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A World-class Opportunity
By ELISABETH ROMAN
February 10, 2005
Travel and tourism are the worlds largest industry, generating 200 million jobs globally. By 2010, worldwide travelers are projected to reach one billion tourists seeking new and interesting destinations to visit and spend their vacation budgets. By 2020, the World Tourism Organization predicts global tourism expenditures will surpass the $2 trillion mark. Within the travel and tourism industry, ecotourism is the fastest growing sector, generating millions in revenue while promoting the conservation of natural resources.
On an island blessed with so much diversity and plenty of natural resources, one would think Puerto Rico would be aggressively competing for the ecotourism market. Not so. In the six years since the local Legislature enacted the law establishing public policy to promote ecotourism and creating a board of directors to coordinate the development of this sector, not a single thing has been done. No members have been appointed to the board; therefore, no one has met to develop this sector of the economy. The Tourism Co. hasnt been able to market Puerto Rico as an ecotourism destination because the agency is waiting for the ecotourism board to establish the industrys guidelines. So, the development and promotion of this sector is basically on hold. There is no reason, however, for the Tourism Co. to wait for an ecotourism board to be approved before it starts promoting this sector. The attractions are there, so why not let tourists know.
Tourism presents Puerto Rico with the greatest economic growth opportunity for many decades to come. A labor-intensive, clean industry, tourism can generate tens of thousands of jobs in Puerto Rico. Tourism depends solely on the islands resources, climate, and human capital, and the jobs created in the industry cant be outsourced. With such potential, Puerto Ricos new government administration must consider making the tourism industry one of its main priorities for economic development. A growing tourism industry not only will generate economic growth, it will help absorb some of the overwhelming number of employees currently weighing down the public sector.
In March, analysts from the credit-rating agencies are returning to Puerto Rico. The rating agencies recently downgraded the outlook for government bonds and the Government Development Bank (GDB) from stable to negative. The credit ratings agencies, says new Treasury Secretary Juan Carlos Méndez, arent coming to see more studies telling them what the commonwealth government plans to do to improve its fiscal situation. The government of Puerto Rico will have to show the rating agencies exactly what is being done or a downgrade of the governments bonds rating is imminent. "I dont think we can prevent a downgrade of the bonds by saying we are studying something, or another committee is studying something else; no, I dont think that will work," Méndez says.
The new heads of Treasury, Management & Budget and the GDB acknowledged the governments $1 billion deficit has created a crucial economic situation for Puerto Rico where immediate tax and fiscal reforms must be enacted. But the question that must be addressed is how much fiscal reform can be enacted when 72% of the governments budget is spent on operational expenses, only 15% is invested in capital improvements, and 13% in servicing the Commonwealths debt. One out of three salaried employee in Puerto Rico works for the government, which is why the majority of the commonwealths budget is spent on payroll or related professional services.
In spite of this, the government executives interviewed by CARIBBEAN BUSINESS this weekwho one way or another have to deal with the fiscal crisissay reducing employment isnt an option because Gov. Aníbal Acevedo Vilá is publicly committed to not cutting jobs. So, what exactly will the GDB tell the credit-rating agencies next month? Puerto Rico has few alternatives, other than increasing taxes. Whether the new administration calls it tax reform, sales tax, or value added, Puerto Rico taxpayers can expect the government to dip deeper into their pockets this year to balance the budget; to continue financing the huge government bureaucracy; and to demonstrate to the credit rating agencies that something is being done to resolve the Commonwealths fiscal crisis.
This Caribbean Business article appears courtesy of Casiano Communications.