No one ever said it’s a perfect world

By William H. Stewart
Special to the Saipan Tribune

As one concerned with, and often involved in, the economy of the Northern Marianas over a period of 35 years, I have formed several opinions about the islands’ current economic difficulties. My interest now is one of recording and interpreting the area’s recent economic history from the lethargic days of the Trust Territory’s economic doldrums, through the carefree period of Carpe diem—seize the day, eat the apple—and beyond to the all-too-brief Asian “boom,” through the depressing years of shell-shocked economic decline and “bust.”

Anyone beyond the islands who follows the news is afforded an opportunity to view the CNMI from a distance. Listed below are several impressions, which I believe are made on many people who may otherwise be strangers to the islands. While the following inventory may appear negative, it is the way I believe some might possibly perceive the islands based on what the media projects throughout the globe—at least to those people that might have a measure of interest in area issues.

If a person’s only source of information and thus image of the CNMI are the windows provided by local and foreign media accounts—the impression broadcast and received is not very favorable.

Several issues to contemplate include:

– the Article XII hangover that still haunts some investors;

– a stagnant Free Trade Zone that has been in limbo for 6 or 7 years;

– a reputation of being a very litigious community;

– bashing of the garment industry;

– CUC’s power plant fuel payment problems;

– the appearance of limited cooperation between the Executive and Legislative branches of government, (this is politely stated);

– alleged misuse of funds by certain government agencies;

– crimes against visitors and others;

– occasional preoccupation with short-term, self-serving temporary gain at the expense of long-range permanent benefits to the community;

– lack of zoning;

– degraded lagoon water quality;

– inadequate 24 hour potable water supply, sewage and refuse disposal;

– unreliable and inefficient electric power supply;

– limited economic diversification;

– high consumer prices;

– poor postal service, (at least from the United States).

All, or part of the above, impart the impression of an unfavorable economic environment. Add to the above:

– the refusal of “environmental purists” to accept reasonable “trade-off’s” to reach a compromise with developers;

– lack of direction that otherwise might be provided by an economic plan or at least an articulated direction as to what level of investment is desired and by whom—foreign, domestic or both;

– the frustration of complying with burdensome, expensive, time-consuming regulations and permitting requirements;

– frequent changes in local laws and feeble, ineffective “band-aid” attempts to correct the unanticipated, unintended consequences of those laws and regulations not previously well thought out. Result: a situation where investment will more than likely avoid an area.

Aside from the tax rebate provisions and the qualifying certificate for a tax holiday—there are no other real incentives to encourage additional investment in the islands.

Perhaps I am unaware, but I don’t read where issues such as the above are prevalent in Guam or Hawaii—at least to the extent they appear to be in the NMI. Foreign investment continues to exhibit interest in our neighbor to the south and the 51st State.

Of course, it’s a free country—freedom of the press and free speech—but in my view the above may be the only impression those on the “outside” will ever have of the CNMI and, as has been said, “First impressions are often lasting.”

Information about the Commonwealth is only a fraction of a second away from anywhere in the world—modern technology has changed everything. One can be in the U. S. East Coast and call the islands for 5 to 7 cents a minute; read local news on the Internet or enter chat rooms for current information and opinions from any location in the world.

While it’s difficult to deal in generalities, it is sometimes necessary in order to make a point and my point is that many within the local body politic are either largely indifferent or uninformed of those elements that promote economic growth and stability. How many, for example have ever been in business and had to struggle to meet a payroll. Precious few, I suspect, with the result that many are unaware of the diverse requirements to run a business at a profit yet they pass laws governing businesses.

If it wasn’t for the largess of the American taxpayer I fear that most islanders would be little better off than many on the outer islands of Micronesia. One has to only read the daily news to learn that over the years the government doesn’t have a good track record with respect to its recent investment decisions and its management of revenue. This is not lost on the business community and potential investors.

U.S. government financial largess should be recognized for what it is: a double-edged sword. On the one hand, it is helpful in providing all manner of grants, particularly in the beginning, to assist a fledgling government. On the other hand, when extended over a long period of time (say, more than 25 years) it makes economic cripples of those dependent upon the “hand-out.” Such assistance can become a financial narcotic and sap the desire for economic self-sufficiency. If you don’t believe this, ask yourself: “Why isn’t there a locally-owned commercial fishing industry?” “After injections of more than a billion dollars over a period of a quarter century, why can’t potable water be provided all island areas on a 24-hour basis?”

The illusion of self-government can be feigned for only so long before sophisticated observers catch on and see the charade for what it is. To many observers it must appear to be more of an extended family than a government. In my judgment many of the Japanese investors may have finally realized this and are bailing out; others simply bypass the islands for opportunities elsewhere.

The great pity being that everyone knows it except many of the islands’ lawmakers. It’s unfortunate that the politicos have gotten themselves into the current situation since the islands have so much potential but fall so far short of achieving that potential. It’s so much easier to blame the Asian crisis, SARS, etc., than to accept at least part of the blame themselves.

I do not know of any other government in the world that permitted so many nonresident aliens to invest in such a small economy at the expense of depriving its own citizens the opportunity to enter businesses that should have been reserved for their (local) implementation.

As I think about the islands, I have in mind a fictional person who lives on the back side of Saipan on a little plot of land he refers to as a ranch. His house is a small structure with a tin roof, he has a pickup, a few chickens, pigs, a goat, and grows a few vegetables. He’s happy and really doesn’t need anything and is quite satisfied with his lifestyle. Like so many local people in the islands, he is not—and has never been—a direct participant in the island’s economy.

Result: He could care less whether the garment industry and the tourism sector rises or falls—it makes little difference to him.

That in my mind is the basic problem—too many local people were left out of the private sector for too long. Even to the extent of permitting non-U.S. citizens and others to take over the “mom-and-pop” neighborhood stores, gift shops and other small “entry-type” businesses. In my judgment, this should have never been allowed and such businesses should have been reserved for the time when a local person stepped forward to implement the activity.

The other epiphany that occurred to me concerns cultural and economic exposure. Too many local people have been confined to the islands without the benefit of travel to other tourist destinations. Result: They have nothing to compare Saipan with another successful tourist destinations such as Bermuda, Bahamas, the Greek Island, etc. They simply don’t know and have no vision as to what an island tourist destination could be.

In any case, no one ever said it’s a perfect world. If some of the constraints to additional investment are to be overcome, or mitigated, at least the starting point should be that they be recognized.

There can be no doubt that these beautiful islands have great potential—it’s only a matter of taking care of their economic and environmental structure and casting petty politics aside for the good of the community.

(William H. Stewart is an economist, historian, and military cartographer.)