THE latest CNMI economic report — titled “Marianas Economic Roadmap” — reminds current policymakers that the local economy “is not simple but rather a complex web of interdependent industries, policies and external influences. Despite its small size, it operates within a broader regional and global framework, shaped by persistent structural vulnerabilities, external shocks, and a heavy reliance on a narrow set of industries.”
This is a fact that local leaders have known since at least the establishment of the Commonwealth 47 years ago. Hence, diversification has also been a goal “since ever since.”
So why are we still talking about it instead of having a ribbon-cutting ceremony for a new industry?
One of the key findings of the economic roadmap is that the CNMI government — the same government with an alphabet soup of departments, divisions, bureaus, commissions, agencies, boards, offices and programs — “does not have any existing process for the development, coordination, and implementation of an economic development policy.”
After mentioning the new industries targeted by the CNMI in its previous diversification efforts, the economic roadmap noted that many of them “required substantial long-term investments in infrastructure, training and policy support. However, there was often a lack of follow-through and strategic planning. The failure to create master plans and secure sustained funding meant that…[potential new] sectors never developed into major economic pillars.”
Previous reports themselves “recognized that institutionalizing economic policy could help ensure continuity across political cycles, mitigating the disruptions often caused by leadership changes — a recurrent challenge in the CNMI’s economic development.”
One of the more interesting new industries considered in the past was the Saipan film studio project, which was proposed in the 2016-2021 CNMI Comprehensive Economic Development Strategy. According to the economic roadmap, the film studio project envisioned converting the former La Fiesta Mall into a film production complex. This initiative would “remediate blight, and generate benefits across a range of supporting industries, including workforce training, tourism, and local services.” But the project never took off. According to the economic roadmap, here’s why:
• No designated agency was responsible for the project.
• No federal grants were explicitly identified in the proposal.
• It did not address critical challenges such as high utility costs or labor availability for construction and operation.
• Potential environmental impacts were not addressed in the proposal.
All true, but perhaps the primary reason the project faded into oblivion is political: the administration that championed it was not re-elected.
To address the lack of follow-through, the economic roadmap recommends the creation of (yet another) government position: that of special assistant for economic policy within the governor’s office, which already has a slew of special assistants.
But I agree. There must be an official point person for economic policy — someone who has the ear of the governor. There is, however, no need for yet another appointee. One of the governor’s current special assistants could be designated as the “economy czar.” Ideally, this person should have the requisite economic credentials, but let’s be realistic: politics will be a key consideration for the governor — whoever s/he may be — in making that choice. Still, that alone shouldn’t diminish the importance of the role. As the economic roadmap has recommended, the special assistant for economic policy would be responsible for coordinating and monitoring economic development activities. Moreover, s/he could liaise with agencies tasked with economic development and act as the primary coordinator for policy implementation. In other words, s/he would be the designated “one-stop shop” for interested or potential investors.
The economic roadmap also recommends assigning responsibility for economic development policy to an existing government entity — one whose very name suggests it’s the perfect fit: the Commonwealth Economic Development Authority. CEDA already “holds specific mandates for industrial solicitation, maintains investor incentive resources, and is [supposed to be] autonomous from the central government….”
Another key recommendation of the economic roadmap is the elimination of overlaps in responsibilities among government agencies and statutory mandates related to economic development. “Existing laws often assign overlapping or unclear roles to various entities, leading to inefficiencies, miscommunication, and delays in economic development efforts. A comprehensive review and restructuring of these mandates would ensure that each agency or office has a clearly defined scope of responsibility. This realignment would improve coordination, reduce redundancies, and allow agencies to focus their resources and expertise on their core functions. Clarifying mandates would also enhance accountability and create a more streamlined, effective approach to implementing the CNMI’s economic development strategy.”
These recommendations should not lead to additional costs or the need for more personnel. However, they do require focus and single-minded determination to carry them through to implementation.
We also have to remind ourselves that the CNMI is not the only Pacific or U.S. jurisdiction seeking new investments.
Ultimately, as the economic roadmap noted, “industrial solicitation and diversification objectives should also acknowledge the decision-making factors of the entrepreneur. Achieving diversification provides positive externalities for the wider community, yet the costs of failing to successfully develop a new industry are assumed solely by the entrepreneur. The incentive for the government to seek diversification is often greater than the profit incentive for the entrepreneur to engage in investment.”
In short, don’t get your hopes up.
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