Monday, June 15, 2009

Made in Puerto Rico

A few weeks ago, I was browsing through the duty free shop in the Luis Muñoz Marin Airport and came out empty handed. We were looking to purchase something unique from the island, but besides Bacardi rum, I couldn't find anything worth buying. Then, I started thinking to myself... Well, what does Puerto Rico manufacture? After some Googling, I came across the Website of the Puerto Rican Industrial Development Company (PRIDCO), which contains some interesting information. For instance, it turns out 16 out of the 20 best-selling pharmaceutical drugs (Viagra is made in Barceloneta) in the mainland U.S are manufactured here on the island.

Low and behold, Puerto Rico is actually the world's fifth largest pharmaceutical manufacturing location. Microsoft (an optical media plant) and Hewlett Packard (manufactures printing and computing equipment), amongst other major companies, also have manufacturing facilities on the island. The local government is also trying to lure biotech companies to the island. One of the reasons why Puerto Rico is such an attractive place for many foreign companies is due to its low tax rates and easy access to the U.S market. In fact, many enjoy the benefit of not having to pay any federal taxes. Although Puerto Rico is officially part of the U.S, it is considered to be a separate jurisdiction. The island has its own tax structure. Case in point, the corporate tax rate in Puerto Rico is around 7% while the top corporate tax rate in the U.S is around 35%. Recently, Pres. Obama has called for the curbing of tax havens. If his proposal is enacted, it'll be sure to have a devastating effect on the Puerto Rican economy, which has been in a recession even before the financial crisis took place.

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