In the event of a total shutdown of the garment industry, thousands of displaced alien workers would get stuck on island as neither the government nor the private bonding companies could easily repatriate them due to a lack of funds, according to Interior deputy assistant secretary for insular affairs David B. Cohen during a recent U.S. Senate hearing.
“It will be quite a challenge. If they [garment workers] are to exit in the next few months and the 19 remaining factories close shops, it's really a challenge. I don't think that funds are sufficient. The bonding companies will not do the job because a lot of these companies are insolvent,” said Cohen when asked by Sen. Jeff Bingaman if the CNMI would be able to handle the repatriation.
Bingaman is chairman of the Senate Committee on Energy and Natural Resources, which held an oversight hearing on CNMI immigration Thursday morning in Washington D.C.
Cohen's statement echoes assertions earlier made by local government officials.
About two years ago, Washington Rep. Pete A. Tenorio warned that existing bonding companies would not be able to pay off all their financial obligations in case of a mass departure of factory owners.
“I have serious doubts that these companies will have the capability to deal with these massive outlays of financial resources to take care of repatriation costs, let alone the guaranteed salaries for these workers,” Tenorio had said.
Over a year ago, then Commerce secretary and Insurance commissioner Andrew Salas had described the bonding system in the CNMI as “a joke.” He said that bonding companies would go bankrupt if they are asked to fulfill their bonding obligations at once.
Under the rules, bonding companies are required to shoulder any unpaid salary or repatriation costs for nonresident workers if their employers fail in their obligations.
But the insurance business in the CNMI requires very minimal investments. A company can start an insurance program with $25,000 investment and, with $100,000, it can offer all lines of insurance, including labor bonds.
There are about 30,000 nonresident workers in the CNMI. The garment industry used to employ over 15,000 workers.
Due to significant downsizing of operations as a result of the worldwide lifting of trade quotas since 2005, the industry's personnel is estimated to have been cut by about 50 percent to date.
As of 2005, there were 11 surety companies: Century Insurance Co., Equitable Insurance Co., Global Insurance Inc., Island Insurance Surety Corp., Marianas Insurance Co., Oceania Insurance Corp., Pacific Indemnity Insurance Co., Premier Insurance Co., Royal Crown Corp., Telebond Insurance Corp., and Traders Insurance Underwriters Inc.
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