Plans to raise the minimum wage rate for workers in Saipan could lead to the end of garment manufacturing on the island according to local media reports.

The wage hike was approved by President Bush in May and will add 50 cents a year to the basic hourly rate over an eight-year period. The first 50 cent increase will take place on 24 July.

According to local forecasts, half of the 15 remaining garment factories will close after the first wage hike and the remainder will shut after the second increase next year.

Richard A Pierce, the governor's special assistant for trade relations, told the Saipan Tribune: "We will still have about 80% of the revenue somewhere about nine to 10 months from now.

"If the second increase is implemented, then we'll lose all of them. That's guaranteed-absolutely, positively, without a doubt."

Under current tariff rules, manufacturers have to carry out a certain amount of manufacturing in Saipan to qualify for the 'Made in USA' label. They are now hoping the value-added provision will be amended so less local work is required.