Weak business confidence grips NMI • Foreign investments come in trickles since 1997

Aside from a string of inquiries and a group of Korean businessmen wishing to pour in $25-million for shooting range facilities on the islands, foreign investors have shown little interest in putting up significant amount of money into the Commonwealth since 1997.

A little over 10 foreign businesses have so far agreed to pump in combined investments of less than $10 million between February 1997 and middle of last year, according to the Foreign Investment Office of the commerce department.

While primarily caused by internal and external economic slowdown, officials said this could be attributed to the weakening business confidence in the Northern Marianas due to the persistent existence of protectionist and restrictive investment policies.

Although proposals have been made to eliminate a chain of business regulations that are seen detrimental to efforts aimed at enticing the entry of foreign investors into the CNMI, nothing have, so far, been made concrete.

Newly-installed Saipan Chamber of Commerce president Anthony Pellegrino said the case of Korean investors who have pledged to pump in millions of dollars into the local economy through the establishment of shooting resorts here is a concrete example.

“We need to know what we really want and what we don’t want. We are not saying which is good and which is bad but we should at least have a list of the things we want prioritized,” Mr. Pellegrino said in an interview after the Chamber meeting yesterday.

He explained that investors would not come out and broadcast their plans until the completion of feasibility studies which determine the profitability of a business in a particular area.

The Korean investors saw good potentials in the CNMI to be a place for professional shooting competition and the Commonwealth apparently put these potentials to death when the proposal was rejected.

Business analysts said weaker confidence in the CNMI economy’s ability to turnaround due to the absence of investment-friendly environment will continue to take its toll unless concrete steps are undertaken by both the government and the private sector.

They said the trickling number of foreign investments in more than three years should have told the CNMI government — loud and clear — that there is something wrong with its business regulations and policies.

A report from the Department of Commerce disclosed that between February 1997 and March 2000, Northern Marianas witnessed the entry of only 10 new foreign companies engaged in real estate, construction, computer consulting, wholesale, retail, furniture production and garment embroidery.

Of all 10 companies, Transasian Corporation which is into condominium and apartment complex construction invested the largest amount at $2 million, while real estate developed Tejima International, Inc. infused $250,000 into the business community.

All the other eight companies pumped $150,000 each, the minimum initial capital required from foreign investors, into the Commonwealth economy.

These companies are: Trade Micronesia, heavy equipment rental and wholesale; Gintian Corporation, wholesale and retail; Framson Group, Inc., computer consulting; Lion Spur Corporation, retail; Coral Ocean Design, Inc., interior design and furniture production; Guangdong Development Co., Inc., construction material wholesale and retail; Seoung Kyung Embroidery, Inc., garment embroidery; and Dear Island Saipan, Inc., retail.

Although these companies pledged to infuse a total of $3.5 million worth of investments into the CNMI, some of them have held off concrete actions pending signs of economic recovery in the CNMI.

According to Mr. Pellegrino, a concerted effort between all business groups and various government agencies is needed in order to help the CNMI economy rebound.

While the newly-installed chamber president remains optimistic of the Commonwealth’s ability to rise from the slump, he said there is yet any concrete sign of economic recovery. “Some signs that are coming are good and some are bad.”

Also, Business analysts blame the economic downturn in Asia and CNMI’s restrictive local investment policy requiring investors to put up a $100,000 security deposit to the dramatic decline in the number of foreign investors coming into the islands.

Officials believe that the implementation of Public Law 10-44 or the Foreign Investment Act in 1997 paralyzed the entry of new investments into the Commonwealth, complicating economic impediments brought about by slowdown n the tourism industry.

At present, legislators are taking concrete steps to institutionalize business-friendly policies like allowing foreign investors to merely secure a Letter of Credit in place of the $100,000 cash security deposit.

Due to its restrictive investment laws, Northern Marianas has been losing potential foreign businessmen to the neighboring island of Guam where investors can get a greencard and American citizenship in five years for a minimum of $250,000 in total investments.