Shades of 2010, 2011, and 2012. We find ourselves facing “austerity’’ holidays, layoffs, short hours, short paychecks, short tempers, much of it avoidable if we were not so short-sighted.
First and foremost, we still rely our tourism-based economy for 92 percent of our income. Tourism is essentially the CNMI’S only job. Yes we have a part-time job begging money from Uncle Sam but that only supplies about $100 million a year on average in non-FEMA typhoon years out of a $1.3-billion economy. If you were to pick a job that was to be your only job, tourism would be down the list somewhere because it is so volatile, so unstable.
A 25-cent screw falls off the front of an airplane headed for Destination X. The screw goes through the jet engine intake, it explodes and the plane crashes. No fault of Destination X but the tourists stop coming and it takes months for the arrival numbers to begin stabilizing again because the crash is headline news for weeks or months. Disaster and death sell TV commercials. Or some new viral disease is discovered and tourists all over the world stop flying because of the scare of becoming infected. Or a major typhoon slaps a destination down and smashes its infrastructure (Soudelor…Yutu), tourists don’t like to visit a place that looks like a war zone. They go to Bali or …? instead of our destination. You get the point. We need another job, another CNMI industry to fall back on when tourism times are tough.
During the high times we did little or nothing to find another job because we were busy raking in the dough from the CNMI’s tourism job. We did not diversify our economy, so here we sit with only tourism providing our country’s living wage. Too late now to do anything but make the best of the spot we put ourselves in. There is tomorrow, however.
Still, tourism is a clean, sustainable and wonderful business, when it is well funded and working right.
That brings us to reflecting on the last major economic downturn in 2010, 2011, 2012. Tourism tubed because MVA did not get sufficient funding to pay its bills and could not promote the destination properly to bring in the tourists and their spending money. So the economy tubed. What brought us out of it? Public Law 18-1 of 2013, which made it mandatory for the CNMI Finance Department to remit 80 percent of the newly-increased hotel occupancy tax to MVA within 30 days. That enabled MVA to pay its offshore bills timely for the first time in years and allowed MVA to begin promoting our destination strongly in Japan, Korea, China, Russia, and Taiwan. Arrivals doubled, CNMI income went up even more, the economy boomed, everybody was happy because the money flowing again. MVA even had money to accomplish some major destination improvements on Saipan, Tinian, and Rota.
We came back from a devastating Soudelor pretty fast because we focused hard on destination infrastructure. Yutu not so much. Departing passengers at our airport climb down the stairs in the rain because we haven’t repaired our jetway movable exit hallways. Visitors take tours through areas of Saipan and Tinian that still look like the typhoon hit last week. So here we sit with visitor arrivals and their cash money down significantly. What do we do? OMG…we defund the MVA and spend that hotel tax promotional seed money on important, but not moneymaking, promotional projects by MVA as mandated by law. Did I mention something about shortsighted policies? Who pays MVA’s hotel tax? Tourists, not us residents.
Here are the particulars: The central government has not been paying MVA the monthly funds due it by law. As of the June 12 board meeting, they are $4.7 million behind in their payments to MVA, according to Pricilla Iakopo, MVA managing director. That is $4.7 MILLION that has not gone to pay offshore advertising and promotional bills that keep the visitors coming to our beautiful shores. MVA is already getting behind and owes its offshore promotional vendors $1.7 million and local vendors will soon be lining up as well. Even the payroll of MVA marketing specialists and other employees is in jeopardy. You should be aware that MVA spends roughly 80 percent of its funds on promoting and improving the destination and only 20 percent on administration and payroll—about opposite of other CNMI government agencies.
Marian Aldan-Pierce, MVA board chairman, said at that same board meeting, “If we start cutting programs and if we can’t pay our offshore bills, it will take years to recover and get our economy going again.” Board vice chair Gloria Cavanaugh opined that, “All expenditure items outside our direct mission should go on hold.” Referring, I suppose, to the millions of dollars MVA has spent improving tourist sites, roadways, the Paseo de Marianas and other Rota, Tinian, and Saipan infrastructure. If you don’t have it, you can’t spend it improving our islands.
Strike 1, Yutu. Strike 2, unlawful late funds transfers to MVA. Strike 3, Yumul’s House Bill 21-56
…And it gets worse. The same guy (Rep. Ralph Yumul) that saved the CNMI’s economic bacon in 2013 with P.L. 18-1 now turns coat and wants to submarine the economy into the dark ages with a new bill, House Bill 21-56, that lets a handful (10 or so) people have the say on where all the money is spent by granting them (likely unconstitutional) “100 percent reprogramming authority.” Once that money is “reprogrammed” to some crony deal under the guise of an “emergency” it will never find its way back to its rightful owner. Think. Can you remember any temporary tax that was ever rescinded later? Of course not. Senators, please vote this measure down. No funding, no promotion. No promotion, no tourists. No tourists, no new money. No money, no honey.
A crushing blow? Possibly. When the People’s Republic of China’s Communist Party dictates a travel ban to its citizens, they listen and obey. Case in point, a couple of years back when South Korea installed a high-tech anti-missile system supplied by the U.S., the PRC ordered a ban on travel to that country followed by a 90-percent drop almost immediately in arrivals from China to South Korea.
If the current travel ban to the U.S. is expanded to include the CNMI, and we were to lose 90 percent of visitors from our No. 1 source country, China (with a 55-percent market share), our economic recovery would derail like an electric Amtrak train on life-support with the plug pulled. Let us all hope this doesn’t happen.
Sky pilot: Tourism bonanza
Why Amelia Earhart? Next time we will look at the possibilities of tying our CNMI destination brand with that of famed aviatrix Amelia Earhart. It’s an interesting story and potentially a very profitable one for te Marianas.
Thanks for reading Sour Grapes!
“I don’t see any malicious political intent here. Just myopia and shortsightedness.”
“Let no wise man flatter himself with the strength of his own judgement, as if he was able to choose any particular station of life for himself. Man is a shortsighted creature, sees but a very little way before him; and as his passions are none of his best friends, so his particular affections are generally his worst counselors.”
Bruce Bateman (Special to the Saipan Tribune)
Bruce A. Bateman resides on Saipan with a wife, a son, and an unknown number of boonie dogs. He has owned and operated a number of unusual businesses and most recently worked as the marketing manager for MVA. Bruce likes to read, travel, tinker with bicycles, hike, swim, and play a bit of golf. He is opinionated and writes when the moon is full and the mood strikes.