Retail sales on the upswing but businesses remain wary

Even wholesalers of general consumer items, such as Micronesian Brokers Inc., reported improved sales these holidays when compared with the situation last year.

“We’re quite amazed actually. We thought that the economy will not pick up sooner,” said MBI general manager Kitz Barja. “This year, we’ve seen a surge in sales in all our lines, be it food, beauty and cleaning products.”

Barja said the improvement in the tourism industry had a domino effect on consumer spending. “Consumers had the confidence back now that the economy is moving forward.”

Barja said consumers did not mind the slight price increases on MBI’s products, which range from 5 to 15 cents per product.

He also said that, while consumer spending normally increases during December holidays, this year’s sales figures for MBI are about 21 percent higher when compared with 1999 and 2000 levels, before global events impacted economies worldwide.

‘THE SHOW MUST GO ON’

Even with garment industry players predicting an uncertain future after quota restrictions on apparel are lifted by 2005, Neo Fashion Inc. is not letting that get in the way of the Christmas spirit. The garment manufacturing company, which has about 500 employees, said it is planning to hold parties for its workforce this month.

Neo Fashion president D. E. Chung said his employees conduct parties by department. He also said the company would be reviewing its records so it could possibly give bonuses to its workers.

However, he said bonuses might be given to employees during the Chinese New Year, as most of Neo Fashion’s workers are Chinese. Chung said the company spends about $15,000 to $20,000 for workers’ bonuses.

The Saipan Garment Manufacturers Association had a modest Christmas party at the AJ’s Restaurant last Friday.

SGMA executive director Richard Pierce said the association also went ahead with its annual Christmas tradition of donating money to Karidat, a non-profit civic group. However, he said SGMA reduced the donation to $2,000, $500 less than what the association gave out last Christmas season.

Saipan Shipping Company executive Alex Sablan also said the company spent less this Christmas than last year.

IMPROVING SPENDING POWER

Sablan, who is president of the Saipan Chamber of Commerce, said the government can do much to help increase consumers’ savings and spending capability.

Noting that the rising cost of fuel would continue, Sablan said the government should have its own fuel farm that will support a privatized power plant. Revenue shortfall had prompted the Commonwealth Utilities Corp. to plan implementing a fuel surcharge that would increase the cost of electricity on the islands. That plan is on hold at the moment due to legal technicalities.

Sablan said the government should privatize the assets and operations of CUC’s power plant to solve the problem. Under his proposal, the government will buy back power from the private power firm, which could run operations more efficiently.

Sablan said a fuel farm would allow the government to source out fuel products in the world market to save on costs. The government would then supply fuel to the power plant, which would pass on the savings to consumers through reasonable power rates.

The proposal, however, is one that will address the problem on a long-term basis. In the meantime, he said the government should cut leaks in its revenue stream through improved tax collection, among other things. The CUC blamed the government for its frail financial health, claiming that the latter failed to pay millions of dollars in utility bills.

To be continued