Govt told: Pursue free trade zone project

After at least seven years of “failed” implementation of a free trade zone, the business community now hopes that the program would finally take off beginning next year.

Saipan Chamber of Commerce outgoing president Alex Sablan said FTZ is another incentive for investors to come to the CNMI.

“Absolutely, it should be pursued. Look at other expanding economies; they’ve got Free Trade Zones. It’s another incentive for investors,” said Sablan.

Former SCC president and incoming SCC secretary Jay Jones said FTZ is one project that the next administration can prioritize.

“I think it’s a huge opportunity to really push for this. A time has come for this program to finally get off the ground,” said Jones.

Jones is actually a former FTZ board member, whose term expired earlier this year.

Jones was appointed by former Gov. Pedro P. Tenorio, who signed the FTZ law in 2000.

Jones said that while there is a law establishing FTZ in the CNMI, there were problems on funding and board quorum.

“The law was passed but it really has not gone off the ground because for one reason or another, its either there’s no budget or everybody’s term was expiring. There’s not enough people to form a complete board,” he said in an interview.

The board should consist of nine members.

FTZ law, which creates the FTZ board, came about following the recommendation by the Free Trade Zone Taskforce under the Strategic Economic Development Council.

The law designated a land near the Saipan international airport as FTZ but the area has not been formally established for such a purpose.

“There’s a designated land but it’s not established. There’s no business established there at all,” said Sablan.

Sometime in 2003, the Free Trade Zone Authority was reportedly allotted some $150,000 but there is no report of its actual use.

The Free Trade Zone Act aims to attract investment in the area of computer hardware and software production, licensing and distribution of intellectual property, computer programming services, database storage and retrieval, and financial and trade related services.

The free trade concept would allow desirable businesses to establish operations in the CNMI with less government restraints, while benefiting from tax and other financial incentives similar to those offered by the United States mainland and other countries.

The law provides that designated public lands can be leased at reasonable rates and permitting processes will be streamlined for businesses in the free trade zones.

As proposed by the FTZ taskforce, incentives included attractive lease rental on public land, substantial tax incentives such as no import tax, no GRT, no impact tax and up to 100 percent corporate tax rebates depending on the training and investment benefit to the local residents, availability of skilled labor at reasonable rates from neighboring countries, protection of U.S. legal system including copyright and trademark laws, year-round operations without worrying about tariffs and quotas, and regular scheduled service of shipping carriers.

To finally take off, the program requires sufficient funding to finance the hiring of the executive director and the publication of the FTZ regulation.