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Steve Colantuoni

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growth potential in El Salvador

Solar and Wind Energy Have Growth Potential in El Salvador

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As countries around the world shift towards renewable energy sources, El Salvador is gradually increasing its solar and wind energy capacity. While the progress is commendable, particularly in solar, there is still ample room for further development and investment in the country. The growth potential in El Salvador is bolstered by several factors, including technological advancements, declining costs, and favorable natural resources for renewable energy generation.

Solar Energy’s Steady Rise

Solar energy has seen significant growth potential in El Salvador over the last six years. According to El Salvador’s official data provider, Unidad de Transacciones (UT), the relative share of solar in the energy matrix has increased by 380% over the period, which is an important sign of both demand and actual development of solar power in the country. As of the end of 2024, solar energy contributed 7.21% to the overall generation of electricity in the country. This percentage slightly increased to 7.40% by the end of May 2025.

More than 60 photovoltaic plants currently operate in El Salvador. Most of them are in private hands and usually take the form of solar panels installed on the rooftops of warehouses, supermarkets, and industrial buildings. The facilities allow their owners to cut electricity expenses and contribute to the energy security of the country at the same time. Ten of the largest solar plants feed the generated electricity into the national grid on a permanent basis.

Solar energy has also become accessible to residential customers in El Salvador. According to Roberto Saravia, the number of residents who use solar panels to generate their own electricity has been steadily increasing. This development is particularly important because it reduces the load on the electric grid while allowing customers to lower their energy bills.

Coupled with battery storage, solar energy can be used during nighttime and on cloudy days. In rural areas and off-grid communities, solutions like these are highly sought after because they provide more stable access to power and allow people to further decrease their dependence on fossil fuels. Battery storage has been steadily growing in accessibility, and it can only add to the growth potential in El Salvador in the future.

Four new solar projects are currently in development. According to data from the Regional Electricity Operator (EOR), four solar projects are under development in different parts of El Salvador, which shows that the renewable energy industry is not saturated yet. This is because the photovoltaic panels and other technological components are becoming more affordable by the day. Roberto Saravia notes that a steady decline in the cost of solar panels and other pieces of equipment makes investment in the industry very attractive in El Salvador and opens up opportunities for new investors, both local and foreign.

Wind Energy: An Untapped Resource

Unlike solar, wind power in El Salvador remains in its early stages of development. As of May 2025, it accounted for only 0.58% of the overall energy mix in the country, which is significantly lower compared to other countries in the region. While 0.58% may seem like a high percentage, in absolute numbers, it is not. The only operational wind project in El Salvador is the Ventus wind farm in Metapán, located in the western part of the country.

The wind farm has 15 turbines and a total installed capacity of 54 MW. Although this project is small on a global scale, it is very important for El Salvador as proof of concept. The Salvadoran government is currently eyeing the 307-kilometer coastline, where the wind conditions are ideal for offshore wind farms. Wind over the ocean is usually stronger and more consistent than on land, which can result in more electricity generation.

Nothing specific has been announced, but there are talks about utilizing the coast for renewable energy generation. A few offshore wind projects could significantly strengthen the growth potential in El Salvador.

Emerging Alternatives: Wave Energy and Aquatic Biomass

President of CEL Daniel Álvarez noted that the country’s Pacific coast experiences wave activity that could be used to generate wave energy. Wave energy is an emerging technology worldwide, but with pilot projects and further research, it could become part of El Salvador’s renewable energy mix.

Daniel Álvarez has also expressed interest in aquatic biomass as an alternative source of renewable energy. Aquatic biomass in El Salvador usually refers to water hyacinths and algae, which are abundant in the country. These plants tend to clog rivers and lakes in El Salvador. As a result, it would make environmental and energy generation sense to convert them into a source of bioenergy. The president of CEL, however, did not note any recent development on this front by the end of May 2025.

Policy Support and Investment Climate

The Salvadoran government has actively encouraged the development of renewable energy over the last decade, and the resulting investment-friendly climate has attracted both domestic and foreign companies to the industry. Tax incentives, streamlined permitting, and grid access guarantees are some of the benefits El Salvador has introduced to attract more capital into the clean energy sector.

The country’s participation in the Central American Electrical Interconnection System (SIEPAC) has also contributed to improving the investment climate because, with a grid that connects El Salvador to the rest of Central America, any surplus renewable energy produced in the country can be exported to its neighbors. This can potentially increase the attractiveness of investing in solar and wind power plants in El Salvador.

Many private businesses are also increasingly interested in sustainability. Some have installed solar systems on their rooftops not just to save money, but also to meet ESG standards. This positive development in the private sector can provide additional impetus for the transition to renewable energy and the unlocking of growth potential in El Salvador.

Challenges and Considerations

The transition to renewables is not without its challenges. Grid infrastructure requires an upgrade to manage distributed resources more effectively. Energy storage, particularly for wind energy, is another issue, since wind power is variable and intermittent. Further, public awareness and education are necessary to facilitate widespread residential and community adoption of renewable energy technologies.

Financing remains a challenge. While the cost of technology has dropped significantly, the initial capital outlay can be a barrier for SMEs and lower-income households. Public-private partnerships and innovative financing solutions will be key in addressing this.

A Sustainable Path Forward

Solar and wind energy present a real opportunity for El Salvador to transition to a more sustainable and diversified energy future. El Salvador already has the foundation in place: over 60 photovoltaic facilities, residential interest in the space, and at least one operating wind farm. The rest is political will and modernized infrastructure that will attract capital investment.

The growth potential in El Salvador is there, and it is quite large. Capitalizing on the country’s solar, wind, wave, and biomass resources, the nation can both diversify its energy mix and improve its energy security. Aligning itself with global sustainability targets would also increase the chances of El Salvador being able to attract more long-term foreign capital. The opportunity is there; it is now a matter of turning growth potential in El Salvador into actual progress.

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Costa Rica Trade and Investment Summit

Costa Rica Trade and Investment Summit 2025 to welcome over 400 Buyers and Investors

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The Costa Rica Trade and Investment Summit 2025, to be held September 1–5, 2025, in Costa Rica, is set to welcome over 400 buyers and investors from over 45 countries. The visitors will meet with over 1,000 Costa Rican exporters, local suppliers, and multinational companies in what has been described as “the most important international trade and investment event the country has organized to date.” The summit is the new evolution of the Buyers Trade Mission (BTM) to be held in 2025. The BTM, organized annually by Procomer, Costa Rica’s Foreign Trade Promotion Agency, has previously welcomed thousands of business visitors to meet with Costa Rican exporters and industry experts in a wide variety of sectors.

After 26 BTM editions, Procomer’s flagship event, now enters a new phase in its development: it is becoming a more substantial, dynamic, and inclusive event with the new format of the Costa Rica Trade and Investment Summit, an evolution that materializes and makes public Procomer’s decision to merge its trade and investment promotion efforts, adopting a more holistic approach and creating a joint experience for its stakeholders.

Laura López, General Manager of Procomer, stated, “With the Trade & Investment Summit 2025, we are reinforcing the strategic repositioning that we have been building in recent years. This edition symbolizes the beginning of a new era: we are linking the best global partners with the best opportunities in Costa Rica. The new format is one more sign of the innovation that characterizes us.”

Seeking to generate productive and long-term commercial and investment ties, more than 3,200 one-on-one business meetings between international buyers and Costa Rican exporters are already programmed, in addition to the possibility for potential investors to evaluate concrete opportunities with local companies.

The agenda of activities that will take place during an entire week will include specialized business roundtables on key sectors, sector-specific exhibitions that will showcase Costa Rica’s most competitive industries, visits to industrial parks inside and outside of the Greater Metropolitan Area (GAM), conferences and panel discussions focused on topics such as innovation, sustainability, and digital transformation, as well as cross-sector networking sessions.

Presenting Costa Rica’s Strategic Economic Sectors

The 2025 edition of the Costa Rica Trade and Investment Summit is being designed to offer the opportunity to visit Costa Rica and explore opportunities in its most strategic economic sectors, including: Agroindustry, one of the pillars of Costa Rica’s export platform and a leader in tropical fruits, coffee, cocoa, processed foods, and other agro-industrial goods. Medical devices and precision equipment, the fastest-growing export sector, are responsible for billions in annual export revenue and the employment of thousands of Costa Ricans in high-tech, high-value-added manufacturing. Creative and digital technologies: software development, animation, video game design, and digital marketing. Advanced manufacturing: precision components for industries such as aerospace, automotive, and electronics. Green and sustainable technologies: renewable energy, water management, and circular economy models that are gaining attention as important magnets for foreign investment with ESG goals.

These are only some examples of the types of businesses and sectors that will be represented at the summit to take advantage of the trade and investment matchmaking opportunities that the event is known for.

Providing Access to Foreign Investment Opportunities

In addition to the traditional matchmaking and business-development opportunities, the summit will also include a comprehensive program for investors looking at new operations in Latin America. Special sessions dedicated to legal mechanisms for foreign investment such as free trade zones, free trade agreements and public-private partnerships; fiscal incentives, such as tax exemptions and preferential treatment for companies located in special economic zones or free trade areas; logistical advantages, such as proximity to major markets in North and South America, access to two major seaports, and free trade agreements with more than 50 countries worldwide; and sustainable infrastructure, such as Costa Rica’s renewable energy grids, industrial parks with LEED certification, and smart city initiatives.

Costa Rica is also a stable jurisdiction in political and economic terms, and also has a very attractive environment for foreign investors who are looking for legal certainty and ease of doing business. In addition, the country’s environmental stewardship and commitment to biodiversity protection are often major draws for foreign investors looking to meet long-term, sustainable business goals.

Connecting International Trade With Solid Export Growth

The timing of the Costa Rica Trade and Investment Summit 2025 is a particularly strong one for the country as its economic performance and export sector, in particular, have grown rapidly.

Exports from Costa Rica reached US$8.99 billion between January and May 2025, a 12% increase over the same period in 2024. Driving this export growth is precision and medical equipment, including surgical instruments, diagnostic devices, and biomedical components, as well as a broad array of agro-industrial products, including processed fruits, beverages, and sustainably produced raw materials.

This strong export performance demonstrates Costa Rica’s competitiveness in high-value global markets and capacity to meet stringent international quality standards. The Trade and Investment Summit 2025 will provide the opportunity to link these Costa Rican companies with new buyers and business partners in order to further increase exports in the second half of the year.

The Impact of Procomer’s Global Investment Promotion Efforts

Procomer, which in 2023 repositioned itself as the country’s Foreign Direct Investment (FDI) Promotion Agency, with a commitment to linking productive sector business opportunities with strategic investors worldwide, has been key in positioning Costa Rica in important international forums and trade fairs, with a focus in the last two years on Asia, Europe, and the Middle East.

The result: FDI flows to Costa Rica increased 20% in 2023 and another 14% in 2024. A year in which FDI closed at US$2.98 billion in a clear sign that investor confidence in the country is at an all-time high and that the country offers a stable, sustainable, and open economy.

The Trade and Investment Summit 2025 is expected to further consolidate this performance through the conversion of dialogue into actionable agreements, including signed contracts, launched joint ventures, and on-the-ground expansions.

Sustainability as a Unique Selling Point

Costa Rica is a pioneer in environmental sustainability, and its use of renewable energies to produce electricity in 2024 was more than 99%. During the summit, participants will have the opportunity to visit and learn about carbon-neutral industrial parks, to understand how to integrate eco-friendly models into supply chains, export standards that are friendly to biodiversity, and investment projects in green hydrogen and clean technology.

Sustainability isn’t just an add-on in Costa Rica. It’s an integrated part of the value proposition of the country as a business destination. This is what is making Costa Rica a particularly strategic partner for foreign investors in meeting ESG (Environmental, Social, and Governance) criteria.

A Welcome Mat for Long-Term Global Engagement

Global companies looking for resilient and diversified supply chains, talent-rich locations, and more stable economies in which to diversify look to Costa Rica. The Costa Rica Trade and Investment Summit 2025 is more than a high-level networking event. It is a strategic inflection point in the country’s global engagement strategy, one that seeks to link opportunity with innovation, investment with impact, and global buyers with local excellence.

Whether it is a company seeking the best-quality products from the most sustainable source or an investor looking for a safe, stable, and dynamic destination to do business, Costa Rica is rolling out the red carpet to welcome them. And the summit, in September, could just be the place where the next great business relationship is born.

Focused on innovation, sustainability, and global partnerships, the Costa Rica Trade and Investment Summit 2025 will redefine the country’s engagement with the world. Through strategic matchmaking, sectoral focus, and a robust investment agenda, Costa Rica is not just inviting the world to do business—it is building the future of business in Latin America.

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Salvadoran Business

The New Salvadoran Business: Professionalization, Technology, and Sustainability

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Seizing the Moment: A Unique Opportunity for Transformation

El Salvador finds itself at a unique juncture in its economic development. A young, highly skilled population, a government actively supporting investment and modernization, and a reshaping global economy seeking new and reliable partners. These are some of the reasons that El Salvador’s private sector is realizing that the time is now to seize the opportunity and take bold action to compete in the global economy.

Technological innovation, shifting consumer preferences, and a changing global geopolitical landscape have opened the door to a business environment that rewards companies that are agile, sustainable, and professional. In El Salvador, the debate is no longer whether to transform but when and how to do it.

Salvadoran Business Resilience: Driven by Adversity

Salvadoran business resilience has historically been forged by adversity. From decades of political turmoil to surviving the 2008 global financial crisis and COVID-19, Salvadoran entrepreneurs have learned how to be practical and adaptable. Coupled with an ever-growing talent pool of educated professionals, there is a strong foundation for transformation.

Today’s Salvadoran workforce is more connected, more skilled, and more aware of the world than ever before. Universities and technical institutes are expanding their curricula to include data analytics, software development, logistics management, and ESG principles of focus in today’s market. The private sector now recognizes the need for greater alignment between education and the needs of the market, a strong first step in creating a more professional and competent  Salvadoran business community.

Adopting technology has been one of the most visible signs of modernization within the Salvadoran business community. From enterprise resource planning (ERP) software to customer relationship management (CRM) platforms and eCommerce websites, businesses across sectors are now digitalizing their operations. However, modernization goes beyond buying new software or purchasing new equipment.

Transformation means rethinking how businesses operate. New governance models will be needed to enable more accountable and agile structures. Leadership will need to adopt data-driven decision-making and foster an innovative culture. Businesses will need to see technology as an ongoing set of capabilities rather than a one-time investment that will need constant upkeep and ongoing investment.

Salvadoran Business Aligning with Global Trends: ESG, Supply Chains, and Consumer Expectations

Increasingly, Salvadoran business leaders understand the importance of aligning with international standards, particularly in areas of environmental, social, and governance (ESG). International buyers, particularly in Europe and North America, are now looking at suppliers on more than just price and quality. They are increasingly looking at suppliers who have sound sustainability practices and employ ethical labor practices.

The world is also undergoing a major shift in supply chains. Companies are looking to be nearshored, especially in the wake of the COVID-19 pandemic. They are looking to be closer to home, especially in the Americas and particularly near the U.S., to facilitate trade. They are seeking to reduce supply chain complexity. El Salvador’s strategic location in the Americas, its proximity to the U.S., and access to the Atlantic and Pacific trade routes position it well to attract new business, provided that the country’s companies can prove reliability and offer value-added services.

At the same time, the modern consumer, particularly the younger generations, are demanding more transparency, social responsibility, and business practices that are ethical. Companies that invest in sustainable practices, communicate openly, and work with their communities are those that will gain consumer loyalty and earn higher valuations.

Organizational Transformation: Leadership, Culture, and Learning

The most advanced cases of Salvadoran business transformation show that it all starts with leadership. Executives who adopt a long-term view and invest in their teams’ capabilities are able to scale. Rather than being reactive, these executives are shaping future scenarios and aligning their companies with these futures.

Culture also plays a role in the ability of Salvadoran companies to transform. Creating a culture of learning, openness, and collaboration across functions enables companies to more easily adapt to market changes. Those that create internal feedback mechanisms to foster experimentation and reward innovative practices are able to outperform peers who hold on to legacy models.

Transformation requires more than vision; it requires a system. Establishing key performance indicators, analyzing data to understand customer behavior, and fostering a results-oriented mindset are all critical elements of the new business paradigm. This is not about throwing out tradition, but building upon it with more precision, more accountability, and more future-facing practices.

Enabling Ecosystems: Public Policy and Strategic Support

No Salvadoran business can modernize alone. El Salvador’s ecosystem of government institutions, financial systems, educational centers, and civil society must all transform to provide the right incentives and remove structural obstacles.

Public policy plays a crucial role. Regulations that incentivize investment in innovation, enable access to capital, and ease administrative burdens can support companies on their journey. Tax incentives for R&D, support for green technology, and explicit legal protections for intellectual property can encourage progress. “Smart capital” is another key element that needs to be available to Salvadoran businesses—this is capital that brings not just money, but expertise and strategic guidance. The government must also enable the creation of sector-specific clusters that bring together companies, universities, and research centers to collaborate on joint ventures, shared facilities, and training programs. This collaborative development will enable innovation and will allow small firms to benefit from scale.

The Role of Academia and Knowledge-Based Partnerships

Salvadoran academia plays a key role in driving sustainable development. Universities in El Salvador are increasingly active in providing applied research, training programs, and innovation hubs that address the needs of industry. From agriculture technology and industrial engineering to renewable energy and data science, these partnerships can accelerate business innovation and enable competitiveness.

Successful economies have often adopted a “triple helix” model of innovation where academia, industry, and government collaborate on research, application, and national development. This model is gaining traction in El Salvador with encouraging examples of co-created programs, research grants, and knowledge transfer mechanisms.

The importance of these partnerships is not just in enabling technical learning, but in creating a shared national vision—one that links economic growth with social equity and environmental resilience.

Focused Strategy: Scaling Businesses with High Potential

The Salvadoran economy doesn’t need to be completely transformed to compete on the world stage. Rather, a targeted approach can drive outsized returns. Identifying and supporting high-potential businesses that are export-oriented, have the potential to scale, and are willing to adopt best-in-class practices can drive high returns.

These high-potential businesses, whether they are in agri-tech, textiles, fintech, or logistics, can serve as beacons of transformation. They can share best practices, bring suppliers into modernization, and expand talent pools. These businesses can be enabled to drive transformation with the tools, connections, and incentives they need to scale.

A National Narrative for Development

Perhaps the least recognized—but most critical—element of transformation is the narrative. Nations that have reinvented their private sectors have done so by believing in a vision: that modernization is not just about making money, but about building a better society. El Salvador has the opportunity to create a new national narrative: one that connects prosperity with inclusion, growth with responsibility, and innovation with dignity.

Many Salvadoran businesses are already engaging in this broader conversation. Through corporate social responsibility programs, inclusive hiring practices, and environmental stewardship, many businesses are demonstrating that business success does not have to come at the expense of the environment or the people of El Salvador.

Looking Forward: A Continuous Journey

The reality is that transformation is not a destination, but a process. Markets will continue to evolve, technologies will continue to advance, and consumer expectations will shift. Salvadoran business leaders must make sure that their organizations are built with adaptability in mind.

At stake is not only business success, but the role of the private sector in shaping the country’s future. El Salvador has the talent, the location, and the entrepreneurial spirit to compete in the modern economy. It will require strategic alignment, collaboration, and an unwavering commitment to transformation.

Conclusion: Leading the Change, Not Just Surviving It

The private sector in El Salvador faces a defining moment: adapt or lead. The former will keep them afloat in the short term, the latter will position them to be relevant and drive change. The path to modernizing the Salvadoran business community is not paved with shortcuts, but deliberate and disciplined efforts that align vision, capabilities, and purpose.

Modernization is not optional; it is the new normal. For El Salvador, adopting it with clarity and intentionality may be the difference between riding the trends or setting them.

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4-3 work shifts in Costa Rica

Key Week for Fast-Tracking  the 4-3 Work Shifts in Costa Rica: A Turning Point for Employment and Competitiveness

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The nation’s lawmakers will consider this week whether to enact pivotal changes to the labor code by approving 4-3 work shifts in Costa Rica after reviewing a proposal designed to modernize national labor standards to meet global industry requirements and operational needs in critical economic sectors. The Exceptional Work Shifts Bill known as the 4-3 Shifts Initiative faces mixed reactions from both supporters and critics. The importance of this proposed legislation to Costa Rica’s industrial development and its ability to generate employment, while enhancing global competitiveness, remains absolutely critical.

Understanding the 4-3 Work Shifts in Costa Rica Model

Costa Rica’s proposed 4-3 work shifts would set a legal schedule where employees complete four days of work before receiving three days off. This work schedule model operates in some industry sectors through special labor contracts but remains without a strong legal foundation, which creates instability for both businesses and employees. The legislation would establish official standards for these schedules to guarantee compliance with national labor regulations and both health and safety requirements, as well as global best standards.

The working model offers distinct benefits to manufacturing sectors that need continuous operations and is especially useful for Costa Rica’s active free trade zones and export-focused industries. Businesses achieve cost reductions and better production efficiency. Employees experience extended rest periods, which improve work-life balance, particularly for those working lengthy shifts or complicated shift schedules.

A Renewed Push for Legislative Momentum

The legislative bill, which has remained under discussion for more than twenty years, has returned to prominence because of the combined pressure exerted by the private sector and legislative representatives. The Social Christian Unity Party’s Congresswoman Daniela Rojas,  who heads the 4-3 Work Shifts in Costa Rica Initiative announced that they may present a new bill this week to implement a fast-track process in the Legislative Assembly. During the initial voting process, the bill did not achieve expedited status because it received only 31 votes, which fell short of the required 38.

Still, there is renewed hope. Ongoing discussions indicate that multiple legislators who initially opposed the motion may now rethink their stance. Political negotiation combined with consensus-building has advanced the initiative further than ever before toward achieving the required threshold to expedite the debate and decision-making process.

The legislative faction leader, Pilar Cisneros, enhanced optimism by revealing that recent endeavors might have brought three to four more votes. The initiative stands only two votes away from meeting the 38-vote requirement necessary for fast-track designation.

Support from Key Economic Stakeholders

The Costa Rican Chamber of Industries represents one of the strongest proponents for the 4-3 Work Shifts Initivative Costa Rica. Carlos Montenegro, the Executive Director of Costa Rican Chamber of Industries, stated that the legislation represents a crucial and overdue step toward better formal employment opportunities and increased industrial sector competitiveness in Costa Rica.

According to Montenegro, the matter, which has been discussed for over 25 years, needs decision-making after extensive sector-wide dialogue. His statement indicated that the proposed measure should not be universally applied to all companies but should serve as a specialized solution for specific industries, which need this level of flexibility.

Montenegro pointed out that this proposal will establish legal clarity for an existing informal practice used in some companies. He explained that the country needs to preserve its competitive edge in crucial economic sectors and emphasized that productive discussions are necessary to create additional jobs with specific and protected working conditions.

Azofras Emphasizes Legal Modernization and FDI Impact

The Association of Free Zone Companies (Azofras) actively supports the bill’s rapid passage because it believes it is critical to drawing and maintaining foreign direct investment (FDI). Azofras emphasized in its written statement that Costa Rica needs to update its labor laws, which have remained essentially unchanged since 1943.

The organization explained that backing rapid approval demonstrates Costa Rica’s readiness to meet contemporary global economic standards to international investors. Azofras argues that the implementation of 4-3 work shifts in Costa Rica will establish a labor system that matches the operational needs of multinational firms in advanced manufacturing, life sciences, and technology fields.

The organization considers this reform essential both economically and as a matter of national priority. Azofras declared that Costa Rica must now demonstrate its commitment to innovation, along with workforce adaptability and strategic long-term planning. The organization called on all 57 legislators to endorse the fast-track procedure and pass this reform immediately.

Political Hurdles and a Complex Voting Landscape

The increasing support has not simplified the approval process, which continues to be politically intricate and challenging. The legislative fast-track motion failed on May 19 because only 31 legislators supported it. The National Liberation Party delivered key opposition support through seven members who voted against the motion, according to directions from former presidential candidate Álvaro Ramos. The independent congresswomen Kattia Cambronero, Johana Obando, and Gloria Navas joined the opposition by voting against the motion.

The political divisions currently in place make the passage of the fast-track motion and the final approval of the bill contingent on continuous negotiation efforts and changes in legislative alliances. Just two additional votes are needed to reach the fast-track threshold. As such, supporters continue to express optimism.

The Broader Implications for Employment and Investment

The passage of the 4-3 Shifts in Costa Rica bill promises to deliver substantial economic advantages for the country. The passage of the bill would provide multinational corporations with increased assurance about beginning or growing their operations within the country. The legislation enhances workforce planning strategies and reduces employee turnover rates in high-demand industries, through the provision of predictable and practical work schedules.

The bill stands out because it provides a chance to generate thousands of formal employment positions. Advanced manufacturing and medical devices companies in Costa Rica search for labor models that support continuous production and meet regulatory standards, while protecting employee welfare. Costa Rica demonstrates its dedication to economic development and employment growth through the adoption of 4-3 work shifts.

The implementation of these reforms would significantly influence social dynamics in rural and peripheral regions that host numerous free zone enterprises. The creation of new employment opportunities through this adaptable structure should lessen poverty and enhance living standards, especially for women and young employees who frequently face informal or inconsistent job situations.

Conclusion: This week stands as a pivotal moment for Costa Rica’s labor reform agenda.

Current legislative activity represents a pivotal moment in Costa Rica’s mission to update its labor regulations. The progress toward implementing 4-3 work shifts in Costa Rica continues to build momentum after years of discussions and procedural delays. The nation faces a pivotal moment that will determine its workforce direction and economic future which business leaders and investors together with legislators watch closely.

The nation stands a chance to implement a labor model beneficial to both employers and workers if lawmakers reach the required 38 votes to fast-track the bill. The present discussion provides an essential evaluation of Costa Rica’s capacity to adjust to worldwide labor developments and maintain its core economic and societal principles.

Costa Rica’s current legislative moment presents an opportunity for the nation to lead the way in the changing landscape of global work. Costa Rica’s formal adoption of 4-3 work shifts could lead to larger labor reforms and demonstrate the country’s preparedness to meet the needs of fast-paced global markets.

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development in San Salvador

Over $3 Billion in Private Investment Drives Development in San Salvador

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Decisive institutional reforms and a significant influx of private investment are profoundly transforming the Metropolitan Area of San Salvador. Within a single year, the Office of Planning for the Metropolitan Area of San Salvador (OPAMSS) unlocked more than $3 billion of private capital, which triggered economic development alongside job creation and infrastructure advancement. San Salvador has entered a fresh phase of development guided by strong visioning and efficient leadership.

A New Era of Economic Dynamism

Executive Director Luis Rodríguez of OPAMSS credits President Nayib Bukele’s economic agenda for this success because it focuses on removing bureaucratic obstacles and enhancing investment conditions. Through its dedication to transparency and efficiency, the administration has transformed the business environment to better serve private sector stakeholders by enhancing accessibility and responsiveness.

Rodríguez stated that the organization has transformed from being a barrier for investment into a facilitator for investment opportunities. The private sector now sees us as a reliable partner, not an obstacle.” This paradigm shift in institutional performance highlights a key component of ongoing development in San Salvador: accountable governance and streamlined procedures that build investor trust by creating transparency and efficiency.

Institutional Reform and Digital Transformation

OPAMSS achieved success through its internal restructuring efforts. The agency improved response times by 70% after its technical team was strengthened and technology was utilized. Projects that previously required 18 months to process for development in San Salvador now complete in just 15 days, prompting more developers and entrepreneurs to choose the region for their ventures.

Automation and digital tools combine to eliminate paperwork and boost transparency across operations. Real-time project tracking is available to investors, together with online document submission capabilities and quick response times for feedback. OPAMSS’s enhanced service delivery framework establishes it as a contemporary benchmark for public sector modernization throughout Central America.

Targeted Dialogue with the Private Sector

The quickening of investment activities cannot be attributed exclusively to procedural enhancements. Rodríguez with his team conducted direct interactions with leaders of different industries to learn about their main concerns and strategic goals. OPAMSS utilized direct dialogue to align reforms with real-world challenges, which resulted in a more adaptive and responsive process.

Rodríguez’s administration successfully unlocked more than $1.1 billion in investment within its first five months through targeted dialogues with the private sector. Project developers now have the confidence to start initiatives because they trust that their proposals will be evaluated both promptly and impartially.

The implemented strategy produced real results by accelerating development in San Salvador compared to previous periods.

Strategic Expansion of Planning Jurisdiction

OPAMSS expanded its planning jurisdiction to include the municipalities of La Libertad Este, La Libertad Costa, and Comasagua to foster more balanced and inclusive urban growth. The agency now administers 1,483 square kilometers, encompassing 23 different districts. This strategic expansion reflects progressive planning efforts to integrate regions together, while addressing issues related to urban sprawl.

The expansion’s dynamic nature stems from its connection to Surf City government program, which focuses on enhancing tourism along the Pacific coast. Through collaboration with the Ministry of Tourism, OPAMSS is directing funds toward infrastructure and service improvements, which will benefit both tourists and improve local living conditions. The coordinated development strategy ensures tourism expansion delivers advantages to the entire region while protecting ecological balance.

Comprehensive planning throughout a broad geographic area leads to smarter and more resilient urban development in San Salvador and its neighboring municipalities.

Construction Boom Reflects Economic Impact

Key economic indicators show the positive impact of the recent investment surge. The construction sector, which serves as a primary indicator for infrastructure activity and employment, demonstrated a 13.5% growth during the year’s first quarter. The recent growth stems from OPAMSS’s improved efficiency, which allowed previously stalled projects to begin implementation immediately.

Rodríguez reported that the agency has entered a stage of launching facilities and conducting technical inspections, which demonstrates the success of the previous year’s groundwork. The capital region experiences a transformed skyline through new buildings and mixed-use developments, which create opportunities for jobs and entrepreneurship.

The construction surge serves as essential infrastructure development in San Salvador by providing necessary housing and commercial facilities for local communities.

Collaboration with State Institutions

OPAMSS achieved its success through the substantial support from other state institutions. Different government departments work together to process zoning, environmental, and infrastructural approvals effectively while supporting national development goals.

The current spirit of collaboration marks a clear break from the departmental isolation and inefficient methods that dominated past practices. Collaborative efforts among public agencies enable them to achieve quicker and more substantial results, which boosts development in San Salvador while providing a model for regional cities to pursue sustainable and inclusive growth.

Looking Ahead: A Sustainable Urban Vision

The shift towards sustainability and long-term planning begins as more projects move from planning stages to operational phases. OPAMSS plans to adopt green building standards and integrate public transportation while building climate resilience into its planning framework. Current investments should deliver immediate economic advantages while producing lasting advantages for future generations.

The agency plans to improve citizen involvement in planning by employing participatory techniques that ensure urban development meets the population’s needs and goals. The upcoming growth phase will see increased utilization of public consultations as well as digital feedback systems, together with community partnerships.

Conclusion: Momentum for Transformation

OPAMSS has demonstrated its importance as a key driver of development in San Salvador through the mobilization of over $3 billion in private investments and the implementation of critical institutional reforms. The agency established conditions for sustainable metropolitan prosperity by implementing strategic planning alongside technological innovation and maintaining open private sector communication.

The economic impact in El Salvador will persist as completed projects reach their end and new initiatives start. The economic progress seen from infrastructure improvements, together with job creation and enhanced public services, represents only the initial steps. The evolution of San Salvador into a progressive and welcoming city for investors continues to progress steadily.

San Salvador’s development demonstrates how national growth can be achieved through the combination of vision, efficiency, and collaboration.

 

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Global Complexity Businesss Index

A discussion on the TMF Group’s Global Business Complexity Index with Adrian Owen

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Adrian Owen
Managing Director-Mid Americas
TMF Group
adrian.owen@tmf-group.com


The Central American Group: Hello. Welcome to the most recent episode of the Central American Group podcast. In these recordings, we speak with individuals who have expertise in Central America and, often, the Latin American region as a whole. Today, we have with us Adrian Owen. Adrian is affiliated with the TMF Group, which publishes the Global Business Complexity Index (GBCI) annually. Welcome, Adrian. Would you please tell us a bit about yourself and the organization that you represent?

Adrian Owen: Yes. Good morning, Steve. Thanks very much for the opportunity today to talk about Central America. So, my name is Adrian Owen. I’m the managing director of a region we internally refer to as Mid-America, which encompasses Central America, the Dominican Republic, and Jamaica. The company I work for, TMF Group, is a leading provider of critical administrative services. We publish the Global Business Complexity Index each year and help clients invest and operate safely around the world. We have more than 12,000 colleagues in over 125 offices worldwide, and our locations span 92% of the world’s GDP and 95% of foreign direct investment inflows. We position ourselves, Steve, as a key part of our clients’ governance, providing the accounting, tax, payroll, fund administration, and legal entity management services essential to their success, particularly when they enter new jurisdictions.

We ensure rules are followed, reputation is protected, and operational compliance is maintained. We work with most Fortune Global 500, FTSE 100, and top 300 private equity firms. Concretely, in Mid-America, I’m based in Costa Rica and oversee operations in the eight countries I mentioned.

The Central American Group: Well, that’s very interesting, and it must be quite a challenge for you. One thing I’ve noticed appearing on the Internet, along with some related stories, is the TMF Global Business Complexity Index. First of all, could you tell us what it is, how it’s compiled, and what its ultimate purpose and importance are?

Adrian Owen: Yeah, sure, Steve. The Global Business Complexity Index (GBCI) is a key piece of research that helps those navigating rules and regulations cut through layers of complexity, enabling them to conduct business effectively and successfully across borders. It’s TMF Group’s flagship annual report. It provides a detailed analysis of the complexities associated with establishing, operating, and expanding businesses across multiple world regions. It includes a global ranking of 79 jurisdictions based on the complexity of their business environments. The GBCI is built, Steve, from over 290 data points that analyze complexity across three key areas, including rules, regulations, and penalties around business operations, accounting and tax, human resources, and payroll. The index ranks jurisdictions from most to least complex, identifying the root causes of complexity, including bureaucracy, frequent regulatory changes, and a lack of digital infrastructure. Beyond the rankings, the report offers valuable insights to customers on global trends affecting international business operations, including rising digitalization, shifts in tax policy, and changes in compliance obligations. For companies looking to expand into new markets, it’s an essential guide for assessing operational risk and planning effectively.

The Central American Group: Well, given that you look most specifically at your role in Central American countries, in recent years, what has been the trend in levels of complexity in that region compared to competitors that are located in Latin America as a whole?

Adrian Owen: Yes. I would say that Central American countries, Steve, have made remarkable progress in reducing business complexity, especially when compared to some of their Latin American neighbors. In the most recent edition of the Global Business Complexity Index 2024, countries such as Costa Rica, El Salvador, Honduras, and Nicaragua have emerged as some of the least complex jurisdictions in Latin America. Indeed, most Central American nations now fall into what I would say is medium to low complexity globally. One reason for this, I would say, is that they’re relatively straightforward human resource and payroll processes, which are easier to manage than in many other countries. Meanwhile, accounting, tax, and global entity management remain more intricate but are improving thanks to digitalization and regulatory reforms. Compared to other Latin American countries, some of which I see continue to struggle with bureaucratic inefficiencies and frequent legislative changes, Central America tends to stand out for its growing stability and business-friendly reforms. Even compared to some more developed markets, which tend to be less complex overall, these countries are proving competitive by offering simpler, faster administrative procedures in key areas.

The Central American Group: According to the Global Business Complexity Index, what factors have made Central American countries less complex over time?

Adrian Owen: I see several structural and policy-driven factors contributing to reducing complexity across the region, Steve. For example, the government has introduced targeted financial support in El Salvador, including tax incentives and infrastructure investments to support logistics and trade. The National Trade Facilitation Strategy aims to modernize and streamline customer procedures, demonstrating a clear commitment to easing international trade and responding to the demands of the global supply chain. Panama, for example, has eliminated the requirement for a municipal taxpayer number, simplifying tax returns for corporate income tax. This is an example of how small reforms can have a significant impact. In Guatemala, digital advancements in invoicing and the registration of employment contracts help simplify operations for foreign businesses seeking to establish a presence in the country. This significantly reduces complexity for all parties involved. Let’s not forget Nicaragua. Nicaragua’s free trade zones are another positive factor, particularly for manufacturing and mining companies, which helps attract investment. Overall, I would say that these efforts, combined, demonstrate a regional commitment to reducing administrative burdens and increasing transparency. These factors are crucial for enhancing investor confidence, streamlining operations, attracting new investment, and achieving a more competitive position on the Global Business Complexity Index.

The Central American Group: As you are aware, the Central American Group has operations in Costa Rica and El Salvador, where the company’s free zones are situated. What can you tell us about the ranking of both countries in the most recent complexity analysis? Can you provide us with some insight into the factors that influenced their scores?

Adrian Owen: Sure. First of all, it’s a privilege to collaborate with the Central American group. In 2024, the Global Business Complexity Index ranked Costa Rica 29th and El Salvador 30th among the 79 least complex jurisdictions. El Salvador’s lower and continually improving complexity score, I would say, reflects advancements in its human resources and payroll systems, a more stable regulatory environment, and a wave of digital innovation. The country has introduced online platforms for identity documents and commercial registration within 24 hours, as well as tools like MITui and Digigob to manage official processes. It also benefits from enhanced security and political cohesion, which have improved investor sentiment in the country. Costa Rica, similarly, stands out for its robust free trade zone regime, which has been attracting diverse financial and foreign investment for many years. As a member of the OECD, Costa Rica adheres to high standards of transparency and governance, which can be demanding to comply with but reassuring for international investors. Global entity management, the constitution, and annual legal compliance of companies is a bit of a mixed bag, to be honest, Steve. El Salvador has simplified many procedures.

It’s the centralization of authority, but potential geopolitical risk can create uncertainty. Costa Rica, on the other hand, is more decentralized and predictable in its processes.

The Central American Group: Some people find it surprising that, according to the Global Business Complexity Index, Central American countries are not more complex for new entrants than other destinations, such as those in Europe or Asia. What are some of the most complicated countries to deal with, and why are they ranked that way?

Adrian Owen: Well, it’s funny. It’s a common misconception that smaller or developing countries are automatically more complex. Some of the most complex jurisdictions in the Global Business Complexity Index are developed economies such as Mexico, China, and Greece. What drives complexity in these cases is usually a combination of frequent regulatory change and high levels of bureaucracy. In Greece, for example, localized processes and a heavy reliance on paper-based systems increased operational complexity. In Mexico, federal and state-level regulations can conflict or change quickly, creating what every business dislikes: uncertainty. China faces similar issues, especially regarding foreign investment approvals and constantly evolving data regulations. I would say that these examples, and I’d also include France in that, show that complexity is not always about infrastructure or wealth. It’s often about how regulations are updated, enforced, and how easily businesses can access the information and systems that need to stay compliant.

The Central American Group: When will the next TMF Global Business Complexity Index be released? And why does TMMF do this every year?

Adrian Owen: The 12th edition of the Global Business Complexity Index is set for release in the last week of May, early June this year. So, in a few weeks. We publish the report annually because global regulatory environments are constantly evolving. What was simple last year may become complex this year due to new tax laws, political shifts, or technological advancements. By closely tracking these changes annually through our experts in each country, we can provide businesses with a consistent, up-to-date resource they can rely on for international planning and risk assessment. But let’s also be clear here, it’s not just about the rankings. It’s also about helping organizations understand how and why jurisdictions are changing so they can prepare, adapt, and make informed strategic decisions.

The Central American Group: Once this comes out, how can listeners get access to it?

Adrian Owen: Sure. The full report will be available on our website, www.tmf-group.com. From there, the listeners can download complete GBI reports, explore interactive data visualizations, and find detailed country profiles.

The Central American Group: What can we expect from the perspective of the region’s business landscape in the coming years? What do you see happening?

Adrian Owen: So, what we’ve seen and continue to see, I’d say, is continued positive momentum in Central America. Despite the potential for regulatory changes, the business community remains optimistic about future investment. We anticipate further digitalization, streamlined registration processes, and enhanced clarity in tax and HR compliance. Countries in the region, I would say, are also likely to define their approaches to planning timelines, penalties, and technology use to enhance administrative efficiency. Challenges remain, of course, Steve, such as labor market volatility, geopolitical risk, and tariffs. Central America’s trajectory indicates a shift towards greater international competitiveness, enhanced investor confidence, and a supportive environment for foreign businesses, particularly in the technology, tourism, and manufacturing sectors.

The Central American Group: It’s been an interesting discussion about your company and the TMF Global Complexity Index. One frequent occurrence is that after listening to these podcasts, individuals have questions. We aim to provide a means by which individuals with questions can directly contact our guests. Adrian, is there a way that listeners with questions can get in contact with you?

Adrian Owen: Absolutely. And I would love the opportunity to engage with your listeners, Steve. I’ll make my email and phone number available. My email is adrian.owen@tmf-group.com, and my telephone number is +506 6026-4124.

We’ll have all that information in the transcript section of the podcast page. Additionally, Adrian, do you have a LinkedIn profile that we can share with you? Yes, of course.

Adrian Owen: Yes, feel free. I can provide that to you after this recording, Steve.

 The Central American Group: This has been a very educational half hour or so. Thank you for making yourself available to speak on these issues. I wish you great luck, both personally and for TMF Global, in the years to come.

Adrian Owen: Thanks very much, Steve, it’s been a privilege.

The Central American Group: Thank you. Have a great day.

Adrian Owen: Thank you. Goodbye.

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food industry transformation in el salvador

Food Industry Transformation in El Salvador Driven by Strategic Alliance Between OPAMSS and ASI

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The food and beverage industry has emerged as one of El Salvador’s most progressive economic sectors, with substantial impacts on employment creation and export generation as well as industrial expansion. The essential sector is currently experiencing a significant transformation period. A strategic partnership between the Office of Planning for the Metropolitan Area of San Salvador (OPAMSS) and the Salvadoran Association of Industrialists (ASI) propels the food industry transformation in El Salvador, with an official launch at the 4th Food and Beverage Industry Congress (CIAB 2025).

The joint initiative lays the groundwork for an industry that meets worldwide benchmarks in innovation, environmental sustainability, and economic competitiveness. El Salvador aims to become a regional hub for food manufacturing, while its cooperation between OPAMSS and ASI shows an effective public-private partnership.

A Landmark Alliance for Industrial Modernization

Luis Rodríguez, Executive Director of OPAMSS-COAMSS, presented the new alliance as the foundation of the National Industry Plan during CIAB 2025 at the Sheraton Presidente Hotel in May. Rodríguez said the initiative provides strategic planning tools for the food and beverage industry, which supports the National Industry Plan to encourage innovation, together with improved efficiency and business development.

President Nayib Bukele’s larger commitment to modernizing industry and revitalizing the economy includes this agreement. The food industry transformation in El Salvador depends on deploying planning systems that nurture sustainable and resilient industrial development. These efforts will concentrate on establishing industrial areas while maintaining dependable infrastructure access, environmental regulation compliance, and supporting technological digital investments.

CIAB 2025: Merging Tradition with Innovation

CIAB 2025 stands as El Salvador’s leading forum for exploring future developments in the food and beverage sector. Leaders from different sectors gather to participate in strategic discussions at this event. The event addresses critical industry issues by featuring discussions on food safety, biotechnology, sustainability, digitalization, and shifting consumer patterns, which indicate a pressing need for innovation.

ASI President Jorge Arriaza underscored the event’s relevance to national development: “Our industry will evolve through a congress that merges traditional methods and modern technologies. Technical training, together with knowledge exchange and state collaboration, stands as fundamental for advancing progress.”

CIAB 2025 illustrates the critical role of public-private partnerships while supporting the narrative of the sector’s transition towards innovative solutions from traditional methods. The food industry transformation in El Salvador centers around the merging of its traditional practices with modern advancements.

Strategic Planning as a Growth Engine

The OPAMSS–ASI alliance focuses on developing territorial and strategic planning tools to steer industrial development. These tools work to create a more structured and innovative approach to both the physical setup and operational procedures within the food and beverage industry. The concept requires finding prime spots for facility establishment and developing scalable infrastructure, while embedding sustainable practices throughout the production process.

Efficient planning enables businesses to use land and resources intelligently, which results in lower energy expenses and better logistics while boosting productivity. Effective planning remains vital for meeting global market complexities while securing future growth during the food industry transformation in El Salvador.

Pilot Projects and Institutional Cooperation

The alliance promotes the implementation of the plan through pilot projects which demonstrate innovative technologies and development models. Both government and industry will receive support through detailed data analysis and technical evaluations, which will help them make well-informed investment decisions for the future.

Pilot implementations could feature green manufacturing areas and advanced food safety tracking systems while introducing intelligent energy management technologies. These projects will play a role in workforce development as well as supply chain efficiency and the adoption of international quality standards.

OPAMSS offers regulatory and technical guidance through collaboration, while ASI provides private-sector operational expertise and insights. Their combined efforts generate a synergistic framework, which strengthens various aspects of food industry transformation in El Salvador.

Academic and International Collaboration

The alliance is developing collaborative relationships with universities and research organizations, along with international bodies, to expand knowledge resources and strengthen industrial capabilities. These partnerships provide essential assistance with curriculum development while supporting technological research and policy design initiatives.

Local universities serve as key players in developing a workforce equipped for automation technology and sustainable manufacturing while aligning with global trade regulations. International allies can provide necessary funding and access to global best practices to build a top-tier industrial ecosystem.

The food industry transformation in El Salvador depends on academic and international connections to enable free knowledge exchange between sectors and help the country stay aligned with worldwide advancements.

Challenges and Opportunities for the Food Sector

The food industry in El Salvador, which traditionally thrived thanks to its abundant agricultural resources and cultural background, is now confronting novel challenges. The food industry in El Salvador contends with intense competition worldwide alongside swift technological advancements and environmental challenges, together with higher consumer demands.

The sector must implement modernization measures across diverse areas, including factory automation and digital logistics, as well as product innovation and environmental responsibility, to maintain its competitive position. Modern consumer demands for transparency and sustainability alongside quality standards oblige producers to make rapid adaptations to fulfill these requirements.

The OPAMSS–ASI partnership delivers essential leadership and strategic guidance needed to tackle challenges in this changing environment. Precisely, these public-private partnerships enable El Salvador’s food industry to overcome obstacles and seize emerging opportunities during its transformation.

Policy Impact and Vision for the Future

The Bukele government prioritizes industrial development, with the food and beverage sector identified as essential to advancing this goal. The integration of agricultural production with manufacturing and international trade positions this sector as a pivotal element of El Salvador’s economic diversification strategy.

The modernization of the industrial base in the country reveals the food sector as a promising model for sustainable growth. New development plans now incorporate circular economy methods together with renewable energy systems and advanced infrastructure.

The comprehensive plan guarantees sustainable development while enhancing El Salvador’s appeal to international investors and trade partners. The food industry transformation in El Salvador stands ready to generate positive outcomes for economic performance, as well as environmental conservation and social welfare.

Conclusion: Leading the Regional Food Revolution

The OPAMSS–ASI partnership marks a significant advancement for the nation’s industrial progression. This partnership merges strategic planning with actionable execution to build the basis for the next phase of industrial growth in the food and beverage industry.

Stakeholders throughout El Salvador demonstrate collective dedication to innovative practices and sustainable growth to maintain industry competitiveness in the dynamic global market. The food industry transformation in El Salvador represents both a national priority and serves as a regional example of inclusive and resilient development for future generations.

 

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Costa Rican Free Trade Zones

The Costa Rican Free Trade Zones Business Association opposes all efforts to introduce new taxes into their operations

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The International Monetary Fund proposes revisions to tax regulations affecting Free Trade Zones.

The Costa Rican Free Trade Zones Business Association (AZOFRAS) strongly rejected the International Monetary Fund’s (IMF) recent suggestions to boost tax revenues by making changes to the Free Trade Zone Regime. The rejection came after the IMF’s Article IV Consultation for Costa Rica, where the institution suggested tax reforms to boost equity and efficiency, along with the revenue-to-GDP ratio.

AZOFRAS stands in defense of the existing Free Trade Zone framework.

AZOFRAS stands firmly against any proposed changes to the existing structure of Costa Rican free trade zones, which includes income tax exemptions that have been essential for economic growth. The association demands that decision-makers conduct a comprehensive evaluation of all elements influencing the national investment environment while keeping global contexts in mind before making any moves that could harm the existing model’s effectiveness.

A sophisticated strategy is necessary to address both global and local dynamics.

AZOFRAS representatives say that future discussions on Costa Rican free trade zones require an analysis of both international and domestic factors. The factors affecting the nation’s investment climate include geopolitical conflicts. along with continuous trade tensions, adjustments to monetary and fiscal policies, and the influence of international social movements and changing public and political policy trends. Approaching this issue with a narrow budgetary reform focus would lead to serious strategic errors.

Strategic Value in Attracting Investment and Driving Development

The president of AZOFRAS, Ronald Lachner, reinforced that Costa Rican free trade zones play a strategic role in securing FDI and advancing national socio-economic growth. The present context demands careful assessment of various elements before deciding on measures that could affect a valuable regime which has demonstrated substantial profitability and strategic advantages for the country through its ability to draw FDI and generate formal high-quality jobs, while creating productive connections and increasing exports.

Free Trade Zones lead to employment growth and quality of life improvements.

The Free Trade Zone framework serves as a crucial pillar of Costa Rica’s development approach while functioning as an essential driver of its economic growth. The operational model supports 600 companies, which create close to 300,000 direct and indirect employment opportunities. The average salary for jobs in this sector stands at 1.8 times the earnings typical of other economic sectors, while job availability remains abundant. The improved living standards and development of a stronger middle class occurred throughout the country as a result of this economic strategy.

The economy grows stronger through productive connections between multinational corporations and local businesses.

The free trade zones in Costa Rica have been essential to establishing productive connections between multinational corporations and domestic companies. The connection between multinational companies and local firms strengthens the national economy by boosting domestic supply chains and innovation while providing small and medium-sized enterprises (SMEs) access to global production networks. Companies operating within free trade zones have surpassed US$6 billion in local purchases, demonstrating how deeply these zones are embedded in the Costa Rican economy.

The free trade zones generate significant value for national production and export performance.

The Free Trade Zone regime stands for 14% of Costa Rica’s Gross Domestic Product while producing 65% of the country’s total export volume. The statistics reveal how crucial the regime is for the nation’s economic performance while also demonstrating its role in establishing Costa Rica as a vigorous competitor in international markets.

Fiscal Returns Justify the Exemptions

The Free Trade Zone regime generates fiscal benefits for the country. The Costa Rican economy gains $2.80 for each dollar exempted under the Free Trade Zone framework, which results in a $1.80 net economic gain. The positive outcomes include new jobs, greater domestic spending, infrastructure improvements, and better skills training for local workers.

Driving Social Inclusion and Gender Equity

The effects of Costa Rican free trade zones surpass economic benefits alone. These zones operate as tools for social development while promoting inclusion. The current workforce composition reflects meaningful progress toward gender equity because women constitute 44% of the workforce in these zones. Women’s participation in skilled professional roles drives social advancement while helping Costa Rica achieve its comprehensive human development objectives.

Enhancing Competitiveness Should Be the Policy Focus

AZOFRAS maintains that Costa Rica should prioritize national competitiveness enhancement instead of taxation, because the free trade zone model has already demonstrated success. The power to draw investment in today’s globally connected competitive landscape requires more than fiscal incentives; it demands legal stability, infrastructure readiness, access to skilled labor, and a business-friendly environment. AZOFRAS believes that weakening this key investment mechanism will damage the nation’s ability to attract global financial resources and economic prospects.

The debate over the global minimum tax brings various risks to international economies.

The global minimum tax represents one of the primary controversial topics being discussed on the international stage. AZOFRAS insists that all actions regarding this issue require careful consideration. The OECD advocates for this policy to mitigate tax avoidance among multinational companies, but this initiative has triggered significant opposition in the United States. President Donald Trump executed one of his earliest executive decisions in January 2025 by pulling the U.S. out of the global minimum tax agreement. The U.S. Treasury was directed by him to create “protective measures” to counter tax systems considered unfair to American businesses by other countries.

Potential U.S. Retaliation Raises Additional Concerns

The U.S. House of Representatives introduced legislation that seeks to levy additional taxes of up to 20 percent against foreign companies based in nations implementing unjust tax regulations. The legislative proposal targets nations that have completely implemented the OECD’s global minimum tax framework. The approval of this proposal will lead to significant consequences for Costa Rica if it follows the OECD framework while ignoring potential trade partner retaliation.

Maintaining a stable legal environment is essential to keep investor trust intact.

Due to changing global conditions, Costa Rica must focus on establishing legal certainty alongside a stable environment for investments. AZOFRAS credits Costa Rica’s successful investment attraction to its reputation for dependable and steady public policy. Investor confidence could be damaged by unexpected changes in fiscal policies, which could invalidate years of positive development.

Conclusion: Safeguarding a Proven Model for Growth

Legal stability and predictable regulatory conditions remain fundamental to preserving and advancing Costa Rica’s status as a top investment location. Lachner concluded by advising national authorities to maintain the free trade zone model because it represents an established strategic public policy.

Through their free trade zones, Costa Rica has become a regional center for high-tech manufacturing alongside medical devices and innovative service industries. The regime provides companies with fiscal incentives along with access to skilled labor forces and superior infrastructure, while being close to major export markets. The achievements of Costa Rica’s free trade zones have established the country as Latin America’s top investment destination.

Costa Rican free trade zones demonstrate an effective method for achieving inclusive growth alongside global competitiveness against the backdrop of a complex international investment environment. Policymakers deserve to focus on defending and strengthening this successful model instead of damaging it with fragmented tax-related changes. The country’s long-term development relies heavily on the economic contributions and social benefits the regime provides, along with its strategic significance.

In summary, the call from AZOFRAS is clear: Costa Rica needs to uphold its dedication to preserving the free trade zone system as it currently stands. The introduction of new taxes or reduction of benefits needs careful consideration and extensive stakeholder input to ensure alignment with a sustainable growth-focused long-term vision that promotes economic inclusion and enhances national competitiveness. A balanced approach is essential for Costa Rican free trade zones to maintain their exceptional performance.

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foreign investment in El Salvador

Spain Was a Major Source of Foreign Investment in El Salvador in 2024

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In the first three quarters, the amount reached $396.21 million, almost $9 million more than the total from all other countries. It may involve the repatriation of capital by Salvadoran entrepreneurs with registered companies there.

According to data from the Central Reserve Bank (BCR), Spain primarily drove foreign investment in El Salvador during the first three quarters of 2024. This European nation recorded positive flows that even exceeded the total FDI received by the country.

In the first nine months of 2024, the net flow of FDI from Spain to El Salvador amounted to $396.21 million. The total from all countries was $387.44 million, meaning Spain alone contributed $8.77 million more than the combined total of all nations.

How is this explained?

FDI from Spain offsets the significant outflows to other nations, which recorded negative FDI flows to El Salvador.

The largest outflow was to Panama, amounting to—$141.04 million. In this case, nearly $127 million was left for Panama in the second quarter alone. According to economist Luis Membreño in a previous report for El Diario de Hoy, this translates to Panamanian individuals or companies divesting from Salvadoran companies and Salvadoran citizens moving their capital to that country.

The United Kingdom, with—$78.74 million, and Guatemala, with—$9.36 million, follow Panama in negative FDI flows.

Economist Rafael Lemus suggests that Spain’s significant foreign investment in El Salvador does not manifest in visible investments. Instead, he believes it is more likely a process of capital repatriation by Salvadoran businesspeople who have registered companies in Spain, which, in turn, hold equity stakes in local businesses.

He notes that a similar phenomenon may occur regarding outflows to Panama: Salvadorans transferring funds to a country with a more lenient tax regime to reduce their tax burden. However, the situation with the United Kingdom is less clear.

“In summary, these movements are not typical, where one can directly identify investments behind the inflows and outflows… I believe the reality is more along those lines,” he explains.

Where are the clear investment movements?

Precise investment movements are evident in the case of the United States, which contributed a positive FDI flow of $103.39 million to El Salvador, making it the second-largest investor after Spain.

Many companies in El Salvador’s manufacturing sector are in the United States. Despite the closure of several plants, this sector remains the country’s largest creator of formal employment.

The third-largest amount comes from Colombia, with $29.41 million. However, there was a negative flow in the first quarter of 2024 due to the sale of AFP Crecer, a company previously owned by Colombia-based Protección S.A., a subsidiary of Grupo Sura. Centro Financiero Crecer, a Panamanian company, now owns AFP Crecer.

Another key takeaway from the data is that foreign investment in El Salvador from cryptocurrency-related companies like Tether is marginal. The funds from the British Virgin Islands (Tether’s former headquarters) amounted to only $8 million in the first three quarters of 2024.

Spain’s FDI in El Salvador has fluctuated over time

In March of last year, El Diario de Hoy reported that Spain had experienced the sharpest decline in foreign investment in El Salvador since the third quarter of 2021. This decline coincided with the Legislative Assembly’s removal—without due process—of the Constitutional Chamber justices and the Attorney General, which had a pro-government majority at the time.

Between June 2021 and September 2023, the net flow of Spanish FDI in El Salvador was -$220.85 million.

The Salvadoran government and the Spanish Embassy have been working on initiatives to attract Spanish investment since at least 2023 to reverse this trend.

One such effort occurred on March 12, 2024, at the Spanish Embassy in El Salvador. The event was attended by then-Spanish Ambassador Carlos de la Morena and former Presidential Commissioner for Strategic Projects Cristian Flores, who is now under investigation for corruption. Neither of them remains in office. Sonia Álvarez Cibanal replaced De la Morena, while Flores’ replacement has yet to be announced.

Representatives of ten Spanish companies from various industries attended the meeting. Most of them, such as CEMOSA and Civing, had already been operating in El Salvador for several years. Their purpose in visiting was to explore new investment opportunities in the country.

At the event, Flores highlighted two key investment plans:

Strengthening El Salvador’s Agricultural Infrastructure

This plan involved investments in agricultural production zones, post-harvest centers, high-quality supply hubs, transportation logistics, and retail market improvements.

The proposal was striking because, in 2023, El Salvador’s production of staple grains was lower than in the previous decade. However, there is no evidence of significant capital injections into this sector. The Salvadoran government has instead set up its supply center in Soyapango (East San Salvador) and established dozens of agricultural markets in different districts. Yet, this distribution network remains insufficient.

Establishing a Logistics Hub at La Unión Port

This project aimed to turn La Unión Port into a central logistics hub.

The Salvadoran government, however, has taken a different approach by granting the port’s management to a public-private company led by the Turkish firm Yilport.

During the meeting, Flores emphasized political stability and favorable investment conditions, stating:

“President Bukele’s reelection with overwhelming support confirms the people’s trust in his leadership… We offer democratic governance… I invite you to be part of this transformation in an investment-friendly environment.”

A history of fluctuating Spanish investment

Between the third quarter of 2019—when Nayib Bukele took office—and the second quarter of 2021, Spanish foreign investment in El Salvador ranked as the second-largest source, totaling $503 million. The highest investment figure during this period occurred in the second quarter of 2020, at the onset of the COVID-19 pandemic when Spain’s FDI reached $306 million.

However, this trend reversed starting May 1, 2021. Spanish FDI recorded negative figures in the last two quarters of that year, amounting to -$14.77 million.

While there was a brief recovery at the beginning of 2023 with an injection of $79 million, the following quarter saw a severe downturn, marking the worst record, with -$287 million.

When former Spanish Ambassador Carlos de la Morena was presented with consolidated data showing Spain’s declining foreign investment in El Salvador—plummeting from the second-largest investor to one of the worst performers following the rise of the pro-government Legislative Assembly—he was asked whether legal uncertainty, triggered by the removal of magistrates and the Attorney General, was the main reason behind this capital flight.

De la Morena attributed the investment decline to the COVID-19 pandemic and its aftermath. However, the data shows Spanish investments in El Salvador remained strong during 2020 and the first half of 2021.

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investment grade in costa rica

5 Key Reforms to Improve the Investment Grade in Costa Rica

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Costa Rica’s economic future is at a crossroads, with its investment grade in the balance. The country’s positive risk ratings, which have been stable over the past three years, could decline without structural reforms. A higher investment grade in Costa Rica is crucial for attracting foreign investment, creating jobs, and improving the business climate. With better ratings, Costa Rica would benefit from lower interest rates and a more favorable environment for entrepreneurs. To achieve this goal, experts emphasize the need for urgent changes in several key areas that would directly impact the country’s economic outlook.

Preventing Loopholes in Fiscal Reform

One of the most pressing changes required to improve Costa Rica’s investment grade is addressing potential loopholes in the fiscal reform approved in 2018. While this reform is a step in the right direction, concerns remain that it may not be fully effective in the long term. Experts recommend preventing future loopholes that could undermine the fiscal discipline necessary to maintain the country’s economic stability. A key part is ensuring that the budgetary reform remains intact and that no additional exemptions or loopholes could undermine the system’s integrity.

Allowing the Government to Issue Debt Abroad Without Legislative Authorization

Another significant change that could directly impact investment grade in Costa Rica is granting the government more flexibility in managing its debt. Currently, Costa Rica must seek legislative approval to issue debt abroad, a process seen as inefficient and detrimental to the country’s financial credibility. Experts argue that eliminating legislative authorization for external debt issuance would allow the government to respond more quickly to international markets when favorable opportunities arise, such as exchanging expensive debt for more affordable options.

This is essential as the Ministry of Finance and the Central Bank make their financing plans public and the deputies approve the budget. “Requesting Congressional approval only delays the process of entering international markets when opportunities arise to swap expensive debt for cheaper debt,” emphasized Róger Madrigal, President of the Central Bank. Swift access to international financial markets would improve Costa Rica’s fiscal position and boost confidence among investors, which is crucial for enhancing the country’s investment grade.

Modernizing Regulations to Improve the Business Climate

The third area of focus to enhance the investment grade in Costa Rica is modernizing the country’s regulatory framework. As the global business environment becomes increasingly competitive, Costa Rica must streamline its regulatory processes to reduce bureaucratic red tape and facilitate business operations. Experts emphasize the importance of regulatory modernization in supporting local entrepreneurs and foreign investors. By simplifying procedures and making it easier for companies to operate, Costa Rica can attract more investment and foster an environment that enables businesses to thrive.

Moreover, a more competitive infrastructure is required, including investment in the modernization of roads, ports, and telecommunications, to attract foreign investment and enhance productivity. Additionally, there should be a focus on technical and university education aligned with market needs, thus attracting investment in high-value-added sectors,” said Mónica Segnini, former president of the Chamber of Exporters. A modern regulatory framework, combined with improved infrastructure and education, would make Costa Rica a more attractive destination for foreign investment, enhancing its investment grade.

Building Competitive Infrastructure for the Future

Investing in competitive infrastructure is another crucial step in enhancing the country’s investment grade. Infrastructure is central to attracting investment, especially in industries that rely on efficient transportation and communication networks. Costa Rica needs to invest in modernizing its roads, ports, and telecommunications networks to enhance productivity and create a competitive business environment on a global scale. These infrastructure improvements would benefit foreign investors and support local businesses, enabling them to grow and increase their productivity.

Investing in Education to Align with Market Needs

Another aspect of Costa Rica’s competitiveness lies in its education system. Experts emphasize the need for a stronger focus on technical and university education more closely aligned with the job market’s needs. Costa Rica can attract investment in technology, biotechnology, and advanced manufacturing by providing a skilled workforce that meets the demands of high-value-added sectors. A highly trained workforce would contribute to higher productivity and innovation, which would help Costa Rica strengthen its position in the global economy and improve its investment grade.

The Role of Government and Congress in Driving Reform

The current government, led by President Rodrigo Chaves, has made several proposals to address the issues impacting investment grade in Costa Rica. However, much of the responsibility also lies with the legislative branch. In recent statements, President Chaves has blamed Congress for the lack of structural reforms, accusing lawmakers of failing to approve necessary changes.

“It’s incredible that in all the countries in the world, there are governments that want to squander resources, and here, it’s quite the opposite; it’s the Congress, sending and trying to approve projects that generate more spending,” Chaves said. This frustration underscores the country’s political challenges in implementing the reforms necessary to achieve an investment-grade rating.

Shared Responsibility Between the Executive and Legislative Branches

Despite the blame placed on Congress, experts argue that the executive and legislative branches should share responsibility for achieving investment-grade status in Costa Rica. While the government proposes reforms, it is ultimately the Legislative Assembly’s responsibility to approve them. Therefore, a collaborative effort between the two branches is necessary to implement structural reforms that address systemic problems in Costa Rica’s economy.

“I believe responsibility is shared because the executive proposes the measures, and the Legislative Assembly approves them. These structural reforms would address a systemic problem; otherwise, it is impossible to move forward with the necessary state reform, and citizens should not have to finance an inefficient state,” said Mónica Segnini, former president of the Chamber of Exporters.

The Need for Fiscal Reforms and Legislative Action

Among the proposals presented by President Chaves’ government are the modernization of the income tax, changes to the methodology for calculating the vehicle property tax, and the elimination of tax exemptions. Additionally, the government seeks to expand the Ministry of Finance’s powers to enhance tax collection. It aims to eliminate the requirement for congressional approval for the government to issue external debt or finance itself through international organizations. These reforms, if enacted, would help improve Costa Rica’s fiscal position and enhance its investment grade.

However, many of these proposals are still pending review by Congress. As the country faces increasing pressure to implement these reforms, experts emphasize the importance of timely action. “99% of what President Rodrigo Chaves says is false or simply a way to get people fighting for other purposes. This is not the responsibility of the Legislative Assembly; it is that of an Executive that has failed to push through more fiscal reforms. It’s easy to blame others when you don’t push the necessary reforms. It’s a political process that won’t be easy, as many irresponsible individuals in Congress won’t want to move forward on these issues. Still, we must strive to do so,” said José Luis Arce, economist at FCS.

By implementing these strategic changes, Costa Rica can improve its investment grade, attract more foreign investment, and set itself on a path toward sustained economic growth. Collaboration between the government and Congress and focusing on regulatory modernization, infrastructure development, and education will be crucial to achieving these goals. The investment grade in Costa Rica is at stake, and the time to act is now.

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