Business licenses issued up in 1st half

Total number of business licenses issued by the CNMI government increased by as much as 100 percent in the first six months of the year to 3,882 from the year ago’s average of 1,794 permits, records from the finance department disclosed.

However, government officials were quick to point out that any increase in the number of approved business permits and licenses does not automatically translate to growth in economic activities.

Commerce officials explained that some establishments in the Northern Marianas hold more than one business license since existing laws require them to secure a permit each for the sale of liquor, cigarette and other consumer products.

In fact, rally of the Northern Marianas economy continues to pale in comparison during the boom years of 1996 and 1997, the same time when the government issued only an average of 1,865 and 2,009 business permit in a six-month period.

Although higher number of business renewals does not translate to economic growth, analysts said the situation indicates stronger business confidence primarily spurred by reports on the slow but sure recovery of the islands’ travel industry.

Analysts said the growth only reveals that the magnitude of ailing businesses have started to drop, indicating a significant reduction in the average number of establishments that are closing down because of economic upheavals.

Government officials said it will take the CNMI longer years to recover from deep economic slump or at least come close to the 1997 level since more than half of all the islands’ existing establishments in 1996 have stopped operations since the Asian financial upheaval fanned towards the Northern Marianas in early 1998.

The Commonwealth Development Authority previously disclosed the number of businesses on the islands dropped by as much as 32 percent in 1997 to 3,800 from about 6,000 in 1996.

The CNMI economy suffered yet another blow in 1998 when the number of existing establishments fell by an additional 10 percent, which totaled only around 3,410 businesses.

Of all existing industries in the Northern Marianas, only the apparel manufacturing sector registered growth of a whooping 22.2 percent between fiscal years 1997 and 1998.

Revenue reductions in the same period ranged from a mere two percent in the shipping sector to over 50 percent in agriculture and fisheries, professional services and the fuel retail industry.

At least 812 establishments in the Northern Marianas did not renew their business licenses last year. A report obtained from the Business License Section of the finance department noted that out of 3,410 businesses in 1998, 812 establishments opted not to renew their licenses by end-December 1999.

However, the Central Statistics Division of the commerce department disclosed that 2,775 new business permits were issued by the Business License Section last year, exceeding the number of establishments that did not renew licenses.

Overall, the government’s business licensing office processed and approved 3,587 business permits last year which represented a trivial growth of 0.05 percent from the year-ago’s 3,410.

At most, the local economy is expected to grow by no more than one to two percent this year, primarily spurred by the number of available regular airline seats between Saipan and South Korea.

According to a report prepared by the Bank of Hawaii, the CNMI economy may pick up by 3-4 percent next year when more Japanese and Korean travelers begin taking overseas trips again.