Big U.S Chains Rule

Imagine yourself showing up for work only to find out that your employer is no longer open for business. You are suddenly out of a job, and your company had not given any sort of notification of what was to happen. This was the predicament which employees at the local Puerto Rican pharmacy chain, El Amal, found themselves in this past weekend. To top it all of, many of these employees are owed three weeks pay. Although El Amal had filed for Chapter 11 bankruptcy in 2009, and things have not been looking all that rosy since then, it still came as a shock for its employees and many around the island.

For many, including yours truly, it was actually surprising to see El Amal hang on for as long as it did. Anyone who has visited Puerto Rico probably noticed the strong presence of Walgreens, the largest American drugstore chain. In my neighborhood alone, within a five mile radius, there are three Walgreens stores. Lo and behold, CVS Pharmacy also opened up several stores on the island last year. American retail chain stores dominate the local Puerto Rican marketplace, and this doesn't just apply to drugstore chains. As we were passing by Dorado on the highway the other day, I couldn't help but notice the inextricably long line of cars at the drive-thru at Krispy Kreme. I still remember last year when the first Krispy Kreme opened in Guaynabo, where dozens of people spent the night outside in hopes of being the first ones to step inside the doughnut mecca. Krispy Kreme has since opened up two other stores, one in Caguas and the other one in Dorado.

Most American fast food and retail chains do very well in Puerto Rico. In fact, KFC and Wendy's are both expanding their franchises on the island. This is not only bad news for the ever-growing obesity problem but it is also a mixed blessing for the local economy. As we've seen with El Amal, many Puerto Rican businesses have become affected as they lack the massive capital and economies of scale to compete with these huge American corporations. On the other hand, these companies do create jobs and pay taxes. Aside from Capri and Pitusa (both are discount retail stores) there aren't many local retail chains. The same goes for fast food, except for my beloved El Meson Sandwiches. While the statehood issue has always been a subject of ongoing debate on the island, the majority are ebullient when it comes to the arrival of yet another Gringo-owned retail store or fast food chain.

Helping Small Businesses

Puerto Rico has been in a recession for the past five years, and many economists see entrepreneurship as one of the possible solutions to help the economy get out of its funk. Movimiento Empresarial ("entrepreneurship movement) is one such government initiative to promote the unemployed to start their own businesses. In many countries throughout the world, like the U.S, small businesses serve as an engine that can drive an economy forward. After all, they generate employment, taxes and spur innovation. Most of the revenue generated by small businesses also tends to stay within the community, another added bonus. I have always been a huge supporter of small mom and pop shops, as I myself come from a family of entrepreneurs.

In order to help encourage the start-up of companies, as well as helping existing small businesses flourish, the government must create an environment where the process to start a company is streamlined and the collection of taxes is done in a transparent and efficient manner. According to a CNN Money article, Singapore is the best place in the world to start a business and New Zealand came in at second place. In the latter country, it only takes 24 hours to start a business. One of the common factors which creates a business friendly environment is the utilization of technology to help achieve efficiency, especially in terms of collecting taxes. The objective is to minimize government bureaucracy. I believe the Puerto Rican government should benchmark such practices. On the island, too much time is wasted at government agencies standing and waiting. How can business owners succeed when they have to spend so much time dealing with red tape?

Several weeks ago, I was at el Departamento de Hacienda (the Puerto Rican tax collection agency) for nearly the entire day trying to work out an alleged outstanding tax payment. To make a long story short, the representative at Hacienda nonchalantly said there was an "error" ("hubo un error en el sistema") in the system. Turns out we owed practically nothing in taxes. It was a huge relief, but I still couldn't believe my eyes and ears. Nevertheless, this is not a first time occurrence. Our family business, which is in the beverage industry, has been operating for over 40 years and there have been many instances where we have found ourselves in such situations. Having a small business is no cakewalk, especially when the government doesn't have its own house in order.