THE demise of the garment industry in the CNMI, the federalization and the withdrawal of Japan Air Lines created the perfect storm that sank the CNMI economy almost to rock bottom.
At the installation dinner of the Saipan Chamber of Commerce held at the Fiesta Resort & Spa last Saturday, Tan Holdings president Jerry Cho Yee Tan said the government and all businesses have resorted to cost cutting and austerity measures, but this is not a solution to the problem.
“We cannot cut costs anymore to lift the island from its economic hardship. Cost cutting will not lead us into a brighter future but the community, private sector and the public sector must embrace tourism because a successful tourism industry means a growing economy,” Tan said.
“Tourism is the only thing that we have, and everyone has a role to play to help boost this industry,” he added.
Tan said that for tourism to grow, the government needs to provide funding for the Marianas Visitors Authority marketing fund to promote the CNMI to other countries.
He said that businesses too have a role to play by adopting a tourist site and make necessary improvements to attract tourists. Tan added that the community’s role includes being nice, helpful, warm and friendly to tourists.
“In our peak years, tourists flock to the CNMI for its clean air, beautiful weather and stunning beaches. Let us maintain it that way,” Tan said.
Bleak facts
Tan presented graphics showing how the overall tourist arrivals plummeted from a peak of 726,690 tourists in 1996 to 1997, to only 369,012 arrivals in 2011.
Tan said the arrivals from Japan, which is the CNMI’s prime market decreased from 450,190 arrivals in 1997 to 156,131 arrivals as of December 2011.
He said the government budget nosedived from $247 million in 1998 to $102 million for 2012, the gross domestic product of $1.2 billion in 2002 dipped by 41 percent to $716 million in 2011.
Tan said that from 2006, the Gross Domestic Product went down by 41 percent while the population went down by 34 percent. The visitor arrivals went down by 55 percent while the minimum wage went up by 82 percent.
With the shrinking economy, the shrinking revenues, high cost of utilities and the minimum wage increases, Tan said that some businesses were left with no option but close up.
Businesses were forced to implement austerity measures including reduction of work hours, conservation of energy, reduction of workforce and layoffs in order to survive.
Key to recovery
For its economy to recover, Tan said that the CNMI needs a stable air service to provide more flights to key destinations.
“We are only three or four hours away from our market destinations and this is an advantage that no one can take away from us,” Tan said.
He said that the drastic 66 percent drop in visitor arrivals of the Japan market from 450,190 in 1997 to 151,343 in 2011 is because of the lack of flights.
He said that if one flight per year brings in 50,000 tourists and each tourist spends $667, the on-island expenditure would be $33,300,000 per year.
“Three flights a year will inject $100 million into the local economy,” Tan said.
He added that every additional flight per year will deliver 50,000 tourists to the CNMI shores would equate to 526 public sector jobs and 588 private sector jobs, or 1,114 good paying jobs.
“The number one need of the community now is to create jobs for the people, and more flights would mean more jobs,” Tan said.
With Tan Holding’s acquisition of Saipan Air, Tan said that they are eyeing a 97 percent increase in tourist arrivals in the next three years from Japan, Korea, China, Hong Kong, Taipei, Russia and other destinations.
“No company is immune from the perfect storm. Let us embrace our tourism industry and believe in our strengths which include clean air, clean beaches, natural environment and location,” Tan said.
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