User fee collection up $2.5-M

Stability in the volume of apparel exports from the Northern Marianas to the mainland United States has facilitated the Commonwealth’s efforts to weather hard economic times due to the sudden turnaround of the tourism industry in the last couple of years.

User fee collection from garment export certification soared by $2.5 million to $39.3 million in Fiscal Year 1999 from the previous year’s 36.8 million, according to records obtained from the Central Statistics Division of the commerce department.

However, actual user fee collection was still lower than the original government projections of $41.1 million for FY-1999.

The FY-1999 figure represents an average of $9.825 in direct quarterly government revenue from garment export certification, up from the year-ago’s average quarterly collection of $9.2 million.

In 1998, the CNMI government generated some $36.8 million from user fee collection.
Department of Finance records indicate an increasing trend in fees collected from garment export certification since 1996.

The trend runs in contrast with the anticipated drop in earnings from the Saipan apparel manufacturing sector due to the billion-dollar class suit filed against the sector and their mainland U.S. buyers.

The Saipan Garment Manufacturers Association previously told CNMI legislators the industry is currently dealing with slow business due to the class action suit filed in two federal courts in Los Angeles and Saipan, and another in a San Francisco state court.

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

Government officials said growth in user fee collection last year helped offshoot the dramatic decline in all other revenue sources of the government during the same period.

Rallying stronger than expected, the apparel manufacturing industry on Saipan 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.

Primarily because of its dependence on the strong U.S. economy, only the garment manufacturing sector posted an increase in earnings of all the existing industries in the Northern Marianas.

Garment exports from Saipan started growing in 1996 from $513.7 million, reaching $748.6 million the following year. 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 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.

At an average of $1,800 income taxes per person, the Saipan 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 spend 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.

The garment sector, composed of over 30 small-and-large-scale firms, is CNMI’s biggest employer, accounting for 21 percent of the 30,000 foreign workers employed in the Northern Marianas in 1995.