From Caribbean Business

The Puerto Rico government is gearing up to host a summit for Latin American investors interested in tapping the island’s business potential through the federal EB-5 program.

The Puerto Rico Investment Summit-LATAM Edition is slated to held in San Juan on November 4. In April, the government hosted a Puerto Rico Investment Summit aimed at wealthy investors from the U.S. mainland, focusing on the Act 20 and Act 22 tax lures.

Department of Economic Development & Commerce Secretary Alberto Bacó said the upcoming summit is aimed at investors and businesses from Latin America seeking to expand into the U.S. market.

“Puerto Rico is a bridge with an ideal location, a bilingual population and a Latin culture,” he said. “The commonwealth also offers the security and stability of being under federal jurisdiction.”

In June, the Puerto Rico Legislature approved legislation week to create a new public corporation, the Puerto Rico Regional Center Corp., ascribed to the Economic Development & Commerce Department (DDEC by its Spanish acronym) that will seek foreign investment to back important infrastructure and economic-development projects through an innovative federal immigration program.

The EB-5 (Employment-Based, Fifth-Preference Category) Immigrant Investor Pilot Program, which began in 1992, grants U.S. residency to foreigners who make investments and create jobs in the U.S. Rural areas with low population density or depressed urban areas where the unemployment rate exceeds 150 percent of the national average can qualify to host EB-5 regional centers, which benefit from special preference for the 10,000 EB-5 visas granted annually and greater flexibility in meeting program requirements.

Within a regional center, foreign investors must invest at least $500,000 and their investment must create 10 or more direct or indirect jobs with an economic analysis to support the claims. So far, the U.S. Citizenship & Immigration Services has approved five regional centers for Puerto Rico.

Setting up centers, which can be done by government or private entities, is increasingly being used as an economic-development incentive by jurisdictions throughout the country as a way to promote themselves to attract investors.

All of Puerto Rico qualifies to host regional centers. The five private centers that have been approved by the federal government are being used to raise money for tourism and housing ventures, according to CARIBBEAN BUSINESS sources.

The public corporation established by the new law will still need to get approval from the federal government to set up an EB-5 regional center, a process that could take about six months.

“The development and financing of new projects is threatened by the lack of private capital and the difficulty in accessing capital markets,” the legislation states. “A regional center under the EB-5 program would help in filling this void and would provide very important assistance to the government and private businesses to make viable the development and financing of important projects for our island.”

Since the program was created in the U.S. in 2003, about $3 billion in foreign investment has been injected into the U.S. economy and some 95,000 jobs created. Most of the activity has taken place since 2008.

Puerto Rico will be among just a handful of places with a government-owned EB-5 regional center, with Vermont and Illinois having regional centers and the city of Miami recently approving legislation to establish one.

While Puerto Rico will have to compete against other U.S. jurisdictions for investment, the island’s tax advantages offer additional incentives for foreign investors.

Puerto Rico is expected to be a competitive destination to attract investors from Latin America, where recent volatility is making U.S. investments more attractive.

The legislation grants the new Regional Center Corp. the powers necessary to undertake investment transactions to create new business and industry, including making loans, issuing bonds, and investing in and providing subsidies to private entities.

Its board of directors will have seven members, including the DDEC secretary, who would serve as president; the AFI executive director; the Economic Development Bank president; the director of the Puerto Rico Industrial Development Co.; and the executive director of the Puerto Rico Tourism Co. The governor will also name two other board members (whose terms are for five years), who will have to win Senate confirmation. One must be a financial professional and the other must be recommended by private-sector groups, including the Chamber of Commerce, Home Builders Association, Manufacturers Association, Associated General Contractors and Economists Association.

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