CNMI QC program has 8 inactive recipients

CDA economic development analyst Carline B. Sablan said Friday that several factors led to the two companies’ decision to give up their QCs.

The government’s QC program was set up to provide various tax incentives for investors to build, expand, and operate commercial projects in the CNMI. It was subsequently amended to relax the criteria for the issuance of QC by lowering the minimum investment amount for hotel or condominium expansion, removing the discretionary authority for the governor to establish terms and conditions in approving a QC, and allowing rebates of taxes of up to 100 percent for 25 years.

Records obtained from CDA show that a total of 15 qualifying certificates were issued since the program’s inception in 2000.

The first company to qualify for the program was SandCastle-Saipan when it was issued the tax break certificate in 2002. Several other companies then applied and were granted tax incentives.

Sablan confirmed Friday that eight out of the 15 issued certificates were “inactive” to date. Companies’ QC certificates are classified as inactive if they back out from infusing the promised investments, do not agree to the conditions and requirements, or surrender the certificate.

Companies that belong to this category include Tinian Dynasty Hotel & Casino, Spring Water Inc., Hyatt Regency Saipan, Rota Resort & Country Club, Dai-ichi Hotel, and Saipan World Resort.

In November last year, two companies gave up their certificates: We Manage Calls Inc., which certificate was issued in 2005 for a proposed call center business, but its plans did not push through.

It cited the uncertainties of federalization, the minimum wage hike, and economic status of the island. Sablan said We Manage Calls Inc. formally surrendered its QC on Nov. 15, 2011.

PTI Services Inc., which was issued a certificate in 2009, also surrendered its certificate on the same period last year, according to Sablan.

Meantime, the seven companies that are still enjoying their tax breaks include SandCastle Saipan, Hard Rock Café, Tony Roma’s & Capricciosa, World Resort Saipan, Bridge Capital LLC, Saipan Laulau Development Inc., and Sandy Beach Homes LLC.

Investors’ concerns

According to Sablan, potential investors are looking at several factors prior to making the final move to put in their hard dollars in the CNMI.

The tax break environment, she added, is only among these factors. Other important areas of concern are the economic climate on island, level of competition, possible sources of skilled labor, wage issues, among others.

Sablan described the tax break as only “icing in the cake” for any potential investor.

“QC is not the cure for all economic woes. We have to understand that the CNMI is competing with Guam and other areas and sometimes tax break is just an icing on the cake. But if you have issues like shortage of skilled labor, infrastructure issues, rising cost of utilities.it’s not easy to make a decision to come here,” added Sablan.

By Moneth Deposa
Reporter