Puerto Rico Manufacturers Association urges gov’t to address corruption allegations

Puerto Rico Manufacturers Association President Carlos Rodríguez delivers his acceptance speech during the organization’s annual summit. (Courtesy)

Says Washington lobbying efforts are being hindered

SAN JUAN — The newly elected president of the Puerto Rico Manufacturers Association (PRMA), Carlos Rodríguez, is imploring the island’s government to quickly address allegations of corruption in certain agencies because it is negatively affecting the trade group’s lobbying efforts in Washington, D.C. to obtain incentives for the island.

The FBI and other local and federal government agencies are investigating the allegations and Rodríguez urged they continue their course but said that “the issue must be addressed immediately because prolonging it without due attention corrodes our international perception as a country of law and order.”

Puerto Rico’s private sector lobbies Capitol Hill lawmakers with the objective of fostering the competitiveness of the island through federal incentives and aid.

“At the same time, we work to promote international investment on the island. News like this affects our credibility as a country and makes our work much harder,” Rodríguez said.

On Tuesday morning, Gov. Ricardo Rosselló gave a press conference to deny an accusation by former Treasury Secretary Raúl Maldonado Gautier’s son, who alleged the governor requested the alteration of audit reports into “Unidos por Puerto Rico,” an organization that helped victims of Hurricane Maria, so they would not affect first lady Beatriz Rosselló, who was the face of the effort.

The allegations came after Rosselló asked Maldonado, who was also Puerto Rico’s chief financial officer and Office of Management and Budget director, after the secretary alleged there was an “institutional mafia” that was being investigated by the FBI.

Rosselló said Maldonado never informed him about the matter and that he lost confidence in his cabinet official. The Department of Justice cited for Friday the former Treasury secretary and his son to provide information regarding their allegations.

Meanwhile, the director of the island’s Health Insurance Administration (ASES by its Spanish acronym), Ángela Ávila Marrero, resigned after it was learned that Chief of Staff Ricardo Llerandi was questioned by a federal grand jury regarding accounting firm BDO consultant Alberto Velázquez Piñol.

The resignation of Health Secretary Rafael Rodríguez was also rumored after an emergency meeting was reportedly convened at the Health Department Tuesday amid the allegations of impropriety related to BDO, which is being federally investigated.

Llerandi said the administration was not concerned about potential irregularities, saying Rodríguez assured Velázquez had no contracts with the Health Department.




Report says Puerto Rico has moderate level of economic freedom

(NASA)

Scores close to average global score but lower than region’s average

SAN JUAN – Puerto Rico was ranked 61 worldwide in the 2018 Economic Freedom Index (EFI), which was developed by the Center for Economic Renewal, Growth and Excellence (Crece by its Spanish acronym), a nonprofit foundation established by former Gov. Luis Fortuño in 2014 and based at the Metropolitan University, in San Juan’s Cupey sector.

The island’s result for the index, which measures the capacity with which a country generates economic activity, signals that the economy is in a state of transition, and headed into positive territory.

Performed by the local consulting firm, Inteligencia Económica, economist Gustavo Vélez, its founder, revealed the results in a presentation he gave Monday alongside Fortuño; Joaquín Villamil, president of Estudios Técnicos; and Rodrigo Masses, president of the Puerto Rico Manufacturers Association.  

The independent analysis was performed to assess and determine the island’s position in comparison with other countries, using the parameters established by the Heritage Foundation’s annualIndex of Economic Freedom, which focuses on four key aspects of the economic environment where government typically exerts policy control. These are: 1) rule of law; 2) government size; 3) regulatory efficiency; and, 3) market openness. 

“The island’s economy is in transition because a lot of fiscal reforms are being implemented now. So it is a transition that goes together with a structural transition, a fiscal transition and the investment of federal funds. The Financial Oversight Board has only been here for three years. We got hit by a hurricane and the money is getting here just now. So there are a lot of processes running at the same time. The economy, for the first time, is in positive territory and will remain there as reforms materialize,” Vélez explained.

Economic freedom goes beyond the capacity of generating economic activity and trade among individuals. The level of economic freedom in a jurisdiction also influences the freedom to interact with others, travel and say “what needs to be said without government restrictions,” according to a release.

There is evidence that suggests that economic freedom is associated with a healthier economic society. The results of the study gave Puerto Rico 61 points, reflecting a moderate level of freedom, comparable among other jurisdictions with Croatia, Oman and Honduras. The average score of economic freedom worldwide is 61.1. When compared with the average score in the Caribbean region, Puerto Rico is below the average.

“Jurisdictions with a higher level of economic freedom have a better quality of life and higher per capita income. This is what we all want for our children. This index is a valuable and practical tool to measure the strengths and weaknesses of our economy. It provides us a clear picture to determine the areas of opportunity to achieve sustainable economic growth,” said Fortuño.

“After analyzing the results of the study and comparing them with other jurisdictions, we can conclude that Puerto Rico’s economic freedom is somewhat limited, and that its potential for economic growth is being affected by a challenging business climate, high taxes and recurring fiscal deficits,” explained Vélez, while emphasizing the need for  tax, fiscal, welfare and labor reforms to improve Puerto Rico’s competitiveness.

Vélez also highlighted the importance of promoting the ease of doing business on the island as a key component for economic development. In this regard, he said Puerto Rico must adopt reforms to improve construction permitting, streamline the process for business permitting and registrations by creating a digital, one-stop-shop system, as well as improving the property registry and taxpaying systems.

Referring to the possibility that President Trump changes the island Financial Oversight and Management Board’s members, unless the U.S. Supreme Court rules otherwise, Vélez said there has been “a learning process over the past three years, so that could be criteria used by the new board members, taking into account the experience.” 

Fortuño, who is a Republican, noted that the issue of the board’s legality is still in court but declined to speak about any of the party’s plan for the board.

Regarding the selection of federal officials to monitor the use of federal disaster recovery funds on the island, a discussion centering on whether an official can work with the local government, as was the case in Louisiana after Hurricane Katrina, Fortuño said:  “I don’t know if one is finally going to be designated, but it is not a person that would take away the power of the local government.”

The EFI measures 12 specific components of the economy, each of which is graded on a scale from 0 to 100. These economic components and their grade for Puerto Rico are:

Vélez said Puerto Rico ranked 71.3 in fiscal health because the fiscal board has given investors confidence. The fiscal health indicator includes the deficit and debt as factors, which have been handled by the board.

“The deficit is also being improved, so the value of the number rose but is still a low number,” the economist said.

Impediments to economic growth in Puerto Rico, according to the report:

·         Limited size of the private sector

·         Government deficit

·         Pension deficit

·         Low labor-force participation rate

·         Population decline

·         Collapse of the mortgage market

·         High cost of energy

Other recommendations in the report to increase economic freedom:

Government Integrity

·         Paying public servants well

·         Creating transparency and openness in government spending

·         Cutting red tape

·         Replacing regressive and distorting subsidies with targeted cash transfers

·         Optimizing the use of technology in government processes 

Judicial Integrity

·         Strengthening internal oversight within the judiciary

·         Modernizing of the court management systems

·         Facilitating the disclosure of information and public monitoring of trials

·         Creating a nonpartisan system to select judges and prosecutors

Trade Freedom  

·         Repealing the Jones Act

Fortuµño said that while the report makes certain recommendations to increase the index, changes need to be made in a consensus with all sectors, including the media, to become more competitive and achieve more economic freedom.

For instance, while the report calls for a hike in the salaries of public workers, it also discusses rebalancing the entire government.  

“As I see it, we are talking about a smaller government but with more efficiency and capability,” the former governor said.

For his part, Masses, the Manufacturing Association’s president, said: “What we are talking about is a renaissance that will take us to another place. A rebirth of all components. It is an opportunity to be able to transition Puerto Rico to a new form.”

Puerto Rico No. 31 Among Countries in Economic Freedom Index




Puerto Rico Manufacturers Association partners with PGA Tour’s Puerto Rico Open

SAN JUAN – The Puerto Rico Manufacturers Association (PRMA) announced Tuesday that it has established an alliance with the Puerto Rico Open, part of the PGA TOUR, with the purpose of maximizing the business opportunities offered by the event, which will be held Feb. 21-24 at the Coco Beach Golf Club in Río Grande.

The agreement between the two organizations has multiple components, which the association’s president, Rodrigo Masses, said are designed to add value to PRMA partners and promote opportunities to do business on the island, as well as promoting it as a tourism destination.

The PRMA will occupy the Hospitality Suite on the 18th hole of the championship course, where the partners, collaborators and sponsors of the tournament will be and where the association said space for corporate networking will be provided.

The goal is to promote that companies in Puerto Rico and those looking to establish themselves on the island invite their executives and site selectors to enjoy the tournament, where they will be urged to expand and reinforce their investments locally.

Through the agreement, PRMA members are offered a discount rate to set up in the exhibition area of the Puerto Rico Open, which annually receives more than 10,000 spectators.

The PRMA Golf Tour, a three-stage tournament, will be held for the first time to give eight participants the opportunity to play with PGA TOUR golfers at the Pro-Am tournament of the Puerto Rico Open in 2020.

Participation in the PRMA tour will consist of two categories, amateurs and professionals: The former will play in the “Two Person Best Ball” format, with first and second place players selected to participate in the 2020 Pro-Am. Pros will participate in the “Individual Stroke Play” format and compete for cash prizes: First place $15,000, second place $10,000.00 and third place $5,000.

The PRMA Golf Tour will consist of two elimination tournaments and a final round. The first stage of the tournament will be held at the Wyndham Grand Río Mar Puerto Rico Golf & Beach Resort during the PRMA’s Annual Convention on May 30. The second tournament to qualify will take place in September at the Palmas del Mar Resort in Humacao. The final round to qualify for the Pro-Am tournament is slated for November at El Legado in Guayama.

“This alliance between the Manufacturers Association and the Puerto Rico Open gives us a valuable additional tool to promote the business opportunities that exist in Puerto Rico. We thank the manufacturers for their vote of confidence and we are confident that new and important working relationships will be forged through this initiative at the Puerto Rico Open 2019,” said Pedro Zorrilla, producer of the Puerto Rico Open.

Puerto Rico Manufacturers Association holds 2nd Industrial Women congress




Puerto Rico Manufacturers Association holds 2nd Industrial Women congress

SAN JUAN – At a ballroom in Hotel San Juan, dozens of women stood barefoot and with their eyes closed as they moved their hands from the shoulder down as if cutting into the air in an effort to clean their spiritual auras.

It was not a New Age or Zen conference but an activity of the Women’s Chapter of the Puerto Rico Manufacturers Association (PRMA) that gathered wellness experts to teach professional women to strengthen their inner self.

The ever-increasing pace of work makes it harder to keep up, thus meditation techniques help to reduce stress and increase productivity at work.

“Our physical, emotional and spiritual well-being takes a special place when we speak about redefining success. During our congress, we will listen to spectacular speakers who will share their experience and knowledge to help us understand better our inner self and learn how to nurture our bodies and our wisdom,” PRMA Women’s Chapter President Elizabeth Plaza said.

Linda Clemons, a body language expert and CEO of Sisterpreneur Inc., spoke about the importance of letting go of toxic thoughts and of maintaining a positive attitude. Looking much younger than her 61 years, her enthusiasm is contagious.

Clemons said she spent seven days in a coma due to the anesthesia she was administered for a simple surgical procedure. When she woke from the coma, she “realized life is too short and I am too blessed to be stressed…. Do not allow anything negative to reign free in your mind,” she said.

Mayra Rodríguez-Mohamed, president and CEO of Reiki Institute of Puerto Rico, gave a presentation, titled “Beyond Success: Learning the Art of Awakening Your Inner Power.” She asked the audience, a majority of which were women, to stand and try to connect with the energy by closing their eyes and opening their hearts.

“While you disconnect yourself from external noise and make a connection with your heart, try to inhale light, peace and love and exhale worries and stress,” she said.

She also taught the audience exercises to deal with stress. One technique involves bringing down ones arm, in a cutting motion, while tightening one’s buttocks.

Yaisha Vargas, the editor of Mindful Writings and Translation, taught the audience about mindfulness, a mental state achieved by focusing on the present and acknowledging one’s feelings.

“I am not alone. I deserve gentleness, I deserve serenity…. I deserve compassion,” she said as she taught the audience a meditation exercise for self-awareness.

“What is self-compassion? It is to be a friend to ourselves,” she explained.

The attendees followed the exercises and one of them told Caribbean Business that she “truly felt new. I am going to do this more.”

The educational program at the conference includes five conferences and three panels as well as workshops. The congress began with a presentation, “The Thrive Revolution At Work: Redefining The Bottom Line for Our Organizations And Our Lives” by Renee Moorefield, Ph.D. and CEO of Wisdom Works Group, chairwoman of Wellness at Work-Global Wellness Institute Inc. (GWI).

Among the topics addressed, Kathy Wengel, the executive vice president and chief global supply chain officer at Johnson & Johnson, spoke about “Health for Humanity.” In addition, emotion management was discussed by Dr. Patricia Baxter, CEO of Dr. Pat Baxter & Associates LLC, in a talk, titled “Emotions & Mental Wellness: Pathways, Evidence And Horizons.”




Puerto Rico Manufacturers Association calls for special session to address energy policy

SAN JUAN – The Puerto Rico Manufacturers Association (PRMA) called on the legislature to immediately convene a special session for the Senate-passed energy framework to also be passed by the House of Representatives.

“We exhort the Governor, Hon. Ricardo Rosselló Nevares, to convene an extraordinary session of the Legislature, including as part of its agenda Senate Bill 1121, which proposes a new energy regulatory framework to govern the transfer of assets and concessions of the Electric Power Authority [Prepa] and to include other public energy policy criteria that allow transforming, modernizing and making our electrical system more efficient,” PRMA President Rodrigo Masses said in a statement.

The bill would require the government to eliminate fossil fuel sources and use 100 percent renewable energy by 2050. In addition, it would empower the Energy Commission to regulate the sector and eliminate Prepa’s monopoly.

Masses stressed that S.B. 1121 is the product of a legislative process, led by Senate Vice President Larry Seilhamer and Minority Speaker Eduardo Bhatia, “where there was broad participation of the various business, professional, union, civic and governmental sectors,” the PRMA said.

“Puerto Rico deserves to have already adopted the regulatory framework that will delimit and guide every PREPA asset-transfer process, to have the certainty, confidence and security that said process will reflect the…public interest of achieving an efficient, safe, stable system, responsive to the needs and challenges of the different residential, industrial, commercial sectors and citizens in general,” Masses added.

The House postponed its vote on the measure after claiming it needed time to evaluate it thoroughly.

“We do not think waiting for the next ordinary session is the most appropriate while Act 120 allows the transfer of assets under the current state of law, which does not provide the standards, criteria and a robust and adequate regulatory framework so said process fosters the economic development Puerto Rico deserves and demands,” Masses continued.

The PRMA said it has been meeting with House Economic Development Committee Chairman Víctor Parés and his technical team, and that it is sure the House lawmakers and Speaker Carlos “Johnny” Méndez would address the measure “in a thorough, diligent manner and with the sense of this matter’s urgency, if an extraordinary session were convened” to consider it.

“We trust that the Governor can consider this recommendation favorably, and that under the leadership of Engineer José Ortiz at the head of PREPA and the Governor’s team, the transformation of the electric system can be directed under an advanced regulatory framework, worked on in an exemplary manner by the Legislative Assembly of Puerto Rico and the majority and minority leadership,” Masses concluded.

Puerto Rico energy policy bill does not make it through session




Puerto Rico manufacturing entrepreneurs recognized

SAN JUAN – Eleven local business people were recognized Friday for their outstanding work in the manufacturing sector as part of the activities carried out by Puerto Rico Manufacturing Extension Inc. (Primex), Puerto Rico Industrial Development Co. (Pridco) and the Puerto Rico Manufacturers Association (PRMA) to celebrate Manufacturing Week on the island.

The awarded categories were: Business Growth, Supplier Development, Continuous Improvement, Technology Acceleration, Exporters, Quality Standards, Workforce Development, Sustainability and Startups.

“We celebrate these awards annually to recognize the development and growth of the island’s manufacturing companies. We have talented entrepreneurs who, every year, along with our team and engineers trace a goal that we help meet. We are witnesses of the effort of each entrepreneur, and every year we recognize and reward that effort during the celebration of manufacturing week on the island,” Primex Executive Director Migdalia Rosado said.

The entrepreneurs spoke about the effort and commitment of their companies after last year’s hurricanes. (Courtesy)

The winners were: in the Business Category, Gur-Meat Inc., whose president is Mariela Ramos; for Development of Suppliers, Caribbean Produce Exchange, whose president is Gualberto Rodríguez, was recognized; and for Continuous Improvement, PSD Corp., whose president is Nestor Dávila, was recognized.

Meanwhile, in the exports category, the award was conferred to Savorcrafters LLC, presided by José Rivera; and for Quality Standards, M & M Manufacturing, presided by María Meléndez, and Edwin Soto of Perfect Cleaning Services, were given the award.

Meanwhile, in the Work Development category, Congar International Corp., led by Phillippe Bonnin, was given the award; Safetech Corp., whose chief executive is Erick Negrón, won the Sustainability category; and for Startups National Distillery’s Dr. William Cruz was recognized.

The entrepreneurs recognized the effort and commitment of their companies after last year’s hurricanes struck the island.

“In our particular case, we lost production…but right now our farm is at full capacity and ready again to offer our product to the market,” said Yanice Deynes, who was given the Business Acceleration award.

“In the future, Avara will be bringing new clients to impact the future and continue to grow economic development and help Puerto Rico grow,” said Operations Director Idalia M. García, who received the Workforce Development .award

The event was attended by Puerto Rico Assistant Secretary of State Eduardo Arosemena, who read the proclamation of the celebration of Manufacturing Day on the island.

Manufacturing Week, Sept. 24 to Oct. 5 included visits to eight manufacturing companies in the food and beverage, technology, aerospace and pharma sectors, as well as a series of talks at universities that focused on manufacturing and areas such as technology, food, exports and medical devices.

The culmination of the Manufacturing Week saw the participation of Resident Commissioner Jenniffer González, who joined the celebration by recognizing the 11 entrepreneurs on behalf of Congress.




Public policy requiring local contracting by public-private partnerships lauded

SAN JUAN – The president of the Puerto Rico Manufacturers Association, Rodrigo Masses, expressed satisfaction Tuesday with the enactment of Senate Bill 999, which amends the Public-Private Partnerships (P3) Act to require compliance with the law that protects local goods and services industries in government contracting.

“Public-Private Partnerships have proven to be an ideal mechanism for citizens to continue enjoying services that the government no longer has the capacity to provide efficiently and adequately. The inclusion of P3s in the preferential public policy for purchases by the Government of Puerto Rico ensures a multiplier effect and significant impact on our economy. That is why it is essential, as noted by S.B. 999 that contractors under the P3 model comply with the provisions of Act 14.

“We thank the Governor, the President of the Senate and the other members of the Legislative Assembly for this initiative, which defends the local industry and will foster the economic and social development of Puerto Rico,” Masses said in a statement.

The signing of the bill comes at a time when a study by the Center for the New Economy revealed that federal authorities prefer to contract stateside rather than Puerto Rico businesses for recovery work related to hurricanes Irma and Maria.

Study: Most federal contracts to rebuild Puerto Rico awarded to stateside firms




Summit in Puerto Rico to focus on social entrepreneurship and post-hurricane reconstruction

SAN JUAN – Social entrepreneurship and the reconstruction of Puerto Rico after Hurricane Maria will be among the main topics of discussion at the two-day conference co-sponsored by the Center for Puerto Rican Studies (Centro) at Hunter College, CUNY, the University of Puerto Rico’s (UPR) Graduate School of Planning and the Puerto Rico Manufacturers Association (PRMA), among others.

The conference, “Empresarismo Social y Reconstrucción,” will be held Friday and Saturday.

The conference Empresarismo Social y Reconstrucción seeks to provide a forum for examining the potential impact of core federal programs supporting economic recovery after the catastrophic impact of hurricanes Irma and Maria. The main goal of the conference will be to “assess challenges and opportunities at this critical juncture of economic recovery and to examine how federal programs could be deployed and combined to support economic development, job creation and poverty alleviation,” according to the center.

Federal programs supporting economic recovery “will be examined through the lenses of stakeholders in the reconstruction process: nonprofit, faith-based, community development corporations and other civic organizations; credit unions and other community development financing institutions; the private sector, state and local government, academics, and others,” the center said.

Empresarismo Social y Reconstrucción begins Friday with six panels with leading experts in various fields. There will also be a special presentation in the morning by Dr. Edwin Melendez, who earned a doctorate in economics is a professor of Urban Affairs and Planning at Hunter College and the director of the Center for Puerto Rican Studies. Public relations consultant and columnist Sandra Rodríguez Cotto will take on the role of Master of Ceremonies.

The conference at the UPR begins with “Perspectives on Social Entrepreneurship and Reconstruction,” a panel composed by Efraín Maldonado, field office director of the U.S. Department of Housing and Urban Development; Rodrigo Masses, president of the PRMA; and Dennis G. González Ramos, undersecretary of the Department of Housing of Puerto Rico. Mildred Santiago Ortiz, executive director of the League of Cooperatives of Puerto Rico will serve as moderator. Lectures will also be offered on the Community Development Block Grant Program for Disaster Recovery(CDBG-DR); Capacity Development of the Civic Sector for Social Enterprise: Intermediaries and Philanthropy, and others.

From 9:30 a.m. to 3 p.m. Saturday at the Puerto Rico Manufacturers Association headquarters in Guaynabo, there will be a program of workshops that aim to give members of the civic sector—everyone from small business owners to community groups—the opportunity to acquire the tools they need to further their projects via grants, private funding, data collection, etc.. There will also be a workshop for those interested in data mapping.

Saturday’s workshops are the first activities coordinated by the newly created PRMA Diaspora Committee, led by Archer Lebrón. The workshops seek to provide practical experience of federal programs and financing to finance social enterprises, housing, community centers and schools, agricultural cooperatives, how private companies could participate, etc.

“There is a wide range of federal funds for the reconstruction that Puerto Rico faces–from tax credits and bond issuances to loan guarantees, grants and other incentives,” the center’s Melendez said. “Unfortunately, Puerto Rico does not use them to the extent that it could. In fact, one of the most important challenges facing Puerto Rico is the diminished civic capacity that exists to take advantage of the opportunity offered by these funds. Our intention is to contribute to the training of people and entities in this area so they can make use of these resources that are available for the reconstruction of the island and the strengthening of the civic sector of Puerto Rico.”

The conference is free and open to the public. Those interested can register via Nation Builder.

To see a live-stream of the conference Friday, visit: https://centropr.hunter.cuny.edu/tv/. A live-stream of Saturday’s workshops can be seen by visiting http://centropr.nationbuilder.com/workshop_program and clicking on the Zoom (livestream) link next to the name of the session.



Puerto Rico Manufacturers Association concerned about impact of US tax reform

SAN JUAN – The Puerto Rico Manufacturers Association will intensify its lobbying this week to “demand,” not ask, that Puerto Rico be treated fairly and that controlled foreign corporations on the island be excluded, be it partially, from the U.S. tax reform.

PRMA President Rodrigo Masses admitted that the association failed in having changes that would be favorable for the island introduced before the House and Senate approved their respective bills, but was confident that amendments to the legislation would be made while it is consolidated in conference committee in the next 10 days.

“They haven’t taken us into consideration” so far, he stressed.

On right, PRMA President Rodrigo Masses (CB file photo)

Masses acknowledged, however, that the PRMA is worried because it has “friends” in the House but not in the Senate. He indicated that asked Sen. Marco Rubio to help Puerto Rico to prevent the expected economic meltdown if the legislation is enacted as is from exacerbating the current pace of outmigration, as his Florida district already has more than two million Puerto Ricans.

“The only thing Puerto Rico has left after [Hurricane] María is the industrial sector,” Masses said. “Manufacturing jobs are the only thing that can support the economy.” The sector generates about 73,000 direct and 250,000 indirect jobs.

US Senate passes tax reform legislation in a 51-49 vote

Former Resident Commissioner Antonio Colorado said Puerto Rico has two options. The first is for the island to be exclude from the taxes that would “annihilate” the economy, such as the 20% on imports found in the House’s bill, and the 12.5% on intangible assets, or intellectual property and patents, in the Senate’s measure.

The second alternative hoped for would be an amendment that all industries in the U.S. Customs Zone be exempt from taxes. Puerto Rico is already part of that customs zone, Colorado said, and has to pay U.S. ships and incur other expenses.

“What we are saying is you can’t compare a CFC [controlled foreign corporation] in Puerto Rico with a CFC in another part of the world. What we are asking for is fairness,” Colorado added.

Puerto Rico CPA Society says proposed US tax code amendments don’t resemble section 936

Meanwhile, Masses said the latest information he has is that Congress will most likely work on the Senate’s version, which would eliminate the 20% import tax.

“All the attention is focused on the 12.5% that would affect intellectual property,” Masses said.

In addition to an exclusion, the official position of Gov. Ricardo Rosselló’s administration is that the final bill provide Puerto Rico with an “empowerment zone,” a federal initiative to create jobs in economically distressed areas through tax incentives and grants.

“We’re all headed there; although we may have different voices, the reality is we are all” shooting for that, Masses said.

However, last week the governor, along with the PRMA and other private sector organizations, said they would lobby for Puerto Rico to be treated as a domestic jurisdiction, or like a state. Masses insisted, though, that what is requested aligns with what the governor is asking for.

“What we’re talking about is that for 100 years Puerto Rico has been under the customs code, which is domestic for imports and customs purposes, and is defined within U.S. territory. On the other hand, Puerto Rico is in the U.S. Internal Revenue Code, and there they treat us as a non-domestic jurisdiction. Therefore, it’s not difficult to talk about the two contexts because both apply,” Masses explained.

Regarding the options left for the island and what is Plan B if the current stipulations were enacted, Masses said, “We have to achieve that these amendments or changes occur within the next few days.”

The president of the Puerto Rico Chamber of Commerce, CPA Kenneth Rivera, said that would consist of a clause that reads, “except Puerto Rico” or “except those in Customs Zones.”

Masses reiterated that companies in Puerto Rico are in U.S. territory and therefore deserve different treatment than those in Uruguay, China, Ireland or Singapore.

“[We want] companies under section 931 of the Internal Revenue Code, which are therefore CFCs, to be excluded from that imposed tax in order to eventually survive, if any survive this bill,” Masses said.

Proposed US tax reform ‘devastating’ for Puerto Rico

In the House, there are at least 10 representatives who have raised their voices in favor of Puerto Rico, but that type of relationship does not exist in the upper chamber despite Sen. Orin Hatch having presided over the Congressional Task Force on Economic Growth in Puerto Rico established by the Promesa law. This is because congressional Democrats are not participating in the process as part of their opposing the measure.

Despite this, Masses said the PRMA will request assistance from Senate Minority Leader Charles Schumer to advocate for the island, as well as continue to ask for Rubio’s support, given he represents Florida and its large Puerto Rican population, and “must rise” to the occasion and “bravely defend Puerto Rico.”

Resident Commissioner Jenniffer González has already said there is no potential for approval of anything similar to the phased-out section 936 of the U.S. tax code, which gave stateside companies an exemption from taxes on income earned in Puerto Rico.

Puerto Rico fiscal board urged to engage in federal tax reform process

If the tax legislation is signed without new Puerto Rico provisions, Masses said a way out would have to be evaluated. When section 936 was eliminated, the textile, electronics and other industries left the island, but many pharmaceutical companies reinvented themselves as CFCs. “It’s possible that what it looks like [now] isn’t so bad if I can vary the business model,” he said. “A bad law can have a way out.”

In addition to sending letters and lobbying, CofC’s Rivera was heading Monday with PRMA members to Washington, D.C. Masses said he will join them at the end of the week.

Also on their way to personally lobby Capitol Hill are Puerto Rico’s House speaker, Carlos “Johnny” Méndez, and Senate president, Thomas Rivera Schatz. Last week, the Legislative Assembly passed a resolution to have Puerto Rico considered a domestic jurisdiction in the tax reform.

Puerto Rico House Speaker wants Congress to consider island a domestic jurisdiction




Preventing collapse of Puerto Rico private sector in power utility’s hands

SAN JUAN – The secretary of Puerto Rico’s Economic Development & Commerce Department (DDEC by its Spanish acronym), Manuel Laboy, said he was confident the target date to have 95% of the island’s electric power restored in December could be met and thus avoid a total collapse of the economy, especially for the private sector.

When Caribbean Business asked the secretary whether he trusted the word of Ricardo Ramos, the executive director of the Puerto Rico Electric Power Authority (Prepa), Laboy simply replied he “trusted the governor’s word.”

However, the DDEC secretary noted Ramos is aware of the need to restore electric power to reduce the impact on the private sector. More than 30 days after Hurricane Maria struck Puerto Rico, much of the local retail and industrial trade has failed to restore operations due to lack of electric energy. Everyday, hundreds of people leave the island—after becoming unemployed because their employer lacks power or water—to support their families.

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

The Retail Trade Association (ACDEI by its Spanish initials) has already warned there could be losses of $8 billion if electricity is not restored within six months, and about $3 billion within three months.

The manufacturing sector has also been affected, with many factories having to reduce operations to limit the use of generators and extra expenses to function. U.S. Food & Drug Administration (FDA) Commissioner Scott Gottlieb has already expressed concern that there is a shortage of medications and medical devices as a result of the hurricane. Gottlieb has said several industries have moved their production out of Puerto Rico.

Since the first day after the hurricane passed, Laboy has held meetings with different sectors and attended assistance activities for businesses and members of the private sector affected by the hurricane.

The head of DDEC also recalled that Hurricane Maria was unprecedented, affecting all sectors, including agriculture and tourism.

Without Power Restored, P.R. Retail Sector Could Lose $8.9B in 6 Months

Given the fact that only 26.2% of electric power generation has been re-established, the Puerto Rico Manufacturers Association (PRMA) submitted its demands and lauded the chairman of the fiscal control board, José Carrión, for board’s intention to appoint Revitalization Coordinator Noel Zamot as Prepa’s “chief transformation officer.”

PRMA President Rodrigo Masses said the leaders of the supply chain and employment production centers are asking—in this “lights out” economy framed by a bankruptcy-like process under the Promesa law and the existence of a fiscal plan for the public power utility—whether it would be possible to reach and maintain the required sustainable competitiveness for the electric system to support businesses and employees in the future.

Puerto Rico revitalization coordinator doesn’t rule out power utility’s privatization

Masses asked that Prepa’s action plan respond to the emergency by including the following:

–A conservative estimate of Prepa’s loss of demand, which will occur because it is impossible to maintain a stable electrical system, while also promoting distributed generation, or energy from various sources or locations.

–That Prepa’s base rate for electricity is reduced so it does not exceed 20 cents per kilowatt-hour (kWh) and not more than 15 cents per kWh for the industrial and commercial sectors.

–That a budget is immediately established for the Puerto Rico Energy Commission, and that a “public collaboration” process be started whereby industry can effectively intervene to ensure all distributed generation technologies and private-sector financial capacities are considered for competitive investment in line with rates.