CNMI 5-year economic development plan readied

A five-year economic development plan for the CNMI is being readied for submission to the new administration of U.S. President-elect Barack Obama.

This five-year plan—2009 to 2014—is seen as the only solution to the economic crises that the CNMI is experiencing, particularly the death of the garment industry and the decline in tourism, according to Commerce Secretary Michael Ada.

Ada is part of the 18-member body called the CNMI Comprehensive Economic Development Strategic Commission that is drafting the recovery plan. It is chaired by hotel association chair and Saipan Tribune publisher Lynn Knight.

The Commission presented its initial draft during a public hearing Friday night at the Susupe Civic Center with over 20 people in attendance, including government officials and private sector.

Joining Knight and Ada in the panel were two officials from consulting firm Management Analysis Inc.: company president Arthur L. Smith and project manager Sergio Loya.

Public hearings had been conducted earlier on Rota and Tinian.

Knight said these presentations aim to gather more inputs, comments and suggestions from the community.

The commission hopes to come out with the final draft by the end of this month because the deadline for submission to the Economic Development Administration for a grant is Feb. 19.

According to the commission, the economic development plan has three main objectives:

* to provide an overview of the current economic challenges;

* to develop a strategic plan that prioritizes economic development projects according to their ability to create jobs and their positive impacts on the economy; and

* to utilize all available resources, both public and private, to help the CNMI remain economically self-sufficient.

In its initial report, the commission discussed global economic condition, particularly Japan and Korea, and its adverse effect on CNMI tourism such as increasing competition from less expensive Asian destinations, and air service shortage. Local tourism is also affected by the rising costs of power, fuel, shipping, imported food, rising minimum wage, uncertainty over federalization and the possible loss of Chinese and Russian visitors.

The opening of world trade has also resulted in the rising cost of doing business, the commission said, preventing the CNMI from competing with China, Bangladesh, Vietnam and Pakistan.

The islands’ garment industry peaked in 1999 with 34 firms, 17,000 employees for an estimated $1 billion in export earnings. The three remaining factories on Saipan are now scheduled to close down this month.

Added to the toxic mix are the rising cost of fuel, drop in outbound cargo (from 140 per week to only five), rise in tariff rates (115 percent in 18 months), and out-migration of the local workforce.

The military buildup in Guam is also seen to foster an out-migration of people from the CNMI work force. However, the commission sees some economic benefits if the U.S. military will only use Tinian for training exercises and from tourism activities of families of soldiers.

The report also discussed internal government challenges.

The problem of the Commonwealth Utilities Corp. continues to deter new investment. Meanwhile, CNMI government services must be duplicated to serve three islands.

The commission said that about 40 percent in government revenues have been lost over the past few years.

Record showed that government budget declined yearly in the past five years—$248 million in 2005, $198 million in 2006, $163 million in 2007, $158 million in 2008 and $154 million in 2009.

Other challenges, the commission said, include a shortage in transportation, poor education facilities and staffing standards, health staffing, labor, power and fuel costs, decreasing rate of new investments, and uncertainty due to federalization.

The commission said it is actively looking for the light at the end of the tunnel to maintain self-sufficiency and fix the economy.

The commission hopes to finish its draft within the next few days for submission to the EDA for the grant. It hired the MAI consulting firm last month for this effort.

MAI is pushing for a public-private partnership as an alternative solution to the economic development for the CNMI.

Commission members were appointed by Gov. Benigno R. Fitial in January 2008 but Ada said they kept a low profile because there was no budget.