The Weekly Journal - May 15, 2019 by El Vocero de Puerto Rico

Wednesday, May 15-21, 2019 - // no. 003

Puerto Rico and the Caribbean

www.theweeklyjournal.com

Business

PR Government showcases the Island to O-zone investors P8 Crypto Market Volatile, But ‘Here to Stay’ P6 Guidelines issued on Labor Legislation P10

lifestyle

‘David versus Goliath’

battle against Jones Act continues Puerto Rico loses latest round

W

>Gabriel López Albarrán

Rosario Fajardo

rfajardo@wjournal.com

@RosarioWJournal

hile the nearby Dominican Republic has benefited from importing liquefied-natural gas (LNG) from the U.S. mainland, Puerto Rico has been unable to take advantage of this opportunity because of the

La Perla After Despacito’s Hit P18

Jones Act. “LNG costs less and is cleaner than petroleum, and the Dominican Republic can get LNG directly from U.S.

ports on the Gulf Coast, but we can’t because of the Jones Act,” Puerto Rico Secretary of State Luis Rivera Marín said, as he lobbied against the 1920 law.

“The Dominican Republic has also benefited from buying cheaper energy through cheaper prices in the hotel and tourism industry,” he said, noting that electricity prices on the island remain quite high.

The average price of electricity in the U.S. is about 11 cents per kilowatt-hour (kWh), while in Puerto Rico it is around 20 cents per kWh, he GO TO PAGE 4

THE WEEKLY JOURNAL > WEDNESDAY, MAY 15, 2019 >

2

An organization is only as strong as its telecommunications provider That’s why so many businesses trust Claro, the leading provider in Puerto Rico, with their mobile telephony, internet and cloud services.

IMAGINE WHAT WE CAN DO FOR YOUR BUSINESS.

Claropr.com (787) 792 6262

The most powerful network

3

/ Wednesday, May 15, 2019

a week in review FEMA Failed in the Distribution of Blue Tarps in Puerto Rico, says OIG The Office of Inspector General’s (OIG) concluded that Federal Emergency Management Agency (FEMA) did not follow all procurement laws, regulations, and procedures when it awarded more than $30 million for two contracts to Bronze Star for tarps and plastic sheeting as part of its 2017 hurricane Maria response and recovery efforts in Puerto Rico.

According to OIG’s report, as a result of these management control weaknesses, delivery of supplies was delayed “and impeded Puerto Rican residents’ efforts to protect their homes and prevent further damage.”

“Overall, FEMA wasted personnel resources, time, and taxpayer money by issuing, canceling, and reissuing contracts for tarps,” the report added.

On December 5, 2017, the OIG received a request from U.S. Senators Elizabeth Warren, Robert Menendez, Richard Blumenthal, Tammy Baldwin, Catherine Cortez Masto, Richard J. Durbin, and Bernie Sanders to review the circumstances surrounding the award of the Bronze Star contracts.

After that, the OIG conducted an audit to determine whether FEMA followed procurement laws by awarding the tarp and plastic sheeting contracts to Bronze Star. >Courtesy of OIG

Gov. Rosselló Announces New Appointment to Head Labor Department Gov. Ricardo Rosselló announced Wednesday attorney Briseida Torres as the designated secretary of the Puerto Rico Labor Department. Torres Reyes’ nomination will now be considered by the Puerto Rico Senate. >Courtesy of La Fortaleza

Powered BY El Vocero de Puerto Rico, 1064 Ave Ponce de León 2nd floor San Juan, PR Postal Address: PO Box 15074, San Juan, PR 00902

Romark Global Pharma Expands Puerto Rico Operations with $80M Investment The pharmaceutical company, which develops small molecules for the treatment of infectious diseases and cancer as well as providing antiviral drugs, established its presence in Puerto Rico in 2014, when it announced an investment of $110 million. The company will create 200 new jobs. >Courtesy of DDEC

President Salvador Hasbún shasbun@elvocero.com

Human Resources Director Arlene Rolón, PHR arolon@elvocero.com

Managing Editor Yennifer Álvarez yalvarez@wjournalpr.com

Comptroller Félix A. Rosa frosa@elvocero.com

Traffic Director Ilia M. Pérez Centeno iperez@elvocero.com

Multi-Platform Digital Director Stephanie Gómez Álvarez sgomez@elvocero.com

Production Director Eligio Dekony edekony@elvocero.com

Editorial Director Juan Miguel Muñiz Guzmán jmuniz@elvocero.com

Multi-Platform Graphic Director Héctor L. Vázquez hvazquez@elvocero.com

Phone: 787-622-2300, 787-721-2300 Customer Service: 787-622-7480

4

/ Wednesday, May 15, 2019

FROM PAGE 1 indicated. “The Jones Act is a burden on our economy, lowers our competitiveness and dampens job creation.”

“We want to purchase LNG from the U.S. market, but the Jones Act makes prices high.

Instead, we have to buy from Trinidad & Tobago, Estonia and Russia,” Rivera added. “The U.S. public policy is to promote energy independence and Puerto Rico is part of the United States.”

The Jones Act, which is included in the U.S. Merchant Marine Act of 1920, requires that all cargo shipments between U.S. ports to be conducted on U.S.-flagged, U.S.-built and U.S.crewed ships. The Jones Act applies to Puerto Rico, Hawaii and Alaska, but the U.S. Virgin Islands is exempt.

Critics charge that U.S.-built and U.S.-crewed ships are more expensive than international ships, resulting in higher prices for consumers.

For example, they state that salaries for U.S. crews are significantly higher than those of their international counterparts. Defenders argue that the Jones Act has had little effect on the local The price of shipping cargo to Puerto Rico is $568.9 million higher, and prices are $1.1 billion higher than they economy and that Jones Act carriers are providing would be without the Jones Act limitations, according a study by John Dunham & Associates.> The Weekly Journal safe and quality service to the island.

The last time the federal government granted jobs in the energy sector as well as save Americans the United States become dependent on foreign a waiver was after Hurricane Maria devastated money. countries to transport energy and critical products Puerto Rico in Sept. 2017. President Trump issued “Furthermore, and perhaps most notably, the within the United States. The Jones Act is essential a 10-day waiver, which resulted in 10 additional waiver would not have cost one single job in the to preserve our domestic shipping industry and cargo ships bring much-need relief supplies to the U.S. maritime sector. No U.S.-flag LNG carriers protect our national and economic security,” island. would have been put out by the waiver as none Cassidy said afterwards.

Rivera highlighted the need for Puerto Rico exist, nor are any being built by the few remaining A long-term waiver to receive a 10-year would have threatened major U.S. shipyards,” he said.

Jones Act waiver on thousands of maritime LNG shipments to the jobs in Louisiana, Competing Studies island. Northeastern echoed fellow U.S. Sen. For years, a number of studies have argued the states, such as John Neely Kennedy case for and against the Jones Act. Massachusetts, were (R-La.), saying that the A 2018 study commissioned by the American also clamoring for the Jones Act supports Maritime Partnership concluded that the Jones Act waiver. Opponents 71,000 jobs in his has had a zero percent impact on consumers in of the cabotage law state.

Puerto Rico. argue that there are “Louisiana is the “The retail prices of goods in Puerto Rico are no Jones Act-compliant greatest beneficiary essentially the same as on the mainland, and ships that can of the Jones Act with freight rates for shipments between the mainland transport LNG from thousands of jobs and Puerto Rico are very similar or lower than the Gulf Coast to New that depend on it. Our rates for shipping between CONUS [continental — Anne Krueger, senior England, so many gas maritime industry is research professor of International suppliers in the region part of the lifeblood Economics, Johns Hopkins University have had to buy the of Louisiana and the product from Russia.

Gulf Coast economy,”

Studies show that it costs about three times more to operate Jones Act ships than international ones and building Jones Act ships in the U.S. costs six times more than doing so internationally

Puerto Rico Loses Latest Round

However, calls for the LNG waiver were apparently to no avail as the powerful shipbuilding industry and their allies in Gulf Coast states reportedly convinced President Trump to scuttle the idea. Media reports had indicated Trump was amenable to the waiver, but after meeting with various U.S. senators and representatives, he was convinced otherwise.

U.S. Sen. Bill Cassidy, (R-La.), who attended the meeting with Trump, lobbied on behalf of Louisiana shipbuilders and maritime workers. “We cannot let

said Sen. Kennedy.

“It would be foolish to push aside those jobs in favor of foreign made and foreign crewed ships,” Kennedy said.

No one said it would be easy to reform the Jones Act, said Colin Grabow, a policy analyst at the Cato Institute.

“If granted, the Jones Act waiver would have allowed Americans in New England and Puerto Rico to obtain bulk amounts of cheap LNG shipped in from other parts of the United States. Such a move would bolster the number of well-paid

CONFLICTING DATA ABOUT THE

5

/ Wednesday, May 15, 2019

sponsored by U.S.] and neighboring islands of Puerto Rico, such as the U.S. Virgin Islands, Haiti, and the Dominican Republic,” stated the study by Reeves & Associates and Estudios Técnicos.

Meanwhile, two 2019 studies commissioned by the Chamber of Food Marketing, Industry & Distribution argued otherwise.

“The price of shipping cargo to Puerto Rico is $568.9 million higher, and prices are $1.1 billion higher than they would be without the Jones Act limitations. This is equal to nearly $375 per resident,” said a study by John Dunham & Associates.

“If this is the case, Puerto Rico has 13,250 fewer jobs than it would have were there a free market for ocean freight. These jobs would pay residents $337.3 million more in wages, and would result in over $1.5 billion in increased economic activity.

Overall tax revenues would be $106.4 million higher were the island be exempted from the Jones Act’s provisions,” said the report.

Another study by Advantage Business Consulting focused on the food industry and concluded that the Jones Act amounts to a 7.2 percent tax on food and beverages alone, which totals $367 million that local residents must pay.

Based on this calculation, families in Puerto Rico pay $300 more a year for food and beverages because of the cabotage law.

During a recent forum on the Jones Act at the Cato Institute, some people in the audience questioned the reliability of a recent study on the impact of the Jones Act on Puerto Rico.

According to an unidentified man, a study by New York-based John Dunham & Associates greatly miscalculated the nautical miles between several international ports and San Juan, resulting in flawed data. “The distance between Busan [in South Korea] to San Juan is about 9,100 nautical miles, not the 15,000 [stated] in the study,” the audience member said, adding that the Dunham study was not reliable.

After several minutes of back-and-forth exchanges between Dunham and the unidentified man, Dunham replied tersely, “well, you can do your own study.”

Economist Anne Krueger called for the “outdated” Jones Act to be repealed, saying it

had long outlived its usefulness. “The Jones Act has been detrimental to Puerto Rico, Hawaii and Alaska,” she said, noting that studies show it costs three times as much to operate Jones Act ships than their international counterparts and that it costs six times as much to build a ship in the mainland U.S. than internationally.

“The Jones Act 100-year anniversary is coming up. This would be a great time to repeal the law,” she added.

7.2 PERCENT TAX $300 more On food and beverages alone

Families in Puerto Rico pay a year for food and beverages because of the cabotage law Source: Advantage Business Consulting

vs.

The Jones Act has a 0% IMPACT on consumers Retail prices are the same locally as in mainland U.S. Source: Reeves & Associates and Estudos Técnicos

Impact of the U.S. Jones Act on Puerto Rican Families

6

/ Wednesday, May 15, 2019

The cryptocurrency market is “very volatile.” Many investors in the crypto community are expecting a comeback.

Cryptocurrency frenzy’s down, but investors still moving to Puerto Rico Crypto market is volatile, but ‘here to stay’

T Rosario Fajardo

rfajardo@wjournal.com

@RosarioWJournal

he cryptocurrency craze that hit Puerto Rico last year—with many investors flocking to Puerto Rico in droves—may be over, but the tax incentives under Acts 20/22 continue to lure some to the “Isla del Encanto.”

“Dozens left when the crypto market went down by about 90 percent last year, and a few withdrew their Act 22 decree applications,” said attorney Giovanni Méndez of Global Economic Optimization,

whose clients include crypto investors. “But was this really the time to leave or actually to come in?” he asked rhetorically.

Méndez noted that while the cryptocurrency market is “very volatile,” many investors in the crypto community are expecting a comeback.

When that happens, he predicts, there will be an increase in crypto investors returning to Puerto Rico.

The latest government figures show there are more than 3,000 Act 20/22 beneficiaries on the island, and of these, more than 200 have crypto decrees. Most are Act 22 beneficiaries, but some also have companies under Act 20 that are related

to the crypto space, Méndez said.

Today, the total market capitalization of the cryptocurrency (i.e. digital currency) market is about $180 billion, a huge drop from more than $800 billion in Jan. 2018, he pointed out. “All the frenzy happened around March [2018], but the market was already coming down for the main players.”

“The returns in less than two years were more than huge… you are talking about people who went from $80,000 to $10 million,” Méndez said.

No wonder the tax benefits of Act 20/22 are such a big lure for crypto investors, particularly Act 22’s zero percent tax rate on dividend and interest

/ Wednesday, May 15, 2019

7

income for bona fide Puerto Rico residents. here, and the starting salaries are high.” in a statement.

The market has bounced back nicely, but there This is a clear positive for Puerto Rico, he added.

SJMBT is reportedly one of the first institutions is still a long way to go from the unbelievable “College students are getting training and an of its kind to give customers the ability to hold peak, Méndez indicated. Today, Bitcoin is at opportunity for employment that pays competitive and manage both “fiat” currency and digital assets $5,500 or so, from an all-time high of $19,000 salaries. Crypto investors are bringing in new on a single integrated platform. Fiat currency is more than a year ago. In May 2017, Bitcoin was at groundbreaking technology to Puerto Rico and any currency, like the U.S. dollar and the British $900, he said. expanding job opportunities for the labor pool.” pound sterling, that is declared legal tender by a CPA Isabel Hernández, of Kevane Grant According to Slazas, he has helped bring in government.

Thornton, said crypto about 10 crypto “Commencing SJMBT banking operations investors and other Act investors over the is a significant milestone. Institutional market 20/22 decree holders past year and from a participants in the digital asset space now are helping Puerto trading perspective, have access to a licensed, fully regulated and Rico become a leader he said the SJMX going operational banking partner that provides a secure in both export services on line is a positive environment for the matching and settlement of and technology. “If development. “There digital asset trades,” said Nick Varelakis, president you can do consulting were regulatory and COO of SJMBT. “As more liquidity venues -Crypto investor Drew Cutkomp, chief services… and trade concerns and [SJMX] onboard with SJMX to trade digital assets, SJMBT visionary officer of Golden Rule Supply from California and is very important will provide critical services, such as real-time Texas, you can do it for what the market settlement and account re-balancing, in support of remotely too from Old needs. It is an our customers’ trading activities.”

San Juan, Condado and Dorado,” she said. opportunity for Puerto Rico as an experiment to “We have been so focused on manufacturing address U.S. regulations,” he said.

Here to Stay jobs, but that has to change to a different mindset, When the frenzy started, New Progressive to be an entrepreneur. The great advantage of A New Digital Bank Party Rep. Eddie Charbonier Chinea filed House these tax incentives is the talent coming in… that Slazas was referring to the recent opening of Resolution 829 to investigate “blockchain” we are bringing in people who are knowledgeable the San Juan Mercantile Bank & Trust International technology and how to implement it on the island. about this new technology,” she added.

(SJMBT), which announced earlier this month that The bill was referred to the House Committee on it had received its first client deposit and began Consumer Affairs, Banking and Insurance, where Positive Outlook operations, following the bank’s receipt of its it has remained since April 2018. A blockchain “The market has rebounded and the tax license to operate from Puerto Rico’s Office of the is a secure digital ledger that is used to record incentives are still here,” said crypto investor Commissioner of Financial Institutions. transactions and is the basis for digital currencies Drew Cutkomp, chief visionary officer of Golden “SJMBT offers fiat and digital asset custody like Bitcoin.

Rule Supply, during a recent investment forum on and settlement services, and it is expected to be However, the lack of a legal framework in Puerto Puerto Rico sponsored by real-estate investment integrated with the trading platforms offered by Rico has not been an impediment to the industry, firm Lifeafar. its affiliate, the San Juan Mercantile Exchange as various federal regulations do exist. Regardless, “There are a lot of positives here,” he added, (SJMX). Together, SJMX and SJMBT will provide an the Puerto Rico government has established noting the tropical climate, the culture and people integrated end-to-end solution for institutional a blockchain advisory council to promote the of Puerto Rico. “I’ve gotten pushback from only customers seeking a familiar, efficient and secure industry. about 2 percent of the population. This isn’t “Coming from San Francisco, which is a big place way to trade digital currencies,” said the company about a ‘taking’ mentality. We for tech, people here are accessible. It’s are reinvesting. You have to be easy to talk to them. We can keep the ecosystem going,” said Jamie Shiller, respectful and you have to know founder of Cryptx Labs. He moved to their culture,” said the Act 20/22 Puerto Rico after attending a crypto decree holder. conference on the island last year, as As an example, fellow did Cutkomp. “The tax benefits are a crypto investor James Slazas, great plus,” Shiller said. the founder of Darma Capital, Méndez said crypto investors said that he is part of an have received mixed coverage from initiative that has bought and the local and stateside media, while is refurbishing a building in some locals are not happy about Santurce that will be developed the island becoming a tax haven for as a business incubator. Other the rich.

“The New York Times article crypto investors have also made didn’t help,” he said with a shake real-estate investments in Puerto of his head.

That article gave a less Rico and opened a café in Old than stellar portrayal of the crypto San Juan. community in Old San Juan and ConsenSys, a global featured several colorful characters, blockchain-technology company, such as former child actor Brock also teamed up with the Pierce, who was leading a movement Puerto Rico Science Trust and to create a crypto utopia in Puerto sponsored scholarships for Rico. college students on how to be “Crypto is new everywhere and we blockchain programmers. “They are becoming a hub, slowly. Crypto is have done one round and they here to stay and I expect the market are going to do a second one,” to recoup and surpass its previous Méndez said. “This is a way of highs,” Méndez said. giving back to the community.

Crypto investor Drew Cutkomp, chief visionary officer of Golden Rule Supply.>Gabriel They are training and hiring from López Albarrán.

We shall have to wait and see.

The market has rebounded and the tax incentives are still here

8

/ Wednesday, May 15, 2019

Puerto Rico Starts its Pitches for Opportunity Zones Las Vegas and San Juan held summits; Puerto Rico promotes its advantages

H Yennifer Álvarez

yalvarez@wjournal.com

@yalvarezjaimes

undreds of national and international investors listened past week in Las Vegas and yesterday in San Juan about the island’s advantages for the development of Opportunity Zones projects.

The U.S. Treasury Department anticipates that $100 billion in private capital will be dedicated towards creating jobs and economic development in Opportunity Zone (OZone) projects, and Puerto Rico government hopes at least $600 million will be directed locally.

Gerardo Portela, Puerto Rico’s first-ever Chief Investment Officer, along with Gov. Ricardo Rosselló during the Gerardo Portela, Puerto Rico’s first-ever Chief First Summit of Zones of Opportunity held at the Puerto Rico Convention Center. >Gabriel López Albarrán Investment Officer, went to the OZ Expo in Las Vegas last Friday –the largest conference for earned in a Qualified Opportunity Fund.

Opportunity Zones– to highlight that Puerto Rico “From now on, Puerto Rico will benefit from “Opportunity Zones will be a ‘game changing’ is more than 97 percent the Puerto Rico economic development catalyst and we will use OZone qualified.

Economic Development this mechanism to change our current paradigm Also, the Government Opportunity Zones Act. and revitalize Puerto Rico,” Portela pointed out. of Puerto Rico held This statute makes us “Puerto Rico is an American territory that has yesterday the First the best place in the a largely bilingual and highly qualified workforce Summit of Zones of Nation to invest. This for jobs in various industries and economic areas, Opportunity at the will promote millionaire • A 18.5% tax on the net income of an exempt so this law facilitates citizens’ access to these Puerto Rico Convention investment and the business important areas,” the Chief Investment Officer Center with the creation of thousands of • Dividend tax exemption added. attendance of Daniel new jobs.

But above all • 25% exemption from patents and property The Opportunity Zones, created under Kowalski and Bradley taxes this measure will have federal law, provide tax benefits to low-income • 25% exemption from construction taxes Wendt, advisors to a significant impact on communities in order to achieve their economic • Maximum investment credit of 25%, the Secretary of the the recovery of Puerto transferable development. Puerto Rico, as well as several other Federal Treasury; Rico after the onslaught • A credit preference system for priority projects jurisdictions in the United States, must comply Denise Cleveland, of Hurricane Maria. in Opportunity Zones with certain population and economic criteria in regional administrator Today we are not only • Capital gains tax deferral for profits invested order to obtain the many and important benefits of Housing and Urban advancing toward a in a qualified opportunity fund on the Island provided by this law.

Development; several fairer society, but we under rules similar to those passed in federal As a result of intense lobbying by resident bankers and other are providing access to legislation experts in tax laws and • Tax exemption for interest earned on loans to capital in different areas commissioner Jenniffer González, and former Puerto Rico Federal Affairs Administration exempt businesses investments. that will allow Puerto executive director Carlos Mercader, 97% of the • Agile procedure for the evaluation and issuance During his remarks, Rico to be even more of permits for exempt businesses and projects Island was designated as an Opportunity Zone, Gov. Ricardo Rosselló competitive,” Rosselló encompassing all low-income communities signed Puerto Rico said. in Puerto Rico, which makes the island more Senate Bill 1147, which Under the attractive in the investment field. establishes the regulatory framework for the Opportunity Zone To achieve the economic development provided development of Opportunity Zones in compliance program, investors may defer capital gains tax on under this law, it proposes an incentive framework with the 2017 Federal Tax Reform (Tax Cuts and the sale of an asset, carried out prior to January 1, for a 15-year period.

Jobs Act of 2017).

2027, if they invest an amount equal to the profits

Key Aspects

of Opportunity Zones:

9

< THE WEEKLY JOURNAL > WEDNESDAY, MAY 15, 2019

10

/ Wednesday, May 15, 2019

Saavedra:

Labor

Reform Goes Beyond

Job Numbers Ease of doing business, a main raison d’être

W Rosario Fajardo

rfajardo@wjournal.com

@RosarioWJournal

ith just days to go before he fully stepped down from heading the Labor Department and taking on his new role as the Puerto Rico government’s general counsel at La Fortaleza, Carlos Saavedra said labor reform was necessary to improve the ease of doing business and establish certainty in labor laws.

“The jury is still out on labor reform, but you can’t judge it in two years. There’s also the huge impact of what happened with Hurricane Maria,” noted the outgoing Labor Secretary in an interview with THE WEEKLY JOURNAL. Aware of the criticism, that labor reform has not produced the job numbers that supporters predicted would occur, he said the benefits go beyond the numbers. “We stand by everything we said before about labor reform, but it is not a magic bullet. It is one piece of the puzzle, and remember that this isn’t just about numbers. It is also a paradigm shift,” Saavedera said.

“Critics said many private employers would fire and rehire employees to take advantage of the changes. That did not happen,” he said.

“We only received three complaints and all were investigated. None of the companies were found

In February, Gov. Ricardo Rosselló named Carlos Saavedra to be La Fortaleza Legal Adviser. > Josian Bruno

jobs and another 28 percent, or 281,000, were to have substituted employees [because of the part-time jobs. new regulations].”

In March 2019, there were 968,000 full time and At the same time, Saavedra said Puerto Rico part-time jobs in Puerto Rico. Of these, about 76 is still in the midst of recovering from Hurricane percent, or nearly 736,000 jobs were full time, and Maria’s devastation in Sept. 2017, in which many businesses were unable to operate for months due the other 24 percent, or some 232,000 jobs, were part time. to a lack of electricity or damages to their facilities.

Economists generally favor the BLS As a result, many jobs were lost, leading to more Establishment Survey because it uses data based outmigration to the mainland U.S. on payroll data, but After the storm, the Establishment Puerto Rico lost Survey does not between 35,000 and differentiate between 40,000 jobs, according full time and part-time to government figures, jobs. which Saavedra said “Part-time jobs practically equaled the are seasonal and total jobs lost on the you see increases island during 2009during Christmas and 2010. summer,” Saavedra —Former Labor Secretary Still, he said said, pointing out Carlos Saavedra most of the federal the regular ups and reconstruction funds downs in part-time job have not been flowing numbers. “At the same time, the labor market is in, but construction jobs are already increasing, changing and self-employment is the new reality.” while tourism has rebounded, and tax collections In February, Gov. Ricardo Rosselló named and car sales are up. Hence, economic activity is on Saavedra to be La Fortaleza Legal Adviser. the upswing.

Saavedra has been in the process of transitioning But employment figures clearly show that full time to La Fortaleza and expects his final day Puerto Rico has not fully rebounded from Maria. at the Labor Department to be in mid-May. In the In March 2017, before Hurricane Maria, there meantime, the governor has nominated attorney were just over 1 million full time and part-time jobs in Puerto Rico, according to the U.S. Bureau of Briseida Torres to head the agency. Torres, who currently works at O’Neill & Borges, received her Labor Statistics (BLS) Household Survey. Of these, law degree from the University of Puerto Rico. about 72 percent, or nearly 723,000 were full-time

Some of the labor regulations were so outdated. For example, lunch hours for sugar-cane workers was still in the books.

11

/ Wednesday, May 15, 2019

Official Guidelines are Ready

Saavedra also said the last step in the labor reform process has been completed with the publication of the official guidelines on interpreting labor legislation.

“Everything has been compiled into one document and includes everything on Act 80 [unjustified dismissals], vacation, salaries, sick days, everything. This will be available to the general public on our website to ensure access, clarity and uniformity,” he said.

For investors, the document notes that federal law is applicable in Puerto Rico and that all local legislation must be consonant with federal regulations. “Puerto Rico is not a foreign jurisdiction,” he emphasized.

Labor Reform in a Nutshell

While the private sector often stated that previous labor laws were pro-employee, critics of labor reform said many of the changes are proemployer.

Saavedra said he did not want to enter that debate, saying labor reform is about a “different vision” to reduce bureaucracy, overhaul labor regulations, promote job growth and economic development. “For example, look at the new flextime regulations. That was changed to eliminate bureaucracy because the inability to

work flextime was affecting the job market. Millennials want flextime, they want to be able to work remotely, from home, on weekends.

Some want to be able to have four-day weeks,” he said.

Labor reform is also related to the ease of doing business and in that sense, the Labor Department has taken about 47 percent of outdated regulations off the books, he said. “We’re talking about hundreds that date back to 50 or 60 years ago. There was even one regulation from the 1940s on > Source: Bureau of Labor Statistics hiring women to work after 10 p.m.,” Saavedra said.

Sick leave was not grandfathered. Today, The Labor Transformation and Flexibility Act employees accumulate one day a month, provided of 2017, widely known as Labor Reform, included that he/she works at least 130 hours during that major changes to the Christmas bonus, vacation month. Previously, the worker had to work a and sick leave, probationary periods, flextime minimum 115 hours a month to accrue sick leave. schedules, overtime, unjustified dismissals and the In terms of vacation, accumulated days now Closing Law, among others. depend on years of service. During the first year, The majority of the changes apply to new hires. an employee gets six days a year, or 0.5 days For example, the mandatory Christmas bonus was a month. More vacation days are accrued as reduced from 6 percent of total salary to 2 percent, the person gains seniority. Previously, workers with caps set in place.

received 1.25 days of vacation per month.

Your lifestyle deserves to GO BEYOND.

Get to the level you deserve with the exclusive benefits from our Beyond Ultimate credit card.

0

Purchases and balance transfers must be made during the first 6 months after opening the account.

APR on purchases and % introductory balance transfers for the first 15

months after opening your account.

Afterwards, your APR will be

13.00% - 26.75%

1

Free Rewards Program that allows you to earn 2 points for each $1 spent on purchases.2

0

$

introductory annual fee1

Exclusive Services3: • Priority PassTM Airport Lounge Access • Personal Concierge Service • Travel and car rental insurance

Apply Today! 787.827.5382 Member FDIC. Subject to credit approval. Certain restrictions apply. 1. Offer will be valid until July 31, 2019, and is only available for new accounts. It may not be applied in combination with other offers. Introductory APR of 0% for the first 15 months after opening your account for purchases and balance transfers made during the first 6 months after opening the account. After the introductory period, your APR will be 13.00% to 26.75%, based on your creditworthiness at the time you opened your account. The APR for Cash Advances will be 19.50% to 26.75%, based on your creditworthiness at the time you opened your account. These APRs may vary with the market, based on the Prime Rate. Penalty APR of 29.99%. $0 Introductory Annual Fee for the first 12 months. After the introductory period, the Annual Fee will be $150. Minimum Interest Charge: If you are charged interest, the charge will be no less than $1.50. Balance Transfers, Cash Advance and Convenience Checks: 2% of the amount of each transaction with a $2.00 minimum and $10.00 maximum, for each one. Transaction fees for any transaction made in foreign currency or for any transactions made in US dollars processed outside the United States will be of 1.40% of each transaction in US dollars for Mastercard and 1.00% for Visa. This fee will be applied in addition to any other applicable fees. Subject to credit approval, and certain restrictions apply. The account must remain in good standing and be opened during the valid term of the offer in order to obtain these benefits. The introductory offer for balance transfers is subject to availability of funds in your credit line and cannot be used to pay, in full or partially, any debt with FirstBank. There are no grace periods on balance transfers. 2. Visit http://www.rewardsfirstbank.com for rewards program details. 3. The insurance products offered by FirstBank Insurance

Agency LLC. do not represent a bank deposit, are not insured by the FDIC or by any other federal government agency, nor by FirstBank Puerto Rico, or any of its subsidiaries. Obtaining this insurance is optional and is not a condition to determine credit approval.

Priority Pass is an independent access program for participating VIP airport lounges.

12

/ Wednesday, May 15, 2019

Popular, Inc CEO:

“Not everything can be a

priority”

Ignacio Álvarez also urged the government and the federal board to work together and stop bickering publicly

I

Cynthia López

clopez@wjournal.com

@cynthia_lope

nstead of spreading too thin, the government should allocate its resources in three main areas: education, health, and public safety, according to Ignacio Álvarez, President and Chief Executive Officer of Popular, Inc. “Not everything can be a priority,” the head of the largest bank on the island pointed out.

“You have to have three or four priorities. In Puerto Rico, we should aspire to have a smaller public service, better compensated, and better trained for the demands of the future.”

Speaking to journalists during a roundtable convened by the institution as an effort to enhance community relationships, the lawyer candidly delved into complicated subjects like the Fiscal Oversight and Management Board (FOMB), government bureaucracy, the reconstruction process after Maria, and the generalized poor image that haunts the banking sector.

“Nobody can think that what a teacher or a police officer earns is fair,” he highlighted as an example of the public policy adjustments needed for the country to move forward.

The average salary of a cop is approximately $26,400 annually, while a teacher earns $27,000,

Popular Inc. President and Chief Executive Officer Ignacio Álvarez. >Courtesy Popular Inc.

half the average public school teacher salary in the it can leave as soon as possible,” he insisted.

United States.

During the two-hour conversation, Álvarez As he dug deeper into the subject of education, recognized that the government bankruptcy and Álvarez insisted that the government has to the delay in the federal aid have cast a veil of guarantee a good public school system, at all uncertainty over the island. Local inversions are levels. more cautious, he said. But that ambivalence has “I did not say free (college tuition),” he clarified not deterred investment in Puerto Rico since other when asked if he was talking about higher mitigating conditions education. were flourishing like While he favored the Opportunity Zones government shrinking and the eventual in some areas, Álvarez influx of money into rejected the idea to the economy for eliminate some of the reconstruction efforts 78 municipalities, a in the aftermath of proposition debated Hurricane Maria. publicly amid the “We receive island’s inability to pay investors on a daily off its $70 billion-plus basis, especially from debt load. Rather, -Ignacio Álvarez, the United States, he supported an President & CEO Popular, Inc. asking about Puerto initiative to consolidate Rico,” he revealed. municipal services and better management The Tolling Agreement practices.

Eight days after Puerto Rico’s federal oversight “We have too many (municipalities), but I don’t board sued 20 banks over fees tied to the think we should only have 10 or 12... One of the government debt it claims illegally, Álvarez most efficient countries in the world is Switzerland confirmed that the institution signed a tolling and it has local cantons,” he said. agreement to extend the statute of limitations Álvarez refused to grade the FOMB’s and avoid -for now- a lawsuit over its role as an performance even though he disagrees with some underwriter of a $3.5 billion emission of bonds in of its positions, but he did urge the government 2014. and the federal board to work together and stop “Yes, we signed a tolling agreement,” he said. bickering publicly.

“We are not included in the lawsuit yet because we “The board is a reality... we have to learn how to live with it. In my opinion, we should work hard so signed the tolling agreement.”

In Puerto Rico, we should aspire to have a smaller public service, better compensated, and better trained for the demands of the future

13

< THE WEEKLY JOURNAL > WEDNESDAY, MAY 15, 2019

14

/ Wednesday, May 15, 2019

Liberty Puerto Rico reports strong growth,

adds 22,000 new subscribers in Q1 2019 Invested about $300 million on the island since Hurricane Maria

L Rosario Fajardo

rfajardo@wjournal.com

@RosarioWJournal

iberty Puerto Rico is continuing its “strong performance” on the island, adding 22,000 revenue generating units, or new subscribers, in the first quarter of 2019, across all its internet, video and mobile products, led by

broadband.

The company has also expanded its footprint with over 5,000 new home subscribers passed.

Liberty Puerto Rico’s revenue increased by $37 million to $99 million, driven by the favorable comparison against the prior-year quarter resulting from the recovery following the 2017 hurricanes.

“There was no doubt that we would reinvest in Puerto Rico after Hurricane Maria,” said Liberty Latin America CEO Balan Nair during a round-table discussion with reporters.

With an investment of some $300 million, he said “it was the smartest thing we ever did.

We outperformed expectations and did even better than in Chile, Costa Rica and Panama. Puerto Rico’s performance was on top.”

The $300 million figure includes capital investments to rebuild infrastructure and provide more resiliency and capability. president and CEO of Liberty Puerto Rico The island’s demographic trends remain an important factor in Liberty’s plans for the future, but Nair said the continuing population drop was taken into account, even before the onslaught of Maria. “The products

we have are getting better, with better speeds, technology and video. We are offering good value and great products. We don’t see Puerto Rico as a declining market but rather a growing market,” he said.

Naji Khoury, president and CEO of Liberty Puerto Rico, said there is certainly room for growth, particularly in broadband, as about 40 percent of homes on the island are not connected to the internet.

Broadband speeds will continue to increase, Naji Khoury, president and CEO of Liberty Puerto Rico along Balan Nair, CEO of while the company is Liberty Latin America. >Courtesy Liberty providing more quality content, aware that Khoury said the company is working on a “next customer patterns have changed. generation” version of Liberty Go, which could be Today, for example, more people are using released this year. mobile for their Internet connection and “While 2018 was about recovery, 2019 is about downloading and streaming more content. Khoury moving forward. The work we put into upgrading said Puerto Rico consumer behavior is in line and improving our network is paying off, with with that of the mainland U.S., as the average growing subscriber numbers and recognitions such person consumes 220 as the Ookla’s Speedtest Award, which we received gigabytes per month. for a second year in a row,” said Khoury said. “We “That is massive are concentrating on expanding our coverage on and it’s not going to the island and continue upgrading our network stop. Our plan for so we can continue offering the most advanced the future is based technology and entertainment products.” on that consumption With regard to demographics, the island’s continuing to go up, population isn’t just dropping, but it is also aging, so we also have to as there are more senior citizens now than children provide high-quality content,” he explained. under five years old. Liberty is also aware of this issue and the fact that many elderly residents are To that end, the on fixed incomes. “They don’t want to pay more Liberty Go app was —Naji Khoury, and with these demographic changes, customers launched in Puerto are price sensitive and value sensitive,” Nair said.

Rico for its cable He noted that there must be a balance between subscribers, expanding prices with value and service. “The days when we its “on demand” could pass on costs by increasing prices are gone. platform—rather than linear—and allowing clients We can’t raise prices, understanding that we just to watch content anywhere, on any device such as got through a hurricane. We have to live within our mobiles, tablets and computers. Liberty Go now own means too,” Nair concluded. features 61 channels.

While 2018 was about recovery, 2019 is about moving forward.

The work we put into upgrading and improving our network is paying off, with growing subscriber numbers

15

/ Wednesday, May 15, 2019

Green Businesses Key to Puerto Rico’s

Economic Development Tax incentives granted to applicable entities

L

Giovanna Garofalo

ggarofalo@wjournal.com

@giopgarofalo

ess than three weeks after Gov. Ricardo Rosselló signed the Puerto Rico Energy Public Policy Act, members of the public and private sectors convened to discuss the path toward sustainable economic development.

The Department of Economic Development and Commerce (DDEC, by its Spanish acronym) Secretary Manuel Laboy stated that his agency is working conjointly with the Department of Natural and Environmental Resources and nonprofit InvestPR to promote the island as a profitable investment jurisdiction and to stimulate ecoconscious businesses.

“We can protect the environment and our natural resources, and ensure that they are available for future generations, while achieving economic growth, job creations, and prosperity,” Laboy affirmed.

Michael Laas, founding member of Sustainable Futures Group, emphasized that the key for green businesses to generate impact is to build infrastructural and community resilience.

Laas indicated that the principles for building resilience are understanding vulnerabilities, strengthening job and housing choices, promoting

equity, leveraging community assets, redefining how and where to build, building the business case, accurately pricing the cost of inaction, designing with natural systems, maximizing cobenefits, and harnessing IT. This is all narrowed to environmental, social and governance (ESG).

According to Laas, good ESG performance results in a 90 percent lower cost of capital, 88 percent better operational performance, 80 percent better stock performance, and 7 percent higher returns on equity (ROE).

“Investors are listening,” he added. Twenty-five percent of assets under management fall into the category of Sustainable Investments. Also, the green industry is projected to experience growth over the next decade to $250 billion.

Renewable Energy a Must

Roughly 70 percent of Puerto Rico’s energy is generated from petroleum. Apart from its harmful effects on the environment, the island’s current energy system has proven to be unable to withstand the impact of harsh weather phenomena.

The Public-Private Partnerships Authority (P3), headed by Omar Marrero, is expected to seal the deal on two energy-centered projects.

Under the first P3, the selected consortium will install a “black start” energy storage system.

Meanwhile, the other P3 will assume the task of transmitting and distributing energy, currently delivered by the P.R. Electric Power Authority.

While these projects are expected to alleviate

government spending on the sector and, according to Marrero, should lead to efficient energy administration, they do not address the island’s disadvantage in renewable energy generation.

As such, the Puerto Rico Public Energy Policy Act aims to further commercialize the island’s energy generation to reduce rates, ensure availability of energy supply, convert public lighting to LED and implement renewable energy mechanisms. It also establishes fines to entities that fail to comply with directives issued to electric service companies.

The goal is for Puerto Rico to have 100 percent renewable energy by 2050—an objective that has been praised by international media.

However, the DDEC secretary urged to look at sustainable options beyond energy generation. He stressed that the lack of collective transportation is an opportunity for investment in Puerto Rico.

“If we really want to achieve sustainability, we have to bet on collective transportation that reduces carbon footprint,” he said.

Tax Incentives for Green Businesses

The Puerto Rico Green Energy Incentives Act (Act No. 83-2010), as amended, states that elevated energy costs take a toll on residents’ quality of life, and it also hinders Puerto Rico’s economic competitiveness because it increases the cost of doing business.

In order to encourage businesses to adopt ecofriendly operations, the Act provides that, under the Green Energy Fund, the government can grant incentives, contracts, loans, investment tools, energy production credits, and financial assistance to eligible entities.

As stated, the administration will provide a max 60 percent incentive per production unit in a smallscale green energy project, “equal to the amount that results from multiplying the reference cost by watt of the technology used by the production unit, by the installed capacity of the concerning production unit, by the partial reimbursement percentage.”

Moreover, “an incentive will be granted per unit of production in a green energy project on a medium scale equal to the amount that results from multiplying the partial reimbursement percentage... for the technology used by said unit of production.” A max 50 percent incentive will be allocated for installation costs.

16

/ Wednesday, May 15, 2019

Oversight Board

to Provide Assistance to Designated Municipalities

Requests five-year fiscal plan from CRIM

T Giovanna Garofalo

ggarofalo@wjournal.com

@giopgarofalo

he Puerto Rico Financial Oversight and Management Board (FOMB) informed that it will implement a pilot program with 10 municipalities to develop fiscal plans and budgets to be reviewed and certified by the Board by the end of the current fiscal year, which ends on June 30.

Additionally, the Board will offer non-financial resources, including a team of advisors. According to Chairman José Carrión, III, all employees under this program were considered in the Board’s budgetary needs, so the fiscal entity will not require an increase in budget for this specific initiative.

The 10 municipalities are: Aibonito, Barranquitas, Camuy, Cidra, Comerío, Isabela, Orocovis, Quebradillas, San Sebastián, and Villalba.

Board Executive Director Natalie Jaresko explained that these municipalities were specifically chosen because they face fiscal challenges, and due to their close proximity and previous collaborative efforts amongst themselves.

“The governor has a plan which has not been forthcoming to us, but this isn’t a situation that should be viewed as an opposition to what the governor is pushing forward. This is an effort to work with the municipalities and to find a way to go forward,” Carrión asserted.

The FOMB approved on Thursday a new fiscal plan that allocates funding for education, healthcare and public safety while making an incremental 10 percent cut to the government’s professional services spending. The 2019 fiscal plan, the third approved in two years, reflects more conservative economic projections than in its previous versions, and retains the elimination of the statutory Christmas bonus, which the government said it will pay nonetheless; sets employers’ contribution to health insurance at $125; and requires the government to document and include in its budget how much the credits and preferential agreements it grants to companies and individuals cost the Treasury.

According to Carrión, FOMB has already been in talks with the respective mayors of the selected municipalities and will not impose measures, but rather, provide technical assistance.

“This is actually not a takeover of anything; it is an effort to collaborate with the mayors... We’re not going into this with a definition of what we CRIM to Present Fiscal Plan think [they should do]. We are there to assist with The second proposal included in the Board’s fiscal matters and to help them pave their own way revised fiscal plan requires a five-year fiscal plan forward,” Carrión said. from the Municipal The chairman Revenue Collection added that they Center (CRIM, by its intend to assist these Spanish acronym). municipalities to According to avoid insolvency and Carrión, the public to adopt financial entity currently has and budgetary best more than $2 billion in - José Carrión III practices to reduce overdue receivables, a their dependency 62 percent collection on the central rate for property taxes, government’s budget. and it is missing more than 300,000 properties “We are confident that the development and from its registry. implementation of fiscal plans and compliant “In our preliminary analysis, we identified the budgets will transform municipalities,” Carrión need for an additional 150 appraisers,” he added. said.

If the program unfolds as projected, the Board might eventually consider other municipalities.

He also said that this is not a defiance to current administration, but he reaffirmed that Gov. Ricardo Rosselló’s fiscal plan does not comply with the Board’s standards and goals.

This is an effort to work with the municipalities and to find a way to go forward

FOMB informed that it will implement a pilot program with 10 municipalities. If the program unfolds as projected, the Board might eventually consider other municipalities. >Carlos Rivera Giusti

17

/ Wednesday, May 15, 2019

By Rafael “Tatito” Hernández

By Anthony O. Maceira Zayas

ACT 22 AND PR’S

Disruptive Business and the Sharing Economy in

Government of Puerto Rico Secretary of Public Affairs

House of Representatives Minority Leader

REAL ESTATE MARKET

T

he first to feel the economic impact of any public policy promulgated by the government is the financial sector, at times, even before it is implemented.

I remember my surprise, as I started my professional career in 1992, when the financial markets adjusted interest rates and asset valuations, only because the polls at the time had Clinton beating Bush senior in the race for the presidency of the U.S. The performance of a loan portfolio is an indicator that reflects the socio-economic realities. I had the privilege of working in home mortgage lending from 1991 to 2008 and experienced the radical changes in the real estate industry as a result of the different public policies announced during those two decades. When Section 936 of the U.S. IRC was revoked, many manufacturing companies in PR operating under 936 did not wait for its expiration ten years later. Those companies in the garment industry and electronics, reporting the largest number of employees, began to shut down operations almost immediately.

Even though these individuals did not earn the highest wages and benefits in PR, still, receiving a weekly payment for work done, brought financial stability and steady income to a family. The abrupt shut down of factories all over the island at the end of the 90’s affected lower income families and even though some found other jobs and tried to reinvent themselves, their individual credit ratings were negatively impacted.

The large amount of properties available for sale, new and repossessed by the banks, moved the government to establish a

new program at the beginning of 2000, called “la Llave para Tu Hogar”, which offered $15,000 in cash for the down payment of the purchase of the home or for closing costs. This was intended to facilitate the private, non-conforming mortgage loan financing for the acquisition of a property, but the basic problem was not resolved, which was the need to create massive job opportunities for the lower middle class of workers, such as Section 936 had done in the past, and bring back stable and steady income to the working families.

In 2009, the government ended this program coinciding with the real estate bubble burst in the US. This situation eroded real estate values in PR to the point where properties were worth substantially less than the amounts owed in their mortgages to the banks. The market for new homes, principally those to be sold for $250,000 or more, collapsed.

Construction projects filed for bankruptcy and unfinished houses were put up for sale by the banks.

But crises bring opportunities, particularly for those individuals holding cash. So, in 2012 legislation creating investment opportunities was approved to attract private capital to PR; among them Act 22. This legislation provides incentives for individual investors to move to PR from the Mainland, purchase real estate property and reside here among us. More than 600 decrees have been granted to these investors.

Economic development incentives play an important role in any jurisdiction’s efforts to create jobs and improve the economy. But, it is up to us in government to extract the most benefit for the people of PR out of this very attractive incentive. In my next column, I will discuss ways in which we can achieve this.

T

Puerto Rico’s Energy Sector

he entrance of UBER to Puerto Rico’s market has been a great focus of controversy, unleashing a fierce fight between taxi drivers and Uber drivers. But beyond that controversy, there are lessons to be learned from their business model and might even found potential applications to the Electric Power Authority (PREPA).

UBER is what’s known as a disruptive business. This means a business whose product or service initially takes root in simple applications in the lower part of the market and economy - in this case, the transportation sector - to then move relentlessly upwards in the market. Eventually, the net effect is displacement of established competitors. It’s innovation that creates a new market, value network and finally interrupts an existing network of market and value, displacing already established companies, products, and market leaders.

Without owning a single car, UBER is one of the biggest “taxi companies” in the world. However, many say this disruptive business offers its users greater service accessibility, better experience and, above all, it is substantially cheaper.

UBER, Lyft and Airbnb are successful examples of the so called “sharing economy”. According to many experts, sharing economy is often defined as a peer-to-peer (P2P)-based activity of acquiring, providing or sharing access to goods and services that are facilitated by a community-based online platform.

This reminds us that markets are organic and only the fittest survive.

We may remember this happening in the movie rental market. Before we had chains like Blockbuster; the entrance of Redbox (among others) displaced those giants that did not

adapt their business models to the new market trends.

The same is happening in the energy sector. Experts from the energy industry have recognized that recent technological and economic changes are transforming the electric utility market. This is reflected in a study commissioned by the Edison Electric Institute entitled Disruptive Challenges: Financial Implications and Strategic Responses to the Changing Electric Retail Business. In summary, the study concludes, among other things, that utilities and stakeholders should develop policies and strategies to reduce the risk of interruption of their clients, including the evaluation of business models in which utilities can add value to customers and investors through new services.

Worldwide, the energy sector could be the next market adopting the sharing economy model as the result of microgrid technology. In other words, the electric generation is owned and distributed by individuals and businesses; no monopolies. Governor Rosselló’s pledge to combat climate change is the most aggressive in the Nation.

The pledge combined with his vision of a Puerto Rico Open for Business, has started converting the Island’s energy grid to 100% renewables, and privatizing generation. In that direction, Rosselló enacted Act 17-2019, which amongst other things, promotes the creation of microgrids. The referred legislation facilitates the interconnection to the electricity grid by any available mechanism including, but not limited to, distributed generation, net metering and the use of micro networks such as solar communities.

The previously discussed changes in public policy will help to strengthen PREPA while allowing new competitors with disruptive businesses to have space in the market for the benefit of all of us.

18

/ Wednesday, May 15, 2019

‘Despacito’

Still Roars in

La Perla

19

/ Wednesday, May 15, 2019

Two years after the mega-hit turned the spotlight on this once forsaken neighborhood, tourists continue to flock the place in search of the song’s legacy

T Cynthia López

clopez@wjournal.com

@cynthia_lope

he narrow streets of La Perla in Old San Juan are empty on this steamy Friday of May. In “la Placita” -the heart of the community- three neighbors sit undisturbed, talking and discussing the latest news.

Suddenly, a recognizable tune breaks the morning stillness.

A couple of tourists, in shorts and beaming smiles, treks into the neighborhood playing music on an iPhone. “Deja que te diga cosas al oído...”

(Let me whisper words into your ear...).

It’s Luis Fonsi and Daddy Yankee’s mega-hit “Despacito”. The song’s video, which features La Perla and the popular bar La Factoría, is the mostwatched YouTube video in history with over six billion views to date.

“Music and history brought us here,” Javier Zuleta and Laura Brokaw confessed, a Spaniard and an American who had met at La Factoría two days earlier. “Music is the mirror of life”.

The scene is common to locals. Since the release of the video two years ago, the sensuous melody has brought a new kind of fame to a neighborhood once considered a high crime area and now is notorious for its musical heritage.

Every day, tourists from all over the world roam around this barrio searching for the locations flashed in the video. Men and women stand on the rocks facing the Atlantic ocean where Fonsi sang his infectious song, walk the promenade where former Miss Universe Zuleyka Rivera strolled seductively, and take pictures of the plaza where men played dominoes, but on this morning talk about the news.

The place is so intriguing that a few hours after they landed on the island, Jair Trujillo and Naty Vega also marched into La Perla at the rhythm of “Despacito”. The couple from Ecuador vacationed on the island for two reasons: reggaeton and stunning beaches. Literally.

>Photos by Gabriel López Albarrán

Luis Almenárez, Daniel Pérez, and David Hernández, three Venezuelans living in Florida, took a taxi from the airport straight to La Perla, an iconic neighborhood of vividly painted houses that was initially home to many descendants of former slaves and poor arrivals from the countryside.

While a group of high schoolers chose the place for their field trip.

But for others, the journey begins in “La Vergüenza” (Shame), a bar on Norzagaray St. at the neighborhood’s entryway. Here, tourists asking for directions are greeted by the bartender -turned into an incidental tourist guide- Juan López.

“Before I send them off, I take the time to explain a little about the neighborhood and its history,” he told THE WEEKLY JOURNAL. Not too far, in La Factoría a small stream of visitors still ask for the spot where Fonsi and

Rivera dirty danced. “At first, a lot of people walked in asking for ‘Despacito’, but now the interest is winding down and we don’t get as many curious,” the owner Juan Pablo said.

A Chance to Shine

While some have criticized the invasion of outsiders, the community rejects its fame as an expression of slum tourism. The notoriety, some residents argued, gives them a sense of pride and an opportunity to tell their story.

“It helps the businesses and the recognition makes the community proud,” Joe Medina, a musician that made this barrio his home two decades ago, responded.

But he is quick to point out that La Perla is more than “Despacito”. It was setting of movies like “Runner Runner” with Ben Affleck and Justin Timberlake and “El Cantante” (The Singer) with Marc Anthony and Jennifer López, among others.

Decades before the song became an anthem of sorts for the community, artists Ismael Rivera, Calle 13 and Ruben Blades celebrated its people and the neighborhood’s combative spirit.

“I like it a lot because we are on the map,” Medina said.

Elisa Santiago agrees.

“La Perla is unique. We were the first barrio,” Santiago affirmed. “This is an opportunity to fall in love with and understand La Perla.”

20

/ Wednesday, May 15, 2019

Edgar Abraham Returns with Latinoamérica Jazz Suite

Along with the Puerto Rico Symphony Orchestra, more than 80 musicians and dancers will bring to life part of the original repertoire of the local saxophonist

R Génesis Ibarra

gibarravz@wjournalpr.com

@gibarravz

enowned composer and saxophonist Edgar Abraham returns to his “home”, the Puerto Rico Symphony Orchestra (PRSO), to reveal to the world his most recent work, Latinoamérica Jazz Suite, a fusion between Caribbean rhythms and the essence of being Latin American.

The concert, Entre Música y Baile, is part of the Puerto Rico Musical Arts Corporation (CAM) Special Series, and is set to go on stage on Saturday, May 18th at the Pablo Casals Symphony Hall, at the Luis A. Ferré Performing Arts Center in Santurce. “(The PRSO) is the largest orchestra in Puerto Rico. The dynamic is always about learning, the majority of these musicians were part of my training as a musician and at this stage of my career the majority are colleagues of many years,” Abraham said.

Guided by conductor Karlo Flores, the three times Latin Grammy Awards winner will held his fifteenth presentation along the PRSO —the first

Edgar Abraham, the three times Latin Grammy Awards winner will held his fifteenth presentation along the PRSO. >Courtesy PRSO

being when the composer was 14 years old— in one of the rare occasions where a guest soloist performs his own compositions.

“The premise of this piece focuses on what we are as Latin Americans. The elements of rumba, bomba, and plena are present.

Elements such as tango and flamenco make their appearances in different parts of the composition,” Abraham added. Latinoamérica Jazz Suite is a musical embrace dedicated to the world born from the Puerto Rican warmth.

The first movement of the musical composition, titled “Lucy’s Bike” —in reference to Lucifer—, reflects on the experience lived on the Island after the impact of Hurricane Maria. “It was the first composition I made after Maria. Lucifer is the reflection of what we breathed, the smell of gasoline, people going out to look for food, the sound of the electric generators, people in extreme need,” Abraham explained.

Lucy’s Bike is the protagonist of the concert. More than 80 musicians and dancers will bring to life part of the original repertoire of the Puerto Rican composer, arranger and saxophonist. Among them, the Suite “The 10 Worlds”, composed by Abraham at the young age of 21.

Conductor Flores said the concert will vary between refreshing rhythms and the world of jazz. “This concert will load a lot of energy. The public is going to enjoy a very varied offer in a single concert, that is the idea of the special concerts,” he said.

Tickets from $15 for Entre Música y Baile are available at the Performing Arts Center box office and through Ticket Pop.

Conductor Karlo Flores.>Courtesy PRSO

21

< THE WEEKLY JOURNAL > WEDNESDAY, MAY 15, 2019

23 junio 1 pm coliseo de puerto rico

Raya

22

A New Frontier of

/ Wednesday, May 15, 2019

Culinary Expression

Far from the chatty boisterous nature of some restaurants, Raya offers an intimate and relaxed atmosphere where sharing food is a must

N Cynthia López

clopez@wjournal.com

@cynthia_lope

o doubt. Chef Mario Pagán enjoys pushing the limits of culinary experimentation. Raya is no exception. Don’t be fooled by the deceptively simple four-letter name. The plate presentation, the choice of ingredients, and the sauces elevate the experience far and beyond the ordinary restaurant visit.

Hidden in the corner of Barranquitas St., right in front of the Condado lagoon, this distinguished resident of the O:LV Fifty Five Hotel mixes unexpected flavors like blood sausage, pistachio mornay and black vinegar, and architectural drama to create another limit.

Tuna Poke Pegaíto. >Brandon Cruz González.

Beet Matcha. >Brandon Cruz González

“Caribbean and Asian flavors get along well,” Pagán explains of his intention to create a bridge or draw a line (raya in Spanish) between these two

cultures. “This was my opportunity to say what I wanted to say. Even the way I plate the dishes was thought out.”

You can tell.

The experience begins from the moment you set foot in the place that takes its name after the manta ray (mantarraya in Spanish). From the cuddly blue velvet sofas to the funky dutch lamps in the waiting room, it feels like you stumbled on a movie set, maybe a James Bond flick or a scene from The Great Gatsby. Black and white marble floors map the way to the small cozy restaurant with towering windows that stare at the shimmering lagoon and the Condado skyline.

On the tables, elegant gold cutlery and golden green plates create a continuum with the sultry chartreuse velvet chairs and sofas. On this Thursday of May, the sweet, spicy, and floral aromas of the kitchen mingled with the nostalgic voice of jazz legend Chet Baker.

Tuna Poke Pegaíto, Miso Sea Bass, Adobo Kurobuta Ribs, Wasabi Grilled Cheese, and Beet Matcha Ice Cream Cookies are some of chef

/ Wednesday, May 15, 2019

Pagán newest creations. All served in black lava plates with a minimalist approach, but flirting with texture, lines, and shapes.

Adorned with flowers that add a citric flair and chili and avocado aioli drops, the Tuna Poke is a favorite of Raya’s devotees and newcomers. Served in a round plate, this exquisite dish is a circle within a circle maybe symbolizing wholeness, perfection, eternity or another gastronomic frontier.

Far from the chatty boisterous nature of some restaurants, Raya offers an intimate and relaxed atmosphere where sharing food is a must. But is not just about food.

The bar, created as a second character, offers Sake and Japanese whiskey-infused cocktails and a bit of historical intrigue and romance. Two black Sicilian ceramic heads, on each side of the bar, watch the patrons as they enjoy their meal. The heads represent a love story akin to Romeo and Juliet, according to Italian legend.

Like in the Bond movies, Raya is a continuous adventure with chef Pagán always trying new flavor

combinations like the Mongolian Skirt Steak stewed in a malt beverage reduction that he recently added to the menu. It doesn’t stop there. Pagán told THE WEEKLY JOURNAL that he is in the talks for a television show devoted to Caribbean food.

“Peruvian food had its moment, Mexican too. Now it’s time for Caribbean flavors, the next boom,” he said.

Raya, which opened its doors in January, has an outside sitting area and prices range from a $14 appetizer to a $36 main plate.

For all its alchemy, this is the place to bring a date you want to impress.

23

24

/ Wednesday, May 15, 2019

Yoly Prohías Conquers

Palettes in the Skies

Hopes to inspire other women to start their own business

F Melissa M. Cruz

mcruz@elvocero.com

@mmcruzrios

or more than 15 years, Yoly Prohías has been taking her passion for cooking to the skies—literally— since she established Prohías In Flight Catering. In fact, her culinary creations travel more than herself and that gives her enormous satisfaction because it reflects the continuous evolution of her company, which she founded after her family life was disrupted when her husband closed his business in 2004.

“Back then, our family support was based on my husband’s business.

And being younger than he, I knew that it was up to me to take my family forward. How and when was what I still did not know,” the businesswoman said.

After many tearful, sleepless nights in despair over how to support her family, Yoly began to bake banana-nut breads and lasagna to sell to her friends and family.

“I have always been passionate about cooking and, although I didn’t have formal preparation in that area, I always knew I’d be headed that way.

Because, also, people eat when they’re depressed, happy, with money or without it,” said Yoly, who has a bachelor’s in Business Administration and several years of experience in the island’s publicity industry.

Thus, in cooking, Yoly started off self-taught, practicing and reading. But it wasn’t until she visited Caribbean Heli-Jets—fixed-base operators in San Juan—and presented her interest in entering the food industry that her business idea found footing.

That’s when the executives told me that there is a fertile niche in private aviation that is not being seized, and it was precisely aimed at making food.

That came as a ‘ring to the finger’ and I said: ‘God, thank you, because you have sent me a niche,’” she recalled.

She then dedicated her full time to develop her business career in the food service industry. She took a catering and service course and another in International Cuisine in the San Juan Hotel School.

“I made a presentation that I was very proud of and [Caribbean Heli-Jets] loved it, but they took six months in making their first order,” Yoly said, adding that the wait felt “like an eternity.”

“Despite all that I remained optimistic. ‘This will come,’ I told myself repeatedly... And it did,” she said. “I am always very thankful to that airline, because they were the first who supported me,” she added.

After that first order, everything has been a chain effect where— thanks to recommendations from that and other clients—she has received important requests. Yoly’s business goal is to provide the client with high quality, presentation, and attention to detail. Also, the business promises to “make them fly with each bite.”

>Brandon Cruz

The Business Evolution

“We are presently a catering business that serves the corporate sector and private flights.

We stand out thanks to our love and passion for cooking. Also, quality, presentation, and service are aspects that we take very seriously. It is a wellprepared family business. We know every detail of the private flight industry, which is highly rigorous,” Yoly said.

She manages her business along her husband, Ignacio Martínez, and her children, Carolina and Roberto Martínez, aged 25 and 38, respectively.

Her husband does accounting, while -Yoly Prohías Carolina oversees administration and Roberto—who studied culinary arts—is the second-in-command in the kitchen.

I would like for my story to inspire other women, to know that it is possible

A Great Achievement

There have been many years of long journeys and sacrifices for her family, who have transformed Prohías In Flight Catering into a leader in the private flight food industry.

In its 15 years of operations, the business has served important people during their stay on the island, including former U.S. Presidents George H. W. Bush, Bill Clinton, and Barack Obama; King Felipe VI and Queen Letizia of Spain; and bands and musicians like the Red Hot Chili Peppers, Madonna, Lady Gaga, and others.

“I am very excited to recall how long we’ve come.

Many people ask what our secret is, and at this point in my life I still can’t believe it. I honestly believe that it is the path that life led me, and one shouldn’t be afraid of change. I would like for my story to inspire other women, to know that it is possible. It isn’t easy, but it is possible. I urge them to never give up. I believe that us women are the first who must support one another,” Yoly affirmed.

25

19

19

convierte tu carro en un SUPER AUTO A BENEICIO DE

AUSPICIADORES PRINCIPALES

UI Q A e t e b í r c Ins

www.mdaevent.org/superheroes2019 Info (787) 597-0824

BUSCANOS EN

< THE WEEKLY JOURNAL > WEDNESDAY, MAY 15, 2019

5

26

/ Wednesday, May 15, 2019

Fashion

>Courtesy Retazo

Located in Caimito, a well known neighborhood in San Juan, Retazo is a startup clothing manufacturer that attracts local fashion designers interested in a sustainable approach

Committed O to

Social change

Yennifer Álvarez

yalvarez@wjournal.com

@yalvarezjaimes

rigins matter. Today, customers are more concerned than ever before about the companies — and their labor practices— that manufacture the products they consume.

A 2012 study done by professors at the Massachusetts Institute of Technology and Harvard University showed that many consumers — even those on a tight budget — were not only willing to pay more, but actually did pay more, for clothes that carried messages about fair-labor practices.

Located in Caimito, a neighborhood in San Juan, Retazo is a start-up clothing manufacturer with a fresh, sustainable approach.

27

/ Wednesday, May 15, 2019

VINTAGE SHOPS GUIDE

Its main goals include connecting local designers with existing textile garment factories; help to develop a sustainability framework for their operations; and create a sustainable fashion lab of high-end ready-to-wear garments.

The company offers training programs and services to help local designers to manufacture their collections in Puerto Rico. Retazo is also the only clothing manufacturer on the island that accepts small orders from local independent designers.

The start-up was established in 2017 by Puerto Rican entrepreneurs Auralis Herrero-Lugo and Daniel Santiago-Díaz.

“We don’t only want to manufacture the products here, but we also want to help designers sell their products locally and abroad,” SantiagoDiaz said.

For them, the most important thing is to spread initiatives that boost a circular economy, one that focuses on minimizing energy use and waste.

“The fashion industry and the world operate in

a lineal model, which means that you take stuff out, you make stuff, that stuff is sold and then it is disposed. We are trying to make that line circular.

So, there is no waste, there is nothing that goes into a landfill, everything could be reincorporated into the loop. We are an island and we don’t have space for landfills,” Herrero-Lugo pointed out.

Retazo’s founders also hope to create an online information hub for consumers to learn about sustainable practices they can embrace in their daily lives, to rethink, reduce, reuse and recycle.

The vision of sustainability also promotes fairtrade products that are manufactured under fair working and labor conditions for workers.

Furthermore, the start-up develops partnerships with local high schools to teach students the art of clothing design and manufacturing. This is achieved through Retazo Moda Lab, its educational branch.

Besides Retazo, San Juan has many other vintage and thrift stores that give that worn and used garment a second chance.

Johnny & June

A vintage shop in Santurce that has been curated to offer pieces that are mostly from the 1960’s-1990’s.

1205 Ave. Fernández Juncos, Santurce www.johnnyjune.com 787 724-8638

Len.T.juela Boutique

Curated vintage local shop in the heart of Loíza Street.

852 Loíza Street, Santurce www.shoplentejuela.com 787 408-7111

Vintage Rack

You can find second hand clothes and houseware pieces.

1221 Jesús T. Pinero Ave., San Juan www.vintagerackthethriftshop.com 787 587-7718

Closet Sustentable

A thrift store in one of the main avenues in Bayamón.

51-33 Main Ave., Bayamón www.clickuppr.com 787 979-9323

28

/ Wednesday, May 15, 2019

When: May 18 at 9:00 p.m.

Where: Luis A. Ferré Performing Arts Center in Santurce One of the most important figures in the music scene in recent years is coming to Puerto Rico from Spain.

Enjoy an intimate night with the creator of hit songs like “Destino o Casualidad”, “La Promesa”, “Déjala Que Baile”, “Un Violinista en Tu Tejado”, among many others.

Broadway Hits Concert 2018 When: May 19 at 5:00 p.m.

Where: Luis A. Ferré Performing Arts Center in Santurce

Enjoy a show with orchestra, vocals and dance, suitable for the whole family. As usual, there will be an opportunity for the public to participate. You can suggest your favorite song on the Facebook page: www.facebook. com/cameratapr

Humberto Ramírez Big Band Mondays When: May 20 at 9:00 p.m.

Where: Metropol Isla Verde 6530 Av. Isla Verde, Carolina Miles Davis Tribute and delicious Cuban food until midnight.

Nonprofit Strategies for a Successful Long-Term Recovery Workshop When: May 16 at 8:00 a.m.

Where: NOVA Southeastern University 997 San Roberto St., San Juan This free workshop provides nonprofits with information and recovery resources to enhance their support for communities recovering from Hurricane Maria.

29

/ Wednesday, May 15, 2019

Puerto Rico ComicCon 2019 When: May 17 al 19 at 12:00 p.m.

Where: PR Convention Center, San Juan The Puerto Rico ComicCon is the premier entertainment event in the Caribbean. A three day show with exhibitors and retailers of what many of us love: comics, toys, anime, Manga, video games, strategic and card games, movies, etc. This is the biggest comic convention in the Caribbean.

SME Digital Forum When: May 16 at 8:00 a.m.

Where: Puerto Rico Convention Center Organized by the Puerto Rico Sales & Marketing Executives Association, this is the largest and most relevant event about Digital Marketing and Advertising in the region. You’ll have access to top-notch speakers, as well as the key findings of the 2019 Digital & Mobile Behavioral Study.

Expand your business opportunities at the Networking & Expo Center and find out who are the 2019 winners of the SME Digital Awards.

Bombazo Vaquero When: May 18 at 6:00-9:00 p.m.

Where: Deportivo Train Station, Bayamón Taller Palenque invites you to enjoy local bomba music.

Cine al Fresco

When: May 15 at 7:00 p.m.

Where: Lote 23 1552 Ave. Ponce de León, Santurce Enjoy local food and short films under the stars. Parking available.

Rock Sinfónico

When: May 19 at 5:00-7:30 p.m.

Where: Luis A. Ferré Performing Arts Center in Santurce Listen to the music of legendary rock bands Kansas, Metallica, Journey, Led Zeppelin, Survivor and Queen performed by Orquesta Filarmónica de Puerto Rico.

30

/ Wednesday, May 15, 2019

Finca Victoria: Guests can feel attuned to nature while enjoying locally-grown products Yaira Solís Escudero

L

ysolis@elvocero.com

@yairasolis

ocated in an area of two and a half acres in one of the highest peaks of the island municipality of Vieques is Finca Victoria—Botanic House and Hotel. It is an eco-friendly hostel with aims to be fully selfsustainable. It was created by interior designer Sylvia de Marco, who also owns the Dreamcatcher Hotel in San Juan.

She was already familiar with the location because that is where she used to hold other environmental activities. According to De Marco, the place used to be called Finca Caribe and its owner was American, Cory Parker. But Hurricane Maria devastated the area in 2017 and everything changed, and Parker—who lives in Washington— sold the property to De Marco.

Throughout the debris collection process and rebuilding, the place took shape quickly and it became a five-room hotel ready to captivate even the highest skeptics.

The hotel provides the ideal environment to reestablish a kindling with nature because it doesn’t have walls that create horizontal or vertical borders. That is, you can actually fall asleep while star-gazing.

You will also feel blessed after witnessing a breathtaking sunset and enjoy the sound of the wind and the smells of nature because the hotel is surrounded by fruit trees and all sorts of botanicals, which are part of the experience of lodging there.

With an eclectic bohemian atmosphere, the hotel has various building structures distributed around. All are strategically hidden among lush vegetation.

The hotel’s central structure, an architectural hybrid between a loft and a wooden cabin with a black metal structure, offers ‘El Livin’—a beautiful, open-spaced common room overlooking a pool of natural water—a large kitchen, and a communal dining room. A spacious room, lounge areas, and five guest rooms complete the structure.

In the center of the common room, there is a store with a variety of items—caftans, vintage clothing, jewelry by local designers, natural homemade products, crafts by Puerto Rican artisans, and even an area that includes vegetarian food made from vegetables and herbs grown in the hotel’s farm.

“The fertile soil of our gardens offers a large variety of tropical plants, fruit trees, flowers, and cacti. The farm’s space design is based on the principles of permaculture, with areas designed for our herb garden, medicinal garden, and edible garden, from which we obtain a large sum of the foods we serve in our vegetarian kitchen,” De Marco said.

Each room is different, making the guests feel special. In fact, each room has a name related to its style and design. In that regard, there are the Victoria Suite, the Nuria Suite, and the Sahar and Báez-Haus treehouses, among others—each with its own vibe in relation to its location and space design. They all have private bathrooms, beach towels, small fridge, cooking utensils, mosquito net, and many other personal touches. Also, each room has a ceiling fan because air conditioning is not necessary.

The two houses in the Báez-Haus trees are strategically located around the property overlooking the ocean and are surrounded by plants to create a nest-like sensation. They were designed by De Marco herself, in collaboration with artist Rogelio Báez, in the “tiny-home” style and they have their own balcony and outdoor shower. The bedsheets are made with organic cotton and each room has unique decorative accents, all related to the eclectic bohemian concept.

Moreover, the rooms come with diffuser oils, teas, and infusions made on the farm.

De Marco says that she expects to have 10 rooms and cabins available by next summer.

Finca Victoria’s goal is to install renewable energy and recycled water infrastructure, so it is completely eco-friendly and self-sustainable, with zero impact to Mother Earth. Nightly rates include a vegetarian breakfast, coffee, and herb infusions all day and yoga classes, among other amenities.

For more information, visit www.lafinca.com.

Ecohotel in Vieques

31

/ Wednesday, May 15, 2019

Rosi Alonso, CCIM

Managing Director, Puerto Rico Properties / Alonso-Mulet Commercial rosi@puertoricoproperties101.com

Do You Really Need a

Real Estate Agent?

Y

ou bet! If you are looking to buy, sell or lease, hiring the right real estate agent will save you time, money and anguish! However, selecting the agent/broker that makes the perfect fit for you can be a challenge. Follow these 6 basic tips: Go local. Choose an agent who has knowledge and experience of the market in the area where you want to sell, buy or lease.

It’s a human to human relationship.

Technology does not replace good chemistry. Choose an agent you can relate with and talk to.

Agents are as good as the knowledge and service they provide.

Be sure your agent has the qualifications to provide the level of service you require and the ability to negotiate and close the deal on your behalf.

Commercial Real Estate (CRE) is a very different arena. A CRE agent must be educated and experienced in the myriad aspects of commercial real estate. A CRE agent must speak the same language as other CRE professionals to be able to successfully navigate through a commercial real estate transaction. The CCIM Institute is the premier leader in commercial real estate education and a good place to search for a certified CCIM in your area.

It’s not just searching for and finding the right property. The job of a Residential Real Estate agent/

1

2 3

4

5

broker requires extensive work, knowledge of the market and a great communication network. Make sure you find an agent you can trust and who has your best interests at heart, not just the lure of a commission paycheck.

Honesty is the best policy. A real estate agent should be held to the highest professional standards. A strong code of ethics is a must to comply with the codes and regulations that regulate the business and guarantee a satisfactory ending for all sides of a transaction. If something doesn’t look right, request referrals and follow your instincts.

Now that you have chosen an agent, you need to choose the right type of brokerage agreement depending on whether you are on the side of the Seller / Landlord or the Buyer / Tenant. This agreement will establish the type of relationship between you and the agent /broker.

There are three basic types of brokerage listing agreements between the agent and the proprietor/landlord: Exclusive, Semi-Exclusive and Open. If you are looking to buy or rent, you will be best represented by a Buyer or Tenant Representation Agreement.

An agent with an exclusive agreement will place greater effort and time into getting the task done. Motivation is key.

An agent who is guaranteed a share of the commission if successful is going to work harder and be more committed.

We will follow up on the different types of brokerage agreements in the next issue.

6

STELLA MARIS CONDADO

TORRIMAR GUAYNABO

Amazing oceanfront condo!

2 bedrooms, 2 bathrooms, 1 parking. $825,000 Call Giselle Stowell (787) 420-4799, Lic. 17560 www.puertoricorproperties101.com

Lovely home in exclusive gated community.

3 bedrooms, 3 bathrooms, separate guest room, pool. $435,000 Call Ana Delgado (787) 562-5033, Lic. 17615 www.puertoricoproperties101.com

FREE STANDING COMMERCIAL BUILDING HYDE PARK, HATO REY

2,846 SF / 495 SM lot $290,000 Call Rosi Alonso (787) 309-6814, Lic. 16224 https://totalcommercial.com/ listings/53575