DOF: Apparel exports soared $1.062-B

The apparel manufacturing industry on Saipan rallied stronger than expected as it registered a modest growth in garment exports by the end of the century, reaching $1.062 billion from the previous year’s $994.6 million.

Of all the existing industries in the Northern Marianas, only the garment manufacturing sector posted increase primarily due to its dependence on the U.S. economy, which has remained unperturbed by the Asian economic conditions and the rising fuel costs.

During the same year, the construction industry suffered a severe blow falling beyond the $20 million-mark by end-December 1999 due to the declining number of new investors in the CNMI and the absence of expansion by existing businesses on the island.

Construction activities on the island amounted to only $18.5 million, which translate to 361 building permits approved by the Department of Public Works’ Safety Code Division, last year.

The tourism industry had also been hardly hit by the economic contraction in major Asian countries, with visitor arrivals dipping to 501,800 in 1999 from 694,900 in 1997.

A report from the Department of Finance disclosed an increasing trend in apparel production in the CNMI since 1996, when garment exports totaled $513.7 million.

Apparel exports has, since then, inched upwards, reaching $748.6 million in 1997. It soared $994.6 million in 1998, then surpassing the billion-dollar mark last year.

In the last quarter of 1999, apparel exports jumped to $275.68 million from the previous period’s $262.16 million. Second quarter figure was $256.76 million, down from the January to March statistics of $267.57 million.

The finance department’s report on apparel exports contradicted the projection of the Saipan Garment Manufacturers Association, which said that the billion-dollar class suit filed against manufacturing companies on Saipan and their mainland buyers last year has started taking its toll on the apparel industry.

SGMA, in a previous testimony to the CNMI House of Representatives, said the industry is currently dealing with slow business resulting from buyers’ apprehension on placing orders from Saipan garment manufacturers.

SGMA officials blame the reduced orders from mainland buyers to the billion-dollar lawsuits filed against Saipan apparel makers in two federal courts in Los Angeles and Saipan, and another in a San Francisco state court

Reports said apparel orders from mainland buyers have dropped by as much as 30-40 percent.

The Saipan garment manufacturing industry has positioned itself to be a significant contributor of direct annual revenues for the government, or nearly 25 percent of all tax earnings, generating close to $40 million annually in direct revenue.

Similarly, an economic study funded by the US Department of the Interior’s Office of Insular Affairs (OIA) revealed that at an average of $1,800 income taxes per person, the apparel manufacturing industry which currently employs about 15,000 foreign workers, contributes $27 million in income taxes alone.

Aside from contributing to the public coffers through income taxes, each garment workers spends on consumer products. Based on foreign workers’ average $50 weekly expenditure, all 15,000 garment workers cumulatively spend $750,000.

This figure represents $36 million in total annual amount circulating within the local economy. Considering its multiplier effect, two nonresident garment workers actually create an employment opportunity somewhere else in the economy.