‘QC program made only $2M in fresh investments’

Saipan Chamber of Commerce outgoing president Alex Sablan said the government’s qualifying certificate program has only generated some $2 million in fresh investments since its inception, an indication that the tax incentive package is not attractive enough to investors.

“Other than retroactive applications and a couple of other existing businesses, the only generated amount is $2 million in new opportunities. That’s SandCastle; it’s only $2 million in direct new investments,” said Sablan in an interview.

“That’s because we have not packaged it well enough,” he added.

Sablan called on the government to come up with a better tax incentive package for new investors.

The QC program, first enacted in December 2000, was set up to provide various tax incentives for investors to build, expand, and operate commercial projects in the CNMI.

The law, enacted during the 12th Legislature, has undergone two amendments “to address the needs of existing businesses in the CNMI.”

The Commonwealth Development Authority, which administers the program, has said that the original law sought to entice new investments, but it was amended to help existing businesses keep up with new competitors.

It was later amended to offer tax break incentives for businesses that have weathered the economic crisis since 1999.

The amendments also lowered the minimum investment amount for hotel or condominium expansion, removed the discretionary authority for the governor to establish terms and conditions in approving a QC, and allowed rebates of taxes of up to 100 percent for 25 years.

Originally, the CNMI QC program called for a three-year incentive deadline rather than 25 years.

The program in general aims to strengthen the existing tourism and garment industries and, at the same time, develop new industries by targeting franchise restaurants, waterparks, cultural centers, aquariums, theme parks, convention centers, dinner theater, special events, golf courses, resort hotels and condominiums, manufacturers or processors of high technology products, Internet-related businesses engaged in Internet commerce and Commonwealth-based airlines and other aviation-related activities.

The first company to qualify for the program was SandCastle-Saipan in 2002.

CDA economic development analyst Carline Sablan said yesterday that qualifying certificates had been issued to Hard Café, Rota Resort, Tinian Dynasty Hotel and Casino, which all qualified under the “rollback provision” of the law.

Tax incentives under the QC program were also granted to Tony Roma’s and Capricciosa, which relocated business operations from La Fiesta to Garapan about a year ago.

Recently, the CDA also recommended a 10-year tax relief for Saipan World Resort Hotel. This is currently pending at the Governor’s Office for final approval.

Sablan said CDA would soon issue a recommendation on the QC application of We Manage Calls, which intends to set up a call center in the CNMI.

Meantime, Sablan said that a new company that wanted to put up a bottled water business on Rota eventually reconsidered its plans. The company was granted a qualifying certificate for its proposed $1.6 million operations.