Puerto Rico

Doubts about incentives bill for pharmaceutical manufacturing

Doubts about incentives bill for pharmaceutical manufacturing

Washington – The Resident Commissioner’s bill is the first step in Congress – amid the coronavirus emergency – towards attracting more pharmaceutical manufacturing companies to Puerto Rico, but industrial sectors believe it may be insufficient or untimely.

The Manufacturers Association President Carlos Rodríguez said yesterday that they do not believe that the incentives are sufficient to bring new manufacturing to Puerto Rico. He added that the bill needs work and they are willing to cooperate, stressing that it is necessary to thoroughly evaluate how it would affect manufacturing companies.

The Manufacturers Association hopes to present their alternatives no later than next week.

Meanwhile, the Private Alliance for the Economic Development of Puerto Rico considered that Commissioner Jennifer González’s bill promotes a debate that should take place after the United States issues an order to manufacture products for the national medical supplies chain on U.S. soil.

“The first thing is to achieve an order or legislation so that critical manufacturing – as a matter of national security – returns to the United States. That immediately bounces back to Puerto Rico,” said Rodrigo Masses, president of the Private Alliance for the Economic Development of Puerto Rico.

Both the White House and congressional leadership are considering pushing for the United States – after the coronavirus experience – to be less dependent on the manufacturing of pharmaceutical products that its companies produce in countries such as China and India.

Commissioner González introduced Sunday a bill proposing tax credits to manufacturing companies that establish themselves in economically distressed areas, with 35 percent of their population under federal poverty levels, which would probably apply to almost all of Puerto Rico.

The bill seeks to grant a 50 percent federal credit for salaries, investments, and purchases made to companies based outside the U.S. that relocate pharmaceutical manufacturing, drug products, or medical equipment essential to maintaining a robust strategic national stockpile,” to an economically distressed area.

Although the legislation does not seek to benefit only Puerto Rico, according to experts, it will be difficult to find another economically depressed area within the U.S. jurisdiction with the island’s experience in pharmaceutical production.

Rodríguez said it is “clever to use the mechanism of economically distressed areas.”

“It’s an interesting way to try to harmonize what was important for a group of politicians,” said economist José Caraballo Cueto, referring to the position of PNP lawmakers to reject proposals seeking to promote manufacturing that are not in line with the path towards statehood.

Masses indicated that the Commissioner’s bill is the proposal he promoted, with the approval of the Private Sector Coalition, so that former speaker Paul Ryan could include it in the 2017 federal tax reform, which finally did not happen.

“It’s a good bill, but you have to be careful,” Masses said.

For Masses, the same evaluation he is asking regarding González’ legislation should be given to former Governor Aníbal Acevedo Vilá’s proposal to reduce the intellectual property tax for foreign companies in Puerto Rico or to Congressman Chip Roy’s (Texas) possible bill to revive, in the Internal Revenue Code, a section that resembles the old Section 936, which exempted profits made by U.S. companies on the island from federal taxes.

Caraballo Cueto, a professor at the University of Puerto Rico’s Cayey Campus, said the election year – because of the political power of the diaspora – is the right time to push for a new incentive.

He indicated that any new incentive should be linked to the development of Puerto Rican businesses, research, and avoid “depending exclusively on these incentives for investment.”

“To start with, [Gonzalez’ bill] seems to be a step in the right direction. But, we have to design this intelligently,” added Caraballo Cueto.

Sources: metro.pr

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