ON INCENTIVES FOR FTZ LOCATORS Deets defends government

Is the CNMI government being unfair when it decided to offer incentives only to investments that will be located in the proposed Free Trade Zone without taking into consideration the request of existing businesses on the island to give them tax breaks for their efforts in carrying out expansion projects amid the slowdown on the island’s economy?

Saipan Chamber of Commerce President Kerry M. Deets does not think so. In defending the CNMI government’s position, Deets said the incentives are meant to entice a different type of business that would not even consider coming to the Northern Marianas.

“It is not really giving special treatment, we just want to bring in a group of businesses that normally would not even have any interest in this part of the world,” she said.

When these new type of businesses decide to come here, Deets said, the whole island will eventually benefit from it because it would diversify the CNMI’s economy.

The administration hopes to attract capital-intensive, computer and machine-driven type business operations with a minimum number of skilled, higher-paid foreign workers in the Free Trade Zone.

Deets said it is understandable why the local government could not provide incentives to existing businesses now because it would reduce the expected revenue, which has already been drastically reduced due to the effects of Asia’s economic crisis.

Officials and businessmen are pinning their hopes on this effort to revive the island’s worsening economic condition which has forced many businesses to close shop.

Among the incentives offered to potential investors in the Free Trade Zone are attractive lease rental on public land, substantial tax incentives such as no import tax, no GRT, no impact tax, and up to 100 percent corporate tax rebates depending on the training and investment benefit to local residents.

The Hotel Association of Northern Mariana Islands has pressed the government to grant incentives, such as tax break to hotels that will carry out expansion, and to spend a huge amount of money in promoting the CNMI abroad. So far, the governor has not made any commitment to such request.

Meanwhile, a separate position paper on the minimum wage and immigration issues will be submitted by the Chamber in the scheduled oversight hearing by the U.S. Senate Energy and Resources Committee. The Chamber will hold a forum to gather suggestions from its members to help the board of directors in drafting the position paper.

On the minimum wage issue, the Chamber believes that local control must be maintained by allowing the Legislature and the chief executive to determine the appropriate laws that must be implemented.

“We feel that local problems need local solutions,” said Deets.

The scheduled July 27 hearing is expected to focus on what efforts have been made by the CNMI government to curb labor abuses on the island. A similar hearing was conducted by the committee one-and-a-half year ago.