“A wonderful destination”: Jon Borschow’s visitor economy vision for Puerto Rico
A [critical] interview by Marina Reyes Franco
Now that Jon Borschow has become the leader of the newly established Destination Management Organization in Puerto Rico, effectively phasing out the Tourism Company while simultaneously operating with public money, I feel that it’s time to publish this. What follows is an interview I conducted with Borschow on August 19, 2016.
- Marina Reyes Franco
Jon Borschow is late. I had scheduled an interview with the founder and president of Foundation for Puerto Rico for 9:00 am and it’s already 9:28 am. I don’t mind. By some strange coincidence, his executive assistant is an old acquaintance of mine and we are catching up. She’s making a documentary, she tells me, about the Americans who have been moving recently to Puerto Rico to take advantage of the tax incentives for businesses and investors. The whole conversation makes me feel like her project is the productive way she has found to work through the utter absurdity of meeting billionaires who were lured to Puerto Rico with promises of tax relief by Laws 20 and 22 as Puerto Rican migration to the United States increases and a 10 year strong economic depression deepens.
The space is cool and clean; glass walls divide a conference room from various small offices with empty desks. Bright orange and green hues of the shared workspace’s palette contrast sharply with the hot, humid atmosphere and barren landscape of the empty lot at the opposite side of Antonsanti Street in the neighborhood of San Mateo de Santurce. This co-working space is a sort of conceptual matryoshka; Foundation for Puerto Rico seems to be both host and guest of a space called Colaboratorio, which in turn is housed inside a mixed use building complex called Ciudadela (Citadel). Colaboratorio is described as the place where “several organizations have the opportunity to unite their ideas and resources for the development of Puerto Rico towards the future.” The open plan office is shared by seven other cultural entrepreneurship initiatives, think tanks and the organizers of a literature festival. It is a marriage of convenience between economic, urban planning, tourism and cultural interests best exemplified by the transformation of this small portion of neighborhood where Ciudadela is located.
After the opening of the Museo de Arte de Puerto Rico in June 2000, an aggressive “urban revitalization” project was carried out around the institution, evicting neighbors to develop new, more expensive apartment buildings. This elicited the wrath of the mostly Dominican neighbors, but also many more who organized legal and cultural ways to fight back and resist the evictions. Many of these efforts happened around the newly founded Museo del Barrio, a grassroots answer to the art museum behemoth down the block. After years of protests falling into deaf ears, the neighborhood was literally turned into rubble. However, local investors, developers and government officials who worked so hard to present Santurce as the urban space for artsy “young professionals” (one of the remodeled buildings in the area is called Museum Tower) didn’t succeed. Gentrification never materialized because there just isn’t enough local money to afford luxury housing, so the fenced off empty lot opposite Ciudadela endured.
First developed by local company Miramar Realty Management under the auspices of the Puerto Rico Housing Finance Authority, Ciudadela went bankrupt in March of 2011. Apparently few lined up to pay $300k for a one bedroom apartment. It was bought years later by distressed property investor and Law 20/22 recruit Nicholas Prouty’s investment firm, Putnam Bridge. After buying the property in bankruptcy court, Prouty was able to sell the apartments at a cheaper price, continue the construction of another tower and propose to turn the empty lot into a park. Fifteen years later, the promise of building a park that connects the Museum to Ciudadela is in the process of being fulfilled.
The first time I went to the Colaboratorio was actually to attend its opening party. After bumping into some friends on the street, I ended up attending, along with a who’s who of the collusion between non-profits, politics, American investors and a handful of artists. That night I found out about Jon Borschow, his vision for Puerto Rico and who he has been working with to achieve the goals Foundation for Puerto Rico has set for this country.
When he finally arrived for our meeting, we sat down for 30 minutes in his glass enclosed office to talk shop about the visitor economy, what it means for the future and the problematic relationship between capital and culture, which makes us “a wonderful destination.”
First of, we should establish your background. How did you become established as a businessman, philanthropist and, later, involved in non profits?
Well, my parents were from the United States. They came to Puerto Rico in 1948; they were sent because my dad was a radiological engineer. They were sent to Puerto Rico because, at that time, for the first time, there was a medical treatment for tuberculosis that was something other than putting people in sanatoriums. They could survive. As Operation Bootstrap began to have its impact, Puerto Rico’s economy began to prosper; people had jobs, people didn’t go hungry. So, I saw -because I remember the fifties- the great transition. I saw the fifties in my childhood and I saw the poverty. My father remained in the healthcare industry and, as I became involved as well, it [Borschow Hospital & Medical Supplies, now Cardinal Health PR] became one of the largest companies on the island.
You kind of semi retired but then started the foundation…
I just thought “gee, if you’re gonna be able to have all this time available, what are you gonna dedicate your life to?” I wanna dedicate my life to what I think I can be helpful in and that is the transformation of Puerto Rico into, once again, the successful, rising island and society that it had been for much of my life. I believed I had something to contribute there; I had some ideas, some vision, I had some thoughts, so I decided to establish the foundation in November of 2011, to dedicate the rest of my capabilities in my life to help transform Puerto Rico.
When I was looking to establish the foundation, I saw that Puerto Rico could no longer rely on the things that had been helping it to grow in the past. It had lost its capability to bring in manufacturing. It had lost Section 936, a system that allowed manufacturers to function in Puerto Rico with certain advantages. It was also loosing some of its growth of federal revenues for transfers and the like, so I thought “gee, we’re loosing some of our inbound liquidity and we’re consuming and importing consumer goods and services at an extraordinary rate. well over 30 billion, almost 40 billion dollars a year, which require a commitment of export of money in payment. As a businessman, I thought the math here isn’t really working for us, so we have to figure out a way, a new way to balance out the math. We’d been balancing the math maybe with borrowings, transfers and subsidies and the like, and that wasn’t gonna be sustainable. So how do we remedy the situation? We have to generate new income from outside Puerto Rico. And how do we do that? We do that by creating value for the world and, of course, monetizing that value.
At the time that we established the foundation, my idea was that we really have to do something to get Puerto Rico to look outside of the 100 x 35 miles of its dimensions and look out to the world and see that it could, in fact, create value for the world, and that could bring new income and new prosperity for Puerto Rico. That was the vision that I had at the moment that I established the foundation and we then said “well, how do we do that?” Well, clearly, we’re in the 21st century now and in the 21st century things are different. There’s a lot of things that are related to innovation, there’s a lot of value added that is not about physical goods. We have always been manufacturers of high end physical goods, and I hope we continue to do that successfully but in the 21st century, so much value is being created by doing things that are not necessarily about physical, but more virtual. Whether it’s digital content, in the arts, music, whatever. Whether it’s software, processes and expertise, services, financial and otherwise. All these different dimensions were extremely value-adding and, so this is what in fact, I said, we have to focus on. It’s what we call the 21st Century export economy, which goes beyond the physical manufacturing of goods, and then…
It’s providing services.
It’s providing services, creating new intellectual processes here and selling them; things that don’t necessarily require the physical relocation of goods. They might require the physical relocation of people, but not so much the manufacturing and exporting of goods. It’s a complement to our traditional manufacturing.
Then, I said, the second thing we have to do is we have to do something about the enormous amount of imports we have and what areas can we deal with where maybe we’re not needing to import. We began to look at that and saw there are a number of areas where imports could, in fact, be mitigated.
Like which ones?
Agriculture is an important one. Certain kinds of services that we currently import could very easily be performed here. There are certain things that we can do that we normally do outside of Puerto Rico, that people could become accustomed to…It’s almost a cultural thing, but it’s also an emphasis. In agriculture, I didn’t realize it’s the 21st Century. It’s not the old kind of agriculture. Agriculture has become technology.
Lastly we said “gee, we just happen to be fortunate that we are not just any place in the world. We’re not your average place. We are a actually a place that has remarkable assets as a destination. We have great natural beauty, we have remarkable, you know, beaches and so on. You know, we have been traditionally…this is nothing new, we have been one of the original beach and sun destinations in the world. I have ads from the 1950s where we were establishing ourselves as that. But we are much more than that. We have a culture, history, architecture…we are geographically very well situated. We’re accesible by sea and by air. Very redundantly, we have many, many flights coming in. It’s very easy for ships to come here. This is nothing new, we’re already doing this, but we also have, internally, a sophisticated physical and even digital infrastructure. We’re very sophisticated, so it’s easy to move around, it’s easy to arrange things, we have great security, we’re under the federal system. You know, all the federal agencies protect us. It’s not like being in some country were you’re kind of cringing like gee, at the next possible moment something is going to happen to me. In fact, you go to many countries and you have to go to an all inclusive resort because if you step out of the resort, what happens? You’re at risk! I’ve been to those and the security guard will not allow you to leave the resort. He says, if you leave I will report you to my manager because it’s a great risk and so on and so on. Puerto Rico is all inclusive in the sense that every single spot in Puerto Rico you can go to and you can access and not be fearful, you can move around in your own way. It’s the perfect place where people can really develop their own experiences and we have thousands of new experiences to offer. What we discovered in our research was that these experiences were in fact highly attractive to people from around the world and, furthermore, that most of the world really was unaware of Puerto Rico until a year or so ago when Puerto Rico came out of the news because of some financial problems, fiscal problems. Most people would confuse Puerto Rico with Costa Rica. Europeans, 19 out of 20 Europeans would confuse us with Costa Rica. Now they’ve heard of Puerto Rico and they think, oh well, they have financial problems. But Puerto Rico has, you know, some problems with the fiscal situation of its government, but Puerto Rico is a dynamic, extraordinary, wonderful place to live; it’s a wonderful place to live, it’s a wonderful place to experience, that I, myself, would not live anywhere else. So, I believe that we simply have to take the 95, 98% of the world that is really unaware of that, make them aware of that, and then, suddenly, our visitor economy will develop and bloom. Our visitor economy today is a 7 billion dollar component of a 69 billion dollar GNP, OK? It’s more than 10% of our economy, as we stand today. We believe that Puerto Rico’s visitor economy can grow in the next 5 years by an additional 7 billion dollars. What do we have to do? All we need is an additional 2 million visitors on top of the 3 and a half that come in now.
We just need to have people realize that there is more to do here than just lie on the beach, infinitely more, and people will in fact stay.
In El Nuevo Día you’ve also mentioned Singapore, Ireland and Israel as other countries that we should be looking at, comparing their economic growth to ours. Seeing as we have not developed our economy as theirs, which aspects of their experience are you looking at?
First of all, strategy. I’m highly respectful of the way in which Singapore has strategically looked ahead. They have implemented a whole series of strategies, one after the other, and they’re constantly planning the next strategy, and the next is pretty much planned. So even as they’re executing one strategy, they’re already preparing the next one and theorizing the third. If we look at how Singapore has grown, I’m very appreciative of their strategy and focus. The other countries you mentioned, like Ireland…Ireland has realized that you come together around a vision and you pursue it. In their case, they’ve done that wonderfully well and they’ve come from some difficulties after 2008 and they’ve turned themselves around by focusing on strategy. One of the Irish strategies -industrial is one of them, innovation and 21st Century exports is another one- but Ireland has done a remarkable job with its visitor economy, with its tourism strategy. Everyone in Ireland understands the importance and the priority of being welcoming to visitors, of finding ways that visitors feel wonderful over there and that is another things that we need to admire with Ireland.
In terms of admiration, Singapore and Ireland are wonderful in how they have turned themselves around…
Both are tech focused, as well. Tech and banking.
That is correct, and Puerto Rico has that fascinating balance between tech and being a destination. As a matter of fact, we talk about Puerto Rico as being a destination to live, to work, to play, to explore.
That’s where I wanted to go next. Do you consider the visitor economy something that’s just for the occasional visitor, or someone who comes on holiday, or is it a destination to come and live?
We believe Puerto Rico is a wonderful place to come and live. It’s bilingual… it’s just such an inspiring place to be in terms of waking up every day and seeing such beauty, having such engaging culture, and being so colorful and having wonderful architecture and historical places. We think it’s enormously attractive for people to retire, to come and live and establish their business. As a matter of fact, I just had a conversation with a young man who has a very substancial business here, from the United States, and he said to me yes, I enjoy the fact that there’s a tax advantage for me and what I’ve established. And then he took me to his conference room and said, look at the window -there’s this beautiful view of Old San Juan- THIS is why I’m here. And this is true for me, who have lived here all my life, Puerto Rico is just wonderful and special, so people can come here and they’ll find an extraordinary place to live at any stage of their life. Certainly a great place to retire as well. We’re under the protection of the United States, we’re part of the United States, and yet we have this exotic, warm, beautiful way about us. (Author’s note: Puerto Rico’s relationship with the United States pretty much much abides by a 1922 Supreme Court decision in which declared it an “unincorporated US Territory…more foreign than domestic…belongs to, but, is not part of the US.”)
If this is an idea of economic development that relies on foreign…people coming from abroad to invest here, and it’s not necessarily a factory, like it used to be. What is really the difference between that and companies that came here in the past to establish their sugar cane plantations, then manufacturing, pharmaceutical, and Section 936 companies? Now it’s like more about human capital; people coming with their ideas and creating their companies here to export their services, but it’s still relying on someone from abroad.
I don’t think that we have to rely on someone from abroad, but we welcome those from abroad who come and bring capital. But more important than their capital, bring ideas and innovation, and also bring their passion. We welcome that passion and welcome the opportunity to create opportunities for Puerto Ricans here. By the same footing, there are many things things that came be done by Puerto Ricans and, by the way, we consider that these people will in fact become Puerto Ricans as my parents became new Puerto Ricans back in 1948, so this whole idea of who is Puerto Rican is something that we have to look at.
So which sectors of the economy are you looking to connect people in? Because that is really the reason why the foundation exists. It’s more about helping people connect — like startups connecting with possible investors; jump-starting an investor scene. Isn’t it?
That’s right. We’re very agnostic in exactly how we intervene. For example, with medical tourism, we came up with a whole theory of medical tourism, we had an MIT study, we designed a kind of enterprise that needed to establish that and the department of economic development accepted from us and created that whole thing and now they’re leading the effort, along with the Hospital Association. We’re very happy to be a catalyst.
So it’s like a think tank, catalyst…
We much prefer not to have to actually do the things, but we will if we have to. I’d be wonderful if we start to do them and then we find someone to finish it. That’s great because then you can move on to the next thing.
So what do you make of all these ad campaigns that we’ve had for decades that are ad campaigns for Puerto Ricans? Like “Puerto Rico lo hace mejor” (Puerto Rico does it better), “Isla Estrella” (“All Star Island”), #yonomequito (#idontquit). It’s always about lifting our morale instead of actually broadcasting what Puerto Rico is and where it is, to the world.
I think that… [stutters] We’re facing a reality that Puerto Rico, because of our economic trajectory over the last decade, has been losing people. Efforts to have people maintain a positive outlook are very important. In our case, with our foundation, we want to link that to actual economic ways forward and opportunities for people. We want people to see their growth and their opportunities within these visions and initiatives that we’re running with. What we’re going to do is to work with these multiple ad campaigns that are ongoing to link them with the hopeful and clear vision and opportunity, and then they will be reinforced.
Yes, but advertise to other people. I already live here, you know.
Puerto Rico needs to be increasingly sophisticated in the way that it brands itself and promotes itself to the world. We’re very heavily involved in that. We just did a study, which you should read. It’s 115 pages. It’s not officially announced yet, but we’ll be happy to share a draft with you and it will be announced in the next couple of weeks. It describes a little bit about how we need to go forward with this concept, the visitor economy, how we’re gonna get that 2 plus 2, or 4 plus 4, if you wish. We think that, in 10 years, 4 plus 4 is possible. So, in any event, that’s the situation and that’s what we’re really working on. We’re trying to get everyone — the government, key strategic players within the tourism industry, the general economy of the island -all the different communities, all the different regions, to see themselves within this new vision and begin to execute it.
I think the broadcasting needs to be outside as well, not just to ourselves.
We have some very, very good strategies about how to engage the world. I’m not gonna go into detail right now, except to say to you that we want the world to understand what an extraordinary place Puerto Rico is, how many experiences they can have, how authentic we are, and how immersed they can become in our lives by coming and being amongst us, whether it’s for a day or a lifetime.
Since I’m in the arts sector, cultural sector. What role do you think that plays? I think it’s very significant that….I used to live around here, and I remember El Museo del Barrio, the whole push from the community and how angry they were because they were being evicted to make way for real estate development. There are certain spaces, like Ciudadela or Paseo Caribe, that are very contentious spaces, still. I know Sofía Maldonado has been doing some exhibitions in Paseo Caribe, and they’re also bringing in some other international artists….
Our mural here is a Sofía Maldonado.
I know, I know.
If you look at this space, this Colaboratorio space, you realize that everything here is the work of Puerto Rican artists. The conference table in the next room is [made from] Capa Prieto puertorriqueño, a special wood, designed by Carlos Bobonis, a Puerto Rican. It was created by two Puerto Rican shops, okay? Everything here…The entire space was designed by a remarkable Puerto Rican architects, María Rossi and Fernando Lugo. We believe that the essence of what we are as Puerto Ricans is reflected in our art, and the attraction of the world to our art and our culture is what will make us a wonderful destination.
Okay. Well, obviously it’s almost September there’s news coming out way about who’s going to be pretty much in charge, with the Federal Fiscal Control Board appointed by President Obama and the Republican Congress. I don’t know if want to talk about predictions but how do you see the country being run from now on? What do you feel the role of the foundation is going to be? If we’re going to be so focused in the service economy, how do you see the role of the worker, who might be in a more precarious situation?
About the last part of your question, our focus on the visitor economy is intense because we believe that it will produce 70,000 new opportunities for people to either be employed in an organization or be involved in self-employment, and family or community ventures. We know there are 70,000 opportunities there for people who do not have to be specialized, highly educated people, though we welcome those as well. This is a really democratic kind of thing. We want this visitor economy to move to every bit of the island. We want to see it in Las Marías, we want to see it in Maricao, Patillas, Naguabo, Florida, all around and throughout the island! And this is why we’re so intensely convinced that this is going to be precisely for all of those people who have been left out of other opportunities. We think it’s the most democratic possible opportunity for Puerto Rico.
What do you see the role of the foundation being now that the federal Fiscal Control Board is coming to Puerto Rico? If Foundation for Puerto Rico is a think tank of ideas for our possible economic development, but we don’t know exactly what’s ahead and how long it’s going to last…
We have been involved and engaged in dialogues with political groups, social enterprises, trade associations…even labor groups. We have been involved in a whole variety of dialogues over the last years and we’ve been discussing our vision. We’ve been sharing and been hearing back; there’s been a give and take. We believe that, certainly, the leading political candidates, and their parties, as well as all the other remarkable people that are involved in candidacies -each one of them is a treasure- all those people are people that we’ve sat down for many, many hours and have shared a lot of the studies we’ve made. There’s a consensus around the importance of the visitor economy for Puerto Rico. If you listen to them speak, if you read through their platforms, you will see that it’s clearly visible and, more importantly, we’ll be working very closely with whoever will ultimately lead the island, and all the rest. We don’t want this to be a partisan thing at all. We want all Puerto Rico to be united around this.
