Forum lays out NMI’s cards

Gov. Arnold I. Palacios delivers his opening remarks at the start of the Saipan Chamber of Commerce’s Economic Forum yesterday at the Kensington Hotel Saipan. (MARK RABAGO)

The source of the CNMI’s current economic malaise and solutions to help it recover from knockout blows brought by super typhoons, COVID-19, and government financial mismanagement were discussed yesterday during the Saipan Chamber of Commerce’s Inaugural Economic Forum at the Kensington Hotel Saipan.

Gov. Arnold I. Palacios, who gave the opening remarks, enjoined members of the Chamber and everyone that “it cannot be business as usual” as the Commonwealth tackles the current financial crisis.

“The challenges we face today require the entire Commonwealth as a whole—including government agencies, legislative leaders, private sector companies, nonprofit organizations, together with our partners in the federal government—to think outside of the proverbial box.” See related column on Page 9.

Palacios said over the last six weeks he and Lt. Gov. David M. Apatang appointed qualified individuals to critical Cabinet positions and agencies as well as shored up relationships with federal partners and allies in the region.

“I was in our nation’s capital a few days ago, speaking before the U.S. Senate Committee on Energy and Natural Resources and top level federal officials at the meeting of the Intergovernmental Group on Insular Affairs. …I emphasized the vital role the Marianas plays in the security of our nation and America’s position in our region. And I asked for help,” he said.

Palacios said he also urged Congress to pass key legislative initiatives, including Delegate Gregorio Kilili C. Sablan’s H.R. 560, the Population Stabilization Act, and amend the U.S. Workforce Act to repeal the touchback provision.

The governor also announced his plan to form a Governor’s Small Business Advisory Council.

“Because we know that small businesses are truly the backbone of a healthy local economy, I am announcing today that I am accepting nominations and letters of interest from individuals who wish to serve in a voluntary capacity…I want to be sure that I am hearing the voices and recommendations of our small businesses on the issues and policies that affect them, and by extension the wider economy,” he said.

Northern Marianas College president Dr. Galvin Deleon Guerrero, who was the keynote speaker, championed building intellectual capital to attain and sustain economic growth, pointing to Hong Kong and Singapore as examples. He said the college is trying to make this happen by introducing innovative programs and courses.

Deleon Guerrero said NMC is also building the islands’ intellectual capital by applying for a Sea Grant designation, supporting more academic research, upgrading two-year degrees into four-year degrees, and developing graduate degrees.

CNMI economist Matthew Guerrero tackled the source of the islands’ economic troubles by zeroing in on the imbalance between exports and imports.

Driven by consumer demand and based on the latest figures from the Bureau of Economic Analysis, the CNMI imported $597 million of goods and services compared to just $111 million it exported.

He said therein lies the problem as more money is flowing out of the CNMI ($597 million) than money that enters the islands ($111 million). This especially became problematic during the COVID-19 pandemic, as fewer airlines flew to the CNMI to bring in tourists.

He also referred to businesses that cater to tourists as “factories” and as all the “factories” essentially closed in 2020 as a result of the pandemic, the CNMI economy plummeted to record lows.

Acting Labor secretary Leila Staffler shared the current challenges within her agency, including filling in the big hole left by American Rescue Plan Act funding, lack/limitation of real-time data, desire to work with U.S. Citizenship and Immigration Services on the CW renewal process, as well as need for legislation and policy review on the following: establishment of a state apprenticeship program establishment of a contractors licensing to fund apprenticeships in construction trades, establishment of a CNMI Unemployment Insurance Program, updates to enforcement statutes, and updates to the CNMI minimum wage law.

Employment Services director Eugene Tebuteb, meanwhile, shared that the CNMI’s unemployment rate rose from 10.5% in 2017 to 14.1% in 2020, according to the 2020 U.S. Census.

Saipan has the biggest number of unemployed at 10.8% followed by Rota at 9% and Tinian at 6.8%.

The current challenges to shoring up tourist numbers from the CNMI’s main tourist markets of South Korea and Japan were discussed by Marianas Visitors Authority chair Gloria Cavanagh.

She said challenges from the Korea market are airline operating cost, the vaccination requirement to enter the CNMI, and MVA’s limited marketing budget.

Cavanagh said airlines are hesitant to add flights as operating costs are getting higher and the yield and revenue is not competitive compared to other destinations.

Meanwhile, Koreans’ full vaccination rate is 87%, and competing destinations do not require vaccination anymore unlike the U.S. which the CNMI is a part of.

Lastly, she said the MVA’s allocated destination marketing budget for Korea has been slashed.

Factors hindering the Japanese from traveling to the CNMI include Japan’s national travel discount program that has made domestic travel affordable, limited and negative media coverage of overseas travel, the exchange rate has changed over 20% compared to December 2019, the low vaccination rate among children and family market in Japan, and fuel surcharge and high travel cost.

She also presented MVA’s action items that include restoring the hotel occupancy tax, improving blighted properties by enforcing a minimum standard for building conditions, fully reopening Managaha Island, and creating more authentic heritage experiences.

Hotel Association of the Northern Mariana Islands chair Ivan Quichocho said the “current pipeline of air seats can only muster 34% across the hotel industry at best.” To alleviate this, he wants the CNMI to reopen the China market while also continuing to grow the Japan and Korea markets.

Quichocho also supports the repeal of the CW touchback provision and added that the CW cap reducing worker number every year coupled with the emigration of the local population, “constrains the local labor market and economy.”

Burger, Comer, Mallari LLC managing partner Dave Burger said the CNMI has tax incentives to attract more investors, which are better than other jurisdictions.

He added that he plans to sit down with the new Finance secretary to attract investment firms by revamping the local tax laws.

Saipan Chamber of Commerce president Joe Guerrero reiterated the CNMI’s need for a nonimmigrant worker program that is “sensible and flexible” with local input and perhaps co-management with the CNMI government “rather than one-sided program determined by the federal government.

Commonwealth Economic Development Authority Economic Development manager Robert Guerrero talked about proposed investments that have come through the new division.

This include proposed investment in the space industry (satellite launch because the CNMI is near the equator),  airlines (Marianas Southern Airway/Northern Pacific Airways), agriculture (pork and cattle industry), labor industry (working remotely, work/life balance), renewable energy (Marshall Holdings CNMI LLC), tourism (Saipan Global International Group), and film industry (Hollywood film producer, entrepreneur, and founder and Motion Picture Corp. of America chairman/CEO Brad Krevoy).