Businesses predict a tough year ahead

Although they remain optimistic, local executives admit that year 2006 will be a tough year for the economy, owing mainly to the departure of Japan Airlines and the continued downsizing within the garment industry.

“We are optimistic but it’s going to be tough this year for the people that are here, the businesses that are here,” said incoming Saipan Chamber of Commerce president Charles V. Cepeda said in an interview yesterday.

He said that, while the tourism industry would see some progress due to anticipated aggressive marketing, “it would be hard to match the number before JAL pulled out.”

JAL, which stopped operating in the CNMI in October 2005 after 28 years, used to bring in some 150,000 passengers a year.

Cepeda said, though, that he sees more traffic coming from other East Asian countries like South Korea and China.

“I see the Korean and Chinese markets to be very strong,” he said.

He said both South Korean and Chinese economies are doing good, which he said, would also translate to good tourism for the CNMI.

He cited that there would be increased flight seats to and from South Korea this year.

China, meantime, has been open to the CNMI following the granting of Approved Destination Status to the Commonwealth last year.

More direct flights are expected to take place between Saipan and China this year, especially during Chinese holidays.

SCC outgoing president Alex Sablan, for his part, said that the business community is in a “wait-and-see” mode.

He agreed that this year is another difficult year.

“I think it’s going to be a tough year. But with the new administration, we’d see new investments pretty quick. It’s looking positive but it’s going to be hard for everybody,” said Sablan.

Joeten Enterprises vice president Clarence Tenorio Jr., meantime, said that based on the current trend, the local economy would continue to experience a major setback due to JAL.

“You have to be positive but you have to be realistic as well. Unless there is a new carrier or unless JAL comes back, we can only say that the tourism industry would continue to sag. With the recent garment closures, you’re talking here of thousands of affected employees who, by the way, need to eat and shop,” he said.

“I want to be optimistic but the current trend [is not very encouraging]. I have high hopes, though, for this coming administration,” said Tenorio.

Joeten Enterprises owns the Joeten chain of retail stores on Saipan.

In a statement last week, Gov.-elect Benigno R. Fitial and Lt. Gov.-Elect Timothy P. Villagomez themselves predicted a difficult start.

The team, who will take over the leadership effective Monday next week, said that initial estimates show that the CNMI government’s deficit would be in excess of $100 million or even close to $200 million.

Fitial and Villagomez described the local economy as “fragile and precarious.”

Still, they said that the financial problems “are not hopeless and insurmountable.” They said the economy would recover with the entry of new investments.