Report: 2008 a bleak year for NMI

Major economic indicators like business gross revenue, garment exports, import tonnage, remittances, tourist arrivals, and vehicle sales either plunged or remained the same in calendar year 2008 compared to 2007. Overall, the CNMI economy was at its worst in at least the last five years and is expected to get worse in 2009.

Business gross revenue went up slightly by 0.9 percent—from $1.672 billion in 2007 to $1.688 billion in 2008, but this is still much lower than the annual business sales of up to $2.034 billion since 2004.

The economy is expected to worsen in 2009, with the Marianas Visitors Authority projecting $339 million in lost tourism revenue each year due to federalization, flight reductions and a drop in tourism arrivals.

Saipan garment factory closures resulted in a 68 percent drop in the value of garment exports, reaching only $98.21 million in 2008 from $307.57 million the previous year. With the planned closure of the two remaining factories early this year, the CNMI will have virtually no garment income to speak of by the end of the year. Saipan used to have over 30 factories.

These figures are based on the report on the quarterly economic indicators “depicting the social and economic conditions” of the CNMI, according to Commerce Secretary Michael J. Ada.

Visitor arrivals slightly went up by 2 percent to 397,271 in 2008 versus 389,261 in 2007. Prior years posted arrivals of over 435,000. MVA projects a drastic drop in arrivals in 2009 with the exclusion of Chinese and Russian tourists from the federal visa waiver program by June 1, reduction of flights from Japan, and a slowdown in Korean arrivals.

Due to the exodus of foreign workers, overseas remittances reached only $76.8 million in 2008, an 18-percent drop from the $93.6 million recorded the previous year. Quarterly remittances went below $20 million for the first time in the last three quarters of 2008.

There were only 966 new cars, vans, trucks and sport utility vehicles sold in 2008, a 12-percent drop from the 1,101 units sold in 2007. Annual vehicle sales reached 1,992 between 2004 and 2006.

The volume of imports, or goods brought to the CNMI like fuel, food items and construction materials reached only 356,350 tons in 2008 compared to 439,440 tons in 2007. Imports reached over 540,000 tons between 2004 and 2006.

Average hotel daily room rate rose by 5.62 percentage points—from $92.12 in 2007 to $97.74 in 2008, but average occupancy rose only by 3 percentage points to 61.89 percent. Despite the slight increase from the previous year, the average hotel occupancy was still way below the average profitability threshold of 70 percent.

The number of telephone lines stood at 30,458 in 2008 after faring below the 30,000-mark the previous year, at 28,963.

Banks saw a 15-percent drop in deposits—from $531.20 million in December 2007 to only $450.60 million in December 2008. Loans also dropped by 13 percent, reaching only $141.25 million in December 2008 compared to the previous year. Loan-to-deposit ratio was at 31.3 percent in 2008 versus the previous year’s 30.4 percent.

Of all the economic indicators, only the value of building construction and renovation went up significantly—from only $16.23 million in 2007 to $44 million in 2008. Despite this, a lot of newly built and old commercial buildings on Saipan stand empty.

All major economic indicators in the Commerce report covered calendar year 2008 except for government spending and income, which covered fiscal year 2008.

Government expenditures reached $172.23 million in FY 2008, while general fund revenue or government collections from taxes and fees stood at only $162.758 million during the same period.

Moreover, government spending in FY 2008 marked a 5.8-percent increase over the $162.76 million posted in FY 2007.

The FY 2008 collection marked a slight drop from the FY 2007 collection of $163.03 million. Included in the taxes and fees collected by the government are business gross receipt, wage and salary, excise, garment certification and hotel occupancy.

FYs 2007 and 2008 expenditures and income do not include suspended employer contributions to the NMI Retirement Fund.

The CNMI will lose $339 million in annual tourism revenue with the exclusion of Chinese and Russian tourists from the federal visa waiver program, Northwest Airlines’ impending reduction of flights, and the continued dip in visitor arrivals from Korea, according to Marianas Visitors Authority projections.