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A mixed menu of good news and bad

BY ELISABETH ROMAN of Caribbean Business

July 28, 2005
Copyright © 2005 CARIBBEAN BUSINESS. All Rights Reserved.

The good news: With fast-food restaurants popping up on just about every corner of the island, the industry has become an important part of Puerto Rico’s economy. There is no doubt local eating habits have changed, and the continually growing demand for fast foods and convenience are a sign of Puerto Rico’s changing economy and consumption habits.

There are over 2,000 fast-food establishments in Puerto Rico serving everything from burgers and pizzas to chicken and Mexican, with the industry generating over $1 billion in sales each year. Furthermore, the fast-food industry provides jobs for over 37,000 people in Puerto Rico, a large number of these students and mothers who can work only part-time. The fast-food business also presents an excellent opportunity for many entrepreneurs in Puerto Rico who want to invest in globally established companies. Puerto Rico’s fast-food industry is a positive note on the local economy.

Now the bad: Unfortunately, the same isn’t true for a large part of the island’s economy. Last week, Puerto Rico’s economy was held hostage by local truckers. Gas stations had run out of fuel, taxis were stopping their vehicles, employees who were unable to obtain gas were struggling to get to their jobs, reservations throughout the island’s hotels were being canceled in this the last holiday weekend before classes commence in August, and businesses struggled to remain open.

All in all, one local economist estimated to CARIBBEAN BUSINESS that each day the truckers strike continued it cost the local economy $278 million and the "spillover effect" added up to $325 million in losses per day. This, at a time when the island’s economy has been struggling to get off the ground in 2005 with little or no success.

While we understand the costs of operating trucks in Puerto Rico has increased over the past year as a result of escalating gas prices, punishing local working families, businesses, and the general economy for something that is out of our hands is unfair. The issue with truckers demanding an increase in their rates is a battle they have been waging with the commonwealth government, which regulates the industry, for quite some time now.

Allowing a few hundred to shut down an economy of four million people is something that can’t continue. It is unfair, selfish, and destructive. This type of action has to stop.

This is just one symptom of the Commonwealth’s failing economic model. If the government hadn’t played politics with the island’s economy, Puerto Rico couldn’t be held hostage by local truckers. One classic example is the fact that plans underway between 1970 and 1972 to create what eventually would become an islandwide train to transport passengers and cargo, were discarded for political reasons. Now, in the 21st century, the commonwealth government is still implementing interventionist policies that are having extremely negative impacts on the island’s economy. Why not let the market establish the trucking industry’s rate? Why not deregulate the trucking industry and let them compete in the open market?

Amid this economic crisis, the administration decided to extend the government’s and all government employees’ holidays. With Monday and Wednesday Commonwealth holidays, Gov. Aníbal Acevedo Vilá decided to give employees the day off on Tuesday. This meant the commonwealth government ceased working on Friday and didn’t return until the following week on Thursday, July 28.

With increases in the water and electricity rates; higher road-toll fees; increases proposed in the cost of milk, food, medicine, and clothes; a fiscal crisis in the Commonwealth’s finances; and with another potential downgrade in the government’s bond rating coming in a few months, it seems the Acevedo Vilá administration is going to have a hard time governing Puerto Rico. On top of this mess, the governor has decided to give Commonwealth employees an extra-long weekend. This is why the private sector and consumers have no confidence in the government.

This Caribbean Business article appears courtesy of Casiano Communications.
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