SAIPAN, CNMI (Saipan Tribune, Feb. 20) - After adopting a measure promoting a $25,000-bond in lieu of the earlier $100,000-security deposit required from long-term investors, the House is poised to take on other business initiatives intended to lure in more foreign investments.

Speaker Heinz S. Hofschneider raised the suggestion of streamlining the process of setting up a business in the Commonwealth by doing away with what he termed as the "territorial or turf mentality" among regulating agencies.

"That has always been the most difficult challenge. We need to streamline the process and provide the minimum protection for consumers and prospective businesses that want to come in," the Speaker told reporters yesterday.

House Resolution 13-107, which the House recently passed, promotes the same objective through the implementation of an executive regulatory reform.

The resolution, authored by Rep. William S. Torres, aims to establish one or several task forces that will undertake a regulatory review process of government regulations that have significant impact on labor, consumers, businesses and the environment.

While agreeing that administrative rules are necessary to protect public health, safety, welfare and the environment, Torres pointed out that many regulations have impeded the public welfare and imposed unnecessary cost, burden and complexity on those who want to set up business here.

"There has been a vast increase in the number and complexity of permits, licenses, certificates and other approvals that individuals and organizations must obtain from an increasing number of agencies in order to undertake commercial, industrial and personal projects or activities in the CNMI," HR 13-107 reads.

This creates inconvenience to individuals and inhibits business growth and the creation of jobs, placing the CNMI at a competitive disadvantage in the global market, the resolution adds.

HR 13-107 essentially requests Gov. Juan N. Babauta to promote a business-friendly and investment environment in the CNMI by using his executive powers to make the needed reforms.

Meantime, Hofschneider said the House is eager to move forward with the actual passage of House Bill 13-193 or the proposal to remove the $100,000- security deposit requirement for long-term business certificate applicants.

"Basically the $100,000 remains but it is in the form of bonds. We don’t expect the $100,000 to be in cash and remain in the bank. But more importantly, we want to see that, at the very minimum, foreign investors come and lease properties or build with their $100,000 rather than have the cash sitting idle in the banks," explained Hofschneider.

The House Committee on Commerce had recommended the passage of HB 13-193, saying the high security deposit requirement is a deterrent to new and existing foreign investments in these difficult economic times.

In a report, the House panel alluded to the 2001 Economic Investment Report by the Department of Commerce, which recorded a disturbing decline in business certificate issuances from 141 in 1996 to five in 2000.

The decrease was blamed on the $100,000 cash security deposit requirement, which was first imposed in 1996 pursuant to Public Law 10-44.

In 2000, legislation (PL 12-11) was enacted to enable business applicants to post a bond in lieu of the $100,000 cash deposit, but the number of renewed certificates still decreased from 348 in 2000 to 264 in 2001, the Commerce committee noted.

The House is supporting the passage of HB 13-193, Committee Substitute 1, which reduces the overall security to a $25,000-bond, to ensure that the deposit is used only to satisfy claims by the government for taxes, penalties and fees.

Under the proposal, a long-term investor can operate a business in the CNMI for two years if he or she posts the $25,000-bond.

February 20, 2003

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