Capitalizing Business Through Foreign Direct Investment. Francisco Chévere, Esq. Executive Director Puerto Rico Trade and Export Company

Transcription

1 Capitalizing Business Through Foreign Direct Investment Francisco Chévere, Esq. Executive Director Puerto Rico Trade and Export Company

2 Contents Puerto Rico Trade & Export Company Exports and Trade Balance during FY 2014 Actual Economic Plan Focus Strategies to Attract New Investment Historical Perspective Capitalizing business through FDI Clusters promotions to foster SMEs growth 2 2

3 Puerto Rico Trade & Export Company Puerto Rico Trade & Export Company, CCE for its acronym in Spanish, is in charge of carrying out the public policy for the strengthening and promotion of small and medium sized enterprises (SMEs) on one hand and exports and entrepreneurship on the other. Exports led foreign direct investment (FDI) has been a key element in Puerto Rico s economic growth. 3 3

4 millon $ % change Puerto Rico Exports in FY 2014 During FY 2014, registered exports from Puerto Rico increased by $60.3 million up to a total value of $62,457.2 million, representing a rate of growth of 0.1% compared to FY This is the second consecutive year of growth in exports after a significant reduction of - 9.2% in FY $66,000 $64,000 $62,000 $60, % $60,118.7 $60, % $63, % $60,806.6 $61, % $64, % $58, % $62,396.9 $62, % 8% 6% 4% 2% 0% -2% $58,000 $56,000 $54, % % -4% -6% -8% -10% Source: Puerto Rico Planning Board (FY 2005-FY2012), Institute of Statistics (FY2013, FY2014) Exports % change 4 4

5 PR Exports Composition 95% of the exports of Puerto Rico during the fiscal year 2014 were composed primarily of pharmaceutical products and drugs (69.4%), medical equipment (9.1%), chemical Basic (6.5%), food (3.5%), electrical equipment (1.65), instruments (1.5%), petroleum products (1.0%), commercial refrigeration equipment (0.7%), computer equipment (0.7%) and pesticides, fertilizers and other agricultural chemicals. % Participation 0% 10% 20% 30% 40% 50% 60% 70% 80% 3254: Pharmaceuticals & Medicines 3391: Medical Equipment & Supplies 3251: Basic Chemicals 3119: Foods, Nesoi 3353: Electrical Equipment 3345: Navigational/Measuring/Medical/Control Instrument 3241: Petroleum & Coal Products 3334: Hvac & Commercial Refrigeration Equipment 3341: Computer Equipment 3253: Pesticides, Fertilizers & Oth Agri Chemicals 9.1% 6.5% 3.5% 1.6% 1.5% 1.0% 0.7% 0.7% 0.6% 69.4% Source: Puerto Rico Institute of Statistics 5 5

6 PR Exports Destination The 92.5% of the exports of Puerto Rico in fiscal year 2014 were destined to the following ten (10) countries: United States (71.8%), Belgium (4.1%), Netherlands (4.0%), Austria (2.6%), Italy (2.2%), Spain (2.0%), Japan (1.7%), Britain (1.5%), France (1.3%) and Dominican Republic (1.3%). % Participation 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% United States Belgium Netherlands Austria Italy Spain Japan Great Britain France Dominican Republic 4.1% 4.0% 2.6% 2.2% 2.0% 1.7% 1.5% 1.3% 1.3% 71.8% Source: Puerto Rico Institute of Statistics 6 6

7 $38,905.2 $42,630.2 $45,265.8 $44,928.3 $40,651.0 $40,810.1 $44,670.6 $46,574.6 $45,038.6 $42,475.6 milion $ $56,543.2 $60,118.7 $60,010.8 $63,953.6 $60,806.6 $61,657.2 $64,876.0 $58,914.1 $62,396.9 $62,457.2 million $ $12,339.5 $14,745.0 $17,638.0 $17,488.4 $19,025.3 $17,358.3 $20,155.6 $20,847.1 $20,205.3 $19,981.6 PR Trade Balance In fiscal year 2014 registered merchandise exports of $62,457.2 million and $42,475.6 million respective imports resulted in a positive trade balance of $19,981.6 million, an increase of $2,623.3 million or 15.1%, when compared with fiscal year ,000 25,000 60,000 50,000 20,000 40,000 15,000 30,000 20,000 10,000 10,000 5, Source: Puerto Rico Planning Board (FY 2005-FY2012), Institute of Statistics (FY2013, FY2014) Exports Imports Trade Balance 7 7

8 Actual Economic Plan: Focus Re-energize Anchor Industries Manufacturing (Life Sciences) Commerce (SMEs) Tourism High-Impact Projects Port of The Americas Science, Research & Technology Trust Roosevelt Roads Attract New Investment Acts 20 & 22 (Knowledge Services) Jobs Now Act (SMEs) Medical Tourism New Agriculture 8 8

9 Strategies to Attract New Investment For over half a century, the Puerto Rican government has been pursuing a policy of attracting foreign investment through financial and tax incentives, with job creation as its main goal. Historical Perspective. Financial incentives include renting out public buildings at attractive rates, wage incentives and access to financing through tax-exempt industrial bonds and direct loans. Free trade zones Trade missions and Expo conventions PR offices in Latin American countries and Europe. The U.S. currently has 42 bilateral investment treaties in place which also apply to Puerto Rico, (Free Trade Agreements, FTA) 9 9

10 Capitalizing Business through FDI Export led FDI and SMEs growth are the two critical elements in developing the private sector in PR. The PR Economic Development Team (CCE, PRIDCO, Tourism) seeks to promote the development of the ecosystem of business (clusters) between large-scale investments and local, particularly in aerospace and technology entrepreneurs. Behind every strategic project there is ample opportunity to develop a solid supply chain, with locallybased businesses, that will generate wealth and economic development for the country

11 Recently Promoted Clusters Aerospace Lufthansa Creative Industries - Fashion P.ERE Medical Tourism 11 11