Only 10 investment certificates approved since 1997

Economic downturn in Asia and restrictive local investment policy requiring investors to put up a $100,000 security deposit continue to chase foreign businessmen away from the Northern Marianas.

Only 10 new foreign investments have been given the foreign investment certificates and visas to do business on Saipan since February 1997, according to the Economic Development Division of the commerce department.

The new foreign investments pumped in some $1.75 million in fresh capital to the CNMI economy, and an additional $1 million from the required $100,000 cash security deposit per foreign investor.

This means that the implementation of Public Law 10-44 or the Foreign Investment Act was implemented in 1997 has virtually paralyzed the entry of new investments into the Commonwealth, complicating economic impediments brought about by slowdown n the tourism industry.

In order to lure foreign businessmen into the CNMI, government officials and business sector leaders have persistently called for the easing or eliminating of the security deposit which have turned off potential investors.

The 12th CNMI Legislature has taken concrete steps to pave the way for a business-friendly economy, the includes allowing foreign investors to merely secure a Letter of Credit from any banking institution in the Commonwealth.

Instead of requiring investors to come up with the $100,000 security deposit, the government may instead require them to secure bond certification by a notable financial institution in CNMI, Guam or in the US.

Earlier proposals include allowing foreign investors to use a pre-paid aggregated amount equivalent to $100,000 on any lease of property.

Officials raised hopes the flexibility instituted on the $100,000 cash security deposit requirement will encourage more foreign investments into the CNMI.

Northern Marianas is reportedly losing potential foreign businessmen to the neighboring island of Guam, which is only about 100 miles south of Saipan, because of the Commonwealth’s unstable and restrictive foreign investment policies.

In Guam, investors can get a green card and American citizenship after five years for a minimum of $250,000 in total investments. The island-territory is attracting many investors because of its non-protectionist laws that also offer benefits and incentives.

Despite the fact that Guam does not require a cash security deposit, it has also streamlined the renewal process by making the licensing office perform all clearances.

In Guam, the renewal is simply mailed to the investors which makes it more comfortable and convenient since they need not leave their office.

Foreign investment in the CNMI was frozen until 1973, and was opened when the foreign investment law was abolished after it became a Commonwealth of the United States in 1982.

Gov. Pedro P. Tenorio previously called for consolidated efforts that would help rebuild the Commonwealth’s tarnished image and eventually lure fresh capital into the islands.

Mr. Tenorio cited the need to come provide stability in local laws which had been a major concern among the members of the business community who claimed that instability of CNMI policies is chasing investors away.

The governor said efforts to revitalize the economy should start with a change of attitude, getting away from the old idea that potentials of the Commonwealth are limited because it is just a few small, remote islands with few resources.

Mr. Tenorio also mentioned the need to institute long-term plans which include the demand for reliable power and water, educational opportunities, adequate health services, public safety and employment opportunities for local workers.

The CNMI’s proximity to Asia and its distance from the United States mainland, coupled with its smallness, will always make its economy particularly susceptible to unforeseen external economic, political and social impacts.