Companies Eye the CNMI

Companies eye CNMI as staging area in Guam buildup
The Saipan Tribune
Wednesday, April 02, 2008
By Mark Rabago, Assistant Editor

Companies hoping to save costs in the upcoming military buildup in Guam are looking at the CNMI as a possible staging ground for their operations.

This was confirmed recently by Department of Commerce Deputy Secretary Michael Ada, who said that his office has received quite a number of inquiries from businesses that are interested in warehousing, labor-intensive, and other related activities on the islands.

Ada said the CNMI is a viable option for these companies because of the islands' lower minimum wage and cheaper leasing terms vis-à-vis that of Guam.

Gov. Bengino R. Fitial's press secretary Charles P. Reyes agrees with Ada's assessment and added that another lure for companies is the Commonwealth's tax incentives and qualifying certificate program.

“Many companies interested in the military buildup in Guam may operate from the CNMI or be based in the CNMI because of our attractive tax incentives, including the QC program.”

Reyes added that, although the minimum wage was raised, the CNMI may still offer lower labor costs compared to Guam, and real estate rental or lease costs may also be lower.

“Lower taxes and lower labor costs may persuade some companies capitalizing on the military build up to base operations in the CNMI.”

He said the tax incentives and QC program were two of the reasons why the government managed to bring in additional air seats in spite of the fact that Japan Airlines pulled out.

In a recent interview with Fitial himself, the islands' chief executive championed the Commonwealth's competitive advantage in getting residual investment from the impending Guam military buildup.

“Because of our tax structure, lower tax rates, and qualifying certificate we stand a better chance at attracting companies that would cater to the military buildup projects than anywhere in the world,” he said during the Covenant Day celebrations held last March 24.

The $15-billion Guam military buildup is targeted for 2010-2014 following the relocation of 8,000 U.S. Marines and about 9,000 of their dependents to the U.S. territory from Okinawa, Japan.