With the post-Franco government easing, restrictions on foreign investment, Spanish industries are beginning to turn to Puerto Rico as their base of operation in the Americas.

During the past year, nearly 700 Spanish corporations have requested information about investment on the island from the commonwealth government. About 40 companies have sent executives here for exploratory visits, 20 have applied for tax exemptions, and a handful are already establishing operations.

Two presidents of Spanisht controlled banks here explained that the inquiries come from corporations that have developed a strong export capacity over the past decade and are planning foreign subsidiaries to strengthen traditional markets, like the United States, and penetrate new area, like Latin America.

Puerto Rico is attractive to these investors because of its halfway status, with the U.S. legal and economic base on one hand and the Spanish language and Latin culture on the othere.

In Latin America, corporations encounter a maze of rules and regulations, such as requiring a certain percentage of local ownership, limiting currency exchange and restricting remitment of dividends and divestment, according to Gonzalo Corral, branch president of the Banco de Santander.

Puerto Rico, as part of the United States, has none of these requirements.

More important, the island economy is based on the U.S. dollar. Even the most successful subsidiary in Argentina or Chile, for example, may report a loss after soaring inflation and devaluations, Corral explained. Puerto Rico's inflation is slightly higher than in the U.S. mainland, but almost insignificant when compared to Latin America.

Puerto Rico also offers relative political stability, with only a small proindependence minority, he said.

Yet Miami or New York can offer the same advantages.

Puerto Rico's Latin culture, where laws, permits and all official business are carried out in Spanish, then comes into play, according to Antonio Campos, president of Banco Central Y Econimias. "In Miami, there is a Latin American atmosphere but it is not the same. Puerto Rico is the United States, but it is not the United States."

The island's high costs, which are often the main deterrent to U.S. investment, seem less important to the Spanish. The cost of energy, freight, raw materials and living expenses are more than compensated by the tax exemption program, Corral said.

Tax exemption, the primary attraction to U.S. companies, is the icing on the cake for the Spanish, the bankers claim.