TWO MAJOR SAIPAN RETAILERS CLOSE SHOP

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By Aldwin R. Fajardo Staff Reporter

SAIPAN, Northern Mariana Islands (June 27, 2000 – Saipan Tribune/Abridged)---The turtle-paced recovery of the CNMI economy from the two-year currency crisis in Asia continues to take its toll on the local business community, forcing two major retailers to cease operations in the Northern Marianas in the last few weeks.

While company officials remain mum on the reason that triggered the closure of the establishments on Saipan, business analysts said weaker consumer confidence and the change in the spending behavior of tourists are major factors behind the decline in the local economy.

Since the beginning of the year, A-One shoe store held a series of inventory and clearance sales, to apparently mitigate further losses, before it finally shut its doors to customers earlier this month.

Businesses have been competing with each other over the dwindling size of the local and tourist market in the Northern Marianas. Those that were not able to brave the heated competition were forced to close down.

Japan-based Yokohama Okadaya earlier announced it is closing down its Saipan outlet, located at the commercial district of Garapan. Its store on Guam will remain in operation.

Company officials did not cite reasons behind the closure of the Saipan outlet, although the store has been struggling for customers in the last couple of years due to the decline in visitor arrivals in the Northern Marianas since 1997.

Yokohama Okadaya insiders said the decision to cease the store's operations on Saipan came from the parent company in Japan. They said sales figures have not been very encouraging.

In what appears to be an indication of another round of fierce economic upheavals, at least 812 establishments in the Northern Marianas did not renew their business licenses last year.

A report obtained from the Business License Section of the finance department noted that out of 3,410 businesses in 1998, 812 establishments opted not to renew their licenses by the of December 1999.

Business analysts fear the decline in the total number of businesses in the islands may result in higher consumer prices, since the collapse of many establishments lessens the competition for customers among the remaining number of shops.

Consumers are eventually faced with costly products since there is less competition in the market, and less competition means higher prices. This may lead to monopolies in some areas, as the number of establishments involved in a particular field of business is trimmed down further.

The Central Statistics Division of the Department of Commerce has disclosed that 2,775 new business permits were issued by the Business License Section last year, exceeding the number of establishments that did not renew licenses.

Overall, the government's business licensing office processed and approved 3,587 business permits last year, which represented a miniscule growth of 0.05 percent from the year-ago's 3,410.

Before the Asian currency crisis fanned into the Northern Marianas, CNMI was enjoying a steady growth in business and economic activities with close to 6,000 establishments operating in 1996.

The figure dropped by 32 percent to 3,800 businesses in 1997. It dropped further, to 3,410 the following year. only to show good signs of stability with last year's tally reaching 3,587.

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

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