Marianas Variety

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    Thursday, September 19, 2019-2:45:15P.M.

     

     

     

     

     

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Variations | Fingers crossed

SOME say the NMI is back in the Pretty-Darn-Good/Better Times era of austerity measures.

But perhaps a better historical comparison is 1998 when the opposition, which won the Nov. 1997 elections, inherited what was supposed to be a booming economy with record-breaking tourist arrivals (projected to reach 1 million “soon”), a thriving even though controversial garment industry, and ever increasing revenue collections. Gov. Lang Tenorio, seeking re-election, submitted the largest budget in CNMI history: $262 million. (Equivalent to $415 million in today’s dollars. Not a typo. Four-hundred-and-fifteen million in 2019 U.S. dollars. For FY 2019, Gov. Ralph Torres identified $258.1 million in projected revenues of which over $167 million [not including DPL’s $4.5 million] was supposed to be available for government appropriation. That figure is now down by almost $30 million. It may decrease further.)

In September and October 2018, two typhoons hit the NMI’s three main islands — a rare if not unprecedented event — further pulling down the already sputtering local economy, and costing the central government tens of millions of dollars in relief and recovery spending for which the NMI is still hoping to be reimbursed by FEMA.

In Jan. 1998, the effects of the “super typhoon” that was the Asian financial crisis finally reached the NMI. A month before, the outgoing governor reported a decline in Japanese and Korean tourist arrivals — by 6 percent and 44 percent — and the reduction of the budget amount to $245 million from $262 million. But the new governor, Teno, said the shortfall was actually $35 million. He said “serious belt-tightening will be required, a lot of fat must be cut and the size of government must be reduced.”

Over half of the Korean businesses on Saipan had shut down. There was a spike in the number of complaints filed by guest workers over “non-payment of wages” and the failure of their employers to “provide work.” A hotel executive said from an 80 to 90 percent occupancy rate in Jan.-Aug. 1997, the figure dropped to 50-55 percent in Sept.-Dec. 1997. Continental reduced its flights and closed its reservation office at Oleai Center. There would be no Korean flights for the rest of the year. Five new hotel projects were shelved. On Rota, Mayor Benjamin T. Manglona declared a financial crisis — “taya salape!” he said — while the Teno administration issued a list of austerity measures, effective immediately. CUC announced a restriction on OT and travel, a hiring freeze and a suspension of pay hikes. At least 40 executive branch employees were given a 60-day termination notice. MVB (now MVA) projected a 15 percent drop in overall arrivals. CPA said it was running out of cash because revenue from its airport division was down by 46 percent. HANMI hotels had reduced work-hours and room rates and was also considering “retrenchment.” In July 1998, the tourist arrival rate was down by 32 percent. In the following month, an 83 percent decline in Korean arrivals was reported. The PSS payroll budget was cut by $1.5 million. Car sales were down by 81 percent.

Even if the opposition won in the Nov. 2018 elections, the NMI government would still be running out of revenue because of Mangkhut and Yutu and the decline in tourist arrivals. People would still be complaining, especially the political appointees who would have lost their jobs. The Teno administration was saddled with an economy that had gone south and compounded, it said, by its predecessor’s “overspending.” But when it implemented the austerity and other belt-tightening measures, it was, of course, the new administration that was blamed and pilloried by the public. “Austerity for us prosperity for them!”

Sounds familiar?

There are big differences, however, between 1998 and 2019. Back then, the NMI still had the garment industry and control over labor and immigration. (One can say that the presence of the garment manufacturers softened the fall somewhat: instead of the local economy dropping from the 5th floor head first, it fell from the 1st floor only, breaking some limbs.) But in 2019, the NMI government is still waiting for a substantial amount of FEMA reimbursements, and there are at least three major investors already here and are trying to get off the ground.

Things can still improve — or they can get worse. My “prediction”? I quote Eugene Ionesco who once said, “You can only predict things after they’ve happened.”

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