integrated economic development plan - · pdf filefirst the textile industries, ......
TRANSCRIPT
Integrated Economic Development Plan
Hon. Manuel A. Laboy Rivera
Secretary, Department of Economic Development and Commerce
Frequently Asked Question
Where is Puerto Rico’s Economic Development Plan?1
How do we get more money to the treasury?2
What are the specific measures to boost Economic Development?3
2
Who is responsible for Economic Development?4
What are we doing for SMEs?5
Evolution of the Economy of Puerto Rico in the Past 50 Years
AGRARIAN ECONOMY INDUSTRIAL ECONOMY
1960’s 2000’s
ADVANCED MANUFACTURING, SERVICES AND KNOWLEDGE
ECONOMICS
Sugar cane,
tobacco, etc.Petro-chemical, electronics,
needle, textiles, etc.
Pharmaceuticals, medical devices,
biotechnology, food, export
services, etc.
4
Comparative Analysis of the Economic Models of Puerto Rico
1940 - 1996 1996 - Present
First the textile industries, then the petro-chemical, and then
the pharmaceutical industries - all depended on importing
almost 100% of the raw material
High dependence of manufacturing activity from foreign
companies - little diversified economy; Local business class far
below its potential; Tourism and agriculture with little impact
on the economy
Federal incentives, cheap labor, preferential access tocontinental US markets, and low utility costs as major tools toattract foreign investment
Most tax incentives and subsidies are granted to large
foreign companies
Import and export depend mainly on foreign companies
Our greatest competitive advantage = Tax Incentives
Second competitive advantage = skilled, educated and bilingual labor
force; Third = geographical location; Fourth = American legal system
High dependence on manufacturing activity by foreign companies
with a slightly more diversified economy (ex. finance, banking,
professional services and insurance) - agriculture and tourism with little
impact on the economy; Innovation and entrepreneurship far below their
potential
Tax Incentives (+ zero federal income taxes - Section 933 FederalInternal Revenue Code) as the main and only tool to attract foreigninvestment. This is due to the loss of the 936 incentives. US FreeTrade Agreements with other countries affected PR preferentialaccess to the North American market.
Most of the contributory incentives and subsidies are granted to
large foreign companies
Import and export depend mainly on foreign companies
5
Current Conditions and Economic Background
Change
2006 to 2016
Gross National Product (GNP) -15.2%
-32.7%
-16.7%
-3.0%
-20.2%
Government Consumption Expenditure
Gross Domestic Investment
Personal Consumption Expense
Net Income to the General Fund
Economic Activity Index
+7.4%
Source: Planning Board, Financial Advisory Authority and Fiscal Agency of Puerto Rico, Department of Treasury and Visitor Profile Report of the Institute of Statistics 6
Machinery and Equipment
Construction
-12.6% -61.3%
INVETMENT IN:
-14.9%
Participation Rate
Non-Agricultural Wage Employment
-17.3%
(at real prices)
Economic Impact of Change in Population Levels
6760
6862 60
76 75 74
8489
31 2934 32 32
23 2025
2025
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Out In
-444k people who do not return
Migratory Balance with the United States – 2006 to 2015
Economy may experience economic growth even as its population declines
Economic approach must be changed
A more favorable environment for local companies should be created and PR must shift from being an importer to being an exporter
(in thousands)
Source: Community Survey, U.S. Census Bureau; Air Carrier Statistics, U.S. Bureau of Transportations; Cargo and Air and Sea Passengers, Ports Authority 7
Socioeconomic Welfare Conditions
Source: KIDS COUNT Data Book of 2017, Annie E. Casey Foundation 8
Puerto Rico Unites States
CHILDREN LIVING IN POVERTY
Number of children
428,000 15,000,00056% 58%2010 2015
22% 21%2010 2015
CHILDREN WITH PARENTS WITHOUT JOB SECURITY
Number of children
422,000 21,363,00054% 57%2010 2015
33% 29%2010 2015
CHILDREN LIVING IN HOUSES WITH HIGH COST OF HOUSING
Number of children
232,000 24,646,00032% 31%2010 2015
41% 33%2010 2015
ADOLESCENTS WHO DO NOT ATTEND SCHOOL OR WORK
Number of adolescents
21,000 1,191,00018% 11%2010 2015
9% 7%2010 2015
How does Puerto Rico compare with other jurisdictions?
Source: The World Bank Group, Economy Rankings 2016 9
EconomyEase of Doing
BusinessStarting a Business
Dealing with Construction
Permits
Getting Electricity
Getting Credit Paying TaxesTrading across
Borders
New Zealand 1 1 1 34 1 11 55Singapore 2 6 10 10 20 8 41United Kingdom 7 16 17 17 20 10 28United States 8 51 39 36 2 36 35Germany 17 114 12 5 32 48 38Ireland 18 10 38 33 32 5 47Portugal 25 32 35 50 101 38 1Spain 32 85 113 78 62 37 1Mexico 47 93 83 98 5 114 61Colombia 53 61 34 74 2 139 121Peru 54 103 51 62 16 105 86Puerto Rico 55 51 131 65 7 135 62Chile 57 59 26 64 82 120 65Costa Rica 62 125 53 27 7 62 71Panama 70 43 73 23 20 170 53Uruguay 90 60 163 43 62 113 146Indonesia 91 151 116 49 62 104 108Dominica 101 64 90 61 139 111 80Argentina 116 157 173 91 82 178 111
How can more money enter the economy?
For an economy that does not control its monetary policy, there are 4 main mechanisms to raise funds
FEDERAL FUNDS CREDITINVESTMENTEXPORTS
Fostering the flow of funds and maximizing their multiplier effect through capital reinvestment and the consumption of local products and services are the necessary mechanisms to revive the economy and create new jobs.
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Socioeconomic Development - Vision
Fiscal responsibility and transparency are fundamental to a healthy, effective, efficient and participative government.
Science, technology and innovation are critical for the modernization of our economy and our institutions.
The model is based on the development and protection of the human resource, including security, education, health and social services.
Stability and representativeness on an equal basis with the other States -necessary to reach our potential as a people.
Productivity is necessary to compete in the global economy and value added is the activity that differentiates our products and services.
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ToolsPublic Policy Setup
Statistics ResultsPlanning & Budget
Main Components of Economic Development
We have to transform Puerto Rico's education to foster a maximum level of innovation & technology that enables us to be globally competitiveand thus reach the desired level of local, national and foreign investmentthat allows the export of goods and services.
13
Main Components of Economic Development
Attract private investment capital where our
creative minds, our ecosystem of innovation
and our human talent are our true main
incentives.
Encourage innovation, technology and the
export of products and services with high
creative content and added value where
universities - public and private - are the main
axes of sustainable economic development of
the Island.
Promote the creation of local companies
that are based on values of productivity
and competitiveness.
Establish the best climate for doing business in
Puerto Rico, both to create local businesses and
to attract foreign investment.
EDUCACIONINVESTMENT
EDUCACIONCOMPETITIVENESS
EDUCACIONEDUCATION
EDUCACIONINNOVATION &
TECHNOLOGY
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Transformation of the educational system, K-12,
university level, and professional level (certifications and
continuing education) to be one of excellence and
embrace innovation and creativity.
Education: System Transformation and Skills Promotion
We believe that the education system is an essential component and is key for economic development, sowe need to continually calibrate and align curricula and teaching methodologies to ensure that theyaddress the needs of local and international industries, and that we help professionals in the work force toreinvent themselves, as they need.
K e y I n i t i a t i v e s i n E d u c a t i o n
1 Puerto Rico Online Campus
2 Bilingualism: Key to Success
3 STREAM: Science, Technology, Reading, Engineering, Arts, and Mathematics
4 Re-focus of the University of Puerto Rico (UPR)
5 Internationalization of University education
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Innovation: Solid Ecosystem for Entrepreneurship
Market Needs
Applied Research
Incubators Startups
Accelerator Startups
Substitution of Imports of Goods and
Services
T e c h n i c a l A s s i s t a n c e
In order to establish a healthy and sustainable ecosystem of innovation it is fundamental that the projects of entrepreneurship respond to the needs of the market.
F i n a n c i a l A s s i s t a n c e
16
Commercialization
Innovation: Natural Energy Laboratory of Hawaii Authority (NELHA)
18
OTEC Efforts & Activities Hawaii Puerto Rico
University program(s) – University of HI Si No
Research centersHI Natural Energy Institute
HI National Marine Renewable Energy CenterNatural Energy Laboratory of HI Authority
Si No
Science & Technology Park Si No
Pilot Plant (100 kW connected to the grid) Si No
Federal & State Permitting Roadmap/Guide Si No
Site-Specific Environmental Impact Assessment Si No
PPA Negotiations with State Power Utility Si
First true closed-cycle OTEC plant connected to aU.S. electrical grid. Inaugurated in 2015
Represents a major achievement for Hawaii, theU.S., and marine renewable energy.
Generates clean, renewable electricity that isavailable 24 hours a day, 365 days a year. TheNELHA-sited plant generates 100 kilowatts ofsustainable continuous electricity – enough topower 120 Hawaii homes annually.
Competitiveness: Structural Reforms
Public access to financial and operational information of the PR Government in a transparent manner to promote economic development.
Elimination of the federal requirement for export, achieving an equal treatment in order for transactions to and from the Island be more agile at a lower cost.
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• Consolidates and rationalizes all economic incentives in a single code.
• Establishes a uniform process for granting incentives.• Focus the resources on the incentives with Return of
Investment
Structural Reforms
Culture of Transparency andPrevention of Corruption (FOIA)
Eliminate Requirement forElectronic Export Information (EEI)
Incentives Code
1
2
3
4
Labor Permits Tax Energy
Investment: Strategic Approach
Destination Marketing Organization (DMO)
Entity will manage the marketing and promotion of
Puerto Rico as a destination of the visitor's economy.
Invest Puerto Rico (IPR)Entity will promote Puerto Rico as an investment destination, organizes the efforts of private sector promoters and focuses on attracting new businesses to Puerto Rico
Link between external capital and local businesses
New DDEC
IPR DMO
INCENTIVES CODE
INCENTIVES CODE
20
Science, Tech, and Research Trust
Link between external investment and local companies with innovation and technology
Investment: Tools and Opportunities
Federal
ProgramsState
Initiatives
Investment
Opportunities
New Market Tax Credits
EB-5 Program
Foreign Trade Zones
Invest Puerto Rico
Destination Marketing Org. (DMO)
Incentives Code
Asset Map
Public Private Partnerships
Science City
Roosevelt Roads Redevelopment
Port of Las Americas
21
Infrastructure Plan
Insert PR in US treaties to
avoid double taxation
Concessions and Contracts of Operations / Maintenance
Regional Airports
Pilot Projects of Hydrogen Generation for Fuel Cells
Vehicles
Compressed Natural Gas
New Natural Gas Plant in Costa Sur
Pilot Projects of Hydrogen Generation for Fuel Cells Vehicles
PR-52 Extension to Aguadilla
Natural Gas Project in Palo Seco
Liquefied Petroleum Gas
Waste Decomposition Plant
Compressed Natural Gas
Natural Gas Project in Aguirre Plant
Liquefied Petroleum Gas
Receiving Terminal (CGL)
• Concessions and Contracts of Operations / Maintenance Regional Airports
• Natural Gas Project San Juan
• Comprehensive Cancer Center Infrastructure Asoc.
• Pilot Projects of Hydrogen Generation for Fuel Cells Vehicles
Investment: Potential Projects with Public Private Partnerships
22Over 50 renewable energy projects under the Puerto Rico Electric Power Authority (PREPA) evaluation
EDUCACION
Bio Economy
Visitors EconomyExport of Goods and Services
Emerging Industries
Aerospace Technology
Advanced Manufacture
1
2
3
45
6
7
25
Strategic Areas for Economic Development
Programmatic Commitments of Economic Development by
Strategic Area
ADVANCED
MANUFACTURE
EMERGING
INDUSTRIES
TECHNOLOGY EXPORT OF GOODS
AND SERVICES
VISITORS
ECONOMY
AEROSPACE BIO ECONOMY
National Network of Manufacturing Innovation
Manufacturing USA
Select USA
Permanency of Section 199 of the Federal Internal Revenue Code
Industrial Hemp
Medicinal Cannabis
Impulse to Puerto Rican Cinema
Sharing Economy
Creative Economy
Thermal Ocean Energy and Deep Water Industries
Innovation and Technology Economic Impulse
Center for Software Development & Info Technology
Maximize Export Services
Federal Contracting Center
Hub Zones
Cultural Entrepreneurship
Medical tourism
Ecotourism Development
Sports Tourism
Districts of Tourist Interest
Cruise Industry
Aeronautics and Aerospace Institute of PR
Recycling of Used Oils and Community Businesses
Development of Raw Materials
Applied Research Center
Bio-Fuel Energy
Microalgae Energy Production
1 2 3 4 5 6 7
26
SMEs
27
SMEs: Areas of Opportunity and Roadmap
Bio Economy
Visitors EconomyExport of Goods and Services
Emerging Industries
Aerospace Technology
Advanced Manufacture
1
2
3
45
6
7
Innovative SMEs
Maletín
Empresarial de
la Mujer
Master Entrepreneurship
Business Intelligence and
Entrepreneurship System
Entrepreneurship in Functional
Diversity population
From School to Business
SME Food Sector
A d d i t i o n a l I n i t i a t i v e s
SMEs: Programmatic Commitments for Economic Development
Designation of 10% of the Special Fund for Economic Development (FEDE) to provide contributory incentives to SMEs that foster innovation in economic sectors.
Program focused on supporting those Puerto Rican women who wish to develop in the business world mainly in the areas of technology and innovation.
28
Does this answer the initial questions?
29
Where is Puerto Rico’s Economic Development Plan?1
How do we get more money to the treasury?2
What are the specific measures to boost Economic Development?3
Who is responsible for Economic Development?4
What are we doing for SMEs?5