Op-Ed: A golden opportunity ignored
Throughout my career, I have had the privilege of working in diverse global markets, aligning business strategies and financial management of multicultural teams in Singapore, Hong Kong, Indonesia, New York, Miami, Peru, Puerto Rico and Barbados. This experience tells me that opportunities, as quickly as they appear, can vanish in the blink of an eye.
The complex social and economic changes the world is going through call for urgent actions to take advantage of the great untapped trade potential between Puerto Rico and South America, which, unfortunately, has not been seriously explored.
When it comes to attracting capital and investors to the island, Puerto Rico’s governments have historically focused their efforts almost exclusively on the United States, Europe and even Asia. In this incomplete vision, they have ignored South America, where there is a bloc of culturally similar countries that have capital and resources that can make a decisive contribution to the island’s development.
Puerto Rico is in a unique position to attract opportunities that harmonize with South American investment needs. In South America, there are urgent business needs that stem from the legal instability that results in high risks for business. There is much insecurity and social conflict, political volatility with radical changes in economic policies, concentration of capital in specific economic sectors and countries, and diminishing returns on invested capital. For all these reasons, Puerto Rico represents an exceptional solution that has not been explored in depth.
For South American investors, Puerto Rico can provide higher returns on invested capital relative to other countries, and an opportunity for diversification. The island offers a more stable institutional, tax and legal framework. Its currency is the dollar (less volatile than South American currencies), its per capita income is much higher than in the rest of South America, and it has highly qualified professionals. All these solutions for South American investors should be used by Puerto Rico to attract companies to the island.
In addition, Puerto Rico can also benefit from the vast South American resources to support solutions to its most urgent problems. The island has serious difficulties known to all, such as its precarious energy system (obsolete and almost entirely dependent on oil), its need to import everything (even food) and the progressive replacement of capital in productive sectors by passive capital. In the face of this, South America has developed innovation in critical sectors for the island. It is a world power in agricultural exports, genetic development of livestock and renewable energy.
Likewise, its entrepreneurship has historically been focused on productive and service sectors, unlike the speculative capital in the real estate sector that is predominant on the island. Finally, it can provide an influx of entrepreneurs and professionals to replace Puerto Rico’s human capital that continues to migrate to the United States.
So, if there are all these vast opportunities of wealth for both sectors, why is there not more trade and capital exchange between the countries of South America and Puerto Rico? Why, for example, do they do business with the Dominican Republic and other Central American countries much more than with Puerto Rico? The fundamental reason is ignorance: South America still sees Puerto Rico largely as a U.S. tourist destination with a Spanish-speaking population and not much more, because the island has not taken it upon itself to project its advantages in these markets.
For sure, the public sector and bureaucracy, both in South America and Puerto Rico, does not provide the tools or the inclination to explore and develop these rich possibilities. Therefore, to address this opportunity and take advantage of it, it is necessary for the private sector to step in, albeit with a different strategy that goes far beyond the traditional meetings of business representatives, seminars and business visits that often do not result in anything concrete.
The process of knowledge exchange should also extend to the important creative industry (music, literature, history and gastronomy) of which Puerto Rico has much to export. Common interest groups (agribusiness, livestock, energy and Fintech) should also be activated to pave the way for a commercial climate between the two.
Just by looking south, the island can discover a genuine golden opportunity, so far ignored. The time is now.