The report prepared by Malcolm D. McPhee & Associates and Dick Conway for the Fitial administration said federal assistance must be extended to investors on the islands to keep their businesses afloat.
“The CNMI is likely to experience an exodus of foreign investors. The stock of foreign investment over the longer term is more important than investment over a few recent years,” states the report which was submitted as documentary evidence to the U.S. District Court for the District of Columbia where the governor has filed a motion for a preliminary injunction to stop the implementation of the CNMI federalization law.
The report stated that a significant number of foreign investors has already left the CNMI and those remaining will not survive if no help is given to them.
“The Small Business Administration and other federal agencies should provide specialized assistance to the small businesses and private sector in the commonwealth to tide them over the current economic depression and ensure their survival,” it said.
The local government recorded in 2002 that there were 1,276 business establishments as of that year.
Of the figure, 220 were owned by U.S. or CNMI-born investors who collectively employed 5,939 people.
At least 226 more were also U.S. owned with 5,168 employees.
More than 130 businesses around the islands were owned by Japanese investors which employed 3,601; Filipino investors totaled 38 with up to 499 workers; Koreans had 122 business establishments with 4,972 employees; and close to 300 more were owned by investors of different nationalities, employing about 10,000 workers.
The report said the CNMI sustained an economic growth rate of 8.7 percent annually for nearly a quarter of a century until the “bubble burst.”
“This achievement was all the more remarkable because of the CNMI’s small size and geographical isolation. Many island states languish in similar circumstances, seemingly powerless to improve their economic lot in life,” it said.
“The CNMI built a prosperous economy based on the apparel and visitor industries, taking advantage of its trading relationship with the United States, its appeal as a tourist destination, its proximity to inexpensive labor in Asia and its expanding infrastructure funded in large part by the federal government,” it added.
But with the collapse of the Saipan garment industry and the steady decline in tourist arrivals , the economists said the islands’ future looks bleak unless help is given.
