Stimulating Increased Investment
The rapid economic expansion experienced in the Commonwealth during the mid eighties thru the early nineties was a result of being geographically situated in the right place at the right time. The great “boom” period resulted in a rapid development pace that, during normal times, would have required some twenty years or so to achieve.
In the Commonwealth this development pace was “squeezed” into the short span of five or six years resulting in cultural pressures and a strain on the infrastructure. The foreign investment which fueled the CNMI’s economic engine was a direct result of the devaluation of the dollar in relation to the yen at the Plaza Accords in New York in 1986. In the ensuing years every sector of the economy in the Northern Marianas grew by an annual increase of sixteen percent. In all probability the islands will not see such growth again in this century nor perhaps well into the 21st century. However, the Northern Marianas should expect an annual normal growth of 2.5 to 3 percent. The area is fortunate that its proximity to major Asian markets permits visitors from these areas to travel to this destination in a rather short time at reasonable air fares. This will continue to stimulate growth in visitor arrivals. Economic conditions are changing which requires a change in methods to generate investor interest. If the people of the CNMI hope to see a return to moderate levels of increased annual economic growth outside the tourism sector an aggressive investment promotion program must be undertaken. The negative publicity generated by confusion over Article XII could be overcome by placing appropriate, well designed, positive advertising announcements in the major news media throughout Asia and elsewhere such as the Asian Economic Review, Wall Street Journal and other business and investment oriented magazines.
Those with suitable property available for lease, namely, sites which could be exposed to foreign investors should be prepared to document that such land is free of any Article XII problem or otherwise be prepared to offer some form of guarantee against such. If the site is suitable for hotel or golf course development the land owner should give such projects a “paper personality”, in the form of an investment prospectus, which at the very minimum should consist of: a cadastral map, aerial photographs, a financial feasibility analysis based on a typical, albeit, hypothetical project which, in the case of a hotel, would display an estimated statement of income and expenses at various levels of occupancy with all assumptions employed clearly explained.
This analysis should be accompanied by a cash flow projection as well as an analysis of the Commonwealth’s existing tourist industry and its potential market. The preparation of such “tools” are standard promotional documents that greatly enhance the possibility of leasing land to foreign investors for those in the Commonwealth who still wish to do so. An office is needed where local people can register the characteristics of the property they wish to either lease or make available for use as equity participation in joint ventures with foreign investors. This inventory of such land would then be available for review and consideration by potential off-island investors. As it now stands, the availability of such land for lease remains unknown to all but a few.