Rep. Angel A. Demapan (R-Saipan) has introduced House Bill 22-70, or the Investment Incentive Act of 2021, which seeks to promote economic development in the Commonwealth and increase competitiveness of the Commonwealth for private sector investment.
“The provision of tax incentives is a common tool for economic development throughout the United States and the world and competition for investments is greatly supplemented by efforts of these jurisdictions to implement economic development plans through the allocation of tax incentives,” he said.
Demapan believes that the 21-year-old Investment Incentive Act of 2000 served the purpose of its time in providing incentives for the development of new investment in the CNMI. He believes, though, that the structure of the program has not kept pace with an evolving competitive market for business investments.
“At this juncture, it’s important to encourage the development of additional business investments and increased economic diversification of the Commonwealth economy by offering investors tax incentives to build, expand, and operate projects,” said Demapan. “As global and regional economic landscapes change and industries evolve, it is an opportune time for the CNMI to update its portfolio for the challenges of the 21st Century.”
H.B. 22-70 is a product based on recommendations proposed by the Governor’s Council of Economic Advisers.
The GCEA agrees with the need to update the qualifying certificate program to keep current with changing dynamics in the competitive market for American investment and to provide greater resources to the CNMI’s development entity (the Commonwealth Development Authority) to compete with competitors across the nation in an effort to provide a more streamlined and targeted effort to use present tools to encourage economic diversification.
“The changes being proposed will ensure that incentives do not create an uneven playing field among private sector operators,” said Demapan. “For instance, in the event a number of industries develop in the CNMI within a targeted industry, through both incentives and natural investment, the ability to alter eligibility of that industry would ensure fairness in the economy.”
The bill also includes the GCEA’s recommendation to grant CDA the authority to delineate Economic Development Zones throughout the Commonwealth that can better target areas or islands in need of specific development in line with the development priorities of the Commonwealth’s municipalities and communities.
“These reforms to the qualifying certificate program are greatly needed to ensure that our economy thrives for generations to come,” added Demapan. “Further, there will also be opportunities for existing businesses to avail for these incentives for eligible expansion projects, finally leveling the playing field for many of our longstanding locally owned businesses. These businesses have been here for decades, in good times and in bad, so it’s only fair that they be allowed to avail of incentives to further expand their business activities.” (PR)