SWOT ANALYSIS

Weaknesses

• The largest existing weakness is the poor economy within the region and throughout Puerto Rico
• The region, and all of Puerto Rico, is burdened by expensive and unreliable power
• The region, as well as all of Puerto Rico has a large underground economy
• Within the SPREDD region, as well as throughout Puerto Rico, the high levels of poverty often result in people building their own homes, which are not compliant with the codes needed for these structures to withstand hurricanes and earthquakes
• The region is burdened by a poverty rate of 52.6%
• The ongoing reorganization under Title III of PROMESA severely limits access to the capital markets for certain initiatives
• Outmigration of skilled labor and a low labor force participation rate
• Some stakeholders fear that the strength of the unions in San Juan will be an obstacle to full development and realization of the Port of Ponce/Port of the Americas
• There is limited capital available for small business expansion and entrepreneurial startups
• Over-regulation, excessive bureaucracy, an “unbearable” permitting process, and lack of government support were cited as issues from many stakeholders
• Poor communication infrastructure in rural areas of the region
• The region lacks economic development professionals
• The Jones Act limits opportunities for development at the Port of the Americas/Ponce, as well as other ports in the SPREDD region
• Mercedita International Airport in Ponce offers limited connectivity
• Some coral reefs are in poor health
• Stakeholders in the agricultural industry claim that many prospective workers prefer to receive government assistance, as opposed to the hard work and low pay associated with agriculture, which limits the potential of certain agricultural initiatives
• The inventory tax is a hinderance to economic development

Threats

• Erosion or elimination of tax advantages, which are believed to be a primary driver of the manufacturing base
• Further outmigration of skilled labor
• Failure to properly upgrade and maintain critical infrastructure
• The region in susceptible to additional natural disasters (hurricanes and earthquakes), as well as additional risks from climate change, such as sea level rise, etc
• The U.S. Treasury Department has stated that the credit U.S. firms receive for paying excise taxes under Puerto Rico’s Act 154 is questionable and was never intended to be permanent
• Continuing and/or new pandemic-related lockdowns could decimate certain sectors of the regional economy

The CEDS process requires a strategic investigation of a region’s capabilities and capacity. Starting in February 2020, supporters of SPREDD began to engage with community leaders and other stakeholders to develop regional cooperation for economic development in southwestern Puerto Rico. Existing cooperation agreements among sixteen municipalities in southern Puerto Rico were analyzed, and the six were recommended, as Ponce, Peñuelas, Guayanilla, Juana Díaz, and Yauco are already members of the same planning and permitting consortium. Gaunica was added to cover all of the southwestern coastal municipalities, and because it was the epicenter of the 2020 earthquakes.

The EDD formation process commenced soon after parts of the region were significantly impacted by a series of strong earthquakes. Initial engagements were held with stakeholders representing: Manufacturing, Entrepreneurship, Agriculture, Small Business, Universities, Vocational Institutions, Tourism, Government, Resiliency Organizations, and Economic Development Organizations.

On January 29, 2021, the University of Puerto Rico – Ponce facilitated a virtual SWOT analysis event, attended by over 50 stakeholders in the region. The event provided a broad opportunity for regional leaders to provide input and direction on the state of the economy in the SPREDD region. The resulting analysis identified several key areas for leveraging opportunities into clear strategic goals and activities.

As a pilot EDD, this CEDS document is SPREDD’s initial economic development strategy. It has been developed to access key stakeholders to engage and coordinate with existing economic development initiatives. Those engaged consist of a geographically diverse group of community leaders engaged in higher education, public service, and private industry.