Saipan, the capital of the US Commonwealth of the Northern Mariana Islands, is an ideal tropical vacation spot with its magnificent beaches, white sand, flaming sunsets, consistent weather, and peace and order. 

But behind the tropical paradise image is a crumbling economy brought mainly by the death of the once almighty garment industry, and fewer tourists and business closures due to the global financial crunch.

Adding to the toxic mix are the uncertainties associated with the federal takeover of local immigration by June 1 unless extended, and another 50-cent increase in minimum wage by May when employers are already having difficulty paying their workers and staying in business. 

From the ultimate globalisation success story, Saipan now faces one of the fastest economic collapses in the history of America and the world.

"What's happening on Saipan is an extreme compressed version of what's happening elsewhere in the US and the world; like a lab test of what globalisation does for good and ill," American journalist Adam Yamaguchi said in a new documentary on Current TV, a cable network founded by former US Vice-President Al Gore.

The documentary, which runs for 25 minutes and 7 seconds, features the birth and death of the once billion-dollar Saipan garment industry which fuelled the CNMI's economic boom, along with tourism which is expected to get worse due to the global economic crunch and US restrictions on emerging markets such as China and Russia come June 1.

Just 10 years ago, Saipan had 34 garment factories producing "Made in the USA" clothing for Tommy Hilfiger, Calvin Klein, Gap, Levi's, Abercrombie and Fitch, Polo Ralph Lauren, Ann Taylor, and Liz Claiborne, among other popular brands. Today, not a single factory is operating, devastating the fragile CNMI economy.

Saipan's garment industry peaked in 1999 with over US$1 billion in exports and contributed more than US$80 million in direct revenues to the government. This represented as much as 30 percent of the CNMI budget. 

Because of US$80 million in lost revenues from the demise of the garment industry, the government is looking at foregoing people, reducing government work hours every other Friday and having unpaid holidays at least until the end of fiscal year 2009.

Nowadays, empty garment buildings and employee housing units are a common sight on Saipan, and the businesses that rely on these factories-from mom and pop stores to land leases and apartment rentals. 

Outbound cargo dropped from 140 containers a week to only five, causing a rapid increase in shipping costs for all goods in and out of the CNMI. Tariff rates for shipping have gone up 115 percent in 18 months, affecting the price of all goods.

Most of the 17,000 foreign workers hired by the garment industry went back home to China, the Philippines, Thailand and other Asian countries. Some who stayed behind are either working in other businesses or choose to work as prostitutes.

In January 2005, the General Agreement on Tariffs and Trade, which had regulated all global trade in textiles and apparel since 1974, expired, eliminating quotas on textile exports to the United States.

The CNMI had been attractive to garment manufacturers because of its exemption from such quotas and tariffs on goods shipped to the US. But when the trade quota was lifted in January 2005, factories on Saipan started moving to China, Vietnam, Bangladesh, Pakistan and Cambodia where they can pay a minimum wage that is way below CNMI's US$4.05 an hour. Another round of US$0.50increase in minimum wage is set for May and every year thereafter until it reaches the US federal level of $7.25 an hour as required by law.

"Saipan used to have the best of both worlds-cheap labor to allow it to compete with the prices of garments in US mainland manufacturers, and no quota on what it could ship to the mainland," Yamaguchi said in his documentary which is about the rise and sudden collapse of a tiny piece of America due to globalisation.

Titled the "Battle of Saipan," the documentary traces the history of the island-from its key role during World War II to the temporary economic boom after becoming a US commonwealth, to its devastation. 

The documentary can be accessed at http://current.com/users/Adam_Yamaguchi/all/0.htm. 

"The present battle of Saipan is an economic one, and throughout the islands you can see the victims," said the documentary, which earned the praise of viewers mostly in the CNMI and the United States mainland.

Richard Pierce, who is CNMI Gov. Benigno R. Fitial's special assistant for trade relations and economic affairs, said the documentary was truthful in its introductions and plan to focus on the loss in this part of America to both global and federal forces outside our control.

He said the authors "could easily grasp what others in federal and local government offices have had difficulty understanding."

"Saipan has lost so much, and will continue to lose more over time as a result of the demise of its once healthy apparel industry.

Jobs are leaving in government and the private sector, in addition to the workers from the factories themselves," said Pierce, a former executive director of the Saipan Garment Manufacturers Association and one of those interviewed in the documentary.

Included in the documentary are footages of World War II, Saipan's pristine beaches, empty garment factories, empty commercial buildings like the former La Fiesta Mall in San Roque, as well as interviews with government officials, former garment workers and local residents about their views on the rise and fall of the garment industry. With no more garment industry to speak of, the CNMI is collapsing. And because of the economic uncertainties, the increasing costs of power and the cost of living, many indigenous Saipan residents have left the island and went to the U.S. mainland.

The military buildup is also expected to foster an out-migration of people from the CNMI work force to Guam.Foreign investors are now also rethinking their multi-million investment plans that include casinos, condominiums and golf resorts on Tinian.

"There is no doubt that 2009 will be a challenging year," Saipan Chamber of Commerce president Jim Arenovski said.

By June 1, CNMI immigration will be placed under federal control but most of the regulations to implement the law have yet to be published for public comment. This creates further uncertainties to businesses that rely on foreign workers whose immigration status under the federal set up is not fully known. Rules governing the immigration status of foreign investors are also still in limbo.

The only regulations in place are the ones governing the Guam-CNMI Visa Waiver Programme, which excludes Chinese and Russian tourists. This means by June 1, Russian and Chinese tourists need to secure a US visa to enter CNMI, which is asking for a 180-day delay in the start of the transition period.

CNMI will also have fewer airline seats by March when Northwest Airlines uses smaller aircraft and cancel night-time flights from Osaka and Narita.The Northern Marianas, according to the Marianas Visitors Authority, will lose US$339 million in annual tourism revenue with the exclusion of Chinese and Russian tourists from the federal visa waiver programme, Northwest Airlines' impending reduction of flights, and the continued dip in visitor arrivals from Korea.

"These changes are going to decimate the CNMI economy if seats can't be recovered," MVA managing director Perry Tenorio said. "The CNMI will become a ghost town."