CNMI sees downpour of foreign investments

Foreign investors are beginning to take notice of the new set of perks offered by the Commonwealth to businessmen who will infuse fresh capital into the Northern Marianas economy under a recently-enacted investments law.

Commonwealth Development Authority Executive Director MaryLou S. Ada yesterday disclosed the entry of a Guam-based company which will build a multi-million-dollar entertainment center on Saipan.

Ms. Ada said Sand Castle will begin construction of the entertainment center, which will showcase live shows similar to those seen in Las Vegas, at the Hyatt Regency-Saipan. The theater will be constructed in the area which housed the former Gilligan’s Entertainment Center.

She said Sand Castle is only one of the several business proposals received by CDA from off-island investors wishing to infuse fresh capital into the Northern Marianas, under the new Qualifying Certificate program.

She said CDA has started receiving inquiries and applications from foreign investors under the recently-enacted Investment Incentive Act of 2000, which is now up for an amendment in efforts to address some concerns raised during the drafting of its implementing rules and regulations.

Ms. Ada pointed out that part of the changes that will be made to the existing Investment Incentive Act would be the grounds for the revocation of the perks, which may be caused by a myriad of reasons detailed in the proposed amendment measure.

Grounds for suspension or revocation of the Qualifying Certificate under the proposed measure include fraud, bankruptcy, dissolution, non-compliance and transfer of the perks.

Under the proposed measure, which was submitted to the Senate for immediate action, the governor has the power to revoke or suspend a Qualifying Certificate upon the recommendation of the development authority.

The proposed changes also clarifies some issues that were not properly addressed in the existing public law, including definition of business expansion and structure renovation.

The new measure wants expansion defined as the “extent or amount by which a building, project or activity is increased in dimension, size, volume, capacity or an increase in the number of locations or branches” from which the Qualifying Certificate beneficiary conducts business.

At the same time, it defines renovation as the modernization, reconstruction, remodeling, upgrading or substantial improvement of an existing building, project or activity which substantially increases the commercial potential of the building project or activity.

Officials are confident the new incentive program would build stronger economic backbone for the Northern Marianas, which has been largely dependent on tourism and apparel manufacturing activities.

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.

Representatives from various business organizations in the CNMI, the Department of Commerce and the Governor’s Economic Revitalization Task Force worked closely with the Legislature to come up with the measure.

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.