By Daniel Bases
NEW YORK (Reuters) – Puerto Rico’s Secretary of Economic Development and Commerce pushed for investment in the struggling economy on Wednesday and said bi-partisan legislation addressing its fiscal crisis needs reworking to be more targeted as it heads to a debate in the U.S. House of Representatives.
“If you don’t solve it (fiscal problems), then economic development will never thrive,” Alberto Baco Bague said in an interview before addressing New York businesses and investors organized by the Consulate General of Israel.
Baco Bague said the bill, known as the Puerto Rico Oversight, Management and Economic Stability Act” or PROMESA, needed amending to address concerns that the proposed Oversight Board, which would set debt negotiations and run fiscal management, was taking away too much political sovereignty.
“I think PROMESA has to get amended,” he said.
“They have to look, again, to address… the fiscal problems of Puerto Rico. It needs to be a targeted approach into solving those issues, but it has to be very cautious in not getting it entangled in the issue of sovereignty and issues of our political relationship (with the United States).”
PROMESA, which took a tortured route through the House Natural Resource Committee represented a rare political compromise where lawmakers from both parties and the Obama Administration acknowledged it was not perfect, but necessary.
Puerto Rico faces $70 billion of debt it says it cannot pay, is struggling with a 45 percent poverty rate and increase migration of its U.S. citizens to the mainland seeking better economic conditions.
Baco Bague highlighted Puerto Rico’s tax code is helping to lift economic development, even with all the negative press about its debt overhang.
Tax incentives passed in 2012 – Act 20 and Act 22 – aimed at spurring the economy continue to draw in new business, he said.
Act 20 offers low corporate taxes to export businesses that set up shop on the island while Act 22 aims to attract entrepreneurs by exempting newcomers from taxes on passive income.
Data unveiled on Wednesday by Baco Bague showed 288 entities approved, signed and in the pipeline for development under Act 20 in the first five months of this year. That represented a 250 percent increase over the same period a year ago. There were 274 individuals signed up under Act 22, he said, versus 112 in the same period in 2015.
Baco Bague, a member of the outgoing administration of Governor Alejandro Garcia Padilla, reiterated the stance that Puerto Rico should be given access to U.S. bankruptcy law to resolve its debt problems because the time for negotiations “has run down.”
“We can really get into a spiral and a humanitarian crisis if we permit this to go to the courts,” he said.
“The only ones benefiting would be the lawyers who are already filling our hotels and looking for clients in Puerto Rico. And that is what I do not want to see,” he said.
(Reporting By Daniel Bases; Editing by Bernard Orr)