Don’t rush FTZ bill approval

Senate Vice President Thomas P. Villagomez expressed concern yesterday over pressures to pass the free trade zone bill without resolving problems on some of its provisions, saying changing the law in the next few years will send a wrong signal to foreign investors.

He asked anew the Subcommittee on Free Trade Zone to address uncertainties regarding employment opportunities for residents as well as benefits of such a plan to the government.

Noting that it would be unhealthy to have policies change after forging a deal between businesses and the government, Villagomez said the measure should include a provision that will ensure investors in the free trade zones comply with the end of the bargain.

“I don’t believe it will be good to change the rules in the middle of the agreement,” he told in an interview. “We must iron out any problems now before creating the free trade zones.”

Villagomez has asked the Senate to withhold final voting on the administration-backed bill following his concerns on the length of tax breaks to be granted to investors and the lack of assurance that jobs will be available for the local workforce.

“I’d like to push the bill and cast my yes vote, but I’m still not convinced that I can support the bill as it is drafted now,” he said.

The senator has met with members of the subcommittee to discuss his concerns, but both sides have yet to reach a compromise on the provisions.

House Speaker Diego T. Benavente, who sponsored the measure, has urged the Senate to set aside differences on the proposal and approve the plan to begin the process of attracting investments into the CNMI, saying the government need to give it a chance to spur the economy.

He also pointed out the incentive package, the length and amount of the tax-free status, will still depend on negotiations to be conducted between the investor and the proposed Commonwealth Free Trade Zone Authority, overseer of these special economic sites.

A provision also allows the government to tie the incentives to employment of local workers, based on the percentage of the jobs given to the residents as compared to foreign manpower.

Last week, JTPA Director Felix Nogis also raised doubts whether locals can have a share of jobs to be created from these new investments, noting that they will require high-skilled workers.

He said that even some existing companies have failed to comply with a regulation that 20 percent of their labor force must be resident workers — a situation that Villagomez said further cast doubt on the intent of the FTZ plan.

“How can the present mechanism work in the future if it doesn’t work now,” asked the senator.

According to Villagomez, he would ask the senators from Rota and Tinian whether their islands would also benefit from the FTZ and probably get the input of the business community before acting on the bill.

The Legislature is under pressure to pass the legislation that will lay the groundwork for the establishment of these zones envisioned as centerpiece of the administration’s attempt to diversify the local economy beyond tourism and garment manufacturing.