A sliver of hope amid economic fragility: With economic ‘diversification’ still out of sight, CNMI clings on to tourism
- Admin
- 19 minutes ago
- 5 min read
By Jayvee Vallejera
Grandvrio Resort will temporarily close in April after more than four decades of doing business on Saipan. ABC Stores in Garapan closed shop on Dec. 31. DFS Galleria ended 40 years of operations in May last year. Hyatt Regency Saipan ceased operations in 2024. These were among several business institutions that were forced to shut down due to stagnant economic activity in the Northern Mariana Islands.
“Given the small size and limited resilience of the commonwealth's economy, the margin for error has effectively vanished,” the CNMI’s top political leaders said in a Jan. 6 letter to President Donald Trump.
“The withdrawal of a single institutional investor or major employer would likely trigger a cascading failure across the private sector, public finances and essential services,” states the letter signed by CNMI Gov. David Apatang, Del. Kimberly King-Hinds, Senate President Karl King-Nabors and Speaker Edmund Villagomez.
Given these bleak circumstances, economists and business leaders are understandably cautious about their forecasts for the CNMI economy in 2026.
But they are keeping their fingers crossed.
“Many believe that we are at the bottom of economic activity and that the only way is upward,” said Joe Guerrero, president of the Saipan Chamber of Commerce.
He predicts the CNMI’s economic tide to turn on two fronts: a slight recovery or a moderate contraction.
The chamber is working with the current administration on economic recovery solutions. “This offers a lot of hope and cautious optimism,” he said.
CJ Bermudes Jr., executive director of the Governor's Council of Economic Advisers, described the CNMI’s outlook for 2026 in two words: “cautious recovery.”
While tourism remains the CNMI’s main economic driver, Bermudes acknowledged the industry’s volatility, which causes uncertainty. “We don't want to put our eggs in one basket, and we're looking to diversify,” he said.
Derek T. Sasamoto, executive director of the Commonwealth Economic Development Authority, said the agency has made significant strides in attracting new industries and investment aimed at diversifying the CNMI economy while supporting tourism.
He said CEDA is promoting the CNMI to potential investors as an ideal manufacturing hub, strategically located to enable access to the U.S. market while remaining close to Asian production centers. “We are working closely with potential investors to establish high-tech manufacturing operations in the Marianas and have been working with and supporting potential partners,” he said.
Guerrero, however, is not too fired up about any emerging players in the CNMI economy. Any actions by these new players could create a ripple effect of optimism and inject small amounts that could spur some economic activity, but it is unlikely to affect the broader economy, he said.
He noted that some of the proposed new companies are still in their early stages, and any impact will not be felt until 2027 or 2028 at the earliest. The planned Google data center on Tinian, for example, is still under development and any economic impact is still unclear at this stage.
Sasamoto said CEDA is working with prospective players as they set up businesses in the CNMI.
As for a proposal to commercially lease the CNMI's outer continental shelf for seabed mining, Bermudes said the proposed venture would not yield any revenue for the CNMI.
Speaking at a December forum hosted by the Northern Marianas College, Bermudes said U.S. territories have no automatic claim to revenues from seabed mining because the proposed sites are considered exclusive economic zones of the United States.
Other industries that are beginning to attract attention in the CNMI are value-added manufacturing, light manufacturing, financial services and tech services, which could signal new or emerging industries.
“Overall, it is still too early to tell how this will shape economic diversification, but it is clear that some diversification is taking shape,” Guerrero said.
Guerrero’s sentiment mirrors that of the CNMI’s top elected leaders.
“The CNMI does not have the runway required for long-term diversification strategies, gradual market development, or the slow construction of local or federal incentive programs,” they stated in their letter to Trump. “Those efforts remain important, but they will not prevent imminent harm or avert systemic failure in the near term.”
CNMI officials noted that the commonwealth has worked with federal partners to pursue every available local option. “At this stage,” they added, “the remaining actions capable of producing immediate impact, without new cost to the CNMI or U.S. taxpayers, are those that remove federal constraints currently suppressing economic recovery.”
Still hoping to resuscitate tourism, the elected leaders have asked the Trump administration to restore the CNMI’s exemption from the China flight restrictions, include the Philippines in the visa waiver program and help boost Asian flights to the CNMI through Washington’s new trade treaties with Japan and South Korea.
“We believe that everyone is on board that this is a good step forward and that we need those flights,” Bermudes said.
The late governor, Arnold I. Palacios, pivoted the CNMI away from the China market in 2023 due to the escalating tension between Washington and Beijing.
Guerrero said the chamber welcomed the Apatang administration’s new position, pointing out that tourists from China, South Korea, Japan and new markets will help diversify the CNMI’s tourism markets and lower risks associated with relying on just one or two markets. “The United States mainland and Hawaii welcome tourists from China, so we should be no different,” he added.
Sasamoto emphasized the need to maintain and enhance current airline partnerships while developing new partnerships and routes.
Guerrero sees positive signs in upcoming new flights from Hong Kong and the Philippines, as well as modest increases in construction from federally funded disaster-related rehabilitation projects, as well as U.S. military activities on Tinian, Saipan and Rota.
With a focus on local entrepreneurs, Bermudes said the advisory council is supporting small businesses and teaching them how to land federal contracts.
Sasamoto said the closures of DFS and the Hyatt Regency Saipan were “extremely unfortunate,” but they served as a wake-up call. They were stark reminders that one cannot be stagnant or passive in economic recovery and development. One must take a proactive approach to market forces and economic downturns, he added.
“It also teaches us a lesson on how we can better support existing businesses here in the Marianas,” Sasamoto said.
While CEDA focuses on attracting investment from outside, Sasamoto said existing businesses in its backyard must not be overlooked as they are the lifeblood of the local economy. “When you consider job retention, as well as job creation within these businesses and how this condition affects the community, the impact is significant,” he added.
Still, one must not lose sight of the CNMI’s main economic driver, Guerrero said. “One thing is clear, especially in looking at what is happening in Guam now: we should not turn our attention and care away from our core industry, tourism. Without tourism, the success of other industries may be compromised.”
(With additional reports from Mar-Vic Cagurangan)
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