With the closure of 10 garment factories on Saipan, including a major factory this week, and the U.S. Congress\u2019 rejection of the CNMI\u2019s proposed tariff amendment to help local manufacturers, what happens next for the industry other than await its own demise?<\/p>\n
Unfortunately, there\u2019s not much that can be done now, local authorities admit.<\/p>\n
What can possibly be explored as a stop-gap is to lower the industry\u2019s user fee as proposed earlier in the local Legislature. <\/p>\n
The Fitial administration had thought of pushing for a reduced user fee but is not confident it would pass.<\/p>\n
\u201cIn the past, Speaker Oscar Babauta introduced legislation to reduce the user fees. I\u2019m not sure if it has a widespread support but now we see the collapse of the largest factory [Concorde]. I\u2019m not sure whether the Legislature would be more wiling now to consider that legislation, but of course the federal government may not be happy with that. It\u2019s a very difficult situation. Besides reducing the user fee, I\u2019m not sure what other tools we have available to help the industry survive,\u201d said governor press secretary Charles P. Reyes in an interview yesterday.<\/p>\n
At present, what is more imminent is a faster rate of collapse for the industry as a result of an impending implementation of a higher minimum wage in the CNMI.<\/p>\n
Reyes said this is \u201can additional dread.\u201d <\/p>\n
\u201cThe industry is declining but it could decline at a much faster rate if the minimum wage rate goes up. Whether it is done locally or whether it be imposed by the federal government or whether it be a compromise agreement between the local and the federal government, that would further jeopardize the industry,\u201d said Reyes.<\/p>\n
Hopes gone on Headnote3a<\/p>\n
The administration has essentially given up hope that the CNMI\u2019s proposed Headnote3[a] amendment, which was rejected by a Republican Congress this month, would make it in a Democrat-controlled Congress next year.<\/p>\n
\u201cIf it was not considered in this Congress, the next Congress may be less receptive,\u201d Reyes said.<\/p>\n
The bill amending Head Note 3 (a) of the U.S. Harmonized Tariff Schedule would allow local garment factories to increase the maximum allowable foreign content material from 50 percent to 70 percent. This means savings for the factories as they would be able to do most of the work outside the CNMI, where cost is cheaper.<\/p>\n
Reyes said the CNMI had high hopes the amendment would pass, considering the generous trade concessions that the United States has with foreign countries.<\/p>\n
\u201cThe reason why we\u2019re pushing that is that Richard Pierce mentioned that many foreign countries have secured generous trade agreements with the U.S. We\u2019re hoping that the federal government would consider the plight of one of its territories,\u201d he said.<\/p>\n
Pierce, the governor\u2019s special assistant for trade and economic affairs, had actively worked for the Headnote3[a] amendment bill.<\/p>\n
Very unfortunate, extremely sad<\/p>\n
Businessman and Saipan Chamber of Commerce president-elect Juan \u201cPan\u201d Guerrero said it was \u201cunfortunate that the U.S. government didn\u2019t see the need for the federal amendment.\u201d<\/p>\n
\u201cWe\u2019re left to our own and we have to move on. It\u2019s very unfortunate that the garment industry will diminish substantially in a short period of time. It will have a devastating effect across the board,\u201d said Guerrero.<\/p>\n
Businessman Jose Ayuyu, local franchise owner of McDonalds and former president of Saipan Chamber of Commerce, said that seeing the garment industry go is \u201cextremely sad.\u201d<\/p>\n
\u201cIt\u2019s very sad especially when we are relying on its revenues to run our government. It\u2019s going to be a big blow to the government. Whether you like the garment industry or not, it really provides money to support us,\u201d said Ayuyu.<\/p>\n
The garment industry used to contribute an estimated $60 million in direct taxes to the government annually.<\/p>\n
In user fee alone, which represents 3.7 percent of total industry sales, the government used to collect an average of $30 million a year.<\/p>\n
In fiscal year 2006, this collection plunged to $19.5 million due to the closure of factories and ongoing downsizing within the industry arising from the worldwide lifting of trade quotas effective Jan. 1, 2005. <\/p>\n
Ayuyu said a short-term remedy to solve the current economic dilemma is to extend land lease term to 75 years to attract more investors.<\/p>\n
\u201cBut that\u2019s short term. We need to address the long-term solution\u2014owning of property. It is very important because the confidence of investors is at stake. The government must move fast. We can\u2019t do business as usual now,\u201d Ayuyu said.<\/p>\n
Saipan Garment Manufacturing Association chair James Lin has remained inaccessible to the media. His office said last week that he was off-island and would be back this week. When reached yesterday, his staff said he went off-island again.<\/p>\n
At least 10 garment factories on Saipan have closed down since 2005.<\/p>\n
These included five last year: Neo Fashions, Express Manufacturing Inc., Sako Corp., Mariana Fashions Inc., and Winners I.<\/p>\n
This year, the factories that shut down operations were Hyunjin Saipan Inc., American Pacific Textile, Hansae Saipan Inc., Handsome Saipan, and Concorde Garment Manufacturing Inc.<\/p>\n
This data [with the exception of Concorde] is based on the documents provided earlier by the Governor’s Office to the media.<\/p>\n
Concorde stopped its operations Tuesday this week, resulting in the displacement of some 1,400 employees.<\/p>\n","protected":false},"excerpt":{"rendered":"
With the closure of 10 garment factories on Saipan, including a major factory this week, and the U.S. Congress\u2019 rejection of the CNMI\u2019s proposed tariff amendment to help local manufacturers, what happens next for the industry other than await its own demise?<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-107015","post","type-post","status-publish","format-standard","hentry","category-local-news"],"_links":{"self":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/posts\/107015","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/comments?post=107015"}],"version-history":[{"count":0,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/posts\/107015\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/media?parent=107015"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/categories?post=107015"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/tags?post=107015"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}