Puerto Rico is an unexpected link between the US and the Indo-Pacific, with investments from major companies like Samsung and Daiichi Sankyo strengthening its role in manufacturing and research.
Puerto Rico's status as a commonwealth of the United States has created a strategic link between the US and Latin America since the Spanish-American War in 1989. However, its role in connecting the US and the Indo-Pacific is less widely acknowledged. These relations facilitate trade and foster economic partnerships that benefit both Puerto Rico and the mainland US. By providing access to emerging markets and encouraging cultural exchange, Puerto Rico enhances economic opportunities for all stakeholders, solidifying its position as an asset in the global economy.
Why Puerto Rico?
Puerto Rico's unique combination of tax incentives, skilled yet affordable labor, established export infrastructure, and strategic location between Latin America and the US makes it a prime investment destination. Puerto Rico’s Tax Act 20 allows companies to expand their services with the benefit of a tax decrease. Puerto Rico has also cemented itself as a major export hub, especially in the biotechnology industry. The Biden-Harris administration announced PRBio Tech Hub in San Juan to fast track the island into “ a global leader in biotechnology”, and currently 12 of the world’s top 20 medical device manufacturers are present on the island attesting to its manufacturing capabilities. Puerto Rico’s workforce offers one of the most competitive labor costs in the United States. Complimenting this, organizations like the Puerto Rico Science, Technology, and Research Trust are also investing in educational programs, to equip students with vital skills in high demand fields, such as manufacturing.
Puerto Rico's unique combination of tax incentives, skilled yet affordable labor, established export infrastructure, and strategic location between Latin America and the US makes it a prime investment destination. Key among its offerings is Puerto Rico’s Act 20, which incentivizes industries like tourism, insurance, and other sectors to set up shop on the island. Income from eligible services—such as research and development, scientific management, and IT—rendered for the benefit of non-residents is taxed at a reduced rate, making it attractive for foreign investors.
Puerto Rico has also cemented itself as a major export hub, especially in life sciences. Forecasts from sources like the Puerto Rico Life Science Air Cargo Community project a remarkable 24% annual growth in life science exports by 2027, largely due to the presence of 12 of the world’s top 20 medical device manufacturers on the island. Additionally, Puerto Rico’s workforce offers one of the lowest labor costs in the U.S., with manufacturing jobs on a steady incline since 2014. This affordable, skilled labor force makes Puerto Rico a strong contender in the global market, drawing significant interest from international investors.
Samsung Electronics
Samsung’s history dates back to its founding in 1938 in South Korea. Originally a trading company, Samsung has since evolved into a global leader in various industries including electronics, shipbuilding, and construction. Samsung Electronics, established in 1969, has become a key sector in the company’s growth. It is now synonymous with innovation and quality in consumer electronics, particularly in smartphones, televisions, and home appliances.
In 2019, Samsung Electronics celebrated 30 years of operations in Puerto Rico, a hub that also extends its influence into the Dominican Republic, Ecuador, Nicaragua, Paraguay, and Uruguay. Samsung has built strong market relationships through investments, product launches, and the creation of jobs. Puerto Rico became the first community in Latin America to implement Samsung Pay in partnership with Banco Popular. In a statement reflecting upon this collaboration, Banco Popular emphasized the need for innovation, "We have developed a technology infrastructure that allows us to design our own banking apps, and continuously stay on top of tech and digital offerings, such as being the first bank in Latin America and the Caribbean to integrate Samsung Pay and Android Pay."
Samsung Electronics has also created multiple showcases of its innovations on the island. In 2019, they unveiled a gallery for the Galaxy S10, and in February of the following year, they introduced the Samsung SmartThings Zone at the Berrios Hato Rey store. This interactive space allows clients to experience and engage with Samsung’s household appliances firsthand. Additionally, last year, a special event was held in San Juan for the launch of the Galaxy Z series, featuring Spanish influencers who engaged with the audience and modeled the signature Korean heart pose, blending cultural elements to enhance the experience.
Recognizing Puerto Rico's potential, Efarian Guerra, the commercial manager of Samsung Electronics Latin America, noted in 2021, "We see a lot of potential in Puerto Rico. Digital is widely used. We see a great opportunity to bring our business clients from other countries to this hub in Puerto Rico." This sentiment was backed by investments from Samsung allowing for the opening of a new business center and a new partnership with the Puerto Rican company Refricentro, expanding distribution in the appliance and digital market.
Daiichi Sankyo
Daiichi Sankyo also has a close economic relationship with Puerto Rico, focusing on the pharmaceutical industry in Puerto Rico since 2009. Originally established as a wholesale distribution entity, the company transitioned to creating a local sales office in San Juan in the same year. This strategic move allowed Daiichi Sankyo to better serve the local medical community, providing access to essential medications, particularly in areas like cardiovascular and diabetes care. This is particularly relevant given the high prevalence of hypertension and diabetes in the Latino community on the island.
Over the past two decades, Puerto Rico has emerged as a major contributor to the US pharmaceutical industry, accounting for approximately 19.35% of the $66 billion in pharmaceutical exports from the US in 2020. This growth can be attributed to a combination of factors, including significant tax incentives offered by the government, which have attracted major pharmaceutical companies.
Daiichi Sankyo's commitment to Puerto Rico extends beyond distribution. The company is actively involved in the development of new medicines, focusing on critical areas such as cancer and autoimmune diseases. As noted by Jose Vazquez, the head of marketing for Daiichi in Puerto Rico, "We are excited about the opening of this new office in Puerto Rico. Our presence here enables us to establish close ties with healthcare partners throughout Puerto Rico and to directly support our customers with educational materials and managed care programs."
Consequences of Covid and Natural Disasters
Alongside the devastation wrought by the Covid-19 pandemic on Puerto Rico’s Investment and tourism economy, the island has also faced significant natural disasters. From 2017 to the present, Puerto Rico has been impacted by four major hurricanes and experienced multiple earthquakes between 2019 and 2020, which have severely strained the recovery process.
These disasters have had profound effects on Puerto Rico’s economy, tourism, and education sectors. The combination of these challenges has also deterred potential investments from Asian investors. Despite these setbacks, the Puerto Rican government remains hopeful and is actively seeking to aid its citizens and increase the island's global outreach, particularly towards smaller regions.
Samantha Garcia is a participant in the Young Professionals Program at the East-West Center in Washington, DC. She is a student at Ewha Womens University acquiring her M.A. in Development Cooperation with concentrations in East Asia and Womens Studies.