Previous Story
‘Come use the NMI investment tools of today’
|
Posted on Nov 16 2006
By TIMOTHY VILLAGOMEZ
Special to the Saipan Tribune
Aloha! [I]Hafa adai! Tirow wáámi! Good[/I] morning to you all from Governor Fitial and the people of the Northern Marianas.
It is my pleasure to stand before you at this Island Business Conference and represent the newest member of the American political family, the Commonwealth of the Northern Mariana Islands: America’s Gateway to Asia. Today I will share with you what investment advantages the CNMI offers you, and a little about what investment offers we are hoping to receive.
Thirty years ago President Ford approved legislation creating the Commonwealth of the Northern Mariana Islands. One of the central objectives of that agreement between the U.S. and CNMI—an agreement called a Covenant – was to promote economic growth and to improve the standard of living of these new U.S. citizens. To achieve this objective, the Covenant contained several special provisions to equip this small community of 14 islands to compete and prosper. When we talk about investment advantages in the CNMI, we can look first at what the Covenant provides:
n CNMI control over immigration—While the CNMI has invested in a skilled and educated resident labor force, certain industries require a larger labor pool or area experts. These gaps can be filled by non-resident workers.
– Local control over minimum wage—This enables local employers to compete. The current minimum wage is $3.05/hour.
– Exemption from the US coastwise laws—The CNMI is exempted from the Jones Act. This is intended to reduce shipping costs.
– Control over customs—to provide flexibility. General Head Note 3 (a) of the Revised Tariff Schedules of the U.S. permits articles grown, manufactured, or produced in the Commonwealth to be imported into the customs territory of the U.S. free of duty if 70 percent or less of the value of the product is derived from foreign materials. For certain articles, only 50% or less of the value may be derived.
– Authority to rebate taxes on local source income—This was intended to stimulate investment. The CNMI offers tax rebates of 50-90% as business incentives. Earnings tax maximizes at 9% on wages or earnings exceeding $50,000. Business Gross Receipt Tax maximizes at 5% on revenues in excess of $750,000.
Armed with these basic tools and generous infrastructure funding from the US Congress, the new Commonwealth prospered far beyond the expectations of the Covenant negotiators. Our economic growth over the last 30 years is reflected in the increases in our population and government revenues. From 12,000 residents in 1972, the Commonwealth’s population grew to 17,000 in 1980, 43,000 in 1990 and about 80,000 in 2005.
The Commonwealth’s government revenues amounted to only one million dollars in 1972, but grew to $10 million in 1980, $102 million in 1990, and peaked at $248 million in 1997.
According to the Bank of Hawaii, the 8.7 percent growth rate during 1980-1995 was “by far the highest population growth rate on record for any economy in the Pacific.” This phenomenal growth was concentrated in two industries: tourism and garment manufacturing. In the past few years, however, there have been declines in both major industries due to factors largely beyond our control—the recession in Japan, the change in WTO trade rules, and more recently the severe rise in fuel costs.
We are determined to face these new challenges with the same energy and commitment that led to our economic prosperity in the 1980s and 1990s. To face these challenges, we have developed new investment tools, in addition to those in the Covenant.
We have a Qualifying Certificate program for tax rebates and abatements of up to 100 percent for a period of up to 25 years to qualified investors.
For manufacturers, we have legislation pending in the Congress (Senate Bill No. S1974) to provide some relief to our garment and other manufacturers. It would increase the permissible amount of foreign content under Head Note 3(a). We are optimistic that it will be approved.
We are pursuing new avenues for attracting tourists. We are the only U.S. insular area to have attained the coveted Approved Destination Status from the Chinese National Tourism Administration. This is still a largely untapped gold mine in the CNMI. Last year more than 31-million Chinese traveled outside mainland China. The CNMI currently has direct flights from Shanghai and Guangzhou, with direct chartered flights from Beijing starting in December. Over the last year, we have seen a 14-percent increase in the number of Chinese tourists.
The Northern Marianas government makes it easy to get the permits you need to do business. Our One Start…not One Stop…One Start Center on Saipan conveniently houses banking, insurance, alcohol and tobacco, weights and measures and other required licensing under one roof. . In 2008 we will also be opening our new Capitol Building, housing both executive and legislative offices. The new Capitol Building will also free up some of the prime real estate property on our main island of Saipan. We have a wide selection of public land available for lease with picturesque views, beachfront access, and more.
We have a range of development opportunities that cannot be matched by any other insular area because of the variety among our many different islands. Let me share with you now some of the unique qualities of each of our islands and just a few of the investments we are looking to see developed:
Saipan is the seat of our CNMI government and, to date, our leading tourist attraction, featuring rich history, modern hotels and glorious beaches. It has about 90 percent of our population, excellent transportation and communication facilities. In addition to an international airport, Saipan has a privatized, deepwater port ideal for cruise lines and just a short 10 to 15 minute walk from our main tourist district.
We are exploring many projects for Saipan. Some are designed to enhance the experience of tourists who visit the island. Others are aimed at attracting companies who wish to do business in Asia from a convenient U.S.-based headquarters. Other projects seek to attract Asian students, who wish to learn English in an English-speaking community, or Asian retirees, looking for a warm and hospitable home away from home.
Tinian is two and one-half miles south of Saipan across a narrow strait. Also with an international airport, it is the only island in the Commonwealth with legalized casino gaming. One major casino has been operating for over 10 years and is shortly to be joined by two other major investors. Several hundred million dollars will be invested in Tinian over the next two years in a major effort to attract thousands of new tourists from Japan, China, Korea, and other Asian countries.
Some of the Tinian projects under consideration are aimed at giving visitors a wide-range of activities outside of the casinos-a breath of fresh air, so to speak! We encourage development of condominium properties to attract retirees. The increasing use of Tinian by the military in the years ahead also highlights the need for new development.
Rota, located about 73 miles southwest of Saipan is perhaps the most beautiful of our islands. As the saying goes, Rota is Friendly, Rota is Beautiful, Rota is Delicious, Rota is Romantic. I think they took all the slogans. Rota would be an excellent area for several of the ventures already mentioned, especially those related to eco-tourism.
The Northern Islands, as they are called, lie to the north of Saipan and are largely unpopulated and undeveloped. Four of these islands have been designated for wildlife conservation. Possibilities include eco-tourism and mining.
There is no doubt about it. The Commonwealth is on the road to full economic recovery. Many recent investors share our enthusiasm and have made significant new financial commitments to our islands. You may be familiar with NTT DoCoMo Inc, a leading communications company with over 52 million customers in Japan and investments and strategic alliances throughout Asia, North America, and Europe. They will soon be closing the deal on a major merger in the CNMI and Guam. Some of our other investors are here with us and I encourage you to speak with them personally.
Thank you all for the opportunity to share with you the wonderful investment advantages of doing business in the Northern Mariana Islands. In closing, Mr. Secretary, on behalf of our people, I will be presenting you with a small gift of gratitude to you for hosting this important Island Business Conference. This is a replica of a traditional indigenous clam shell adze, called [I]higam[/I], once used as an all-round tool for carving canoes, houses, bowls, and even in warfare. As this tool once helped provide for our people, we invite potential investors to come and use the CNMI investment tools of today to provide for your well-being and the well-being of the Northern Mariana Islands. Thank you, Mr. Secretary, for helping to make this possible.
[I]
Si Yu’us ma’ase yan olomwaay.
The investment conference was attended by Interior Secretary Dirk Kempthorne, Palau President Tommy Remengesau, Marshall Islands President Kessai Note, Hawaii Gov. Linda Lingle, American Samoa Gov. Togiola Tulafono, U.S. Virgin Islands Gov. Charles Turnbull, U.S. Pacific Command Deputy Commander Lt. Gen. Daniel Leaf, and Honolulu Mayor Mufi Hannemann. Gov. Felix Camacho failed to attend due to the ongoing election issues in Guam.
(Timothy Villagomez is the lieutenant governor of the Northern Mariana Islands.)
[/I]
