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Americas Review World of Information
Puerto Rico Profile
September 29, 2003
1493 The island was inhabited by some 100,000 Taino Indians (an Arawak culture that also occupied most of Hispaniola and part of Cuba) at the time of the first European sighting by Columbus. A member of the expedition, Juan Ponce de Leon, was given permission to settle the island, which he named San Juan.
1898 The island was ceded to the US by Spain at the end of the Spanish-American war. The US ruled it as an unincorporated territory.
1917 The inhabitants became citizens of the US.
1948 Puerto Rico elected Luis Munoz Marin as its first governor.
1952 A new constitution designated Puerto Rico a self-governing commonwealth within the US.
1967 A plebiscite rejected the option of becoming a state of the US.
1993 The statehood option was rejected for a second time in a national referendum.
1998 In December, Puerto Ricans again narrowly rejected the option of statehood in favour of maintaining the constitutional status quo.
2000 Sila Maria Calderon Serra became the first female governor.
2001 Governor Calderon announced the creation of the Blue Riband Commission to review all large transactions made by the previous (Rossello) administration.
2002 In a move which angered Puerto Ricans, a US judge dismissed the lawsuit by Puerto Rico aimed at stoppng US naval training on the island. This allowed the US navy to continue their naval operations.
2003 In May, the US navy stopped military exercises on the island of Vieques and navy land was transferred to the US Department of the Interior.
The island is a self-governing commonwealth within the US constitutional system.
The local government consists of executive, legislative and judicial branches. Puerto Rico has 78 municipal governments.
Detailed laws governing the status and relationship of the Commonwealth of Puerto Rico with the US cover, among other aspects: military conscription, tax and trade, social security, citizenship, constitutional changes and internal autonomy.
The governor of Puerto Rico is elected by popular vote in November every four years, along with Puerto Rico's Resident Commissioner to the US Congress, as well as all legislative and municipal officials throughout the island.
Form of state
Both the Constitution of Puerto Rico and the US Constitution are applicable - Puerto Rico is an overseas Commonwealth Territory and freely associated state of the US. Puerto Ricans have US citizenship with local self-government but not full political rights as US citizens.
The governor heads the executive branch, and is the head of state and chief commander of the state militia.
Cabinet members, consisting of department secretaries and other agency heads are appointed by the governor with the advice and consent of the Senate.
The Asamblea Legislativa (Legislative Assembly) has two chambers. The Camara de Representantes (Chamber of Representatives) has now 51 members, elected for a four-year term, 40 elected in single-seat constituencies - 11 at large by proportional representation. Up to an additional three seats can be allocated to allow the opposition to have one-third of the seats. The Senado (Senate) has 28 members, elected for a four-year term - 16 members elected in two-seat constituencies and 11 at large by proportional representation and one additional seat to allow the opposition to have one-third of the seats.
The legislature convenes each year from January through April, but the sessions usually extend into May or June to complete pending legislation.
Last elections: November 2000 (national elections)
Next elections: By November 2004 (national elections)
Ruling party: Partido Popular Democratico (PPD) (Popular Democratic Party)
Main opposition party: Partido Nuevo Progresista (PNP) (New Progressive Party)
Population: 4.00 million (2001)
There is a fusion of three main cultures: native Indian, European and African.
The Spanish conquistadores initially came to the New World without wives or family and married into the native population, producing the mestizo (Spanish and Taio) and the mulatto (Spanish and African) groups.
99 per cent of the population are Christians (85 per cent Roman Catholic). Religion has traditionally played an important role in the island's history. The religious groups have been instrumental in fostering community co-operation and providing health and educational services.
Education is compulsory from six to 16. Six years of elementary school are followed by three years of junior high school and three years of senior high school. All teaching is conducted in Spanish, although English is a compulsory subject at all levels. There are 34 post-school educational institutions, both government and private.
The World Bank estimated life expectancy at 76 years in the period 1995-2001 and infant mortality at 10 deaths per 1,000 live births.
The US social security system is in operation, together with Puerto Rico's own health, unemployment, and workers' compensation schemes. Employer contributions to the unemployment and social security funds are compulsory. Despite a high per capita national income, about 60 per cent of the population were recorded as living below the official US poverty line, and 45 per cent of the population received federal food stamps. Federal medical aid is also provided.
San Juan (capital, population estimated at 433,900 in 2003), Bayamon (209,300), Ponce (159,400), Carolina (172,900).
Spanish is the primary language of the vast majority of Puerto Ricans and English as an important second language.
Government affairs are conducted in Spanish, while English is the language of commerce.
Official language/s: Spanish, English
Dailies: The three main dailies widely circulated include El Vocero de Puerto Rico, Nuevo Dia Interactivo and San Juan Star (English). Other regional dailies and those published from San Juan are Apuntenlo, El Cronista, La Esquina, La Estrella de Puerto Rico, El Expresso, El Impacto, Impresiones, El Periodico, Primera Hora, Puerto Rico Herald and Vieques Times.
Weeklies: Caribbean Business.
Periodicals: Que Pasa is an Official Visitor's Guide published bi-monthly.
Around 115 national commercial radio stations and nine television stations broadcast.
By international standards, the economy is in a parlous state. Puerto Rico has few natural resources and is heavily dependant on federal aid from the US government. Real improvements to Puerto Rico's economic status will only come with an upswing in the US economy. In power since late 2000, the Calderon government has brought about major improvements to Puerto Rico's business environment. Changes include the slashing of capital gains taxes and lowering operating costs for manufacturing plants. There still exists a high degree of red tape and Puerto Rico has yet to adopt a private sector mentality.
Despite the recession in 2001, the manufacturing sector experienced growth towards the end of the year. In 2002, as part of the government's economic development plans, many enterprises were expanding to deal with changing global conditions and in an effort to create more jobs. There is little support for high technology innovation companies in Puerto Rico and a number of companies have transferred their operations elsewhere.
The weaknesses in Puerto Rico's manufacturing sector is being addressed, essential if exports are to remain steady and economic growth sustained. Regional agreements such as the North American Free Trade Agreement (Nafta) have made countries such as Mexico attractive low wage, tariff free alternatives to Puerto Rico. However, Puerto Rico is hoping to gain from the implementation of the Free Trade Area of the Americas (FTAA) in 2005.
Section 30-A of the US tax code, which offered incentives for US firms operating in Puerto Rico, was not renewed in 2002. Governor Calderon is lobbying for permanent tax exemption status, saying this would be the best way to secure the Commonwealth's fiscal autonomy from federal government. Other generous tax provisions include Section 936, which is up for renewal in 2006. The Republican control of both houses of Congress following the mid-term elections in November 2002 puts Section 936 in jeopardy. With approximately 50 per cent of the economy supported by special exemptions for foreign firms, the repeal of tax incentives will severely undermine Puerto Rico's ability to compete with its Caribbean neighbours, prompting concern that the economy could collapse.
There has been a regular trade surplus since 1985 due to increased exports of manufactured goods. The balance of payments is, however, still reliant on US federal aid flows.
The US accounts for over 75 per cent of the island's imports and exports, much of which are intra-company shipments of parts from US companies and exports of finished goods in return. This flow of materials and products creates profits for private companies and jobs for workers in Puerto Rico and the US.
The Free Trade Area of the Americas (FTAA) is to be created in 2005. With this in mind, Puerto Rico is hoping to transform itself into a 'trade bridge' between North and South America, and between the Americas and Europe.
Principal exports: drugs and pharmaceutical preparations (45 per cent of total), food and food products (12 per cent), electronic components (11 per cent), electrical machinery (8 per cent), scientific precision instruments (6 per cent) and machinery.
Main destinations: US (typically 75 per cent of total), Dominican Republic (3 per cent), Japan (1 per cent).
Principal imports: drugs and pharmaceutical preparations (19 per cent of total), electrical machinery (12 per cent), food products (10 per cent), transport equipment (9 per cent) and petroleum refining products (8 per cent).
Main sources: US (typically 75 per cent of total), Dominican Republic (6 per cent), Japan (4 per cent).
The agricultural sector is small-scale, contributes around 1 per cent to GDP and employs 2.3 per cent of the workforce. Only 10 per cent of land is suitable for agriculture. An additional 25 per cent of the island is composed of uplands, partially suited for agricultural purposes. Dairy and livestock farming is of increasing importance.
Farming on the island has changed considerably since the 1940s and 1950s, when traditional small-scale farming methods prevailed and sugar cane, coffee and tobacco were the dominant crops. Of these, only coffee has survived, but it lags behind milk and poultry production. Milk production accounts for 34 per cent of total gross farm income. Changes in consumer preferences are slowly taking place as the population ages.
Around 90 per cent of food requirements are met by imports. Almost all of Puerto Rico's farm output is consumed locally, although small quantities of coffee are exported to Europe and Japan. Some fruit and vegetables, mangoes, tomatoes and onions also go to Europe.
Industry and manufacturing
The industrial sector forms the mainstay of the economy, contributing approximately 45 per cent to GDP and employing 20 per cent of the workforce. Most of the island's manufacturing output is shipped to mainland US.
Industrialisation has been the focus of government economic policy since the late 1940s when a programme known as 'Operation Bootstrap' was launched. In 1950, there were 82 industrial plants in Puerto Rico, but by 1965 there were around 1,000. Since then industrial development has tended to be more capital intensive and dependent upon highly skilled labour.
Production is centred on food processing, textiles, petrochemicals, rum distilling, pharmaceuticals, metal fabrication and assembly of electrical/electronic components.
Most of the assembly industries are US-owned and are heavily dependent on the US market. Much of the manufacturing investment had been encouraged by Section 936 of the US tax code. These benefits were revoked in 1996 leading to the loss of jobs in the sector.
The US Commerce Department's Foreign Trade Zones Board has approved the conversion of all the island's industrial parks into free trade zones (FTZs). This, together with Puerto Rico's generous incentives package and skilled workforce has in the past made the island a prime destination for companies looking to expand or relocate. However, competition from Mexico in particular has had an adverse effect. The period for approving applications for FTZ operations has been cut from 18 months to 90 days, reducing the cost of applications from US$150,000 to US$5,000.
The island's agricultural industry makes an important contribution to the economy through the food industry services of prepared food and retail sales.
In 2002, the manufacturing sector expanded in response to changing global conditions. In October 2002, Abbott Laboratories Barceloneta, a pharmaceutical company, announced that it was building a new US$350 million biotechnology plant in Puerto Rico. The plant should be operational by 2006. The pharmaceutical industry is crucial to Puerto Rico. Nine of the top 10 pharmaceutical drugs in the US are manufactured in Puerto Rico and all the leading US manufacturers are represented, some with major investments. There is heavy investment by US computer and electronics companies, footwear and rubber goods manufacturers. The K-Mart Corporation, the US retailing group, is well represented in Puerto Rico.
Tourism is traditionally a key source of income for the island, with over three million tourists annually. About 70 per cent of visitors come from the US. The Puerto Rico Tourism Company (PRTC) is determined to make the island a world-class destination. Between 2001-04, the PRTC plans the addition of 5,000 hotel rooms and a new Puerto Rico Convention Centre. The Centre will be completed in 2004 and is expected to be the largest convention facility in the Caribbean. It is a crucial part of the Golden Triangle project, a tourism development project to maximise the potential of San Juan.
At least US$25 million a year has been spent on the promotion of Puerto Rico as a mix of Caribbean and Latin America, but with an American business culture.
Activity in this area is extremely small - production is centred on non-metals such as stone, sand, salt and clay.
There are small unquantified reserves of copper, nickel, cobalt, iron, chromium, lead, gold and silver.
Puerto Rico typically consumes over 160,000 barrels per day (bpd), all of which is imported. The island's refining capacity is 93,000bpd. There are two refineries, one located at the Bayamon refinery owned by the Caribbean Petroleum Corporation and the other owned by Royal Dutch/Shell and located at Yabucoa.
Puerto Rico depends on imported energy fuels, mainly from Venezuela and the Netherlands Antilles. The Puerto Rico Electric Power Authority (Prepa) is the second-largest municipally-owned US utility. Demand for power is growing at 3.5 per cent a year. Additional capacity is also being provided through the refurbishing of some Prepa power stations and the opening of new plants. This will add significantly to Prepa's capacity. Prepa is spending US$1.9 billion during the period 2000-2003 to improve generating, transmission and distribution infrastructure. Many companies still maintain their own generators as essential back-up.
Banking and insurance
The Puerto Rican commercial banking system comprises about 17 banks with around 300 branches. Financial deregulation and consolidation in the industry have improved operating conditions. Major US banks include Citibank, Chase Manhattan and First National Bank of Boston. Foreign banks include Royal Bank of Canada, Bank of Nova Scotia, Banco Central de Madrid, Banco Bilbao Vizcaya and Banco de Santander.
Banco Popular de Puerto Rico, Puerto Rico's largest bank, continues to expand into US Hispanic markets.
Central bank: There is no central bank.
Such functions as fiscal agent for the Commonwealth of Puerto Rico and its public entities, and the provision of development loans to the public as well as the private sector, are undertaken by the Government Development Bank for Puerto Rico (GDB).
Time: GMT minus four hours
Puerto Rico comprises the main island, together with the small offshore islands of Vieques and Culebra and many other smaller islets, lying about 80km (50 miles) east of Hispaniola (Haiti and the Dominican Republic) in the Caribbean Sea. Roughly 160km long by 48km wide, Puerto Rico is the smallest and most westerly of the Greater Antilles. The centre of the island is composed of dead volcanoes, the highest of which, the Cordillera Central, has an elevation of 1,325 metres. To the north of the mountains lies a belt of broken limestone country, and then a fertile coastal plain. The whole island is well supplied with rivers. Only about 1 per cent of the country remains forested and is largely reserved.
Tropical with extremes of heat tempered by constant sea winds. Temperatures are 28-30 degrees Celsius (C) in summer, and 21-26 degrees C in winter. Rainfall is heaviest in the second half of the year, especially June-October. Puerto Rico lies in the 'hurricane belt'.
Suits and ties are customary for businessmen since almost all offices are air conditioned. A jacket and tie may be required in first class restaurants. The Hispanic Caribbean guayabera, a long decorated shirt, is worn increasingly commonly.
Passports: Required by all except nationals of US and Canada.
Visa: Required by all except nationals of US and Canada.
No restrictions on import/export of any currency to the value of US$10,000. Higher amounts must be declared.
Health (for visitors): The standard of health care in both government and private hospitals is high, but expensive.
Mandatory precautions: None
Hepatitis A occurrs in the northern Caribbean. There is also a risk of rabies. Travellers should consider vaccination before travelling. Dengue fever, transmitted by mosquitoes, is endemic in rural areas. Its initial symptoms may be similar to influenza. Bilharzia parasites may be present in rivers.
No special precautions are necessary for food and drink.
There are several modern business hotels in San Juan. There are also paradores, government-owned inns, that are of a reasonable standard. Fifteen per cent tip usual.
Fixed dates: 1 Jan (New Year's Day), 10 Jan (De Hostos' Birthday), 22 Mar (Emancipation Day), 4 Jul (US Independence Day), 18 Jul (Munoz Rivera's Birthday), 25 Jul (Constitution Day), 19 Nov (Discovery Day), 25 Dec (Christmas).
Variable dates: Epiphany (Jan), Washington-Lincoln Day (Feb), Good Friday, Memorial Day (May), Barbosa's Birthday (Jul), Labour Day (Sep), Columbus Day (Oct), Veterans' Day (Nov), Thanksgiving (Nov).
Banking: Mon-Fri: 0830-1430. (Some banks 0830-1700; some banks open Sat.)
Business: Mon-Fri: 0800-1700.
Government: Mon-Fri: 0800-1630.
Puerto Rico's telecommunications system is fully integrated with that of the US.
Telephone/fax: Direct dialling and fax facilities are available at all main hotels.
Mobile phones: The main providers of mobile phone services are Centennial, Cingular, MoviStar, Suncom, Verizon and Sprint PCS.
Puerto Rico has acquired a presence in the Internet Access Point of the Americas. The main problems of Internet services in Puerto Rico are the slow connection speed and the inability to make calls while in use. Two systems are emerging to replace telephone lines: digital subscriber line (DSL) and Internet through cable television.
Electricity supply: 120V AC
Social customs/useful tips
Despite links with the US and the almost universal ability in the business community to understand English, the use of Spanish by the visitor is appreciated.
Hotel and restaurant staff, and taxi drivers, may expect tips of 15 to 20 per cent. Service charges are rarely included in restaurant bills.
Puerto Rico combines the lifestyle and social customs of the modern US and the traditional Spanish-speaking Caribbean.
Poverty and unemployment have helped to contribute to a growing crime rate, particularly in San Juan. As in all cities, it is unwise to leave articles unattended in parked cars or hotel rooms.
There are direct flights from Europe. Latin American countries are connected via Miami. There are also numerous other connections via New York. Other US cities are also well connected to Puerto Rico.
International airport/s: Luis Munoz Marin (SJU), 14.5km east of San Juan; duty-free shop, bar, restaurant, bank, post office, shops, hotel reservations, car hire.
Airport tax: None
Main port/s: Ponce, Mayaguez and San Juan (major Caribbean hub for maritime shipping).
Air: American Eagle links San Juan, Ponce and Mayaguez.
Road: Modern highways link all main centres. The island's roads are being extended.
Buses: Regular bus (guagua) service operates in San Juan from central terminal at Plaza Colon.
Buses are scarce after 2100.
Taxis: Within San Juan: metered - small charge for taxis ordered by telephone. Also shared taxis (publicos) which have yellow number plates and run to all parts of the island. Fifteen per cent tip usual.
Trains: In 1996, the San Juan Tren Urbano Light Rail System was projected to cost an estimated US$1.25 billion; by 2002, the cost had risen to US$2.04 billion. Construction commenced in 2003. It is hoped that the Tren Urbano will reduce traffic congestion levels to those that existed in 1990. Estimates predict that by 2010, it will absorb 45 per cent of the increase of all private vehicle trips projected for that year.
It is advisable to book through the airline well in advance. Foreign licences are acceptable. Copyright: Walden Publishing Ltd. All rights reserved. Walden Publishing Ltd and Quest Information Ltd assume no liability for the consequence of reliance upon any opinion or statement.