Thoughts on the economic situation of the Commonwealth

I write to set forth some of my thoughts regarding some of the underlying reasons that appear to have contributed to the extremely poor economic conditions that the CNMI has found itself in during the past five years. It is my hope that by setting forth these reasons in writing the people of the Commonwealth and its leaders—political, business and civic—would be able to see the forest from the trees, in order to be able to map out a plan of action that would guide the CNMI back from total economic collapse.

A year has now passed under the new administration of Gov. Benigno R. Fitial and Lt. Gov. Tim Villagomez. When they took office in January of this year, there was a heightened degree of optimism that with a new administration the CNMI would somehow be able to take stock of the situation, adopt sound economic policies, and begin to take concrete actions that would hopefully begin lifting the CNMI out of the economic quagmire that it has found itself in over the past several years. The task of turning around our economy has been quite daunting.

A full year has now passed and the economic condition of the CNMI still remains bleak. Indeed, as we have seen from most of the economic indicators, the situation has actually turned for the worse during the past year. Revenue has continued to decline dramatically. The number of visitors to the CNMI has fallen substantially. The garment industry has just about left the Commonwealth. And local businesses are hurting badly. There appears to be no measure of relief coming our way. And as we end the year, we are faced with the very real possibility that the new Democratically-controlled Congress would this time around surely take away from the Commonwealth the economic tools provided us under the Covenant to spur our economic development: our exemption from the federal minimum wage, local control of immigration and, if you really look long and hard, a certain amount of the Commonwealth’s right to local self-government.

The inevitable questions that naturally follow from all these events are: Why does the economy of the Commonwealth now appear to be self-destructing? What is it that is causing the economy of the Commonwealth to continue to falter and weaken? What could be done to try and turn things around? Why is the CNMI visitors industry having such a very difficult time attracting visitors to our islands? What are we doing wrong to entice visitors to come and visit the CNMI?

Ten years ago, they used to come here in droves. Continental Airlines, Japan Airlines, and Northwest Airlines, together, sued to have our 20 plane-loads of passengers every day, seven days a week. Now the flights to the CNMI consist mostly of the sparse commuter flights to and from Guam. Northwest and Asiana Airlines of Korea are now the only two airlines regularly servicing the CNMI, but with only about five flights a day.

Where did the CNMI go wrong? Where did we fumble the ball? Why haven’t we been able to recover? What are the underlying reasons for our inability to turn our economy around? And what would happen if we don’t turn things around? All of these questions must be answered immediately.

Many businesses in the CNMI are now beginning to really worry, and some are very likely already making plans to close up shop. Indeed, many garment manufacturers have already left the island and the remaining garment manufacturers are in the process of closing up shop, too. Just last week, one of the largest garment manufacturers abruptly decided to close shop. It apparently determined that it is no longer profitable to do this type of business in the CNMI. The competitive edge in operating here is no longer present.

Like an impending natural disaster, businesses are either running for cover or just simply leaving. That is the situation that the CNMI has found itself in. It is a very gloomy picture. And when things are bad, the immediate tendency is either to close up shop and leave, or not to do anything at all and simply “ride out the wave.” Either of these two possibilities should not be an option for the CNMI. To simply leave the island would be irresponsible for those of us who call the CNMI our home. To merely ride out the wave would be an admission that we are not in control of the situation. Either one is a defeatist attitude, at any rate, that should not be allowed to prevail.

Positive action must be taken by our political, business and civic leaders; and the people of the CNMI must support such positive actions. But action must be taken now. We must not leave things to chance, as the CNMI has been doing for sometime now. We cannot close our eyes to what is actually happening around us. We should not be saying that “the economy is pretty darn good,” when the economy is actually falling apart. Such statements are very irresponsible because it gives us a sense of false hope. But to some extent, we the public are also responsible and partially to blame for allowing the notion (that things are pretty darn good) to continue, even when we clearly know that things are pretty darn bad.

But to dwell on the past and the mistakes that we have made would not help us one bit. To dwell on blaming others would also be of no help. We need to move on. We must take positive action now. To begin with, we must realize the fact that the CNMI’s past approach to foreign investment and foreign investors leave much to be desired. For example, when an investor comes to the CNMI to invest, we literally make the hurdle so difficult that the investor ends up frustrated and leaves. Who is his right mind would want to invest in the CNMI, if the attitude of the CNMI is to put you through the wringer first? We talk about the CNMI being investor-friendly, but we clearly don’t “want that talk.” We have seen this happen too often in the immediate past; and this practice has to stop. The present administration has mentioned its plan to implement a “One-Start Business Center” that would assist investors and remove all of the burdens of starting a business in the CNMI. Let’s do this right away.

Our foreign investment policy should hereafter be: “Here is your business license; you may start tomorrow. Let us know what else you need.” That’s it. I say this because with our economy so bad, we cannot afford to be picky or choosy. We simply don’t have the luxury like before, to be able to pick and choose. Any investor that wants to invest in the CNMI and wants to start a business that appears legitimate and above board should be allowed to operate immediately. This is one of the first things that the CNMI should do right away.

The other thing that must also be done immediately is to do something positive that would promote the CNMI as a competitive visitor destination in our region. As we all know, the airlines would come to the CNMI if there are passengers to fill up their planes. It is as simple as that. No business wants to operate at a loss; not the airlines, not the garment industry, and certainly not our local businesses that are hurting very badly at the moment: the supermarkets, the hotels, the hardware stores, the banks, contractors, restaurants, golf courses, and so forth. If the visitors were to start coming back to the islands, the planes will surely return, and the visitor industry will begin to get back on its feet.

So what do we need to do to get the visitor industry moving again? I’ve asked myself this question so many times: What is it that the CNMI is doing wrong in terms of luring visitors to our islands? We have to identify these problems and correct them first, if our visitor industry is to turn around and grow. Have we done this? I don’t think so. Guam (there we go again) has been able to turn around its visitor industry and is back on track toward achieving its one-million visitor goal this year. What are we doing wrong that Guam is doing right? Can we find this out? Can one of our visitor industry officials go to Guam this week and talk to them and find out what is it that they are doing right? They surely have cornered a large part of the market share for this industry, but the CNMI is still reeling as if “9/11” were only yesterday.

Some say that the reason why the CNMI visitor industry is having a very difficult time recovering is because the CNMI is considered to be a “cheap destination.” They say the airlines are losing money with their CNMI route, because they are not making a profit on the CNMI route. If this is indeed the case, then you cannot blame the airlines for leaving the CNMI. The question that we should be asking ourselves is what we should do to make the CNMI a profitable destination for the airlines. If Guam is a profitable destination for the airlines, why can’t we do the same for the CNMI? Can someone from our visitor industry find out if indeed this is true, so we could take action and correct this matter immediately?

One other major point that we have to address is the need for the CNMI “to have our act together.” We don’t seem to have our act together. Many times, we merely react. For example, when Japan Airlines pulled out last October a dozen or so of our industry officials took off for Japan the following day to talk to JAL officials. But as we all know, by then it was too late, for JAL had already made its decision to leave. My point is that our leaders need to sit down and figure out just exactly what makes the visitor industry tick. If we have to get a professional tourism consultant to help us out on this point, for God’s sake, let’s do it right away so we could find out what we are doing wrong and also find out what we should be doing to make the industry viable.

I mentioned in one of the local talk shows a few months ago that the economic situation in the CNMI is somewhat like the condition we saw in the movie The Perfect Storm. There appear to be a convergence of several calamitous factors that, if not handled properly, would cause the Commonwealth’s “ship of state” to run aground or even sink. I do not mean to be an alarmist with that analogy, but our situation is getting pretty close to that. Strong anti-economic waves from all directions are hitting the shores of the Commonwealth. There is a pressing need for strong, decisive and wise leadership to provide the guidance and direction that must be taken by the Commonwealth to lead us out of this impending disaster; otherwise the CNMI would find itself bankrupt soon and, as one editorial put it bluntly last week, the CNMI may become a “ghost town.” Is that what we want to happen? The answer is to this is clearly a resounding “No.”

It is all up to us, to pull together as one Commonwealth, so that we could avoid the impending disaster. Let’s do it!