Asian economic slowdown may hamper efforts to lure investors

Current economic conditions in major Asian countries may hamper efforts by the administration of Gov. Pedro P. Tenorio to lure more foreign investors into the proposed Northern Marianas Free Trade Zone.

While Mr. Tenorio said a group of investors from Taipei has expressed interest in putting up investments here, he admitted that majority of businessmen were a little reluctant in branching out of Taiwan due to the regional economic slowdown.

But the governor said there will be no letting up in efforts to promote the Free Trade Zone as an ideal place to do business, adding that the government will continue to look at other available means to attract more foreign investments into the CNMI.

Mr. Tenorio recently left for a trade mission in Taiwan where he met with business and aviation leaders. The governor went home victorious as his delegation managed to convince Mandarin Airlines executives to continue flying the Saipan-Taipei route.

However, economic conditions in Taiwan and major countries in Asia obstructed CNMI efforts to attract investors to pour in fresh capital into the Northern Marianas by establishing businesses in the Free Trade Zone.

Despite this, the CNMI chief executive officer is confident they are able to make a good presentation before a group of Taiwanese businessmen who expressed intentions to look at the viability of setting up businesses here.

“There are some groups that said they will look into the business prospects in the CNMI and we are optimistic we have a good set of perks and incentives to offer them,” he told reporters in an interview yesterday.

The governor previously vetoed the FTZ bill due to changes made by the 11th Legislature to the original draft, including a provision which places control of large tracts of land under the Tinian and Rota mayors.

The CNMI government started coining the idea of establishing free trade zones in the islands when the local tourism industry suffered strong blows from the Asian financial crisis in middle of 1997.

A study prepared for the 11th Legislature suggested that the Commonwealth come up with an overall incentive package, including tax holidays, that may be given to businesses that would relocated to the proposed trade zone.

The government should be willing to sacrifice some short-term revenue in the interest of long-term growth, given the strong competition to attract investment.

Tax holidays would allow an FTZ to offer significant financial incentives to investors.

Also, establishment of a Free Trade Zone Development Corporation would help facilitate business relocation to the FTZ which may be ideally erected in a tract of land lying adjacent to the southern side of the Saipan International Airport.

The entity may also be tasked with setting appropriate strategies and goals for the trade zones, like what types of investments to solicit and what the goals for growth are.