House OKs measure removing $100K security bond

In an attempt to relax investment requirements for prospective investors, the House of Representatives yesterday passed a measure that would eliminate the mandatory $100,000 security deposit for Foreign Investment Certificate applicants.

The measure, House Bill 14-133, amends 4 CMC Section 5951 (A) that requires foreign investors to maintain a security deposit of $100,000, which may be withdrawn only upon dissolution of the business.

The measure maintains, though, that investors must still pay the $10,000 application fee and shell out an aggregate investment up to $10 million. The measure also stipulates that for aggregate business, minimum investment is $2 million and individual investment requires a minimum of $100,000 capital.

House Speaker Benigno R. Fitial said the measure is an attempt to zero out the mandatory security deposit, which the lower house believes to be unnecessary.

Fitial said the removal of the mandatory security deposit is better than the Qualifying Certificate program of the CNMI government.

Under the existing guidelines, foreign investment certificates are granted to investors to have the right to lawfully engage in business in the CNMI as long as the investors are in compliance with the standards of issuance.

In addition to the security bond of $100,000 investors have to pay the certificate fee of $10,000, investor visa fee of $2,500, among other requirements.

The measure passed the lower house yesterday and is now heading to the Senate for action. The lower house believes that the measure would help infuse money to the Commonwealth economy.

Aside from the significant investment incentives—the QC program and now the removal of the $100,000 security bond—investors would also enjoy the protection of the American judicial system and U.S. laws, including those that relate to copyright, trademark, patent regulations and the protection of intellectual property; trading in U.S. dollar currency, with no restrictions on repatriation of profits or capital; significant tax advantages for executives and all employees on Northern Marianas sourced income; ports that are free of U.S. Customs duties, local control over immigration and minimum wage.

Investors would also benefit from the CNMI’s duty free status for certain eligible goods to be exported to the United States; favorable tariff treatment for qualified exports to other countries; reliable, scheduled ocean shipping and exemption from the Federal “Jones Act,” which allows foreign flag vessels to enter CNMI ports; exemption from U.S. vessel documentation laws for companies licensed in the Northern Marianas; and state-of-the-art telecommunications linked by undersea fiber optic cable to worldwide facilities.