Investments come in trickles • Other economic indicators show tell-tale signs of hard times

The Foreign Investment Office of the Department of Commerce only issued three new business permits for 1998, a strong indication on how Asia’s financial crisis has battered the island’s economy.

Of the total 596 business licenses issued last year, 130 were one-time 90-day permits, 220 were renewals of one-year permits (a category which no longer exists), and 249 were two-year permits. Some 246 of the two-year permits were renewals.

Despite the low turnout of new investments, bank deposits ballooned from $481 million in 1997 to $523 million in 1998. According to a report submitted by the department to the Office of the Governor, the significant increase in bank deposits indicate a high level of uncertainty prompting individuals and businesses to seriously curtail spending in favor of increasing savings.

Similarly, loan activity showed considerable increase from $280 million in 1997 to $305 million in 1998.

Businessmen in the CNMI have been highly critical of the $100,000 security deposit which investors must comply with under the Foreign Investment Law.

A proposed amendment passed by the House of Representatives to the Foreign Investment Act will ease the requirement on the $100,000 security deposit by allowing businessmen to pay either in cash, bonds or mortgage their capital equipment.

Business have also opposed the imposition of a three-year residency limit on non-resident workers since the island does not have enough qualified workforce.

So far, the CNMI government is pinning its hopes on the planned Free Trade Zone to lure investors to come to the CNMI as it prepared a package of incentives, which will include unrestricted repatriation of profits, low business tax, use of Made in USA labels on finished products, quota-free treatment of qualified goods exported to the mainland as provided in Headnote 3(a), unhampered entry of capital goods and tax benefits for employees.

Government leaders believe that the CNMI will still be an attractive investment site because of its proximity to Asia, availability of modern banking and financial services, low crime rate, reliable shipping schedule, direct dial communications network and U.S. standard mailing system make the islands a conducive place for investments.

As part of its effort to improve the business climate in the Northern Marianas, the commerce department said it is currently working with the Legislature on the proposed banking reform bill which, would be the first major revision since the passage of the Commonwealth Banking Code in 1984.

In the insurance sector, the year 1998 saw major changes in the promulgation of new rules and regulations, including a 300 percent increase on the security required of insurance companies writing labor bonds and increasing workers compensation reserve requirements.

In fact, one insurance company was closed down by the department in 1998 for substantially impaired capital.

In addition, the department provided comments on the proposed bill to regulate finance companies for the first time in the CNMI. Furthermore, the department issued licenses to 196 taxi businesses, 255 taxi operators and 300 taxi vehicles.

The Alcohol Beverage Control Office has issued license to 800 entities to sell alcohol on Saipan, Tinian and Rota. As part of its education campaign, the office has helped in the federally-sponsored program Drugged and Drunk Drivers and the Safe and Sober Foundation.

The Department of Public Safety and personnel of ABC visited all 15 public and private grade schools and high schools in 1998 as part of its awareness campaign program to the youth.