Opportunities in the CNMI - Guam Chamber of Commerce

Alex Sablan President 1 CNMI   Population: 51,173
  Area: 44 sq. miles
2 Popula'on per island En're Marianas 200,000 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 179,896 Guam 51,174 CNMI Population 3 168 members 393 members 44 linked companies 4 CNMI Economic Timeline Early Days 1980‐1992 Tourism Boom 1992‐1997 Re‐focusing and re‐
planning 1998‐2008 The Return 2010‐future 5 Economic Highlights   Tourism growth in 2012 allows the economy to recover   Tourism arrivals made a remarkable turnaround in 2012, posting a growth of 14%   The Marianas Visitors Authority is already forecasting that 456,417 visitors will come to CNMI in 2013—the most since 2004‐2005 or before Japan Airlines stopped serving the market.   Gross Island Product experienced modest increase 6 Economic Highlights   “A Good Problem” :   Shortage of flight seats during peak seasons   excess demand in hotel accommodations, with hotel occupancy rate reaching above 90 percent in February 2013 and hotel room rates averaging above $125 in January 2013   “…Commonwealth can become more accessible to its main tourist markets by adding regular and charter flights by airlines already serving the market as well as the entry of new airlines…” 7 Government Budget 2013: $123.4M Economic Highlights   Recovery is underway, pace is steady.   Households are spending more: sales tax collections are on the rise.   Job outlook is improving: ◦  Job growth is positive (but modest). ◦  Unemployment in 2010 was 18%, today is 10% ◦  Good job news for some industries, especially tourism   No quick fix for recovery; must be considered a long‐
term goal. 9 Nurture and Sustain  Public and Private organizations will continue focusing its energies on destination enhancement, increasing passenger air service, and the need to increase lodging accommodations. 10 11 Demand: Arrivals FY2012 •  389,475 FY2013 (est) •  445,748 14% increase 12 1997 Peak: 726k Arrivals 2013 Forecast: 450k Arrivals 13 The Future of Arrivals 600000 500000 400000 450000 484000 516000 389475 2012 2013 300000 2014 200000 2015 100000 0 Overall Arrivals 14   Old NMI: Total reliance on the Japanese Market   Today’s NMI: Diversified 15 We are working to create a balance of all 4 markets by 2015 Poten'al for even more arrivals from Korea Confirmed interest by these LCC’s whom are eager to being flights to Saipan provided availability of additional hotel rooms. 650,000 / year 16 Air Service Carriers   ASIANA AIRLINES   UNITED AIRLINES   SICHUAN AIRLINES   DELTA AIRLINES   CHINA EASTERN   VLADIVOSTOK AIR   YAKUTIA AIR Direct Destinations   Seoul   Busan   Guangzhou   Shanghai   Beijing   Vladivostok   Khabarovsk   Narita 17 Path to Recovery   Since November, 2009, Chinese and Russian citizens have been granted exclusive visa exemptions to travel into the Island   Chinese tourism boom has fed an increase in arrivals 19 20 Focused efforts to recovery 22 The CNMI ‐ PROVEN POPULAR DESTINATION for Chinese tourists 120,000 in 2013 Chinese Tourists Arrival in Saipan, USA (source: 2004-MVA China/CT)
Chinese Tourist arrival rates consistently top other markets in 2012 Feb, 2013 Saipan is projected to rank 11th in the top American airports catering to the high‐spending Chinese travelers this summer. 24 Visitor Spending   Japan (3 days)   Hotel: $161   Hotel: $52   On‐Island: $200   On‐island: $666   Korea (3 days)   Hotel: $165   On‐Island: $396   China (4‐5 days)   Hotel: $137   On‐Island: $831   Russia (10 days)   Hotel: $620   On‐Island: $3,704   Others: 25 26 Current Room Inventory 2,731 online Offline Resort Rooms: 518 Offline Inland Rooms: 134 27 Steady Recovery   91.05 percent occupancy rate in January 2013   Highest rate since 1998 (91.96%)   June occupancy rate is at 84%, 10 points higher than last year to date Source: Hotel Association of the Northern Marianas, June 2013 29 30 What do our visitors ask for?  “American style” dining and shopping options   More nightlife   Authentic locally made souvenirs   New attractions   More activities   Cultural activities   Opportunities to mix with the local community Source: 2012‐2016 DOI Tourism Master Plan/Tourist Exit Surveys 32 “American style” dining and shopping op>ons   Exit surveys and local surveys have all shown that there is desire, hunger for new options   Today, our economy grows   Our people enjoy stable jobs   Consumer confidence has returned 33 Major Interna'onal Companies Hotels Services F&B Telecommunications Finance/Insurance 34 Saipan Op'ons Shopping F&B Franchises   Joeten Susupe   Joeten Garapan   Subway: 3   KFC: 1   Joeten Superstore   DFS Galleria   Taco Bell: 1   McDonalds: 2   Star Sands Plaza   Pizza Hut: 1   Capricciosa: 1   Tony Roma’s: 1   Winchell’s: 2   Hard Rock Café: 1 Paseo De Marianas   Currently undergoing beautification efforts by the Marianas Visitors Authority   23,800 sq m of floor space   60% occupied   Negotiable leases as low as $1/sq ft.   Within walking distance of 3 major hotels and 1,325 hotel rooms 36 CNMI Only Transi'onal Workers (CW VISA) and Minimum Wage   As of July 2013:   12,339 CW1 workers are sponsored on these petitions   current cap for is 15,000   Minimum wage in the CNMI has increased from:   $3.05 per hour in 2007 to the current $5.55   another 50‐cent increase scheduled on Sept. 30, unless Congress intervenes. 37 38 Benefits   Duty Free Ports   Duty free export status   International telecom link   Tax rebate program   Exemption from Jones Act 39 Taxes   Significant tax advantages for executives and all employees on Northern Marianas sourced income   The CNMI offers the most favorable tax climates of all United States jurisdictions   Among the fifty states and other territories in the Pacific, CNMI businesses pay just 5% of a Business Gross Revenues Tax (BGRT’s) on a graduated scale.   Personal income tax is maximized at 9% on earnings above $50,000.00 40   Qualifying Certificate (QC) Program   Allows for up to 100% for tax rebate and/or abatement for a period up to 25 years   CNMI Free Trade Zone (FTZ)   Located in the Saipan Air and Seaports   Additional rebates on sourced income, excise taxes, and gross revenue taxes 41 CNMI Investment Incen>ves Qualifying Cer>ficate Up to 100% tax abatement for up to 25 years for qualified investors   Tax Rebates on CNMI sourced revenue up to 30%   Targeted Investments will receive favorable incentives:   Franchise restaurants
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Franchise restaurants Water parks Aquariums Cultural centers Theme parks Resort hotels and condominiums Golf courses Convention Center Educational Institutions www.cda.gov.mp for detailed investment information QC Ideas In Summary   We’re 120 miles away   Our arrivals are getting stronger   Our infrastructure is getting stronger   Operational structures in Saipan will be the same as Guam   There is limited competition in Saipan   Free‐market, low tax jurisdiction, US protected 44 Summary   Economy is improving, but progress is slow.   Continued recovery depends on the strength and efforts by public and private sectors Recovery is under way, but will require attention for years to come. 45 46