Investor mulls military products factory in NMI

Gov. Juan N. Babauta disclosed that a Korean investor is eyeing to put up in the CNMI a factory that would manufacture military products for the U.S. Department of Defense.

Babauta said Dong-In Entech Co., Ltd. is in the process of identifying a public land that would house the multi-million dollar investment. The governor, who recently met with representatives of the Korean firm, said the investment could exceed the threshold amount for a possible qualifying certificate in favor of the investor.

The company wants to put up a factory to manufacture CamelBak products in the CNMI. CamelBak is a leading name in outdoor gear products, including military backpacks and hydration systems. The governor recently invited the company to meet with officials of the CNMI Department of Commerce in connection with the proposed venture.

The Investment Incentive Act of 2000 encourages economic development in the CNMI by offering tax breaks to businesses that engage in or implement a desirable project or business activity.

Eligible businesses under the law may apply and receive a qualifying certificate executed by the governor, as recommended by Commonwealth Development Authority. The QC will allow an investor to benefit from certain tax rebates or abatements.

“I fully support the investment plan…including the proposed production of CamelBak products in Saipan…for use by the U.S. Department of Defense,” Babauta said in a recent letter to Dong-In president In Soo Jung. The governor strongly urged the Korean firm to return to the island and assured the company his assistance to make the plan a reality.

Babauta also assured Dong-In that it could enter into contracts with the Defense Department and that it could benefit from economic incentives provided by federal law, particularly from the so-called “Berry Amendment.”

Upon the advice of his legal counsel, Steve Newman, Babauta said federal economic incentives apply to Saipan. The amendment provides economic incentives to production facilities that are based in the nation’s states, territories or possessions. The governor also cited the provision contained in section 105 of the Covenant, which generally confirms the applicability of federal legislation to the Northern Marianas.

“Accordingly, [the Koran firm], like other existing and potential investors that have expressed interest in establishing production facilities in Saipan, CNMI, can enter into contracts with the U.S. Department of Defense for the provision of products such as those referred to and presented in the ‘Saipan Proposal,’” Babauta said.

The governor also said he would instruct Newman to work with the Attorney General’s Office and the Commerce Department’s legal counsel to provide the investor with detailed analysis on its entitlement to the amendment’s economic incentives.

This development cropped up amid plans by the military to increase its presence in the Marianas.

Rear Admiral Arthur Johnson, commander of the U.S. Naval Forces Marianas, earlier disclosed that the Navy is eyeing the possibility of a military buildup on Tinian.

The military currently controls about 30 percent of the landmass of Tinian, maintaining its leasehold over some 7,628 acres of public land. The military leases about 178 acres of public land on Saipan, while maintaining leasehold over the Farallon de Mendinilla Island, where it frequently conducts bombing exercises.

Speaking before local businessmen several weeks ago, Johnson reported on the tremendous economic impact the military has brought to Guam, citing a total of about $1.1 billion in Navy and Air Force expenditure in Fiscal Year 2002. He said military spending in the region would likely increase.

The New York Times earlier reported of plans by the Pentagon to transform the Marianas into the nation’s power hub on the edge of Asia.

The report noted that various movements in military logistics and construction activities have been going on, saying that Defense Secretary Donald H. Rumsfeld wanted to build up the nation’s military strength on Guam, as the U.S. government decides on closing up other military bases next year. Guam is home to the Andersen Air Force Base and the Naval Forces Marianas headquarters.