Economist warns NMI on diversification

A Hawaii-based economist and financial analyst has cautioned the CNMI officials against diversifying the economy in areas that are not closely related to tourism because the Northern Marianas may find it hard to be competitive.

According to David McClain, a professor of business and financial economics, College of Business Administration, University of Hawaii, health care improvement is one area which the Northern Marianas may pursue as CNMI officials are trying to market the island as a retirement haven for Japanese.

Since the Northern Marianas has proven for many years that its competitive advantage is in tourism because of its pristine and scenic environment just like Hawaii, it would take so much effort for the CNMI to succeed in a field if it lacks the necessary resources.

The plan to diversify the tourism economy came at a time when members of the Hotel Association of Northern Mariana Islands believe that the CNMI is no longer a favorable place to do business due to the instability of local laws and regulations.

In Hawaii, McClain said officials are maintaining ties with the Japanese and Taiwanese medical communities for health care training. Hawaii has recently held training programs for Japanese physicians.

Based on the Hawaii experience, diversification is no easy task. From being number 17 in the list of the most diversified economy in 1969, it slipped to number 45 in 1997 compared to other American states.

“It is very hard, you cannot expect very much promise, very quickly. It will take 10 or 20 years and we’ve been trying to do it for a long time,” said McClain.

And if the CNMI wants to go into hi-tech, just like Hawaii, McClain said the Northern Marianas should have a strong educational system and good infrastructure because technology experts would be interested to relocate in areas where their children can go to good schools.

In Hawaii, investors would have to send their children to private schools if they want a good education for their children since its public school system still needs a lot of improvement.

Only three to five hours away from the major Asian markets, the Northern Marianas offers an enormous untapped tourism potential for prospective investors including a favorable tax system.

Ron Sablan, president of HANMI, said members of the association have many good ideas for tourism development projects which could help lure more visitors to the island but raised doubts if anyone would invest in them.