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Steve Colantuoni

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HanesBrands in El Salvador

HanesBrands in El Salvador Produces Fabric That Circles the Planet Two Times

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The clothing giant produces 82 million meters of fabric each year in the plants it operates in El Salvador. The American clothing giant HanesBrands makes enough fabric in El Salvador to circle the circumference of planet Earth twice. The company, which has been operating in the Salvadoran market for 30 years, produces 82 million meters of fabric annually, while the planet’s circumference is 48,008 kilometers (more than 48 million meters).

Leading Exporter in El Salvador

For 11 consecutive years, HanesBrands has been the company with the most exports in El Salvador, according to a ranking prepared by the Salvadoran Association of Industrialists (ASI). In 2023, the firm shipped containers valued at $637.7 million, equivalent to 9.8% of the country’s total exports. The company operates four plants: Construcciones Jiboa and Confecciones El Pedregal, both dedicated to producing multi-style clothing, as well as El Salvador Textiles, where it manufactures textiles, and El Salvador Socks for socks. The company is also the largest private employer in the Salvadoran economy, occupying more than 6,000 workers.

Strategic Vision and Market Adaptation

“The company’s strategy has been very visionary in the sense that it has opted for the sectors, within textiles and clothing, of products that are basic consumption, such as underwear, which has allowed us to withstand the drop in demand for products,” said Francisco Barahona, manager of the Textiles El Salvador plant and legal representative. HanesBrands in El Salvador has adapted to market changes by focusing on essential products like socks and underwear, which remain in high demand even when other sectors experience downturns.

Demand for Socks Keeps the Operation Going

HanesBrands began the forced closure of a plant dedicated to producing sports and casual clothing due to a drop in demand in the US market due to inflationary pressures. “These are the areas that have suffered. The majority of manufacturing and clothing companies are the areas in which demand has fallen; however, in the coming years, after the election year in the United States, which is full of speculation, we may see an increase in demand,” said Barahona. On the other hand, the company saw a growth in demand for socks and underwear because they are considered mass-consumer products. In 2023, more than 32.5 million pairs were exported from the El Salvador Socks plant in San Juan Opico. This production is enough to “dress every American citizen with a pair of socks with everything we produce in the year,” said the executive.

Continued Operations and Sustainability Strategy

The company spokesperson explained that the departure of the El Salvador Sew plant was executed in two stages, one in November 2023 and the second planned for the first quarter of 2024. However, the plant remains in operation because the “demand has been requiring a little more from us,” and the closure is expected at the end of the year. Through its sustainability strategy, HanesBrands in El Salvador accounts for savings of $23 million in three years, of which $10 million corresponds to 2023. The plan, implemented in 2019, includes a reduction in polluting emissions and control of the use of water and waste.

HanesBrands in El Salvador: A Model of Industrial Resilience and Sustainability

HanesBrands in El Salvador exemplifies a significant industrial presence within the country and globally. The company’s annual production of 82 million meters of fabric highlights its immense capability and contribution to the textile industry, with its fabric production stretching around the planet twice. Over its 30-year tenure in the Salvadoran market, HanesBrands has consistently led in exports, contributing $637.7 million in 2023, nearly 10% of El Salvador’s total exports. The company’s four plants specialize in multi-style clothing, textiles, and socks, making it a versatile and critical player in the sector. Employing over 6,000 workers, HanesBrands is the largest private employer in El Salvador, emphasizing its economic impact. Despite challenges like the reduced demand for sports and casual clothing due to US market inflation, the company has maintained robust operations, particularly in the high-demand sectors of socks and underwear. The foresight and adaptability of HanesBrands in El Salvador and a robust sustainability strategy that has saved $23 million in three years underscore its resilience and commitment to environmental responsibility. As the company navigates market fluctuations and anticipates future demand shifts, it remains a cornerstone of the Salvadoran economy, demonstrating the substantial influence and potential of strategic, sustainable manufacturing in the global textile industry.

 

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Foreign Investment Increases in El Salvador

Foreign Investment Increases in El Salvador

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Reports from the Central Reserve Bank (BCR) recently indicated that foreign investment increased in El Salvador, with foreign direct investment (FDI) growing by eight percent in the first quarter of 2024. The banking entity detailed that after receiving the least FDI in Central America during 2023, the Salvadoran economy was favored by an inflow of 176.3 million dollars in the first three months of this year. That sum represents 14.33 million dollars more than the 161.96 million reported in the same period of 2023.

Capital Injection and Sectors Benefiting

The president of El Salvador’s Central Bank, the BCR, Douglas Rodríguez, who has recently been mentioned as a potential Minister of Finance of the new economic cabinet, indicated that the primary modality of this capital injection was the reinvestment of profits and capital contributions. After a year of contraction, the manufacturing industry was its main destination in the first quarter, with 154.1 million dollars, followed by trade, with 119.1 million dollars. This clearly shows how foreign investment increases in El Salvador are driving growth in critical sectors.

Promising Areas for Investment

El Salvador’s manufacturing sector offers several promising areas for investment. Textiles and apparel are among the most attractive sectors and have long been a cornerstone of the country’s economy. The nation’s strategic location, trade agreements, and well-established infrastructure make it an ideal hub for apparel manufacturing. The growing demand for high-quality, ethically produced garments in global markets further enhances its appeal. Another promising sector is the electronics and electrical equipment manufacturing industry. With a skilled workforce and increasing government support for technological advancements, this sector is poised for significant growth.

Furthermore, the country’s burgeoning automotive parts industry presents substantial opportunities, driven by the global shift towards electric vehicles and the increasing complexity of automotive electronics. Given the rising demand for locally and internationally processed and packaged foods, the food and beverage processing sector also shows considerable potential. Lastly, investments in sustainable manufacturing and green technologies are gaining traction, supported by initiatives to promote environmental sustainability and reduce carbon footprints. Overall, these sectors collectively offer a dynamic landscape for investors seeking to capitalize on El Salvador’s manufacturing potential, which is a testament to how foreign investment increases in El Salvador are shaping its economic landscape.

Leading Investors

During the period under consideration, the leading investors were the Spaniards with 97.2 million dollars (55.1 percent), followed by the Americans with more than 69.04 million (39.1 percent), while Mexico stood out with an injection of 42.8 million (24.3 percent) into the Salvadoran economy. Other nations, such as the Bahamas (22.12 million), Guatemala (14.37 million), Switzerland (12.16 million), Holland (10.40 million), and the Cayman Islands, with 8.59 million, opted for investment in the local economy.

Potential Sectors for Investment

As a potential foreign direct investor, El Salvador offers several promising sectors that are ripe for investment. The renewable energy sector stands out due to the country’s commitment to sustainability and its abundant natural resources, including solar, wind, and geothermal energy, supported by government incentives. Tourism also presents significant opportunities, leveraging El Salvador’s rich cultural heritage, archaeological sites, beaches, and national parks to develop eco-tourism, adventure tourism, and hospitality infrastructure. The textile and apparel manufacturing industry benefits from competitive labor costs, proximity to the U.S. market, and established supply chains, making it an attractive investment area. Agribusiness is another promising sector, with coffee, sugar, cocoa, and agritech opportunities, capitalizing on the country’s fertile land and favorable climate. The information and communication technology (ICT) sector is expanding. It is driven by a young, tech-savvy population and increasing digital infrastructure, creating investment opportunities in software development, business process outsourcing (BPO), and IT services. Infrastructure development, including transportation, logistics, and urban projects, presents significant potential due to ongoing government initiatives and public-private partnerships to improve the country’s infrastructure. The financial services sector is evolving, with opportunities in banking, insurance, fintech, and cryptocurrency services, especially following El Salvador’s adoption of Bitcoin as legal tender.

Additionally, the healthcare and pharmaceutical sectors are promising, with growing demand for quality healthcare services and medical devices, supported by government efforts to enhance healthcare access and quality. Lastly, the real estate sector is burgeoning, driven by urbanization and economic growth, offering opportunities in residential, commercial, and industrial real estate development, supported by government incentives for housing projects. Foreign investment increases in El Salvador are critical in unlocking the potential of these diverse sectors.

In conclusion, foreign investment increases in El Salvador have demonstrated a positive trajectory, reflecting the nation’s potential as an emerging hub for diverse economic activities. The notable growth of foreign direct investment (FDI) in the first quarter of 2024, primarily driven by reinvestment of profits and capital contributions, underscores the confidence of international investors in El Salvador’s economic prospects. The significant contributions from the manufacturing and trade sectors, alongside substantial investments from countries such as Spain, the United States, and Mexico, highlight the country’s appeal. With promising sectors like renewable energy, tourism, textile manufacturing, agribusiness, ICT, infrastructure development, financial services, healthcare, and real estate, El Salvador stands poised to attract even more foreign investment, fostering sustained economic growth and development.

 

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energy market in el salvador

Sixty-one companies sell in the energy market in El Salvador

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Over the past several years, the energy market in El Salvador has witnessed a significant expansion, as indicated by the growing number of companies authorized to import or export energy to other Central American countries. This trend underscores the lucrative nature of buying and selling energy in the regional wholesale market from El Salvador. Currently, sixty-one companies are authorized to engage in energy import and export activities in El Salvador, a figure substantiated by data from the Regional Operating Entity (EOR).

In April alone, twenty-two companies imported energy, mostly from Guatemala, and twenty-three exported energy from El Salvador, according to Transactions Unit (UT) data. The number of companies is also much greater in El Salvador than in Guatemala, which has thirty companies that market energy. The rest of the countries in the region do not have marketing companies because their energy contributions to the regional market are minimal.

El Salvador’s Leading Role

With its most developed regional electricity market, El Salvador takes the lead in the energy sector, as highlighted by energy expert Roberto Saravia. “We are more active because we are in the middle of generation and demand,” he stated. Nicaragua and Honduras, in comparison, “are barely in their infancy” regarding energy commercialization, according to Saravia.

According to Saravia, the companies classified as marketers are the driving force behind the sector, enabling the flow of energy surpluses and providing an energy alternative at a better price for those who demand it. “From my point of view, it is good that there are more companies because they are managing the rules and energizing the sector,” he stated, instilling a sense of optimism about the sector’s growth.

How does El Salvador Generate its Electricity?

El Salvador generates its electricity through hydroelectric, geothermal, thermal, and solar sources. Hydroelectric power, primarily generated by the Executive Hydroelectric Commission of the Lempa River (CEL), significantly utilizes the country’s rivers to produce renewable energy. Geothermal energy is another substantial contributor, with LaGeo, a subsidiary of CEL, harnessing the geothermal activity in the region to produce electricity. Thermal energy, generated by burning fossil fuels, complements these renewable sources and helps meet the country’s energy demands, especially during dry seasons when hydroelectric output is reduced. Additionally, solar energy is increasingly being integrated into the national grid, supported by government initiatives and private investments to expand the country’s renewable energy capacity. This diverse energy mix ensures a stable electricity supply and positions El Salvador as a leader in sustainable energy practices within the region.

Continued Growth in the Energy Market in El Salvador

The energy market in El Salvador has been experiencing steady growth, with more companies entering the business each year. In 2013, fifteen energy marketing companies in El Salvador were authorized, followed by another eight in 2014 and seven in 2015. The trend continued in 2023, with six more marketing companies authorized, per the EOR statistics.

The Executive Hydroelectric Commission of the Lempa River and LaGeo, which are state companies that generate hydroelectric and thermal energy, respectively, have their own marketing companies. Other private companies, such as Alas Doradas and the distributor AES, also have companies dedicated to commercializing energy to sell the surpluses from their operations at a better price.

Profit Margins and Market Opportunities

The greatest incentive for marketing companies in the energy market in El Salvador is the wide profit margins they can achieve, depending on the purchase and sale modalities they employ. For example, Saravia explains that profit margins are between 3% and 6% in the Opportunities Market. However, he notes that this is a precarious market, requiring sufficient liquidity to make investments.

In contrast, the profits are higher in the contract market, where purchases and sales are established for six months, one year, or more. “The contract market is where the biggest profits occur,” said the expert, who worked for several years at the EOR.

In April, the country exported only 31.67 gigawatt hours (GWh) of energy due to the dry season, which reduced hydroelectric generation and limited the sale of energy to neighboring countries. Energy trading in the regional market is key to the composition of the national electrical system since it also generates income. According to data from the Central Reserve Bank (BCR), the country exported $14.43 million in energy from January to April 2024.

The dynamic energy market in El Salvador showcases the country’s strategic position and advanced infrastructure within the regional electricity market. With sixty-one companies engaged in the import and export of energy, El Salvador significantly outpaces its neighbors in energy commercialization. This growth is fueled by the attractive profit margins and opportunities in both the Opportunities Market and the contract market. The involvement of both state and private companies indicates a robust and competitive market, essential for sustaining economic growth and meeting energy demands. As more companies join the market each year, El Salvador’s role as a central player in regional energy trade continues to strengthen, promising further advancements and economic benefits.

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free zone companies in Costa Rica

Procomer opens the Second Edition of the Incentives for Talent Development in Free Zone Companies in Costa Rica

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The program of Incentives for Talent Development in Free Zone Companies in Costa Rica seeks to close the gaps in existing professional training and update worker skills according to the market demands expressed by Free Zone manufacturers in Costa Rica.

The Costa Rican Foreign Trade Promoter (Procomer) announced the opening of the call for the II edition of the Incentive for the Development of Talent in Companies in Free Zone Companies, which seeks to promote the development of Costa Rican human talent and encourage the generation of capabilities that meet the needs that companies demand today.

The program has been designed to close training gaps

Procomer assured that this program aims to close the training and updating gaps in companies located in the free zone through co-financing that will allow them to cover the training needs of their collaborators – current and in the hiring process in areas of high demand for knowledge, digital skills aligned with the 4.0 revolution, specialized technical skills, among others.

The general manager of Procomer, Laura López Salazar, expressed:

” This program is one of Procomer’s efforts with which we seek to improve the employability profile of those who already work in free zone companies in Costa Rica and of possible candidates who wish to join this sector. Human talent is a fundamental pillar within Costa Rica’s value proposition; for this reason, with these tools, we seek to generate well-being for people and new investment and reinvestment opportunities for the country.”

Free zone companies in Cosa Rica interested in applying for their projects will have until June 28, 2024. To do so, they must enter the Human Talent section on the Procomer website, review the Operational Bases of the Second Edition (located at the end of the web page, in the activities section), and then enter the Project Application portal, where they must generate a user on the platform.

Likewise, people interested in scheduling an appointment to learn more about the project’s scope may do so by emailing csancheza@procomer.com with a copy to abarrientos@procomer.com.

The effort to upgrade talent in free zone companies in Costa Rica is a collaborative effort

Procomer officials highlighted that this initiative is the result of collaboration with the Ministry of Foreign Trade (Comex), the Ministry of Labor and Social Security (MTSS), the National Learning Institute (INA), and the Association of Free Trade Zone Companies of Costa Rica.

Over several decades, Costa Rica has strategically invested in its workforce to meet the needs of its growing manufacturing base through a combination of government initiatives and private sector efforts. The government has prioritized education, ensuring universal access to primary and secondary education, which has resulted in a literacy rate exceeding 97%. Additionally, investments in higher education have been substantial, with universities and technical institutes offering programs tailored to industry requirements. Institutions like the Costa Rica Institute of Technology (TEC) and the National Training Institute (INA) provide specialized training in engineering, electronics, and industrial maintenance, aligning their curricula with the demands of the manufacturing sector.

Government and private economic development agencies such as the Foreign Trade Promotion Agency (PROCOMER)  and the Costa Rican Investment Promotion Agency (CINDE) have played pivotal roles in attracting multinational companies by identifying and addressing their specific skill requirements. These agencies facilitate partnerships between companies and educational institutions, ensuring that training programs are tailored to meet the needs of free zone efforts in Costa Rica. Establishing Free Trade Zones (FTZs) has further supported this initiative by providing incentives to attract foreign investment. These zones are often strategically located near educational institutions and training centers, fostering synergies between academia and industry and ensuring continuous training for the workforce to keep up with technological advancements and industry standards.

Private sector free zone companies in Costa Rica have also been instrumental in workforce development. Multinational companies like Intel, Boston Scientific, and Baxter invest heavily in employee training. They often collaborate with local universities and technical schools to design curricula that equip students with the necessary skills for modern manufacturing. Apprenticeship programs, internships, and on-the-job training help bridge the gap between education and employment. Public-private partnerships have created specialized training centers and programs, such as the TEC-Intelecto program, a collaboration between Intel and TEC that focuses on advanced engineering skills, ensuring the curriculum remains relevant and updated with industry standards.

Free zone companies in Costa Rica engage in R&D

Additionally, free zone companies in Costa Rica emphasize research and development (R&D) as part of their workforce development strategy. They invest in R&D centers that drive innovation and serve as training grounds for employees, fostering a culture of continuous learning and development. This focus on innovation ensures that the workforce remains highly skilled and adaptable to new technologies and processes.

Overall, Costa Rica’s comprehensive approach to workforce development, encompassing government initiatives, private sector engagement, and strong educational foundations, has successfully created a talent pool in free zone companies in Costa Rica that is capable of meeting the needs of its manufacturing base. This collaborative model has facilitated sustained economic growth and positioned Costa Rica as a competitive player in the global market. The Second Edition of the Incentives for Talent Development in Free Zone Companies in Costa Rica continues this effort.

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el salvador's credit rating

Moody’s raises El Salvador’s credit rating to Caa1 from Caa3

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The international credit rating agency notes that El Salvador’s risk from a short-term credit event has decreased substantially.

The government of El Salvador has been instrumental in upgrading its credit rating. Moody’s Ratings have raised the government’s long-term and senior unsecured foreign currency issuer ratings from Caa3 to Caa1, a clear testament to the country’s proactive measures and fruitful results. This underscores the country’s economic stability, with the outlook for the Central American nation remaining steady.

El Salvador achieves improved financial stability

The credit rating upgrade results from a substantial decrease in credit risks from very high-risk levels for sovereign debt. Given the lower probability of liquidity stress episodes, this significant development should reassure the audience about the country’s improved financial stability. El Salvador’s credit rating improvement reflects the nation’s efforts to strengthen its financial standing.

The agency highlights the positive impact of liability management operations, particularly the debt buyback carried out in April 2024. This operation has significantly reduced external debt amortizations through 2027, providing a reassuring sign of the country’s sound financial management. The Government of El Salvador has taken specific actions to improve its credit rating. It has expanded the maturity profile of its domestic debt, reducing its dependence on short-term instruments by issuing longer-term promissory notes to local banks. Debt restructuring operations, together with moderate and relatively stable fiscal deficits, have also played a significant role in reducing the Salvadoran Government’s overall financing needs. These measures have been pivotal in the credit rating upgrade.

Moody’s underlines the positive shift in El Salvador’s financial landscape, pointing out that new financing options have been opened with access to international capital markets and better market confidence. This development instills confidence in the country’s economic growth potential. “Overall, April’s transactions helped sovereign debt regain market access and reduce its funding needs through 2027, keeping liquidity risks under control.”

While the credit rating upgrade is a positive development, it’s essential to acknowledge the remaining challenges. Financing capacity “remains somewhat limited based on the cost at which El Salvador can currently access external markets,” the fact that official dollarization limits the availability of a lender of last resort, and the lack of a program of the International Monetary Fund (IMF) that can provide and catalyze financing at more affordable rates. Local financing options are also limited, as the domestic market is shallow, and banks have high exposure to public debt. This balanced view will help the audience understand the complete picture of El Salvador’s economic situation. El Salvador’s credit rating continues to incorporate “weak institutions and governance, as well as a relatively high susceptibility to event risk, reflecting the government’s limited access to cross-border financing.”

Finally, Moody’s indicates that the stable outlook balances the positive developments that have led to a more favorable debt profile. The above could reduce liquidity-related credit risks more significantly than currently assessed and improve domestic security, supporting increased investment prospects and further economic growth.

How can El Salvador’s credit rating be boosted further?

To further increase El Salvador’s credit rating beyond Caa1, the government should implement a multifaceted strategy addressing short-term liquidity and long-term structural issues. Here are the key steps the government should consider:

Strengthen Fiscal Discipline and Transparency

Implement Fiscal Reforms: Strengthen revenue collection through tax reforms, including broadening the tax base, improving tax compliance, and reducing tax evasion. Implement expenditure rationalization measures to ensure efficient use of public funds.

Enhance Budgetary Transparency: Improve fiscal transparency and accountability by publishing detailed budget reports and spending reviews. This will help build market confidence and credibility with investors.

Diversify Financing Sources

Engage with International Financial Institutions: Renew efforts to secure a program with the International Monetary Fund (IMF). An IMF program could provide El Salvador access to lower-cost financing and catalyze additional financial support from other international donors and investors.

Develop Local Capital Markets: Foster the development of local capital markets to reduce reliance on external debt. This can include encouraging domestic savings and investment, improving financial infrastructure, and enhancing regulatory frameworks to attract local investors.

Enhance Debt Management

Optimize Debt Maturity Profiles: Continue extending debt maturities to reduce rollover risks. The government should issue more long-term debt instruments while reducing reliance on short-term borrowing.

Liability Management Operations: Conduct further debt buybacks and swaps to manage debt levels and smooth repayment schedules. This can help mitigate refinancing risks and reduce the overall debt burden.

Improve Institutional Quality and Governance

Strengthen Legal and Regulatory Frameworks: Enhance the rule of law, improve contract enforcement, and protect property rights to build a more favorable business environment. This can help attract foreign direct investment (FDI) and support economic growth.

Combat Corruption: Implement robust anti-corruption measures to improve governance and institutional quality. Transparent governance practices can enhance investor confidence and reduce the perceived risk of doing business in El Salvador.

Boost Economic Growth and Diversification

Invest in Infrastructure and Human Capital: Increase public investment in transportation, energy, and telecommunications infrastructure. Additionally, it will improve education and healthcare to build a more skilled and productive workforce.

Promote Economic Diversification: Encourage economic diversification by supporting sectors with high growth potential, such as tourism, agriculture, and technology. Reducing dependence on a few sectors can enhance financial stability and resilience.

Enhance Security and Stability

Improve Domestic Security: Address issues related to crime and violence, which are significant impediments to investment and economic activity. Enhancing security can create a more conducive environment for business and tourism, fostering economic growth.

In conclusion, while the recent upgrade of El Salvador’s credit rating to Caa1 from Caa3 by Moody’s is a testament to the country’s improved financial stability and proactive debt management, significant challenges still need to be addressed to achieve further rating enhancements. El Salvador can build on its current momentum by strengthening fiscal discipline, diversifying financing sources, enhancing debt management, improving institutional quality and governance, boosting economic growth, and enhancing security. Implementing these strategies will improve El Salvador’s credit rating and pave the way for sustained economic stability and growth, fostering a more favorable environment for investment and development in the years to come.

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free zones in el salvador

Four new free zones in El Salvador are in the process of being established

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According to María Luisa Hayem, Minister of Economy of El Salvador, there are currently four new free zones in El Salvador that are in the process of joining those currently in existence.

These free zones are in addition to the 17 that already operate in the country, as detailed by the Chamber of the Textile Industry, Clothing and Free Zones of El Salvador (CAMTEX). They operate in Santa Ana, La Libertad, San Salvador, La Paz, Usulután, La Unión and on the highway to Comalapa.

In the same regard, the official explained that other companies have shown growth in their operations.

Google and others have decided to invest in the country

According to Hayem, besides Google, which recently opened its offices in El Salvador, other companies are investing in the country, such as Nestlé, Unilever, PriceSmart, Telus Internacional, and Industrias La Constancia. This group of companies represents an aggregate investment of more than $56.2 million.

“We see growth in companies already established in the country, which we are pleased to see. It is a growth that extends throughout the national territory,” Hayem stressed.

The Law on Industrial and Marketing and Free Zones facilitates the establishment of free zones in El Salvador.

Since 1998, the Law on Industrial and Marketing Free Zones has been in force in El Salvador, whose regulations define these projects as places where the establishment of companies and the introduction of merchandise is allowed as if they do not enter the national customs territory. These conditions speed up the process of the import and export of products.

The 1998 Law on Industrial Marketing Free Zones in El Salvador provides several provisions to attract and facilitate foreign direct investment (FDI) in the manufacturing sector. These provisions help create a hospitable environment for investors by offering a range of incentives and protections. Here are the key contributions:

  1. Tax Incentives
  • Income Tax Exemptions: Companies operating within the free zones are exempt from income tax for a specified number of years, significantly reducing business costs and increasing potential profitability.
  • Import and Export Duty Exemptions: Businesses in free zones benefit from exemptions on import duties for raw materials, machinery, and equipment, as well as export duties on finished goods. This lowers production costs and makes exports more competitive.
  • Value-Added Tax (VAT) Exemptions: Exemptions from VAT on goods and services used in production further reduce costs and streamline operations.
  1. Simplified Customs Procedures
  • Streamlined Import/Export Processes: The law facilitates more accessible and faster customs procedures for companies operating in free zones, reducing bureaucratic delays and allowing for quicker turnaround times in the supply chain.
  • Customs Inspections: There are often special arrangements for customs inspections within the free zones, which can be less stringent and more efficient than those outside.
  1. Legal and Operational Certainty
  • Stable Legal Framework: The law provides a stable and predictable legal environment crucial for long-term investments. Investors are assured that the incentives will not be arbitrarily changed or revoked.
  • Protection of Investments: Provisions are in place to protect foreign investments, including guarantees against expropriation and mechanisms for dispute resolution that can reassure investors of the safety of their capital.
  1. Infrastructure and Services
  • Developed Infrastructure: Free zones often come with developed infrastructure, including transportation links, utilities, and communication facilities, reducing initial setup costs for investors.
  • Access to Services: Companies in free zones can access various services such as logistics, warehousing, and business support, enhancing operational efficiency.
  1. Employment and Training Incentives
  • Labor Market Flexibility: The law often provides more flexible labor regulations within free zones, making it easier for companies to manage their workforce.
  • Training Programs: There are sometimes incentives for training local employees, which can help companies develop a skilled workforce suited to their needs.
  1. Promotion and Facilitation of Investment
  • Investment Promotion Agencies: The law supports establishing agencies dedicated to promoting and facilitating FDI, providing information, and assisting investors in navigating the regulatory environment.
  • One-Stop Shops: These agencies often provide one-stop services for permits, licenses, and other regulatory requirements, simplifying starting and operating a business in the free zones.
  1. Export Orientation
  • Encouragement of Export Activities: The law encourages companies to focus on export activities, which can lead to increased foreign exchange earnings and economic growth. This aligns with the interests of foreign investors looking to serve international markets.

Overall, the 1998 Law on Industrial Marketing Free Zones in El Salvador creates a favorable investment climate by offering substantial financial incentives, ensuring operational efficiencies, providing legal protections, and developing supportive infrastructure. These factors collectively make El Salvador an attractive destination for foreign direct investment in manufacturing.

Free Zones in El Salvador are vital in attracting FDI

The establishment of new free zones in El Salvador, alongside the 17 existing ones, underscores the country’s commitment to fostering a dynamic and attractive environment for foreign direct investment. The 1998 Law on Industrial Marketing Free Zones provisions have been pivotal in this endeavor, providing substantial financial incentives such as income tax exemptions, import and export duty exemptions, and VAT exemptions. These incentives reduce operational costs and enhance profitability for businesses. Simplified customs procedures and streamlined import/export processes within the free zones in El Salvador ensure that companies can operate with greater efficiency and fewer bureaucratic delays.

Legal and operational certainty is another cornerstone of the law, offering a stable legal framework and protections against expropriation, which reassure investors about the safety and longevity of their investments. The well-developed infrastructure and access to essential services within these zones further reduce setup costs and enhance operational efficiency. Employment and training incentives also play a crucial role, as labor market flexibility and local training programs help create a skilled workforce tailored to the specific needs of manufacturing companies.

The efforts of investment promotion agencies and the provision of one-stop shops streamline the process of establishing and operating businesses, making the free zones in El Salvador even more appealing to foreign investors. The focus on export activities boosts foreign exchange earnings and aligns with international investors’ strategic interests to expand their market reach.

The growth of companies like Google, Nestlé, Unilever, and others investing over $56.2 million in El Salvador is a testament to the effectiveness of these free zones. These developments contribute to a robust economic growth trajectory that benefits the entire national territory. By creating a favorable investment climate with comprehensive incentives, streamlined processes, and a supportive infrastructure, the free zones in El Salvador stand as a model of how targeted policy measures can attract and sustain foreign direct investment in the manufacturing sector.

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investment outside of the greater metropolitian area of Costa Rica

Investment outside of the Greater Metropolitan Area in Costa Rica

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Contact the Central American Group if you want to establish a  manufacturing facility in Costa Rica. 

Maria Paz Araya
Coordinator for investment outside of the Greater Metropolitan Area of Costa Rica
Procomer
maraya@procomer.com

The Central American Group: We’re pleased to have a knowledgeable individual with us today. Her name is Maria Paz-Araya, and I’m sorry if I butchered that pronunciation, Maria. Excuse me. Was it even close to being correct?

Maria Paz Araya: I think you nailed it.

The Central American Group: In any event, Maria is the Coordinator for foreign direct investment outside of the Greater Metropolitan area in Costa Rica. She will explain exactly what that term means in a few minutes. But before she does, I want to say that she is a member of Procomer. Procomer is the National Agency for Investment and Export Promotion for Costa Rica. Maria, welcome. Can you give us a little bit more information about your background?

The Central American Group: Sure. Thank you, Steve. It is a pleasure to participate in your podcast today. Thank you for the opportunity. As you said, my name is Maria Paz Araya. For the past eight months, I have served as the coordinator of foreign direct investment outside of the Greater Metropolitan Areas in Costa Rica. I have 10 years of experience working in foreign trade and around the free trade zone regime in Costa Rica. This experience was gained precisely outside the Greater Metropolitan area in Costa Rica. I’m thrilled to discuss the opportunities and challenges these regions of the country present.

The Central American Group: I’d like to have you first before we get into further questions, explain the terms in Costa Rica: there’s the Greater Metropolitan Area, and then there’s outside of the Greater Metropolitan Area. Can you tell me what the latter means in the context of Costa Rica and name some communities that are a part of that area?

Maria Paz Araya: Okay, well, I’m going to start by saying what the greater Metropolitan area, or GMA, is from now on in Costa Rica. The primary urban concentration includes the major provinces of San Jose, Heredia, Alajuela, and Cartago, located in the country’s central area. This delineation was established in the 1980s as a fundamental tool for urban planning and fostering economic development within the region. Therefore, areas outside the GMA lie beyond this area and are mainly situated in the northern part of the country. This includes the Pacific and Caribbean coastlines and the Southern regions of Costa Rica’s territory. Some examples of well-known communities outside the Greater Metropolitan area are Limón, Liberia in Guanacaste, San Carlos, San Ramón, Punta Arenas, and Turrialba, to name a few.

The Central American Group: Why is it important for Procomer to promote investment outside the Greater Metropolitan Area in Costa Rica at this time, specifically?

Maria Paz Araya: Promoting investment outside the Greater Metropolitan Area in Costa Rica is vital for Procomer. It’s important because it opens up new opportunities for businesses and investors in various regions. This directly translates to creating new job opportunities, which is our absolute main goal right now. It is important because it helps distribute economic growth evenly throughout the country.

The Central American Group: What specific advantages do locations for investment outside the Greater Metropolitan Area in Costa Rica offer foreign investors looking to establish manufacturing operations, particularly in terms of cost-effectiveness and resource availability?

Maria Paz Araya: Sure. There are many advantages for investors to establish investment outside of the Greater Metropolitan Area in Costa Rica. First of all, I could say government incentives. Costa Rica provides tax incentives offered through the free trade zone regime law to companies established outside the greater Metropolitan area. I can go into more detail if you like. Also, there is access to skilled labor. Many regions outside the GMA have access to a skilled labor force, particularly in specialized industries such as agriculture, agro-industry, light manufacturing, and services. With training programs and vocational schools, these areas can provide a pool of skilled workers for manufacturing operations. Another advantage for companies that execute and investment outside of the Greater Metropolitan Area in Costa Rica is the access to natural resources. Many regions outside the GMA have fertile land for agriculture and forestry. It can be advantageous for manufacturing operations that require specific environmental conditions.

Now that I have mentioned the environment, we love investors who prioritize environmental sustainability in their operations. Non-metropolitan areas often offer more opportunities for eco-friendly manufacturing practices, such as access to sustainable raw materials. And so, well, in 2022, work was done to reform and improve incentives for investment outside of the Greater Metropolitan Area in Costa Rica, and law 10,234 was launched, which I would love to tell you about.

The Central American Group: Oh, please do.

Maria Paz Araya: Okay. The tax treatment outlined in the Costa Rica Free Trade Zone Regime Law significantly differs for companies established within the urban area compared to those that make an investment outside of the Greater Metropolitan Area in Costa Rica. Outside the GMA, established companies have greater exemptions, like 0% corporate income tax. Also, they enjoy a temporary reduction of Social Security payments for their employees. Additionally, the law I mentioned before, Law 10,234, enabled three new categories for attracting FDI outside the GMA. And these are sustainable adventure parks. These should be places for recreational and commercial activities, promoting conservation and research in a natural environment. Also, it applies to strategic suppliers. This refers to goods made in Costa Rica and used to produce final goods, excluding machinery. But this includes material for agriculture, fishing, manufacturing, and other operations, et cetera. The third category is healthcare-centered services. By this, we mean specialized centers offering medical services like ophthalmology, orthodontics, cosmetic surgery, et cetera. So yes, these incentives significantly enhance the appeal for companies to make an investment outside of the Greater Metropolitan Area in Costa Rica by lowering operation costs and improving profit in the end. This, in turn, attracts more foreign investment, simulates economic growth in regional areas, and creates job opportunities, fostering sustainable development beyond urban centers.

The Central American Group: Well, it’s a really good thing that Costa Rica is paying attention with greater focus to balance out investment throughout the country because most people that are in the know about Costa Rica and foreign direct investment have been able to note that over the last 30 years, Costa Rica has been very, very successful attracting medical device companies that are globally known. Most of that investment, however, is centered in the Greater Metropolitan Area. Now that you’re working with investment outside of the Greater Metropolitan Area in Costa Rica and trying to balance out investment in the country, can you give some examples of recent investments that have been made outside of the Greater Metropolitan Area, whether they’re medical devices or other types of investments?

Maria Paz Araya: Sure. Last year, we managed to attract 13 companies to locations outside of the Greater Metropolitan Area. This is nearly twice the average of six companies in previous years. So, yes, 13 new companies have placed their trust in Costa Rica in its regions outside of the GMA. The diversity of locations where they will be establishing investment outside of the Greater Metropolitan Area in Costa Rica is worth noting. We have projects in all of the provinces outside of the GMA. These companies are engaged in various activities, including food production, aeronautical services, distribution, light manufacturing, logistics,  and, of course, medical devices, We also have companies involved in metalworking, and information and communication technologies.

The Central American Group: When you look at the workforce, and you compare the Greater Metropolitan Area with that outside the Greater Metropolitan Area, what are the differences, if there are any, regarding skill levels, labor costs, and availability?

The Central American Group: Sure. I think the most particularly positive aspect is that, unlike the current workforce inside of the GMA, where employees may easily switch between companies, which leads to increased labor costs, those outside that make investment outside of the Greater Metropolitan Area in Costa Rica tend to display a greater commitment to companies that offer meaningful opportunities for growth and development. Over the past eight months, along with my outstanding team, in my position as the Coordinator of FDI Attraction outside of the GMA, we have traveled to many parts of the country, visiting numerous companies, various organizational groups, and academia. Suppose there’s one thing I can tell you from first-hand experience. In that case, workers outside of the GMA are available and eagerly awaiting promising job opportunities. While we are aware of the challenges in terms of upskilling needs, we are actively engaged in overcoming them, understanding their significance in attracting foreign direct investment, and trying to articulate the needs of the private sector with what academia offers.

The Central American Group: It’s wonderful to hear that Costa Rica is trying to bring foreign direct investment to all regions and corners of the country. In a short period here, we’ve discussed several issues related to investment outside of the Greater Metropolitan Area in Costa Rica. Typically, we’ve experienced with these podcasts that our listeners, once they take in the information included in these recordings, often have follow-up questions they’d like to ask. We want to facilitate that communication between our listeners and our interviewees by providing contact information so that there can be a direct discussion between you and anybody who might have a question to ask about anything that you’ve said today. If somebody wants to get in contact with you, how do they go about doing that?

Maria Paz Araya: Listeners seeking more information about investment outside of the Greater Metropolitan Area in Costa Rica, please feel free to contact me via email at maraya@procomer.com. I will be more than happy to provide them with the information they may need.

The Central American Group: Maria Paz, if it’s okay with you, we include key information at the top of the transcript section on the page where the podcast is hosted. We’ll put your name. We’ll make it a link to your LinkedIn profile so people can get to you directly. We’ll include a link to Procomer’s website. We will also add your email address. If that’s okay with you, we’ll also do those things to facilitate discussions between you and anybody interested in this topic.

Maria Paz Araya: Sure, Steve. Thank you. Please go ahead.

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puerto acajutla

A Comprehensive Guide to Puerto de Acajutla, El Salvador

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Contact the Central American Group to explore the foreign investment option in Costa Rica and to establish nearshore manufacturing operations in the Green Park Free Zone.

Located on the vibrant Pacific coast of El Salvador, Puerto de Acajutla stands as a vital gateway to regional and international trade. As one of Central America’s key maritime hubs, this port offers a strategic blend of accessibility, infrastructure, regulatory efficiency, and environmental responsibility, making it a preferred choice for businesses seeking efficient logistics solutions. This guide will delve into the various facets contributing to Puerto de Acajutla’s significance in the global maritime landscape.

Location and Accessibility

Situated strategically on the Pacific coast of El Salvador, Puerto de Acajutla enjoys proximity to major shipping routes, facilitating seamless connectivity with key markets across the Americas and beyond. Its location offers favorable access to the Panama Canal, enabling efficient transit for vessels traveling between the Pacific and Atlantic oceans. Navigational channels are well-maintained, providing safe passage for vessels of varying sizes. At the same time, the water depth ensures accessibility for larger ships, enhancing the port’s capacity to accommodate diverse cargo requirements.

Infrastructure

Puerto de Acajutla boasts modern infrastructure comprising terminals, berths, cranes, and storage facilities designed to optimize operational efficiency. The port features state-of-the-art container terminals equipped with advanced handling equipment to expedite cargo handling processes, thereby minimizing vessel turnaround times. Additionally, bulk terminals cater to transporting commodities such as grains, minerals, and petroleum products, further diversifying the port’s capabilities. Ro-Ro terminals facilitate the seamless transfer of vehicles and rolling cargo, enhancing the port’s versatility in handling various cargo types.

Connectivity

The port is seamlessly integrated into El Salvador’s transportation network, with robust road, rail, and waterway connections facilitating efficient cargo distribution. Extensive road networks link Puerto de Acajutla to major industrial and commercial centers, enabling seamless inland transportation. Rail connections provide an additional mode of transportation, offering cost-effective and environmentally friendly solutions for cargo movement. Furthermore, waterway networks complement existing infrastructure, offering alternative transportation routes for cargo destined for inland destinations.

Customs and Regulatory Environment

Puerto de Acajutla prides itself on its efficient and transparent customs procedures, ensuring smooth clearance processes for incoming and outgoing cargo. The regulatory environment is conducive to trade, with streamlined procedures to reduce bureaucratic hurdles and promote business growth. Stringent safety and security measures are in place to safeguard against maritime threats, including navigation safety protocols, cargo security measures, and piracy prevention initiatives, instilling confidence among stakeholders and ensuring the integrity of supply chains.

Environmental Considerations:

Environmental sustainability is a key priority at Puerto de Acajutla, with a strong commitment to environmental rules and regulations compliance. Efforts to minimize pollution are paramount, with stringent measures in place to mitigate the port’s environmental footprint. Initiatives such as waste management programs, emission control measures, and renewable energy initiatives underscore the port’s dedication to environmental stewardship, ensuring sustainable operations for future generations.

Port Services and Support

Puerto de Acajutla offers a comprehensive range of port services to meet the diverse needs of its clientele. Bunkering services are available to vessels requiring fuel replenishment, ensuring uninterrupted operations throughout their stay at the port. Skilled professionals provide Repair and maintenance services, offering timely solutions to vessel maintenance requirements. Crew welfare providers are also available, with amenities and facilities designed to enhance the comfort and well-being of seafarers during their time at the port.

Costs and Fees:

Transparent fee structures govern port operations at Puerto de Acajutla, with competitive port fees, tariffs, and berthage charges reflective of the port’s commitment to facilitating trade. Costs are calculated based on vessel size, cargo type, and duration of stay, ensuring fairness and transparency in financial transactions. Additionally, ancillary services such as pilotage, towage, and waste disposal incur nominal fees, providing value-added services to port users while maintaining cost-effectiveness.

Services rendered by Grupo Maritimo

Grupo Maritimo, as a member of the Central American Group, offers a comprehensive range of maritime services at the Salvadoran port of Acajutla. These services are tailored to meet clients’ diverse needs within the port, encompassing various aspects of vessel operations and cargo handling. Some of the key services provided by Grupo Maritimo at Puerto de Acajutla include:

  • Port Agency Services: Grupo Maritimo is a trusted port agent, facilitating seamless communication and coordination between vessel operators, port authorities, and other relevant stakeholders. Their expertise in port operations ensures efficient vessel turnaround times, smooth berthing arrangements, and timely clearance procedures.
  • Cargo Handling and Stevedoring: Grupo Maritimo offers expert cargo handling and stevedoring services, ensuring the safe and efficient loading and unloading of cargo from vessels. Their skilled personnel employ best practices and modern equipment to expedite cargo operations, minimizing turnaround times and optimizing productivity.
  • Logistics and Supply Chain Solutions: Grupo Maritimo provides end-to-end logistics and supply chain solutions to streamline cargo movement and distribution within the port of Acajutla. From warehousing and storage to transportation and distribution, they offer tailored solutions to meet each client’s unique needs, optimizing supply chain efficiency and minimizing costs.
  • Customs Clearance and Documentation: Grupo Maritimo assists clients with customs clearance and documentation processes, ensuring compliance with regulatory requirements and facilitating smooth cargo clearance procedures. Their knowledgeable staff navigates complex customs procedures efficiently, expediting cargo clearance and reducing client administrative burdens.
  • Bunkering Services: Grupo Maritimo offers bunkering services to vessels requiring fuel replenishment while docked at the port of Acajutla. Their reliable supply chain ensures timely delivery of quality fuel products, enabling vessels to maintain uninterrupted operations throughout their stay at the port.
  • Vessel Maintenance and Repair: Grupo Maritimo provides vessel maintenance and repair services to address the needs of vessels requiring maintenance or repairs while docking at the port. Their team of skilled technicians and engineers offers various repair services, including mechanical, electrical, and structural repairs, ensuring vessels remain seaworthy and operational.
  • Crew Welfare Services: Grupo Maritimo prioritizes the well-being of seafarers and crew members, offering a range of crew welfare services at the port of Acajutla. From provisioning and medical assistance to shore leave arrangements and recreational facilities, they ensure the comfort and safety of crew members during their time ashore.

Overall, Grupo Maritimo’s comprehensive suite of maritime services at the Salvadoran port of Acajutla underscores its commitment to providing efficient, dependable, and customer-focused solutions to clients operating within the port. Their expertise, professionalism, and dedication to excellence make them a trusted partner for regional maritime operations.

In conclusion, Puerto de Acajutla is a beacon of excellence in the maritime industry, offering a compelling blend of accessibility, infrastructure, regulatory efficiency, and environmental responsibility. Its strategic location, robust connectivity, and world-class facilities make it a preferred choice for businesses seeking reliable and efficient logistics solutions. With a steadfast commitment to excellence, Puerto de Acajutla continues to play a pivotal role in driving economic growth and fostering international trade in the region and beyond. Grupo Maritimo is on-site to provide a comprehensive array of maritime services.

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the free zone regime in costa rica

The Free Zone Regime in Costa Rica is a pillar of the economy

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Contact the Central American Group to explore the foreign investment option in Costa Rica and to establish nearshore manufacturing operations in the Green Park Free Zone.

The Free Zone Regime in Costa Rica represents a fundamental pillar in the country’s economic and social development. It is a successful model that has promoted foreign direct investment and revitalized the Costa Rican economy. These delimited areas, regulated by the Free Zone Law, offer a series of fiscal and tax incentives to companies that establish themselves in them, which has significantly impacted various aspects of national economic life.

Job Creation and Labor Well-being

Firstly, the Free Zone Regime in Costa Rica has been key to job creation, with constant growth in the number of jobs, especially when the unemployment rate remains high. In addition, companies located in Free Zones offer competitive salaries and a variety of benefits for their employees. This contributes to labor well-being and the country’s human capital development.

Another notable aspect is the boost to innovation and technology that the Free Zones have brought. The companies installed in these areas are related to high-tech sectors, such as the service industry, medical equipment, and electronic devices, strengthening the export offer and generating value chains within the country.

In addition, the Free Zones Regime in Costa Rica has encouraged the development of productive supply chains with domestic companies. This, as well, has boosted the economy and generated thousands of indirect jobs. This model has proven to be an engine of sustainable economic growth, positively impacting labor inclusion and the development of the female workforce.

Corporate Social Responsibility and Contributions

Regarding corporate social responsibility, companies participating in the Free Zone Regime in Costa Rica have made important contributions to the country regarding sustainable development and the inclusion of women in the labor market. In addition, they have complied with their tax and social security obligations, thus contributing to financing public services and social well-being.

The year 2023 marked a significant change in the model of attracting Foreign Direct Investment (FDI) in Costa Rica. Although it is premature to evaluate its results, the beginning of the new year allows us to reflect on the work done and establish new objectives. According to the Ministry of Foreign Trade, in December 2023, the attraction of FDI for regions outside the Greater Metropolitan Area (GAM) doubled. During the year’s first three quarters, 56 investment projects were established in the country. Twelve companies have chosen locations outside the GAM, marking a milestone in attracting foreign direct investment. This 16% growth compared to 2022 represented almost $3 billion, with free zones playing a prominent role in generating around 51% of FDI.

Despite these advances, challenges are still ahead for the Free Zone Regime in Costa Rica. Global geopolitical and macroeconomic uncertainty continues to impact the attraction of FDI globally. However, this presents an opportunity for developing economies like Costa Rica. The expectation of a decrease in interest rates in the United States and Europe could lead multinationals to diversify their investments in countries with attractive economic growth rates. In this context, Costa Rica must maintain its position on the map of FDI flows, reinforcing the search for projects and highlighting its value proposition as a country.

Despite the challenges, Costa Rica attracted 12 times more FDI projects in 2023 than expected for the size of its economy, underscoring the need to retain and grow these projects to remain successful in attracting new investments, especially outside the GAM, where economic growth is a necessary priority.

In the context of the Free Zone Regime in Costa Rica, business dynamism is notable. This is evidenced by the constant increase in exports, which currently reach levels close to 20%. This sustained increase in the commercial activities of companies in the free zone regime has been a key driver of the national economy.

Evolution of the Free Zone Regime in Costa Rica

The Free Zone Regime in Costa Rica has evolved significantly in the last decade, transforming from simple recipients of foreign investment to dynamic environments that foster national and international projects. This change has implied adjustments in multiple dimensions, including the diversification of financing sources, the flexibility of operating modalities, and the promotion of attracting investments outside the Greater Metropolitan Area.

The country’s ability to attract and retain specialized talent is also highlighted. This has greatly contributed to the continued success of the Free Zones Regime in Costa Rica. In this context, the constant measurement of competitiveness and the implementation of corporate policies aimed at sustainability and productive efficiency are crucial to maintaining the leadership position of free zones as references in profitability and excellence.

In conclusion, the Free Zone Regime in Costa Rica stands as a beacon of economic resilience and innovation, pivotal in driving domestic and foreign investment. Its multifaceted impact, from job creation and technological advancement to fostering sustainable supply chains and social responsibility, underscores its significance in the country’s economic landscape. While challenges persist, such as global economic uncertainties, Costa Rica’s proactive stance in adapting to changing dynamics and reinforcing its value proposition positions it favorably for continued success in attracting investments. With a steadfast commitment to competitiveness, sustainability, and talent development, the Free Zone Regime is poised to spearhead Costa Rica’s growth trajectory, ensuring prosperity for the nation in the years to come

 

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google and el salvador

Google and El Salvador Forge Partnership: Tech Giant Opens Offices and Offers Investment Opportunities for Entrepreneurs

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Contact the Central American Group to explore the foreign investment option in Costa Rica and to establish nearshore manufacturing operations in the Green Park Free Zone.

The arrival of Google takes place due to an agreement signed with the Nayib government Bukele in August 2023 to advance the modernization of the Central American country in digital government, health, and education. The government of El Salvador has committed US$500 million from the nation’s state budget to pay for services.

The technology giant Google officially opened its offices in El Salvador on April 15, 2024, in the company of the current president, Nayib Bukele, and also announced a grant of US$200,000 for women entrepreneurs.

“We are inaugurating the Google offices in El Salvador, let’s say the most important physical presence or the base of operations of Google in El Salvador,” declared Bukele when presiding over the opening ceremony in the capital.

Bukele’s government is promoting a digitized education

Bukele highlighted that El Salvador already works with technology and cited as an example that “there is not a single child” in the country who does not have a device with the Google Classroom teaching platform, which “is a great step in digitalization.” and the improvement of education.”

Promoting education in the country “is not so fast” and requires many allies, such as “the case of Google, which has the technology that we need,” he indicated.

The president announced that ” new applications and new technologies ” will be developed over time to improve the public health system and for the “modernization” of procedures in institutions such as land, sea, and airport customs.

Bukele, who was re-elected in February for a second term, announced that in the “first months” of his next government, which begins on June 1, he will launch a “telemedicine” system with Google technology.

Also included, among other projects, is the installation of “a data center in El Salvador,” which will be a “million-dollar investment” by Google, he emphasized.

For his part, the president of Google Cloud for Latin America, Eduardo López, assured that the commitment to El Salvador is “long-term.”

“Today, we are opening this office that marks our official arrival in the country to be an active enabler in cloud technologies that generate a positive impact on economic development and the growth of opportunities for the Salvadoran population,” said López.

Before the inauguration, Eleonora Rabinovich, of Government Relations and Public Affairs for Google Hispanoamérica, announced that Google.org would provide US$200,000 in grants to the Promujeres organization “to help develop entrepreneurs in El Salvador.”

Why the partnership between Google and El Salvador will be a game changer

In an era where technology is increasingly central in shaping economies and societies, partnerships between tech giants and emerging nations hold immense promise for progress. The recent collaboration between Google and El Salvador is a testament to this potential, offering many opportunities for positive transformation. Let’s delve into why this partnership stands as a beacon of hope for both Google and the people of El Salvador.

  • Digital Empowerment: Google’s expertise in digital technologies and El Salvador’s eagerness to embrace innovation can pave the way for digital empowerment. By leveraging Google’s resources and knowledge, El Salvador can enhance its digital infrastructure, expand internet access, and foster digital literacy among its citizens. This empowerment can unleash innovation, entrepreneurship, and economic growth across various sectors.
  • Education and Skill Development: Education is the cornerstone of progress, and Google’s partnership with El Salvador can revolutionize learning experiences. Through initiatives like Google for Education, El Salvador can access cutting-edge educational tools, online courses, and resources to enrich its education system. Moreover, Google’s training programs can equip Salvadorans with digital skills essential for future jobs, enhancing employment prospects and driving socio-economic development.
  • Entrepreneurship and Innovation: El Salvador boasts a vibrant entrepreneurial spirit, and Google’s support can fuel this spirit to new heights. Aspiring entrepreneurs in El Salvador can turn their ideas into thriving businesses by accessing Google’s startup resources, mentorship programs, and funding opportunities. Collaboration with Google’s research and development teams can also spur innovation, creating solutions tailored to address local challenges.
  • Tourism and Cultural Preservation: El Salvador is renowned for its rich cultural heritage and breathtaking natural landscapes. Through platforms like Google Maps and Google Arts & Culture, the country can showcase its cultural treasures to the world, attracting tourists and promoting cultural exchange. Furthermore, leveraging Google’s mapping technologies can facilitate sustainable tourism management, preserving natural habitats and heritage sites for future generations.
  • Sustainability and Environmental Conservation: As the world grapples with pressing environmental challenges, collaboration between Google and El Salvador can drive sustainability initiatives. By harnessing Google’s data analytics and environmental monitoring tools, El Salvador can make informed decisions to protect its ecosystems and promote renewable energy solutions. Together, they can work towards a more sustainable future for the planet.
  • Community Engagement and Empowerment: Beyond technology, Google’s partnership with El Salvador underscores a commitment to community engagement and empowerment. Through initiatives like Google’s Impact Challenge, El Salvador can support local nonprofits and grassroots organizations in addressing social issues and driving positive change at the grassroots level. This collaboration fosters a sense of ownership and collective responsibility, strengthening social cohesion and resilience.

Conclusion

The partnership between Google and El Salvador holds immense promise for catalyzing positive change across multiple fronts. By harnessing the power of technology, innovation, and collaboration, they can unlock new opportunities, empower communities, and build a brighter future together. As they embark on this journey, let us embrace the potential of this partnership to create a lasting impact and inspire others to follow suit in harnessing technology for good.

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