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New law in Puerto Rico may discourage U.S. investment

Fred Schloth, assistant vice president of marketing for Sea Star Line, told LM that business has never been better, but he is concerned about the impact this may have on future bookings.
By Patrick Burnson, Executive Editor
November 09, 2010

Law 154, which imposes a discriminatory tax on multinational companies operating in Puerto Rico, may pose serious consequences for shippers, said The National Association of Manufacturers (NAM).

“We are alarmed by the actions taken by the Puerto Rican government to impose a new excise tax on multinational manufacturers,”  said NAM president and CEO John Engler. “Over the years, U.S.-based manufacturers have invested in Puerto Rico, most notably in the chemical, pharmaceutical and biotechnology industries.”

According to NAM, these shippers represent approximately 80 percent of all the manufacturing jobs in Puerto Rico and nearly 26 percent of Puerto Rico’s gross domestic product (GDP). 
“The imposition of this tax could jeopardize the jobs of over 100,000 people and could damage business relationships that have taken years to develop between the affected companies and the government of Puerto Rico,” added Engler.

Even more concerning, he said, is that this law was passed in a period of 48 hours with no public hearings.

“By increasing costs for these manufacturers, the Puerto Rican government is jeopardizing jobs and economic growth at a time when our global economy is struggling to recover from a crippling recession,” he said.
NAM said that U.S. manufacturers provide stable and high-paying jobs for Puerto Ricans.

“The Puerto Rican government’s decision to impose this discriminatory tax could profoundly impact companies as they consider both existing and future operations,” Engler said.

Fred Schloth, assistant vice president of marketing for Sea Star Line, told LM that business has never been better, but he is concerned about the impact this may have on future bookings.

“We feel that the law is simply a way for the Puerto Rican government to cover its shortfalls due to mismanagement,” he said. “We hope that the law will be reversed before it does too much damage to their economy.”

Sea Star Line has recently reinvested in its San Juan Port facilities with an all wheeled equipment fleet.

About the Author

Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).

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