During the period of the Trust Territory Government, it was the
policy of the United States Government as the administering authority and
its implementing agent, the U. S. Department of Interior, to strive to
develop the local economy for the benefit of the indigenous people. That is
not to say that foreign investment was not desirable since everyone knew at
the time that the limited financial resources of many local people was such
that  large projects were simply beyond their financial capacity to
implement.  In those days it was hoped that the smaller “mom and pop”
businesses would be identified and undertaken by the Chamorro and
Carolinian people. To  an extent some did enter the world of business and
develop thriving enterprises. But it seems not enough people were willing
to accept the risk that all entrepreneurs recognize when they embark on
their own business venture. When the old Trust Territory law governing
foreign investment was repealed in the early eighties nothing was put in
its place to encourage and direct “selected” outside investment. The door
was opened and both large and small amounts of “off island” investment
flooded into the new Commonwealth.
     While large “outside” investment was welcome and, hopefully, will
continue to be so saluted, one is astonished at the large number of
smaller, lower capital investment enterprises that are foreign owned which
have also located in the CNMI. During the period before Commonwealth status
was achieved it was just such businesses as the smaller “mom and pop”
operations that  was hoped the local people would undertake. Only a few
seem to have taken up the challenge. A few years ago the primary concern of
many was to lease land to anyone from anywhere. It should not come as a
surprise that the outside investor would develop the leased land to his or
her advantage. So, in effect, the more land that was leased to, and
developed by, outside investors, the more control over the local economy
was lost by the indigenous people. It was a “trade off” that had to be
accepted if not fully realized at the time. Very often the profits from
such businesses are fugitive in that they are not reinvested in the local
economy.
     Certainly a government cannot on the one hand invite outside
investment at a point in its economic evolution and later “uninvite” it. To
do so would seriously jeopardize its investment reputation and
creditability around the world and I certainly don’t advocate such action
nor has the CNMI Government.
     However, the question remains if the investment opportunities,
particularly the smaller endeavors, that are available in the Commonwealth
are open and available to all comers - what opportunities will remain for
the local people and the graduating youth that come forward in the future?
     Currently a foreign investor need only  demonstrate that an investment
of $50,000 has been made in the Northern Marianas. I once thought the
amount far too low and that the minimum investment threshold should be
several million dollars. But then what about such desirable investment as,
for example,  watch or shoe repair, portrait photo studios, tailor shops
and hundreds of other small businesses? These activities require a small
capital outlay - far less than $50,000. Are we to forego these services if
no local person seizes the business opportunity? When you think about it -
you can begin to appreciate the dilemma. Such outside investment results in
leased land or space rental, pays taxes, contributes to a competitive
environment and culturally enriches the community and it has a significant
multiplier effect throughout the economy.
     In an economy dominated by the tourism sector, few local people  are
directly participating in the rewards generated by the industry . Unless
this record changes the local people will not be full participants in the
Commonwealth’s  future growth potential. At the end of 1995 of the 3,488
hotel rooms in the CNMI, only 5.6 percent or 197 rooms within 12 hotels or
motels were controlled by local people.  Of this number 7 of the hotels
were located on Rota and Tinian with a total of 88 rooms or 45 percent of
total number of locally owned hotel rooms. Local owners on Saipan
controlled 5 hotels with a total of only 109 rooms. However, a substantial
number of apartments and office buildings are locally owned.
     According to data from the CNMI Department of Commerce of the 4,257
business licenses issued in 1995 only 735 or 17 percent were issued to CNMI
born United States citizens. Thirty six business licenses were issued for
fishing and farming; 33 for travel and tour enterprises; 405 issued for
general merchandise activity; 30 nightclubs and bars; 10 speciality shops;
5 car rentals and 216 import - export licenses.
      In the 1994 -’95 school year there were 3,767 secondary and 9,767
elementary students enrolled in both the public and private school systems.
Assuming only 50 percent will enter the world of work upon graduation, in a
few years this economy will need to either generate more than 6,700
additional jobs or reduce the number of nonresident workers by a similar
amount. With the latter there will always be some jobs performed by
nonresident workers that  local people don’t want.
     There is one other factor in the equation to be considered and that
concerns the large influx we can expect from the Federated States of
Micronesia once U. S. financial assistance to that area is cut off or
reduced substantially. As one who has  watched the FSM economy, what there
is of it, since 1970, I have never believed the nation was economically
viable and could stand alone and sustain itself very much beyond the
subsistence level without considerable financial assistance from donor
nations. As this money declines we can expect to see FSM youth migrating to
the Marianas for jobs.
    The issue remains as to whether certain of the smaller business
opportunities in the Commonwealth should be reserved for local
implementation and, if so, the best method to do so.
      Certainly it is not difficult to identify matters that need
addressed. But to suggest possible remedies - that’s the hard part - and
that’s when one must come face to face with one’s own deficiencies of not
being able to suggest  reasonable and fair solutions that please everyone.

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