The departure of garment manufacturers from the Northern Marianas as a result of the application of the US laws on immigration and minimum wage to the commonwealth would hurt the more than half-a-billion-dollar banking industry, a bank executive said yesterday.
Tomas B. Aldan, chairman and chief executive officer of Bank of Saipan, said Washington’s proposal to take away CNMI’s authority over labor and immigration policies poses a threat to the banking sector, which over the years has surged to become one of the most robust industries in the islands.
Aldan cited the case of BOS, a locally-owned bank, whose depositors comprise mostly of garment workers. He said a number of banks on Saipan count garment companies as their big clients.
“Of course, the sector is worried about the federal takeover,” Aldan said in an interview, “The feeling is once the garment manufacturers are gone, that will definitely hurt the banking industry,” he added.
With the plunge in the tourism industry, once the backbone of the island economy until a financial storm slammed into the mighty economies of Asia in 1997, the banking and garment sectors have been the steady provider of revenues to the financially-troubled government.
The garment sector’s gross income topped $1 billion last year and pitched in more than $36 million to the local coffers. Officials predicted the sector to contribute over $41 million in user fees this year.
Government figures show bank assets in the first half of 1998 grew almost $31 million to $561 million, representing a 5.8 percent increase compared to the same period the previous year, despite over a year of Asian recession that has pushed the commonwealth into economic distress.
For the fourth straight year since 1994, bank assets have been climbing steadily, with the biggest growth posted in 1996 at $507.7 million, or 16.2 percent, compared to year-ago figures.
It was the first time the banking industry hit the half-a-billion mark to make it one of the most vibrant sectors after tourism and garment when the commonwealth was still prosperous.
While Aldan foresees the damaging effects of the federalization of the local labor and immigration policies to the banking industry, he said it would not go as far as closures.
“Majority of the depositors belongs to the garment sector, mostly garment workers, but we still have the general public as our second biggest client,” he explained.
Washington officials have been wanting to extend federal immigration and minimum wage laws to the Northern Marianas, particularly to garment workers, who represent the single biggest group of foreign workers in the islands.
The growth of non-resident workers, whose number has been estimated between 28,000 and 30,000, has worried the feds because of a number of problems spawned in hosting them.
Federal officials underscored the need to put these commonwealth functions under US authority, citing the failure of CNMI to adequately address labor abuses, curb entry of guest workers, and raises local wages to federal standards.