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A SPECIAL ADVERTISING SUPPLEMENT TO THE NEW YORK TIMES MAGAZINE
Puerto
Rico
INVESTOR-FRIENDLY ISLAND
SET TO BECOME REGIONAL HUB
he history of Puerto Rico dates back
to November 19, 1493, when Christopher Columbus discovered the
Caribbean island on his second
voyage. The Spanish settlers originally
called the island San Juan and its capital
Puerto Rico, meaning rich port, before the
names were eventually switched.
In 1897, the island was granted a Letter of Autonomy from Spain, allowing it
to enter into free commerce with the United States. A year later, as a result of the
Spanish-American war, it became a U.S.
territory. By 1951, Puerto Rico had acquired the right to establish a government
with its own constitution, and in 1952, was
declared a semi-autonomous U.S. commonwealth territory.
Today, Puerto Rico is home to approximately four million people. San
Juan, the island’s capital, with its
T
diverse mix of people, commerce, and
industry, is still thriving on its busy harbor. Just a two-hour flight from Miami,
the Latin city is a popular tourism spot
for American travelers and cruise ships.
The Governor, Sila María Calderón,
oversees one of the most stable
economies in the region, maintaining
close ties with America. Investor-friendly policies and a pro-business stance
have ensured a steady influx of foreign
companies from the U.S. and elsewhere.
Important industries include pharmaceuticals, electronics, petrochemicals,
processed foods, clothing, and textiles.
The financial sector is one of the strongest
in Latin America with healthy competition among banks and a highly-developed
insurance market.
Governor Calderón is eager to transform
Puerto Rico into a major regional eco-
P.R. CONVENTION BUREAU
The liberalization of trade across the
Americas is providing new opportunities
for the island, and the government
is developing its long-term potential
The island was declared a
semi-autonomous U.S.
commonwealth territory in 1952
nomic hub, a sophisticated services center for the Caribbean, and a logistics base
between the Americas. To meet these
goals, billions of dollars are being channeled into new infrastructure improvements.
The Puerto Rico 2025 project transcends the normal political and economic agenda to target the long-term
potential of the island. Secretary of
State Ferdinand Mercado says the idea
is not just about constructing large
buildings. “To develop our country the
way we want, we have to plan to
combine its material and spiritual
aspects. We want to preserve a country
that really values its national identity, its
heritage, and its culture.”
Puerto Rico certainly has all the credentials for success. The island has the
technological resources and the talented per-
sonnel to achieve its goals. The
undisputed success of the pharmaceutical
industry underlines this potential. Puerto Rico supports an estimated 8.4% of all pharmaceutical employment globally, including
the U.S., and manufactures 16 of the world’s
biggest-selling drugs.
Puerto Rico is also well placed to help
U.S. companies tackle the Central and South
American markets under the proposed new
Continues on page 2
INSURANCE
Page 2
FINANCE
Page 4
INDUSTRY
Page 7
MUNICIPALITIES
Page 10
TRANSPORT
Page 12
This supplement has been produced and sponsored by Summit Communications.
It did not involve the reporting or editing staff of The New York Times.
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Continued from page 1
free-trade legislation, including the Free
Trade Area of the Americas Agreement.
Latin American countries tend to view Puerto Rico as the ‘Spanish U.S.’ because of
the strong links.
Governor Calderón’s Chief of Staff
César Miranda is confident that Puerto
Rico can act as a bridge for many countries involved in the new international
trade agreements. In addition to global
economic uncertainty, Puerto Rico has
been coping with the withdrawal of the U.S.
internal revenue code Section 936 which
helped support local industry.
“We had to be creative to overcome that
reality. We started creating new, locallygenerated incentives, to motivate some of
the companies that were based in Puerto
Rico. We wanted to keep them investing
here instead of going somewhere else.
We created an attractive business environment for them.”
Many international companies chose
to stay in Puerto Rico because of its location and the opportunities that are
emerging through the liberalization of trade
across the Americas. Other firms, in the
technology sector, for example, are moving in as the government acts to create
new competitive niches.
There are also high hopes for the development of the tourism sector. This year
alone 17 new hotels are set to open, and
an additional 13 are slated to open in 2004.
With an estimated $4 billion in new infrastructure designated for 2004 in areas like
ports, industrial parks, and housing, the construction sector is booming. “The forecast
for all areas of the Puerto Rico economy
for the next 18 months is positive.”
The Government Development Bank
(GDB), the state’s fiscal agent, with assets of $8.7 billion, will play a key role in
financing future development. Héctor Méndez-Vázquez, GDB’s President, says the institution is committed to prudent fiscal
management but remains steadfast in fueling the national economic development
agenda. “We are not going to be held
down, we are not going to slow down. We
are going to continue with our mission.”
Fernando Torres Ramírez, General
Secretary of the Popular Democratic
Party, says economic development and
job creation are key priorities for the
current administration. There are exciting developments across the island,
not only in the capital and the second
city Ponce, but elsewhere, as moves
toward decentralization continue.
“There are several cities close to San
Juan, such as Guaynabo and Bayamon,
that are experiencing rapid development at the moment. Other examples
are Mayagüez, on the west coast, and
Arecibo in the north.”
SPECIAL ADVERTISING SECTION
LOCAL FIRMS ARE COMMUNITY’S FIRST CHOICE
The domestic insurance industry is thriving and Puerto Rican companies are taking their expertise overseas
he Puerto Rican insurance
in Puerto Rico, as well as smallindustry made $5.8 billion
and medium-size local busiin premiums in 2002, maknesses. All of them need insuring it one of the three principal
ance.”
markets in Latin America from
One of the most important
the subscriptions side. Morelocal companies is Triple-S,
over, in spite of the presence
which began as a health inof some of the world’s largest
surance provider but has since
insurers, such as Aon and Roysuccessfully diversified. Esal Sun Alliance, it is the local RAMÓN M. RUÍZ
tablished in 1959 by local docPresident & CEO of tors and dentists, the compacompanies that dominate.
An impressive 83% of the Triple-S Manageny was restructured in 1999,
island’s property and casualty ment Corporation
moving into property, life, and
policy holders are served by
casualty insurance. In 2002, it
domestic insurers with native
began moving into financial
capital. Foreign firms, both
services, offering a wider
American and European, pick
choice of products to its large
up the remaining 17%. In the
customer base.
life sector, the ratio is an even
Ramon Ruíz, President and
50-50 split.
CEO of Triple-S Management
Insurance Commissioner
Corporation, the group holding
Fermín Contreras Gómez says
company, explains how the enthe events of 9/11, the war in
terprise has carved out its leadIraq, and the general global SOCORRO RIVAS
ership position. He says that
economic downturn, mean lo- President & CEO of
service is the group’s tradecal people are acutely aware Triple-S
mark. “We want to serve. We
of the need for insurance. He
want to provide the best service
says the domestic insurance
to our people.”
industry is likely to continue
There is strong customer loyto post healthy gains. The govalty. The Triple-S health insurernment is eager to support
ance account with the federal
the industry, acting as a progovernment, which started in
moter as well as a regulator. “I
1960, says it all. Although embelieve the government has a
ployees now have other healthrole in creating awareness in
care options, 98% of employees
the community about the imhave stayed with Triple-S.
FERMÍN M.
portance of insurance.”
Innovation, including trying
The value of insurance has CONTRERAS GÓMEZ to find new ways to deliver
already been proven in Puerto Insurance
health insurance to those miRico, helping the island and its Commissioner
norities that fall outside the
people to recover quickly from
various government and prinatural disasters and other unforeseen vate programs, also sets Triple-S apart
circumstances. The liberalization of the from the rest. “More than 90% of our popinsurance industry, including the reform ulation have healthcare insurance, priof the critical health insurance market, has vate or with the government program,”
allowed local firms to flourish, creating says Mr. Ruíz. “That means that 10%
a highly competitive market. There are ap- might be uninsured. There is an opporproximately 5,000 insurance agents and tunity to serve that 10% of uninsured peobrokers in the country. In 2000, a new law ple if we have something affordable and
was passed to permit banks to partici- accessible for them.”
pate in the insurance sector, paving the
Triple-S is eager to expand abroad. The
way for greater competition. Consolida- company has big plans for the U.S. martion in the sector is already underway ket where it has already made significant
with the completion of a number of key in-roads. “Not many people know that we
mergers in 2002 and several more ex- started providing phone consultation serpected soon.
vices in Spanish for the Hispanic comDespite the density of insurance munity in the state of Oregon this year.
providers, Mr. Contreras believes that there This service is called Tele-Consulta.”
is still room for growth both for individual
In the same call center, the company
insurance and commercial policies. “There is also covering the overflow calls to Engare a lot of pharmaceutical companies, lish speakers. It has fully bilingual regisbanks, and manufacturers doing business tered nurses to help answer calls and
T
there are plans to roll out the service to
other parts of the country.
But Mr. Ruíz says he does not just want
to make up the numbers. “Many companies from Puerto Rico go to the U.S. to
have a presence there. I don’t want to be
in America just for that reason. We want
to be there, and be different.”
The experience of Triple-S over the last
four decades can be put to use across the
region. The liberalization of the Puerto Rican healthcare market gives it a definite
edge. Mr. Ruíz says the company is evaluating opportunities in places such as Costa Rica and the Dominican Republic. “The
experience we have gained in the reform
business is something we can use in many
Latin American countries where the government provides health insurance.”
The company has also invested heavily in technology to improve the efficiency of its customer service. Mrs. Socorro Rivas, President and CEO of Triple-S,
says the company maintains a strong
technological edge over its rivals. She
says the Triple-S administration cost for
claims is among the lowest anywhere.
“We process thousands and thousands
of health claims without human intervention at all. We send the payments to
the provider’s bank, and we send an electronic explanation of payments.”
Mrs. Vivian López, Vice President for
Public Relations, says that Triple-S wants
to communicate its experiences to help
other institutions with information and
support to meet the challenges of the
modern health insurance industry. She
says the company shares its knowledge
with Puerto Rican organizations such as
the university and the Department of
Health. “We have a motto – we share
what we have.”
TRIPLE-S Business Areas
in millions of dollars
120
100
80
60
40
20
1999
2000
2001
2002
Vehicles, commercial and personal
Multi-area commercial policies
Other areas
SOURCE: TRIPLE-S
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SPECIAL ADVERTISING SECTION
BANKING ON SUSTAINABLE GROWTH
uerto Rico’s recent economic development has been underpinned by a
strong financial sector that boasts a
number of world-class banks and other specialized institutions. Many of these organizations have made a big impact in America.
Leading institutions such as Doral Financial
Corporation, W. Holding Company, and R&G
Financial Group, are now listed on the New
York Stock Exchange.
According to Alfredo Padilla, the Commissioner of Financial Institutions, the
banking sector is well placed to sustain
its growth. The island’s leading banks
continued to grow during 2002. Assets
held by the 11 commercial banks that
serve Puerto Rico grew from $55.7 billion
in 2001 to $66.3 billion by June 30, 2002.
“The banking sector is very solid,” says
Mr. Padilla. “The growth of the loan
market is sustainable. The total growth of
our assets for this year will be approximately 10%.”
In addition to its financial regulatory and
supervisory role, the Commissioner of
Financial Institutions takes an active
stance in educating private investors on
the benefits and pitfalls of investment.
Mr. Padilla believes that the banking community is able to
withstand future
changes to the economy, including further
interest rate cuts. Despite the sluggish
global economy, expectations for Puerto
Rico and its financial
sector remain high.
“The economic con- ALFREDO PADILLA
ditions look good, es- Commissioner of
pecially taking into Financial
account the prob- Institutions
lems around the
world, which have a direct impact on us. In
terms of banking, the industry’s profitability will continue.”
There are a number of key challenges
on the horizon, including the possibility of
taxing the island’s International Banking
Entities (IBEs). The IBEs on the island
have combined assets of more than $52
billion. Citibank is the largest institution
in the IBE sector, accounting for more
than 40% of the assets. There are fears
that new tax legislation could scare away
some of these organizations which help
drive domestic banking expansion and
create local jobs.
Passed in 1989, Puerto Rico’s International Banking Center Regulatory Act provides that income earned by an IBE from
P
offshore activities is exempt from Puerto
Rican income taxes, branch profit taxes,
and municipal license taxes. Moreover,
dividends, profit participation, or other
distributions to shareholders, partners, or
owners of an IBE are completely exempt
from all withholding taxes.
Mr. Padilla says that while there is a
lot to gain from the presence of the IBEs,
the government also needs income. “A
balance has to be found between the interests of the banking industry and the
Treasury Department.”
A SUCCESSFUL DYNASTY
oral Financial Corporation is one of
Puerto Rico’s star performers. The
company has risen rapidly to become
one of the island’s most successful diversified financial holding institutions, with a
firm footing stateside where it sees plenty
more growth potential.
Headquartered in San Juan, Doral Financial Corporation is today the island’s largest
mortgage and commercial banking operation. It has been consistently profitable with
growth at rates of 20% or more since its inception in 1972. Most
recently, it reported
record results for the
second quarter ended
June 30, 2003, the
22nd consecutive
quarter during which
it achieved record
earnings. Net income
for the period amountSALOMÓN LEVIS
ed to $75 million,
Chairman & CEO of
compared with $52
Doral Financial
million for the second
Corporation
quarter of 2002, an increase of 44 %.
Doral Financial Corporation’s senior management team are optimistic about the company’s future prospects. Founder, Chairman,
and CEO, Salomón Levis, says the group has
once again surpassed historical records in
loan production, new housing financing,
mortgage servicing portfolio, deposits both
in Puerto Rico and New York, earnings, capital, and run-on in key financial ratios.
One of the most respected men in American banking, he remains fairly modest about
this success. “You have to give the best you
can but without assuming everything will
be realized – aim for the best but be prepared for the worst.”
Doral Financial Corporation’s success is
rooted in its family ties. With its family history – the institution was founded over 30
D
Many of Puerto Rico’s world-class banks and other
specialized banking institutions are based in the
Golden Mile financial district of San Juan
TOMAS GUAL
The island’s economic development is underpinned by the strength of its financial sector
years ago by the current Chairman and CEO,
his brother David, and sister Zoila – it represents a successful dynasty in the making. Today, it is a publicly-traded company achieving consistent results despite the uncertain
market. Mr. Levis still holds a small interest
in the group but admits that it is open to all
like any public company. “You don’t have to
be a Levis to get ahead in this company and
to make big money.”
At the beginning of 2003, Doral Financial
Corporation’s common stock began trading on the New York Stock Exchange after
moving from the Nasdaq National Market,
a gesture of the group’s commitment to the
global market. The move is expected to increase the visibility of the company among
the investment community, expand the potential investor base and improve liquidity.
In Puerto Rico, and now in New York, the
name Doral Financial Corporation is synonymous with the very highest caliber of consumer banking services. In 2002, the company’s 30th anniversary year, it was ranked
number one among the top 100 U.S. banks
by U.S. Banker magazine. The view from independent analysts is equally positive, given the impressive results. Doral Bank Puerto Rico, which is Puerto Rico’s fastest grow-
Doral Financial Corporation is eager to
expand its U.S. interests
ing bank, finished the first half of 2003 with
$6.2 billion in assets and $2.4 billion in deposits, an increase of 41% and 26% respectively compared to June 30, 2002.
According to Mr. Levis, the outlook for
2003 and beyond remains upbeat, with demand for new housing in Puerto Rico still very
strong. “The residential real estate market in
Puerto Rico has been one of the best worldwide in the last 40 years because of the continued appreciation in value of property.” The
level of home ownership in Puerto Rico is traditionally higher than in America. The island’s
rise in population, the limited land availability, reverse immigration from America, and
the arrival of more U.S. citizens are the main
drivers in the demand for property.
Outside the traditional mortgage market,
Doral Financial Corporation’s income has diversified considerably in recent years, creating a stable platform for growth. Commercial banking, insurance agencies, and
securities brokerage contributed 54% of the
total income in the second quarter of this
year; four years ago the figure was just 11%.
Doral Financial Corporation is especially
eager to expand its U.S. interests, currently centered in New York. Doral Bank New
York mirrors the group’s overall performance.
As of June 30, 2003, it had assets of $474.3
million and deposits of $305.5 million, an
increase of 61% and 29% respectively compared to the same period in 2002.
With a population that is three times
bigger than the entire Puerto Rico market
and more savings oriented, there is plenty of growth potential. Mr. Levis believes
the bank has a special role to play in serving not only the resident Puerto Rican
population, but also the city’s wider pool
of immigrants. “We understand the mentality of immigrants and minorities. I think
that we can address their financial needs
in a better way than most of the established institutions.”
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SPECIAL ADVERTISING SECTION
FURTHERING FINANCIAL OUTLOOK
Bridging the gap between Latin and North
America, Puerto Rico’s financial industry
has long been recognized as one of the
fastest-growing sectors in the
community. Westernbank and parental
holding company, W Holding Company,
Inc. is chartering a leading role in Puerto
Rico’s economy through market
penetration and an unbroken string of 45
years of profitability and growth.
With much room for expansion,
Westernbank is the pioneering bank in
90% of its branch regions, a large
majority of which are located in the
southwest of Puerto Rico. Efforts have
been primarily concentrated on
entering the eastern coast, and
launching branches in Humacao,
Fajardo and Caguas.
Established in 1958, the bank has
increased its array of services and,
within the past ten years, has
experienced a 30% increase in profits
– objectives for 2003 are targeted
around the $10 billion mark.
Chairman of the Board, President and
CEO, Mr. Frank Stipes, adds: “Western-
bank is not a bank for the masses, but
for those who want to improve the quality
of their daily life.”
Using service as the main driving force,
Westernbank’s product line has over ridden competition in Puerto Rico’s finance
sector. The first biometric and digitalized
bank, Westernbank has eliminated the use
of traditional identification to access
accounts and complete transactions, and
for the past four years, has used electronic
fingerprint identification.
The caller enquiry system is now tailormade. Customers wishing to consult the
bank via telephone are greeted personally
through the use of a caller ID, positioning
the bank in a client-driven, not productdriven stance.
The recent and most successful launch
of the new ‘Expresso of Westernbank’,
directed toward the smaller loan and
consumer market, is expected to derive
in an added $10-15 net income.
Westernbank’s search for new niches
has been continuous. Two years ago, it
opened a door in insurance, Individual
Retirement Account (IRA), which
“We are the bank with the longest
hours, largest array of products.
Not the largest, but the best.”
dominated the market, offering great
benefits for both the customer and bank.
Boasting one of the most successful
banking histories, Westernbank has
measured the success of the company,
not by the yearly results, but by its final
objectives. Interesting investment
opportunities in Puerto Rico’s banking
industry open up a number of advantages
for overseas participants. Mr. Stipes
believes that Puerto Rico is prepared to
enter the larger U.S. market, and has the
labor force to support it. “Puerto Rico
has a tremendous amount of wellprepared people, and when multinationals
come to operate in Puerto Rico, they do
not need to import talent management,
least of all labor.”
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SPECIAL ADVERTISING SECTION
ENCOURAGING ENTREPRENEURS
Creating a favorable environment for investors and business people
uerto Rico intends to maximize its the island even more attractive to exporters.
strategic location and take advantage
“We need to continue reducing the cost
of the liberation of trade across the of doing business here and to make the percontinent. The Free Trade Area of the Amer- mit process more flexible and less burdenicas (FTAA) Agreement and the Central some for investors, to keep the economy
America Free Trade Agreement (CAFTA) moving,” adds Mr. Segarra.
both offer significant opportunities for local
Pridco, the state agency responsible for
exporters and manufacturers.
promoting the island’s advantages to inThe government is eager to inject mo- vestors, is helping to refine this competitive
mentum into the island’s industriprofile in collaboration with other
al and commercial sector with a
groups. Héctor Jiménez Juarbe,
series of innovative development
Pridco’s former Executive Direcplans aimed at stimulating investtor, says that Puerto Rico has
ment, creating jobs, and supporteverything it needs to be sucing the growth of small businesscessful. “We have the infrastruces. These include financial incenture and we have a government
tives for foreign and local investors,
committed to that purpose. We altax breaks, and infrastructure imso have the private sector and
MILTON SEGARRA
provements.
academia working to that end.”
Milton Segarra, Secretary of Secretary of Economic
In San Juan, new legislation
Economic Development and Com- Development and
has been approved to promote
merce and Executive Director of Commerce and
future industrial development,
the Puerto Rico Industrial Devel- Executive Director
to compensate for the demise of
opment Company (Pridco), says of Pridco
traditional labor-intensive manthese measures will make the isufacturing activities. The Inland more competitive in its attempts to at- dustrial Tax Incentive Act provides a tax
tract global capital. The elimination of the U.S. bracket of 7% and can go down to 2% or
internal revenue code Section 936, which al- less in the case of pioneer industries that
lowed exemption from Federal taxes for lo- introduce new products and innovations to
cally based subsidiaries of U.S. companies, the country.
was a setback, but now the island must find
Puerto Rico is also promoting the inits own way to compete. He believes it is dustrial cluster concept to attract likeideally placed to partner U.S. interests with minded businesses that can interact in
an eye on Latin America. “With Puerto Rico fields like pharmaceuticals, medical deknowing the way Latin Americans think and vices, and IT services.
do business, we can help and bring added
Mr. Jiménez Juarbe thinks credibility is
value to a U.S. firm in negotiations.”
very important. “We need to convince peoPuerto Rico’s track record in pharma- ple that our programs are good, that we are
ceuticals production means it can realisti- the best place to invest, that we can comcally expect to bring in innovative new com- pete with any other country and that we
panies in areas such as biotechnology, can create the appropriate environment to
nanotechnology, robotics, and space help companies grow and be profitable.”
engineering. In addition to its well trained,
PromoExport, a public corporation in
bilingual labor force, unique tax system, and charge of promoting exports, wants to ena strategic geographical position, large in- sure that Puerto Rican enterprises benefit
Continues on page 8
frastructure developments are set to make
P
Walking on air?
Puerto Rico Technoeconomic Corridor, Inc. (PRTEC),
hand in hand with HP’s expertise, aims to enable
the economic development of Puerto Rico through
the creation of an ideal and particularly attractive
environment that promotes innovation, development
and commercialization in the new economy. The
project is providing the island with a solid
infrastructure base, including social infrastructure
enhancement programs, and a state-of-the-art
science and technology park in the western area.
Entrepreneurs willing to establish operations in the
GROSS DOMESTIC PRODUCT BY MAJOR INDUSTRIAL SECTOR
area join in the ignition of a new wave of activity
that will lift the island to a new business dimension.
SOURCE: GDB
HP invites you to be part of the PRTEC experience!
Hewlett Packard Caribe Ltd.
Highway 110 North, km. 5.1, Bldg. 2
PO Box 4048, Aguadilla, PR 00605-4048
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SPECIAL ADVERTISING SECTION
Hewlett Packard’s plant in Aguadilla, 80 miles west
of the capital San Juan, manufactures 33% of the
group’s total ink production and continues to grow
ISLAND EMBRACES VAST
OPPORTUNITIES IN HI-TECH
ver the last 50 years, Puerto Rico’s
manufacturing base has shifted
markedly from the original labor-intensive industries such as tobacco, leather,
and apparel products, to more capital-intensive and specialized labor areas such as
pharmaceuticals, chemicals, machinery,
and electronics. Today, the island’s primary exports consist of antibiotics, tranquilizers, and other medicines, as well as machine
parts and instrumentation.
The government is eager to encourage
the trend, nurturing new areas such as IT,
communications, and software, by improving
access to infrastructure and creating an appropriate enabling environment. Already
home to one of the most diverse manufacturing sectors in the Caribbean, Puerto Rico is ready to move forward, edging into
advanced research and development and
frontier niches like the biosciences.
Many of the world’s leading IT brands are
already present. Hewlett Packard, for instance, has been active in Puerto Rico for
many years. Its plant in Aguadilla, 80 miles
west of San Juan, manufactures 33% of the
group’s total ink production and continues
to grow. It is a case study for manufacturing success in 21st century Puerto Rico.
“When I started we had 400 employees,
now we have 1,200 employees,” says Iris
Santos, Vice President and General Manager
(Americas Hub) of Hewlett Packard Ink Supplies Business. She insists that the quality
of the local labor force – educated, skilled,
and versatile – has underpinned the firm’s
growth and its commitment to
O
SPECTACULAR PROJECT
WILL RAISE PUERTO RICO’S
INTERNATIONAL PROFILE
he construction industry has been
one of the island’s star performers in
recent years, outpacing other parts
of the economy with an increase in private
and public sector-led building activity. Since
1999, the total value of construction activity in Puerto Rico has exceeded the $6
billion level every year, reaching a peak of
$6.9 billion in 2000.
One of the most spectacular developments will be the $200 million Paseo Caribe
(Caribe project), led by local developer San
Geronimo, which will establish a world
class hotel, leisure, and entertainment complex close to the Caribe Hilton in San Juan.
The locally-financed project will include a
high-class shopping mall with exclusive
boutiques, the Condado Lagoon Villas condo-hotel – with 88 villas representing approximately 264 rooms, to be managed by
the Caribe Hilton – plus a 21-storey deluxe
apartment block and related facilities such
as movie theaters, restaurants, and parking lots.
Arturo Madero, President and Managing Director of the San Geronimo Paseo
Caribe Project, part of the Lema group of
companies, says the development – due
for completion in late 2004 – is the culmination of many years of hard work. “Without a doubt, the project that I have really
put my heart and soul into is the Paseo
Caribe development. This has been the
most important project I have been involved with. It’s been a difficult one, but I
feel very satisfied to be part of it.”
The design of the complex takes into account the premium strip of land it is located
on in Condado, sited on the Caribe Hilton’s
vast outdoor parking lot, near Fort Geronimo, and on a plot that once belonged to
the U.S. Navy. The resort will incorporate
a beautiful new plaza opening up to the sea
and provide better access to the fort through
the Paseo San Geronimo, a path leading
from Ponce de León Avenue to the historical site.
The Caribe project is regarded as something of a flagship for both the local construction sector and the tourism industry.
“Since this development is located at the
entrance of San Juan, it has to be a prominent and attractive project. Anyone would
love to develop a project in such a beautiful place.”
Moreover, the Paseo Caribe is creating
important economic benefits for the local
T
MARIA MARTHA CABRERA
Continued from page 7
from the changes. Executive Director
Antonio Sosa Pascual says there are
plenty of areas where local firms are already strong, such as food and beverages, manufacturing, and technology.
“The trade balance is positive because
of the high value of the production that
takes place here,” says Mr. Sosa Pascual.
“This is largely due to the level of pharmaceutical exports.” These goods make up
approximately two thirds of total exports.
While Puerto Rico has shown it can manufacture world-class products, there is a
need to filter the export success down the
line to locally-based small- and medium-size
companies. It is a priority to ensure that local businesses understand the implications
of the new free-trade agreements.
innovation. “We have very talented people facilitate the growth of the IT industry.
who work with us. They are capable of han- Another is enabling the development of the
dling the pace and growth of the business. Aguadilla region in which Hewlett Packard
We challenge our benchmarks constantly. is based.
The fact that this is a multinational company
PRTEC has been assessing future infratriggers a high level of competition.”
structure requirements including the conCrucially, industry experts like Mrs. nection between the Port of the Americas
Santos believe that Puerto Rico has all the and the Aguadilla airport. “The airport in
right ingredients to develop into more spe- Aguadilla is a magnificent location not oncialized areas under the technology um- ly for cargo. We are looking forward to imbrella. “It is amazing the transformation that proving that facility together with the Ports
is taking place at present, though there is Authority. We have been making recmore to do. Puerto Rico is very capable of ommendations. It’s been a great expemaking the shift from a manurience. The government is infacturing economy to a technocorporating some of our reclogical economy.”
ommendations.”
As head of the Puerto Rico
One core project under way is
Techno Economic Corridor
the development of the Americ(PRTEC), a non-profit organization
as Technology Park, an industrial
that seeks to promote technolocomplex designed to foster growth
gy and medical clusters on the
among IT companies on the island,
island, Mrs. Santos is also workespecially smaller firms. Niche
ing closely with the government
opportunities include electronics
to develop the island’s IRIS SANTOS
manufacturing, contact centers,
Vice President &
future economy.
healthcare IT, banking and insurThe initiative provides impor- General Manager
ance processing, software detant support to the economic de- (Americas Hub) of HP
velopment, and pharmaceutical
velopment of the western area of Ink Supplies Business process outsourcing.
the island, to create a competiThe island continues to stand
tive environment for investors and entre- as a pillar among other much larger Latin
preneurs to establish hi-tech companies. American countries for its flexibility, agiliShe says Hewlett Packard is always eager ty, and ability to adjust rapidly to industry
to support the local community in which it and technology changes. “When you have
operates. “Supporting PRTEC is supporting an economy based on manufacturing which
Puerto Rico and the people who work at is starting to move into services and reHewlett Packard. We take good care of search and development, the structure that
our people.”
you have for manufacturing does not necThe organization is involved in several essarily fit in. A change of mentality is rekey areas. One is the development of re- quired. The government is working with us
search and technology infrastructure to so that businesses can evolve.”
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9 / Puerto Rico
Bolstered by an increase in private and public sector-led
building activity, the construction industry has
outperformed other areas of the economy in recent years
AUTHORITIES WORK TO
ATTRACT WIDER CLIENTELE
ore than 80% of Puerto Rico’s five
million tourists are from the United States. Proximity to the U.S. and
safety are important factors that visitors value now and give Puerto Rico a tremendous
advantage over other islands in the
Caribbean. The sector brings in around $2.2
billion in annual revenues representing
around 3% of GDP.
José Suárez, Executive Director of the
Puerto Rico Tourism Company, says the island can increase its share of the Caribbean
tourism market to 20% by 2020 if it creates
the right environment. This includes building the necessary hotel and leisure infrastructure and appealing to a wider clientele. “Visitors can experience 500 years of
Puerto Rican history and culture, and we’re
only three or four hours away from America. We have beautiful beaches, mountains,
rain forest, and many other attractions.”
TOMAS GUAL
M
community. As a source of 700 direct and making it the largest hotel on the
1,500 indirect jobs, it will become a focal island. The resort’s proximity to the new
point both for local residents and tourists. convention center will also make it the ideIt will also help to create awareness of al hotel choice for group business travelthe new convention center that is under ers, although it already boasts some of the
construction.
best conferencing facilities in Puerto Rico.
Mr. Madero says that the plan has been
José Campo, General Manager of the
well received with most of the 88 villas Caribe Hilton, is excited about the new dealready sold to private buyers, mainly lo- velopment. “It’s going to be an outstandcal residents. Under an innovative strat- ing five-star property with marble bathegy the owner allows Caribe
rooms and top-notch materials
Hilton to manage the villas for
and services, operating as ana period of 10 years, during
other hotel within the hotel. It’s
which he or she can stay for up
going to be something special,
to 30 days a year or more, suba destination in itself.”
ject to availability. Many of the
He believes that the island
46 luxury apartments in the
still needs more rooms to cope
high-rise condominium have alwith the surge in demand
so been sold.
among international visitors,
The shopping mall will be ARTURO MADERO
especially when the new conmanaged by a specialist prop- President & Managing
vention center opens next year.
erty management firm. There is Director of the San
Other hotels are also springing
plenty of fresh potential in Puer- Geronimo Paseo
up around San Juan as well
to Rico’s fast growing sunshine Caribe Project
as the other major centers
sector with the firm support of
like Ponce. In 1999, the Caribe
the local government. “We believe that Hilton invested $60 million in additional
Puerto Rico has a lot of opportunities. There improvements.
is a commitment from the government to
There is a high level of anticipation about
make our economy stronger. To develop a the opening of the new resort complex at
project like Paseo Caribe you need total the end of next year. “Paseo Caribe is gocommitment from both the government ing to become the new center of social acand the private sector.”
tivity in San Juan, offering casual and fine
The Caribe Hilton, one of the island’s top dining, shopping, movies, a casino, and
hotels, already plays a major role in pro- great entertainment. The first phase is promoting Puerto Rico’s international gressing very quickly and will be comprofile. The new development will boost the pleted by September 2004, and the sechotel’s room inventory from 645 to 910, ond phase in 2005.”
Business tourism is being developed by
the Puerto Rico Convention Bureau, which
is marketing the $400 million convention
center now under construction in San Juan
– one of the largest infrastructure projects
in the region and due to open next year.
Executive Director Jorge Pesquera, says
it will open the door for all kinds of groups,
events, meetings, and conventions. “We
believe that this is a historically important
time for Puerto Rico. We are right in the
middle of the Americas and will become
the preferred meeting destination.”
Other resort developments are also under way throughout the island. The Horned
Dorset Primavera, a luxury inn in Rincon,
western Puerto Rico, is one of the most
exclusive new tourist addresses with 30
rooms and 20 villas. Wilhelm Sack, General Manager, says Puerto Rico is unlike
any other Caribbean island. “Puerto Rico
is a different place. You can get in your
car, drive around, walk to the beach and
feel safe. It is a free society. I think that
is one of its blessings.”
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DECENTRALIZATION PROCESS HIGHLIGHTS ISLAND’S DIVERSITY
Puerto Rico’s 78 municipalities are eager to become fully autonomous and take on responsibility for regional development programs
ith a population of 1.6 million, San
Juan may be the pulsating heart
of Puerto Rico, the arrival point for
foreign tourists, and the center of government, but the capital city is just one of the
many attractions of this beautiful island.
Scattered throughout the mountainous interior are stately hill towns surrounded by
pristine beaches along the coast, and over
four centuries of unique Spanish Caribbean
history. There are plans to open up lesserknown parts of the island to more visitors,
so that they can enjoy everything Puerto Rico has to offer.
There is a strong move towards decentralization, with regional administrations eager to take on more responsibility
for local development. Puerto Rico actually consists of 78 municipalities each governed by a popularly elected mayor and municipal assembly. Locally-elected leaders
are driving the decentralization debate in
a bid to attract federal funding to promote
economic development across the island.
Some of the more important municipali-
W
NEW INITIATIVES SET TO
BOOST PONCE’S ECONOMY
he southern municipality of Ponce is
one of Puerto Rico’s most exciting
development regions and an important maritime trading hub. The city of
Ponce itself, home to 188,000 people, is
one of the island’s national treasures,
known as ‘La Perla del Sur’ (the Pearl of
the South). Its historical center, which
dates back to 1692, consists of beautiful
plazas, churches, highly decorative homes,
and glorious fountains. Approximately
$500 million has been spent preserving
the colonial core in a bid to entice more
visitors. One hundred years ago it was the
largest city in Puerto Rico and Spain’s
capital of the southern region until it fell
to the U.S. in 1898.
Mayor of Ponce Rafael Cordero Santiago, a firm believer in the decentralization
process, says local inhabitants are proud
of their unique history. He says a lot of
T
Plans are under way to open up lesser-known
parts of the island to more visitors
ties such as Ponce, the island’s second
largest city, and Mayagüez, the third
largest, are home to key economic and infrastructure projects that will set the pace
for future growth on the island. The continued development of each of the municipalities will play an integral role
in Puerto Rico’s long term progress and
prosperity.
work has gone into maintaining and improving the quality of life in the district.
“This was once the most important city
in Puerto Rico. It was the largest in terms
of population and had the biggest concentration of political leaders – of the five
governors that Puerto Rico has had, three
have been from Ponce. It was an artistic
and cultural center. We have tried to recapture the life of the city and also the
historical zone.”
In economic terms, Ponce has always
relied heavily on its port and natural bay
for its prosperity. Playa de Ponce Port is
the island’s principal shipping port and
one of the busiest maritime facilities in
the Caribbean, handling tobacco, coffee,
rum, and sugar cane. Ponce is also an important ship-building center. The Port of
the Americas project, a mega transshipment hub due to become fully operational
in 2006, will strengthen the region’s maritime credentials. The initiative includes
a 1,000 acre industrial development area
and free zone that is expected to bring re-
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SPECIAL ADVERTISING SECTION
newed prosperity to large parts of the southern part of the island. Mr. Cordero Santiago
says the intention is to spread the benefits
of the new port as widely as possible.
He believes that the development of the
new port has the potential to further catapult the regional economy forward over
the next 25 years.
Other infrastructure investments are taking place. New roads are under construction that will link Ponce with the rest of the
island and create faster connections. A water treatment plant will allow the municipality
to produce approximately 65 million gallons of water each
day. New waste water pipelines are
being deployed. “This
is due to the growth
that has taken place
in the city,” Mr.
Cordero Santiago
RAFAEL CORDERO
explains.
On the social side, SANTIAGO
there is substantial Mayor of Ponce
investment in the local educational and healthcare infrastructure. The San Lucas hospital has invested
$60 million in its first phase of improvements, and has allocated a further
$40 million.
Technology is being deployed in academic centers to improve training for
the young. “What counts is the universities, the hospitals, and the schools
where people go. The city has to be
prepared for all of this.”
INVESTMENT IS KEY TO
NEW ROLE FOR MAYAGÜEZ
he western municipality of Mayagüez
wants to raise its profile on the international stage. Mayor José Guillermo Rodríguez believes the region can prosper more quickly with greater autonomy,
moving away from the centralized decisionmaking processes in the capital. Key economic initiatives, such as the Mayagüez
port and the regional airport in Aguadilla,
a former U.S. Air Force base, currently fall
under San Juan’s management. These two
projects could enable the region to leap
ahead given the right encouragement and
local leadership, he argues.
Puerto Rico’s third largest city, with a
population of over 100,000 people,
Mayagüez is one of the most important
cities on the island. The center is based
around the impressive Spanish-style Plaza
Colon, a tribute to Christopher Columbus,
whose statue stands in the square.
Mayagüez was one of the areas most affected by changes to tax exemptions
following the removal of U.S. internal rev-
T
enue code Section 936, which hit the manufacturing industry hard. Several large organizations have withdrawn in recent years
costing thousands of jobs. “Mayagüez started its real economic development in the
1960s and 1970s via the manufacturing industry, especially when Section 936 was approved,” says Mr. Guillermo Rodríguez. “The
biggest concentration of industry was based
here. Once Section 936 was withdrawn
Mayagüez and the west side were the most
impacted by a loss of employment.”
There are signs the tide is turning, however. Investment in
the roads system will
connect Mayagüez
to the rest of the island via a fast modern highway for the
first time. The development of Aguadilla’s Rafael Hernandez Airport is
JOSÉ GUILLERMO
also a priority. Mr.
RODRÍGUEZ
Guillermo Rodríguez
Mayor of Mayagüez is keen to make sure
that the Mayagüez
harbor facilities are also exploited. “That port
is in front of the Caribbean and the Mona Channel, the principal maritime highway that intersects the two Americas. Instead of receiving shipments into Mayagüez, everything goes to San Juan port, which has an
overflow of shipments. I am hopeful that the
airport and harbor of Mayagüez can be developed to full capacity.”
The municipal authorities have already
shown their management credentials.
“We acquired the main regional hospital
instead of it being transferred to a private
company under the health reforms. We
succeeded in turning this hospital into a
cardiovascular center for the region. Instead of going to San Juan or Ponce for
a heart transplant, patients can have the
same treatment without leaving town.”
The hospital is proving invaluable to residents on neighboring islands, with patients from the Dominican Republic traveling to Mayagüez for treatment, rather
than going as far as Miami or Houston.
“What we are saying is that if we developed our own airport we would be minutes
away from saving lives on many Caribbean
islands,” adds Mr. Guillermo Rodríguez.
Tourism is a key part of the plan to
rebalance the local economy. A tourism
campaign to promote the Porta del Sol
includes Mayagüez as the main focal city
on the west coast of the island.
The municipality has set up an agency
to promote the west side of the island. “All
the promotional tools we need to develop
our economy will be ready this year. I hope
that in the next five years our tourism industry will play a significant role in Puerto Rico’s economic development.”
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KEEPING PACE WITH DEMAND
Investment in infrastructure is set to make the island a Caribbean hub
he Calderón administration ranks the
improvement of transport and infrastructure among its top priorities as it
seeks to consolidate its position as a hub in
the Caribbean. This year alone, the government has allocated $2 billion in investment
for infrastructure development to be distributed through public agencies covering
transportation, housing, and utilities.
A number of important transport projects
are under way. These include the Strategic
Highway System which will provide the whole The Urban Train is the first of its kind in the
island with a fast, modern road network, and Caribbean and will reduce road congestion
the Urban Train Initiative, the construction of
17 miles of new track and 16 stations runThe Rafael Hernandez Airport in Aguadilning right through downtown San Juan.
la, site of the former U.S. Ramsey Air Force
Fernando Fagundo, Secretary of base, is also under development and will help
Transport and Public Works, describes the improve the island’s cargo and passenger
recent capital investment program in the in- capacity when it opens fully next year. This
frastructure sector as “extraordinary”, with will take the strain off San Juan’s Muñoz
state agencies tapping innovative financing Marin Airport. The new transport facilities
mechanisms to help fund development. Ear- will link up with the highway system now
lier in the year, the Puerto Rico Highway and under construction.
Transportation Authority successfully
Miguel Soto Lacourt, Executive Director
launched a $1.47 billion bond,
of the Ports Authority, says these
the biggest local government isand other projects will help to resue in recent years, to refinance
inforce Puerto Rico’s strategic
and restructure existing debt.
and geographic advantages, both
Mr. Fagundo says the idea bein terms of cargo and passenger
hind the Urban Train is the Amertraffic. With the arrival of private
ica suburban concept, discouroperators like express courier seraging people from bringing their
vices FedEx and UPS, and more
cars into the congested city cenand more cruise liners in the harter. “This is a heavy rail train costbors, there is constant pressure
ing $2.25 billion. It travels from FERNANDO FAGUNDO from all sides to improve. Other
Bayamon to Santurce and goes Secretary of Transport facilities, including the main port
through the heart of the metro- and Public Works
and airport facilities in San Juan,
politan area with 16 stations. We
are undergoing improvement. “It
have never had a train of this type before.” is an evolution that pushes management
With the Strategic Highway System and airports to change.”
Mr. Fagundo says the aim is to unlock
A more sophisticated transport system
the development potential of some of will open the doors for more tourists, acthe island’s most promising regions cording to Mr. Soto Lacourt. “We receive apalong the west coast, again taking some proximately 625 cruise ships every year.
pressure off the capital. “Our objective These ships are getting bigger in size. The
is for the whole island of Puerto Rico infrastructure needed to manage this volume
to have an economic, efficient, and safe of passengers and activity is very different
mass-transit system, and then the car from that used 15 years ago.” Puerto Rico
would be an alternative, not a neces- is staying one step ahead of demand.
sity, like it is today.”
A number of major port and airport
NOTE: Summit Communications would like
initiatives to bolster international links are
to thank Tomás Gual for providing some of
also in progress. Flagship projects include
the images in this report
the development of the Port of the Americas, a giant transshipment hub in Ponce,
For further information contact:
capable of handling post-Panamax ships up
Summit Communications
to 12,000 TEUs.
1040 First Avenue, Suite 395
An international port development firm
New York, NY 10022-2902
is due to be appointed by the end of 2003
Tel (212) 286-0034. Fax (212) 286-8376
to manage the project. With value-added arE-mail: info@summitreports.com
eas to be developed across a 1,000 acre free
An online version is available at
zone that will extend over three municipalwww.summitreports.com/puertorico2003
ities, it is expected to be operational in 2006.
T
TOMAS GUAL
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