the mainland U.S. amounted $262.16 million. The onset of the holiday seasons which triggered a slight increase in orders from the sector’s buyers pushed outbound apparel inventories to $275.68 million from July to September 1999.

Following a major fall between the periods covering the last quarter of 1999 and the first three months of last year, the apparel manufacturing sector resurrected moderately in the second quarter to export $257.3 million worth of garment products from the previous period’s $238.9 million.

While the volume of third quarter exports appeared promising, industry players and government finance managers anticipate a downward trend as they project that the sector will now feel the adverse effects of the billion-dollar class action suit against Saipan manufacturers.

In fact, even the CNMI government is anticipating an average five percent reduction in annual earnings from user fees collected from garment exports beginning last year primarily because of the controversies created by the class action suit.

In 1998, the CNMI government generated some $36.8 million from user fee collection. Department of Finance records indicate an increasing trend in fees collected from garment export certification since 1996.