Kumho Asiana holds tight against declining economy

It was touted as the deal of the year in 2007, and while Kumho Asiana has followed through with all their promises, it has been a struggle as the South Korea-based company deals with a declining economy both here and there.

In 2007, Kumho acquired the sprawling LaoLao Bay Golf Resort property in Kagman with plans to build a $60-million resort. With that investment, the company would add additional flights to Saipan to back up the investment.

“The CNMI is truly blessed that Kumho Asiana is committed to expanding its investment here. This is the type of investment we need to revive our economy, the type that will help bring more investments,” Gov. Benigno Fitial said in 2007.

But the Korean won took a huge hit this year, making investments more expensive and slowing travel for Korean citizens.

The $60 million Gold Resort’s completion date was pushed back from mid-2009 to the end of 2009.

Yun Kim, president of the company, said raising funds for the investment has been difficult.

“As you know, the big issue is fundraising,” he said in November.

But despite the hardships, the company unveiled the resort’s renovated clubhouse in December, the first step to completing the resort.

“If this golf resort succeeds, as I fully expect it will, the CNMI will also experience success and benefit from the success of this multi-million dollar venture. The project’s success, however, is a long-term undertaking, one that will be fully realized beyond the immediate financial volatility in today’s world markets,” Fitial said during remarks at the clubhouse’s opening.

Some lawmakers thought the CNMI was giving Kumho too many breaks with the $18 million in tax incentives the company will receive under the qualifying certificate program.

The House of Representatives in November adopted a resolution asking the Commonwealth Development Authority to deny a request for more benefits.

A resolution that Fitial said was, “an attempt to sabotage the CNMI’s economic recovery efforts during a time of global financial crisis.”

As part of Kumho Asiana’s investment in the CNMI, the company substantially increased the flights to and from Korea. There are a total of 18 flights to and from Korean now, although like with Laolao, Asiana has seen the won impact the market.

Through October of this year, Asiana lost $5 million on the Saipan-Korea flight, said Kwang Joong Kim, general manager for Asiana Airlines’ Saipan sales office.

In November, the load factor was approximately 55 percent, compared to nearly 85 percent during the same period last year. Asiana had anticipated an 80-percent load factor for the flights, allowing for as many as 43,000 additional visitors each year to the CNMI.

The CNMI saw Korean tourism numbers fall from 11,227 in January of this year to 8,909 in November. Also, hurting the CNMI was the fact that the Korean government issued a communiqué requesting its citizens not to travel out of the country in order to reduce cash outflow and to help stabilize the won against foreign currencies.

However, Asiana has kept its word and has added flights to and from Osaka, Japan, which brings the number of Asiana flights to 21.

The first of the thrice-weekly service arrived in December and had a total of 170 passengers on the 177-seat plane.

“This is another Asiana service coming to the CNMI. Because of our Laolao Bay investment we inaugurated this flight. We hope we will bring a lot more Japanese tourists from Osaka. I’m very happy to have almost 95 percent load factor in the inaugural flight. We hope we do good,” Kwang Joong Kim said.