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Marianas in Crisis
27.11.2005

Fifteen of the 25 garment factories on Saipan have ceased operations since the World Trade Organisation (WTO) lifted restrictions on garment exports to the United States at the beginning of this year, an economic report shows.

According to the Marianas Roundtable 2005 Economic Conference Report, there are indications that the remaining 10 factories may decide to transfer their operations elsewhere in the months ahead to take advantage of lower labour costs in Asia from which apparel products can now be exported to the U.S.

"In Jan. 2005, 25 garment factories were in operation in the CNMI, employing 16,500 workers 90 percent of whom were non permanent residents mostly from the Peoples Republic of China. However, the number of operating garment factories dwindled from 25 at the beginning of the year to only 10 in Oct. 2005," the report stated.

"There has been a shift in major supplier countries. China currently leads the game, scoring a 79 percent increase in U.S. apparel imports, followed by India and Jordan. These countries share the common features of lower labour and production costs, all being more competitive than the rates Saipan can currently offer," the report added.

The Saipan Garment Manufacturers Association confirmed to the Marianas Variety that as of this month, their records show that only 10 garment factories remain on Saipan.

Five businessmen in the shipping and garment sectors assessed the garment situation on the island for the report.

They said the garment industrys slump affects related businesses on island and the local governments revenue since the industry "accounts for about US$82 million in direct and indirect taxes."

"The garment industry is languishing due to changes in WTO quota restrictions and increased competitiveness from other supplier countries. Several factories have already closed, resulting not only in a decline in direct garment revenue but also in the income of related industries, notably the cargo and shipping sector," the report stated.

"In addition, Saipan supports several thousand foreign workers in its garment factories. Most of these workers will be repatriated and their contributions in taxes and disposable income have been crucial to the economic vitality of the CNMI," it added.

The report stated the CNMI has become increasingly dependent on the garment industry over the past 20 years, and this is why the slump has had a major impact on its overall economy.

By Marianas Variety

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