Sunday, May 31, 2020

Economic Task Force or Business Group?

By on April 12, 2020

Members of the Business Emergency Operation Center

Economists Association Head Calls Advisory Group ‘Political Marketing’

By Angélica Serrano-Román and Yanira Hernández Cabiya

SAN JUAN — The economic task force that advises Gov. Wanda Vázquez to draft proposals and make recommendations for the economic development of Puerto Rico, amid the Covid-19 crisis, has its origins in the Business Emergency Operation Center (BEOC) created by the Federal Emergency Management Agency (FEMA) after Hurricane Maria struck in 2017.

“The task force is based on what is known as the Business Emergency Operation Center after Maria. It is FEMA’s practice in other jurisdictions in the United States to formalize the efforts of the public and private sectors during an emergency. The BEOC was already divided into the 14 areas that FEMA organizes, but for this emergency, additional groups were added to complement them such as for the tourism, retail and construction areas,” said the secretary of the Department of Economic Development and Commerce (DDEC), Manuel. Laboy, in an interview with Caribbean Business.

The BEOC was officially announced June 6, 2018, by then-Secretary of State Luis G. Rivera Marín when serving as acting governor. In a press release at the time, the State Department indicated that officials decided that after the historic hurricane, “it was important that the private sector and the Government were aligned in the recovery efforts.”

Laboy explained that the team is divided into three subgroups. The first is to offer recommendations during the emergency, such as the limited opening of hardware stores, supermarkets, pharmacies, gas stations and auto parts stores.

The second group prepares the recommendations for the second phase of the pandemic, when the opening of businesses and companies begins. And a third group will present a longer-term plan to drive the economy when the critical part of the emergency is over.

Laboy leads the initiative, which currently has 57 members, of whom six are agency heads. Although the official maintained that the team has six economists, two for each subgroup, the list provided by DDEC only includes four economists: Vicente Feliciano and Juan Lara of Advantage Consulting Group, and Roberto Toledo and José Villamil of Estudios Técnicos.

The officials are Omar Marrero, director of the Fiscal Agency and Financial Advisory Authority (Aafaf by its Spanish acronym); Francisco Parés Alicea, Secretary of the Treasury Department; Briseida Torres, secretary of the Department of Labor and Human Resources; Joel Pizá, director of the Ports Authority; and Ottmar Chávez, director of the Central Office of Recovery, Reconstruction and Resiliency (COR3).

For the president of the Association of Economists of Puerto Rico, Heriberto Martínez Otero, the advisory group, rather than an economic task force, “is a business task force.” “An economic task force requires certain expertise on the subject of the economy,” Martínez Otero said.

The economist denounced several obstacles regarding the selection of these members. Among them, that the group is made up of 57 people, the imbalance between the private sector compared with the number of economists, the roles these members would have, and the lack of representation of associations that work on these issues.

“The big problem is that even if you have economists like Lara and Villamil, you have more than 50 people representing private interests. Each one will be watching over a sector,” he added.

“Part of the need to create a business task force with all these people and these sectors is to send a message: ‘I have not forgotten you; when an agreement is reached with the recommendations I will act according to what they told me.’ And that is buying time,” Martínez Otero warned.

“I don’t see major proposals or different economic policies [emerging] with positive or negative results for Puerto Rico. This is simply political marketing,” he stressed.

Asked by Caribbean Business, Laboy indicated that the meetings have been very productive. He said the group is developing guidelines, called “governance protocols,” which allow for discussions to take place in an organized way even though they are via videoconference. But that document has not been provided, even though it was requested three days ago.

Laboy admitted, however, that the group has no guidelines on how to handle privileged information mentioned during the discussions, nor a specific code of conduct that prevents members from unduly benefiting from the information.

“Up to now, all the information that has been handled is public information, so there has been no need to establish these guidelines. We may be approaching a stage where access to privileged information is required and we have talked about needing to establish a framework for that,” he said, referring to the need to establish non-disclosure agreements.

On the sidelines

Martínez Otero confirmed that the Association of Economists has not received any calls or invitations to participate in the discussions of the advisory group.

The list also does not include organizations or associations such as the Puerto Rican Planning Association, the Association of Financial Analysts or the CPA Society.

Instead, the group comprises the Builders Association, the Shippers Association, the Bankers Association, the Gasoline Retailers Association and the United Retailers Center.

But even those organizations that are represented are not entirely happy with the results of the economic task force.

The executive director of the Chamber of Food Marketing, Industry and Distribution (MIDA by its Spanish acronym), Manuel Reyes, said last week that the decision to reduce supermarket operating hours, the requirement that business owners use their own security personnel to monitor the population’s compliance with executive orders and the closing of supermarkets on Holy Saturday were not discussed with him, the representative of the affected sector.

“It was the wrong strategy. We followed it, but in four days it caused the crowds that we wanted to avoid in stores,” Reyes said.

For his part, Iván Báez, spokesman for the Retail Business Association said that although Laboy “has been a great ally of the private sector,” the recommendations made by members of the task force are not necessarily adopted by the governor. “For example, the decision to close everything this weekend was a bad decision,” he said.

Meanwhile, the DDEC’s inclusion of tourism in the team as a lynchpin sector for the economic recovery once the current crisis passes clashes with Martínez Otero’s projections that the revival of the island’s tourism won’t come about until next year.

“I don’t understand the obsession with tourism when there is a disruption of airlines and cruise ships. The hotels are in the process of [multimillion-dollar] losses; we do not know what will happen to the paradores, nor do we know the behavior of the post-virus trauma of travelers and tourists. Betting on tourism is not understanding the political economy and the global macroeconomy,” the economist said.

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