Two new hotels to rise in Garapan

Two new hotels will rise in the tourist district of Garapan as immediate result of the newly-signed law granting tax breaks to investments in the CNMI, according to a major proponent of the economic incentive program.

House Floor Leader Oscar M. Babauta, main sponsor of Public Law 12-32, said these two big projects are expected to boost the islands’ economy following more than three years of stagnant growth.

One of the new investments will be a floating hotel to be built across from the Kristo Rai church, while the other will be a high-rise hotel on the property across the DFS Galleria that used to be the Samoan housing, he said.

“There are other several entrepreneurs or potential investors who are eyeing the Commonwealth as investment site,” Mr. Babauta told in an interview, adding a high-technology manufacturing firm has already sent feelers to CNMI officials about its plan here.

He expressed hopes of attracting more businessmen to come here and open shops by early next year when the new law is implemented by the Commonwealth Development Authority and the Division of Tax and Revenues.

Signed last week by Gov. Pedro P. Tenorio, the “Investment Incentive Act” provides a package of tax cuts and rebates to both new investors and existing businesses that plan to expand their operations on the islands.

It came two months after the governor approved the two-year-in-the-planning free trade zones that will be set up on Saipan, Tinian and Rota to grant incentives in an effort to diversify the local economy beyond tourism and garment manufacturing.

“Hopefully, there are going to be more investments by next year. We are pretty optimistic because transportation is also included in the new incentive program which will bring other carriers to fly to the Northern Marianas,” Mr. Babauta pointed out.

To ensure continuity of economic growth, the House leadership has vowed to review existing policies and laws that may have led to the CNMI losing its luster among investors, he said.

“This leadership will continue to review pertinent policies that adversely affect development in the Commonwealth and hurt our overall investment climate,” the Saipan lawmaker explained, “so that we can get rid of them if they are not helping commerce at all.”

Earlier, House Speaker Benigno R. Fitial underscored significance of PL 12-32, noting plans by two internationally-renowned hotels, a peanut butter manufacturing firm and a high-tech software producer to invest in the CNMI.

Existing businesses like the big hotels have also been awaiting implementation of the program before clearing proposed expansion.

Under the program, incentives include rebate of up to 100 percent of all taxes paid to the government for a period not to exceed 25 years or 50 percent tax abatement for the next 50 years.

But beneficiaries must comply with the conditions to be qualified, such as cap on the tax breaks; donations like improvement of public facilities or training program for local workers; and purchase of products or services from CNMI-licensed vendors.

New investments should have a minimum capital of $100,000, such for Internet-related businesses, or $10 million for a golf course for instance to be qualified, while those expanding must pump fresh funding half of those amount.

Qualified businesses are franchise restaurants, water parks, aquariums, cultural centers, theme parks, resorts hotels and condominiums, golf courses, convention centers, dinner theaters, special events like convention and sports, CNMI-based airlines, hi-tech manufacturing, Internet commerce, and other projects beneficial to the economy.