Island seals its pitch at Puerto Rico Investment Summit
MAY 20, 2015 • CaribbeanBusiness.com
The latest edition of the Puerto Rico Investment Summit, which ended Tuesday at the Condado Vanderbilt Hotel in San Juan, focused on attracting business players from Spain and Latin America to the island as an investment destination and entry point to the U.S. mainland market.
The event–organized by the Puerto Rico Department of Economic Development & Commerce (DDEC by its Spanish acronym), alongside advertising firm Adworks–centered on the fiscal incentives the island offers in industries such as export, manufacturing and filmmaking, among other areas. Benefits stemming from federal programs, such as the EB-5 investor visa, were also discussed, as were opportunities for public-private partnerships.
An estimated 180 people attended the event, including potential investors from Colombia, Panama, Peru, Dominican Republic, Brazil and Mexico, among other countries.
Puerto Rico Gov. Alejandro García Padilla addressed investors during his keynote speech in which he mentioned the various business opportunities present under the different economic incentive programs. The governor also highlighted various success stories from companies that have established their businesses on the island. "This forum will allow us to understand each other, so that we can help grow the necessary trust to carry out all manner of economic interactions," he said.
During the event, several conferences were held in which public officials explained the different incentives available, and businesspeople discussed their experiences when establishing their businesses in Puerto Rico. For instance, DDEC Secretary Alberto Bacó Bagué presented the various mechanisms through which the island can become an effective entry point to the U.S. market.
"Puerto Rico offers a unique advantage compared to other jurisdictions," Bacó Bagué said. "We do business here under a U.S. regulatory framework, with the operational stability that only a federal jurisdiction can provide, and a workforce that is bilingual and bicultural. That makes us the U.S.'s real entry point, on top of having a very attractive incentives package. We are open for business here and now."
Among the participants at the event's many conferences was Sebastián Piñera, former president of Chile, who highlighted Puerto Rico's potential and identified advantages such as the island's cultural offerings, which contribute to the development of tourism, its attractive year-round climate and its "spectacular" natural resources.
Other panel participants included Efrén Ocampo, president of Mexican pharmaceutical company Neolpharma; Ernesto DiGregorio, president of Ecolift Corp.; Nicolás Kogan, of Americas Leading Finance; and Carlos Ramírez, vice-president of Evertec, a Puerto Rican company that has inserted itself successfully into the Latin American region.
Augusto Maxwell, from New York-based law firm Akerman LLP, was also on hand to discuss the opportunities that the changing U.S.-Cuba relations represent for Puerto Rico.
The event follows a key aspect of Puerto Rico's economic plan, centered on attracting offshore capital through a package of laws led by Act 20, or the Export Services Act, and Act 22, the Individual Investors Incentives Act. Act 20 offers a 4% corporate tax rate, which may be reduced to 3%; a 100% tax exemption on dividends or profit distributions from export services businesses, and a 100% tax exemption on property taxes for certain export service businesses for the first five years.
Meanwhile, Act 22 seeks to attract new residents to Puerto Rico by providing a total exemption from Puerto Rico income taxes on all passive income realized or accrued after such individuals become bona fide residents of the island. This relocation is intended to result in new local investments in real estate, services and other consumption products, and in capital injections to the Puerto Rico banking sector.
Another benefit for offshore investors is the fifth-employment based (EB-5) immigrant visa, which applies to those willing to invest in a business that will benefit the U.S. economy and create or save at least 10 full-time jobs. While the required investment is typically $1 million per foreign investor, an investment of $500,000 is accepted if made in a designated Target Employment Area, such as Puerto Rico.