Tourism – The CNMI’s Bread & Butter
During the period when the United States provided a wide variety of economic assistance to many of the newly emerging nations of Africa and elsewhere, America’s economic development programs required that each project be structured to provide three essential elements. These were: first, establish and articulate a specific goal for the project; second, establish a time limit to achieve the goal and third, provide a method to quantify or measure the success of the goal.
The next step in the development process was to determine the actions required to achieve the established goal. These usually required one or more of four basic elements: (1) working capital; (2) a commodity or material object of some sort; (3) training for those who were to implement the task; or (4) the provision of expert assistance to assist in the assignment. All required a realistic budget and adequate financing. For example, a basic goal for the CNMI might be: increase visitor entries by 10 percent annually to the year 2001. Thus, a goal has been identified, quantified and a time limit established. Next, what actions are required to accomplish the goal?
Recalling the adage, “It takes money to make money”, obviously the Marianas Visitors Bureau, reorganized or not, must be provided with the funds and freedom to expend the money in appropriate market areas. If, in the opinion of our island’s tourism experts – and we do have them – business men and women who are on the line every day catering to the visitor – if they feel additional marketing personnel or publicity expenditures are needed then the financing and employment of such should be provided. There is more at stake than just the generation of government tax revenue. Business profits, land lease payments, jobs, and the need to meet the obligation of parents employed in the industry in providing for the necessities of their families should be of major consideration. According to my rough calculations the tourism industry is not a one half billion dollar industry as several have stated – but rather – in recent years it has been almost a one billion dollar industry considering the multiplier effect of visitor expenditures throughout the economy.
Add to this another three quarter billion in fixed capital investment that is jeopardized by a faltering industry and you can begin to appreciate the desperate need to get this sector back on track. The industry must be protected and enhanced. It cannot be expected that every program or method to generate an increase in visitors will be successful.
Mistakes will be made, markets change. The industry itself is noted for its mercurial and wavering nature. When it is discovered that a particular promotional program has not achieved the desired results – then change it and consider it an expense of doing business. In my judgment politics should not enter into this vital issue – leave it up to the experts and stop the hand ringing, finger pointing and fault finding and get on with it. I am reminded of something told to me long ago about the establishment of the State of Israel and its economy which, by the way is fifty years old this year. The individual making the statement said, “you would not believe the tremendous amount of money lost as a result of bad decisions in the rush to develop Israel’s economy. In their haste to develop they accepted the trade-off of losses on what later proved to be unsound projects.” I certainly don’t advocate this philosophy and the example is cited to make the point that not every decision achieves the desired results. However, compare the above with the CNMI”s economy which is just a little over ten years old. I am not aware that the Commonwealth has wasted any great sum of money on any of its projects. Things are much better than they were ten years ago. This essay started out with a discussion about establishing goals.
One goal might be to establish regulations for the posting of signs. The island is littered with ugly signs many of which should be removed Another goal might be to double the beautification effort. Built some water fountains. Close Hotel Street and make a walking mall out of it. Take another look at the myriad of regulations now effecting the industry and future investment in the sector with a view toward possibly rescinding some of the more burdensome requirements placed on business.
That assumes, of course, that additional hotel investment is desired. I don’t recall reading any recent policy statements to that affect, but I assume that it is. As previously pointed out in a related article, economic development per se can not be "legislated", or “willed” to occur as is so commonly thought. Only the legal environment known as the "business climate" under which such investment is expected to thrive can be established by an area’s legislative body. Even then there is no guarantee investment will result, but such legislation, (or lack of it) in a real sense is a "welcome mat." In recent years Hawaii has created one of the most anti-business climates in the United States. Perhaps we should take a look at what they have done – and avoid doing it. There is a lot of talk about reducing the size of the government but still ever more laws and regulations are promulgated or those on the books changed. Then the changes are changed. One doesn’t know from one day to the next what will occur to alter the rules for doing business. Very often when a law is passed additional employees are required either in business or government to implement and monitor the new provision. Maybe fewer laws would result in fewer employees. Dale Carnegie has a postulate that goes something like this, “if you are going to address a group of people and advance an opinion you must have earned the right to occupy their time and attention.” I mention this because I believe I have earned the right to express these opinions. As one whose entire 27 year career in Micronesia has been associated with economic development issues, published several books, written numerous essays, briefed countless potential investors, suggested and analyzed the financial viability of a wide variety of projects, I get no pleasure what-so-ever in making the following observation. It is simply this – given the current situation relative to investing in the Commonwealth, the uncertainty of the minimum wage, immigration control, the copious federal and local regulations and permitting requirements, the difficulty of recruiting workers, and on and on – one wonders why any investor would select the Commonwealth as a location to do business today given the difficulties and red tape which must be complied with at this time.
With the exception of the Tinian casino, the financing of which was probably scheduled two and half to three years ago, I am not aware of a single new major, resort hotel investment on Saipan in recent years. While several of our existing hotels have expanded on land previously acquired, to my knowledge the Plumeria built in 1991 was the last major facility constructed.
The CNMI has a lot going for it. Proximity to Asia, it’s tropical environment and a mirror, of sorts, of America. I believe that the promotion of island culture in tandem with an American flavor is a marketable item in the region that has only Guam as an equal. There is no question in my mind that a dedicated and sincere group of island government and business leaders can solve the island’s problems and once again make the Commonwealth a desirable host for both future investment and increased visitors