Kumho does it again
First Asiana steps up to the plate and brings in a major airline presence with many available seats from a desirable market. Then they bought a golf resort. Now Kumho Asiana has brought 160 business executives here to show them what they are doing on Saipan and what the investment climate is like here. Some of the business leaders they brought are from Kumho’s 30 plus subsidiary companies. Other possible investors representing large independent companies were in attendance as well. The group got to tour our historic sites as well as some other tourist draws and got to play some golf in addition to attending investment conferences.
While it is nice to treat employees, interested investors and partners to a relaxing vacation on Saipan, this event may do far more than that in the long run. We are all aware that Kumho has some exciting plans for the Lau Lau Bay Golf Resort including a major 100 million dollar building project and other site improvements. It will certainly be to our advantage if other, like-minded investors from other Korean companies likewise begin to think about projects here in the Marinas. Rota and Tinian resorts come to mind as well as Lau Lau and other projects on Saipan.
Just the exposure of those 160 executives to our beautiful island and it’s laid back lifestyle may bring them and their families back for more and may cause them to sing the praises of Saipan and the Marianas as a tourist destination for those people in their companies seeking R&R. Let’s hope so.
It is important that we, as a community, show our support for major projects like this. We have much to offer in the way of tourist oriented investment opportunities. Other opportunities abound also, but a major component of the decision making process for these individuals and these powerhouse companies is a sense that we are behind them and will support their endeavors. Our government can help by ‘greasing the skids’ of the permitting and leasing processes to see that those processes move along in a timely manner. We need to protect our environment, move cautiously to protect our long term public land holdings and make sure that proposed development in harmony with the Saipan and Marianas image. We do not need to drag our feet or cause lengthy delays to accomplish these important functions.
Lets see to it that their Lau Lau project gets the support it needs, public and private. Doing so may give us the chance to approve or disapprove other high value projects in the future.
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Who will do our Bidding?
Public law 15-95 recently went into effect over the veto of Governor Fitial. The law, amends the Planning and Budgeting Act by restricting further, bids from companies which are not headquartered here in the Marianas or are not American owned.
While the concept of promoting and supporting our local businesses is important, especially so in a small marketplace such as ours, there was a well-honed and workable process already in place to accomplish this. The local business preference laws and procurement regulations have amply protected all American citizens and their companies. Those companies have also been able to take advantage of preference bidding under US Small Business Administration rules allowing them entry into the lucrative federal government procurement system.
Now enters the new law requiring that a company actually be headquartered here to comply with preference bidding. This will undoubtedly cause our government to spend wastefully on items and services it could have procured much more cheaply. As an example, we need copy machines and computers and myriad other office machines to keep the government offices humming. It is doubtful, however, that Xerox or IBM will consider moving their headquarters here. That means that we will be paying 15% more for all those millions of dollars in purchases. Many other, smaller US concerns that have not had a business license here for years or do not have their headquarters located here will also be affected. Our taxpayer pockets will also be affected. It will cost us more.
Construction projects and Capital Improvement projects are often small. The new law requires all such projects under $500,000 be bid out to US Citizen owned firms with headquarters here. Most of the companies interested in doing those small jobs are based here locally but are owned by foreign investors. Meaning we taxpayers will pay a minimum of 15% more for those millions bid out for small construction jobs. It will cost us taxpayers more.
Some construction and capital improvement projects are big, very big by local standards. Previously a smaller local American owned company could team up or partner with a larger company from offshore to bid on these large contracts. Not so under the terms of the new law. A local company would have to perform 51% of the work to be eligible for bidding and this is out of the scope of many of those US owned firms who might otherwise have had a shot a big contract. Even a modest construction project of 5 million dollars will wind up costing us taxpayers at least $750,000 more to complete as the threshold for overbid by an American firm is 15% above any other competitive bid. A 50 million dollar project will cost us and extra 7 ½ million bucks maybe much more as competitive bidding is heavily restricted. It will cost us taxpayers more.
This may cause bidders to drop out of the process altogether rationalizing that they have no chance to win the bid so why bother. This will ultimately see some jobs go begging altogether and will see other jobs bid price go through the roof because of lack of competition.
In any project up for bids, declaring persons and companies we have aggressively solicited to come here and invest in the Marianas as unworthy to compete on an even playing field with American owned companies is both unfair and unwise.
This law has been in effect for a short time and so far no really significant effects have been felt. I will predict that with the advent of the first few bids to fall under this new set of regulations all sorts of teeth gnashing and ‘Oh My Goodness, we had no idea’ reactions will be forthcoming as few if any bidders are to be found and those that do respond, do so with excessively high bids. Several local Procurement Officers agree that there will be major problems arising from this. Heads up. Incoming.
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Quote of the week: Govern a great nation as you would cook a small fish. Do not overdo it. Lao-Tzu (c. 570 BC - ????)