Over 2,500 businesses did not renew permit in 1999

More than 2,500 establishments in the Northern Marianas did not renew their business licenses last year, apparently indicating another round of fierce upheavals in the Commonwealth’s heavily-knocked economy.

A report obtained from the Business License Section of the finance department noted that out of 3,410 businesses in 1998, only 812 renewed their licenses by end-December 1999, down by over 76 percent.

The decline in the total number of businesses in the islands may result to higher consumer prices since the collapse of too many establishments would virtually lessen the competition for customers among the trickling number of existing shops.

Business analysts said consumers are eventually faced with costly products since there will be lesser competition in the market, and lesser competition means higher prices.

According to the Central Statistics Division of the commerce department, business activities in the islands likewise fell by over 76 percent in 1998 to 885 from a total of 3,801 licensed businesses in 1997.

The scenario may lead to monopoly especially when the number of establishments involved in a particular field of business is trimmed down further and may give death to the open market environment.

This could make bigger companies out of “already big ones” that can dictate prices on the market, leaving the consumers at the losing end since there will be no other place to go to compare prices with.

Bigger companies are more likely to survive the competition which are also more presumably to dictate prices. But as it is to a wheel, doing business is a cycle. A monopolistic approach in conducting business in a free market as the Commonwealth is not going to be a long-term problem.

When prices start skyrocketing, new investors will come in to compete and offer similar products at practically lower prices.

True enough, government figures relating to new business licenses issued in 1999 are more encouraging. The statistics office disclosed that 2,775 new business permits were issued by the Business License Section last year, exceeding the number of establishments that did not renew licenses.

Overall, the government’s business licensing office processed and approved 3,587 business permits last year which represented a trivial growth of 0.05 percent from the year-ago’s 3,410.

Before the Asian currency crisis fanned into the Northern Marianas, CNMI was enjoying a steady growth in business and economic activities with close to 6,000 existing establishments four years ago.

The figure dropped by 32 percent to 3,800 business in 1997. It soaked deeper to 3,410 the following year only to show good signs of stability with last year’s tally reaching 3,587.

However, investment officials said last year’s growth remains inconclusive considering the declining trend recorded since 1997, the year when business activities started taking turtle-pace movement due to economic contraction in Japan and other Asian countries.

From January-September 1999, the business license section issued close to 3,000 business permits with the first quarter accounting for almost half of the total licenses approved at 1,511.

In 1998, the Northern Marianas witnessed a mass dislocation of businesses with more than 1,700 establishments confirmed to have closed shop since January of that year primarily due to the dramatic decline in the tourism sector.

Existing establishments plunged by 47 percent or a difference of 1,754 that year while new investments pale in comparison with the previous year’s figure from 922 to 877 in 1998.

The Department of Commerce reported that overall investments dropped by 39 percent to 2,854 two years ago, posting a deficit of at least 1,799 compared with the previous year’s tally.

In 1997, the commerce department recorded a total of 4,653 businesses in the CNMI. Of this, 922 were new investments while 3,731 establishments renewed their business licenses.

The records were based only on the official number of business licenses issued by the Department of Commerce. This does not include underground establishments which operate without proper documents.