Rift with U.S. takes its toll on business

Gov. Pedro P. Tenorio yesterday admitted that continuing disputes with federal government over control of CNMI’s labor and immigration and unstable local laws are creating unfriendly business climate on the islands.

In a speech at the opening of a two-day economic conference funded by the Office of Insular Affairs, the governor said these twin problems dull the attraction of the Northern Marianas especially at this time when fresh capital comes in trickles because of the Asian economic woes.

“I suspect that many potential investors, both foreign and American, are waiting to learn the eventual outcome of several issues that need to be resolved between the CNMI and the Federal government,” Tenorio told businessmen.

Tenorio made a pitch to legislators for frequently changing business rules and regulations which erode confidence in the Commonwealth as an investment haven.

“These issues, together with the economic recession in Asia, create uncertainty among the investment community. Uncertainty is the single factor that investors dislike above everything else. When investments frequently change, investors lose confidence in the reliability of laws that affect investment,” he said.

One law that has drawn criticisms is the Foreign Investments Act, which requires potential investors to put up a $100,000 security deposit on top of the $150,000 minimum capital.

Businessmen frowned at the policy lawmakers envisioned to curb the proliferation of mom-and-pop-type of investments. Since the law was put in place two years ago, the island government has seen its fresh investments plummet, and the private sector has sought the lifting of the restriction to lure fresh capital.

Renewed threats by Washington to apply US laws on minimum wage and immigration in the Commonwealth have also sent jitters in the business community already hurting from the worst economic crisis to hit the islands.

But while recognizing that the takeover plans will adversely affect businesses on the islands, Tenorio sought the help of the federal government to diversify the tourism-dependent economy, pump in fresh capital as well as restore business confidence.

During the conference, the governor also outlined efforts his administration has embarked on to expand and boost the slumping island economy, such as the creation of a task force, plans to improve tourist district, parks and recreational facilities and establishment of tourism support industries.

“To achieve these, we need to develop a diversified economy. We need to attract capital intensive industries that are friendly to our environment. We need to retain continued duty free access to US markets. But above all, we need stability in both local laws and within our relationship with the Federal government,” Tenorio said.