Yumul resolution ‘reckless’ and ‘irresponsible’

Gov. Benigno R. Fitial has called “reckless” and “irresponsible” a lawmaker’s resolution urging against additional tax breaks for the investor behind the multimillion-dollar construction project at the LaoLao Bay Golf Resort.

Fitial in a press statement yesterday said the resolution is “an attempt to sabotage the CNMI’s economic recovery efforts during a time of global financial crisis.”

The statement reads, “This irresponsible resolution proposes to deny critical qualifying certificate investment incentives to the CNMI’s largest anchor investor, the Kumho-Asiana Group, at a very critical time for our economy. And I am gravely disappointed that such a reckless resolution could even be offered at this critical time.”

The resolution, introduced by Rep. Ray N. Yumul, urges the Commonwealth Development Authority to deny a request to add benefits under the qualifying certificate program to Saipan LauLau Development, a subsidiary of the South Korean conglomerate Kumho Asiana.

Pointing to the global economic crisis, Fitial said that now is not the time to be withholding critical investment incentives. “The Korean won has weakened against the dollar and the South Korean stock market and banking and financial system have not been spared from the global financial meltdown and credit crisis,” he said.

He also noted that the Kumho Asiana Group has been investing in the CNMI since 1992 and has added flights and capital to the Northern Marianas, despite suffering major losses over the years.

“This is not how we should express gratitude to a committed investor,” said Fitial.

Over the past year, Asiana Airlines has significantly expanded flight service to the CNMI, launching flights from Russia, China, Japan, and other cities in South Korea, such as Incheon and Pusan. The Kumho-Asiana Group is currently embarking on a major golf resort development at the Saipan Laulau golf site it acquired from the United Micronesian Development Association.

Fitial also took exception to language in Yumul’s resolution urging the governor to keep his hands off of negotiations between CDA and Saipan LauLau Development.

“I was elected to help bring investments into the Commonwealth and this is a job I take very seriously,” said Fitial. “I believe it is my job to bring in investments, but I also strongly believe it is not the job of any elected representative to chase away the investments I have worked so hard to bring in for the people of our islands.”

Earlier this year, CDA and Fitial approved a plan to provide up to $18 million in tax relief for the $68.8 million golf hotel, or “golftel,” a complex with condominium-style apartments for golf tourists. The tax relief ceiling is significantly less than the $27.7 million the resort had requested.

Saipan LauLau Development and the governor are now asking CDA to amend the qualifying certificate to increase the incentive cap. In response, CDA has taken steps to amend its regulations and allow for reconsideration of an approved qualifying certificate.

“We’re basically bending over backwards to accommodate [Saipan Laulau Development],” Yumul has said in an interview. “As chairman of the House Committee on Ways and Means, I am concerned because all of these tax breaks affect government revenue.”

In his resolution, Yumul also argues that the government has more than shown its support for the investor. He notes that the Legislature has granted the resort a new 40-year lease agreement for 161 hectares of land at a rental rate of $103,000 a year, a substantial decrease from the original rental amount of $384,000. He adds that the investor has been given relief from all applicable taxes, except for alcoholic beverage tax.

“[T]he current benefits such as the low rental rate … and the benefits of the current qualifying certificate granted to Saipan LauLau Development Inc., are sufficient as an investment incentive,” the resolution states.