INVESTORS IGNORE CNMI DUE TO US$ 100,000 SECURITY DEPOSIT REQUIREMENT

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By Cookie B. Micaller SAIPAN, Northern Mariana Islands (August 5, 1998 - The Saipan Tribune)---The Northern Marianas continue to experience tough times luring foreign businessmen onto the islands because of the Asian economic slump and an investment law requiring investors to put up a $100,000 security deposit.

To date only three new foreign investors have been given foreign investment certificates and visas to do business on Saipan since the law was implemented, according to the Department of Commerce.

This means garment manufacturer Top Fashion, condominium developer TransAsia, and diving equipment and accessories retailer Deer Islands Saipan, Inc. were the only investors willing to shell out the security bond on top of the fresh capital they will infuse into the economy.

The combined capital the three will put up is expected to reach almost $10 million.

Because of the significant drop in tourist arrivals since last year, a number of officials have called for the easing of the security deposit -- a requirement that has turned off potential investors -- to attract foreign businessmen.

The implementation of Public Law 10-44, or the Foreign Investment Act, early last year has virtually frozen the entry of fresh investments into the commonwealth and compounded economic woes brought about by the slowdown in the half-a-billion dollar tourism industry.

Businessmen frowned at the security deposit requirement, saying they would rather see the money remain part of their capital than let it sit idle in the local treasury.

The law, envisioned to eliminate the proliferation of mom-and-pop stores which lawmakers said contribute to the influx of guest workers in CNMI, is now under deliberation in the Legislature for amendment, with some legislators seeking to scrap the stringent requirement.

Meanwhile, the department said a hundred new licenses were issued to business establishments in May and June while 161 others were renewed.

However, the number of new licenses issued is not enough to offset the number of business closures (131) recorded from last year to April as a result of the economic recession.

These businesses include night clubs, restaurants, grocery stores and souvenirs shops, mostly owned by foreigners.

A large number of the business establishments were operated by Koreans who left the island after the collapse of South Korea's economy, which forced a large number of its citizens to postpone travel plans to the Northern Marianas.

For additional reports from The Saipan Tribune, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/The Saipan Tribune.

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