I attended the inauguration of Governor Benigno Repeki Fitial and Lieutenant Governor Timothy Pangelinan Villagomez of the CNMI on January 9, 2006. This page is a report during my stay at the CNMI and a proposal for recovering the CNMI’s economy.
1 : The inauguration of the new Governor
I was invited to attend the public inauguration rites held at the Marianas High School gymnasium, Saipan, in connection with a publisher engaged in this area. It was my first overseas travel. Here are some photos I took during the ceremony.
“This administration’s top priority is the economy-the foundation for education, public safety, health and welfare, infrastructure development, and social programs," said Fitial.
In this speech he set a goal of attracting one million tourists to the CNMI per year over the next four years, re-focusing on the Japan travel market.
Japan is their nearest advanced economy. About thirty thousand Japanese settlers used to live on Saipan before the Second World War, but I found nobody dancing in Japanese costume after the closing ceremony. Very few except the old could understand Japanese. I felt the presence of Japan was getting smaller.
2 : What is the CNMI?
The CNMI is the Commonwealth of the Northern Mariana Islands, a territory with U.S. commonwealth status, whose population mainly resides on Saipan, Tinian, and Rota. As the map below shows, the CNMI is located in the West Pacific Ocean.
The Northern Mariana Islands were once under the regime of Japan. After the First World War, the League of Nations entrusted them to Japan as a mandate territory. In 1921, Matsue, Haruji (松江春次) founded Nanyo Kohatsu Co. Ltd. (南洋興発株式会社) that developed the sugar industry and its related enterprises at Saipan, Tinian and Rota. His business succeeded and the population of islands amounted to fifty thousand.
His company, however, was closed, because the U.S. military invaded and occupied the Mariana Islands during the Second World War. After Japan’s defeat, the U.S. administered the islands as part of the U.N. Trust Territory of the Pacific Islands.
3 : Why has the CNMI’s economy gone wrong?
The U.S. began to compensate the Marshall islanders for nuclear testing at Bikini Atoll in 1975. In 1980, the U.S. Department of Agriculture worked with the CNMI to design food stamp programs. Islanders worked for agriculture under the regime of Japan, but they now can live without working because of food stamps.
Agriculture has waned owing to the food subsidies. An old man living in a village of Saipan deplores the decline of agriculture.
Now you don’t have to be a farmer. You can become lazy, go and apply for food stamps, and survive. In the olden days, there were no food stamps. People had to go out there and plant or go out there and fish. Today, there are quite a few people on food stamp programs here in this village.
Until recently the CNMI prospered thanks to garment manufacturing and tourism. But the government spending has exceeded the decreasing revenues since 2002 and the CNMI virtually went bankrupt in 2006. Why has the CNMI’s economy gone wrong?
Although most of the native islanders, Chamorro people, do not work, immigrants from Asia have been engaged in the tourist and the garment industries. So far these industries supported government finance, islanders worry about nothing. But today both industries have come to a crisis and that is why the CNMI is in an economical predicament.
4 : Problems of Tourism
Saipan flourished thanks to many tourists from Japan. But the number of Japanese tourists decreased year by year and in October 2005 JAL (Japan Airlines) decided suspension of all flights to Saipan. Saipan is no longer attractive to Japanese. It has lost beautiful sea it used to have. Failure in waste disposal has caused water pollution.
Instead of Saipan, Rota has attracted Japanese tourists. It still has beautiful sea that Saipan used to have.
But I am afraid Rota might repeat the same mistake that Saipan made. People in Rota do not dispose waste. They just throw away their garbage and do nothing special, as the pictures below shows.
Because the population of Rota is much smaller than that of Saipan, the garbage has not polluted seawater yet. But its bad influence has already appeared. Flies have proliferated and swarm on human meal, which annoys tourists. The dumping site is not far from the most popular beach of the island, Teteto Beach. Someday the dirty rainwater that percolates through garbage heaps might penetrate into Teteto Beach.
5 : Problems of garment industry
Another biggest industry that has supported the economy of the CNMI is garment industry. Garment manufacturers from the People’s Republic of China transplanted their operations to the CNMI, because they could enjoy benefits that exceeded those enjoyed by foreign or the U.S. mainland manufacturers, that is to say, they were not subject to the U.S. minimum wage, had to pay no duty on fabrics they import, free from import quota restriction and yet could sell their products to the mainland U.S. with domestic label.
Saipan’s garment industry peaked in 1999 with over one billion dollars in exports, but in January 2005 the U.S. changed trade law and abolished the import quota restriction. Thus the CNMI’s garment industry has declined in recent years with factory closings and reduced production. The value of garment shipments to the United States dropped by more than 16 percent between 2004 and 2005 and by an estimated 25 percent in 2006.
After all, the garment industry in the CNMI flourished, utilizing its ambivalent political relation to the U.S. while their products themselves were not competitive. If the CNMI aims at enduring prosperity, it should utilize its truly competitive resources, namely tourist attraction.
6 : What should the CNMI do?
My advice on the recovery of the CNMI economy is as follows.
- The CNMI should abolish or diminish the food stamp program and motivate islanders to engage in agriculture including fishery. You might think the program is necessary, because prices of food are high there, but it is dependence on import that raises prices. The low labor costs can make the local agriculture reduce the prices of food.
- The revival of agriculture has good effect on tourism. At present there are few fresh local foodstuffs in supermarkets in the CNMI, because most of foodstuffs sold there are imported. Tourists are often disappointed to find that local cooks are using unappetizing expensive imported ingredients. Traditional Chamorro dish that uses fresh local ingredients (especially fish) is more charming to tourists.
- Under the Japanese regime, many sugar canes were grown. How about resuming growing them? Sugar canes offer not only food (sugar or alcohol) but also fuel (ethanol fuel or hydrogen). The recent rise in oil price has hit the economy of the CNMI and, to protect them from such a crisis, they should produce energy by themselves.
- Another source of energy is garbage. Thermochemical or biochemical conversion of waste into methane and hydrogen not only offer fuels to thermal power plant or fuel cells, but also solve the garbage problem. Using clean energy also makes the island of sightseeing attractive.
Some skeptics insist that energy outputs from ethanol produced using corn, switchgrass, and wood biomass should be less than the respective fossil energy inputs. But the recent study refutes it, indicating that reported negative net energy incorrectly ignored by-products and used some obsolete data and says that current corn ethanol technologies are much less petroleum-intensive than gasoline. Even if it fails, ethanol from sugar canes can be sold as rum. In short the enterprise of producing ethanol from sugar cane runs a low risk of failure.
7 : References
- The location of the Philippine Sea.
- the CNMI: Tanapag. The Land: Planting. Accessed Date: 3/26/2007.
- JAL. “JALグループ、2005年度下期路線便数・機材計画を一部変更.” 2005年07月29日.
- “Energy outputs from ethanol produced using corn, switchgrass, and wood biomass were each less than the respective fossil energy inputs. The same was true for producing biodiesel using soybeans and sunflower, however, the energy cost for producing soybean biodiesel was only slightly negative compared with ethanol production. Findings in terms of energy outputs compared with the energy inputs were: • Ethanol production using corn grain required 29% more fossil energy than the ethanol fuel produced. • Ethanol production using switchgrass required 50% more fossil energy than the ethanol fuel produced. • Ethanol production using wood biomass required 57% more fossil energy than the ethanol fuel produced. • Biodiesel production using soybean required 27% more fossil energy than the biodiesel fuel produced (Note, the energy yield from soy oil per hectare is far lower than the ethanol yield from corn). • Biodiesel production using sunflower required 118% more fossil energy than the biodiesel fuel produced.” Pimentel, David, and Tad W. Patzek. “Ethanol production using corn, switchgrass, and wood; biodiesel production using soybean and sunflower." Natural resources research 14.1 (2005): 65-76.
- “To study the potential effects of increased biofuel use, we evaluated six representative analyses of fuel ethanol. Studies that reported negative net energy incorrectly ignored coproducts and used some obsolete data. All studies indicated that current corn ethanol technologies are much less petroleum-intensive than gasoline but have greenhouse gas emissions similar to those of gasoline. However, many important environmental effects of biofuel production are poorly understood. New metrics that measure specific resource inputs are developed, but further research into environmental metrics is needed. Nonetheless, it is already clear that large-scale use of ethanol for fuel will almost certainly require cellulosic technology.” Farrell, Alexander E., et al. “Ethanol can contribute to energy and environmental goals." Science 311.5760 (2006): 506-508.