Draft Puerto Rico Opportunity Zone Regulation Published for Public Comment

(Juan J. Rodríguez/CB)
Economic Development Secretary Manuel Laboy Rivera (Juan J. Rodríguez/CB)

SAN JUAN — The Secretary of Puerto Rico’s Department of Economic Development and Commerce, Manuel A. Laboy Rivera, announced Thursday the publication, for the public’s review, of the regulation that implements the Opportunity Zone provisions of sections 6070.54 – 6070.69 of the Puerto Rico Incentives Code, which establishes the rules, requirements and criteria that will be used for the request and issuance of decrees.

“After several months of intense work, we published the regulation on our website www.ddec.pr.gov and in the Office of Legal Affairs of the Department of Economic Development and Commerce. It will be available for the next 30 days. Once this period ends, we will proceed to evaluate and integrate the recommendations that we deem pertinent. It is estimated that in the future the Opportunity Zones will generate over $600 million in investments, as well as the creation of thousands of jobs,” said Laboy Rivera, who is a member of the Committee of Priority Projects in Opportunity Zones.

The implementation of the regulation of the Opportunity Zones of the Puerto Rico Incentives Code will apply to any person who intends to establish or has established an eligible business on the island and received a designation as an Opportunity Zone Priority Project by the committee and request a decree from the director of the Incentives Office.

“We have the best interest of being able to count on the public input on this important initiative. When this process is finished, we will officially publish this regulation, along with the request for interested parties to submit their investment projects. We will continue working on this public policy initiative of the administration of Governor Wanda Vázquez Garced, which will be of great benefit to the economic development of Puerto Rico,” the Economic Development secretary is quoted as saying on the department’s website.

“Interested citizens should submit their comments in writing by mail to: Department of Economic Development and Commerce, P.O. Box 362350, San Juan, Puerto Rico 00936-2350, Attention: Lcdo. Gabriel Maldonado-González or via email: gabriel.maldonado@ddec.pr.gov.,” the release adds.

Concern Grows for Puerto Rico Businesses in Quake Affected Area

SAN JUAN — The president of the Puerto Rico United Retailers Center (CUD), Jorge Argüelles, said Wednesday that the number of businesses that had to close in the western municipalities that were devastated by the earthquakes in early January was worrisome.

“49.5 percent of the businesses are closed at the moment. 33.1 percent closed temporarily, 55.4 percent are permanently closed. 5.1 percent said they were closed without specifying the duration and another 5.78 percent reported they are about to close, and that is really worrying,” Argüelles said in a NotiUno radio interview.

He said the data derive from an online survey conducted with Colmena66, a business support network that operates under the direction of the Puerto Rico Science, Technology and Research Trust. He indicated that the survey is ongoing and about 330 businesses in the area have responded.

The retailer association head stressed that the number could be much higher.

“The United Center has some 155 members in the southern area and the information we have is that everyone has been impacted in some way by these earthquakes,” Argüelles said, adding that although some ​​Ponce businesses were not damaged, they cannot operate while the surrounding streets remain closed.

Argüelles said the Economic Development and Commerce Department has a $2,500 stipend for businesses. In the case of Yauco, the municipality added $500 for affected businesses. Other entities such as the Small Business Administration also offer assistance to business owners.

Seminar to Help to be Held Feb. 20

In order to continue the recovery of southern Puerto Rico, on Thursday, Feb. 20, Upfront Communication will hold a conference, entitled “Reactivate Your Business in Times of Crisis,” which will be free of charge for owners of businesses operating in Ponce, Peñuelas, Yauco, Guánica, Guayanilla, Lajas and Cabo Rojo, whose economic activity has declined after the earthquakes that have been registered in that area.

During the seminar, participants will learn about methods to strengthen their brands, give greater exposure to their businesses, attract customers and earn their loyalty.

“The small and midsize business owners of the south face various challenges that include loss of customers, markets being reduced, greater competition and reduced budgets to invest in marketing. For those in the southern coastal zone, there is the additional fact that their businesses have been severely affected by the emergency situation we are experiencing. That is why we saw in education another alternative to help revitalize this area,” said Idia Martínez, communication strategist, author and president of Upfront Communication.

The conference will take place from 1 p.m. to 2:30 p.m. at the Parguera Plaza Hotel in Lajas. Space is limited, so registering via Eventbrite or by writing to imartinez@upfrontpr.net is suggested. For more information, call 787-603-3200.

—Cybernews contributed to this report.

Invest Puerto Rico banks on attracting overseas knowledge services firms to grow economy

In an overseas direct investment attraction strategy formulated by a private investment promotion agency (IPA), the government of Puerto Rico is shifting its focus away from traditional manufacturing to promoting highly skilled labor on the island to lure fast-growing companies in the so-called knowledge services and industrial value chain sectors.

The strategy—part of the promotional plan devised by Invest Puerto Rico, the commonwealth’s IPA—deemphasizes the promotion of a sunshine-filled, low-wage location and touts a high-quality talent pool residing on an island that is rich culturally and is reinventing itself economically. Tax breaks are still in the mix but are aimed at attracting companies providing better-paid, highly skilled work.

“We have to be surgical on how we target companies in sectors that make sense for Puerto Rico,” Invest Puerto Rico CEO Rodrick Miller said, noting that the island can no longer compete with low-wage locations such as Mexico and the Dominican Republic. “We want to go beyond this to aspire to a better economy. The generic pitch does not work; we have to refine the message.”

Last week, Miller unveiled a promotional plan based on research and analysis of global trends, economic data, perceptions, disruptive factors and Puerto Rico’s existing competitive advantages. The plan, which is being used to attract investment from key U.S. and foreign markets instead of looking for investors in all economic sectors, he said, noting that “global megatrends” such as the spread of artificial intelligence are “critical mass” sectors being targeted.

Invest Puerto Rico CEO Rodrick Miller said the IPA “has been a driving force in the recent surge of new business investments,” noting that IPAs in the states as well as Ireland and Singapore have helped the countries compete globally and create thousands of jobs. (Screen capture of Invest Puerto Rico)

Best bet for investments

The research yielded that Puerto Rico has the best chance in attracting overseas businesses involving knowledge services such as consulting, technical and business support services, including computer and software development and programming, as well as finance and insurance. These sectors include media services, professional services such as engineering and accounting, blockchain technology and web hosting, as well as investment firms, including hedge funds.

Another area of opportunity is overseas businesses involving the industrial value chain, including automation infrastructure, utility innovations, engineering testing and resiliency building.

“About 60 percent of promotional efforts are being concentrated in these core areas,” he said, noting that this strategy is targeting burgeoning companies in these sectors that are growing 20 percent to 30 percent a year. He added that jobs in these sectors are easier to bring to the island than for new manufacturing operations, which can take up to 18 months to open.

“We need to impact the economy today,” he said, noting that key selling points to attract investors include the island’s bilingual and highly educated workforce as well as lower wages in these professions compared to the U.S. mainland. 

Selling points for financial sector investors include U.S. market stability on the island, access to New York and Latin America, quality of life with high-end-living potential, and the Opportunity Zone program.

Investment is also being sought in “building industry capacity,” including “logistics enhancement” and “reinvention opportunities,” Miller said. This involves bringing in financing to shore up air and sea cargo systems, cover supply chain gaps, and ensure maintenance, repair and operations supplies. He said reinvention opportunities exist in the use of technology to grow agriculture and in a sustainable ocean-based economy.

According to the IPA’s study, the economic impact of Hurricane Maria included a loss of $100 billion in economic output and up to a 20 percent decline in economic activity. The catastrophic event prompted the immediate closing of 2,400 small businesses, while more than 5,000 small businesses are estimated to have closed permanently.

“Puerto Rico has very good incentives which are a critical part of its promotion, but the primary purpose of these incentives is to offset disadvantages in manufacturing, economy and infrastructure,” Miller said. (Screen capture / Invest Puerto Rico)

“This will make up 30 percent of our efforts, and involves the long-term health of the community, the rebuilding of the entire island-nation again, and not looking back,” he said, acknowledging that the success of this effort will rely largely on the flow of federal post-hurricane reconstruction funding to the island.

All in all, these promotional efforts target “high-tax” U.S. states and Europe, where investors are looking for lower tax jurisdictions and have been affected by the U.S.-instigated trade wars, Miller said, adding that long-term strategies include Latin America and Asia, which he pointed out as having a rapidly growing middle class. Invest Puerto Rico plans to open two business advisory council offices in New York and San Francisco, he said.

Invest Puerto Rico is part of a three-pronged strategy by the Puerto Rico Economic Development & Commerce Department (DDEC by its Spanish acronym) to attract and retain overseas business investment on the island. It includes Discover Puerto Rico, the island’s tourism destination marketing organization, and DDEC’s efforts to accommodate and retain businesses on the island.

Hand needed to reach economic goals

DDEC Secretary Manuel Laboy said that the task of attracting overseas investments was outsourced to Invest Puerto Rico because the commonwealth government was not being able to provide the “consistency and continuity” needed in this area due to changes in policy with every new government administration.

Invest Puerto Rico has a $4 million yearly budget provided by DDEC’s Special Fund for Economic Development (FEDE by its Spanish acronym) and the Act 22 Fund.

“It takes one to two years to design and implement a new promotional plan…so this can’t be subject to the political cycles,” the DDEC chief said. “To sell Puerto Rico is very difficult. Its image and credibility has been affected by such events as the Zika outbreak, the government bankruptcy and the 2017 hurricanes. Few people know about Puerto Rico. We need a group of people to amplify the message consistently. This is a long-term plan.”

Laboy said the strategy allows DDEC to focus on facilitating the local establishment of companies and retaining existing businesses, as well as working with looming threats such as the possible elimination of the federal creditability of Act 154’s 4 percent excise tax. Having an IPA is needed to reach the administration’s goal of raising the labor-force participation rate from 40 percent to at least 50 percent.

“We need to triple the number of investments,” he said. “There’s no way the government can do that [alone].”

Invest Puerto Rico is part of a three-pronged strategy by the Puerto Rico Economic Development & Commerce Department (DDEC by its Spanish acronym) to attract and retain overseas business investment on the island. (Screen capture / Invest Puerto Rico)

Invest Puerto Rico results

So far, Invest Puerto Rico’s initial efforts following this strategy have yielded some 2,000 leads, Miller said, noting that the entity has “engaged in direct contact and servicing” with more than 80 companies considering the island as an investment destination. About a third of these companies are in the knowledge services sector, he said, adding that 19 percent constitute retail or construction investments, 16 percent are healthcare companies, 13 percent are advanced manufacturing operations involving pharmaceutical and aerospace companies, and 19 percent involve agricultural and food services.

“Invest Puerto Rico has been a driving force in the recent surge of new business investments,” he assured, noting that IPAs in the states as well as Ireland and Singapore have helped those countries compete globally and create thousands of jobs.

Between fiscal year 2017, when Invest Puerto Rico was established, and fiscal 2019, the number of decrees for incentive Acts 20, 22, 73, 273 and 399 increased 1.4 times, rising from 593 to 1,434, according to a recent Estudios Técnicos Inc. report commissioned by the DDEC. In contrast, such incentive decrees rose 13.6 percent between fiscal years 2015 and 2017.

Most of the decrees were issued under the Export Services Act (Act 20) and the Act to Promote the Relocation of Individual Investors to Puerto Rico (Act 22).

(Screen capture / Invest Puerto Rico)

Miller was president and CEO of the Detroit Economic Growth Corp., the public-private partnership charged with leading the economic revitalization of that city, which filed for Chapter 9 bankruptcy in 2013. Miller helped the city exit from bankruptcy by negotiating the sale of key public assets to pay creditors. He also brokered the transaction to bring the Detroit Pistons back to downtown Detroit.

Previously, Miller served as founding president and CEO of the New Orleans Business Alliance, the official organization responsible for ensuring the long-term economic development of New Orleans, which was devastated by Hurricane Katrina in 2005. Since its establishment in 2011, the entity helped devise targeted tax incentives that attracted more than $720 million in new investment and 7,500 new jobs to the city.

Miller said that surveys involving business people and potential investors found that tax advantages are not as important to them as the quality of the workforce, logistics and infrastructure, quality of life and cost of construction.

“Puerto Rico has very good incentives, which are a critical part of its promotion, but the primary purpose of these incentives is to offset disadvantages in manufacturing, economy and infrastructure,” he said. “Puerto Rico is a complicated place but not a difficult place. [The problem is] it’s not functioning as an ecosystem.”

Puerto Rico Economic Development Dept. holds Single Business Portal seminars

Offers guidance on permits and licenses

SAN JUAN — Puerto Rico Economic Development Secretary Manuel Laboy Rivera announced Wednesday that his department’s Permits & Endorsements Management Office (OGPe by its Spanish acronym) will hold workshops at several organizations aimed at providing guidance on the new permits that will be managed through the Single Business Portal (SBP), which was created to unify processes and expedite the granting of licenses, certifications and permits, among other procedures.

Laboy said workshops will be offered “on the new products that will be integrated into the SBP as of June 7: Construction Permit, Operational Incidental Only Permit, Single Permit, and licenses for opening and operating businesses. These processes that have been entered in the Single Business Portal are part of the changes stipulated by the Permits Reform of Governor Ricardo Rosselló Nevares, who created a Unified Computer Information System where project proponents can request permits, in order to eliminate bureaucracy, measure effectiveness and give transparency to the processes,” Laboy said in a statement.

The first seminar was conducted by the Builders Association on Wednesday. The second, to be given by the Planning Board, will address the autonomous municipalities and will take place Thursday, May 30. The third will be held at the Architects and Landscape Architects Association on June 4, from 9 a.m. to noon. The fourth will be held by OGPe on June 5, at the Engineers & Land Surveyors Association (CIAPR by its Spanish initials) from 6 p.m. to 9 p.m.

For more information, call 787-721-8282, extension 16356.

[EDITORIAL] Up By The Bootstraps—Again

Editor’s note: This editorial was originally published in the June 21-27 issue of Caribbean Business

There was some good news on the jobs front for Puerto Rico—perhaps light at the end of the tunnel that is not a freight train barreling toward us—in an announcement by Sartorius, a German firm that manufactures pharmaceutical and laboratory equipment, would be moving forward with an expansion of its operation in Yauco. That $130 million investment will create 300 jobs.

Importantly, the German firm’s expansion is the result of work begun under a previous administration—Gov. Alejandro García Padilla and Economic Development & Commerce Department (DDEC) Executive Director Alberto Bacó Bagué—concluded under the administration of Gov. Ricardo Rosselló and DDEC Executive Director Manuel Laboy.

Thus, the German firm’s decision to invest in Puerto Rico is the result of a bipartisan initiative, an example of the art of the possible when opposing parties—in this case, the pro-Commonwealth Popular Democratic Party and the Pro-Statehood New Progressive Party—work together for the good of Puerto Rico.

The result of that expansion—job creation—conjured important infrastructure work, the Teodoro Moscoso Bridge, which commenced construction under the administration of Gov. Hernández Colón (1989-1992) but was inaugurated during the first term of Gov. Pedro Rosselló in 1994.

When the time came to cut the ribbon prior to the bridge’s first fare, then-Gov. Rosselló invited Hernández Colón to participate in the inaugural ceremony. That is the sort of statecraft that celebrates progress and leads to the creation of jobs. “Just because he has a different ideology doesn’t mean we should not cooperate; he started that project and it was right for him to be there,” Rosselló told this journalist in an interview that took place nearly a decade after that momentous occasion.

We must recapture bipartisan initiatives as Puerto Rico muddles toward frugality in this new abnormal. Sadly, there is very little of that spirit on display in the middle of this latest perfect storm spun by a mammoth debt crisis and a natural disaster the likes of which Puerto Rico has not experienced in nearly a century. Instead, we have disaster capitalists—some feeding on funds for recovery, others feeding on the costly process of debt restructuring—hovering above.

During an exclusive interview with this newspaper, U.S. House Natural Resources Committee Chairman Rob Bishop (R-Utah) said it would be a good idea for Puerto Rico to put fed funds coming to the island to work in this economy. He has expressed the same concern about the legal fees—overblown billable hours—being spent on financial advisers working their “restructuring magic” under the Puerto Rico Oversight, Management & Economic Stability Act. Bishop believes it is a good idea if that money goes to local firms to help kick-start an economy that is aching for a jolt to commence a path to sustainable growth.

Bishop stressed the need for the private sector and entities from the nonprofit realm to cooperate in pulling Puerto Rico up by the bootstraps once again. In other words, don’t count on the government and don’t count on the U.S. Congress.

There is no cavalry coming to save this economy. Yes, there is a trailer full of fed funds coming down the pike. A huge windfall is expected for Puerto Rico’s economy, commencing in the last quarter of 2018, tied to two separate grants by the U.S. Department of Housing & Urban Development (HUD) totaling $20 billion. The first assignment coming down the pike is a $1.5 billion Disaster Recovery (DR) grant announced in February that will start to trickle into the local economy in September. The local Housing Department has already filed a plan with HUD laying out the specific use of those federal funds, which are likely to be used to rebuild homes, assist businesses and help repair critical infrastructure. Another $18.5 billion in grants have been earmarked by HUD through the Community Development Block Grant (CDBG) program.

How much of that is put to good use with local talent will be very important for maximizing this economy’s growth. Attract capital to remain here (see Top Story, p. 4) and create jobs, lest we find ourselves in the same spot long after we have blown through the disaster fund windfall.

Will Puerto Rico Incentives Code help offset tax slide?

Copan Industries to set up Puerto Rico operation with $13 million investment

SAN JUAN — Italian health and biotech company Copan Industries Inc. will establish a facility in Puerto Rico through a $13 million investment and committed to creating up to 100 new jobs, Gov. Ricardo Rosselló announced Thursday.

Among the new jobs are supervisors, engineers, scientists, and administrative, warehouse and operational personnel who would be dedicated to manufacturing medical devices. Specifically, Copan Italia is dedicated to standardized universal specimen collection and preservation systems for bacteriology, virology, molecular biology, forensic and environmental sampling.

“Companies like Copan Industries prove that investing on our island is worth it. We continue on the path toward economic recovery. Our thanks to Copan for believing in Puerto Rico and creating new, specialized jobs,” the governor said.

The Italian biotech and health company will create up to 100 new jobs. (Courtesy photo)

Meanwhile, Copan CEO Stefania Triva said that “our company, hand in hand with Puerto Rican professionals, has identified the potential represented by Puerto Rico’s regulated infrastructure, its knowledgeable workforce, and its diversity of cutting-edge professionals who, along with a government system that promotes economic development, makes it the ideal place to reach our next step of business development.”

“Our goal is to take our high-technology and high-quality products to be used worldwide and Puerto Rico becomes the ideal platform to achieve it,” Triva said.

Economic Development Secretary Manuel Laboy stated that he is “pleased that Copan Italia has placed its trust in our working force, which so needs specialized and well-paid job opportunities to stop its exit from Puerto Rico.”

Founded in 1979 by Giorgio Triva as a small, family-owned distributor of disposable plastic lab components, was quickly grown globally with Daniele Triva with improvements in product design and manufacturing. With a reputation for innovation in preanalytics, it is a leading supplier of collection and transport systems.

The company patented FLOQSwabs, eSwab, and UTM Viral Transport to improve microbiology assays.

Copan Group is composed of the following six companies: COPAN Italia, COPAN Flock Technologies, COPAN NewLab Engineering, COPAN Diagnostics Inc., COPAN Wasp and COPAN Innovation Shanghai Limited.

Gov’t official assures San Juan port congestion being addressed

SAN JUAN — Puerto Rico Economic Development Secretary Manuel Laboy confirmed Monday that his department is looking into the number of shipping containers with merchandise that continue accumulating in the Port of San Juan, which are also causing traffic on Kennedy Avenue and pickup delays.

“I have had conversations with MIDA [Spanish acronym for Chamber of Food Marketing, Industry & Distribution], with the Retail Trade Association, with the United Retailers Center, with the Chamber of Commerce itself. It’s a topic that has arisen, especially after the hurricanes. It’s one of the core issues. Yes, I’ve been in conversations in which those concerns have been brought. I am a member of the Board of Directors of the Ports Authority and it is something I have been able to share. It is being worked on,” Laboy said in a Radio Isla 1320 interview.

He also announced that there are scheduled meetings in which the matter will be discussed.

Puerto Rico government to set up warehouse for local SME exports

“There is concern and I believe that in many instances there are concerns that are merited and I think they deserve to be taken care of responsibly,” he added.

Since the passage of hurricanes Irma and María, the cargo container delivery has been affected, causing traffic congestion on Kennedy Avenue, at the entrance to the port area. Which in turn complicates the process and waiting time for truck drivers to pick up the containers.

“I cannot indicate specific situations because that is part of what has to be evaluated. But I can tell you that there is a concern in the food distribution sector,” the official maintained, unable to explain the reasons for the problem.

Meanwhile, the spokesperson for the Broad Teamsters Front, Víctor Rodríguez, blamed the Federal Emergency Management Agency (FEMA).

“This is caused by non-planning and the fact that the government does not [tackle] the problem. The problem is simple. Everyone knows it. FEMA made agreements with some shipping companies and [now] they have this kind of problem when there are more than 1,000 containers stuck at the docks of Puerto Rico, especially in the Kennedy [Avenue] area. That’s why the traffic is immense,” Rodríguez said in an interview with the same radio station.

He argued that during normal times, it can take truckers about an hour and a half to collect merchandise, but that it is currently taking up to 10 hours.

“Why? Because the hoarding of containers by FEMA and with the conspiracy of some companies has caused this type of problem that is not needed by the people of Puerto Rico,” he denounced.

Honeywell Aerospace expands Puerto Rico operations

SAN JUAN — Puerto Rico Gov. Ricardo Rosselló announced Thursday that Honeywell Aerospace will expand its testing capabilities at its research and technology facilities in Moca, Puerto Rico.

As a result of the expansion, 50 people will be hired for engineering and technology positions, as well as other support areas. Honeywell Aerospace Puerto Rico has two facilities, in the municipalities of Aguadilla and Moca, and employs more than 850 professionals.

The governor emphasized that the expansion will attract new businesses in addition to creating jobs. (Courtesy photo)

“With a $2 million investment, Honeywell Aerospace will expand the capacity of its installations and its workforce in Moca, which will help bring new businesses to Puerto Rico and result in new jobs in addition to the ones announced today,” the governor said.

The Aguadilla Service Center provides support to Honeywell’s operations and clients around the world. Meanwhile, the Moca facility is a cutting-edge engineering design center and laboratory used to carry out research and development work in the field of electromagnetic interference and compatibility.

Honeywell Aerospace products and services are used by numerous commercial, defense and space aircraft, and its turbochargers are used by nearly every automaker and truck manufacturer.

According to the company, its aerospace business unit develops solutions for “more fuel-efficient automobiles and airplanes, more direct and on-time flights, safer flying and runway traffic, along with aircraft engines, cockpit and cabin electronics, wireless connectivity services, logistics, and more.”

New small businesses expected to create over 200 jobs in Puerto Rico

The announcement came about following a collaboration between Economic Development Secretary Manuel Laboy and Luis Ramos, the director of engineering for Honeywell Aerospace Puerto Rico and Puerto Rico Research & Technology Center (PRR&TC) site leader.

Rosselló added that “the service expansion of a world-renowned company such as this one proves that Puerto Rico is open for business. This government continues to fulfill its programmatic commitments focused on the development of technology and innovation, as well as job creation.”

Meanwhile, Laboy said that “the governor, as well as the Economic Development & Commerce Department, are committed to continuing to strengthen the economy by through the creation of professional jobs in businesses with great potential for expansion.”

For his part, Director Ramos said that “with today’s announcement, Honeywell Aerospace Puerto Rico reaffirms its commitment to the growth of its test engineering capabilities here on the island.”

“This announcement, together with the inauguration of an electromagnetic interference test chamber at the Polytechnic University of Puerto Rico and the donation of safety equipment during the Hurricane Maria recovery efforts, reaffirms Honeywell’s commitment to our employees, the communities where we live and work, and the continuous development of the best aerospace products for our global aviation customers,” Ramos added.

Economic Development Bank to take over preparation of Puerto Rico Economic Activity Index

Survey: Economists disapprove of administration’s economic development efforts

SAN JUAN — A second survey by the Puerto Rico Economists Association (AEPR by its Spanish acronym) reflected a tendency in its membership to disapprove of the Gov. Ricardo Rosselló administration’s economic development efforts.

The survey was carried out by the association to learn of its members’ position regarding the proposals and economic arguments pushed by the government.

The survey revealed consensus regarding multiple public policy proposals, such as 84 percent of the economists do not believe that economic growth for 2019 will be 8.4 percent, as suggested by the fiscal plan.

Likewise, 72 percent of the members do not believe that the privatization of the Puerto Rico Electric Power Authority (Prepa) will benefit the island’s economic development.

Also, 81 percent of the economists are against eliminating $423 million in subsidies to the University of Puerto Rico, while 62 percent believe the privatization of PR-22 was not beneficial for economic development.

Loan to Puerto Rico power utility won’t impact government’s liquidity, governor says

In addition, 77 percent of economists favor a moratorium on the debt’s payment for five years; 72 percent favor a greater than 60 percent reduction of the debt’s principal—as proposed by economists Martin Guzman, Joseph Stiglitz, and Pablo Gluzmann—and 81 percent said incentives and subsidies to companies that are not creating jobs should be eliminated.

In general, more than 81 percent believe that the island’s fiscal oversight board and the government are poorly advised in financial matters.

“The perception that economists do not agree on anything is incorrect. On the contrary, on many of the issues there is a consensus among most economists, many of whom are never consulted or given serious consideration. That is an integral part of the current crisis,” AEPR President José Caraballo said.

With respect to the compilation and preparation of statistics, 93 percent of respondents consider the financial and human resources allocated to prepare statistics in Puerto Rico are insufficient; 83 percent disagree with the integration of the Puerto Rico Statistics Institute (PRSI) to the Economic Development & Commerce Department; and 90 percent is against the entity’s privatization.

“There is consensus that instead of eliminating the SI, the government’s policy should be aimed at strengthening it. If the collection of statistics is not strengthened, we will continue to have uncertain credibility before the markets and the island in general because it is a necessary transparency measure. In addition, having reliable data generates healthy public policies anchored in reality,” AEPR Vice President Alba Brugueras said.

The survey also found consensus in proposals that have not been seriously considered.

Revised Puerto Rico fiscal plan doesn’t guarantee projected revenues

Among these, 67 percent of the economists support a tax increase on  luxury goods and services; 87 percent said they were against trickle-down economics, the theory that growth among the largest businesses will eventually benefit the entire economy. Also, 75 percent believe that the creation of work cooperatives and incentives for agriculture, and agri-ecotourism are important.

However, there was little consensus on whether the privatization of the Luis Muñoz Marín International Airport and PR-22 were beneficial or on the importance a second labor reform.

The AEPR indicated that the survey was conducted among 69 affiliated economists, which it stressed is a relatively high sample based on its number of members.

The entity’s spokespeople clarified that the survey did not receive any financial or institutional support from any other organization, and added that they will continue to hold conferences and events in the coming months that will be available to their members and the public.

Changes to Puerto Rico Economic Development Dept. reorganization plan announced

SAN JUAN – Gov. Ricardo Rosselló, along with Puerto Rico House of Representatives Speaker Carlos “Johnny” Méndez, announced the withdrawal of the Reorganization Plan of the Department of Economic Development and Commerce (DDEC by its Spanish acronym) and the introduction of a new version of the measure.

“These new changes strengthen the bill so we have decided to withdraw the original Reorganization Plan and submit a modified one to receive input from the Legislative Assembly and [include] what my Administration discussed with the tourism sector,” the governor said in release issued by his office, La Fortaleza.

The changes include keeping the games of chance and room tax with the Tourism Office and not transferring them to the Treasury Department; having a separate management structure for the Tourism Office–with its own secretary–in the new consolidated structure; and creating a pro bono advisory council to help the head of the Tourism Office make the currently running industry programs more efficient.

“Consideration of these reorganization plans are a priority for the Legislative Assembly because they make it possible to fulfill the promise of giving [the people] a more efficient and less expensive government. We will continue communicating with the governor to make the necessary adjustments to these plans to ensure the best possible operation of the Government,” the House speaker added in the release.

La Fortaleza had announced this week agreements with several tourism industry sectors and the House speaker had indicated that a modified reorganization plan would be needed to adopt them.

The reorganization measure would put in effect the integration of nine agencies and public corporations associated with economic development within the DDEC.

The introduced bill integrates as part of DDEC’s structure the Industrial Tax Exemption Office, the State Energy Public Policy Office, the Government Regional Center Corp. and the Permit Management Office.

While the Trade and Export Co., the Tourism Co., the Puerto Rico Industrial Development Co. (Pridco), the Roosevelt Roads Redevelopment Authority, and the Planning Board are attached to its structure.

In addition, the proposed consolidation plan orders the outsourcing of the Statistics Institute “to give it independence.”

According to the government, the reorganization plan will achieve savings of $7.8 million in the first year and nearly $100 million in the first five years.

“With the new changes, the House of Representatives will be in a position to pass the DDEC Reorganization Plan,” said in the release.