Chamber: Scrap federal takeover proposal

With the expected collapse of the CNMI economy in the event of a federal takeover, the Saipan Chamber of Commerce has urged the House Committee on Resources to scrap permanently the planned legislation that will federalize local labor and immigration functions.

In a testimony before the committee, Chamber vice president Lynn A. Knight asked that a genuine cooperation between the Federal government and the Commonwealth must be encouraged to resolve lingering immigration and labor problems.

This would provide the business community and the CNMI government the time, and potential investors the confidence, to bring new and diversified economic opportunities to the Northern Marianas.

“Our message to the Committee is simple: please don’t cause a collapse of our economy by adopting legislative solutions that may seem unremarkable in the context of the economic boom now enjoyed in the 50 states but that are so foreign to the CNMI,” said Knight.

Due to the effects of the Asia’s economic crisis, the island’s tourism industry plunged 30 percent. Garment manufacturers lost 25 percent of their orders. Automotive sales are down nearly 50 percent just like most of the retail in general. One in every 10 businesses has closed.

Knight has expressed concern that hundreds more that cater to Filipinos, Japanese, Chinese and Koreans will close overnight if all of the guest workers would have to go home.

Instead of pushing for a federal takeover, she asked the Committee members to work together with the CNMI on law enforcement to ensure that the incidence of labor abuse on the islands will continuously decline.

Efforts to educate businesses on the island on all applicable federal and local laws are working, Knight said. Similarly, she said reforms that have been put in place by the local government are making a difference.

Although the Chamber has been working with local government officials to diversify the CNMI economy under the Governor’s Economic Revitalization Task Force, the Chamber believes that the Northern Marianas would not be able to entice investors to come here.

“We cannot diversify our economy in the face of an unrelentingly negative campaign launched by those who would demonize our culture and take away our local economic controls,” said Knight.

This is made worse by the possible 100 percent hike in the local minimum wage amid the downturn in the island’s economy and the removal of necessary access to labor supply if the federal takeover is implemented. Aside from this, a package of new local laws have already been instituted by the local government to improve labor and immigration systems.

“These circumstances have created an air of instability for any investor, whether foreign or local,” said Knight. She added that the situation has made it impossible for businesses to plan for the coming months and recoup investments that will take years to recover.

“Potential investors have simply turned away. Clearly we are in a crisis, one that many will not survive if drastic change occurs in the way we must do business,” she said.

The Chamber warned that an increase in minimum wage will have negative consequences such as slower job creation, reduction in man hours and lost jobs. Small businesses with fewer resources will be affected and it will cause higher-level wages to be increased, thus boosting inflationary pressures, said Knight.

Since the Chamber has enacted its own minimum wage law and formed its own Minimum Wage Review Board, Knight said the Chamber believes that this system best accommodates local economic and employment conditions.