Widespread investor dis-confidence

The Saipan Tribune’s Wednesday, January 6, front-page headline ominously read, “Gloom hangs over the CNMI.” In that news article, Tasi Tours President Koki Narita was quoted as saying, “I am afraid I’m not too optimistic that we will see some recovery this year. We have not reached bottom yet.” Japan’s impending job layoffs, Mr. Narita lamented, should only exacerbate our already grim tourism outlook.

Note that the very fate of our economy depends almost entirely upon the confidence of foreign investors like Mr. Koki Narita (who was recently shafted on the Managaha island tourism concession, after many years of delivering excellent service). If Mr. Narita, a tourism insider, is not confident about our economic outlook, it is safe to say that many other foreign investors probably feel the same way. And if foreign investors stop feeling bullish about the CNMI’s prospects, there goes our prosperity and economic vitality.

Never forget: our whole economy is founded upon foreign investments. Remember that there are basically only three sources of capital infusion into our economy: the tourism industry, the garment industry, and the federal government (through federal funding). Of all these revenue sources, federal funding makes up only a small percentage of our cash infusions. The vast majority of our gross island income comes from private foreign investments, mostly from Asia, which is still struggling from a very protracted economic recession.

If our economy is to rebound, foreign investor confidence must be fundamentally altered. The CNMI must be viewed as a safe, stable, profitable investment destination. All else is folly.

The foreign investor, today, as always, has to ask himself a very fundamental and crucial question: why should I invest? Implicit in this basic question, of course, is also the sub-question: why shouldn’t I invest?

And why shouldn’t the foreign investor invest?

Well, let’s consider a few reasons:

1. The lingering specter of Ted Mitchell-induced Article 12 uncertainties.

2. The limitations and political-regulatory frustrations of the labor market: the labor moratorium, health regulations, fees, documents, etc.

3. The perception of a corrupt, unstable and anti-business government.

4. The threat of higher fees and taxes, in light of a deficit-ridden, bankrupt government.

5. The $100,000 security deposit, which still has not yet been repealed.

6. The reduction of Continental flights, the tourism slump, lessening market demand, the ongoing Asian financial crisis.

7. The continuing threat of a federal takeover, the Equal Employment Opportunity Commission, and the addition of other stifling federal regulations.

As we can see, a prospective foreign investor has many reasons not invest. What the government should constantly try to do is eliminate those reasons and offer many more good reasons why the foreign investor should risk his investment capital in the Northern Marianas. Only then will we recover from this terrible recession.