Local economy lost $132 million in ’99

The Commonwealth economy continues to rally behind the pre-crisis level with official government statistics indicating a dramatic decline in business activities in the Northern Marianas last year.

The slowdown was attributed to the big number of establishments which were forced by economic upheavals to cease operations or continue incurring losses due to the weakening consumer confidence on the island.

Business gross revenue in 1999 fell by over $132 million to $2.106 billion from the previous year’s $2.238 billion, according to an economic report from the CNMI Department of Commerce.

In comparison with the 1997 figures, or shortly after the two-year-old Asian financial strife set in, the local economy slowed down by a whooping $504.4 million from $2.610 billion.

The losses were attributed to abrupt changes in the spending behavior of visitors to the Northern Marianas, which have also caused a significant drop in revenues generated by the CNMI government from the excise taxes of products normally purchased by travelers.

A report prepared by the Central Statistics Division of the commerce department disclosed that the average excise tax quarterly collection fell to $4.9 million in Fiscal Year 1999, from $6.1 million during the previous year.

In 1997, the CNMI government collected an average of $7.3 million in excise taxes per quarter or $29.2 million, higher from the 1996’s figure of $6.25 million every quarter of $25 million for the whole year.

During the first three quarters of 1999, excise tax collection pumped measly $14.8 million into the government’s coffers, with the April-June collection reaching only $4.8 million.

The prevailing weak consumer confidence resulted in the closure of too many establishments in the Northern Marianas in recent years, with hundreds of them choosing not to renew their business permits last year.

Business analysts are concerned that the decline in the number of establishments may result to higher consumer prices since this would virtually lessen the competition for customers among the trickling number of existing shops.

Consumers will eventually be faced with costly products since there will be lesser competition in the market, and lesser competition means higher prices.

According to the Central Statistics Division of the commerce department, business activities in the islands likewise fell by over 76 percent in 1998 to 885 from a total of 3,801 licensed businesses in 1997.

During the pre-Asian currency crisis period, the Northern Marianas enjoyed a steady growth in business and economic activities with close to 6,000 existing establishments four years ago.

The figure dropped by 32 percent to 3,800 business in 1997. It soaked deeper to 3,410 the following year only to show good signs of stability with last year’s tally reaching 3,587.

From January-September 1999, the business license section issued close to 3,000 business permits with the first quarter accounting for almost half of the total licenses approved at 1,511.

In 1998, the Northern Marianas witnessed a mass dislocation of businesses with more than 1,700 establishments confirmed to have closed shop since January of that year primarily due to the dramatic decline in the tourism sector.

Existing establishments plunged by 47 percent or a difference of 1,754 that year while new investments pale in comparison with the previous year’s figure from 922 to 877 in 1998.

The Department of Commerce reported that overall investments dropped by 39 percent to 2,854 two years ago, posting a deficit of at least 1,799 compared with the previous year’s tally.

In 1997, 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.