Investor-friendly island set to become regional hub
The liberalization of trade across the Americas is providing new opportunities for the country and the government is developing its long-term potential

The island was declared a semi-autonomous U.S. commonwealth territory in 1952.

The history of Puerto Rico dates back to November 19, 1493, when Christopher Columbus discovered the Caribbean island on his second voyage. The Spanish settlers originally called the island San Juan, and its capital, Puerto Rico, meaning rich port, before the names were eventually switched.

In 1897, the island was granted a Letter of Autonomy from Spain, allowing it to enter into free commerce with America. A year later, as a result of the Spanish-American war, it became a U.S. territory. By 1951, Puerto Rico had acquired the right to establish a government with its own constitution, and in 1952, was declared a semi-autonomous U.S. commonwealth territory.

Today, Puerto Rico is home to approximately four million people. San Juan, the island’s capital, with its diverse mix of people, commerce and industry, is still thriving on its busy harbor. Just two hours away from Miami, the Latin city is a popular tourism spot for American travelers and cruise ships.
The Governor, Sila María Calderón, oversees one of the most stable economies in the region, maintaining close ties with America. Investor-friendly policies and a pro-business stance have ensured a steady influx of foreign companies from the U.S. and elsewhere. Important industries include pharmaceuticals, electronics, petrochemicals, processed foods, clothing and textiles. The financial sector is one of the strongest in Latin America with healthy competition among banks, and a highly-developed insurance market.

Governor Calderón is eager to transform Puerto Rico into a major regional economic hub, a sophisticated services center for the Caribbean, and a logistics base between the Americas. Billions of dollars are being channeled into new infrastructure improvements.

The Puerto Rico 2025 project transcends the normal political and economic agenda to target the long-term potential of the island. Secretary of State Ferdinand Mercado says the idea is not just about constructing large buildings. “To develop our country the way we want, we have to plan by combining its material and spiritual
aspects. We want to preserve a country that really values its national identity, its heritage and its culture.”
Puerto Rico certainly has all the credentials for success. The island has the technological resources and the talented personnel to achieve its goals. The undisputed success of the pharmaceuticals industry underlines this potential. Puerto Rico supports an estimated 8.4% of all pharmaceutical employment globally, including America, and manufactures 16 of the world’s biggest-selling drugs.

Puerto Rico is also well placed to help U.S. companies tackle the central and south American markets under the new free-trade legislation, including the Free Trade of the Americas Agreement. Latin American countries tend to view Puerto Rico as the ‘Spanish U.S.’ because of the strong links.

Governor Calderón’s Chief of Staff César Miranda is confident that Puerto Rico can act as a bridge for many countries involved in the new international trade agreements. As well as global economic uncertainty, Puerto Rico has been coping with the withdrawal of the U.S. internal revenue code Section 936 which helped support local industry.

“We had to be creative to overcome that reality. We started creating new, locally-generated incentives, to motivate some of the companies that were based in Puerto Rico. We wanted to keep them investing here instead of going somewhere else. We created an attractive business environment for them.”

Many international companies chose to stay in Puerto Rico because of its location, and the opportunities that are emerging through the liberalization of trade across the Americas. Other firms, in the technology sector, for example, are moving in as the government acts to create new competitive niches.

There are high hopes for the development of the tourism sector. In 2003, 17 hotels are due to open, with a further 13 next year. With an estimated $4 billion in new infrastructure designated for 2004, in areas like ports, industrial parks and housing, the construction sector is booming. “The forecast for all areas of the Puerto Rico economy for the next 18 months is positive.”

The Government Development Bank (GDB), the state’s fiscal agent, with assets of $8.7 billion, will play a key role in financing future development. Héctor Méndez-Vázquez, GDB’s President, says the institution is committed to prudent fiscal management, but remains steadfast in fueling the national economic development agenda. “We are not going to be held down, we are not going to slow down. We are going to continue with our mission.”

Fernando Torres Ramírez, General Secretary of the Popular Democratic Party, says economic development and job creation are key priorities for the current administration. There are exciting developments across the island, not only in the capital, and the second city Ponce, but elsewhere, as moves toward decentralization continue. “There are several cities close to San Juan, such as Guaynabo and Bayamon, that are experiencing rapid development at the moment. Other examples are Mayagüez, on the west coast, and Arecibo in the north.”