Tax incentives to FTZ investors opposed

Senate Vice President Thomas P. Villagomez yesterday expressed concern over a proposal to grant tax holiday to investors on the planned free trade zones in the Northern Marianas, saying the incentive program must be cut from 20 years to less than eight years.

He said a study should be conducted by the Subcommittee on Free Trade Zone to back up the provisions in the legislation establishing these special economic sites to ensure that the Commonwealth will benefit from the plan.

“Twenty years is too long,” said Villagomez, referring to a provision allowing the free trade zones to offer a package of tax incentives to potential investors for such a period.

According to the senator, business consultants claim that plans in other countries or those existing now only provide a minimum of five to eight years of tax abatement.

“We are giving away 20 years. What are we going to expect from the FTZ’s in the next 10 years?” he asked, noting a huge chunk of employment opportunities may yet be given to nonresident workers.

In the bill passed by the House of Representatives last month, legislators underscored the benefits of the proposal to attract new businesses, create jobs for local people, stir industrial and commercial activities on the island, as well as help diversify its economic base beyond tourism and garment manufacturing.

They also noted other opportunities to be made available to the CNMI with the establishment of such sites, including training for locals by highly-skilled and well-paid workers who will be hired by businesses within the zone.

But Villagomez said the skills required by these companies are not available on the island, and thus foreign workers will again be hired. “What is the guarantee that they will search from the available labor pool. It looks like they will just import nonresident workers,” he added.

He said he would meet with the subcommittee and other members of the Senate to address these concerns before acting on the measure. The bill has been approved on first reading in the upper house.

Villagomez initially lobbied other senators to defer final voting on the proposal precisely because of these questions, despite pressure from the administration to hasten its passage.

Introduced by House Speaker Diego T. Benavente last March, the legislation went through a three-month review by the joint House committees of Commerce and Tourism as well as Ways and Means to incorporate recommendations from the private sector and other public agencies.

It is envisioned as a milestone of Gov. Pedro P. Tenorio’s administration as the ambitious project was broached last year amid the worsening economic difficulties confronting the Commonwealth.

The subcommittee, which is part of the Task Force on Economic Revitalization composed of business leaders, public officials and lawmakers, fine-tuned the bill to come up with the proposal that would be workable on the island.