Slight growth in approved business permits noted

Economic activities in the Northern Marianas registered a modest growth as indicated by the higher number of business licenses approved by the Department of Commerce during the third quarter of last year, totaling 508 from the year-ago’s 473.

From January-September 1999, the Revenue and Taxation Division of the finance department issued close to 3,000 business permits with the first quarter accounting for almost half of the total licenses approved at 1,751.

However, investment officials said the third quarter growth remains inconclusive considering the declining trend recorded since 1997, the year when business activities started taking turtle-pace movement due to economic contraction in Japan and other Asian countries.

According to a quarterly report prepared by the Central Statistics Division, the government issued 4,019 business permits in 1996. The figure fell to 3,3731 the following year, dipping further to 3,375 in 1998.

In order to at least reach the 1998 level, the CNMI government should be able to process and approve 415 business permits for the fourth quarter of last year.

In 1998, the commerce department issued 877 new business licenses or a monthly average of 73 new investments. This is translated into 45 difference or a five percent drop compared with the previous year’s tally.

Only 1,977 of the 3,731 establishments in 1997 renewed their business license in 1998. The highest drop was recorded in December that year when 407 establishments did not renew permit to operate.

During the first semester of the last calendar year, the commerce department issued 2,452 business licenses. The second quarter report also registered growth at 701 from the previous year of the same period’s 498.

More than 1,700 establishments have closed shop since January 1998 due to the dramatic decline in local economy. Existing establishments plunged by 47 percent or a difference of 1,754 during that period.

New investments pale in comparison with the previous year’s figure posted from 922 to 877. Overall investments dropped by 39 percent to 2,854 in 1998, posting a deficit of at least 1,799 compared with the previous year’s tally.

In 1997, the Central Statistics Division of the commerce department recorded a total of 4,653 businesses in the CNMI. Of this, 922 were new investments while 3,731 establishments renewed their business licenses.

The CNMI economy is not expected to experience major improvement between now and 2005 as economists predict another round of recession within the five-year period due to the slow growth of the tourism industry and the anticipated demise of the Saipan apparel manufacturing sector.

At most, the local economy is expected to grow by no more than one to two percent this year, primarily spurred by the number of available regular airline seats between Saipan and South Korea.

According to a report prepared by the Bank of Hawaii, the CNMI economy may pick up by 3-4 percent next year when more Japanese and Korean travelers begin taking overseas trips again.

The report also ruled out further growth in the garment manufacturing industry explaining that the sector has reached its mandatory peak for active licenses and employment due to the cap in the number of apparel factories and nonresident workers it may employ.