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Puerto Rico is Rebounding!

I am so encouraged by this article. This is the motivation I needed to get in on the rebuilding action, NOW! See you PR in 90 days!!!
https://mobile.nytimes.com/2017/08/05/u … iness.html

http://www.elvocero.com/manos-a-la-obra … ef938.html

this is my community group in Condado... Join us.

Stumbled onto your post, and I did follow the hyperlink and read/skimmed the entire article.  Most telling quote is this: "If no one is here to change what is happening, we will suffer." The people look to politicians to solve problems, but politicians make a point of creating problems -- they're good at it.  Case in point: the US Congress. So, it is, indeed, up to "the people" to solve their own problems and just sidestep the politicians.

I know Calle Loiza, Santurce, and Ocean Park from the 1970s, and I've been back and forth on returning at this point in my life when the only draw would be the climate. Otherwise, the quality of life is more than concerning. Awhile back I posted a question on this forum about what expats thought the ten-year outlook would be. It was not positive. And it's not positive if those living on the island do nothing to change what they can, no matter how little.  Having said that, I wonder what you're getting yourself into. Sounds like you're jumping in w/o having done your homework. What planning have you done?

I think this link is important, so I want to repeat it here:
https://mobile.nytimes.com/2017/08/05/p … ness.html.

Good article!!

As has been stated in numerous posts, if the Government will stay the course and stay a territory, PR will become a Singapore of the Caribbean.

The glass is over 50% full now!!!!

Moving there very soon!!!! Looking forward to meeting new people, creating a new life and investing in the PR Economy.

I have been an editor of scientific manuscripts for about 15 years, mostly biotechnology subject matter. I own my own business. I'm accustomed to working with/for scientists all over the world.  What do you think would attract energetic minds to PR? Explain why Silicon Valley types would want to migrate to PR as a place to live, work and, most importantly, innovate. I don't believe UPR stands out as a research institution.

No worries, thanks for caring but Man, I'm good! PR is not for everyone! But living in PR cannot be as stressful as working in the biotech/pharmaceutical industry! I spent many sleepless nights working in that industry. Ethically and morally, I could never square it up. However, the paychecks were unbelievable.
NOW it's time to relax, and enjoy the culture of PR. And I believe the ups are better than the downs; the young people are key for PR rebounding! They are innovative, risk takers and courageous. The article makes the point.

I am not currently in PR, actually, I have never been there, but the island as a whole intrigues me from a business standpoint. I own multiple online businesses and if I do move to PR I would undoubtedly open additional businesses.

What businesses are needed? What do you (anyone that currently lives in PR), want to see that isn't currently available? The mainland has unlimited resources for investment opportunities. Unlimited. My question is, what is needed?

What's needed is a way to get out of the debt spiral that the government is in. Next public services need to be restored, modernized. What's also needed badly is jobs, any jobs, where locals can make a living.

Although the NY Times article is positive and encouraging it does not reflect the overall situation on the island.
Still many people are leaving the island and moving to the mainland US in search of a way to make a living. The major debt is still there and,  unless I'm missing something, there are no signs of overall economic improvement, on the contrary..

Gary -

It seems to me the main income of PR should be tourism. Is this correct? I read that Royal Caribbean is building or has built a massive port in San Juan. What is PR doing, if anything, to attract more tourism and utilize the cruise industry?

Smates :

Gary -

It seems to me the main income of PR should be tourism. Is this correct? I read that Royal Caribbean is building or has built a massive port in San Juan. What is PR doing, if anything, to attract more tourism and utilize the cruise industry?

The latest is using the song Despacito to attract people to the island. It is a hit in the Internet so it is being use to advertice Puerto Rico.

I realize I am an outsider and may be way off base. But look at this article:

http://puertoriconow.seepuertorico.com/ … se-season/

This is INSANE. There is no way PR should be in the financial crisis it is in when 1.6 million visitors come to the island JUST FROM CRUISE SHIPS. The PR tourism company must absolutely be horrific to not capitalize on this aspect.

Cruise ships moor in Old San Juan and that's the #1 tourist attraction for their passengers. Bars, restaurants, souvenir shops are plentiful. Tour guides try to seduce cruise passengers for day tours, it's all there.
Several companies offer package deals like staying a couple of days on the island before or after a cruise.

Lots of jobs in manufacturing were lost after tax advantages for pharmaceuticals (section 936) were ended. Read f.i. https://www.puertoricoreport.com/the-en … ction-936/

The government was or most likely still is the main employer. Too many people were on government payrolls and this is changing now the government basically is bankrupt.

So we have (soon to be) ex-government employees and pharmaceutical industry workers who are jobless, They need jobs or they pack their stuff and go to the mainland like many are doing. Over the last 10 years or so around 500.000 left the island.

Meanwhile because the government needs to spend less services are cut and that makes live not better for those who (have no other choice than to) stay.

That's the story in a nutshell.

Smates :

1.6 million visitors come to the island JUST FROM CRUISE SHIPS.

Keep in mind that the majority of them are here for 24 hours or less. Add to that "free" (included) meals aboard the ships and what's left is an excursion, a couple of drinks, lunch maybe and some lousy souvenirs. Not a lot of business.

Also most of the money being drop by the cruise ship tourist is mostly spend in the general area of where the cruise ships are which is the Old San Juan. Most of the island is getting little to nothing from that.

Most other tourist that do stay in the island are still mostly in the San Juan area (Condado), Rincon and in Fajardo to some extend, so again only a small amount filters out to other areas

The key to the cruise industry is the day excursion.  Also, some cruises begin in San Juan so the passengers will have to be in PR at least 1 day beforehand.

Smates :

The key to the cruise industry is the day excursion.  Also, some cruises begin in San Juan so the passengers will have to be in PR at least 1 day beforehand.

Yes and the other 77 towns basically get nothing for it. I am not too fond of cruiser, there is more money in the ones that come stay in the island specially those that are adventurous and visit other towns outside of San Juan.

PR cannot switch to a Cayman Islands - BVI style tax system with the size of its local government (both state and municipal). In addition, I have never known of a non-common law jurisdiction that is a successful "tax haven". Civil law countries just don't have the right touch of regulation, legal clarity, and legal certainty. The missed opportunities in this area are enormous and the whole failure to be more business, finance and tax friendly is tragic, in my opinion.

Smates :

The key to the cruise industry is the day excursion.  Also, some cruises begin in San Juan so the passengers will have to be in PR at least 1 day beforehand.

Not necessarily.
Many cruises do the same round trips over and over again and passengers can start and end their trip in several ports, San Juan being one of them. Since cruises are popular among locals I would assume (since I don't have figures) that most people who start their cruise here are locals.
I do know about package deals flight-hotel-cruise-flight from Germany to Puerto Rico. The direct flights from and to Frankfurt, Germany with Condor are (almost) full of people who booked a trip like that.

I have lived in areas that cultivated the cruise ship industry, (Sitka AK for one) and other areas as well.  IMO the benefits to the local economy are very limited, limited to a few merchants at the docks and some day tours.   It is also very sensitive to economic variables and highly unreliable.

Better to focus economic development efforts towards sustainable basic industry and agriculture.

Smates: PR is ripe with opportunity (IMHO). It just needs innovative minds, capital investment and a plan.

If I had the resources, I woud contract with agencies to improve infrastructure, restore old buildings (especially the historic ones), expand agriculture (the organic food industry is one of the fastest growing in the States, which is why Amazon bought Whole Foods), develop ecotourism, etc. This would boost employment and the improvements would make PR more desireable as a permanent home and draw talent back to the island.

The cruise ship industry is big in PR, but this is just one revenue stream, and a somewhat limited one. Contrary to what has been said here, the majority of passengers on cruise ships originating from San Juan port are not PR locals. And most do not spend time touring the island before they hop on board, so, as Rey has said, the money doesn't trickle out far beyond the San Juan/Candado area. Further, I do not agree that the key to the cruise industry is day excersions for a number of reasons: lack of profitability, lack of demand, and basic impracticality.

I recently visited Cuba, which does have a plan. Even with limited resources, it has its goal of restoring Viejo Havana to its colonial glory as the largest European city in the Americas. Construction is everywhere, and although the pace is slow, it is steady

And Cubans are looking to the future. What might appear to us as draconian measures in defense of resources and property rights, are actually ways of bulding the economy and keeping foreign money inside Cuba.

And Cubans are not ignorant of the fact that English is the language of diplomacy and eoncomics. English is a requirement in school from first grade on, and no student can graduate from college without complete English proficiency. Cubans realize that to compete globally and attract foreign investment, they need those skills,

lgustaf :

Contrary to what has been said here, the majority of passengers on cruise ships originating from San Juan port are not PR locals.

I didn't write that the majority of passengers are locals, I wrote that I assume that the majority of passengers that start their cruise here are locals. Like you I know that most cruise passengers are US Americans.

My post regarding the cruise industry was based on the fact that they are already a part of PR's economy. I was implying that maybe more could be done to capitalize on the cruise revenue.

I realize the other 77 cities "get basically nothing". That is still no reason to "not be fond of cruisers". The goal should be to entice cruise passengers to vacation in PR.

Also, I disagree that passengers that start their cruises in PR are locals. Unless you want to get into the whole "PR is the US" go around. We get it. PR is part of the US. However, when you use the word "local" you are implying that the person lives locally in PR and is taking a cruise from that port. If PR is in such dire straits economically, which citizens are taking cruises?

I know what you meant, Gary, and I don't agree. The majority of cruisers who START their cruise from San Juan are not locals (from PR). At least not on the cruise ships I've been on. German passengers far outnumbered Puerto Rican passengers on those ships.

When I worked in Old San Juan, it was a horrible few hours while the tourists were in port. Nothing against them, of course, they were all well behaved - just the surge in foot traffic was a bit much. The nicest times to enjoy the architecture were in the early morning, before the tourists and the heat took over, or on a weekday evening with a nice breeze.

Puerto Rico is hurt badly by its higher costs for tourists. I know this topic has been covered at length here, but recently a colleague of mine in our Zurich office told me that she and her husband had considered PR for a vacation holiday before choosing Jamaica because it was significantly cheaper. A real shame.

Nomad is correct, when the cruise passengers descend on the town it can be overwhelming.  In Sitka, they would swarm the downtown area, wander in the middle of the streets blocking local traffic trying to get to & from work, wander up on the front yards of houses and look in windows!   Tourist can be rude and obnoxious.     :mad:

OK, see you've started an interesting thread, and I don't give advice, just tips.  Have you ever even been on the island? Do you speak Spanish? I know that in Mexico, my fluency in Spanish when conducting any type of business, whether grocery store or beyond, was appreciated and respected. You say you're interested in the culture, but you could treat yourself to six months, or so, of immersion, to see up close what it's like, and that wouldn't begin to scratch the surface.  And there are other, more serious, headwinds. The dire healthcare infrastructure is basically what makes it impossible for me to relocate. Just Google quality of healthcare in PR and see where all the specialists have gone. Care to wait six months for an appointment? And what happens if Medicaid is not funded at the end of the year; it will be a calamity for a good chunk of the population. Your Silicon Valley transplants would have to believe in immortality, as well, or that they will never have an accident.  I would pay attention to the posters on this forum and ask questions, lots and lots of questions.

lgustaf :

I know what you meant, Gary, and I don't agree. The majority of cruisers who START their cruise from San Juan are not locals (from PR). At least not on the cruise ships I've been on. German passengers far outnumbered Puerto Rican passengers on those ships.

I guess my assumption was wrong, then :)
The German passengers must be form the package deals I was talking about, Two or three big planes full of Germans arriving weekly.

Smates :

Unless you want to get into the whole "PR is the US" go around. We get it. PR is part of the US. However, when you use the word "local" you are implying that the person lives locally in PR and is taking a cruise from that port. If PR is in such dire straits economically, which citizens are taking cruises?

I'm not one of those (I think there's only one and it's not me) who keep telling that PR is part of the US. When I say/write locals I mean locals, real Puerto Ricans.
Those who go on on cruises are people who have a job or a good retirement check.
Cruises are very popular among Puerto Ricans and a relatively cheap way to get a short vacation.

But let's leave the cruises behind us in this discussion, most or all has been said about the subject.

It would be more interesting to explore ways to get the economy going again.
What about simplifying the process to obtain permits and licenses, lowering the cost of utilities for businesses instead of making them (for no reason) higher for commercial and industrial customers, stimulating the usage of government owned real estate for businesses, actively help to get business loans etc. etc. etc.
So much needs to be done to create a climate in which business owners and investors would feel confident to start a new venture on the island.
There's a long history of discouraging businesses here on the island and a mentality change is needed.

ReyP :
Smates :

The key to the cruise industry is the day excursion.  Also, some cruises begin in San Juan so the passengers will have to be in PR at least 1 day beforehand.

Yes and the other 77 towns basically get nothing for it. I am not too fond of cruiser, there is more money in the ones that come stay in the island specially those that are adventurous and visit other towns outside of San Juan.

I didn’t know that the other Muni’s didn’t get a piece of the money. I read Muni’s are maxed out at 1.5% of stuff bought in their border from the highest sales tax in the US of 11+%. But SanJuan gets it all and it doesn’t trickle down? Brutal. Can you imagine how the other poor municipalities would benefit if the sales tax $$ from cruiser industry workers went into the state general fund? More $$ then 1,000 new 'under the table' Pincheras’s, Bars, or virtually any small retail would contribute in a year to any town.

Cruise tourism is now and will be the major source of tourism $$ for PR. SJ was the third highest of Latin America Ports of Call in 2016-7.  25,000 people docked in one day in August '16 for example, a record breaker. 

Land based PR tourism, no shocker, a different story. The below linked Reuters article is 2 years old but presents data on why land based tourism in PR has declined without change in sight. If the link doesn’t get posted, google “Reuters puertorico tourism insight”. Nothing surprising–PR can't match the cheap cost of labor etc in places such as the Independent Cuba or DR, not to mention loco electric, red tape and –read the article. Simply put, too many beautiful Caribbean destinations offering cheap rates and/or all-inclusive deals 50% lower then PR. PR cannot compete. It’s expensive to do business in an American Colony with wage requirements all deserve in any country but don’t have in these other “Free” Caribbean nations.
http://www.reuters.com/article/us-usa-p … sm-insight

The fed NOAA’s Coastal Management Division commissioned a study last year “Describing the Coastal Economies of the USVI and PR”. Data for each Colony/Territory hahaha is reported separately in this study Worth reading. A few numbers may be of interest.

In 2015 they estimated app 1 million “Transit passengers”–meaning not “Homeport passengers”  who totaled app half of that.

The Transitos on average spent $70 per person per visit or $67 million. The Homies spent on average $125 per person per visit or $56 million. Crew members spent $150 per crew per visit or $35 million.

Wages were broken down by category totaling $800 million but difficult to decipher what to attribute solely to Cruisers. But wages paid in only eating and drinking joints that the authors attributed to the ocean trade was $670 million and 56,000 employed, but you say doesn't trickle down so that doesn’t trickle down in taxes or wages because they all live in SJ?

Anyway, here’s the current income tax rates, I think it is current anyway, for Puerto Ricans, who do not pay US Fed taxes on personal income from PR, generally, only FICA/Medicare.  I’ll leave it to better analysts then me to figure what that means in total dollars paid in PR taxes from the Cruise industry but you are saying that doesn't trickle down.

Over 9,000, but not over 25,000    7% of the excess over USD 9,000
Over 25,000, but not over 41,500    USD 1,120 plus 14% of the excess over USD 25,000
Over 41,500, but not over 61,500    USD 3,430 plus 25% of the excess over USD 41,500
Over 61,500    USD 8,430 plus 33% of the excess over USD 61,500

And then there’s the millions spent by Cruise Lines in what the authors term “Port Services”, which include dockage fees, linesmen, tugs, utilities, water , gas, navigation services, and food and booze and necessities etc purchased for passengers and crew that doesn't trickle down?

So many many millions of dollars in sales tax alone that should be split up en todo via the general fund, and hundreds of millions more in salaries and income taxes but what you are saying it stays local and doesn’t trickle down and other towns get nothing.

So Gary, some has been said, I wouldn't say a lot, about the Cruising industry as it relates to PR, but real data is always the very best as opposed to pure baloney that doesn't require others to post a bail out. Next bailor will be?

Gary,

yes, you are spot on.  Perhaps like minded could open an investors group to support development of new enterprises.   When we return, will look at development of our place in PR.

I agree!! The PR Gov. should reinstate part of the Pharma. Manufacturing tax incentives as well. The plants are already here. Just need up fitting and modernizing (which will also generate jobs) in the construction field.

To bring a large number of long term, decent paying jobs to the PR People, you have to have Manufacturing, then Agriculture to help feed the masses. With Agriculture also comes Manufacturing and distribution jobs.

Naturally this is not the sole answer, but it strengthens the economic base and gives large numbers of people jobs and money to spend. Which they do not have or have lost.

Regardless of what any Naysayers proclaim, the tax incentive moves by the PR Gov. are helping and things will change over time. I agree with the government cuts to stop the bleeding and reorganize. They did not get into this mess over night and they will not get out over night. The Naysayers complain about the Acts which have been implemented and some of them harp about becoming a State. THAT would be disastrous to PR.

What they do not tell you is, at the current tax rates (39% Federal + 33% PR State) and then add Obama Health Tax and any other tax that I am forgetting and PR would be the HIGHEST Tax State in the Union. THEN, the people with money would leave and the economy would be far worst than it is today. THEN, the PR Gov would be crying to the Feds for more Well Fare, hence PR becoming another State surviving on Tax Dollars from the other 50 states. THAT would NOT be a pretty picture.

I am sure this will draw some fun comments. 

Again, I see a cup OVER Half Full!!!!!

Jos66 i wrote something similar about a news article. You are not off on that. As mush problem as PR has cutting the budget, could you imagine them lowering the income tax to 5-6% like many states? I dont see it ever, its not in their blood.

For the coming years the PR government can hardly do anything without the approval of the oversight board and from what I see those guys are not focused on getting PR back on its feet but on squeezing out  as much $$ as they can to pay off the debts...

Gary
You are right. They were wasteful and took loans they should not have taken. So there is a price to pay, just like in Greece. But PR will be in far better shape since they are taking actions to resolve the debt/spending problems and entice money back to the Island. Bringing new Entrepreneurs, R&D and Business People to the island will help stir up creative ideas and solutions to the problems that PR faces.

The one thing I do not agree with the PR Gov. on is their stance with the current businesses (small & large) on the Island now, that do not meet the criteria for the different ACTs.

It would really help the local economy in PR if they would create a set of ACTs that target local business (large and small). For the first year or 2 the Tax Revenue would possibly be down some, but over that year or 2, you would see business owners growing, hiring more people and consumer spending would increase that would increase Sales Tax Revenue.

Once revenue starts increasing, then you wisely start addressing the Infrastructure, school and hospital issues that are pending. As I see it, they really need to do something like this to help local business and create additional jobs.

One last thing, they need to bring in the right Bull Dogs to handle the Creditor (Bond) negotiations!!! Go for the throat and don't let go!!!! Pay them based on results. NO Gov. Employee or Gov Paid Attorney can get the job done like it needs to be done. THAT is their best and quickest way to reduce their debt. But they also have to be in a position to fulfill the Terms of the negotiation.

But just remember folks, as bad as the debt issue is with PR, PER CAPITA the US is far worse than PR. THAT IS A FACT!!!!!!

SUMMARY
1. Staying the course they are on to bring in new people, business and money to the Island

2. Create favorable ACTs for the local businesses

3. Bring in the right team to handle Debt Negotiations

PR GOV, PLEASE CONSIDER SOME FORM OF No. 2 & 3 TO COMPLEMENT No. 1 AND YOU HAVE A SOLID STRATEGY (there would be fine tuning of course) TO REBUILD THE PR ECONOMY, ELIMINATE DEBT AND GET INTO A POSITION TO BE ABLE TO DO THE JOB THE PR PEOPLE ELECTED AND HIRED YOU TO DO!!!! PROVIDE, GROW AND WISELY HANDLE THE INFRASTRUCTURE, SCHOOLS AND MEDICAL FOR THE PR PEOPLE!!!! Of course the stated always includes Police, Fireman and all the other wonderful Civil Servants that do all that is needed for the PR People.

Any "new" jobs, as a result of pharma plants being updated/improved, would not go to Puerto Rican construction... just another part of the Union system! I ran into a bunch of men, doing some construction and pipefitting work, in the Lilly plant, in Guayama, years ago. According to these guys, they can ONLY hire union workers, and they get paid triple time, Union wages, to come here, work 6hr days, and get put up for free, with free meals... the rest of the time, they'd be at one of the many local bars... so that the only way their money would benefit Puerto Rico, would be bar & hotel owners. This is just another example of how difficult our problems are; there's no easy answer.

I do agree, that if improvements/upgrades were made, to existing plants, and many of the thousands laid off (also, years ago) as a result of the Pfizer/Bayer merger, (I'm running on memory here, but I believe most of those were early retirements), but some of the inhabitants, of the towns of Salinas, Guayama, Arroyo, could see some benefit. Sure, bring 'em back!

mac00677
I did not realize the Unions were so prevalent in PR. That is a real shame. Just another bureaucratic money & power sucking leach (Unions).

There are other potentials as well. PR has so much potential (old & new).

This has been mentioned before, PR's debt is staggering given its economic output and only 3 million people left on the island.
  I don't know all the details of the current debt restructuring but if it means putting a super tight leash on an already weak economy to pay back part of an unfeasible debt, then they'll just restructure again. 
It will take at least 10 years to get through that mess.
But in that time, private investment in tourism, business, etc can occur to help the island move forward.
In Aguadilla area, I've been impressed with some of the new small businesses popping up in the area mostly focused on tourism.

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