A suggested compromise to help resolve our economic predicament

If the Northern Mariana Islands were rich in terms of natural resources, like oil-rich Saudi Arabia, we don’t have to worry about the economy and we don’t need investors. Indeed, we will be the ones investing in other places. But we are not Saudi Arabia, and we don’t have any natural resource to rely on except the revenue that we generate from the visitor industry and the leases of lands to businesses and outside investors, mostly foreign investors.

The major problem we are now encountering is that investors are no longer coming here to invest. Why? We really do not know exactly what the reason is; but we could ask ourselves several questions to figure out the likely reasons. Is the problem the way we enact and amend our laws frequently? Is the problem the fact that our land laws are very restrictive for investors? Is the problem the fact that our government puts up so much hurdle for investors to overcome? Is the problem the mixed signals that we give investors by saying one thing and doing just the opposite? Is the problem “the perception” by potential investors that the business climate in the CNMI is not investor-friendly?

If the answer to all of those questions is “yes,” then the CNMI has a lot of work to do to change our image with investors. One way of doing this is to do something concrete immediately to show investors that we will in fact hereafter do things differently. For example, we might want to begin anew the CNMI economic development process by making the existing restriction on land alienation more investor friendly. The CNMI should consider amending Article 12 of the NMI Constitution so as to allow non-NMD U.S. citizens to own land in the CNMI and non-U.S. citizen investors to own or lease out privately-owned lands for, say, 99-years. Investors could be defined as qualifying for land ownership if they are investing a certain amount of money in the CNMI, say, at least $1 million. For real estate developments, for example, such as housing development for the so-called “silver market,” the housing developer should be allowed to own the land in fee simple. The same arrangement could be given to investors who are building hotels, shopping malls, golf courses, and other major real estate developments.

There is no question that we need to review our land alienation laws and liberalize it because our economy is not moving at all and the only thing of value that we could offer to investors is land. There is no question that the CNMI land alienation restriction is the major critical problem that is affecting the CNMI economy and its growth and development. This fundamental economic issue, therefore, has to be re-assessed by the people of the CNMI and its leaders.

In addressing the critical issue of land ownership, we should also address the concerns raised by the pro-Article 12 group: namely, landowners would be tempted to sell all their land and eventually become landless. The issue of landlessness is clearly a valid public policy concern. But the possibility of an indigenous landowner becoming landless could still occur under Article 12 as it now exists; landowners could always sell all their land to buyers of NMI descent, without any restriction. The Article 12 restriction is only against buyers who are not of NMI descent.

If the concern of those in favor retaining Article 12 is to make sure that persons of NMI descent do not become landless, Article 12 does not address such concern entirely. Under Article 12 now, an NMI descent buyer could buy all the land of an NMI descent seller, and the landowner would still end up being landless. The problem of potential landlessness for persons of NMI descent has to be addressed separately. It may be that there is really no legal solution to this problem, because the matter of selling your land is a strictly personal matter that ultimately rests with the landowner himself.

Having said all of the foregoing, the CNMI is still faced with getting out of its present economic predicament, one that affects all of the people of the Commonwealth, both those of NMI descent and those who are not. Unless we fix our economic problem, many of our people may end up leaving the Commonwealth and the very land they do not wish to part with. Obviously, no one wants this to happen.

Making critical public policy decisions under difficult and trying circumstances takes a lot of guts. We all know that. The decision-maker fears that the decision he makes might end up being wrong. Fear, in difficult and trying situations, is either a powerful deterrent or highly motivating factor. For example, the fear that the CNMI economy might go “belly-up” is causing panic and uncertainty within the business sector, as well as the CNMI government and the general population. The cry to “abandon ship” has not yet come up, but if the CNMI government could no longer provide essential public services such as public education, public safety, and public health, then the CNMI would be in one big mess. And as we are all too painfully aware, we appear to be headed in that direction. We, therefore, have to take bold and decisive action immediately to improve our economy.

The time for action is now. We need to explore all the avenues that we should take to try and turn our economy around. Right now there are three things that we could and must consider doing. First, the CNMI government needs to arrange for more air carriers to service the Japan-to-CNMI route. This is a must if the tourist industry, which is now our only industry, is to survive. A key reason for the decline in visitors to the CNMI has been identified previously; and it is the lack of adequate air service, primarily from Japan. This is the major problem of the CNMI visitor industry. How we go about attracting other air carriers is for the CNMI government and the business community to immediately figure out. But adequate air service to and from the CNMI is a must for the CNMI visitor industry.

Second, the CNMI government must immediately take action to amend and liberalize Article 12 so that we could attract new businesses and foreign investors to invest in the CNMI. This would involve an amendment to or the repeal of Article 12: to provide for either a fee simple ownership interest or a 99-year leasehold interest that investors and businesses who are not of NMI descent could acquire.

Third, the CNMI government’s indifferent attitude toward businesses and investors has to change. The new attitude must be friendly, helpful and accommodating. Every now and then government leaders make it quite obvious that it goes out of its way to accommodate only some investors, but not others. This is not good, of course, and should stop. Every legitimate investor should be treated fairly and decently. The CNMI investment climate has to be friendly, helpful and accommodating. Investors should never be made to feel that they are not wanted in the CNMI.

If we immediately implement these three suggestions for starters, I firmly believe that the economy of the CNMI would begin to turn around. The two sides on the Article 12 issue would have to stop fighting each other. There is too much at stake for the Commonwealth right now; and we simply cannot afford to continue being divisive and antagonistic towards each other.

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