Better days ahead for the CNMI • Government chronicles slow but sure growth in the Commonwealth’s existing industries

Slight upsurge in the tourism industry and growing business confidence have given the Northern Marianas economy the extra push to reach the $2-billion mark by end-December 2000.

A report released by the Tenorio Administration indicated that Business Gross Revenues is likely to soar 1.6 percent, or amount to $2.140 billion, for the end of the year 2000.

This growth is primarily spurred by the 5.3 percent increase in visitor arrivals to the Northern Marianas last year. Records from the Marianas Visitors Authority disclosed the entry of close to 530,000 tourists into the islands in 2000.

Governor Pedro P. Tenorio said the CNMI anticipates a 1.9 percent increase, or a yearly total of 538,756, in visitor arrivals this year. His projection was based on the figures recorded during the first two months of the year.

“The continued upward movement in visitor arrivals from our tourist markets has provided a stimulus for the modest revival of one of our main industries. Despite the fluctuating performance of our major tourism market, Japan, visitor arrivals are healthier than the past two years,” he said.

Although Saipan’s garment exports dropped by 2.6 percent to $1.035 billion in 2000 from the previous year’s $1.062 billion, Mr. Tenorio said the island’s apparel manufacturing industry remains the strongest economic contributor in the Northern Marianas.

“The apparel manufacturing industry has persistently managed to stay buoyant amid controversy. The industry continues to support the overall well-being of the economy through the collection of user fees and the multiplier effect of its expenditures throughout the economy,” he added.

Slight growth in the travel sector and the garment manufacturing industry’s resilience received additional boost from the ongoing Capital Improvement Projects, jointly funded by the local and federal governments.

Mr. Tenorio also noted that measures recently passed by the Legislature and enacted into laws spurred renewed interest in the potential and the possibility of further economic development throughout the islands.

These measures include the Omnibus Reform Act of 2000 and the Qualifying Tax Certificate which grants perks to new investments and existing businesses that are up for expansion.

The governor said CNMI is fortunate to experience some modest gains in the overall state of the local economy despite the continuing volatility in the global marketplace, which saw the US economy tumbling down and the extended financial upheavals in major Asian countries.

Economic Projection

“Notwithstanding the fragile state of the economy, there are signs that an upturn is on the horizon. Recent economic developments since the year 2000 have led us to strengthen our forecast for economic activity in 2001,” said Mr. Tenorio.

He said rally of economic indicators last year mirror a milder whips received by the Northern Marianas since the adverse effects of the Asian financial upheavals fanned towards the islands in the middle part of 1997.

Most of the improvement in the outlook stems from the continuing strength of the economy, and actions by the CNMI government and the private sector to expand and diversify the Commonwealth’s economic base.

“Although the road ahead continues to be a challenge, these difficulties are unlikely to se as severe as in past years,” said Mr. Tenorio.

The efforts put forward by Mr. Tenorio’s administration, the regime being caught in the middle of a recession in Asia, had always been geared toward the alleviation of the islands’ economic conditions.

Mr. Tenorio said the hardwork is slowly paying off, noting the recent trade visit of 59 investors from mainland China and Hong Kong who traveled to the islands to seek business opportunities here.

The CNMI chief executive is also confident that more investors will infuse fresh capital into the Northern Marianas once the Commonwealth Development Authority completes the formulation of the implementing rules and regulations for the Qualifying Tax Certificate.

In fact, CDA has started receiving inquiries and applications from foreign investors under the recently-enacted Investment Incentive Act of 2000. The inquiries are consistently coming in although crafting by CDA of the new law’s implementing guidelines are still in the final stages.

Increased number of concrete applications for the establishment of new businesses in the CNMI are anticipated to pour in once the implementing regulations are put in place.

Initial reports from CDA indicate that the Qualifying Tax Certificate is already beginning to reap good fruits from interested Asian and American investors.

Under Public Law 12-32, CDA would issue a Compliance Certificate to businesses that have qualified for tax rebates or tax abatements in exchange for a new business activity on the islands.

Businesses that are qualified to become a holder of the Compliance Certificate are those engaged in franchise restaurants, water parks, cultural centers, theme parks, resort hotels and condominium, golf courses, electronic commerce, telecommunications, manufacturing and other tourism-related activities.

Minimum capital that should be involved in the new and expanded investments ranges from $500,000 to $10 million, depending on the type of business that will be established.

Government officials and business leaders have joined forces to plot measures that would spur economic activities in the Northern Marianas primarily because of flat growth in terms of new investments, as well as expansions.