Inversió estrangera directa (IED) a Puerto Rico

FDI in Figures

For more than half a century, the Puerto Rican government has pursued its principal objective of creating new jobs by attracting foreign investment through financial and fiscal incentives. Among the financial incentives offered are rental of public buildings at attractive rates, wage incentives, and access to financing through tax-free industrial bonds and direct loans. However, in the name of national security, the federal government limits foreign investment in transportation, utilities, banking, communication, finance, nuclear power, and defense. Puerto Rico is not included in UNCTAD's World Investment Report 2023. According to data from Invest Puerto Rico, in the fiscal year 2022/23, the island attracted new investments worth USD 416 million, up from USD 350 million one year earlier. Among the most significant investments made in Puerto Rico over the past few years are the investment of USD 30 million made by the German health-care company Fresenius Kabi, to expand its manufacturing complex in San Germán, modernizing and automating the plant to increase its capacity and competitiveness; and a USD 50 million investment made by another German corporation, the pharmaceutical giant Boehringer Ingelheim, also made to expand its manufacturing site in Puerto Rico. Furthermore, the burgeoning technology sector is further strengthened by the presence of prominent tech companies with established operations, including Honeywell and AWS.

The United States has created a variety of incentives for foreign investment in Puerto Rico, including tax incentives and exemptions, the use of U.S. currency, and government-backed start-up costs. The Puerto Rican government actively seeks FDI, mainly through financial and tax incentives, which include renting out public buildings at attractive rates, wage incentives, and access to financing through tax-exempted industrial bonds and direct loans, full or partial tax exemptions on income, property ownership, gross income of municipalities and construction, and excise taxes for certain agricultural activities. Additionally, the national investment promotion agency (Invest PR) provides aid for foreign investors who seek to invest in the country. Puerto Rico's attractiveness includes a skilled and relatively cheap labor force, excellent infrastructure, political stability, and a diversified economy. Also, as Puerto Rico is a U.S. territory, treaties signed by the U.S. government apply to the island as well. However, Puerto Rico is vulnerable to climatic factors, it has a high rate of poverty and unemployment, and a high level of bureaucracy.

What to consider if you invest in Puerto Rico

Strong Points

Puerto Rico's strong points in terms of attracting FDI include:

- bilingual and skilled labour force, which is less expensive than in the mainland United States;

- excellent communication network and infrastucture;

- the security and political stability of the U.S. judicial system;

- diversified economy, benefiting from its US founding.

Weak Points

The major obstacles to FDI in Puerto Rico include :

- vulnerability to climatic shoks (a huricane partially destroyed the island in 2015, strongly slowing down the economy);

- high external debt ;

- rather complicated administrative organisation, as a self-governing Commonwealth inside the US;

- high poverty and unemployment rates.

Government Measures to Motivate or Restrict FDI

For over half a century, the Puertorican government has been pursuing a policy of attracting foreign investment through financial and tax incentives, with job creation as its main goal. The financial incentives offered include renting out public buildings at attractive rates, wage incentives and access to financing through tax-exempted industrial bonds and direct loans .

Tax incentives include full or partial tax exemptions on income, property ownership, gross income of municipalities and construction, and excise taxes for certain agricultural activities; they also concern some manufacturing, tourism, film production and service industries (such as banking, finance, insurance, audit, IT, distribution and laboratories), if these services are rendered in Puerto Rico exclusively for non-residents and provided that 80% of employees are Puertorican residents.

Bilateral investment conventions signed by Puerto Rico

Since Puerto Rico is a U.S. territory, treaties signed by the U.S. government apply. The United States currently has 42 bilateral investment treaties in place. For more information, see this website.