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Cantero Insists: Section 956 Will Pass U.S. Congress
Says administration will not seek passage of 30A; Pridco studies new development incentives
BY MARIALBA MARTINEZ
April 11, 2002
Economic Development & Commerce Secretary Ramon Cantero Frau held fast to his belief that the administrations proposed amendment to Internal Revenue Code (IRC) Section 956 would still be approved by the U.S. Congress, despite recent reports from Washinbgton that point to its demise.
"IRC Section 30A is not the solution to Puerto Ricos economic future and is not an alternative to the islands manufacturing base," said Cantero Frau during the Puerto Rico Chamber of Commerces Forum between the Private Sector and the Government held last week.
"Despite the fact that we included it in the [Popular Democratic Partys] platform, the changes that have since taken place--such as current federal laws, the minimum wage law, and Puerto Ricos rising business costs--demonstrate that it is not an effective tool to attract the kind of manufacturing industry we want."
When asked by CARIBBEAN BUSINESS whether the administration would consider lobbying for the measure if efforts to pass Section 956 failed, Cantero Frau repeated, "Section 30A is not an alternative right now and I doubt we will be lobbying for it next year."
During the PRCCs economic development workshop, Cantero Frau briefed participants on how the administration was continuing to find ways to reduce the costs of doing business in Puerto Rico. While admitting that the18 economic incentives laws that were approved last year have yet to be translated into English so U.S. mainland and foreign investors can understand them, he highlighted the benefits of the Puerto Rico Electric Power Authoritys (Prepa) 11% power rate discount program.
Presented by Prepa and the Puerto Rico Industrial Development Co. (Pridco) last week, the program provides energy consumption discounts over a five-year period to new or expanding companies in Puerto Rico. According to Cantero, this was made possible by the administrations foresight in securing more than 20% of the islands fuel during 2001, before gasoline and petroleum prices began to increase.
In related news, also last week several agencies that require permits and are involved in the economic development process submitted reports to Gov. Sila Calderon with suggestions on how to minimize permit bureaucracy. According to Cantero Frau, he will also review the suggestions in order to eliminate unnecessary or duplicate permit requirements that add to the cost of doing business in Puerto Rico.
Another panelist in the PRCC workshop was Pridco Executive Director William Riefkohl, who said that his agency had close to $2 billion in its new construction or expansion projects pipeline for the next 18 months. He also discussed different ideas that could also be implemented to help reduce business costs.
Among the alternatives is the donation of employees vacation or sick days to coworkers for special circumstances, in lieu of losing those days due to expiration periods. Riefkohl is also studying the possibility of establishing the sale of internal revenue stamps in private institutions such as banks, instead of limiting it exclusively to Municipal Revenue Collection Centers (a.k.a. Colecturias).
Regarding future incentives for the Port of the Americas value-added areas, Riefkohl said the agency would create new foreign trade zones. In addition, new incentives would be legislated at the start of the project to attract those industries that are an essential part of Pridcos master development plan.
Pridco is also considering incentives for medical research and clinical trials in lieu of research & development centers, which are more complex to transfer from companies headquarters. Other incentives are being considered that would attract the transfer of multinational companies headquarters from Latin America to Puerto Rico and vice versa, the establishment of Latin American companies headquarters in Puerto Rico, using the island as an economic development bridge.
This Caribbean Business article appears courtesy of Casiano Communications.