ECONOMY FLAT IN NORTHERN MARIANA ISLANDS

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By Gaynor Dumat-ol Daleno Pacific Daily News

HAGÅTÑA, Guam (September 1, 2001 – Pacific Daily News)---The Commonwealth of the Northern Mariana Islands economy will, at best, stay flat this year, according to a bank's evaluation of the CNMI's vital economic signs.

But there's a worse and more likely scenario that will revert the commonwealth into a period of decline, said the Bank of Hawaii's latest CNMI economic report.

It was the CNMI's turn yesterday to hear its economic health diagnosed by Bank of Hawaii international economist Wali Osman as part of the bank's tradition of assessing -- every two years or so -- the economic conditions of the markets where it conducts business.

Three days ago, Osman said Guam's economy has been stagnant.

For some CNMI government and business leaders, the assessment confirmed what they've already seen throughout the community dotted with shuttered stores, empty tourist souvenir shops and idle construction machinery.

''Consumer confidence has been shaken,'' said Efrain Camacho, a local businessman who owns an engineering and architectural consulting firm.

In the construction contracting sector, projects are few and far between, he said. Construction activity is down as much as 75 percent, Camacho added.

Numbers on retail sales, tourist arrivals and taxes from garment manufacturing also give consumers reason to feel uncertain.

Tourism: The islands of Saipan, Tinian and Rota saw their tourism industry peak -- with a combined total of 736,117 visitors mostly from Japan and South Korea -- in 1996 before the Asian economic crisis. The annual total the past three years has slid by 200,000 each year, according to Marianas Visitors Bureau statistics.

Garment manufacturing: Sales reached a record high of $1.06 billion in 1999 and dropped slightly to $1.04 billion last year. By the end of this year, sales are expected to slide to $919 million, according to a Saipan Garment Manufacturers Association estimate.

Richard Pierce, head of the garment manufacturers association, said reduced orders from the continental United States because of the U.S. economic slowdown could force three of 31 Saipan garment factories to close this year.

Retail: Gross business revenues in the retail trade reached an all-time high of $635 million in 1997, but there has been a reduction of about $200 million each year since then through last year, according to CNMI Department of Finance statistics.

To help stimulate business activity and improve investor confidence, Gov. Pedro P. Tenorio said he has approved tax breaks for certain investments and a tax amnesty program.

Despite those efforts, external factors -- notably the wobbling of Japan's own economy -- have weighed down the CNMI economy, Tenorio said.

The commonwealth's next governor faces a tough challenge because of adverse external economic factors, he added.

The CNMI is gearing up for a gubernatorial election in November, and the incumbent Republican governor is not running.

Juan N. Babauta, the CNMI resident representative in Washington, D.C., and the Republic gubernatorial candidate, said he would like to see more discussions on ideas for diversifying the commonwealth economy.

The bank's economic report suggested that the CNMI enhance its tourism infrastructure.

Now is the time to put the necessary changes in place so that the commonwealth will be ready to welcome more tourists when the Asia-Pacific economy rebounds, the report said.

Local businessman Joe Ayuyu, who owns the McDonald's franchise on Saipan, said he wishes that the government would listen more to the ideas of the business sector in terms of how to help stimulate the economy.

''I wish the economy were more market-driven rather than government-driven,'' he said.

At Ayuyu's two McDonald's stores, the slow economy has meant better-than-last-year sales from consumers, including some who have scaled down to burgers and fries from higher-end dining.

''Consumers now are going to places where they can get reasonable prices and still get value for their money,'' according to Ayuyu.

For additional reports from the Pacific Daily News, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/Pacific Daily News (Guam).

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