CNMI’s long and ongoing search for economic diversification

Life from Saipan By Zaldy Dandan

 “DFS Saipan has been in existence since 1976. We have six hotel shops, an airport store, and our Galleria, all of which are manned by over 400 employees. Ninety-five percent of our workforce is local. Eighty-five percent of our management people are locals. We have been here for almost 23 years — and we’re here to stay.” — From the DFS president’s presentation at the “Planning for the CNMI Economic Future” conference, March 18-19, 1999

“After almost 50 years of doing business on island, Duty Free Saipan will officially close on April 30, [2025] including its store at the Francisco C. Ada/Saipan International Airport….” — Marianas Variety, Feb. 20, 2025

Saipan — Thirty years ago, the financial prospects of the Commonwealth of the Northern Mariana Islands government were so strong that the administration could propose reducing tax rates. The “healthy” economy had produced “surplus funds,” Marianas Variety reported at the time. For fiscal year 1997, then-Gov. Froilan C. Tenorio announced plans to submit a $237 million budget— worth roughly $500 million today—representing a $25 million increase over FY 1996 spending levels.

Three decades later, the CNMI projected $179.7 million in revenues. Of this estimated amount, $138.9 million is expected to be available for appropriations —assuming projections align with actual collections. The FY 2026 budget, however, was passed before officials announced that direct flights from South Korea, the island’s primary tourism market, could be suspended in March 2026.

In February 1996, Variety reported that visitor arrivals had risen 9 percent, from 55,318 to 60,125. By contrast, January 2026 arrivals—the most recent figures available as of this writing—totaled just 17,744.

The Hotel Association of the NMI reported an 82.6 percent occupancy rate for 1995, nearly 6 percent higher than in 1994. Officials said the numbers confirmed that Saipan remained competitive in both appeal and price, despite increasing competition from other Pacific and Asian markets offering sun and sand. At the time, the island was even experiencing a shortage of hotel rooms.

Fast forward to January 2026. HANMI reported an average occupancy rate of 28.69 percent across its 11 member hotels in December 2025, down 29 percentage points from 39.75 percent in December 2024. The association has noted that hotels typically require occupancy rates of 70 percent to 80 percent to remain viable.

Yes, the numbers from three decades ago, compared with today’s figures, point to something far beyond a routine downturn.

In a March 1996 letter to Variety’s editor, a local resident reminded the public that the garment industry would meet a “natural death” with the implementation of global trade rules under the World Trade Organization in 2005. That shift, he warned, would cost the CNMI government at least $24 million annually, roughly $49.5 million in today’s dollars. Beyond tourism, he asked, what other investments were on the horizon besides what he described as “exploitative political patronage”?

“With a royally spoiled populace,” the letter writer added, “try asking the kids to head to family farms. The loss of [the garment] industry will only fan the welfare mentality…among our people. No wonder everybody wants to be a politician.”

Then, as now, officials spoke of “diversifying” the economy. After the Asian currency crisis of the late 1990s rattled the CNMI, leaders rolled out tax abatements, free-trade-zone incentives and a succession of proposals designed to attract new industries. Successive administrations stressed economic diversification and courted investors. The ideas included shoe manufacturing, a peanut butter factory, a floating casino, casino gaming, e-casinos, call centers, a convention center, world boxing matches, an international high-security prison on one of the Northern Islands, agriculture, fishing, aquaculture, education tourism, eco-tourism, senior tourism, cannabis legalization, chip manufacturing, ship registry, telecommunications, digital enterprises and other internet-based ventures.

At a federally funded economic forum in 1999, a planning consultant from the mainland U.S. even floated the idea of regulating, zoning and taxing prostitution.

The list of potential new businesses has always been long, and the CNMI has been trying to diversify its economy for as long as anyone can remember. The CNMI, however, remains a small, remote island chain in what is commonly known as typhoon alley, with a shrinking population, persistent labor shortages, limited air service, rickety infrastructure, and a big government frequently steered by tax-and-spend politicians.

What legitimate business entity would risk investing here right now?

Diversifying an economy, alas, is not as simple as clicking one’s ruby slippers and chanting, “Diversification now.”

Zaldy Dandan is the editor of the CNMI’s oldest — and only remaining — newspaper, Marianas Variety. His fourth book, “If He Isn’t Insane Then He Should Be: Stories & Poems from Saipan,” is available on amazon.com/.

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