Sayonara To The CNMI

The pullout began in mid-2004, when Japan-based owners sold the Hafa Adai Hotel and Dai-Ichi Hotel, followed by Diamond Hotel. The Grand Hotel, Laolao Golf Resort and Meitetsu Shopping Center were sold early this year. The Rota Golf Resort was unloaded in late February. All were formerly owned by large Japanese corporations.

Few companies will say specifically why they are pulling out. Only the management of Laolao Golf Resort explains that its owners have lost millions of dollars and were ordered by corporate headquarters in Japan to sell. The good news for the embattled CNMI is that buyers have quickly stepped in. Willie Tan, owner of the family-owned business conglomerate on Saipan, Tan Holdings, bought Dai-Ichi, Grand and Century Hotels.

Japanese tourists still make up most of the CNMI visitor count. Photo: Floyd K. Takeuchi

Shinichi Yoshida, the Saipan-based regional manager of Japan Airlines, partly blames the commonwealth's "immigration system" for allowing people to enter as tourists or for employment purposes with little or no background checks at all. Since 9/11, Yoshida says Japanese tourists are wary of destinations that are considered not safe and the Northern Marianas fit that category.

Echoing Yoshida is Yoshiro Kishimoto, general manager of Coral Ocean Point Resort, one of Saipan's golf resorts. "The (CNMI) government never protects current (foreign) investors," he declares. "Yet, they kept asking for new investors to come in."

And a large and evident problem is the open solicitation by prostitutes, most of whom are Asian. The biggest prostitution problem is centered in Garapan, the main tourist district on Saipan, and home to two of the island's finest hotels, the Hyatt and Dai-Ichi.

The Coral Ocean Point's Kishimoto believes "the government understands our problems," Kishimoto said, "but there's no communication at all."

Another problem, according to Yoshida and Kishimoto, is the failure of commonwealth leaders to visit corporate offices in Japan to show local appreciation for the services being provided by Japanese investors. In fact, it was not until a brief visit by Governor Juan Babauta in late February that a CNMI governor has met with JAL's senior executives.

"We need to work together," Kishimoto says. "We worry about (the future of) these islands. The Japanese love these islands."

CNMI Rep. Heinz Hofschneider, cites the current administration's "overemphasis" on the Chinese tourism market through the Acquired Destination Status (ADS) as a contributing factor. "I believe that we hastily embark on a new policy and that we did not have certain regards to historical differences," Hofschneider says.

But Peter Callaghan, the governor's press secretary, says "the reality of it is that in the early and mid 1990s, the Japanese-when their economy was booming-gobbled up properties all over the world especially in the U.S.," he explains. "And when the banks (in Japan) started tightening their loan structure and realized that these investments weren't bringing the returns that they had hoped for, they sold them at huge loss. I think the same thing is going on here on Saipan."

Saipan Chamber of Commerce President Alex Sablan and House Speaker Benigno R. Fitial say "protectionist" laws and government regulations are partly to blame. Sablan includes among these the moratorium on the hiring of highly-skilled workers and current minimum wage laws. And Fitial believes the government's policy of requiring foreign-owned businesses to report income generated locally and externally are partly to blame, recommending the government just remove this requirement.

"We're asking our leaders to sit down and listen and find solutions to our problems with investment opportunities here. We have a climate here that is not attractive to (foreign) investments," Sablan says.