Governor asked: Protect industry
Garment sector leader James Lin has asked the Babauta Administration to continue supporting the manufacturing sector so the latter could get through a most crucial stage in its existence in the Marianas.
In a two-page letter, Lin lauded Gov. Juan N. Babauta for taking the time to better understand the current state of the industry’s economic health and help secure its future in the islands.
Lin, who is the chairman of the Saipan Garment Manufacturers Association, was particularly pleased with the governor’s recent announcement that the Administration will pursue two suggestions made by SGMA in a previous apparel industry briefing it held for CNMI leaders.
These were for the government to: help keep the industry competitive through a viable wage rate system; and attempt to amend the value-added requirement to General Headnote 3(a) from 50 percent to 30 percent.
Lin said he is thankful that the governor is trying to “work with us” in the interest of keeping the industry here at least for another five to 10 years.
SGMA had asked for the new administration’s help in light of gloomy state of affairs the industry is in. The apparel industry briefing was meant for CNMI leaders to have a better understanding of its internal operations, its status today, what will happen in the near future, and its long term prospectus.
“Right now, our industry is at its crossroads,” Lin told Babauta. “Competition has never been as great as it is right now. It is now that we need to work with this Administration to allow for the ability to compete with the world for America’s market.”
He added: “Now more than ever before, we need your guidance and protection for our industry’s survival.”
Lin noted that as per recent reports, through the CNMI Department of Finance’s Customs Service Division, user fee collections are dramatically down during the first two quarters of FY 2002.
This amounts to an approximate 20 percent reduction in collections from the industry, as well as 22 percent decrease in user fee and excise tax collections for the same periods of the preceding year.
“Our industry had predicted this trend, and certainly while no one knew that the horrible events of September 11, 2001 would occur, again no one knew how we would be affected by those events,” said Lin.
He related that the customers for all NMI production do their business from the U.S. After September 11, 2001, and through the holiday season in mainland department stores, the U.S. went through its largest inventory reduction of manufactured goods in the history of the United States.
“This is the reason that our production, and the CNMI Government’s user fee collections plummeted during the first two quarters of FY 2002,” he said.
“Reciprocally, and as a direct result of that inventory disposal, and we discuss this with caution, currently almost all Saipan factory production lines are at peak performance. We expect this to continue until those U.S. warehouses are returned to their normal stock levels. We estimate this trend to continue for about 4-5 months.”
SGMA still stresses that we anticipate an overall decline in production, sales and user fee payments to the CNMI in FY 2002. Lin said a 12 percent to 15 percent decline overall from FY 2001 levels could be expected.
“We express caution with this announcement because: it will be a short-lived boost in production; we do not know how our market will respond after those U.S. warehouses are re-stocked; and, while the CNMI Government will benefit from solid user fee collections for a few months, our industry still faces an uncertain future,” said Lin.
“The bittersweet story is that while government collects its fees, employees are content with their hours, and our buyers are getting their best prices ever, we are still worried about what is around the next corner,” he added.
