$20M tax breaks for Laolao Bay resort approved

Gov. Benigno R. Fitial has approved the modified qualifying certificate that will provide up to $20 million in tax breaks to Saipan Laulau Development Inc., the firm that acquired and upgraded the Laolao Bay Golf Resort.

In the amended QC, the government approved the abatement of business gross revenue tax for 20 years. The abatement shall equal 100 percent of BGRT above the current tax base. The company was also granted 100 percent rebate on any excise tax paid to the CNMI government after the effective date of the QC and up to the start of operations. Saipan Laulau is also entitled to a hundred percent rebate on any developer infrastructure tax paid to the government.

Part of the conditions set by the CNMI government is for the company to remain a community-conscious and civic-minded business: The company is required to design and implement an internship program for CNMI residents for them to learn skills and build careers in the golf course resort industry.

On an annual basis, the Laulau Bay company is also required to contribute not less than $100,000 to community-based public programs and activities.

Saipan Tribune learned that the governor approved the modification on March 16, three days after he received the Commonwealth Development Authority’ recommendation.

Saipan Laulau was first granted a qualifying certificate in September 2008, with $18 million tax breaks. Because of the risks associated with its investment during a period of uncertainty and a highly competitive tourism industry, Saipan Laulau asked for a modification, initially asking for $22 million in tax benefits and then raising it to $27 million in 2008.

The CDA board initially approved $18 million. The CDA board proposed changes to the QC rules and regulations to accommodate the Laulau Bay request. On March 5, 2009, CDA approved the request—for $20 million.

Saipan Laulau president Kim Yun said yesterday they are elated with the decision of the CDA and the governor. He said the modified QC is important as it will help them fulfill their commitment to the CNMI.

Despite the global recession and the depreciation of the Korean won, Kim said Saipan Laulau and its affiliate companies on island are serious in their investment.

The company president said that outside of the $54 million investment for Laolao Bay Golf Resort, over $5 million will also be spent to build five villas at the Laulau Resort.

The target completion of all the project’s phases is before the end of 2010.

Saipan Laulau is an affiliate company of Kumho Group, which also owns Asiana Airlines. Early this year, the company unveiled its multimillion-dollar clubhouse and pathways.