Commerce sees need to fast-track changes in foreign investment law

The Department of Commerce is calling for an expedited legislative action on the proposed changes in the existing foreign investment law in order to clear the road for a Northern Marianas business climate that is conducive to growth and progress.

Acting Commerce Secretary David S. Palacios expressed the department’s support on intensified moves by both chambers of the CNMI Legislature to update the existing foreign investment law and other wide-ranging business policies.

“The Department of Commerce sanctions the need to build a business and investment climate that is healthy and conducive to business,” according to Mr. Palacios.

Current local regulations that govern foreign investments have been viewed restrictive and prohibitive which practically discourage investors from coming in to the Northern Marianas.

In the last three years, foreign investors pumped close to $3.5 million in fresh capital to the Northern Marianas economy in three years through a variety of new business activities.

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.

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.

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.

“It would appear because of the obvious change in the general business climate, the amendments to business policy should be expedited to ensure that the CNMI does not lag behind other investment destinations,” Mr. Palacios said.

Northern Marianas, due to its restrictive foreign investment laws, 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..

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.