Economic woes create a more resilient business sector

Economic difficulties give birth to a more resilient business community with strong indications becoming more visible during the recession recovery period, according to Development Authority Board Chai John S. Tenorio.

Mr. Tenorio said investors whose businesses managed to survive the Asian currency crisis are more likely to become restrictively cautious due to fears of financial instability and even closure.

He pointed out that the economic turmoil which hit the Asia-Pacific Region since middle of 1997 paved the road for investors to realize the need to get their fiscal house in order, considering the fact that the two-year old financial upheaval resulted from mismanagement and fiscal excess.

“Individual economics would change because of the crisis. Definitely, it will make businesses stronger and a little bit more cautious. Indeed, hard lessons were learned from the recession,” the CDA chief said.

Mr. Tenorio believes it will take longer than expected for the CNMI economy to completely recover from the adverse impacts of the Asian crisis, although he is foreseeing movement through the government’s Economic Recovery and Revitalization Task Force.

He noted the Commonwealth’s plan to establish free trade zones in the CNMI, several infrastructure developments that include road improvement and the slight increase in the number of tourists coming in compared with previous months.

Significant recovery in the economies of major Asian countries such as the stabilization of the respective currencies of Japan and Korea is also expected to give visitors from these nations more buying power.

Japanese and Korean travelers have become the lifeblood of the Northern Marianas’ billion-dollar tourism industry. Visitor arrivals to Saipan have dipped in the last two years due to the depreciated value of the yen and the won against the U.S. dollar.

Accordingly, volatility of global economic environment allowed banking institutions to gain much importance as they offshoot the extent of problems in the domestic economy.

Banks are very resilient even during a recession since there are strong markets elsewhere and banks have the ease in accessing these markets.

With the worsening economic conditions in the CNMI and the rest of neighboring Asian countries, financial analysts said banks normally receive more loan requests than they do without the crisis.

This, as they warned that aggressive loan growth usually precede a banking crisis especially if the flows are not used to strengthen banking systems. (Aldwin R. Fajardo)