Foreign investors inject $3.5-M in NMI economy

Foreign investors pumped close to $3.5 million in fresh capital into the Northern Marianas economy in three years through a variety of new business activities, a report from the commerce department’s Foreign Investment Office disclosed.

Between February 1997 and March 2000, Northern Marianas witnessed the entry of only 10 new foreign companies engaged in real estate, construction, computer consulting, wholesale, retail, furniture production and garment embroidery.

Of all 10 companies, Transasian Corporation, which is into condominium and apartment complex construction invested the largest amount at $2 million, while real estate developer Tejima International, Inc. infused $250,000 into the business community.

All the other eight companies pumped $150,000 each, the minimum initial capital required from foreign investors, into the Commonwealth economy.

These companies are Trade Micronesia, heavy equipment rental and wholesale; Gintian Corporation, wholesale and retail; Framson Group, Inc., computer consulting; Lion Spur Corporation, retail; Coral Ocean Design, Inc., interior design and furniture production; Guangdong Development Co., Inc., construction material wholesale and retail; Seoung Kyung Embroidery, Inc., garment embroidery; and Dear Island Saipan, Inc., retail.

Business analysts blame the economic downturn in Asia and CNMI’s restrictive local investment policy requiring investors to put up a $100,000 security deposit to the dramatic decline in the number of foreign investors coming into the islands.

Aside from the $3.5 million fresh capital, the new foreign investments also provided an additional $1 million from the required $100,000 cash security deposit per foreign investor.

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

Providing flexibility on the security deposit, which have turned off potential investors, is being eyed by both the Tenorio Administration and the Legislature in order to lure foreign businessmen into the CNMI.

At present, legislators are taking concrete steps to institutionalize business-friendly policies like allowing foreign investors to merely secure a Letter of Credit in place of the $100,000 cash security deposit.

Other 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 measures instituted on the $100,000 cash security deposit requirement will encourage more foreign investments into the CNMI.

Due to its restrictive investment laws, Northern Marianas has been losing potential foreign businessmen to the neighboring island of Guam where investors can get a greencard and American citizenship in five years for a minimum of $250,000 in total investments..

Aside from not requiring foreign investors to post a cash security deposit, Guam has also streamlined the business permit renewal process by making the licensing office perform all clearances.

Gov. Pedro P. Tenorio 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.