IN 2019, prior to the pandemic, 487,008 tourists visited the CNMI. The average HANMI hotel occupancy rate was 80.43%. Of these tourists, 249,211 were Koreans, 185,526 were Chinese and 17,121 were Japanese. (Japan ceased to be the CNMI’s primary tourism market in 2014. China was the top market in 2014 and 2015. Since 2016, South Korea has been the islands’ no. 1 market.)
And then Covid-19 happened, and with it, the global imposition of travel and other government-sanctioned restrictions that all but killed the CNMI’s tourism-based economy. (Federal ARPA funds prevented that.)
Over the past few years, most of the travel restrictions have been lifted. The CNMI, through MVA, is going all out to promote the islands in South Korea, Japan and “new markets.”
In calendar year 2023, there were 215,543 arrivals — a 44% drop compared to 2019. In FY 2023, there were 7,373 arrivals from Japan,159,315 from South Korea, and 162 from Taiwan. There were no direct flights from China, but 4,309 tourists from that country managed to visit the CNMI.
Clearly, Japan’s numbers are still too low, and although the South Korean market continues to recover, the total arrivals are not enough to boost the sputtering local economy as reflected in the CNMI government’s revenue collection.
Since last year, HANMI and the Saipan Chamber of Commerce have been pointing out that the absence of another major tourism market is preventing economic recovery. That market is China. Hence, HANMI and the chamber recommended the resumption of 1) MVA promotions in that country, and 2) direct China-Saipan flights.
Saipan Chamber of Commerce members include big and small businesses that hire people and provide services and goods that members of the public need (otherwise they won’t patronize the business). They also pay taxes to fund this bloated government, which seems to believe that it knows how to operate an actual business without running it into the ground like what it almost did with CHCC and CUC (never mind the Retirement Fund).
As for HANMI, its members collect and remit the hotel occupancy tax that is supposed to fund MVA’s promotional activities.
Both the chamber and HANMI believe that tourist arrivals will significantly improve with the revival of the China market, especially now that EVS-TAP will be implemented to address concerns regarding “visa-free” visitors from China.
Neither HANMI nor the chamber is arguing against the governor’s “pivot” policy and geopolitical concerns or even his goal to create a “better” economy. What the business community is recommending is a return to what things were in 2019 when the tourism industry was based on three actual markets, and not the only one that exists now plus a hypothetical (and nonexistent) “new” one.
Sadly for the business community, government employees and other residents that depend on many government programs and services, there is no sign that the governor, like Congressman Kilili and Senate President Edith Deleon Guerrero, will request the feds to reinstate Annex VI so that direct China flights to the CNMI can resume. There is also no indication that he will allow MVA to again promote the CNMI in China.
The governor is basically saying that under his watch, the local economic situation right now is as good as it gets — although it can get better, soon or someday, somehow.
In the meantime, what can the business community do? Those who choose to remain open should continue with their lobbying activities to revive the China-CNMI direct flights. With or without MVA’s assistance, they should find ways promote the islands in China. Perhaps they can ask the lt. governor’s help.
As for government employees and retirees — the CNMI’s largest voting bloc — they should be reminded that the CNMI government’s revenue collection depends on the state of the tourism-based local economy. Seventeen months since a new administration and Legislature were sworn in, tourism numbers are still way below their pre-pandemic levels. Businesses are either shutting down or downsizing. They are either cutting work hours or laying off employees. More and more residents are leaving the islands. All this is reflected in the missed revenue projections of the CNMI government, which has so many obligations, including government payroll, health & life insurance payments, pension checks, medical referrals, etc.
The local economy will not improve without the arrival of more tourists.
In any case, businesses, you’re on your own — but don’t be late in paying taxes and fees, and don’t complain if the government can’t pay you for what it owes.
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