Puerto Rico looks to Congress to secure increased manufacturing activity
Representatives of the island’s pharmaceutical, aerospace, medical devices, and accountants, among other private sectors, expressed their support for the Medical Manufacturing, Economic Development and Sustainability Act, submitted in Congress by Puerto Rico Resident Commissioner, Jenniffer González.
The bill was touted as “an ideal route to strengthen Puerto Rico’s position as a national manufacturing center.”
The MMEDS Act, or H.R. 2653, would offer federal incentives to companies that manufacture medical and pharmaceutical equipment in exchange for job creation and capital investment, to relocate to American soil, specifically in places with high levels of poverty, designated as “Distressed Zones,” or DZ.
Companies that are located in the “Distressed Zones” could benefit from 40% in tax credits for salaries and fringe benefits; 40% depreciation and amortization of property; and 30% on purchases of goods and services from a DZ, González said.
It would also grant higher tax credits for research and development activities or production lines that are relocated from abroad to a DZ or related to population health products, and for goods and services acquired from minority-owned businesses.
Population health products are those drugs or medical devices that have been identified by the Biomedical Advanced Research and Development Authority to address chronic health problems that aggravate the effects of pandemics and cause disproportionate harm in vulnerable populations.
A collaboration with BARDA would be established for research, approval and infrastructure. Procurement commitments would be made with federal health agencies and the GAIN Act would be applied, providing expedited approval processes and extensions to the marketing exclusivity period, she said.
For the production of population health products, companies could benefit from 60% in tax credits for salaries and fringe benefits, 60% depreciation and amortization of property, and 50% on purchases of goods and services from a DZ.
The MMEDS Act seeks to create economic activity in areas with a sustained poverty level of more than 35%, while ensuring the supply chain as a matter of national security. More than 75% of the island would be eligible for DZ designations, she said.
If the company comes from abroad, the tax credits increase: 60% in tax credits for salaries and fringe benefits; and 50% on purchases of goods and services within a DZ. The company is also given the opportunity to choose between a 60% property depreciation and amortization credit or take an immediate deduction of those costs.
“I appreciate the support of the government and the private sector to my measure, the MMEDS Act, that would promote economic development in an area in which Puerto Rico has already proven that it knows what to do, that it has the infrastructure, knowledge and manpower specialized,” González said.
The support from trade groups such as the Puerto Rico Manufacturers Association,
“This measure, bipartite and bicameral, benefits the local economy by promoting the development of economically disadvantaged communities, it would prevent foreign dependence at the national level on raw materials, prevent shortages of equipment and medical supplies, which makes it a national security tool,” the congresswoman said.
Representatives from the Puerto Rico Manufacturers Association, the Homebuilders Association, the Puerto Rico Chamber of Commerce, the Private Sector Coalition, the Puerto Rico Society of CPAs, the Pharmaceutical Industry Association, the Puerto Rico Aerospace & Technology Cluster, the Medical Device Cluster, the Puerto Rico Economic Development Bank and Invest Puerto Rico all backed the measure.
“Puerto Rico as a territory of the United States is positioned as an ideal jurisdiction for the call of President Biden’s administration to bring the supply chain closer to the continental United States,” Department of Economic Development and Commerce (DDEC, in Spanish) Secretary Manuel Cidre said, of the effort to reshore manufacturing to US soil.
“At a time when a comprehensive tax reform is being discussed at the national level to finance the administration’s infrastructure project and that could significantly affect the competitiveness of the foreign industry established on the island, the Resident Commissioner’s project represents a novel and different tool,” he said.
US Sen. Marco Rubio filed a sister bill in that chamber, known as S. 1203.
