IN April 2019, six months after Super Typhoon Yutu thrashed Saipan and Tinian, the then-Torres-Palacios administration announced the release of a federally funded, 204-page updated “CNMI Comprehensive Economic Development Strategy” or CEDS. It was described as a “comprehensive economic planning document which considers the jurisdiction’s human, physical and natural assets towards an integrated economic plan for a five-year forward looking period.” The updated CEDS revisited “growth priorities and projects identified in an [earlier version]…with an emphasis on recovery and resiliency needs.”
Four years ago, many believed that the economic growth enjoyed by the islands until Oct. 2018 would soon resume. Among the concerns back then: the need for improved infrastructure, more hotel rooms and more workers. The updated CEDS likewise stressed “the importance of diversification and redundancy in the growth of a local, sustainable economy.”
It was a plan that was based on extensive, community-wide consultations and meetings. It was also drafted with the use of trendy, cutting-edge analytical and assessment tools.
It was yet another beautiful comprehensive government plan that failed to anticipate a single event that rendered its “development strategy” all but useless. I’m referring, of course, to Covid-19.
“Everyone has a plan,” boxing champ Mike Tyson once said, “until they get punched in the mouth.”
But Covid-19 was not just a punch in the mouth. It was also a knee to the groin, and a karate chop to the throat.
Still, the 2019 CEDS — especially its section on the history of the local economy — should be read by administration officials and lawmakers as they try to cope with the CNMI government’s financial woes — compounded by its so many self-imposed obligations.
Policy-makers must be familiar with the past. They must know what has happened, how it happened, what were the measures proposed and implemented, and what were the results.
For example, how many still remember that between 1986 and 1991, the CNMI’s annual economy growth was an astonishing 16% which was “one of the highest of any American state or possession at the time”?
How many are aware that “a rapid decline in tourism began in 2006 following the cessation of service by the islands’ most significant air carrier [Japan Airlines]”; and that the “lack of stable air service and a significant reduction in destination marketing resulted in major declines in tourism”?
According to the CEDS, as “the CNMI addressed a sharp economic decline, policies and practices implemented during its economic peak aggravated its fragile condition. Most notable among these policies was the installation of a liberal government retirement program which proved too onerous to sustain during [the CNMI’s] economic freefall. On Sept. 25, 2013, the…federal court…placed the…Retirement Fund under receivership [through the Settlement Fund], requiring the CNMI government to remit retirement payments as a priority over other operational expenses.” My italics. (For the current fiscal year, the CNMI must pay the Settlement Fund $36 million. That amount doesn’t include the retirees’ 25% benefit which is about $14 million-$15 million annually.)
This requirement, the CEDS noted, “placed the CNMI government in a perilous dilemma, prompting the CNMI’s leadership to explore options to introduce new sources of revenue.” In 2014, the Saipan casino law was enacted. Its “passage was indicative of the state of economic despair,” the CEDS stated. Previous attempts to legalize casino gaming on Saipan were rejected by voters (in 1979 and 2007).
The casino law, in any case also “represented the beginning of the CNMI’s economic revival. The award of the [casino] license immediately infused cash into government coffers, as well as spurred investments into the CNMI’s private sector in anticipation of the economic upswing premised on the casino and resort development. These new developments prompted a demand in labor, goods, services and arrivals to levels not experienced in the previous five years…. Business Gross Revenues increased by 107% between 2011 and 2016, [and there was a] 90% increase in visitor arrivals over the same period.”
But then the casino investor committed several “unforced errors” which involved alleged violations of federal laws. Around this time, moreover, China-U.S. relations started to deteriorate even as China’s government was imposing new restrictions that directly affected the primary market of the Saipan casino — China’s high-rollers.
And then Covid-19 happened.
As a famous Yiddish adage would put it, “Mann Tracht, Un Gott Lacht.”
Man plans, and God laughs.
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