BPL cautions gov’t on trade-zone perks

Opposed to a government plan to offer tax breaks and other incentives to investors of the proposed free trade zone in the CNMI, the Board of Public Lands has cautioned the legislature on the move in view of its additional costs to the public sector and unfair treatment of other businesses.

Since they are all aiming to make profits, companies within the free trade zone should not be accorded a preferential treatment when it comes to lease payment of public lands, according to BPL Chairman Tomas B. Aldan.

“It is rather discriminatory to isolate them solely because they are licensed under the free trade zone,” he said in a letter to Rep. Oscar M. Babauta, chair of the House Committee on Commerce and Tourism.

Commenting on House Bill 11-389 seeking to establish special investment sites on the island, Aldan questioned a package of incentives being offered to potential investors in a bid to entice them into the commonwealth.

“Given my limited knowledge of such operation and all the cake and icings this bill is providing, one wonder what benefits the CNMI will get that other businesses such as the garment or hotels is not giving our islands,” he said.

“For these reasons and I guess my stupidity of the benefits to be derived, I totally disagree to allow a public land lease at a lesser amount than what other businesses are paying,” Aldan added.

Although the proposal is still under review by a joint panel of Babauta’s committee and the House Ways and Means Committee, his statement is the first expression of rejection against the government plan that aims to revive the faltering local economy.

According to the BPL head, the creation of special administrative body to oversee the free trade area may lead to waste of public funds, whose functions can be properly handled by the Department of Commerce.

Customs inspection for equipment, goods or merchandise entering or leaving the sites would also add on to the government spending, especially when these businesses are exempted from paying taxes, Aldan pointed out.

“Care must be exercise in the granting of tax exemptions and other icing to entice business,” he explained. “Be mindful of the fact the businesses’ primary goal is to make money. They don’t necessarily care about the government’s health or predicament, so long as they get what they want (profits and less taxes).”

The measure filed last month by House Speaker Diego T. Benavente will set up the mechanism of the free trade zone in the Northern Marianas, including the incentive package and a government-owned corporation to run its affairs.

This is the centerpiece of the plan by the Economic Recovery and Revitalization Task Force in a bid to steer business activities on the island following the fallout of the prolonged recession in Asia, NMI’s main tourism market and source of investments.