JAPANESE INVESTORS PULLING OUT OF CNMI

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By Gemma Q. Casas

SAIPAN, CNMI (Marianas Variety, Jan. 6) – More and more Japanese investors are pulling out of the Northern Marianas and one of them says the business climate on the islands is no longer as conducive to investment as before.

Hiroyuki Saito, vice president of Saipan LauLau Development Inc. which operates the LaoLao Bay Golf Resort, said the trend should alert the local government that there is something wrong with the system.

Saito’s firm invested $61 million, but is now selling the company at a bargain price of just $8.5 million.

"There must be suitable conditions for investors to come in. Like in terms of taxes, the legal system. If people are starting to withdraw and not coming in, then there is something wrong with the system. That is not suitable, at least to Japanese investors," he said.

Japanese companies invested heavily to the Northern Marianas 20 years ago when Saipan was really "profitable."

But the so-called "bubble economy" of that era is long gone and investors are now waking up to the painful truth of heavy losses.

"As you know, this island depends a lot on Japanese tourists—70 to 80 percent. But the Japanese economy declined and the number of Japanese tourists coming in decreased so the revenue of companies went down," said Saito.

"More than this there are some disturbances. As you may know, the insurance company, Tokio Marine Insurance, withdrew from the CNMI because of the court system," he added.

According to records from the CNMI Superior Court, Tokio, which Saito referred to, is facing a total of 18 cases. The single biggest one involves a $14 million damage suit filed by the representative of an elderly Korean who drowned at the Hafa Adai Beach Hotel in 2001.

The adverse legal climate in the CNMI apparently reduced Tokio’s profitability.

Saito said investment is like a human being. If it is nurtured under suitable conditions, it will grow and flourish, but left on its own it will die and wither.

January 6, 2005

Marianas Variety: www.mvariety.com

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