NMI construction sector reels from slump

The construction sector in the Northern Marianas is not likely to rally stronger this year with all indications pointing to the declining trend in the real estate sector.

Department of Commerce records revealed a shrinking pattern in construction activities in the islands since the first three months of last year, as the quarterly average of building permits dropped to less than a hundred from 141 in 1998.

The Building Safety Code of the public works department issued only 84 construction permits between July and September 1999, down from the previous quarter’s 93, and over 120 permits in the January-March period.

This, even when private financial institutions in the CNMI expanded their lending base for real estate loans beginning the first quarter of 1999, ending the year with a total of $53.4 million approved loans.

The construction industry received a major boost in 1997 spurred by new activities totaling 463, which is higher than the previous year’s 343. New construction activities jumped higher in 1998 with the BSC issuing 564 new building permits.

CNMI enjoyed additional $57 million in fresh capital from the construction sector in 1998, although the amount is lower than the previous year’s $80 million.

From January to September 1999, only $18.2 million worth of new construction activities in the commercial sector were pumped into the CNMI economy which is below by $10 million than the previous year’s average of $28.5 million.

In addition to the $18.2 million from commercial construction, the residential sector injected $13.3 million into the local economy during the first three quarters of last year.

Housing loans approved by the Commonwealth Development Authority, and its commitment to release 1,000 home loans by the turn of the century helped minimize the decline in the residential sector.

However, government officials are upbeat on the possible multiplier effect of the pending commencement of $120 million worth of locally and federally funded Capital Improvement Projects with the nearing flotation of the $60 million municipal bond.

The CIP Task Force earlier completed the seven-year spending plan for $120 million in new capital infrastructure projects. The first $11 million has been appropriated for the construction of a new prison facility and the completion of the long-delayed Marianas High School gymnasium.

Gov. Pedro P. Tenorio said the multiplier effect of several infrastructure projects in the local economy would mean additional employment, and with it comes stronger buying power which would help local businesses flourish.

Mr. Tenorio is optimistic that the capital infrastructure projects, listed under the 702 CIP Plan, would reach more than $400 million in four years.

The governor last year signed into law House Bill 11-408 which guarantees local matching funds for the construction of several infrastructure projects which will be partially funded by the federal government under the Section 702 of the Covenant.

Mr. Tenorio is upbeat on the ripple effect of the new construction projects which, he said, will provide for the much needed fresh capital into the Commonwealth’s struggling economy.

He said the projects listed under the CIP Plan will vastly improve the infrastructure on Rota, Saipan and Tinian, as these will also provide a much needed boost in the local economy by getting over $100 million in total funds circulated within the CNMI.